A town in South Africa beginning with D

So the UNFCCC juggernaut gears up again for another year. According to reports, top celebs attending COP17 in Durban include Angelina Jolie, Bono, Leonardio di Caprio, Arnold Schwarzengger and Sarah Palin. But for them, and the thousands of official delegates and NGOs who will also be there, the summit is, by common consent, very unlikely to deliver anything significant on emissions targets, and may not even deliver in areas like finance for developing countries. Key players, including China and the US, have been playing down expectations – this morning the Financial Times reported that the Americans are not even prepared to sign off the flagship Green Fund.

So far, so familiar. Indeed, the dramas of individual COPs have now become so repetitive, that it is surely worth standing back and reminding ourselves of why we already know, really deep down, before the event what will happen at Durban. It is also worth reflecting on the fundamental dynamics of the climate change  negotiations. For me, the best way of doing this is to turn to Scott Barrett’s essential analysis.

His account is pretty simple. To work, binding environmental agreements have to involve an incentive to participate. In the case of the Montreal Protocol, addressed at stopping the growth of the hole in the ozone layer and on which the Kyoto protocl was modelled, the incentive for North American and European leaders was political pressure from publics worried about skin cancer. For the developing world, it was the (relatively small) side-payment they got for phasing out CFCs and HFCs over time. In the case of climate change, it’s not at all so clear what the incentives are. As we have frequently said in the past, concern about climate change is widepread, but not a priority (outside of the climate community). Future generations will be the worst affected, and they don’t have a vote. Latterly, countries like China and maybe India have started to see some benefit to exporting clean energy technologies to a global market driven by an agreement, but they are not quite ready to sign up, and obviously the US is worried about ending up importing all that kit (looks like a two-way action in the WTO is looming).

A second issue is enforcement, which for Barrett is the most important factor. He noted that “the focus of the Kyoto negotiations was on the setting of targets and timetables. When the treaty was first negotiated, little attention was given either to compliance or participation”, and the same looks like it will be true of any successor. Again, the Montreal Protocol tied compliance to trade sanctions. Barrett argues that this same approach would not work for a climate agreement. the main contender for a mechanism, border trade (or carbon) adjustments are too open to political manipulation, accusations of protectionism in disguise and would rub up against the WTO.

Where does that leave the prospects for an agreement, now and in the future? As for the now, we seem to have lapsed into a dynamic that the eminence grise of game theory, Thomas Schelling, actually recommended as long ago as 1998:

Thomas Schelling’s proposal is characteristically singular in its approach. It explicitly eschews international enforcement. It would also abandon the targets and timetables approach, relying instead on the implementation of policies and measures—that is, on actions rather than outcomes. Schelling would invite countries to pledge to adopt policies and measures, and open these to international review. The policies and measures proposed might create a kind of yardstick by which countries would be judged—providing a small incentive, perhaps, for mitigation beyond the non-cooperative level. Without international enforcement, however, his proposal cannot effect substantial mitigation.

Barrett’s answer is different. With very weak incentives, he argues, the only solution is to reduce costs, and the way to do this is through technological development. As he argues, an agreement dominated by targets, like Kyoto, cannot do this on its own:

Like Montreal, Kyoto is meant to provide a “pull” incentive for R&D. In capping emissions, Kyoto raises the cost of polluting, and so creates a demand for carbon-saving technologies, just as Montreal created a demand for CFC substitutes. The difference between the two situations, as already shown, is that the cost of substituting for CFCs was low. The cost of climate change mitigation will be much higher, and this matters. When the costs of supplying a global public good are high, the incentive not to participate is high, and the burden on enforcement very great. If the treaty cannot support that burden, the result will be very weak incentives for innovation and diffusion of new technologies.

Instead, argues Barrett, we should be aiming for an agreement that commits countries to serious support to R&D for low carbon technoloogies and action in areas such as technological standards, making an agreement look less like the Montreal protocol and more like the MARPOL agreement on shipping pollution.

Many people in the climate world will have read Barrett’s book, so why are they at Durban? Maybe it is just the buzz, getting to watch Bono and Angelina doing their thing, and hitting the surf afterwards. Precisely because they are so stark and simple, the underlying dynamics of the UNFCCC aren’t nearly so sexy, but we forget them at our peril.