Copenhagen: There must be a better way.

Posted on 22 October 2009

As we watch the progress, or more likely lack thereof, in the run-up to the December Copenhagen Climate Change Conference (COP15), we keep thinking “there must be a better way.”   We think the chances of a real “success” in Copenhagen, as distinct from a partial solution that is “spun” as being a success , are “vanishingly small” as one observer  put it.

We are therefore leery of investments that depend too heavily on a global deal on carbon, at least for the near-term.   Many alternative energy investments (solar, wind, smart grid) that would do well if a price were placed on carbon can also be justified on the grounds of rising fossil fuel prices alone.  Other cleantech investments (e.g. Climate Exchange PLC–CLE in London) are more uniquely dependent on a price on carbon.

Is the UN even the right body to be pursuing a climate change treaty?  We think of the UN as more of a debating society than a governmental body with a mandate and ability to get things done.  Even if some agreement were to be reached, where is the believable enforcement mechanism?  Is a grouping of the world’s 193 counties into “Developing” and “Developed” even a sound starting point since there are so many differences and needs among countries within each category?    Developing countries understandably want to be compensated for what they see as sacrificing future economic development, but polls in developing countries say voters would not support it.

The US is said to be the key player, and the rest of the world seems to have learned from the Kyoto experience that trying to proceed without the US is unwise.  US negotiators seem to have learned from the Kyoto experience too that the White House cannot take a position that is not already backed by Congress.  And Congress does not appear likely to have taken a position in time.  Maybe the world is trying too hard to reach a comprehensive multilateral agreement.  Maybe no amount of effort will lead to an agreement among all the countries of the world, no matter how hard they try.

An NYU professor, Bruce Bueno de Mesquita (the “Predictioneer”), has gotten extensive press recently for his predictions using game theory.  His methodology seems well suited for situations like the UNFCC talks.  One prediction in his recent book, according to Newsweek is:

“Copenhagen will be a bust, as will its main mission: by 2040 we’ll have given up on regulating carbon emissions. Global warming will be solved with wind, rain, and solar invention.”

He also elaborated on his predictions in this article from Foreign Policy, adapted from the book.

In effect, he is saying that the countries of the world, all acting in their own best interests, are very unlikely to find common ground on the GHG emissions issue.  (A look at the actual article, rather than relying on Newsweek to read it for us, reveals that he does not in fact predict that “global warming will be solved by 2040.”)

What might a better way look like?

One interesting path to a deal lies in the upcoming summits that the US has scheduled with both India and China.  The speculation is that Obama will emerge from both of these meetings with bi-lateral climate, energy and perhaps trade agreements related to these sectors.  With a bridge between the world’s biggest emitter of GHG’s per capita (the US) and the world’s absolute biggest emitter (China), plus an agreement with the other heavyweight in the developing world debate (India), other countries would be hard pressed to form meaningful alliances again that could scuttle the overall Copenhagen deal.  The Kyoto treaty failed to make a real dent in GHG emissions.  The US did not participate because the developing world did not face limits.  The developing world could hide behind the lack of US participation to justify its lack of limits.  Perhaps a US-China-India deal would be more success.
The wildcard, it seems, would lie in enforcement.  We would guess that anything to do with India or China would include a provision for tariffs in the event of noncompliance to appease blue dog Democrats and Republicans and secure ratification.  The ironic effect would be that now China and India would occupy privileged positions with the US with respect to carbon and trade that would force other countries to harmonize their own GHG emissions caps.   This raises a host of other issues but, ultimately, it may be the right start.

Perhaps governments are not even the right entities to be trying solve the GHG problem.  Maybe a new international agency is needed.  Perhaps there are diplomats and political scientists who could design such an agency.  The Nobel Prize in Economics was just co-awarded to Elinor Ostrom, a political scientist at Indiana University, for her work on the “tragedy of the commons” issue.  That phrase refers to a landmark 1968 paper by biologist Garrett Hardin with the title, “The Tragedy of the Commons”.  That paper said the only two ways to deal with a common resource were to privatize it or to turn it over to the government.  Neither solution looks promising for the world’s skies and seas.  Subsequent research has identified a third way.  The research has been done under the academic name “Common Pool Resources.   Elinor Ostrom was awarded the prize for showing how users themselves could develop rules and enforcement mechanisms that did not result in overuse.  One of the design principles from that work would suggest that most of the Copenhagen delegates could be excused to go home early.  Quoting from the Committee’s award document:

“A final lesson from the many case studies is that large-scale cooperation can be amassed gradually from below. Appropriation, provision, monitoring, enforcement, conflict resolution and governance activities can all be organized in multiple layers of nested enterprises. Once a group has a well-functioning set of rules, it is in a position to collaborate with other groups, eventually fostering cooperation between a large number of people. Formation of a large group at the outset, without forming smaller groups first, is more difficult.”