Global cooperation is not needed to fight climate change


The UN Climate Change Conference (COP27) in Egypt highlights the growing consensus that multilateral cooperation is needed to avert environmental catastrophe. But with rising geopolitical tensions and intensifying US-China rivalry, such efforts seem doomed, as have previous efforts to promote global coordination on vaccines, trade, technological innovation and macroeconomic policy.

The good news is that the consensus can be wrong: a lack of multilateral cooperation is not necessarily fatal to the climate cause. Existing international coordination frameworks are outdated anyway, and technological competition, fueled by the climate-focused US Inflation Reduction Act (IRA), could prove to be a more powerful driver of innovation, ensuring that the fight against climate change will continue apace.

Until now, the main framework for promoting multilateral cooperation on climate change has been based on the principle of “cash for cuts”, whereby developed countries offer financial assistance to persuade developing countries to launch ambitious climate change efforts. decarbonization. But this approach is no longer credible, given that the international community has failed to meet its financial commitments and has shown no signs of improvement.

Worse still, the “cash for cuts” paradigm relies on a double standard. As low-income countries are urged to cut emissions, rich countries are increasing their reliance on fossil fuels, especially in the wake of Russia’s invasion of Ukraine. Moreover, the European Union’s planned border tax on carbon-intensive imports would effectively punish low-income countries in Africa and elsewhere, limiting their own transition to clean energy. The EU Carbon Border Adjustment Mechanism essentially imposes the policies of developed countries on poorer countries, which amounts to climate imperialism.

Fortunately, rapid technological advancements have sharply reduced the price of renewables, putting decarbonization within financial reach. This is why some developing countries, notably India and China, have embarked on massive renewable energy programs over the past decade.

However, given the need for massive investment in renewable energy infrastructure and already high storage costs, the transition to a net zero economy is still not financially viable. Moreover, the transition would upset millions of people in developing countries who live off fossil fuels, resulting in huge adjustment costs. Underestimating these costs or believing that these problems will solve themselves is another, more subtle form of climate imperialism.

While multilateral cooperation in the fight against climate change seems unlikely, the new American IRA could be a game-changer on a global scale. By subsidizing renewable energy research and development, this would eliminate the need for onerous and inequitable carbon tax mechanisms. Specifically, such measures would help create a hopeful new narrative that focuses on mitigating climate change through technological innovation and boosting supply, rather than sacrifice and reducing Requirement. Like the United States, few developing countries are likely to “tax carbon” to reduce their emissions.

The ERI could also help low-income countries reduce the costs of decarbonisation by encouraging the deployment of technologies such as low-cost batteries and carbon capture and storage. In our book Greenprint, Aaditya Mattoo and I argue that by making greater use of these technologies, developing countries could meet their energy needs without increasing global climate emissions.

The IRA is essentially a protectionist trade and industrial policy. As such, it could trigger an international arms race of green energy subsidies. But that could be a good thing. A global subsidy war could spur technological innovation, potentially driving down the price of renewables. Moreover, it can do for new technologies what China’s photovoltaic subsidies have done for the global solar energy industry.

As many have warned, the IRA is not without its risks. President Joe Biden’s signature legislation ties many of his grants and incentives to production and research in the United States and North America. It thus constitutes what the World Trade Organization calls “local content requirements”. The EU, one of the main trading partners of the United States, has complained about this obstacle to trade.

But, given the urgency of the existential threat posed by climate change, a global rush to subsidize key technologies seems like a feature, not a bug. To the extent that a global subsidy race could make clean energy financially viable, it would save rich countries from pledging to provide trillions of dollars to poor countries that they cannot raise.

Finally, such a race could help resolve the grievances of developing countries over the climate hypocrisy of the rich world. Reducing renewable energy costs would be a global public good provided by the developed world – assuming, of course, that all new emerging technologies are freely available. The uneven global rollout of Covid-19 vaccines should serve as a reminder that simply inventing new technologies does not guarantee equitable distribution.

The Green Revolution of the 1960s, when industrialized countries dramatically reduced world hunger and poverty by introducing high-yielding crops to the developing world, is a useful model for distributing cheap, non-proprietary renewable technologies. But to achieve a green revolution for the 21st century, the world must move beyond outdated and divisive discussions about which countries are responsible for the climate threat.

Given the current geopolitical rivalries, efforts to strengthen multilateral cooperation on climate change are likely to be futile. But competitive technological progress, even fostered by protectionist policies, could save the planet.

The author, Senior Fellow at Brown University, is a Distinguished Nonresident Scholar at the Center for Global Development and the author of Of Counsel: The Challenges of the Modi-Jaitley Economy (India Viking, 2018). © Syndicate Project, 2022

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