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Dec 11 2014
Why China will drive global climate change deal
By Den Steinbock
This month, the world's leading nations are gathering in Lima, Peru, for the 2014 UN Climate Change Conference. The talks' procedural objective is to develop a foundation for a new climate agreement that could be signed in Paris in December 2015 and that would take effect by the 2020s.

The substantial objective of the talks is to significantly reduce global emissions.

Toward more inclusive global climate talks

Over the past two decades, global climate talks have evolved through three phases: the UN Earth Summit (1992), the Kyoto Protocol (1997), and the Copenhagen Accord (2009).

In Rio and Kyoto, the process and outcome of the talks was largely established by the major advanced economies that used to account for the bulk of total global emissions. That era faded away with the Copenhagen conference.

After an all-night session in Copenhagen, the leaders of a small number of mainly large emerging economies - Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh, Brazilian President Luiz Inacio Lula da Silva, South African President Jacob Zuma, and the United States' President Barack Obama - agreed on a politically feasible path forward. Although Brussels had been one of the most vocal advocates for climate change action, no European Union leader participated in the final talks.

A comprehensive and legally-binding protocol was simply not viable in 2009. However, in the Copenhagen Accord's first article, the signatories agreed to "urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities." They also acknowledged that deep cuts in global emissions were necessary to limit global temperature increases to 2 degrees Celsius.

Despite advanced economies' criticism of the Copenhagen Accord, the agreement was able to mitigate some of the Kyoto Protocol's shortcomings by expanding the coalition and by extending the time frame for action. Perhaps most importantly, for the first time, large emerging economies played a critical role in the final decision-making.
In the past few weeks, there has been rising optimism that negotiators in Peru might be able to secure a deal that will commit all countries to take action against climate change. Ultimately, the U.S.-China deal changed the atmosphere surrounding the talks.

U.S.-China deal a game-changer?

The United States, which remains the world's largest historical emitter of greenhouse gases, has now agreed to cut emissions by 26-28 percent of 2005 levels by 2025. In turn, China, which is currently the biggest emitter in aggregate terms, has pledged to reach peak emissions no later than 2030.

China's proposed target reflects the determination of Xi Jinping and Li Keqiang's leadership to contain climate change and tackle the difficult challenges and tradeoffs posed by the high levels of domestic air pollution caused by rapid industrialization, urbanization and reliance on fossil fuels.

However, the new targets are in line with China's transition from extensive growth based on investment and net exports to intensive growth characterized by consumption and innovation.

The United States' proposed target reflects popular opinion as defined by surveys and polls. In terms of aspirations, it is significantly more ambitious than President Obama's previous "U.S. Climate Action Plan," which he announced in Copenhagen half a decade ago.
However, the U.S.'s stated commitment will lead to a showdown with the newly-Republican-controlled Congress. Senate Minority Leader Mitch McConnell (R-Ky.) said after the deal that the bilateral pact signaled that the president "has no intention of moving towards the middle."

On Capitol Hill, things will only get more heated as Republican Senator James Inhofe, one of Congress's most prominent climate change skeptics, succeeds Democratic Senator Barbara Boxer as chair of the Environment and Public Works Committee in the Republican-led Senate next year. Inhofe has called the U.S.-China deal a "nonbinding charade" while promising to "do everything in [his] power to rein in and shed light on the Environmental Protection Agency's unchecked regulations."

But what will the U.S.-China deal mean in China?

Green growth - an opportunity, not a liability

The global climate crisis is one of the most daunting crises precipitated by traditional economic growth. In Britain and the United States, industrialization took place a century or two ago when there was much less knowledge about the adverse affects of early capitalism, so few efforts were made to contain industrialization.

With its track record of rapid growth, China is one of the countries most affected by climate change. In the Global Climate Risk Index, an index that tracks which countries suffer most from extreme weather events based on the past two decades of recorded weather data, China and the United States are both ranked 26th worldwide, significantly behind India (17th) or Russia (23rd), but far ahead of South Africa (74th) and Brazil (78th). China's massive population translates into extraordinarily high death tolls and total economic losses, and the country's vast and diverse territory means that it suffers from a higher overall number of extreme weather events.

Neither China nor other large emerging economies have the luxury of replicating the experience of advanced countries that became rich first and cleaned up later.

China's new growth plan, which was developed in concert with the World Bank, supports the country's efforts to "grow green." Much will depend on how effectively government policies make firms internalize negative externalities and motivate firms to innovate and seek technological breakthroughs.

As China makes real gains in low-carbon development, the correlation between growth and carbon emissions will significantly weaken, and carbon emissions will peak. Such decoupling is already on the horizon, so it is likely that peak emissions in China will happen sometime in the 2020s.

Common but differentiated responsibilities

Today, all parties in the global climate talks support the principle of "common but differentiated responsibilities," abbreviated as CBDR. On the one hand, all countries have a shared responsibility to protect the climate. On the other hand, each country's level of responsibility varies according to its historical contributions to global warming and its current capacity to address the problem.

In 1992, the UN categorized countries' CBDR in terms of whether the countries were then industrialized or developing. Next year's Paris conference must determine whether a comparable classification system will be used and how different types of obligations will apply to the mitigation, adaptation or financing responsibilities of different groups of countries. The outcome of the Peru talks will give us a general idea about which scenarios are more likely.

The issue of CBDR is highly contentious, dividing advanced economies from emerging economies, even creating internal divisions in emerging nations themselves.

Todd Stern, the U.S. special envoy for climate change, has warned against sorting mechanisms, arguing that all countries must take responsibility. Conveniently, such a solution would force emerging and developing countries to take responsibility for the historical pollution that was caused by today's advanced economies.

Understandably, many parties continue to insist on using sorting mechanisms, including the members of the Least Developed Countries Group, the Africa Group and the Like-Minded Developing Countries, which include China, India, Indonesia and Venezuela.
A viable solution must take both advanced nations' concerns about aggregate pollution and emerging economies' concerns about per capita pollution into account.

The U.S.-China climate change deal suggests that pragmatic compromises may come in the near future. But neither the construction of those compromises nor their enforcement will be easy.

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