The Bali road map: towards a binding framework

What form will a new global agreement on climate take, and what role will China play? This year may prove a critical turning point, writes Elliot Diringer.

After years of struggle to mobilise an effective international response to climate change, 2007 may prove to be a critical turning point. From the G-8 summit in Heiligendamm to the APEC summit in Sydney, from a high-level UN gathering in New York to a meeting of major economies in Washington, climate change has suddenly vaulted to the top of the global agenda. This burst of climate diplomacy culminates these two weeks in Indonesia, where the goal will be a Bali “road map” pointing the way to a new global agreement. 

How should this map be drawn? In what direction should it lead? The year’s stream of summits, dialogues and ministerial huddles has produced plenty of ideas, but a grand consensus has yet to emerge. Indeed, the newly energised debate has exposed fundamental rifts and sharply contrasting visions of the way forward. As governments head into the Bali conference, they face a fork in the road. Down one path lies a lasting solution; down the other, only false hope.

The critical issue in Bali is whether the new road map sets governments on a course toward establishing binding multilateral commitments. The Kyoto Protocol, with its binding emission targets for industrialised countries, was a step in that direction. But Kyoto is limited in both scope and duration: without the United States and Australia, its targets encompass only about a third of global emissions; and they expire in 2012. The next stage of the climate effort will be effective only if it entails some form of commitment by all the world’s major economies.

The alternative vision, championed by the Bush administration, eschews international commitments. In this view, countries may agree on an “aspirational” long-term goal for reducing global emissions. But each country would decide independently what contribution it would make toward meeting this collective goal. There would be no binding international commitments. And for that very reason, this path can not produce an effort nearly sufficient to the task.

Why are international commitments essential? Because without them, countries cannot be confident that others are contributing their fair share to the global effort. And without that confidence, they will not be prepared to adopt the policies and make the investments needed to build low-carbon economies. There are costs to addressing climate change. In the long term, those costs will be far outweighed by the benefits of reduced climate change impacts. But in the near term, governments, business, and private citizens will be far more willing to bear those costs if they know that their counterparts – and their competitors – are bearing them as well.        

Yet, while binding commitments are needed from all the major economies, they need not take the same form. There are huge differences among the world’s major economies. Their per-capita emissions range by a factor of 14 and their per-capita incomes by a factor of 18. The kinds of policies that effectively address climate change in ways consistent with other national priorities will vary from country to country. The post-2012 framework must accommodate different national circumstances and strategies. To achieve broad participation, it must allow countries to take on different types of commitments.  

The Kyoto approach – economy-wide emission targets coupled with emissions trading – should remain a core element of the climate framework. But not all countries are prepared to take on economy-wide targets. China, India, and other emerging economies fear that binding targets holding them to specific emission levels regardless of the economic consequences would unduly constrain their development. As a technical matter, economy-wide targets also may be unfeasible for some countries: to accept a binding target, a country must be able to reliably quantify its current emissions and project its future emissions, which at present few if any developing countries have the capacity to do.

So other approaches are needed as well. One promising option is policy-based commitments. Under this approach, a country would commit to undertake a national policy or set of policies that will moderate or reduce its emissions, without being bound to an economy-wide emissions limit. This allows countries to put forward commitments tailored to their specific circumstances and consistent with their core economic or development objectives. A country like China, for instance, could commit to fully implement its existing energy efficiency targets, renewable energy goals, and auto fuel economy standards. Tropical forest countries could commit to reduce deforestation. Such commitments would need to be credible and binding, with mechanisms to ensure close monitoring and compliance. As an incentive for implementation, countries could be granted tradable emission credits for meeting or exceeding their policy commitments. 

Another potential element of the post-2012 framework is sectoral agreements, in which governments commit collectively to a set of targets, standards, or other measures to reduce emissions from a given sector. Such agreements could include both developed and developing countries, for the latter, in particular, offering a practical alternative to economy-wide commitments. In energy-intensive industries whose goods are traded globally – the sectors most vulnerable to potential competitiveness impacts from carbon constraints – sectoral agreements can help resolve such concerns by ensuring a more level playing field. 

The post-2012 framework also could include commitments on technology cooperation, both to accelerate the development of “breakthrough” technologies such as carbon capture and storage, and to ensure broader access to technologies by addressing finance, intellectual property rights, and other issues impeding technology flows to developing countries. Finally, the post-2012 framework must do more to help poor, vulnerable countries adapt to the impacts of climate change. Top priorities include helping countries develop comprehensive national adaptation strategies and providing reliable assistance to the poorest and most vulnerable countries for their most urgent implementation needs.  

While the post-2012 climate effort must allow for a diversity of approaches, it is critical that they be integrated in a common framework. If countries decide independently how they will contribute, the aggregate effort is likely to be modest at best. By linking actions, and negotiating them as a package, nations are likely to undertake a higher level of effort. The objective should be an integrated agreement that is flexible enough to accommodate different types of commitments, and reciprocal enough to achieve a strong, sustained level of effort.

What kind of map might lead from Bali to this goal? In name at least, negotiations are underway already under the Kyoto Protocol. In 2005 in Montreal, Kyoto parties launched talks to establish new commitments for the post-2012 period. But these negotiations contemplate commitments only for those countries already with targets under Kyoto. The political reality is that few if any of these countries will be prepared to assume binding post-2012 commitments without some form of commitment from the United States and the major emerging economies. In other words, on its own, the Kyoto track launched in Montreal leads to a dead-end. The Bali road map must offer a new direction.

What is needed in Bali is a decision to launch negotiations under the 1992 Framework Convention on Climate Change, Kyoto’s parent agreement, which includes all the Kyoto parties plus the United States, Australia, and others. These talks should run in parallel with or encompass those under Kyoto, with the goal of a package deal setting new commitments under both the convention and the protocol. The Bali road map, then, should lay out a process and timeline for establishing new incentives and commitments under the convention that, in concert with new commitments under the protocol, form a comprehensive post-2012 framework.

The prospects for such a road map emerging from Bali hinge, first and foremost, on the willingness of the US to enter talks on commitments. Only with the US on board will China, India, and other emerging economies even entertain the idea of commitments. However, it appears highly unlikely that the Bush administration would agree to a road map if one clear destination is commitments for the US. So the launch of formal negotiations is unlikely. Perhaps the best plausible outcome is a new Convention process that, while not a negotiation per se, has the potential to become a de facto negotiation once the politics allow.

Looking beyond Bali, and beyond the Bush administration, the prospects look considerably brighter. There is growing political momentum in the US for mandatory greenhouse-gas limits. Serious efforts are underway in Congress to establish a mandatory cap-and-trade system, and enactment by 2010 appears likely. Once the US resolves what it will do at home, it will know what it is prepared to commit to abroad, and will have strong incentive to help build an inclusive and effective post-2012 framework. The global politics of climate change will be thoroughly transformed, and a new set of multilateral commitments may then be in reach.

Standing today at a fork in the road, some governments may not yet be prepared to head down the path of commitments. But they must resist the illusion that the alternative path of no commitments can lead to an ambitious and sustained global effort. For now, it is better to remain at the crossroads than choose the wrong path.

Elliot Diringer is Director of International Strategies at the Pew Center on Global Climate Change

homepage photo by David Steven