Little Likely to Result from Montreal Conference, Victor Says

David G. Victor, a Council adjunct senior fellow for science and technology and director of the Program on Energy and Sustainable Development at Stanford University, spoke to cfr.org’s Esther Pan on November 23 about what to expect from the Montreal Conference.

What you expect to come out of the climate change conference in Montreal?

Mostly nothing.

It’s the first time all the international players have met since signing the Kyoto protocol in 1997. That’s not significant?

It’s significant in the sense that there’s a legal timetable moving forward. The Kyoto Protocol entered into force in February of this year; once it enters into force a whole series of activities are triggered. For example, they need to finalize all the procedures for something called the Community Development Mechanism, which allows the developing countries to participate in controlling their emissions and attract additional investment. And then they also have to start a process no later than the end of this year to consider the commitments the countries would adopt after the Kyoto period. And so most people are looking at this meeting, not as an end point, but rather as a beginning point for the process of negotiating new commitments beyond Kyoto. In that sense, the meeting is likely to result in the airing of views, and an enormous amount of dispersion of those views, and not much beyond that.

And when does the Kyoto period end?

The Kyoto period ends in 2012. The commitments written into Kyoto apply for the years 2008 to 2012, which sounds like a long time in the future, but in the energy business, that is essentially today. Most of the emissions of carbon dioxide and other greenhouse gases that cause climate change come out of the energy sector, and most of the technologies that really affect those emissions are long-lived. So you can order a power plant today; the plant will be operational in five to six years and it will have a twenty to thirty-year lifetime. So they cycle of the capital stock in the energy business is on the order of thirty to forty years, and that means 2008 to 2012 isn’t actually a long way off at all. That’s why most people who are serious about addressing climate change are already looking at the kinds of commitments that would exist beyond 2012, 2030, and even 2050.

When you talk about the people who are serious about climate change, are they meeting in Kyoto? Are they the ones who will get together and talk about future commitments?

Well, there isn’t a single community. The Kyoto meetings taking place in Montreal are formally between diplomats from countries that are negotiating these commitments. That means, essentially, all countries on the planet. But this is a diplomatic process. In addition to the diplomatic process, there are lots of NGO’s, analysts, scientists, and all kinds of other people from energy companies and other firms, who will also go to the meetings—in part to observe the discussions, and also to participate themselves in a series of side events. That means you’ll have thousands of people involved, but that’s only a subset of all of the folks that will ultimately be involved in some kind of solution to the problem, because at the end of the day, in some sense, it includes everybody on the planet. And so this is an important process. But it’s also important that we not lose sight of the fact that this is also just a diplomatic arm of what is ultimately a whole scheme to change the nature of the industrial economy.

What is the U.S. level of participation in the meeting, given that the United States has rejected the Kyoto Protocol?

I think the United States is in a really tough position because it rejected the Kyoto Protocol back in March 2001. It hasn’t really presented a credible alternative. It has unveiled a plan to have firms in the U.S. make voluntary reductions, and in the last few months it’s unveiled a scheme to get key developing countries involved in some kind of cooperative effort to make emission reductions—which, in itself, is a very good idea, but the scheme doesn’t have any details right now. So I think most of the rest of the world is looking at the United States and is now—to a degree that wasn’t true four or five years ago -- is looking at everything the United States says with enormous skepticism. So I think the United States has an uphill battle. My guess is that the United States will participate in the discussions in Montreal, and will simply rehash what it’s already outlined as its approach to the problem, and that there will be a lot of criticism of that, but it won’t actually go anywhere.

Since the Kyoto Protocol was signed, can you talk about some of the changes that have been made and the effectiveness of those changes? If all these other countries have signed on and have started to make the required commitments, what effects do you see from that?

I see three things happening on the ground that are really important. The first is that some countries are implementing serious mechanisms for addressing emissions, and the most important of those is the European Union’s Emission Trading System. This is a system that operates similarly to the way the United States controls emissions of sulfur oxide, which is the leading cause of acid rain. They put a cap on the total allowable emissions of carbon dioxide—which is the main cause of global warming—and then they’ve allocated emission credits under that cap to all the major industrial facilities inside the European Union. And then those companies, individually, make decisions about whether they are going to go out and buy more emission credits or install various kinds of technologies that reduce their emissions. The European Union is very far advanced in putting this scheme into place. It’s not without troubles. There are all kinds of difficulties because this is a little like inventing a new form of money. In this case it’s a carbon currency, and you have to have procedures for monitoring and enforcement. You have to figure out what you’re going to do if a company simply can’t acquire enough emission credits in order to comply with its obligations. These are all really difficult questions the European Union is struggling with in a very serious way. So that’s one thing happening.

A second thing that’s very important is a handful of major developing countries are starting to struggle with how they’re going to control their emissions of carbon dioxide and other greenhouse gases while at the same time focusing on economic development. The developing countries have always refuse to take on targets—in the Kyoto agreement, the targets that were agreed to for the years of 2008 to 2012 apply only to the industrialized countries. The developing countries don’t have any targets. Part of the effort to involve the developing countries is a scheme known as the clean development mechanism, and we’re starting to see some serious projects [related to] it. This is a mechanism by which if a company invests in a developing country in a project that results in lower emissions, than the difference between the level of emissions that would have occurred otherwise and the lower level of emissions amounts to a credit the company can use in its home market -- for example in the European Union’s Emission Trading System. So it’s an effort to tentatively extend an emission trading system worldwide. It has all kinds of technical problems. It won’t address the fundamental issue, which is how to completely transform the world’s energy system, but it’s a start.

And the third thing is that many more countries are realizing we’re never going to solve the climate problem without fundamental technological change. Kyoto is about making small adjustments in the world’s emissions. For example, the Kyoto commitments call for a total of about 5 percent reductions in emissions below the 1990 levels by the industrialized countries. That’s relatively small. If you really want to solve a climate problem you have to make a reduction in all countries’ emissions on the order of 60 percent to 80 percent over the next half-century to a century. And the only way we’re going to do that is with fundamental technological changes. For example, by using nuclear power on a much larger scale; by developing a way to burn coal and other fossil fuels to generate electricity while not emitting any carbon dioxide whatsoever—take the carbon dioxide and inject it underground, or at least store it away from the atmosphere, essentially forever. And some of these ideas we have some commercial experience with and some of there are sky blue, way off in the future, and we need to start working on those. This is an area where the Bush administration has articulated the right approach in that we need to create incentives for fundamental technological change—but in practice, we haven’t done much to deliver on that promise. But we are starting to see more countries embrace this view, starting with the United Kingdom.

What percentage of worldwide emissions comes from developed countries, and what percentage from developing countries?

Roughly half of the world’s emissions of greenhouse gases comes from industrialized countries and half comes from developing countries. And those figures include all of the emissions of greenhouse gases. If you look just at carbon dioxide, which is the most important greenhouse gas, then probably three-fifths comes from industrialized countries and two-fifths from the developing countries. A big part of the difference is that there are very large emissions that come from changing land use patterns, such as deforestation. In general, the advanced industrialized countries are net-growing their forests, so when the forests grow through the process of photosynthesis, they absorb carbon dioxide from the atmosphere and they are what we call sinks: net absorbers of carbon dioxide. And when forests are cut down and that land is turned into pasture, for example, those forests when they’re burned or decayed emit carbon dioxide into the atmosphere, that turns out to be a significant part of the story. So already, developing countries are about half of the story. It’s important we keep that in perspective because the developing countries are much more populous. And so on a per capita basis their emissions are about one-fifth to one-tenth of the level of the industrialized countries. And their argument has always been, "Hey, you guys developed without any restrictions on your carbon dioxide emissions, so you had an industrial development that relied heavily on fossil fuels. We also want develop rapidly with the benefit of low-cost fossil fuels." And so in their perspective, which is completely understandable, they place a higher priority on near-term economic development, whereas the industrialized countries—especially the European countries—are putting a much higher priority on long-term protection of the climate rather than near-term economic development.

The key lesson from all this work that’s been done on technology is that you can provide the energy services needed for economic development without causing these emissions into the atmosphere if you encourage radical technological change. But that can’t be done quickly. It has to be done over a period of a normal turnover of the capital stock, which going back to the beginning of our conversation is in about thirty to fifty years. So the long-term problem is really, really difficult for governments to deal with, because it’s hard for any individual government to make a credible commitment today that it is going to follow a particular path of regulation over say, fifty years. Because those policies can be undone just as easily they’re put together. And you can imagine how much more difficult that is at the international level, where we have very weak enforcement powers, and where international treaties in effect require the consent of all the countries that are governed. And this problem of credibility in making long-term commitments is at the core of why the climate problem is such a really, really difficult problem.

Does the United States have an extra credibility problem because it’s seen as not taking climate change seriously?

Unfortunately, I think that is true. The United States has an opportunity in the wake of leaving Kyoto, which it did for largely understandable reasons. There was no way the United States was ever going to be able to comply with Kyoto, and there was no way, no matter who the president was, the United States was going to get the kind of legislation needed for Kyoto to pass through the Congress. So we had no choice but to leave. But then we had this opportunity to present a viable and attractive alternative, and we never did it.

My last question is about India and China. These are developing countries that are seeing significant environmental damage in their pursuit of economic growth. What do you think the attitude is in those two really large countries about the balance of environmental protection and economic growth?

It’s very important to think about the environment in its particular forms rather than a general form. I’m going to India on Friday, and I’ve spent a lot of time there and a lot of time in China and here’s what I see: There’s enormous concern about local environmental problems like urban air pollution, fouling of the rivers, things that people can see and the consequences are felt immediately and locally. There’s an enormous amount of concern about that in India and China alike, and I think especially in China because they’ve suffered so much from poor environmental protection. So they are willing to spend an enormous amount of money dealing with those problems because people require it, and because there is now some evidence that it is harmful to the economy. For example, if you try to grow crops downwind of cities where the air is incredibly polluted the crops aren’t going to grow as well. If you have a population that’s sick it can’t work. So there are all these immediate reasons the Indians and the Chinese understand extremely well as to why you want to protect the environment. But the environment as a global good, a global long-term good, is a totally different story. Because they have to evaluate whether it’s better to spend resources on dealing with immediate near-term environmental problems and development problems, or whether they should spend resources to control emissions of carbon dioxide today so that there might be less global warming in the future, which might benefit future generations of Indians and Chinese. When you think about the value of time in that kind of framework, it’s not surprising the Indians and Chinese are extremely wary of spending serious resources on the climate problem right now. It certainly doesn’t help that the world’s largest economy, namely the United States, isn’t doing that much on the problem. They’re also sitting back and waiting to see whether the rest of the industrialized world can get it together to implement significant reductions. Until then the Indians and the Chinese are going to do exactly what they’re doing right now, which is: They’re happy to have investments in their countries that reduce emissions of greenhouse gases as long as somebody else pays the extra cost of making the reductions.

One last comment on this—which is in my view the successful way to engage the Chinese and the Indians on the problem—is to stop thinking about this as a climate change problem, but instead to focus exactly on your question, which is what are the Chinese and the Indians really worried about? They’re worried about local air pollution, for example. So we can help them solve local air pollution problems by encouraging them to switch to natural gas from coal. Both those countries burn a lot of coal. If they use natural gas in their power plants instead of coal, they’d have much lower local air pollution, and they would also have half the level of carbon dioxide emissions for each unit of electricity they generate. We can help them use nuclear power instead of coal, and in that sense, what the Bush administration has done with the Indian government in the last few months is put together a technology-sharing program for commercial nuclear power. That is essentially the biggest news in our relationship with India on the climate problem. But most of the climate community doesn’t pay attention to that because they’re not thinking about that as a climate issue, they’re thinking about it as nuclear proliferation. And my argument is that the two are deeply intertwined, and the more we think about actions the Indians will already want to take on their own, the more successful we’re going to be in lowering their carbon dioxide emission.