The problem with the public debate over ratifying the Kyoto Protocol
is that the media always wheels out lobbyists from either fossil fuel
industries (easy to spot) or lobbyists from the renewable energy
industry or finance industry (well disguised as impartial experts). Both
sides make reasonable arguments and occasionally throw in emotive
assertions, but the person in the street is no better informed about the
issue. Most people believe that they want something done about climate
change and somehow believe that the Kyoto Protocol is the way to go.
What is really needed in such an important debate is a more balanced
assessment of the issue - but this is not good media nor good politics.
As an expert in this area, I find it hard to see how the casual observer
can form an opinion on what should be done when there is more hot air
than light in the public arena.
In a recent article ("The Role of Economics in Climate Change
Policy" Journal of Economic Perspectives vol 16, no2), Peter
Wilcoxen from the University of Texas and I survey the science and
economics of climate change and make an assessment of what a good public
policy response would look like.
The first point to stress is that there is a great deal of
uncertainty about the consequences of climate change and about the costs
or benefits of taking action. Any policy response must be directed at
managing the uncertainty that lies at the heart of climate change. This
implies that the view that nothing should be done is just as wrong as
the view that something drastic should be done. What is required is a
flexible system that enables some low-cost action to be taken now, and
creates an infrastructure that enables more serious action if warranted
in the future.
In particular, there are two areas in the recent debate about
Australia's non-ratification of the Kyoto Protocol that need to be
clarified. The first is whether action today to reduce carbon emissions
would be costly. Most of the evidence in the exhaustive reports of the
Intergovernmental Panel on Climate Change (IPCC) suggest that it will be
costly to reduce emissions. It is curious that those who advocate
ratification of the Kyoto Protocol appeal to that part of the expert
opinion in the IPCC Reports that support the idea that climate change is
an issue, but they dismiss that part of the body of expertise in the
reports that suggest there are costs in doing something about it.
Indeed, the key point is that there is a large range of uncertainty
about the estimated costs of cutting emissions. Clearly in the longer
run, technology is the ultimate answer to reducing carbon emissions, but
in the short run (over say 10 to 20 years) it is hard to imagine that
there won't be significant costs in restructuring our energy systems.
Even so, there are some who argue that there are only benefits (you can
always spot a lobbyist). Perhaps this minority opinion is correct, but
with so much uncertainty about costs and benefits is it really sensible
to take a risk that we might be lucky and the costs might be low when
the benefits are uncertain?
But suppose we concede that the optimists are right and the costs are
low, is the Kyoto Protocol the correct approach? By any reasoned
assessment, the Kyoto Protocol is completely the wrong approach to
climate change policy. First, it targets emissions of carbon into the
future without knowing what the cost will be - it might be cheap but it
might be expensive (it worsens the uncertainty). Second, governments are
required to give up national sovereignty in order to hit an arbitrary
emissions target with uncertain benefits. Third, there is no rule of law
that can make penalties for non-compliance by countries binding if some
countries decide to withdraw. The negotiations in the Protocol over
compliance are still a stumbling block. Fourth, a large majority of
carbon emitters are not part of the system so there is unlikely to be a
noticeable change in the trend of carbon emissions. Finally, the act of
trading emission permits across countries implies large transfers of
wealth, which is both politically unrealistic but also could destabilize
the global economy. Kyoto is a very unstable system that creates more
uncertainty and in reality postpones serious global action on climate
There are alternatives available to the Kyoto Protocol, which we
identify in our survey - now is the time to consider these.
The Kyoto Protocol is a purely political compromise created by
exhausted negotiators. To sign up to it because of the lobbying of
vested interests and sheer ignorance of the range of implications in an
uncertain world would be foolish. The Howard government has made the
correct decision not to ratify the Kyoto Protocol. But that cannot be
the end of the debate. Now what is needed is for the government to
implement a clear alternative within Australia so that institutions can
be created and incentives put in place to begin to deal with carbon
The government also needs to convince other countries to adopt a more
sensible approach because, as a major fossil fuel exporter, even if
Australia does not participate in the entrails of the Kyoto protocol,
the possible contraction in the participating economies has the
potential to inflict costs on Australia. Leading world opinion by
example is very much in Australia's interest when it comes to climate
change policy. Now is the opportunity to implement a realistic
alternative to the Kyoto Protocol and show the world how to do sensible
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.