Tuesday, October 02, 2007

Carrots and Sticks

It's a small thing, but the recent decision by the New York Times to end their Times Select subscription service and provide open access to their op-eds and other content is very welcome. Among other things, it means I can resume citing and critiquing the op-eds of my favorite Times columnist, Tom Friedman, without worrying that most of my readers won't be able to see them. In an op-ed last week, Mr. Friedman lamented the lack of a strong American example on climate change, and how that has influenced countries such as China, which will account for the largest increment of new emissions in the years ahead, unless we can help them find another path. The chicken-and-egg dilemma involving the US and large developing countries remains a major obstacle to an effective response to global warming, and breaking out of that loop is going to require some deft moves, indeed.

While looking for information on China's stance at last week's climate meeting in DC, I ran across a related development that surprised me. The meeting itself wasn't anticipated to produce any breakthroughs and apparently lived up to that expectation. However, it seems we are already considering how to penalize other countries that aren't working to reduce their emissions, even though the US still has essentially no federal response beyond R&D and voluntary measures. This provision would apply to the offshore emissions associated with energy-intensive imports, since domestic producers would otherwise be at a competitive disadvantage under a US cap & trade plan or carbon tax . That strikes me as excellent politics and sound economics, but questionable foreign trade policy, and quite possibly disastrous climate policy.

Just imagine we were back in early-to-mid 2001, when it became clear that the US was never going to implement the Kyoto Protocol on climate change. At that point Europe was just gearing up for emissions trading (an American idea) and European companies were complaining that it would put them at a competitive disadvantage versus US firms that could emit without penalty, at least at home. What if the EU parliament had proposed a compensatory tariff--called something else, of course--to ensure that US products sold in the EU met the same emissions standards? Would that have catalyzed a consensus on this side of the Atlantic towards passing our own emissions regulations, or would it have inflamed US attitudes towards Europe and triggered trade reprisals? I can't be certain, but I don't think it would have gone down very smoothly. Why then should we expect such a policy to be welcomed now in Beijing, Delhi, or Brasilia, even if it's not intended to kick in before 2020?

Although I can appreciate the practical and legitimate reasons for such a measure, the idea of someone as late to the party as we are threatening those who are still later--for what they regard are better reasons than ours--strikes me as counter-productive. If this is going to come down to carrots and sticks, the carrots had better be fat and juicy to make up for sticks like that. By contrast, Mr. Friedman's approach focuses on having the US lead by example, as the proper first step. (His recent op-ed on the spread of American-style energy consumption shows how the counter-example works.) The conversation about what to do with those who don't follow our lead on climate would seem a lot more appropriate, once we've actually implemented some real cuts of our own.

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