The political economics of climate change


    Outdated economic rankings an obstacle to an effective global climate pact
    WHEN the Lima Conference on Climate Change went into overtime last week, most observers’ expectations that it would do so without producing a major breakthrough on a global climate agreement were unfortunately met.

    “I could have written down the outcome for you before the conference even started,” Stephen Lysaght, First Secretary of the British Embassy in Manila and head of its economic and political section, commented wryly.

    Lysaght, who along with the embassy’s Climate Change and Energy Attaché Roslyn Arayata visited The Manila Times offices to discuss the UK government’s climate change policies and initiatives, offered an interesting observation about why a practical and effective global agreement to mitigate and adapt to the effects of climate change has so far been elusive.

    “The Kyoto Protocol,” he said, referring to the 1997 emissions-reduction accord that is the only agreement adopted on a large scale until now and has served as the starting point for subsequent negotiations, “is fundamentally broken.”

    The insurmountable political obstacle that has scuttled efforts to achieve a larger and more effective agreement has been the division of financial and regulatory responsibility for carrying out the terms of any agreement between “rich” and “poor” countries. The general concept, popularly referred to as “climate justice,” is that wealthier, developed economies have a moral responsibility to financially underwrite the climate change needs of lesser-developed countries.

    While stressing that the UK does not disagree with the basic idea, Lysaght suggested that the way countries are categorized is obsolete. “Even though Kyoto was signed in 1997, you have to remember it was all based on 1990 data,” he explained.

    What Lysaght was referring to are the “annexes” of the Kyoto agreement, three lists of countries according to very broad economic groupings. Annex I included the most-developed countries—countries that were members of the OECD (Organization for Economic Cooperation and Development) as of 1992—and “economies in transition,” countries like Hungary and Poland that at the time were in the process of changing from centralized to free-market economies. Annex II was a similar list but excluded the transition economies; countries listed in Annex II therefore are expected to bear the highest economic burden for global climate change action.

    The third list was the “Non-Annex I Parties to the Convention,” which are the countries loosely defined—in 1990 terms —as “developing” or “emerging” economies. These countries were the ones that were considered to be most adversely affected by climate change on a global scale, and therefore the least economically liable for it. The Philippines is part of the “Non-Annex I” list.

    The obvious problem is that the economic pecking order of the world in 1990 was very different than it is now, 24 years later. Some of the countries sharing the list with the Philippines arguably no longer belong on it: For example, China, whose GDP per capita is seven times higher now than it was in 2014; Malaysia, whose GDP per capita has more than doubled in the same period to nearly $7,000; South Korea, which has since become a member of the OECD; and Singapore, whose economy is ranked among the top five in the world no matter which authoritative database (World Bank, International Monetary Fund, or UN statistics) one consults.

    As long as the outdated classification of national economies continues to be the baseline for determining proportions of climate change funding responsibilities, the efforts of the countries in the highest category—like the UK, which is contributing approximately 12 percent, or about $1.2 billion, of the recently created Green Climate Fund—“will not make much of a difference,” Lysaght said.

    The implication is that strict, effective emissions-reduction programs like those under the UK’s 2008 Climate Change Act, which has resulted in a 27 percent reduction in greenhouse gas emissions from their 1990 levels in the UK, will be undermined by industrial growth (and increasing emissions) in economies that have outgrown their qualifications for being held to lower standards.

    Updating the Kyoto Protocol or developing an improved replacement for it would have to include nations under terms that reflect their current economic status, and consequently would impose greater economic burdens on them. That is not an appealing proposition to most “Non-Annex I” countries—the Philippines being a noteworthy and somewhat surprising exception—and thus a larger agreement is consistently stalled, with such progress as can be claimed by meetings such as the Lima Conference being simply “back-loading,” as Lysaght described it, or the development of initiatives that are immediately postponed to some future date.


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