Obama in China

Obama’s epoch-making and still inadequate carbon deal with China.

The CW on Obama’s climate deal with China has it about right: it is
(a) a huge diplomatic breakthrough, removing the main roadblock to an agreement in Paris to cut carbon emissions and get the world on a path to sustainability in a liveable climate;
(b) completely inadequate, as the actual emissions targets for 2030 to which the two committed – peaking by then “or earlier” for China, a 26% reduction from 2005 for the USA – fall far short of what is required. The EU has signed up to 40% cuts, and even that is too low for safety.

Obama has neatly snookered the GOP. They have been using the “what about China?” talking-point as an excuse for inaction. A dangerous one, as it concedes the principle that action is needed. Now they will have to switch to “China isn’t doing enough”. Which implies that there is some Chinese policy which would trigger US action, and we are in negotiation mode on overflight rights for the black helicopters. The target looks achievable on current policy, defined to include the coal regulations, so the cost argument doesn’t hold up either. It remains true that the next legislative heave will have to await 2016, and depends on a very unlikely Democratic sweep or (dream on) Damascene conversion by the GOP.

The Chinese side is more interesting. The government imposed a surprising domestic news blackout on the climate deal. (France 24 broadcast news 13/11). Why? Bleg to China experts. One possibility is a Middle Kingdom hangover: it’s embarrassing for the government to be seen negotiating important domestic policies with foreigners, even on very one-sided terms. Foreigners are for paying tribute.

Another, more likely IMHO, is that the Chinese Foreign Ministry has been too clever by half. In a traditional zero-sum IR perspective, the deal is fantastic. The Americans make all the cuts, we don’t have to make any for 15 years. Win! Later the fen drops. The Central Propaganda Department will have to explain to the Chinese people through the tame media that the plan is for air pollution to increase for another 15 years. Recriminations, pause for thought. Obama, a good negotiator of the patient and cerebral rather than the game-theory madman type, may well have seen this coming.

The joke is that the self-inflicted wound is unnecessary. The diplomats have been defending China’s policy freedom to pollute, but pointlessly. Chinese emissions will peak much earlier anyway. The conservative IEA thinks there are pathways for Chinese coal consumption to peak by 2019.  In fact there is good reason to think that Chinese coal may have peaked already: here and here. Imports have nose-dived (say 你好 for us to the sharks at Bondi Beach, Tony Abbott). Deutsche Bank analysts have cut their valuations of Chinese coal companies by up to 92%.

Overall carbon should peak only a few years after coal. Emissions from cement-making and other heavy industrial uses will follow the same path of decline, driven by the structural decarbonisation of the economy. More cars and trucks would by themselves lead to an increase in gasoline and diesel burning, but fuel efficiency standards  and the strong push for evs should contain the effects. The Chinese government has overwhelming domestic reasons to tighten its emissions targets.

What does the deal mean for global carbon diplomacy? It’s good news, and virtually rules out a rerun of the Copenhagen fiasco. India is now isolated as the sole major player refusing an emission cap, and it’s hard to see it blocking a deal alone. Plus, judging by long past experience, Coal India is incapable of delivering the large increase in output that Energy Minister Goyal is projecting, and he has a year to realize this.

The deal itself is morphing. The NYT report on this by Coral Davenport (international paper edition, 13/11) quotes the lead French sherpa for the UNFCC Paris session next December, Laurence Tubiana:

[She] said she did not expect the agreement to resemble a traditional top-down United Nations treaty. Instead, she anticipates it will resemble a collection of targets pledged by individual countries, along with commitments from each government to follow through with domestic action.

You read it here first.  The collapse to zero (as near as dammit) of the net costs of aggressive mitigation has exorcised the free rider problem created when these were thought very large. All that is needed is a (large) coalition of the willing. If countries set up cap-and-trade domestically or regionally, the schemes can be linked; but if they prefer carbon taxes or regulation, fine.

There may still be a smaller free rider problem through merchandise trade. But generally, the holdout governments will mostly be blinkered ideologues (Australia, Canada) rather than rational calculators. The rest of us will need a stick, since the donkey won’t eat the nice carrot. How about carbon tariffs on imports from countries refusing the accord? Imagine the GOP screams if Obama’s delegates accepted this in Paris, under overwhelming pressure &c.

Update 15/11: Krugman on the deal, also endorsing carbon tariffs. Honest, I hadn’t seen this first.

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

2 thoughts on “Obama in China”

  1. Carbon tariffs aren't new, and they are a good idea. IIRC, they were part of Waxman-Markey.

    The EU tried to put them in their airline carbon taxes. I don't know what happened in the end.

    The trick in carbon tariffs if you're serious about them is to spend the money on emissions reduction in the country producing the emissions, rather than stealing the money for yourself.

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