The Sherpa teams organizing the next G20 summits are in a position to design a win-win package deal to help break the climate change deadlock. Realistically, there is little hope of an agreement on binding emission targets. Nor will there be large financial transfers from developed countries. Progress requires leadership — a small group of countries must agree to move forward together — Graham Allison’s “many-lateralism” or Stewart Patrick’s “mini lateralism.” A small group of key countries could have significant impact if they agree to a “Grand Bargain” involving cooperation on research and development (R&D), future standards, security of supply and measurement of emissions. Forget targets and transfers for now.

The consensus rule required by the United Nations Framework Convention on Climate Change is a recipe for paralysis. Establishment of new norms requires a flexible process. We need a critical mass, not unanimity. We cannot let the laggards set the agenda. We need a group of powerful high-emitting countries to agree and move forward — the laggards can adjust later. If China and the US agree, and several other high emitters join them, the rest will eventually follow. In any case, most of the problem would be addressed.

The US Congress will not ratify any treaty that includes targets for the US unless it also contains binding targets for developing countries. Emerging and developing countries will not accept binding targets unless there are several years of verified reductions by developed countries. The consequence is that a binding global agreement on emission reductions will not happen in the next few years — nor will a binding global agreement on fiscal harmonization, as carbon taxes and cap and trade systems cannot be forced on countries.

A “Grand Bargain”

 “The perfect is the enemy of the good.” Given the larger deadlock, can we make significant headway without binding targets and fiscal transfers?  Yes.  A “Grand Bargain” could establish an energy security compact, organize a royalty-free, multi-billion-dollar global R&D collaborative and set up future greenhouse gas-related product and process standards on selected traded goods. It could legitimize future border tax adjustments on goods below the standards. The “Grand Bargain” could institute a credible emission monitoring and reporting system. (Verification will come later.)

There are several examples of successful global collaboration that could serve as a model for the energy R&D and technology transfer initiative:

  • ITER, an international experiment to produce commercial energy from fusion, consists of member countries that share every aspect of the project: science, procurements, finance and staffing, with the aim that, in the long run, each member will have the know-how to produce its own fusion energy plant (www.iter.org). 
  • The Consultative Group for International Agricultural Research (CGIAR) generates cutting-edge science through a "strategic partnership whose donors support 15 international centers, working in collaboration with many hundreds of government and civil society organizations as well as private businesses around the world...The new crop varieties, knowledge and other products resulting from the CGIAR’s collaborative research are made widely available to individuals and organizations working for sustainable agricultural development throughout the world" (www.cgiar.org). 
  • The China Greentech Initiative interactive website  "designed to facilitate the collection, analysis and sharing of research on the evolving greentech market in China… is an open source, commercial collaboration of over 80 of the world's leading technology and services companies, entrepreneurs, investors, NGOs and policy advisors" (www.china-greentech.com).
  • The Asia Pacific Partnership on Clean Development and Climate includes Australia, Canada, Japan, China, India, Korea and America. These countries work together and with private sector partners to accelerate the development and deployment of clean energy technologies. 

A global royalty-free R&D collaborative could be worked out more easily if it were limited to pre-commercialized R&D. If R&D results were entirely royalty free, financed by rich countries, then it may count as technology transfer and help induce large developing emitters to take action. A G20 R&D collaborative would be a natural extension of Korean President Lee Myung-bak’s proposal to establish a think tank to serve as a global hub of ideas, new technologies and new policies for the Asian Green Growth initiative (www.greengrowth.org).

Future product and process standards could be agreed on high-carbon-content traded goods, not a universal product-by-product standard. They would be enforced, over time, by border tax adjustments on goods “below the standards.”  With sufficient notice, this would be feasible for basic industries like cement and aluminum, and for high volume industries that are highly integrated across borders. Ultimately, a monitoring and reporting system, with verification, possibly based on peer review around commonly agreed refined standards, will be the core of an agreement on truly global action. This package is more than enough to get started and, albeit difficult, much easier to negotiate than binding targets or fiscal transfers.

Stewart Patrick writes that the case for a coalition is more compelling if “the contingency is discrete, no standing international framework exists, institutions are paralyzed by discussions… bureaucratic inertia prevents prompt decisions.”  In real life, complex agreements are negotiated first in small groups. The US and China together are responsible for 40 percent of current global emissions. Can we imagine that a deal could emerge from the future US-China Strategic and Economic Dialogue?

China and the US to the Rescue?

Do the US and China have sufficient complementary or congruent interests, beyond financial interdependence, defined by their respective domestic realities? The list of common interests is impressive. Both countries desire global financial stability and to maintain the value of the US dollar. With respect to climate change, both want to develop technologies for "clean coal" and carbon capture and sequestration, and adaptation strategies in low-lying coastal zones. Both want to mitigate European protectionism. Both have interests in nuclear non-proliferation, in preserving safe international shipping. China faces desertification, drought, smog and other forms of pollution that could threaten internal stability. The US must reduce its dependence on hydro-carbon imports.

On the negative side is Chinese Premier Wen Jiabao’s statement that: “Global issues should be decided by all nations in the world, rather than by one or two countries.” Apparent obstacles include the different interests, affluence, political ideology and diplomatic style of the two countries. Deng Xiaoping is often quoted to underline China’s fears that a global leadership role entails responsibilities that it isn’t ready for:

Observe calmly. Secure our position.
Cope with affairs calmly.
Hide our capacities and bide our time.
Be good at maintaining a low profile.
Never claim leadership.

Both China and the US are “over promoters of sovereignty.” In real life, the US decision-making system is dysfunctional.  Stewart Patrick’s description of the Bush administration’s perception of the UN as “hopelessly dysfunctional, unaccountable, and obsolete, prone to lowest common denominator policy making, working at cross purposes with US interests” — would also be a fair representation of the freedom of action of the US government domestically. These discrepancies, and tensions such as censorship of Google and arms sales to Taiwan, seriously diminish the likelihood of a G2 coalition leading the way. Given the dysfunctional world of US politics and China's view of its priorities, it is inevitable that these will continue to be sources of tension that may well throw a wrench in any G2-led advance on this issue, especially when combined with the Chinese view that global problems have to be solved globally. But that’s why we have the G20 — to allow purely bilateral issues to be finessed while addressing global issues.

Is the G20 the Best option?

Rather than the G2 acting alone, the G20 is a more credible scenario for an effective coalition. Should the Canadians or Koreans so decide, they could devise the parameters for a package deal that would consist of security of supply, investment in a global R&D collaborative, future standard setting to be supported by border tax adjustments and a monitoring/reporting framework. (Although Il SaKong, the principal responsible for Korean preparations, is on record as writing: “Don’t dilute the focus by adding other heavyweight issues.”)

Alternatively, France, the 2011 chair of both the G20 and the G8, could flesh out a package deal that is in the selfish national interest of both China and the US, enroll them, and then sign on the European Union and Japan.  The G20 could refine and bless the package. It could then be brought to the UN process.

It will be more feasible to reach an agreement on binding targets and on economic instruments if we have several years of confidence building and cooperation on security of supply, investment in a global R&D collaborative, standard setting and a monitoring/reporting framework. A small number of key countries can reach agreement on such a package. Then, maybe, it will be possible to reach a binding universal agreement assigning country-by-country emission trajectories, introduced over time.

In the absence of leadership, the waters will continue to rise.

 

REFERENCES

Patrick, Stewart (2009). “Prix Fixe and la Carte: Avoiding False Multilateral Choices,” The Washington Quarterly. October. Volume 32, Issue 4:77– 95

Allison, Graham, quoted in Katrin Bennhold and Alison Smale (2010). “In Davos, Signs of Shift in Global Power,” The New York Times. January 27. Available at: www.nytimes.com/2010/01/28/business/global/28g20.html

Barry Carin is a senior fellow at The Centre for International Governance Innovation in Waterloo, Ontario, Canada.