A new take on Kyoto

Obama faces major challenges on carbon emissions at the G8 – but the best solution is a new, global system of regulation

Oliver Tickell
guardian.co.uk, Tuesday 7 July 2009 12.00 BST

President Obama is facing a problem at this week's G8 meeting in L'Aquila, Italy. Having promised serious action on climate change, the legacy of GW Bush's inaction will be hard for him to overcome. Under the Kyoto protocol, the US should have reduced its emissions by 7% from 1990 levels. But last year it emitted 16% more than in 1990, or almost 25% above its Kyoto target. And to persuade the rest of the world to make meaningful cuts in emissions, the US will need to take on deep cuts for 2020 based on its Kyoto targets, rather than on where it is now.
Obama's fear is the US will be unable to cut fast enough. And if it fails, US taxpayers could have to pay for a billion tonnes of carbon credits. At $20 per tonne of CO2, that would add up to serious money. But with a large forced buyer like the US, the carbon price could soar. Just how high, no one knows. Obama is understandably reluctant to take on such a huge open-ended commitment – one which could prove highly unpopular with electors demanding spending on health, education and pensions.
Can Obama find a way out? Yes he can! He should ditch the whole system of national emissions targets and move instead to a genuinely global system for regulating emissions. It sounds revolutionary, and it is. But a proposal along these lines could garner widespread international support. The talks leading up to the Copenhagen climate conference in December are stuck. Governments are all reluctant to take on ambitious targets – because doing so could cost their taxpayers dear, and because they fear competitive disadvantage compared to countries with weaker targets.
So a US proposal for a new world climate order is just what's needed to break the deadlock. Here's what the new order could look like. Define a global cap on emissions, and sell permits up to that cap in a worldwide auction. The permits would have to be bought, then surrendered, by fossil-fuel producers based on the carbon content of their production. That cost would then be passed on to consumers anywhere in the world through the supply chain. And all governments would have to do is to supervise the system within their territories.
This may sound scary to developing countries who already struggle to pay the high price of oil. But they would be the biggest beneficiaries. The permit auction could easily raise $1trn per year to spend on climate solutions, and most of that money would be spent in developing countries – paying for them to conserve their forests, farm sustainably, and "leapfrog" the carbon-intensive development path by paying for new energy infrastructure based on renewables and the efficient use of energy.
The system would also finance an adaptation fund similar to that put forward by Gordon Brown last week – but with over $200bn a year to spend, rather than the $60bn he proposed. This would be enough to provide widespread protection against the flood, drought and disease that global warming is expected to bring, and to finance emergency responses to climate-related disasters.
Another benefit would be to shift the debate from the current negative discourse on "burden-sharing" to a positive engagement on how to apportion the benefits of rapid and meaningful action on climate change. This truly global approach offers our best chance to break the deadlock in climate negotiations, and put in place, at Copenhagen, a climate agreement that would be fair, affordable, and effective.