Horse Trading and Climate Change: Noreena Hertz

WHEN the panda smiles, the world applauds. Or so it seemed after Chinese President Hu Jintao’s recent speech at the United Nations. Judging by the way much of the media reported his words, it seemed as if China had actually made an important announcement on cutting greenhouse-gas emissions. It hadn’t. All President Hu really said was that China would now “endeavour” to curb its carbon emissions by a “notable” margin. But how does one measure “endeavour” or “notable”? As someone with close links to the Chinese administration told me when pressed: “What was said was actually pretty meaningless.”

Indeed, there were no specific targets and, as any China watcher knows, the “greening” of the government is old news. Official Chinese policy in recent years has been to make GDP growth greener. But not at the expense of growth itself — and China plans to grow pretty fast.

At least the panda smiled. Poor Barack Obama didn’t even have that to offer. He offered no pledge to cut emissions in the United States, and, with vote-sapping battles already underway over health-care reform, one wonders how much time and energy Obama will have for environmental imperatives.

If all the world got out of this UN General Assembly meeting of government leaders was insubstantial rhetoric, the worse news is that it got more of the same at the G-20 meeting in Pittsburgh. As one finance minister told me rather wistfully, when I asked him what had actually been delivered on climate change: “Words,” he said, “just words.”

Given that there are little more than two months until the Copenhagen summit on climate change, which is supposed to frame the successor agreement to the Kyoto Protocol, this is depressing. Perhaps the only people not suddenly depressed are those immersed in the negotiations. With more than a thousand points still to be agreed, all the policymakers I’ve spoken to recently say that they cannot see how a meaningful deal can be reached by December in Copenhagen.

In reality, everyone is gearing up behind the scenes for a “Copenhagen 2,” and what those involved in the negotiations are calling “an even greater slog.” Even if some sort of communiqué is cobbled together in December, it is hard to believe that it will contain sufficient detail or reflect the proper level of commitment to have the impact so desperately needed.

“Copenhagen 1” was always bound to fail, partly because — and this may sound strange at first — it is all about climate change. Although cuts in CO2 emissions and agreement on funding and finance are necessary goals, the geopolitical reality is that climate change cannot be decoupled from trade or discussions on exchange rates, the IMF, reform of the UN, and so on. There is a quid pro quo that no one explicitly talks about but which must be addressed: trade-offs between these negotiations, not just within them. Meaningful action on climate change will not be seen until it is agreed within this broader framework.

This means taking the issue out of its current compartment and being realistic enough to understand that Brazil’s position on cutting down rainforests, for example, will be affected by whether or not it is given a seat on the UN Security Council. It means being sophisticated enough to understand that as long as China feels under pressure to stop propping up the renmimbi, it is unlikely to deliver commitments on emissions cuts.

Widening the scope of the next round of negotiations so that much more can be used as bargaining chips would make the job of the negotiators considerably harder. But it would also give them considerably more to work with. In fact, there is no other way to prevent the process from remaining a zero-sum game.

Worryingly, “Copenhagen 2” will not only have to navigate this complicated terrain, but it must do so in less than five years. The climate bomb is ticking, and there is a palpable sense of urgency among policymakers. For, as the UN’s Intergovernmental Panel on Climate Change has explicitly warned, if emissions do not fall before 2015, and only fall from then onwards (and the overall trend is that they have been rising), we will reach the point of no return.

At that point, the Armageddon scenarios of droughts, rising sea levels, floods, energy and resource wars, and mass migration will become a reality. Just think of the images of recent storms and floods in the Philippines and Vietnam that displaced and killed thousands, and multiply those horrors manifold. That is what we are up against.

Climate change negotiations are arguably the most important of our lifetime, because their outcome will determine the fate of our planet. It is essential that they take place within structures and frameworks that encourage agreement by putting other major multilateral issues up for discussion. The world’s governments must be able to trade horses if pandas and presidents are to do more than smile.

(The author is Professor of Globalisation, Sustainability and Finance, Duisenberg School of Finance, Amsterdam and Fellow, Judge Business School, University of Cambridge.)


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