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Copenhagen climate talks will hinge on economics

Most nations agree on the dangers of climate change and its causes. The question is how to balance the risks and opportunities of curbing carbon emissions and promoting cleaner energy.

December 07, 2009|By Jim Tankersley

Reporting from Washington — When world leaders gather in Copenhagen today for negotiations on a new agreement to combat climate change, their success or failure will ride on economics, not environmental science.

Theoretically, the two-week conference will focus on measures to limit emissions of the heat-trapping gases blamed for global warming. But the major debates will center on money: How could emission limits affect major industries and the jobs they provide? How could a new climate treaty reshape the global economic playing field?

Those issues sharply divide some of the most important players at the conference, as they ponder the economic possibilities and pitfalls.

For China and nearly all of Europe, the issue offers tempting opportunities to expand industries and create jobs by developing and selling new technologies for wind, solar, nuclear and other low-emission energy. That is especially the case if there is a strong agreement to move away from the carbon-based energy sources that the world has depended on for more than a century.

Many of those nations, particularly China, devoted huge chunks of recent economic stimulus measures to low-emission energy technology.

"You're seeing a shift in developing countries," said Ned Helme, a climate policy veteran who is president of the Center for Clean Air Policy in Washington. "Rather than looking out and saying, 'How do we protect our old cement kilns?' they're looking forward to clean energy as their new market."

Meanwhile, the most immediate concern of nations such as the United States, Canada and India is the potential economic and political cost of imposing stricter limits on greenhouse gas emissions -- particularly for their coal, oil and manufacturing industries.

For example, the Obama administration won more than $80 billion in stimulus spending to promote "clean energy." But its push to combat climate change and create "clean energy" jobs has been slowed by resistance from members of Congress who represent parts of the country that produce coal and oil or depend on those energy sources for power and manufacturing.

Tension between the possible winners and losers of a low-carbon energy future runs through every major negotiating topic, including how deeply individual nations will cut their emissions and how much richer countries are willing to spend to help poorer countries adopt cleaner energy sources and adapt to a warming world.

"One of the reasons that this negotiation is difficult is it really does involve issues of competitive and comparative advantage between countries," said Nick Main, the global managing partner for climate change and sustainability at the consulting firm Deloitte Touche Tohmatsu.

"I don't think there will be any science debate of any substance," he added. "This is really an economic debate of, 'How do you pay the costs?' "

In the dozen years since the first climate treaty was signed in Kyoto, both sides have squabbled bitterly over the science of global warming -- how serious the threat is, how rapidly conditions are changing and what role carbon emissions play in the problem.

The war of words intensified in recent weeks after hackers stole and released thousands of e-mails between leading climate scientists that skeptics say undercut the evidence of anthropogenic climate change.

But the leaders of the world's largest and fastest-growing nations have reached a broad consensus on the fundamentals: With rare exceptions, the negotiators in Copenhagen agree that Earth is warming; that humans are largely to blame; and that current trends in greenhouse gas emissions will result in flooding, drought and death in many parts of the world.

Representatives of 192 countries will be attending the 15th United Nations Climate Change Conference that opens today and runs through Dec. 18. Although some of the debate will focus on how much emissions must be reduced to lower the probability of catastrophic warming, the big disagreements center on what to do about the cost of change.

Poorer countries want the developed world to help finance their energy transition. That could mean tens, or even hundreds, of billions of dollars a year in direct aid and technology transfers from nations such as Japan and the United States to less developed nations.

By some reckonings, that could result in U.S. dollars flowing to China -- a politically unpalatable prospect.

How much money President Obama is willing to pledge for developing countries will be one key to the negotiations, said Abraham Haspel, a lead climate negotiator during the Clinton administration who is now president of the Cogent Analysis Group.

"And can he sell the notion that a lot of that money is going to China or to India?" Haspel asked.

Another issue is whether nations' varied emissions targets will give any an unfair edge. Europe is already on its way to steep cutbacks. The Obama administration has pledged much more modest reductions for the United States.

China and India say they will emit less as a share of their economies, but because both countries are growing so quickly, their emissions could still rise overall.

A group of Senate Democrats considered swing votes on a climate bill, most of them from manufacturing states, warned Obama in a letter last week that "reciprocal commitments are essential" to any international agreement.

Environmentalists contend that the potential for clean-energy jobs will change the dynamics of the coming talks.

If the talks do lead to agreement, Main of the Deloitte consulting firm and his colleague Joseph Stanislaw wrote in a policy paper last week, businesses around the world will change investment decisions. Countries will rethink competitive advantage.

"It is," they wrote, "a whole new framework of risk and opportunity."

jtankersley@latimes.com

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