A highly noted student of foreign relations, following the U.S. debacle in Vietnam, wrote a book with the rather odd title: "The Irony of Vietnam: The System Worked." Something of the same might be said of the famous--or, if you prefer, notorious--Kyoto Protocol. The industrial countries that promised toward the end of the 1990s to cut their emissions by a total of 5-6 percent by 2012 have in fact largely succeeded in doing so, and that's no mean accomplishment. Yet their reductions have been swamped by soaring emissions by the very rapidly developing countries, notably China, which are exempted from mandatory reductions in Kyoto.
Nobody really knows what to do about that, diplomatically or otherwise. And so, as the nations of the world gathered this week for the latest annual climate conference, expectations could hardly have been lower. In principle the top item on the agenda would be to negotiate new reduction targets for a second Kyoto compliance period, running to 2020. But given the radical differences between the United States and China, nobody expects that to happen.
An immediate fear this week is that if Kyoto becomes in effect a dead letter, what will happen to the carbon trading systems that have developed under the aegis of Kyoto--the carbon-offset system, linked to the so-called Clean Development Mechanism, which enables those emitting excessively in the industrial countries to invest offset money in green energy projects in the developing world; and the European Trading System, which in practice is closely linked to the CDM. Reputedly, a very large fraction of the money going into the CDM comes out of the ETS.
Even if these fears are essentially exaggerated and groundless, their very existence could have an adverse impact on markets. "It's like somebody waving an empty gun around in a coffee shop," the director of the Climate Markets & Investment Association told the Financial Times yesterday. "It scares off customers even if there are no bullets."
If anything big comes out of Durban, it''s likely to originate in hallway conversation, not the plenary negotiating sessions. In the runup to last year's conference in Cancun, there emerged a group of important developing countries--a group somewhat more inclusive than the BRIC nations (Brazil, Russia, India, China). A still larger version of the group could include not just South Africa and Argentina, but Mexico, Turkey, Indonesia, and so on. Perhaps a group of that kind could somehow bridge the gap between the very big, very rapidly developing countries like China and India, on the one hand, and the United States, on the other.
Some have suggested the answer might lie in direct bilateral talks between the United States and China. But even if those two countries could agree on anything, wouldn't all the important countries left out of the discussion regard the outcome with suspicion and resentment?
Maybe a better model is the Congressional Supercommittee--six U.S Democrats and six Republicans--who were supposed to agree on big budget balancing measures, or drastic spending cuts would result. What's generally referred to as the super-failure of that committee means that there will be sharp cuts in defense spending, which almost everybody recognizes as necessary but nobody wants to take responsibility for. So: create a global committee consisting of three China-like countries and three U.S.-like countries. If it fails--which it almost certainly would--then mandatory carbon emission targets result for all!