London’s policy on climate change should begin in Beijing

Today's Hot Topic, 4th November 2011. London’s policy on climate change should begin in Beijing

If a windmill is about to blight your cherished view of the green English countryside, you might start to wonder why on earth the Department for Energy and Climate Change thinks it is a good idea to subsidise the monsters at vast cost to the British taxpayer. Why not retune some boilers in Guangdong instead? Or encourage the booming cities of China to power themselves with gas, not coal? There’s a whole raft of practical, carbon-saving steps which can be more cheaply achieved in the growing, bustling emerging world. After all, a ton of carbon saved in China is as good in global terms as a ton saved in the UK. So why ever spoil our green and pleasant land? Hang on, though. Doesn’t this all assume a perfectly working international agreement – the kind of consensus which if we had it would mean that there’d hardly be a political worry about implementing the right solution? And isn’t it up to the Chinese to sort out climate policy in Beijing?

So where should London’s policy be aimed: here or there?

There
Look at how small the UK is! Barely 2% of the world’s carbon dioxide (CO2) emissions against almost 25% for China. Even worse, China’s per person emissions are growing massively while the UK’s are falling. It is pretty clear cut: if you want less CO2 in the global atmosphere, it is what happens in China that matters.

Here
How convenient to mention total emissions and the growth in per capita emissions … Emissions per person in the UK in 2010 were 8.8 metric tons per person per year. In China, they were only 5. UK emissions are small because there are fewer Brits emitting, not because they are green compared to China. In fact, they are much dirtier. The simple fact is that if we want to keep the climate within 2 degrees of current temperatures (as the world agreed to do at Copenhagen in 2009), then the consensus forecast is that we should be aiming for 2 tons of emissions per person per year. So who has the more policy work to do: London, at 4 times the target level? or Beijing, at 2.5 times? Everyone has to get greening, but London has more to do than Beijing. Time to start here, then.

There
Simple appeals to fairness like this are easy for primitive moral logic to grasp, but the economic reality is more complicated. As good husbanders of the earth, we have a duty to organise our management of the climate to waste as little effort as possible in doing so. Cutting emissions in China is much, much cheaper than cutting them in the United Kingdom. In the UK, it takes 141 units of energy (measured as toes, or “tons of oil equivalent”) to create $1m of value. In China, they need to burn the equivalent of 231 toes. So trying to cut emissions in the UK rather than in China is punishing the virtuous. Of course, there is a strong fairness case to be made that the UK should pay for much of the reduction in Chinese energy intensity … so precisely: our climate change policy should begin in Beijing.

Here
How naive the “all-knowing” global technocrat actually is! The view from the top ignores both practicalities and political realities. First, the Clean Development Mechanism – the institution set-up under the Kyoto protocol to allow “offsetting”, by which UK carbon credits could be earned for greening actions in China – was full of holes. It was corrupt and produced, at great cost, very few incremental benefits. So the top-down view from the global bureaucrats fails operationally. Worse than that, even if it did work, it wouldn’t go nearly far enough. We need to get to 2 tons per person per year. You can offset cheaply maybe 20% of the UK’s emissions. You can’t offset 60% cheaply, though, which is what we need. The real problem is that the technocrats believe that a global problem requires a global solution, while the realists understand that power still only lies with sovereign states. All of our sovereign states have work to do. Just get on with it: we should tackle climate change in London and the Chinese should tackle it in Beijing. To complicate matters further seems suspiciously like an excuse to do nothing at all. On top of that, to get on with cleaning up our own act has the knock-on benefit that we won’t look so hypocritical in international negotiations on a global deal.

There
Who’s being naive now? So London is meant to reduce its own emissions without a concern for what happens in Beijing? We impose costs and controls on UK industry to reduce our emissions with no regard for what happens in China? That’s a clear-cut recipe for the emasculation of what’s left of British manufacturing through environmental dumping. It will just shift production to – and reward – whichever place does not do the responsible thing.

Here
It is simple enough to protect oneself from environmental dumping and disingenuous to argue that we therefore need to meddle directly in China’s affair. We can adjust prices of Chinese goods at our borders to reflect their carbon content and so neutralise any advantage from environmental dumping. Even better, if we do that and the Chinese still want to sell to us, they’ll have a strong incentive to reduce the carbon intensity of their products. Sovereign policy in London thus leads to just the right actions in China … and all of that without the distraction of trying to get an impossible international agreement.

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