III
Entitlements for the heaviest emitters

The worst aspect of the Kyoto Protocol is that it has already given the heaviest emitters of greenhouse gases, namely, the industrialised countries full entitlements to their heavy ‘current emissions’ minus the small amounts that they are expected to reduce as a percentage of their current emissions. The final level of emissions that industrialised countries are expected to reach in their first commitment period from 2008 to 2012 is described as their ‘assigned amount’. But, in the Kyoto Protocol, this ‘assigned amount’ has gone well beyond being a mere target to be reached. It has been turned into an ‘entitlement’ by giving developed nations full ‘property rights’ over these ‘assigned amounts’. Under the Kyoto Protocol, the property rights bestowed on the ‘assigned amounts’ include:

• The right of a nation to use the assigned amount (Article 3 of the Kyoto Protocol).

• The right of a nation to trade any part of the assigned amount it is not going to use (Article 3, paragraphs 10, 11 and 12 of the Kyoto Protocol).

• The right of a nation to bank any part of the assigned amount it is not going to use in the first committment period for use in future commitment periods.

It is hard to think of what other property rights can be bestowed on the ‘assigned amount’ — an entitlement created out of ‘current emissions’.

This provision of full property rights over the ‘assigned amounts’ of industrialised countries, which takes them well beyond being mere targets to be reached, have, firstly, opened up vast opportunities for ‘hot air’ to be traded — Russia, for instance, can now trade a large part of its assigned amount which it is quite unlikely to use even without mending any of its current enegy-efficient ways because of its economic collapse. It has been estimated that even if the US were to stabilise at its estimated 1997 carbon dioxide emissions, which were 6 per cent over the 1990 emissions, it can still meet its Kyoto Protocol reduction targets for 2008 to 2012 simply by trading emissions with Russia and Ukraine because they have such large assigned amounts which they are not going to use because of their economic collapse.

Secondly, the system of property rights attached by the Kyoto Protocol has left developing countries without any entitlements of their own. Even though their per capita emissions are currently and have historically been low, they cannot bank any emissions for use by their future generations. The only rationale for trading emissions between industrialised countries and developing countries is that reducing emissions in developing countries will be far more cheaper than undertaking emissions reduction in industrialised countries. Though the guiding principles of the Kyoto Protocol say that all measures that are undertaken to protect the global climate system should bring benefits to both the present and future generations and, furthermore, they should be built on the basis of equity (Article 3 of the Framework Convention on Climate Change), there is nothing in the Kyoto Protocol that gives credence to these principles. Firstly, entitlements, built around current emissions, have been created on the basis of a most unjust principle. And, secondly, there is nothing in the KP that protects the rights of the future generations living in developing countries.

The principles of ‘emissions trading’ (under Article 17) which have to be elaborated at the next Conference of Parties, to be held in November in Buenos Aires, must now be built upon the equitous principle of ‘equal per capita entitlements’ for all people on earth. Not only would such a step be globally just and in conformity with the principles of the Framework Convention on Climate Change, environmentalists and diplomats must also realise that it would be the best way to take the world towards the ‘ultimate objective’ of the Convention, namely, the stabilisation of the atmospheric concentrations of the greenhouse gases, far faster and better than the ‘creative accounting’ strategy presently inherent in the Kyoto Protocol.

Unlike the Eastern European countries and Russia, which cannot use their assigned amounts built on 1990 emissions because of their economic problems, developing countries, and especially the larger developing countries like China and India are growing at a rapid rate. Any entitlement they obtain would get used up steadily over the years. But as it is unikely they can use up their assigned amount in the immediate future, they would have the potential to trade their unused entitlements. This provision would immediately give them the incentive to trade — not merely to help industrialised countries to "meet their targets’, so ingeniously stated in the Kyoto Protocol, but also to move towards a low-emissions developmental path themselves so that the benefits from trading emissions can stay with them for a longer time. The trading system would also provide them with sufficient financial resources and an "enabling economic environment for technology transfer" to be created place, as indicated in Article 10 of the Kyoto Protocol.

It is quite likely that such an economic environment would help to create a global market for Western solar energy technologies — first in developing countries and then later in industrialised countries — and help to kick-start the global transition towards zero-emissions technologies. The faster these technologies invade the energy sector, quicker would the world be able to avert the threat of climate change. If India were to find the current high cost of a solar power plant subsidised by the economic advantages obtained by trading the saved emissions more competitive than than the cost of building a coal-based power station, it is quite likely to think in terms of investing in a solar power project. Such a development would not only help to create a market for solar energy technologies worldwide, because increased sales would lead to decreases in costs, but also create jobs in the solar industry worldwide. What holds true for India would equally hold true for all other countries.

In this way, developing countries would enter into the most meaningful form of participation — to use the oft-repeated US phrase. In fact, the emissions trading price should be pegged more to a cost that would encourage developing countries, which have more solar energy, to move away from fossil fuels rather than providing the cheapest alternative to the cost of reducing greenhouse gas emissions in industrialised countries. Such trading would truly help to prevent climate change instead of the ‘creative carbon accounting’ that is currently envisaged "to help industrialised countries to meet their reduction targets".

IV
Resolving the difficulties for industrialised countries

While it is true that the entitlements that would accrue to industrialised countries under the ‘equal per capita entitlements’ principle, would be far less than the assigned amounts that have been given to them on the basis of current emissions under the Kyoto Protocol, and therefore it would be economically very difficult for them to accept such low entitlements and therefore high reduction targets, right away. But the reduction targets could be negotiated in successive committment periods in a way that they steadily move towards ‘assigned amounts’ based on per capita entitlements without disrupting their economies even as developing countries get an opportunity to trade their unused ‘entitlements’ and use those resources to move towards a slower emissions growth trajectory.

Given the fact that developing countries have a high population growth trajectory, the population distribution of the world could be frozen as of an agreed date in order to avoid giving developing countries an unfair advantage and a perverse incentive to increase their populations.

Equal per capita entitlements could be built on one or a combination of the following concepts:

1. The emissions absorbed annually by the global atmospheric sinks, especially which arise out of common resources like the oceans, could be distributed equally amongst all the people of the world thus providing each person with an equal entitlement.

2. A long-term per capita emissions convergence target could be identified and each person could be given that as an entitlement. This target itself could be kept flexible which can be moved up or down based on latest scientific information available.

3. Atmospheric concentration targets of different greenhouse gases could be agreed upon to be reached by an agreed year, keeping in mind that the targetted concentration does not threaten to seriously destabilise the global climate, and then the global emissions budget that would allow humanity to reach that concentration target could be equally distributed among all nations on the basis of equal per capita entitlements. Such a ‘contraction and convergence’ strategy would again hurt industrialised countries economically if the principle of equal per capita entitlements was implemented immediately. However, once the principle is accepted, the national entitlements can be steadily phased in towards a convergence point of equal per capita entitlements over successive commitment periods. At the same time the targetted atmospheric concentration could be kept subject to review based on latest scientific information available.

It is obvious that in the future the world will have to accept some common maximum per capita emission for each country in order to deal with global warming. We can’t have a world in which some countries have to freeze their carbon dioxide emissions at one level and other countries at another level. This would mean freezing global inequality. A convergence principle towards a just and sustainable norm can be the only rational principle in such a situation — those who have higher emissions than the norm cut back to the norm and those who have emissions below the norm can reach upto the norm.

The per capita principle may sound harsh to many in industrialised countries. On the other hand, it is a very gracious position for developing countries to take because such a position is only asking for the future benefits of the atmosphere to be shared equitably. It is not asking for the factoring in of the past emissions of the industrialised countries which began with the Industrial Revolution and which have already accumulated in large quantities in the atmosphere.

In sum, what developing countries should not — and nor should industrialised countries expect them to — accept is the principle of trading emissions or, for that matter, international cooperation to prevent climate change which is built on the argument that developing countries provide a lucrative opportunity to reduce emissions cheaply than in industrialised countries. Trading and cooperation must be built on equitable emission entitlements. Trading cannot simply be carried out to achieve economic efficiency. It must be undertaken in an environment that also promotes ecological efficiency and social efficiency (social justice).