Cleaning Up The Environment: The Gradual Way

There are plenty of alternative technologies to burning carbon fuels to generate power, all of them with drawbacks, and generally lower efficiencies and higher costs. I do not want to debate here the relative merits of solar, wind , nuclear etc. but simply to look at what sort of system is needed to make sure that the world economy is incentivised to improve them and reduce carbon emissions. Burning fossil fuels and capturing the carbon dioxide may be quickest step forward anyway: not ideal, but better than nothing (probably by reinjecting into spent oil and gas reservoirs, where it may have the added benefit of improving oil recovery rates) .

Firstly an effective system should as far as possible use market mechanisms , essentially carbon taxes and credits. On a global scale regulation without market incentives simply leads to cheating, bad implementation, and corruption. There will be some of the latter with market mechanisms, but less so as decisions are decentralised and self-interest comes into play. Nevertheless certain conditions have to be met .

Examine the world free trade set-up (today, the WTO, and its predecessor GATT). Why does it work?
- it is in the self interest of any one country to introduce free trade even if all others do not: as long as other countries are willing to trade. In other words, it does not need everyone to take part for the system to work
- it is in the interest of countries to join up even if others are more efficient at everything they produce (Ricardo's theory of comparative advantage: a neat way of showing that economics is not all bullshit, as it is both true and non-obvious). This means all parties gain, there are no absolute losers
- advantages are progressive. A bit of cheating through susidies, non-tarriff barriers etc. will not wreck the system, as long as it is not too bad
- an important consideration is that there is at least one power who is strong enough to police the system. In the case of free trade, it is actually two, the USA and the EU. Both of them are generally for free trade, despite some glaring omissions in areas like agriculture and steel, and thus usually if reluctantly obey WTO rulings. In the case of the USA, WTO rulings are thus the only international law which is accepted to have precedence over the will of Congress (although it is doubtful if Congress realises or will admit the fact)

These two players are powerful enough to use sticks as well as carrots to get others who sign up to obey the rules, and incentivise non-members to join or even shadow the behaviour of members.

What about a global emissions system (whether Kyoto or something different). Not everybody has to join, but the major emitters do; too much freeloading wrecks the system. The biggest problem is that it does pay to freeload: you would be an absolute winner if you had no emission controls and everybody else (or even the majority) do. Thus policing of the system has to be more coercive, more akin to punishing lawbreakers than to maintaining the WTO.

Essentially it depends on America- without it nothing can be driven through, including getting rising economic powers like China to take part as well. Not only does the US emit 25% of global carbon dioxide for only 4% of the popluation, at twice the rate per head of Europe or Japan, but the right which is now in power is virulently anti-environmental. The key is any change of attitude among Republican voters, and it is not hopeless . Even some green evangelical groups (the What would Jesus drive? constituency ) are emerging. The problem is to convince them that global warming has nothing to do with other issues on liberal agendas. Too early to despair.