Throwing down the gauntlet to Secretary Clinton

By Marc Stuart

Secretary Clinton’s weeklong trip to Asia was notable for a number of firsts. The first time a new Secretary of State of a new administration has opened her tenure by flying west, rather than east. Well, George Schultz apparently went south, as the exception that proves the rule. It’s also the first time that these kinds of “nice to meet you” meetings have happened in the eyewall of an global economic meltdown, at least since Cordell Hull got on the boat for FDR. And it’s clearly the first time that climate change was generally at or near the top of any agenda for any Secretary of State at any time.

Secretary Clinton stopped in four countries – Japan, Indonesia, South Korea and China – who for various reasons are each a keystone to a future climate accord. Including the US, the four industrial countries are all among the world’s top ten emitters and roughly account for just about half of the world’s direct emissions from fossil fuels, while Indonesia is generally regarded as the largest emitter from land-use change – i.e. deforestation. So, to paraphrase the bank robber Willie Sutton on why he robbed banks, if we’ve looking for emission reductions, you could do a whole lot worse than starting with these five countries.

And, to briefly get into the odd position of praising the Bush administration on climate policy, its recognition of efficiencies in getting the world’s biggest emitters around a far smaller table – and thereby launching the Major Economies Meeting – was really not a bad one. The UN process of embedding 200 countries into a highly complex stream of multifaceted negotiations is, if nothing else, a giant time suck at a moment when alacrity is of the essence. And to be blunt, it really doesn’t matter what Togo, Paraguay and Laos do when it comes to emissions. Emit to your heart’s content – go nuts. By and large, the decisions and agreement of those 17 countries are what matters – some 85% of the world’s emissions – even if the MEM itself was quite deliberately impotent. And Secretary Clinton’s itinerary went straight to the heart of both the MEM and, more importantly, APEC, a international configuration that indeed might have some teeth going forward, as trade, environment and social issues begin to bubble together around the Pacific Rim.

Leaving aside Indonesia ‘s annual half billion tons of forest clearing CO2 emissions for the moment, Japan, South Korea, China and the US represent not just massive emitters, but the foremost inventors, disseminators and consumers of technology. But beyond that, their status differs quite radically. Despite being the symbolic birthplace of the Kyoto Accord, Japan has consistently argued that its namesake agreement treats it unfairly, giving no credit for its impressive embedded efficiency (catalyzed by the 1970’s oil shocks), as well as the direct impact of its technologies around the world. In other words, Japan thinks should get some kind of credit (beyond a pat on the shoulder) for all the Prius’s and other superefficienct gizmos’s that develops and exports around the world. For South Korea, despite being the world’s 9th largest emitter and having per capita GDP roughly comparable to places like Spain, Portugul and Belgium, it has been classified under Kyoto as a developing country without emission caps. They recognize that this is certain to change and today Seoul is gripped with a mini-carbon fever, as they get ready to become a major importer of emission credits after 2012, if indeed the current architecture is continued.

But it is undoubtedly China where the State Department and others should be putting their focus. China and the US have such an integrated economic relationship that it is foolhardy to think that global emission policy derives from anything else but the power politics that characterize their “coopetition” rivalry. China and the US account for some 40% of the world’s emissions and are definitely each others largest potential markets for the GHG friendly technologies that both Beijing and Washington trumpet commitment to. China has also easily been the largest beneficiary of Kyoto’s Clean Development mechanism with some 60% plus of all forthcoming emissions reductions. Yet despite this, at the last global climate meeting in Poznan, China fired off critiques of the CDM’s woeful inefficiencies that would have made industry blush. All in all, this represents a market and policy gap that is waiting to be filled

So, Secretary Clinton, how about something like this the next time you head over for banquets in Forbidden City? We negotiate a permanent free trade agreement between China and the US for all low emission technologies. That’s all of them – wind turbines, fuel cells and solar panels, smart meters, microturbines, cellulosic ethanol and nuclear reactors and everything else that comes out of the skunk works of either Silicon Valley or Shanghai. We seek a bilateral emissions trading regime between our two countries that starts with sectoral benchmarks and caps on key output areas of China, combined with a hard aggregate cap on the US. We develop a constant stream of exchange on green technology development, finance and execution via channels such as the Energy Foundation, Tsinghua University, World Resources Institute. etc We start a serious dialogue about how to embed carbon issues into the WTO negotiations, so that countries can actually have leverage on each other for emissions underperformance, malfeasance and fraud.

And last, but not least, we agree to use our collective bully pulpit to drag the rest of the world towards a real half century policy trajectory that mirrors the aims of the IPCC and President Obama’s campaign commitments. We’ll bring in the Europeans, Canada the Australians and Japan. China can use carrots and sticks with rest of the developing world. Maybe it’s the other way around – who knows. We can split Korea, since they are still on both side of the fence. But a united front from China and the US on this key issue of our time would be difficult to object to

We can only hope that President Obama and Secretary Clinton realize as well that the world’s two largest emitters have gone without any kind of serious comprehensive emissions policy for at least a decade too long. The world is subsequently much closer to an environmental tipping point than anybody should feel comfortable with. The economic dislocation is giving us a profound and unique opportunity to hit a bit of a reset button on a whole lot of levels. The opportunities from developing a technology and trade partnership for greenhouse gases with China are extremely compelling, whereas the risks of keeping to the old modalities are unacceptable.

Marc Stuart is the Co-Founder and Director of New Business Development for EcoSecurities, a global carbon trading firm. The views expressed are his own and do not necessarily represent the view of EcoSecurities.

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