Why we need a fair trade campaign for carbon

For many commentators in the wake of Copenhagen, China became the scapegoat for the failure to secure a meaningful and binding agreement. But one reason for China’s resistance to international climate treaties is that they measure emissions (and therefore required emissions cuts) on a national production basis, not consumption, and so ignore the carbon imbedded in the huge imports of goods from China to the West (especially the US).

On this issue they have a point – a recent estimate is that taking into account the net export of goods from China to be consumed abroad reduces China’s CO2 emissions by almost a third. Another way of looking at this issue is that countries with a trade deficit (like the US and the UK) have much higher emissions that the conventional Kyoto accounting principles suggest.

What should be done? An economist’s prescription might be to argue for lower consumption in the West (partly achieved by the financial crisis) and carbon border taxes. The problem with these is that they would be difficult to set fairly and transparently, just as accurate carbon labelling hundreds of thousands of products is an almost impossible task. Border taxes would also be viewed as protectionist (as well as being very difficult to get through the WTO).

An alternative starting point would be to recognise that the actors with the most detailed knowledge of global supply chains and their energy inputs are transnational companies. These huge corporates are already very active in driving changes through their supply chains, improving quality and reducing costs, and often have detailed information on how parts and materials are produced. These companies also have considerable market power in sourcing countries. They could demand lower carbon energy sources and greater energy efficiency, but also help suppliers achieve these.

There is already some interest within corporates in “greening” the supply chain. What is missing is an organised pressure from consumers to demand greater progress, providing a powerful motivation for faster and deeper corporate action. This should not be hard to mobilise, since there is evidence that consumers in countries like the UK want the brands they buy to have lower carbon footprints. They are likely to be willing to pay more for lower carbon goods, just as they do so for fair trade goods. This willingness is key, for it is right that western consumers rather than producers in China and elsewhere should pay for the decarbonisation of products, bearing the true cost of their consumption and providing the resources to invest in lower carbon energy.

We also know that this approach can work, because it has worked before. Back in the late 1990s a number of international development charities, such as Christian Aid, ran campaigns for better working conditions amongst suppliers, targeting supermarkets. This successful campaign led to the establishment of the Ethical Trading Initiative, bringing companies, charities and unions together to transform conditions along the supply chain. What we need now is a similar campaign, and a Carbon Trading Initiative.

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5 Comments

Filed under China, Consumption

5 responses to “Why we need a fair trade campaign for carbon

  1. Reg Platt

    Well observed to link consumption imbalances directly to negotiating positions.

    Different tack, but worth noting changing trends in thinking on consumption in the UK – away from excessive consumerism and towards finding some other value in what we buy. Rise in entrepreneurs finding ways to use the spare capacity in products – e.g. the neigbours car when they are away http://www.whipcar.com/. Still small at the moment but likely to grow in significance as energy prices and cost of living go higer and stay higher. John Grant’s work is an interesting place to start on this – http://www.coopp.net/

    but this won’t make a dent on the embedded carbon in international trade so an interesting piece

  2. David

    Interesting to read that the Chinese government is apparently one step closer to levying a carbon tax as part of its next five-year plan (2011-15), which could be seen as a means to dissuade the US and others from thinking about imposing border tax adjustments on high carbon imports (under the Kerry-Lieberman bill for instance, BT provisions could be phased in so long as there continues to be no tangible global climate agreement in sight)

    I agree on your point about the need to push for decarbonisation of supply chains, but the extent to which this is achieveable surely depends on the product in question? Electrical equipment accounted for the largest volume of Chinese exports to the US in 2009 and I imagine its relatively simple to green production of computer and telecommunication parts. But its much more difficult and costly to reduce the co2 intensity of iron and steel, which, combined, were still worth some $8 billion in Chinese exports to the US in 2009, despite a recession-induced drying up of global demand.

  3. Pingback: From Poverty to Power by Duncan Green » Blog Archive » Good and bad ideas on climate change; soccer for Americans; contradictory views; bad Canada; mobile banking; what motivates people? Links I liked

  4. Fair Trade Goods are increasingly popular in Westernised societies because there is increasing awareness that we in the West are able to help those less fortunate than ourselves. Unfortunatlely, the global recession has led to people watching there purse strings a little more and fair trade has suffered as a result.

  5. Rachel Godfrey Wood

    There is certainly a place for a campaign in developed countries to demand lower carbon goods, but we cannot be naive about the potential of this, or ignore the fact that it could still be potentially problematic. The basic point to make is that the number of consumers actually willing to pay more, either for fair trade or low carbon goods, is a small niche of the population. Even the most ethically aware of consumers find it extremely hard to decide which goods are the most ethically appropriate to buy (for example, focusing exclusively on food miles could overlook the risk that this could pose to livelihoods dependent on food exports in developing countries). Moreover, one might question the extent to which corporations could be trusted to genuinely bring about an improvement of standards in their supply chains (there have been numerous scandals where companies have failed to implement their own guidelines effectively). Ultimately, this issue can only be resolved with cooperation with the likes of the Chinese government, increased efforts to transfer technology to developing countries, and efforts to prove that this whole debate is being driven by environmental integrity, rather than ‘green protectionism’.

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