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Greenhouse Gas Emissions: Enough Talking, It’s Time to Act

This year’s G8 summit in Japan resulted in a commitment from the leaders of some of the world’s largest economies to reduce greenhouse gas emissions by 50% by 2050. It is ironically symbolic that this resolution was made in a place not far away from another Japanese city where a similar – but much stronger – commitment had been made a decade ago. If the Kyoto treaty failed to produce the results it was intended to produce, why should the G8 summit’s resolution be any better?     To make things even worse, this time around the G8 leaders did not even bother explaining exactly what they were committing to. First, it is not clear whether the commitment is to reduce greenhouse gas emissions to 50% of their current levels, or of some historic or (God forbid) future expected peak levels. Second, no intermediate targets were set, pushing any judgment on the success of this year’s resolution to the conveniently distant year 2050 which is, presumably, long after all the current leaders will have left office. And third, it was not specified exactly what measures the G8 countries will take to reduce greenhouse gas emissions. So this resolution, in itself, sounds more like a child’s Christmas wish list than like an international treaty.

Even before the summit had ended, the so-called resolution met stiff opposition from the leaders of some of the largest developing economies. They simply did not feel that they should be expected to make the same commitment. They argued that it is the developed countries that produced today’s greenhouse emissions problem problem by not limiting their levels of pollution in the time they themselves were developing. So, they insisted, it is up to the developed world to take the first step.

Steven Harper commented that since in 2050 only 20% of the world’s pollution will come from what is today the developed world, little can be accomplished without the participation of countries like China and India.

In the meantime, shortly before the G8 summit, the Liberal Party of Canada introduced its so-called “Green Shift” policy suggestion, involving the introduction of a carbon tax to discourage use of polluting practices. A Harris-Decima poll was conducted shortly after measuring how Canadians feel about the Liberal’s Green Shift policy, and found that a slight majority of Canadians favour it, but also uncovered a division between the Eastern and the Western halfs of the country.

It  sure looks like climate change is getting a lot of attention these days. But in line with most activity we’ve seen over the past decade, this attention has not result in any action – at least not in North America. Given all the talking that has been going on, it is somewhat depressing to see how little has been accomplished.

Read some online discussion forums on the topic, and you will find lots of people saying that while action to fight climate change is generally needed, now is not the right time, given the world’s economic problems. This is what seems to be behind much of the opposition to measures that would curb pollution: We, as a society, want the benefits, but are not really prepared to pay the price quite yet.

It is true that a carbon tax or pollution caps will increase prices, by affecting the balance of supply and demand and by impacting production costs. This may, on balance, make us worse off than we are today. But it is also a fact that the status quo rewards polluters, because polluting is free, and environmental protection isn’t. It costs companies to be “clean”. When a company decides to “go green”, it may need to buy and install new equipment, and limit its choices in any matter to environmentally-friendly alternatives only (while “dirty” ones are usually cheaper). So companies that choose to employ environmentally friendly practices and technologies inherently pay a price for their choice, unlike those who don’t care about the impact of their activities on the environment. This makes the products of “green” companies more expensive without increasing their profits, and any salesman knows that a higher price puts you at a disadvantage on the marketplace.

There has been an effort to make consumers recognize products of “green” companies and pay premium for them, but these have had limited success so far. The reason is simple: Even if consumers are prepared to pay a premium for “green” products, it is often impossible to know with certainty whether a given product or service has been produced in a “green” way or not. You have to trust what the salesman is telling you. The products of companies that are investing into clean technologies end up competing against cheaper alternatives. To make things worse, since there are little environmental standard, anyone can claim that any product or service is “green” even if it isn’t. If there is no way to know how “green” a product really is, then why bother paying a premium for it?

We already have legislation to prevent similar imbalances in other similar situations: Violating someone’s patent is penalized, because innovative invention are the product of investing into research and development, and the law protects such investments. Similarly, abusing someone else’s brand can also result in a penalty, because the law protects the investment that companies make into their brands. These kinds of laws also increase the cost of products and services by impacting supply/demand, but nobody argues that they are unnecessary, or that they should not apply in hard economic times.So why is it ok to have laws protecting investments made in research and development and into building one’s brand, but not the investment made into protecting the environment? It is not true that now is the wrong time to introduce such legislation. The truth is that the right time passed years ago – and today’s economic crisis is partially the result of our failure to act. Had we made our economies less dependant on oil and more reliant on renewable energy sources, the world’s economy would be in a better shape today. The painful oil price increase only gives us a taste of what is to come if we don’t act. Environmental imbalances will cause shortages of water and food in the future – and these will be a lot more painful than an oil price increase. Compared to the impact of food and water shortages on our life standards, the negative impact that environmental taxes will have on us today will look like a minor inconvenience. It is time to finally stop talking and start acting.

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