|| November 27, 2007
|| UNDP wants climate justice through trade
by ASHOK B SHARMA
published by Indian Society For Sustainable Agriculture and by Indian Express Newspapers (Mumbai) Ltd.
The UN Development Programme (UNDP) for the first time in its human development report has analysed the impact of climate change. The Human Development Report 2007-08 – Fighting climate change : Human solidarity in a divided world is released at a time when the climate change agenda is slowly gaining its entry in the WTO negotiations and the discussions on the review of the work under Kyoto Protocol is slated to take place in Bali in Indonesia in December, this year. The report documented the impact of climate change across the world also projected the likely scenario for the future. Making out a case for alternative sources of energy and fuels like bio-fuels, the UNDP report said that global trade has a major role to play. It said :
International trade could play a much larger role in the expanding Markets for alternative fuels. Brazil is more efficient than either the European Union or the United States in producing ethanol, Moreover, sugar-based ethanol is more efficient in cutting carbon emissions. The problem is that imports of Brazilian ethanol are restricted by high import tariffs. Removing these tariffs would generate gains not just for Brazil, but for climate change mitigation.Negotiations on emissions limits for the post-2012 Kyoto Protocol commitment period can – and must – frame the global carbon budget. Saying so it noted most developed countries like Canada fell short of the targets. Though the European Union and UK have both embraced their targets, they are likely to fall far short of the goals set unless they move rapidly to put climate mitigation at the center of energy policy reform. Two major OECD countries like US and Australia are not bound by Kyoto Protocol. The report suggested two ways to mitigate climate change, one is to directly tax carbon dioxide emission and the other is cap-and-trade. Under cap-and-trade system, the government sets an overall emissions cap and issues tradable allowances that grant business the right to emit a set amount. Those who can reduce emissions more cheaply are able to sell allowances. One potential disadvantage of cap-and-trade is energy price instability while the potential advantage is environmental certainty, it noted. While the transition to climate protecting energy and life styles will have short-term costs, there may be economic benefits beyond what what is to be achieved by stabilizing temperatures. These benefits are likely to be realized through Keynesian and Schumpeterian mechanisms with new incentives for massive investment stimulating overall demand and creative destruction leading to innovation and productivity jumps in a wide array of sectors, the foreward to the report said. While government leadership is going to be essential in correcting the huge externality that is climate change, Markets and prices will have to be put to work so that private sector decisions can lead more naturally to optimal investment and production decisions.
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