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Redesigning the International Approach to Climate Change

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Limiting climate change requires a revolution in the way the global economy generates and consumes energy. It is becoming increasingly clear that the current diplomatic approach -- as evidenced by the results of last year's Copenhagen Climate Conference and the follow-on talks completed in Bonn just this month -- should be redesigned to meet this immense political, technical, and social challenge.

Almost two decades ago, the world's nations, including the United States, ratified the United Nations Framework Convention on Climate Change, pledging to stabilize atmospheric greenhouse gas concentrations below dangerous levels. Since then, negotiators have aimed for a global agreement on the specific level considered dangerous and on binding targets for emission reductions that ensure this threshold will not be breached.

The Copenhagen negotiations aimed, but failed, to implement this plan. Nations expressed support for holding any increase in global average temperatures below 2° Celsius, but obligated themselves to no actions to ensure such an outcome. This is not surprising: this strategy requires nearly two hundred nations to commit themselves to march down a revolutionary path to combat a very serious but uncertain threat.

The global agreement strategy assumes that governments can set a meaningful threshold beyond which climate change becomes dangerous, and then chart a path far into the future to avoid crossing that line. But climate science can define no such precise threshold. It can only suggest an increasingly serious accumulation of risks as temperatures rise. In addition, meeting any reasonable target requires eliminating the atmospheric release of greenhouse gases from fossil fuels, and no nation in human history has ever grown rich without burning such fuels. The chronicle of environmental diplomacy suggests that most nations will prove very reluctant to sign a treaty with binding commitments they do not yet know how to meet.

As an alternative to the diplomatic process, some commentators emphasize a Clean Energy Revolution strategy that focuses on national governments taking aggressive but independent actions to cut emissions. This view makes some sense. National governments are primarily responsible for policies necessary to limit climate change: increased support for research on clean-energy science and technology; regulatory policies such as a cap-and-trade system that set a market price on greenhouse gas emissions; and complementary measures such as efficiency standards for automobiles and buildings. All three types are needed to enable the private sector innovation and investment on the scale needed for an energy revolution.

But this strategy also rests on some questionable assumptions. Climate change presents what economists call a collective action problem, in which successful solutions require many different parties to respond in a coordinated manner. Limiting climate change requires all nations to eventually eliminate their emissions. The clean energy strategy assumes national actions will make green energy less expensive than today's fossil fuels quickly enough to limit changes to the Earth's climate.

A more robust solution might combine the best of the two approaches. Rather than attempt to drive an energy revolution through international negotiations, it would rely on some national governments -- driven by a mix of environmental concern and economic self-interest -- to aggressively pursue a low emissions path. But global negotiations would still have an important role. They would refocus on supporting these early adopters and creating conditions that make it economically risky for lagging nations to fall too far behind.

The next round of climate negotiations in Mexico this December could pursue several actions to implement such a strategy. It could continue current efforts to promote the broad-based scientific assessments that establish the seriousness and damages from climate change; establish international reporting standards for monitoring and reporting of greenhouse gas emissions; set greenhouse gas emissions standards for industries and products, based on demonstrated best practice. Developed countries should also continue to assist the poorest nations in adapting to the impacts of climate change.

These steps would help create internationally recognized norms for what practices, and what nations and firms, were contributing to the solution, and which to the problem. International climate negotiations could also begin laying out the conditions under which nations that had substantially reduced emissions could impose carbon tariffs on those that had not. Ensuring the consistency of any such carbon tariffs with the rules governing trade is a necessary and proper role for international negotiations.

Under this race-to-the-top strategy, individual nations would invest towards a clean energy revolution. The international negotiations would promote the legitimacy and importance of those efforts, and provide tools that the leaders might eventually use to protect their investments against the laggards. Such tools, like carbon tariffs, would unlikely be applied until a majority of nations were already well on their way to zero emissions economies. While no nation would be asked to commit to a green energy revolution, all would have an incentive to invest towards one, because each would fear a future where they had dropped too far behind and were excluded from markets by a growing majority of green energy leaders.

Over the last two decades, those most concerned with climate change have grown accustomed to the idea that because climate change is a global problem, it can only be solved by a global consensus on the precise definition of dangerous climate change and a binding plan for how to avoid it. When negotiations fail to produce a sufficiently ambitious plan, advocates emphasize the dangers of climate change and call for renewed efforts. Not surprisingly, this approach has failed to catalyze change on anywhere near the needed scale. Perhaps it is time for a new strategy, one that sets no specific international plan for the energy revolution, but instead relies on some nations to race ahead and, once a majority have discovered a promising path, gives them the tools to strongly encourage the rest to follow.

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