I Spent $100 Billion and All I Got Was This Lousy National Communication

For most climate policy scholars, analysts, advocates, and makers, the last gasp before a much-needed two-week break will be trying to make sense of what happened in Copenhagen, and what it means for the short-and long-term global response to climate change.  It would be easy to get bogged down in analyzing the chaotic process that produced the Copenhagen Accord, but I will focus on what the outcome means for the United States cap-and-trade debate over the next several months.

 

The central outcome of the conference appears to be similar to what many expected: a quid-pro-quo between China and the United States on financing and verification (aka transparency).  In one sense, you could look at it as the developed world providing $30 billion in fast start financing from 2010-2012 and pledging to raise $100 billion per year by 2020 so that China and other major economies will write a report once every two years about their mitigation actions and discuss it with the international community.  To many this will not seem like a particularly attractive “deal”.

 

On the other hand, it would also be valid to view the outcome as the United States wresting major concessions from China et al. in an 11th-hour drama that no other developed nation had the stomach, or clout, for.  As a direct result of United States consistently taking a hard (but ultimately more credible) line in negotiations regarding developing country actions, the fundamental division of the Kyoto days is gone and has been replaced by the embryo of an arguably much more equitable system.  Although there is still some differentiation, all major emitters have embraced the principle that they must take action and subject that action to international review.  Barack Obama stared down Chinese Premier Wen Jiabao, and Wen blinked first.

 

While the real outcome of the accord lies somewhere in between, it is worth examining how these narratives and Copenhagen overall will play out in the Senate. 

 

The most important point is that President Obama has made a major bet on cap-and-trade with the pledge to help raise $100 billion in financing by 2020.  Based on past contributions to multilateral initiatives, and depending on whether all nations (ala the Mexico Proposal) or just developed nations contribute, the United States would be expected to put forward at least $10 billion, and likely $20-25 billion, of this financing.  While the United States could probably reach its short-term mitigation commitments through the Clean Air Act or a European-style limited cap-and-trade system combined with fuel economy and efficiency programs, it is hard to envision increasing the foreign aid budget for climate much beyond the $1.0 billion included for FY2010 or $3 billion for FY2011 requested by John Kerry (D-MA).  Using allowance price and offset volumes projected by U.S. government analyses, the Waxman-Markey bill would generate about $28 billion in international funding by 2020—including about $20 billion in private-sector offset purchases.  While this fact has largely been overwhelmed by domestic economic concerns in the cap-and-trade debate thus far, expect these provisions to draw much greater scrutiny—and support from the administration—as legislation moves through the Senate.  Especially critical will be provisions for reducing tropical deforestation, which is a large percentage of the Waxman-Markey funding and received a $1 billion boost from the administration in Copenhagen.

 

But the second (and much more helpful) line of analysis has already made its way through to moderate Lisa Murkowski (R-AK), who noted the willingness of China and India to participate in an international agreement as a positive for ongoing work in the Senate.  In the weeks leading up to Copenhagen the Republican narrative had coalesced around the supposed fallacy of U.S. leadership—that if we act and impose costs on our economy, other countries will not follow but just ignore us and keep on polluting and stealing U.S. jobs. The framework negotiated by President Obama (and the product of years of work in the UNFCCC and dozens of bilateral meetings) and the events of the last few weeks provide a clear counter to this argument.  Once the United States came forward with a mitigation pledge, China and India came forward with theirs.  Once the United States pledged to help raise substantial mitigation and adaptation funding, China and India agreed to subject their actions to international scrutiny.  Although the divisive rhetoric between China and the United States dominated much of the first 10 days of negotiations, the Copenhagen process has shattered once and for all the myth of developing country inaction.

 

This leads to my next point: Copenhagen further solidified the notion that the world can only go so far without the endorsement of the United States Congress.  The counter-argument could be made that, absent the United States, the world could have moved forward with a successor to the Kyoto Protocol much more easily, with new legally binding mitigation commitments for developed nations.  But this misses the point that the United States is on the right side here—both politically and substantively.  While securing action from all major economies is most critical to domestic politics in the United States, it is also essential in Australia, Japan, Canada, and other developed nations that have struggled to convince domestic constituents that climate policies are worth the cost.  None of these countries has the political clout to stand up to the G77 + China bloc, and benefitted immensely from U.S. efforts that can now be used to increase support at home.  Substantively, it is also simply not defensible to say that the climate problem can be solved without meaningful commitments from China, India, and other major economies.  Without U.S. leadership, it is unlikely the new system would have included their actions in such a meaningful way.  Furthermore, forcing the transition to an architecture of domestic commitments backed by international review has also increased the credibility of the entire system.   The power of U.S. leadership is both a positive and a negative—the United States can shape the nature of the international system to suit its interests and benefit the world, but can also hold progress hostage absent further domestic action.

 

No doubt the administration will continue to move forward on energy, technology, and land use initiatives, and increase the role of the G20, Major Economies Forum, and bilaterals that produced substantial progress this year even without U.S. legislation.  Indeed, Copenhagen proved that these fora will remain vital with or without a cap-and-trade system. They can advance common interests without being held up by roadblocks or a lack of progress on other issues.  However, the holy grail of climate policy—a global legally binding instrument—will continue to remain elusive absent further action from the U.S. Congress.