The ultimate measure of the success of global climate policy is reducing emissions while ensuring economic growth and living standards. Since the 1980s, global GDP decarbonised, and emissions increased by 1.7% and 1.8% per annum, respectively. Despite climate treaties, decarbonisation slowed and emissions increased. Evidently, global climate policy has failed.
Failed treaties
COP 27 now progressing in Sharm El-Sheikh, Egypt, should examine why climate treaties failed. The planet is just a decade away from crossing the Paris Agreement goal of limiting warming to 1.5 degree C when compared to pre-industrial levels and another two more decades from crossing the dangerous 2 degree C threshold (compared to pre-industrial levels again).
To meet the 1.5 degree C goal, emissions should peak in 2025 and decrease 43% below 2010 levels in 2030, which is almost impossible. According to IPCC, even if all countries met their Nationally Determined Contributions (NDCs), the world will still warm by 2.5 degree C. Going by the past experience of failed treaties and current emission trends, it is likely that most NDCs will remain unachieved, and the planet will be ravaged by dangerous warming with serious and irreversible consequences.
The celebrated Kyoto Protocol fixed "legally binding" targets on 36 rich countries to reduce their collective emissions by 5.2% below the 1990 levels by 2012. Half of them failed to meet the targets, USA and Canada withdrew from it and rich countries' emissions went up by nearly 11% without any attendant consequences. Climate policy has seen more political compromises and less commitment to treaties.
Free rider problem and tragedy of the commons
The main weakness of the current global climate policy is that emission reduction commitments are voluntary and self-enforcing with no legal tools to monitor or enforce compliance. Nor are there particular benefits for a country for complying with its climate pledges or penalties for breaking them.
This fundamental flaw in climate policy has led to the free rider problem making global warming a tragedy of the commons. Countries have announced ambitious targets in their NDCs. More than 130 countries have stated their intentions to achieve net zero emissions in another five decades or sooner. Unless the free rider problem is fixed, these voluntary offers and promises are likely to remain unfulfilled.
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Carbon tax
According to Nobel Laureate William Nordhaus, pricing emissions is the best way of getting rid of the free rider problem and reducing global emissions immediately. Imposing a Pigouvian tax on carbon is justifiable given the significant negative externalities associated with emissions. Nordhaus argues that emissions should be uniformly taxed in the range of US $50-150 per tonne of CO2 which is roughly the social cost of negative externalities that every tonne of CO2 emission brings to the global economy.
The social costs and economic benefits of emissions are vastly different for rich and poor nations. The suggested tax of US $50-150 per tonne of CO2 will deplete 5-15% of India's GDP, which has a carbon intensity of 0.92 Gt CO2 per trillion US dollars. For the US with a low-carbon intensity (0.25 Gt CO2 per trillion $), the impact on the economy will be much smaller (1.2 to 3.6%). A uniform carbon tax across countries and sectors as mooted by Nordhaus will be a regressive tax, more hurting the poor.
Alternatively, a progressive carbon tax regime could be designed according to the needs and economic growth stage of different countries. This will make the emitter pay a price according to its financial capability and amount of emissions. High-carbon products and services could be taxed at a higher rate similar to the luxury tax and basic necessities are spared. This is congruous with the "polluter pays" and "common but differentiated responsibility" principles enshrined in the 1992 Rio Declaration on Environment and Development and UNFCCC, respectively. Revenue from a carbon tax could be used to finance the yet unfulfilled offer of $100 billion-a-year climate fund promised by rich nations in 2009.
A non-uniform carbon tax regime across countries risks rich countries with high carbon taxes shifting their emissions to poor countries with low taxes. But trade-adjusted accounting like the proposed Carbon Border Adjusted Mechanism which taxes carbon-emitting products entering the EU at its border can address this issue. This way, concerns of large emission-exporting countries like China could be addressed.
Take the poor on board
Pricing carbon will dent emissions and make a low-carbon economy imperative, but this can make products and services with high carbon footprints more expensive in the short term. While the benefits of switching to a low-carbon growth trajectory will be realised only in the long term, its social and financial costs are immediate and prohibitive for the poor. The financial and human costs of inaction to address continued emission growth will be costlier for everyone, especially for the poor who have fewer financial means and technologies for adapting to a dangerously warm world.
The World Bank has reported that the world will begin to see internal migration within countries due to climate change as early as the 2030s and by 2050 there will be about 216 million internal climate migrants. It will not be the rich, but poor nations and economically marginalised communities living in rich countries, especially women, children and the aged who will be the worst affected. This will have unimaginable social, economic, and political consequences. COP 27 should take cognizance of failures of past climate treaties, get rid of the free rider problem in its climate policy and come up with a realistic and implementable action plan to avoid catastrophic warming by immediately reducing emissions. The time for negotiating unimplementable climate treaties is long over.
(The author was formerly with the Rubber Research Institute of India, Kottayam, and Smithsonian Environmental Research Center, US, and presently with the Plantation Corporation of Kerala. Views are personal).