CIESIN Reproduced, with permission, from: Grubb, M. 1989. The greenhouse effect: Negotiating targets. London: Royal Institute of International Affairs.


Michael Grubb




Summary and Conclusions

1.   Introduction

2.   Greenhouse Gas Emissions

3.   The First Steps
3.1  An umbrellas convention
3.2  A framework convention
3.3  Fossil carbon emissions as a case study

4.   The International Problem
4.1  The scale of the problem
4.2  The holy grail: setting targets for CO2 reductions
4.3  A brief comparison of energy economics
4.4  Why the traditional approaches will not work
4.5  Underlying themes

5.   Alternative Approaches to International Agreements
5.1  Carbon taxes
5.2  Production quotas and production permits
5.3  Marketable carbon emission permits
5.4  Review

6.   Getting There
6.1  Monitoring, biomass energy and deforestation
6.2  Compliance incentives and enforcement
6.3  Recalcitrant countries

7.   What if an Effective Global Emission Agreement is Impossible?
7.1  Regional and select group agreements
7.2  Component activities agreements
7.3  Informal regimes
7.4  The role of unilateral action

8.   Conclusions

Summary and Conclusions

The late 1980s have seen an unprecedented growth of concern about the 'greenhouse effect'. The political impetus for an international convention to address the problem is now considerable, but as yet there has been little analysis of the form which any agreement might take.

The sheer breadth and complexity of the greenhouse problem means that the first step in a comprehensive international process has to be a framework convention. This would develop common ground on the nature and seriousness of the scientific and political issues involved, and would establish international monitoring and research co-ordination. It would lay the basis for approaching a range of quantified, binding and perhaps costly commitments expressed through various protocols to the convention. Negotiating the protocols will cause the greatest difficulties.

The linchpin of any serious attempt to tackle the greenhouse problem will be the negotiation of international limits on carbon emissions from the energy industries. There have been many calls for target reductions applied either across the board to developed countries or negotiated on a country-by-country basis. This approach cannot succeed. Negotiations conceived in this manner would drag on interminably and would be counterproductive because of the tactical value they would place on over-emphasizing the difficulties of reducing emissions.

In addition this process would not address important underlying issues. In particular, the developing countries will not join any agreement which seeks to reduce their carbon emissions from current levels, and these emissions will grow rapidly unless they receive assistance aimed at avoiding the inefficiencies normally associated with the earlier stages of industrialization.

It is therefore necessary to examine alternative approaches. These include carbon taxes, production quotas, and systems of tradable or leasable emission permits.

Carbon taxes could be an effective way of raising funds for international programmes to alleviate emissions. Applying them on a much larger scale, as an economic instrument, is more problematic. Any international agreement on domestic taxation policies faces difficulties because of the wide range of existing policies and the social and political implications of harmonization. A sizable international carbon tax faces major problems of institutional control and political acceptability, and of exchange-rate manipulations.

Setting quotas for energy production raises major political problems, mainly because of the scale of windfall profits generated. Auctioning quotas internationally faces difficulties similar to those of an international carbon tax.

A system of marketable carbon emission permits offers by far the most promising approach. Bilateral trading of permits offers the greatest flexibility in making the technical, economic and political trade-offs involved. Permits should be leasable but not permanently traded; the currency of exchange should be limited to development and pollution abatement programmes and related transfers of technology and technical expertise. Permits should be allocated on an adult per capita basis.

Such an approach would establish a logical basis for a long-term emissions control regime, and create a mechanism for technical assistance to the less developed countries, paid in proportion to current over-exploitation of the atmospheric resource.

The difficulties associated with monitoring of fossil carbon emissions and enforcement of an agreement do not pose major obstacles. More serious is the problem of universality: countries which do not join a carbon abatement protocol stand to gain. Applying carbon taxes on trade with non-participants could be a legitimate and effective sanction against recalcitrant countries.

Despite these possibilities an effective carbon abatement agreement is clearly going to be extremely difficult to achieve and success is far from guaranteed. Alternatives to a global agreement include regional accords, agreements between select groups of countries, and agreements on various component activities. In the absence of agreement, relatively informal regimes driven by internal pressures and international non-governmental networks may have a substantial impact. None of these is likely to be as a successful global agreement on abatement but they could still be of great significance.

Countries can and should also act unilaterally to limit carbon emissions. Unilateral measures can be in the national interest, and they may well be crucial in creating the conditions necessary for an effective international emissions abatement agreement.

3. The First Steps

3.1 An umbrella convention

Two broad approaches to an international agreement are possible. One is to attempt to set up an 'Umbrella Convention' which defines rules governing national behaviour on all important aspects of the problem in one go.

The main agreement of this type attempted so far is the Law of the Sea, which sought to regulate access to ocean resources. This bears testimony to the problems of such an approach. The text was elaborated over a period of fifteen years of negotiations for final signing in December 1982. In the event, the US and several other important participants declined to sign; the full treaty is still not in force.[18] Furthermore, the Law of the Sea was trying to set up access rights in a field where the scientific uncertainties were relatively few, and where there was little prior exploitation (particularly with respect to deep sea mineral resources) and therefore relatively little in the way of established interests to challenge.

There have been preliminary discussions on a Law of the Atmosphere, most notably at a meeting in Ottawa in February 1989.[19] This conference produced an outline of the issues such an agreement would have to cover in order to be comprehensive. It would clearly be a forbidding task. In some respects it could be simpler than the Law of the Sea, because the issue of extracting resources from the sea bed or fisheries does not arise. But in other respects, it would be more complex, because the current level of pollution is much more serious and more intrinsic to economic activity, and the uncertainties are greater.

One overwhelming conclusion from the discussion in Chapter 2 is that any agreement attempting to tackle the greenhouse effect needs to be flexible in the way it deals with different gases and emission sources. It is hard to see how a comprehensive umbrella convention could provide this. Trying to address all the problems simultaneously could prevent any actually being resolved. The Director of the United Nations Environment Programme, in addressing the Ottawa conference, argued that:[20]

By trying to do too much too quickly we may actually retard the moves underway ... In the light of experience with the Montreal Protocol and Hazardous Wastes Convention, I believe that it is much more prudent to seek specific and separate agreements - in parallel where necessary, but within a clear framework of what needs to be done to protect the atmosphere.

In other words, what is required is to provide a general framework within which negotiations on explicit abatement and other measures can proceed.

3.2 A framework convention

The idea of a framework convention has gained increasing acceptance during the past year or so. As noted in the Introduction, the United Nations Environment Programme (UNEP) has already begun preliminary discussions on how such a convention might be approached.

In addressing the nature of a framework convention, there is much to be learned from the 1985 Vienna Convention on the Protection of the Ozone Layer. The Vienna Convention itself said nothing about quantified targets for reducing CFC emissions. Rather, it was an expression of concern about the destruction of the ozone layer, a statement of common ground in recognising the role of CFCs and areas where further work was required - and it provided a framework which made explicit provision for subsequent protocols which could involve quantified targets on CFC emissions, as was taken up two years later at Montreal.

A framework convention on the greenhouse effect would be a formal international recognition of the problem and expression of concern about it. It could contain statements on the current best understanding of the scientific issues, including discussion of the range of gases and a note of the sources involved. It would probably recognise the need to take action in principle, and include general commitments to minimize emissions of greenhouse gases as reasonably practical. In doing so, one valuable function of a framework convention would be to improve understanding in many of the countries which currently have limited experience of the issues. Such an understanding is an essential prerequisite for any more specific protocols.

A framework convention might go further. It could provide recognition of some of the underlying political issues, for example the fact that the industrial countries have been the major source of past emissions of greenhouse gases, and the observation that developing countries are likely to require substantial technical and other resources from the developed countries if they are to limit their emissions. The question of international relief for victims of climatic disasters could also fall within the purview of a convention. So might assistance with measures for protecting against such disasters, such as sea defenses, in particularly vulnerable areas of developing countries.

A framework convention could also set up more extensive international research and monitoring programmes on climatic change, and provide the apparatus for coordinating programmes already under way under the auspices of UNEP, the World Meteorological Office and the International Council of Scientific Unions, as well as more individual national activities operated by various government agencies.

Yet, as the name implies, a framework convention could be much more than this. Its most important role should be to provide a framework for protocols which attempt to tackle the many areas of concern. Among these - and arguably the most important - would be protocols involving explicit measures or targets for reducing emissions of greenhouse gases.

The advantage of a framework convention is that it would enable the many complexities to be tackled piecemeal. Different protocols could be developed covering the different gases, or even the different economic spheres involved in their emission. Ideally there would be some linkage between the protocols to reflect the relative importance of the different contributions, but to do this formally would re-introduce the overwhelming complexities of trying to tackle the whole problem at once. Such linkage is probably best left to the age-old techniques of political horse-trading.

Fulfilling these many requirements will be far from easy. A framework convention will have to be robust enough to be useful and yet sufficiently flexible to encompass the many issues from adaptation to limiting emissions, from technology and resource transfer to the co-ordination of a global research programme, all in the context of a rapidly developing scientific understanding. It will take time, and it is just as well that the early stages of the process have already begun.

Drafting and then agreeing a framework convention will be difficult enough, especially if it is drawn more widely to include some of the more politically sensitive issues touched upon above (though these will have to be faced at some stage, and arguably, the sooner the better). However, the real problems will emerge in trying to negotiate the protocols. For it will be the attempt to agree on specific targets or other measures to limit emissions which will require countries to do things they would rather not do, and which will raise most seriously the issues of responsibility, international equity, monitoring, and incentives for compliance. Consequently, the sooner the process of examining and debating the options for the most difficult protocols begins the better. The process may be greatly eased, and repetition between different protocols avoided, if some of the underlying issues can be settled or at least considered in the process of working out the convention.

There have already been a number of independent initiatives by groups of concerned countries, the most notable being the Hague Declaration of March 1989[21] and the Noordwijk Ministerial meeting of November 1989.[22] At this stage, initiatives which seek to move more directly towards controlling emissions are likely to be of substantial value, so long as they encourage rather than impede a more coherent and complete international approach. Agreements arising from such initiatives may result in commitments and policy changes earlier than could occur if all decisions awaited the negotiation of protocols subsequent to a framework convention. Indeed, prior agreements on aspects of the problem might form the basis of later protocols, and offer backstops in the event of the comprehensive approach running into the ground. Even if effective agreements are not concluded on this basis, the attempts can test many waters.

It therefore makes sense to consider the range of possibilities open for a specific agreement on limiting emissions. One particular case stands out. However broad the scope of a framework convention, and however many the protocols or other media for negotiating agreements on reducing particular emissions, centre stage must be taken by an agreement to limit the emission of carbon from fossil fuel combustion.

3.3 Fossil carbon emissions as a case study

The rest of this paper concentrates on the issues involved in trying to limit emissions of 'fossil carbon' - carbon which is added to the climate system from fossil fuel combustion, as distinct from changes in the sinks and sources of carbon already circulating in the biosphere.

The reasons for this choice are simple. Carbon dioxide emissions form the most important single contribution to the greenhouse effect. The great majority of man-made emissions come from the fossil fuel cycle, and these emissions are projected to rise substantially. The next largest contribution, methane, is a complex mixture of natural and man-made sources. A number of other relevant emissions are associated with fossil fuel combustion, including some methane and carbon monoxide (both formed from the carbon in fossil fuels), nitrous oxide, and the precursors to tropospheric ozone.[23] Limiting fossil carbon emissions will also do much to limit these other gases.

In addition, unlike some other contributions, we can in principle do a great deal about fossil energy consumption. Projections for the year 2050 vary by more than a factor of ten.[24] The lower reaches of these are 'projections' only in name: in reality they are more indications of what the authors believe could be achieved given suitable policies. Studies by the US Environmental Protection Agency have concluded that, even against constant economic background assumptions, serious abatement policies could have a major effect on future carbon emissions.

Such changes can only be achieved over a very long time scale, however. Power stations and mines planned today could still be operating in the middle of the next century. If energy systems need to change substantially, the signposts need to be visible as soon as possible.

Carbon emissions from deforestation and other biosphere changes are excluded in the present analysis because of the wide uncertainties in trying to quantify and verify them; estimates of this contribution, as noted in Chapter 2, vary widely. By contrast, the technical obstacles to an agreement on limiting fossil carbon emissions are relatively minor, for, unlike most other contributions to the greenhouse effect (other than CFCs), carbon in fossil fuels is relatively easy to measure and verify from national fuel consumption statistics,[25] and the technical options available for abating carbon emissions are well understood.

An agreement on energy-related carbon abatement would, however, touch upon the major institutional and economic interests associated with energy provision. Consequently, carbon abatement is likely to be politically the most difficult issue to deal with, and will raise most starkly the various questions of equity and distribution in responding to the threat of global climate change.

For all these reasons, negotiating an agreement on limiting carbon emissions from energy systems is likely to be the most critical single step in attempting to limit the greenhouse effect, and the one most in need of study at this stage. The rest of this paper considers the options.

4. The International Problem

'By any traditional standards there are no solutions to

climate change' - Konrad von Moltke'[26]

4.1 The scale of the problem

Energy consumption provides the main services which underpin civilization: heat, light, materials, transport and communication. The pattern of human development has been one of almost uninterrupted rise in the demand for energy. For the last few hundred years, energy supply has been dominated by fossil fuels. They provide energy in an accessible, concentrated form and their technology is well developed and familiar.

Projections of energy demand vary widely, but almost all see a substantial increase as the poorer countries develop. Traditional forecasts show a doubling or trebling of energy demand over the next thirty years.[27] The foremost study of world 'low-energy' futures concluded that it might be technically possible to supply these needs at only 10% above current world demand, but this would involve a 50% cut in demand in developed countries to offset the rise in the developing world.[28]

Even if technically possible, this would require a major revolution in the development of energy demand. Yet, if supply was still based on fossil fuels, even this would still fall far short of requirements for stabilizing the atmospheric concentration of carbon dioxide, which requires an estimated cut in emissions of 50-80% (Table 2).

Energy supply constitutes some of the biggest business in the world. Gross annual revenue in the OECD oil companies alone averaged about $6OObn annually over 1980-85, bigger than the GNP of many countries.[29] In most countries, energy accounts for a considerable percentage of GNP and is a major employer. Even if the technical obstacles and economic costs of limiting carbon emissions are not great - a subject of intense debate - the institutional, social and political obstacles to forcing a decline in the scale of fossil fuel industries in the industrialised world are formidable.

Of course, the difficulty of achieving anything approaching atmospheric stabilization is not a reason for doing nothing. Quite the converse: all efforts to curtail emissions will help to reduce the rate of change and consequent impacts, and give more time for other solutions to be sought. Yet because the economic and institutional forces involved are so strong, no amount of fine words and pledges are likely to have much impact on the growth of carbon emissions. If emissions are to be curbed, more forceful and quantified measures and targets will be required. Foremost amongst the proposals have been calls to set national targets for reducing carbon dioxide emissions.

4.2 The holy grail: setting targets for CO2 reductions

The final statement from the June 1988 Toronto Conference on 'The Changing Atmosphere' called for a 20% reduction of CO2 emissions worldwide by the year 2005, with the brunt of this to be borne by developed countries. This was echoed at the Hamburg conference in November 1988, which called for 30% reductions by developed countries by the year 2000. Most of the discussion since has been framed in terms of whether countries can or will pursue such reductions. There is a strong expectation that they will negotiate agreement on the basis of such targets applied at the national level.[30]

This is probably because the two most important international agreements on limiting emissions of atmospheric pollutants - the Montreal Protocol on CFCs and the European Community's Large Combustion Plant (LCP) Directive to limit acid emissions - have been formulated in this way. The Montreal Protocol calls for 50% reductions in CFC emissions by the signatory countries by 1999, with a 10-year lag for developing countries. The LCP Directive incorporates a complex formulation of sulphur dioxide and nitrogen oxide reduction levels for three target dates, with different elements of backdating for each member country, resulting in a wide range of target reductions from the nominal 1980 base level.

With the conclusion of two important agreements based upon percentage reduction targets for gaseous emissions, it is not surprising that calls for limiting the greenhouse effect have focused on a similar strategy. If the political pressure and concern over the greenhouse effect increase further, it is quite possible that following in such footsteps will lead to the conference chamber. However, such a path seems most unlikely ever to lead on into the signing hall.

Consider first the Montreal process. A limited number of countries are involved in extensive CFC production; substitutes for many CFC applications are readily available; the economic costs and institutional changes involved are small on a national scale; and a number of major industries stand to benefit.[31] Few of these conditions apply to carbon emissions.

The negotiation of the LCP Directive indicates some of the problems likely to arise when more costly measures are at stake, in conditions where countries are starting from different positions, and reduction costs will not necessarily apply equally to all countries. The negotiation involved twelve countries, all members of the same economic group and all at roughly the same level of economic development, certainly as compared with the gulf between the developed and developing countries. Yet negotiation of the Directive took some five years of intensive bargaining, with twice-weekly sessions much of the time.

Attempts to negotiate an agreement on carbon emissions based upon country-specific target limitations could focus on the simple 'equal reductions' framework of the Montreal Protocol (which does not necessarily exclude demarcation between broad categories, such as the differing provisions made at Montreal for industrialised as opposed to developing countries). Alternatively it could adopt the 'trade-offs' approach of the EC Directive, with each country arguing its case for different targets. In reality, both these approaches seem likely in the case of carbon emissions to founder upon technical and political obstacles which make those involved in the previous agreements seem quite trivial in comparison. To examine the reasons for this in more depth, we need to consider the extent to which the energy economies of some of the major players differ.

4.3 A brief comparison of energy economies

This section briefly examines some indicative statistics of a wide range of economies, covering the nine most populous countries and major regional economic groups. Figure 2a shows the carbon emissions from their commercial energy consumption, Figure 2b shows their population and Figure 2c their GNP. The US is the largest emitter, followed by the USSR, the EC, and China: these four together account for more than 60% of global emissions.

Current emissions of fossil carbon per capita, shown in Figure 3, vary by a factor of more than 30 across the range of countries.[32] Historic per capita emissions show a wider variation still.[33] The fuel sources also differ widely, as illustrated in Figure 4: carbon emissions in China are almost entirely from coal, while those in many other developing countries, and in Japan, are dominated by oil.

Carbon emissions per unit of GNP shows up other wide differences. Numerical comparisons are greatly complicated by exchange-rate variations, as discussed in Appendix 1. On standard exchange rates, emissions per GNP vary by a factor of more than 10 (Figure Sa, p.20). Even when compared on the basis of 'Real GNP' [34] (GNP corrected for Purchasing Power Parities[34]) there is still variation by a factor about 2.5 (Figure Sb, p.20).

There is little correlation between the measures of per GNP and per capita emissions. Insofar as there is any, it is an inverse one: the developing nations have the lowest emissions per capita and the highest per unit of GNP.

To express these variations differently, if China and India emitted carbon at the same per capita level as the US, world emissions would be nearly trebled. If all economic activity could be conducted at the per GNP emission level of Japan, then at current world GNP (standard measure), emissions would be reduced almost to a third.[35] Neither situation is possible in practice - the former because China and India simply could not afford or sustain such a level of energy consumption, and the latter because high efficiency in energy use itself requires a degree of economic development and a move towards importing energy-intensive raw materials, and the statistic is again amplified by exchange-rate effects.

The difficulties raised by these variations are compounded by differences in indigenous energy reserves. Figure 6a shows one estimate of the total proven fossil fuel reserves in the selected areas. Figure 6b shows the time for which these would last at current consumption levels (the 'reserves/consumption ratio'), and 6c the corresponding time if each of the fuels were consumed at a steady rate of lkW (ie kilowatt-hour per hour) per person at current population levels (see p.21).

There are many uncertainties and discrepancies in detailed reserve estimates, and different sources vary widely.[36] Nevertheless the figures are sufficient to emphasize the extent to which, in the long term, most countries are dependent upon coal for major fossil energy supplies,[37] and again it highlights the great divergence in energy situations. The outstanding feature about China is not just its enormous coal reserves, which in per capita terms are not exceptional compared with those of the US and USSR. The salient point is its lack of other identified fossil reserves with which to supply its huge population (though it is possible that there are still substantial reserves not yet identified, especially of gas). Japan has little of anything. The USSR, especially, has substantial gas reserves which could in principle be used to reduce carbon emissions by replacing other fossil fuels. Renewable energy resources - sun, wind, and other forms - may well differ similarly, partly in inverse relation to the population density.

Looking ahead reveals the future implications of the most important differences. Developing countries are seeking to industrialise; both economic activity and, to an even greater extent, energy demand in the developing world are currently expanding much faster than in the industrialised nations in percentage, though not in absolute, terms. China envisages expanding its coal consumption fivefold to 3 billion tonnes a year by 2020.[38] this alone would add nearly 50% to current worldwide carbon emissions.

This observation does not in any way suggest a case for trying to restrict the rate of development in the developing countries. On the contrary, economic development will be a major factor in helping countries to withstand the impacts of climatic change, as well as in minimizing further population growth.[39] Even ignoring other benefits of development, these gains far outweigh the associated additions to carbon emissions, which at present are still much less than the growth in emissions in the industrialised world.

The long-term potential emissions from the developing world are nevertheless of great importance. The 'climate stabilization report' by the US Environmental Protection Agency concluded that:[40]

Action by the industrialised countries on their own can significantly slow the rate and magnitude of climatic change, but ... because of the large potential for growth in their emissions, the participation of the developing nations is crucial for stabilizing greenhouse gases.

The root global problem to be faced is the environmental consequence of world wide economic development and still expanding population, combined with a fossil energy resource base which is dominated by coal. In terms of allocation, the problems are wider than just the differing levels of economic development. They also reflect different patterns of development, fuel mix, and resource endowment.

4.4 Why the traditional approaches will not work

These variations rule out any targets based upon equal percentage reductions as a practical and effective tool even amongst developed countries. Japan, for example, would argue - with some justification that it cannot reduce emissions as much as other industrialised [countries because it has already taken major measures to limit fuel use, during the 1970s. As a result, its emissions are substantially lower than any of the other developed countries both in per capita and per GNP terms. By contrast, the US and the USSR both have relatively easy options for reducing emissions: neither uses energy very efficiently, by either measure, and both have options for moving away from coal, particularly in the case of the USSR.

This would make an 'equal reductions' agreement very hard to negotiate and economically inefficient. Some nations - such as Japan might incur substantial costs in achieving relatively modest reductions. Others might be able to reduce by much more for lesser costs. If they were bound to equal targets, many relatively cost-effective options for reducing emissions could go unexploited.[41]

Yet a 'country trade-offs' agreement scarcely seems to offer better prospects, for similar reasons. All countries will endeavor to find some arguments why they should reduce emissions by less than the average sought. The US has already started preparing the ground by arguing that its large continental land mass inevitably results in high energy requirements for transport, and by pointing to the energy requirements of operating a large part of the West's military forces. Officials in many other countries are similarly trawling for historical, geographical and economic arguments to wield in negotiations. Inevitably there will be an abundance of special cases.

Such difficulties will be greatly compounded by the need to include developing countries, for most of whom the question is not how to reduce carbon emissions but how to limit their rate of growth while developing, and how to finance the programmes for such limitations. The associated questions will further magnify the complexity of negotiating targets.

In an attempt to address some of these problems, researchers have suggested a variety of alternative target setting systems. The most serious attempt is that described in the 'Princeton Protocol',[42] which proposes targets set to result in a progression towards equal per capita emissions over an 80-year time scale, with the exact targets revised every decade to correct for population variations and other changes. Such an approach would require an abrupt turnaround in the path of industrialised countries, changing from current increases in emissions to decreases of 2-3% a year. This in practice might make such targets impossible to negotiate or implement. Such an approach would still not give an efficient solution, however, because there is no mechanism for trading-off the many other variations between countries.

More general questions remain unanswered, and may be unanswerable. What is to be done if countries fail to keep within their targets? Forms of sanctions might be considered for industrial nations, but since a major part of the developing countries' problem is their lack of capital and technical resources for efficient development, trying to enforce agreed targets through some kind of economic sanction might only make things worse.

How far ahead should targets be set? It takes many years for energy systems to change, indeed power plants planned today could well be operating in the middle of the next century, so targets should be set far ahead. Or should they? Future emissions will depend upon growth and population changes, and technical change; it is absurd to propose hard targets so far ahead for every country. Targets for each country would therefore need to be renegotiated every few years, adding further to the potential for political deadlock, and weakening the impact of initial targets.

The difficulties involved in negotiating the EC LCP Directive have already been alluded to. Those involved in negotiating reductions in carbon emissions would be very much greater. The time taken to reach such an agreement may well rise exponentially with the number of participants, the extent of inequality in historical and current contributions, and the costs of taking action - especially when that cost may vary greatly between countries. Past experience of negotiating international agreements suggests that a 'country trade-offs' agreement would require many thousands of meetings, over many years. In such circumstances, the target of what is achievable, and the political circumstances of the negotiating countries, would change far more rapidly than the negotiations could keep pace with. Agreement on targets might never be achieved. And even if it were, a treaty on this basis could probably not be enforced in the developing countries.

Finally, as indicated above, a fundamental drawback to the whole process of trying to negotiate country-specific targets is that it creates entirely the wrong incentives. In preparing this paper and a related study of energy policies,[43] the author has talked to analysts and officials in many countries who are considering responses to the greenhouse effect. Many have seemed more keen to emphasize the problems in limiting carbon emissions than to examine seriously the options for curtailment. This tendency partly reflects the genuine difficulties to be faced in altering energy systems, but it is reinforced by the expectation that there will be negotiations on setting national emission targets.

From the standpoint of national self-interest, the higher a countries emission target is set, relative to others, the better. Consequently, the pressure in such negotiations will always be to prove how difficult it will be to limit emissions. This psychology is pervading much official research on the problem, and could be very damaging: the difficulties in limiting carbon emissions are great enough without the diplomatic prizes being awarded to whoever can amplify them the most.

To conclude, it may or may not be possible for the world to reach the Toronto or even the Hamburg targets for carbon emissions. But one conclusion seems clear: these goals are very unlikely to be achieved by the countries of the world sitting around a table and agreeing on who should reduce by how much. The idea that a protocol on limiting carbon emissions will be like the Montreal Protocol writ large is an illusion best dispersed before it leads us irretrievably down a blind alley.

4.5 Underlying themes

A number of possible alternative approaches are considered in the following chapter. Before turning to these, it is necessary to examine some of the underlying features of the greenhouse effect as a problem in international affairs.

The atmosphere as a common resource

The main difficulties to be faced in negotiating control of carbon emissions can be summarized in six points:

i) Carbon emissions control can have profound and potentially costly political and economic implications.

ii) By whatever measure is chosen (whether absolute; per capita; per unit of energy; etc.) countries vary greatly both un past and current contributions.

iii) The implications and costs of limiting emissions, and the possible impact of global warming, may vary greatly between countries.

iv) Many countries at very different stages of development, would have to be involved for any agreement to be acceptable and effective in the long run.

v) Carbon emissions are closely tied to (though not necessarily proportionate to) the extent and structure of economic development.

vi)There is a long time-lag involved in any programme to modify carbon emissions.

Points ii) to v) in this list require particular attention as they raise basic issues of international equity. They reflect the fact that the atmosphere is a global commons in the literal sense of the term: the atmosphere does not respect political boundaries.

What has happened, and is happening, with respect to the atmosphere is exactly the process enunciated by Garrett Hardin in his essay 'The Tragedy of The Commons'.[44] The atmosphere has been exploited by all without reference to the possibility of ultimate degradation, or to the access rights for the different parties. It has been treated as a free and infinite resource, and humanity is now faced with the realization that it is neither, and indeed that a portion of the reservoir has already been 'used up'.[45]

In the process, some countries - mostly those that have exploited the resource most heavily - have grown rich. Others, likewise seeking to enrich themselves through development fuelled by fossil fuel resources, may not be able to do so without engendering serious, and global, climatic costs. In this situation, attempts to address the problem can take one of two broad approaches:

Marginal adjustments, in which the current level of exploitation is taken as the basis from which to negotiate marginal changes to prevent over-exploitation of the resource; or Neutral entitlements, in which future access is managed on the basis of equal entitlements to the resource through a flexible system which encourages countries to develop towards a state of exploitation which is regarded as 'just' on some clear and widely-accepted criteria.

Almost all attempts to deal internationally with both environmental resource and economic issues have taken the approach of marginal adjustments. All attempts to consider agreements on country-specific target limitations of carbon dioxide are of this type. Most of those concerned with the issue recognise that a degree of assistance for developing countries will be required, and that there is a strong practical basis for this, in addition to the moral aspect of compensation which emerges from the standpoint of regarding the atmosphere as a common resource which has been partially used up by the industrialised countries.

The 'North-South' issue is bound to cause further difficulties, and is considered below. The central element in the critique developed earlier, however, is that an agreement based on negotiating country-specific targets provides entirely the wrong incentives, and requires too many parties to agree to too many arbitrary targets too far ahead, for there to be much chance of success.

Are the prospects for an agreement based upon some system of 'neutral entitlements' any better? In general, two fundamental objections can be raised against such an agreement: it is too complex; and it defies the nature of Realpolitik, because it involves the more powerful countries giving up some of the fruits of their power to an international system of control.

However, a system which focuses upon one particular gas or source, as a protocol to a framework convention, will not necessarily be very complex. Indeed, as will be argued in the next chapter, there are a number of options for carbon regulation which in fact have the merit of relative simplicity.

The major objection is thus one of Realpolitik: if the nature of a 'neutral entitlements' agreement requires developed countries to give up their current privileged position, would they ever agree to it? The question of resource transfer to developing countries is thus not only a very important factor in marginal adjustments agreements, it is central to any attempts to develop a more coherent system of management.

Developing countries and resource transfer

Clauses on technology transfer have been included in previous environmental agreements. Article 5 of the Montreal Protocol makes special provision for CFC emissions from developing countries, and states:

The Parties undertake to facilitate access to environmentally safe alternative substances and technology for Parties that are developing countries and assist them to make expeditious use of such alternatives.

The Parties undertake to facilitate bilaterally or multilaterally the provision of subsidies, aid, credits, guarantees or insurance programmes to Parties that are developing countries for the use of alternative technology and for substitute products.

The Article recognises the problem and gives assurances, but does not contain binding or quantified commitments. Such clauses have in general resulted in providing little of what the developing countries had hoped for, and they are becoming increasingly frustrated with the situation. The minor rebellion of China and India in refusing to sign the Montreal Protocol is likely to become more widespread and deep-rooted, and there are signs that developing countries will refuse to agree to significant constraints on their future emissions of greenhouse gases without more binding commitments from the developed world.

Technology transfer is a more fundamental issue than many realize. The dire predictions of future global carbon emissions cannot be avoided if the developing countries industrialise along the same broad path as the developed have done. They will need to 'leapfrog' directly to more advanced and efficient technologies than would occur naturally in the course of development-[46]

Yet little has been written on the form which such aid might take or the levels which might be involved.[47] China submitted proposals for a global assistance fund at the Helsinki meeting subsequent to the Montreal Protocol. These proposals received substantial support, and some developed countries at least seemed genuinely prepared to offer cash to back their verbal recognition of the problem. The UK Secretary of State for the Environment complained:[48]

No one has yet addressed a number of fundamental questions about this idea. It has not been suggested who would run such a fund; how it would operate; on what criteria its funds would be raised, and from whom, and what would happen if they did not contribute. Nor have we heard how it would be administered.

Such complexities can be overcome if sufficient political will exists; the Chinese negotiators have now suggested that such a fund could be financed by payments directly in proportion to CFC emissions, and administered by the UNEP executive. With reference to global warming, the Princeton Protocol (see footnote 42) contains detailed proposals on the nature and control of a World Agency for Technology Transfer. Yet such issues will certainly further complicate any attempts to negotiate an agreement based upon arbitrary targets. If developing countries do take a strong stand on the issue of resource transfer, one attractive feature of neutral entitlement agreements is that some forms automatically address some of these issues, as described in Chapter 5.

[18] An excellent, if somewhat rosy, summary of the Law of the Sea negotiations and treaty is given by Elisabeth Borghese, 'The Law of the Sea', Scientific American. March 1983.

[19] 'Protection of the Atmosphere: an international meeting of legal and policy experts', Ottawa, Canada, 20-22 February 1989.

[20] M.K. Tolba, A Strategy for Success. address to the meeting of legal and policy experts on the protection of the atmosphere Ottawa, 20 22 February 1989.

[21] The Hague Declaration on the protection of the Atmosphere, 11 March 1989, declared that 'faced with a problem the solution to which has three salient features, namely that it is vital, urgent, and global, we are in a situation that calls not only for implementation of existing principles but also for a new approach, through the development of new principles of international law including new and more effective decision making and enforcement mechanisms .

[22] Ministerial Conference on Atmosphere, Pollution and Climate Change, Noordwijk, Holland, November 1989. The final declaration, signed by all the major industrialised countries, expressed strong concern about the greenhouse effect and the need to take action, but did not contain any binding commitments.

[23] Bill Keepin et al., Future Energy and C02 Projections. Beijer Institute, Stockholm, 1985.

[24] EPA, Policy Options. op. cit.

[25] M.J. Grubb, On Coefficients for determining Greenhouse Gas Emissions from Fossil Fuels, IEA Expert Seminar on technologies to reduce greenhouse gas emissions, Paris, March 1989. (IEA/OECD, 1989).

[26] Address to World Environment Day Conference on the Greenhouse Effect, Shell Centre, London, 5 May 1989.

[27] W. Haefele et al., Energy in a Finite World - A Global Systems analysis, Ballinger, Cambridge, Mass., 1981; J.R. Frisch (ed.), World Energy Conference, Energy 2000-2020: World Prospects and Regional Stresses. Graham & Trotman, London, 1983.

[28] J. Goldenburg et al., Towards an Energy Strategy for a Sustainable World. World Resources Institute, Washington DC, 1987.

[29] International Energy Agency, Annual Oil Market report. IEA/OECD, Paris 1986.

[30] This expectation seems to be prevalent in both government and non-governmental organizations. The NGO statement of policies at the Hamburg conference carried as the first international aim 'Establishment of explicit carbon emission budgets for each country within an international framework of agreements'. The central debate at the Noordwijk Ministerial Conference, November 1989 (op. cit.) focused on an attempt to agree target reductions. (See footnote 41).

[31 ] There were indeed possible advantages to some of the major Western industries in the Montreal Protocol, since it created a market for substitutes in which the more advanced chemical companies have a strong lead, whilst the production of the standard CFCs was becoming increasingly widespread. The positive attitude of industry was a critical factor in the US decision to sign the Protocol. The incentives to industry in signing and applying the Montreal Protocol, and some of the lessons which can - and cannot - be applied to the greenhouse effect, are discussed in Scott Barrett, Ozone Holes. Greenhouse Gases. and Economic Policy. to be published by the Institute of Economic Affairs, London, (draft, July 1989).

[32] The carbon emissions from some developing nations are much higher if emissions of new carbon from biomass and deforestation are included. The reasons for concentrating on fossil carbon are given in Chapter 3.

[33] In this context, a concept of 'natural debt' has been advanced as an indicator of cumulative per capita use of global resources (Kirk Smith, Global warming and the Natural Debt. Environment and Policy Institute, East-West Centre, Hawaii, 1989). Naturally this further emphasizes the disparities: Smith calculates a US:lndia ratio of 260:6 in historic per capita C02 emissions. The practical or even ethical relevance of this indicator is limited, however. (See footnote 47).

[34] Purchasing Power Parity represents an attempt to compare directly the purchasing power of currencies, rather than the value as expressed through the exchange rate. For a variety of reasons, there can be large differences between the two, as discussed in Appendix 1. The source used for PPP comparison uses the term 'Real GNP' to denote GNP adjusted in this way, a practice which for convenience will be followed here.

[35] Author's estimates.

[36] BP Statistics are used for figure 6. These illustrate 'proven recoverable reserves': reserves in place are much larger, and every year more is added to the 'proven recoverable' category. The statistics are derived from Oil and gas journal which in turn are taken from indigenous country sources Submissions of various reserve estimates are also made by countries to the World Energy Conference. These figures for proven reserves are in some cases very different. The WEC submissions also include estimated recoverable reserves, which are usually (though not always) larger than the BP proven reserves, especially for developing countries where exploration is less advanced. The WEC figure for Chinese proven and estimated recoverable coal reserves for example is four times the level illustrated in Figure 6a.

[37] The dominance of coal resources is challenged by the theory that natural gas is formed in the earth's mantle and is available in vast quantities if drilling is deep enough. Gas reserves are certainly the least explored of the major fossil fuels but the idea that there are such large and accessible reserves is not widely accepted.

[38]. Chinese Institute of Nuclear Energy Technology/institute for Techno-Economics and Energy Systems Analysis, Energy Demand Forecasting in China for the Year 2030, Tsinghua University, Beijing, March 1989. The projections envisage further expansion to 5 billion tonnes - almost equal to world emissions at present - by 2050.

[39] A point argued forcefully by Kirk Smith, developing Countries and Climate Change: Implications for Risk Management. Workshop on Responding to the Threat of Global Warming: Options for the Pacific and Asia, Argonne National Laboratory & East-West Centre, Honolulu, Hawaii, June 1989.

[40] Lashof and Tirpak (eds.), Policy Options for Stabilizing Global Climate. op. cit.

[41] As this paper was being completed many of these points were graphically illustrated at the Ministerial Conference at Noordwijk, Holland, November 1989. The original Dutch draft for the conference resolution called for 30% reductions by all industrialised countries, to which Japan and some other countries objected strenuously. After various interim attempts to reach an agreement on acceptable targets, the final text was amended to a form which recognised the need to stabilise emissions, but at an unspecified level on a unspecified timescale.

[42] Princeton Protocol on Factors that Contribute to Global Warming. Woodrow Wilson School of Public and International Affairs Policy Conference on the Global Environment, Princeton University, December 1988. The paper is the result of a series of seminars which worked through various issues involved in negotiating a global agreement on limiting carbon emissions and takes the form of an example protocol.

[43] Michael Grubb (ed.), Energy Policies and the Greenhouse Effect. Gower, Aldershot, forthcoming 1990.

[44] G. Hardin, 'The Tragedy of the Commons', Science162, pp.1243-48, 1968.

[45] A systematic discussion of the economic issues involved in recognising the atmosphere as a global commons resource is given by Jesse Ausubel, 'Economics in the Air - An Introduction to Economic Issues of the Atmosphere and Climate', in Climate Constraints and Human Activities. IIASA Proceedings Vol.10, Pergamon Press, Oxford, 1980.

[46] See for example W. Fulkerson, R.M. Cushman, G. Marland, S. Rayner, International impacts of Global Climate Change, Oak Ridge National Laboratory ORNL/TM-11184, February 1989; J. Goldenberg et al., Energy for Development, World Resources Institute, Washington DC, September 1987.

[47] There have been suggestions that the developed countries should explicitly compensate developing countries for their past use of the atmospheric resource, either by estimating its value in monetary terms, or by agreeing to a ceiling on the total atmospheric concentration of gases and allowing countries portions of the total pie consistent with this principle, so that the developing countries can emit much more than the developed before their allocation is used up. In the context of the greenhouse effect this is a political non-starter. It would also be impossible to determine a consistent level. In past decades nations were barely aware that they were degrading a finite resource. Furthermore, technology has advanced greatly: the technology of the industrial revolution rarely used energy at much above 5% efficiency for mechanical work or, later, for electricity generation. The technologies available to nations developing today are many times more efficient. Even if the political will existed, it would thus be very difficult to determine a rational level of 'compensation '.

[48] Nicholas Ridley, Statement to the Helsinki 1989 Meeting, op. cit.