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A political ill wind blows

Governments meeting in Copenhagen have taken the wrong approach to climate change, says Tim Harford. They should be working to increase the price that polluters pay for emissions.

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My sunny disposition wavered as the Copenhagen summit on climate change approached. I believe that the governments of the world have taken the wrong approach to the problem – and if they had taken a different tack 12 years ago in Kyoto, we would be much closer to dealing credibly with climate change.

The complexities are dizzying, so it may help to be reductive for a moment. The governments of the world are focusing on reducing the quantity of greenhouse gases emitted, through cap-and-trade programmes; they should instead be focusing on increasing the price polluters must pay for emissions. The incentives provided by the two approaches are similar. Both will lead to a higher carbon price and lower emissions, and both could be tweaked over time to produce much the same trajectory of lower emissions. Either system would work well from an economic perspective.

Yet politically speaking, cap-and-trade – where an agreed cap on the level of pollution permitted in a region is set, within which companies can trade those permits between themselves so long as the cap is not exceeded – has long been regarded as the easier sell. I am not convinced it deserves that reputation. There are already several technically successful cap-and-trade schemes, but none requiring anything like the political compromises now necessary. The Kyoto Protocol, a quantity-based agreement on emissions, effectively died in the United States long before George W Bush became president, took eight years to come into force and could not meaningfully accommodate China, India, Indonesia or Brazil. This is hardly auspicious.

The trouble with cap-and-trade is that countries must agree how to divide the allocation of permits. This has proved troublesome when emissions targets were assigned relative to a 1990 baseline. Rapid growth in the US economy suddenly made its allocation look stingy, while the Russian allocation looked absurdly lax following the economy’s collapse in the early 1990s. It should not have been a surprise that some economies would grow faster or slower than predicted.

Gabrielle Walker and Sir David King, in their otherwise superb book on climate change, The Hot Topic, assert the conventional wisdom that cap-and-trade is politically more achievable. This statement is somewhat undermined as they start to describe the political prerequisites for such a deal, which include agreement on a global emissions cap (a hugely contentious question) and the distribution of emissions rights among countries.

There is a form of carbon tax that would be far simpler – and would not, contrary to Walker and King’s implication, be levied by the World Bank. G20 members would agree to impose a broad-based carbon tax on their own economies. The tax would be levied by national governments and spent as they saw fit. Precise harmonisation would be unnecessary. The taxes would simply need to be broadly in line, with a commitment to keep them that way.

Cameron Hepburn, co-editor of The Economics and Politics of Climate Change, points out that quantity regulation puts knotty issues of distribution and compensation at the heart of the international negotiations. Harmonised carbon taxes put these questions to one side. They could be – and would have to be – discussed separately. Perhaps a carbon tax is the wrong approach, and it is all for the best that the whole sorry mess will be on the table at Copenhagen. That is the path the world’s governments have chosen. I sincerely hope that they are right.

Tim Harford writes “The Undercover Economist” column in the FT Weekend Magazine of the Financial Times. His latest book is Dear Undercover Economist (Little, Brown).


Copyright The Financial Times Limited 2009

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匿名 | Anonymous



tax is a good method

I always take tax as a good method not only in environment protection, but also in social justices. For example, luxuries have higher tax rates. We can put the taxes in a new account, and make it transparent. We should supervise the taxes and put them into the proper usage.

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匿名 | Anonymous






Advertising and a sustainable climate

This article is like a breath of fresh air.

However, it doesn't mention something simple - that governments have the power to modify citizens' aspirations and patterns of consumption, not just through tax (although hitting people in their pocket is probably much the best option) but also through advertising and the media.

I appreciate that "retail therapy" gives politicians an easy life - and that the media would give politicians a hard time if their advertising revenue declines.

If advertising has contributed to unsustainable consumption, it can (and should) do the reverse.

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匿名 | Anonymous




How to resolve the problem of distribution of industry

If one of the outcomes of globalization is the global distribution of industry, and if we are unavoidably a high-carbon technology component of the global economy, then based on what the writer has said, who will be responsible for this role and pay an even higher price? In short, is it the producers or the consumers?

Translated by Tiffany Gray

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匿名 | Anonymous


评论者:丁文广博士,兰州大学西部环境与社会发展中心主任,兰州大学西部环境与气候变化研究院气候适应研究所副教授 [email protected]

Returning to the tradition maybe one of good approaches

Most solutions intend to resolve climate change problems by market, however, the nations' traditional wisdom of live, energy-saving and environment-protecting has not been brought to the forefront. For instance, in the westen china, the traditional pro-environment idea of Tibetans, the prairie culture of Mongolian, and ten Moslem minority nations possess very good culture of environment protection. It is a disappointed thing that, however, these conventional pro-environment customary traditions are in the danger of becoming extinct or maybe extinguished already. These reported disappearance of cultural heritages are good for coping with the climate change. Maybe Bhutan could provide us a advisable example of enviromental protecting culture.
Commentator: Dr Ding Wenguang,
diector of Westen China Environment and Society Development, Lanzhou University,
associate professor of Institution of Acclimatization, Academy of Westen China Environment and Climate Change
[email protected]