Friday, October 23, 2009

climate talks moving towards trainwreck & way out

Hi, Marc!

I have spent more time on this carbon issue than on anything else this year, here at the Hart building.
It's pretty complicated, and I don't represent anyone but myself on this, but I agree with you that it's important.

As well as frustrating.

Not long ago, I heard that the chief negotiator for China said in the Bangkok negotiations (then the latest prep for Copenhagen) that we are on course for a 'trainwreck." The Carnegie endowment had an open discussion between major participants a week ago -- and they made it clear than no one expects to see the kind of binding treaty they once hoped for. It's now all damage control and PR.

Discussions of Copenhagen always remind me of something Bernard Shaw once said:
"The reasonable man adapts to his environment. The unreasonable man tries to adapts his environment to him. Therefore all progress depends on the unreasonable man." (That was in his Revolutionists Handbook, though after 40 years I might have mixedyup a word or two in memory.)

Reasonable negotiators are all trying to fit within the Bali framework. But in my view the Bali framework was fundamentally flawed. The framework itself is responsible for the near-impossibility of useful progress right now.

What would it take to get real progress?

A few of the negotiators are arguing that we could at least aim right now for concrete "sectoral' arrangements on energy efficiency, renewables and carbon sequestration. That's not bad, but I would replace "carbon sequestration"
with transportation fuel, and go for new national laws or agreements like what I propose at

BUT MORE THAN THAT -- for the international negotiations on carbon control as such, we need to make a paradigm shift from Q to P (or from x to lambda).

In ordinary language -- we should give up trying to negotiate separate binding quotas or targets for individual nations.
That won't work, for many reasons. It's like the old command-and-control quotas for separate companies or states, which were thankfully replaced by a cross-cutting market systems WITHIN the US for acid rain and such.
EVEN to get to first base, and develop a workable foundation for future negotiations if necessary, we should be aimed
at an international agreement on PRICE, NOT QUANTITY. Some environmentalists say we need to focus on quantity "results' -- but right now, they are on course to getting no useful results at all from the negotiations on carbon control as such.

It may be hard... but I could envision a very simple treaty in which all ratifiers agree to pay a common carbon price,
meeting the minimum standards in the one-page attachment here. If the **US** climate bill included these kinds of standards, it would be easier to actually get to such a treaty. (Likewise, there should be no US aid to
other countries under cap and trade EXCEPT as contingent upon ratification of such a treaty.)

China might possibly agree, because $20 per ton would not hurt them nearly as much as not signing,
under these conditions. But would China change emissions much at $20 per ton? IN my view, they would, even though they don't realize it themselves. The carbon capture and geologic sequestration technologies are NOT likely to come on line at $20 per ton, and they also entail some very big possible risks to the environment so far as we know at present.
But if they persuade Congress to give billions of dollars to EPA to upgrade China's technology, it won't help China so much as their negotiators seem to imagine. On the other hand, a $20 carbon fee in China would give great incentive for
certain new, more advanced and aggressive high-tech companies to pay more attention to
the market in China, and help China clean up at a price they didn't realize was possible.

In sum... the situation for international carbon control now looks impossible, but there is some hope ouot there if only
people could be "unreasonable" and get out of the Bali box. If people really believed their lives were at stake, they would
not hesitate to stick out their necks and do just that.

Best regards,


P.S. There is some technical game theory implicit in what I am saying here. Focus on what teh common price should actually be changes the incentives dramatically, compared with a game of posturing.

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