Can Green Trade Tariffs Combat Climate Change?

BERKELEY – In recent months, China has taken center stage in the international debate over global warming. It has surpassed the United States as the world’s largest source of greenhouse gases, and it became developing nations’ diplomatic champion at the recent United Nations climate negotiations in Bali. Now China may become the target of a full-fledged trade war that could destroy – or perhaps rescue – the chances of bringing rich and poor nations together to fight global warming.

The focus on China intensified late last year, when new data from the International Energy Agency and other research organizations revealed that China had overtaken the US as the largest source of greenhouse gases – and, more ominously, that its emissions are growing at a rate that exceeds all wealthy nations’ capacity to decrease theirs. Even if China met its own targets for energy conservation, its emissions would increase by about 2.3 billion metric tons over the next five years – far larger than the 1.7 billion tons in cutbacks imposed by the Kyoto Protocol on the 37 developed “Annex 1” countries, including the US.

After the inconclusive end of the UN led Bali talks on the global environment, worry has grown among US and European industries – especially iron, steel, cement, glass, chemicals, and pulp and paper – that any new climate treaty would put them at a big disadvantage against their fast-growing competitors in China. In response, the US Congress is moving to create a system of trade sanctions that would levy heavy taxes on imports from other major greenhouse gas emitters. Ironically, the American plan is taking shape even before the US takes any action to reduce its own emissions, inviting charges of hypocrisy, violation of international law, and threatening a major trade war.

The tariff proposal – contained in the central piece of global warming legislation now before Congress – would impose emission controls on domestic industries starting in 2012. It would also levy punitive tariffs on greenhouse-gas-intensive products imported from countries that lack “comparable action” to that of the US, starting in 2020. Industrial lobbies and labor unions are pushing hard for these sanctions to take effect more quickly.