COP21 must address the trade cost of carbon pricing: Don Pittis
Tackling the thorny problem of levelling the international playing field
This story is part of a package of special coverage of climate change issues by CBC News leading up to the United Nations climate change conference (COP21) being held in Paris from Nov. 30 to Dec. 11.
When we lived in a hilly part of Belgium, the kids at our local school played soccer on a field with a pronounced slope from one goal to the other. It always made me think of the "level playing field" in international trade.
As world leaders struggle to negotiate new cuts to greenhouse gases in Paris at COP21, one of the stumbling blocks is that when it comes to trade, countries making the biggest cuts in carbon output are always playing uphill.
If they really want to cut carbon, delegates must begin to address that problem.
- Canada warming at twice the global rate, scientists say
- Canadians say they are willing to pay to cut emissions
- Insurers aim to reduce huge losses from climate extremes
That the problem is obvious does not make it easy to solve. When one country imposes strict limits on carbon, whether through taxes or regulation, the cost of doing business in that country rises, at least in the short term.
Trade comes first
Russian leader Vladimir Putin, for instance, has taken a skeptical view on climate change, an opinion shared by much of the media in that fossil-fuel-dependent country. So what happens if Alberta adds a carbon tax of $30 a tonne by 2018 as it has promised while Russia does nothing?
"If oil production just moves from Canada to Russia, there's no advantage for Canada," says Coleman.
It is very possible that in the longer term, developing new technology to replace fossil fuels will make advanced economies more efficient and successful.
But in the medium term, countries that are climate leaders bear the cost of switching away from cheap and familiar power sources such as coal.
That gives the laggards an advantage. Their industries can sell their products at lower prices on world markets. With the current state of the world economy, that matters. And currently there is no trade law to fix it.
"The problem historically was that the trade people didn't want to have anything getting in the way of their objective, which was to put trade priorities first," says Gus Van Harten, a specialist in international trade law at Toronto's Osgoode Hall Law School.
He says trade laws actually conflict with green laws. Large corporations have used trade agreements to challenge environmental rules, suing national governments for losses caused by environmental, health and labour laws.
Van Harten says a first priority will be an international treaty superseding such trade challenges in the case of domestic laws intended to cut greenhouse gases.
The ultimate result might be to put tariffs on a country's exports if a lot of carbon went into making them
Coleman says the complications of using trade laws to impose carbon tariffs remain enormous. Determining the exact carbon content of another country's products means examining the entire production chain and could lead to massive disputes and years of litigation.
"It's a very complicated scientific problem and in the few places where it's been adopted, it often ends up being a guise for protectionism," says Coleman. Nevertheless, Canada has signed on to the UN's standard way of calculating carbon use without which climate targets would be meaningless.
Coleman says the whole process of measuring carbon for trade purposes remains political. For instance, while India continues to expand its use of coal, it quite reasonably claims its historic contribution to global carbon is dwarfed by that of the industrialized West.
Developing countries with low carbon output per person claim a simplistic carbon tariff would be unfair. Carbon policy, even among carbon leaders, is littered with exemptions for their most important industries. Other countries claim to be hitting carbon targets when the reason is only that their economies have weakened.
Complexity by itself is not necessarily an issue, says Coleman. We use complex policies all the time.
"The problem is when you marry a complex policy with a strong protectionist impulse that we know exists in every country."
The countries attending COP21 must face the fact that they need to add teeth to international carbon limits. In a weak global economy when everyone depends on their trade advantage, they must begin developing a set of rules to level the playing field.
Because when it comes to cutting carbon, no one will play ball when only cheaters prosper.
Follow Don on Twitter @don_pittis
More analysis by Don Pittis