Politics, protests and emissions trading

Last month’s Bonn summit on climate change dominated news headlines. The summit was presented as a last chance to save the Kyoto protocol, but in reality the failure of COP6 in The Hague last November and the US decision to veto the protocol had already sounded its death knell. The countries present in Bonn should have accepted that Kyoto, in its current format, would never work globally and start to draft a more meaningful alternative.

Instead the main protagonists, Japan and the European Union, agreed to compromise on their emission policy positions. The main concession was on the use of carbon sinks to absorb emissions, critical for Japan, which is the world’s second largest polluter (see box). As a result the Bonn summit produced a concession agreement outlining the way forward on emission reduction, the financial incentives to emerging markets to encourage them to reduce emissions, the penalties for being out of compliance, and the framework for trading carbon permits to reduce greenhouse gas emissions.

In reality though the Bonn summit served only to maintain the status quo until this November’s COP7 summit. Japan has not formally agreed to the protocol and will not sign up until COP7. Importantly, the US is planning to produce its Kyoto alternative by COP7 and Japan would prefer to join a US-led agreement, if it met its objectives. If Kyoto were to lose both the US and Japan it would be worthless, resembling at best a European nations agreement. For this reason the euphoria from EU ministers that followed the Bonn agreement should be muted until COP7. There is still a long way to go.

The weekend following the G8 summit in Genoa saw a rally in London organised by the Campaign for Climate Change. Its focus was the US Embassy and the perceived intransigence of president Bush towards the Kyoto protocol.

The protests appear to be borne out of general naivety on energy issues. For example, the largest contributor to carbon dioxide emissions is not electricity generation plants but transportation. Yet the protestors did not cite the UK government, and its approach to transport policy, which has increased the number of cars on UK roads. Similarly why have there been no protests about the UK government’s decision to financially support the country’s private coal industry when coal-fired generation is the largest contributor to carbon dioxide of all generation plants? Last month the UK government subsidy to the coal industry topped £131 million, approved by the European Commission. Energy Minister Brian Wilson said that the investment was crucial to support the coal industry community. In other words the government is putting subjective party politics – the coal industry is heavily unionised and pro-Labour – above objective energy policy.

To imply, as the protestors do, that the US is not interested in climate change and the reduction of emissions is simply not true. Implicit in the Bonn agreement was the qualification of emission trading programmes to reduce emissions, yet it is the US that has been at the forefront of emission trading programmes and it is the US that will have the first carbon dioxide exchange with the Chicago Climate Exchange.

Contrary to the view of the protestors, the US is committed to reducing emissions, but not through the Kyoto protocol, which it rightly points out is flawed and could be damaging to the US economy. While the US produces 25 per cent of global emissions it also produces 25 per cent of world GDP. If the US economy fails it has a knock-on effect on the global economies, leading to business failures and unemployment. Would these protestors sacrifice the economy for a few percentage point reduction in emissions? And then there is energy itself. While the development of renewable energy sources and energy conservation can make positive contributions, they cannot be promoted at the expense of traditional energy sources. Renewable energy will not replace all the oil, gas, coal and nuclear energy. Energy demand is increasing, not reducing. And it is not possible to conserve energy if there is no energy to conserve.

If these protestors were to look closely at the Bush energy policy they would see that the US administration is attempting to balance the development of new energy sources to meet demand with investment in technology to reduce emissions. It is also committed to devising an alternative climate change programme to Kyoto.

Far from reneging on its responsibilities the US is seeking to develop a policy that is both beneficial to itself and the world in general. Before these protestors start volleying rhetoric across the Atlantic they should await the alternative proposals on climate change from the US, expected at the COP7 negotiations in October.