The United Nations summit on climate change at Copenhagen in December is being preceded by an acrimonious debate on the impact of strict greenhouse gas (GHG) emission targets on economic growth.
Developing countries such as India argue that since carbon energy is vital to sustaining their rapid economic growth, any binding limits on GHG emissions will erode the competitiveness of their businesses and retard growth. Sceptics question the motives of developed countries advocating such restrictions after having themselves benefited from unrestricted emissions in the early stages of their development.
In an environment clouded by such suspicions, it is easy to lose sight of the threat posed by climate change to human lives, especially those in developing countries, and the fact that developing countries form an increasingly large share of GHG emissions. In the circumstances, it is inevitable that any meaningful effort to address climate change involve active participation of the developing countries.
Therefore, instead of blindly opposing emission caps and risk being left behind as the world moves forward with climate change policies, India and other developing countries should use the platform of the Copenhagen summit to present long-term, clearly defined and quantifiable counter-proposals that safeguard their interests while addressing one of the most important challenges facing the world.
This assumes greater significance since climate change could soon replace traditional issues that divide developed and developing countries—tariffs, labour standards, agriculture subsidies, etc.—and become central to global trade negotiations.
Stockxpert
Economists such as Robert Stavins of Harvard University argue that gradual GHG emission reductions are both possible and affordable, and the costs are not as overwhelming as opponents project. He points to the fact that “from 1990 to 2007, while world emissions rose 38%, world economic growth soared 75%—emissions per unit of economic activity fell by more than 20%”.
Carbon tax and cap-and-trade have emerged as the two most favoured approaches to lowering GHG emissions. However, there are sharp differences in their effectiveness.
A cap-and-trade regime would place limits on GHG emissions and permit surplus emitters to purchase credits from those who emit less than their allocations. Accordingly, those who can reduce their emissions at the least cost can sell their saved carbon credits to those facing higher marginal costs.