North v South 2.0

In the seventies and eighties it became trendy to talk about
the global gap between "North" and "South," in the sense
that the rich countries that are mostly in the North of the planet were
exploiting the poor countries to their south.
That was actually an exercise in blame deflection, with the poor
countries blaming the North for problems that arose from their own poor
choices, such as a predilection for socialism and corruption. Today, however, there is another North v
South conflict developing. This time,
the cause is global warming, and the complaints of the South deserve much more
consideration.

Ever since the Rio Earth summit in 1992, it has been
generally agreed at the international level that global warming is a problem,
that greenhouse gas emissions are the cause, that something needs to be done
about reducing them, but that different nations face different challenges in
doing so. The result was the Kyoto
Protocol of 1997, which committed developed nations – the North – to reducing
emissions by 2012, while exempting less developed nations – the South. The reasoning was that economic growth and
greenhouse gas emissions are very strongly linked. To insist on developing nations reducing
their emissions would essentially be to insist on keeping them in poverty.

However, this was unacceptable to the United States. Even before the Kyoto Treaty was signed, the
Senate voted 95-0 in favor a resolution that said, "The exemption for
Developing Country Parties is inconsistent with the need for global action on
climate change and is environmentally flawed." The resolution also said that, "the
disparity of treatment between [developed nations] and Developing Countries and
the level of required emission reductions, could result in serious harm to the
United States economy, including significant job loss, trade disadvantages,
increased energy and consumer costs, or any combination thereof."

This has been the Bush administration’s position ever since,
and slowly but surely, it has won the rest of the developed world round. That is why the G8 this week announced that,
"This global challenge can only be met by a global response, in
particular, by…contributions from all major economies." In other words, they expect the developing
nations to do their bit. If the
necessity of emissions reduction is taken as a given, the position successively
adopted by the Senate, Bush Administration and now the G8 makes sense.

Indeed, it is essential that the developing world reduces
emissions substantially if any sort of significant reduction target is to be
met. China
is now the world’s largest emitter of greenhouse gases, ahead of the USA. Indonesia
is third and India
fourth. As time goes on, these
countries’ emissions will dwarf those of the developed world, even in aggregate
going back to the Industrial Revolution.
If emissions are indeed a problem, the developing world will have to
reduce them.

However, this brings us back to the problematic link between
emissions and growth. The developing
world has put its cards on the table. In
a counter to the G8 statement, the G5 – China,
India, Mexico, Brazil
and South Africa
– said bluntly that it was not going to agree to emissions reductions and that
it was up to the developed world to follow that course. They said the developed nations must
"take the lead in achieving ambitious and absolute greenhouse gas emission
reductions" and that they must take "into account historical
responsibility and respective capacities as a fair and just approach."

And you know what?
They have a point. It is surely
unjust for the developed world to deny the developing world the chance to
develop in the most cost-effective way possible, which requires fossil
fuels. At the same time, developed
nations cannot bear the whole cost of emissions reduction alone. Yet attempting to force the developing
nations into emissions reductions by trade barriers or withdrawing aid would be
eco-imperialism. The emissions circle
simply cannot be squared with national sovereignty, economic development and
poverty reduction.

So we are tied in a Gordian Knot. If global warming is indeed a risk to be
managed, we shall have to use lateral thinking and cut through it. We should be thinking not so much about
targets for emissions reduction, but under what circumstances such reductions
would become attractive enough that they would be uncontroversial.

First, the developing world would need to be developed
enough for its citizens to value environmental improvement (in the language of the
economic literature, they will need to have passed through the
"environmental transition.")
This requires growth. Secondly,
the developed world will need to have demonstrated that "clean
energy" technology can be cost-effective.
It has yet to do this in any meaningful sense.

Until these two conditions are met, emissions reduction
targets are not a credible way of managing global warming risks, but a recipe
for impasse. Instead, we should look to
mitigating potential consequences, by investing more in adapting to a changing
climate and by increasing the resiliency of the global economy, which, once
again, requires growth.

Last time, the North v South debate allowed despots in the
developing world to use an illusory moral high ground to get away, literally,
with murder. Today, the modern version
of the debate risks the developed world using an illusory moral high ground to force
its will on poor nations. It is time to
abandon the idea that all international negotiations on global warming have to
be about emissions reduction targets.
That approach has failed for sixteen years. North and South need to think again.

Iain Murray is Director of Projects and Analysis at the Competitive Enterprise Institute and author of The
Really Inconvenient Truths, new from Regnery.