The Third Rock From The Sun

That the world is warming, there is little doubt. That we, the human race, are mostly to blame for it, is now more or less accepted. That if we don't do something fast, we may have to pay heavily for it later, is hardly an alarmist view. But how we should go about arresting the phenomenon of global warming is still politically a frustrating issue, for at stake is the economic future of the interested parties. How much each, chiefly the highly industrialised nations, is willing to concede to preserve the world's climate is a billion-dollar question.

Last month, 6,000 delegates representing various governments and ngos from around the world met in The Hague to fashion a political consensus on how to implement the 1997 Kyoto Protocol, which lays down specific targets to reduce carbon emissions. Given the grand cacophony which lasted for 12 days, it wasn't surprising that the talks ended in an impasse. Basically, the world failed to persuade the US, the biggest emitter of carbon, to lead by example, be a little accommodating towards the developing nations and not view climate change in purely market terms.

Down but not out, the chief players have begun rethinking their strategies so that they can strike some kind of a deal in May 2001, when they gather for an emergency meeting in Bonn. There is a sense of desperation now. For, most expect the protocol to come into force latest by 2002 for it to have any significance. However, now with a Republican president in the White House, even optimists believe that only a miracle can rescue it.

In the Kyoto Protocol, 38 industrialised countries, besides the European Union (EU), committed themselves to an overall reduction of emissions of greenhouse gases (ghgs) to 5.2 per cent below 1990 levels for the period 2008-2012. Commitments for individual countries vary: none for Russia, 7 per cent for the US and 8 per cent for the EU. Sceptics, however, point out that by 2000, most developed countries were nowhere near reducing their emissions to 1990 levels—voluntarily committed in the Climate Change Convention.

It is far from clear whether the protocol will force cuts in ghgs or whether it's pure humbug. It all depends on decisions about what kinds of action the countries will take to make cuts and perhaps on whether defaulters will be penalised. Indeed, much of the confusion revolves around the differing perceptions over how a country should balance its carbon accounts.

Some bones of contention:
l Should developing countries commit to reduce or limit their emissions at present? Most say no, but the US is adamant that if they don't it won't ratify the protocol.

l Should the quantity of ghgs, which each country will be allowed to produce in the long term, be determined on a per capita basis? This involves working out the total emission of ghgs the globe can sustainably support and dividing it by world's population. This per capita right would then be used for setting national allocations. According to this formula, in 1996, one US citizen was responsible for producing as much greenhouse gas as 19 Indians, 30 Pakistanis or 269 Nepalese. Calling it unfair, some industrialised countries argue for per capita or national entitlements to be based on historic and current levels of emissions. If equity is taken as the benchmark, then the burden on industrialised countries would be enormous—the US currently uses 12 times the permitted per capita amount.

l Should the developed nations be allowed to invest in carbon-efficient technologies in the developing world and then subtract the consequent carbon reductions from its account? While it is a much cheaper option for the developed nations, critics argue that it would force countries like India and China to compete with each other to provide the developed countries the cheapest rates for making reductions, leaving no least-cost options for themselves when it is their turn to make cuts.

l Should carbon sinks such as plantations and forests be factored into a country's net emissions? For some, especially the US, they might play a crucial role in reducing total ghg emissions. However, critics argue, since 85 per cent of ghg emissions come from burning fossil fuel, touting forests as carbon sinks is a distraction from the real task of cutting down on fuel consumption.

So far, India has consistently said no to emissions trading between developed and developing countries. But there are signs that it may agree to what is known as the Clean Development Mechanism (cdm), a regime under the protocol that allows developed nations to buy emission credits from developing nations. Union power minister Suresh Prabhu said recently at The Hague: "We are of the view that the host developing country should be the sole judge for deciding the areas of technologies for cdm projects."

Those who lobby for or against cdm can be divided into three categories: idealists, pragmatists and opportunists. The Delhi-based Centre for Science and Environment (cse), which champions the idealist stance, argues that cdm is patently unfair unless it is premised on per capita entitlements. The Tata Energy Research Institute (teri) and Development Alternatives (DA), which take the pragmatist position, argue that cdm is good for us provided there is a cap on the amount of emission credits a developed country can buy from another country and the host country has the prerogative to choose technologies relevant to its needs.

For industry, cdm represents an excellent opportunity to make money. In fact, the Confederation of Indian Industry (cii) has identified 21 potential cdm projects with the help of an international consultancy called Haigler Bailly. Says V. Raghuraman, energy advisor to cii: "The price of carbon is crucial for these projects. At current prices, we won't sell our carbon credits for less than $25." Indeed, cii claims Indian business can earn more than $1 billion annually, besides cleaning up our environment in the bargain. cse, however, calls cii's approach myopic and believes that India would gain more if its demand for equal per capita rights to the atmosphere is in the protocol.

For climate expert Kalipada Chatterjee of DA, industry is plain greedy. He says that more than state-of-the-art technologies, we need best practices of the west to improve energy efficiency.

But with the protocol in the doldrums, it's still rather early for cdm projects. Besides, the government is still to make up its mind on how, if at all, it should accept cdm. The per capita rights approach may be the best for India but in this moment of liberalisation, the government might get carried away by Indian industry's vision of billions of dollars flowing into Indian coffers.