Symbiosis International Education Centre 2007 M.B.A SNAP TEST - Question Paper

That points to 2 general conclusions about how to im¬plement Kyoto. The simplest is that countries should search out “no regrets” measures that are beneficial in their own right as well as reducing emissions -- such as scrapping coal subsidies, liberalizing energy markets and cutting farm support. The 2nd is that implementation should use mar¬ket-friendly measures that minimize the costs and risks of slowing economic growth.

The arguments center on this 2nd point, and in particular on the use of emissions trading and carbon “sinks” (such as forests) that could lower the cost of reach¬ing the Kyoto targets. The Americans want unrestricted trading and generous definitions of what constitutes a sink, despite scientific uncertainties about this point. The Europeans want strict curbs on both.

The common thread to these problems is that the Europeans are taking a moralistic stance that the lion’s share of reduc¬tions should come from “real” emissions cuts at home. The implication is that cuts made via market mechanisms such as trading, or the clever use of carbon sinks, are somehow un¬worthy. Yet the planet is impervious to where or how cuts are made, so long as the stock of greenhouse gases in the atmo¬sphere is decreased.

Not that the American stance is beyond reproach. Though negotiators try to paint themselves as principled, market minded folk, the real explanation for their position is prag¬matic. They know there is no chance that America will meet its target through cuts in domestic emissions. That is why they see sinks and trading as saviors. And, though they are on firm ground in insisting on unrestricted trading, they should agree to conservative definitions of sinks until scientists un¬derstand them better.

The proper aim of the negotiations should thus be to turn Kyoto into a treaty that bites, but with full flexibil¬ity over how countries should reach the targets that they have signed up to. And the guiding principle must be to err on the side of flexibility. A rigid deal that imposes heavy costs on economies would not only be undesirable in its own right; it would risk scuppering the Kyoto process altogether, leaving the atmosphere far worse off. Onerous short-term targets that force expensive adaptation will come at the expense of jobs, wages and other public goods, including measures to im¬prove the environment. The pain could be particularly acute in the developing world.

The best Kyoto deal would harness the engine of econ¬omic growth and the ingenuity of entrepreneurs, not bet against them. Not only would that ensure that the treaty was implemented at minimum cost. It would also help to create new markets and give incentives for businesses to inno¬vate.

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