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From Carbon Insolvency to Climate Dividends

BERLIN – Limiting global warming to 2°C above pre-industrial levels is absolutely crucial, says the G-8 and most of the world’s best climatologists. If this is to be more than lip service, the consequences will be radical.

For starters, until 2050, only a total of around 700 gigatons of carbon dioxide can be emitted into the atmosphere. At the current rate of emissions, this “budget” will be exhausted in 20 years; if emissions increase as expected, the world will become carbon “insolvent” even sooner. So reducing CO2 and other greenhouse gas emissions must begin as quickly as possible. Wasting any more time will cause costs to skyrocket and render the 2° limit obsolete.

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The rich North cannot continue as before, emerging industrial countries must leave the old industrial-based path to prosperity, and the rest of the world may not even embark upon it. Yet the negotiations on emissions limits with each of the 192 signatory countries in the run-up to the Copenhagen Summit in December 2009 have so far given no indication of so radical a change.

A global climate deal must be simpler, fairer, and more flexible than is today’s Kyoto Protocol. To achieve this, the Global Change Council of Germany (WGBU) suggests that a budget formula be adopted. The idea is that, in the future, all states will be allocated a national per-capita emissions budget that links three core elements of a fair global climate deal: the major industrial countries’ historical responsibility, individual countries’ current performance capacity, and global provision for the survival of mankind.

The task is immense. On a global level, quick and comprehensive de-carbonization of the world economy is necessary. All countries must reduce their use of fossil fuels and switch to renewable energy sources as soon and as much as possible. But, since the OECD-countries (led by the United States and Australia) will soon overrun their carbon budgets even after far-reaching emissions reductions, they must cooperate with developing countries that still have budget surpluses. Breaking the Gordian knot of climate negotiations requires offering technology and financial transfers in exchange for the ability to overrun a national budget.

A responsible global climate policy thus entails a fundamental change of international relations, and making the necessary institutional innovations in global governance requires courage. Until now, the wealth of nations has been based upon the combustion of coal, gas, and oil. But, if the 2°C target is taken seriously, the twenty-first century will see countries that are not so far down the path of carbonization (such as large parts of Africa), or that leave it in time (such as India and Pakistan), able to become wealthy by helping societies that must de-carbonize rapidly.

For the moment, all this is still utopian. In its current state, cap-and-trade schemes to reduce emissions are far from being fair and effective; a major improvement would include establishing a Central Climate Bank to register and supervise the transfer of emissions credits. This bank would also ensure that emissions trading did not run counter to the goal of remaining within the entire global budget, for example via the complete sale of unused emissions credits by individual developing countries at the beginning of the contract period.

In order to achieve this, the Central Climate Bank must have the power to do its job. That, in turn, implies that it is accountable and that it has democratic legitimacy – something fundamentally lacking in multilateral agencies such as the World Bank.

Additional changes to global governance will also be needed. These changes include the consolidation of face-to-face negotiations between old and new world powers (the US, the European Union, and China) and developing and emerging countries, including new regional powers like Mexico, Egypt, Turkey, and Indonesia.

In this framework, the old G-7/8 can no longer function as a hegemonic center, but rather as a kind of broker and preparatory body. Simultaneously, within a variable architecture of negotiation, there must be links to the numerous conference institutions of the United Nations, as well as to political-economic regional associations such as the EU, Mercosur, or the African Union.

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This flexible (and, alas, fragile) architecture of multi-level negotiation can function only as long as it is oriented towards clear moral bases for negotiation, has sufficient democratic legitimacy, and is supported in national and local arenas of action. Global leaders will find it significantly easier to steer towards big cooperation targets if they are supported by visions of the future within civil society.

A low-carbon society is not a crisis scenario, but rather the realistic vision of liberation from the path of expensive and risky over-development. In 1963, when the world narrowly escaped nuclear catastrophe, the physicist Max Born wrote: “World peace in a world that has grown smaller is no longer a Utopia, but rather a necessity, a condition for the survival of mankind.” Those words have never been truer.