Tuesday, December 9, 2008

Dawn of the Energy Climate Era

While the negotiations going on this week in Poland often seem plodding and diffuse, when one considers the magnitude of exactly what is happening, they are an exciting moment in history.

After World War II, the victors created a set of institutions (United Nations, World Bank, International Monetary Fund) and treaties (United Nations Charter, Universal Declaration of Human Rights) that collectively defined the world order for the ensuing 60 years.

As Fareed Zakaria said (audio) in his talk earlier this year at The Commonwealth Club, those institutions are ill-equipped to deal with the challenge of climate change. And, as the carbon muscles of India and China illustrate, the industrialized West will not get to dictate terms this time around.

Next year, developed and developing countries will negotiate a new treaty on climate change that will impact every person, industry and organization in ways that we are just starting to comprehend. That treaty will rank up there with the pillars of the post-war era and its implementation will be accompanied by the creation of new international structures that don't even exist now. In 20 years they will be household names. Thomas Friedman is calling this new chapter the Energy-Climate Era.

The centerpiece agreement of this carbon-conscious era could be built on several architectures, says Rob Stavins, co-director of the Harvard Project on International Climate Agreements.

1) It could be centralized under one mega-treaty with a set of targets and timetables for each signatory country to reduce carbon in the atmosphere;
2) It could consist of harmonized national policies, which could include a portfolio of various treaties or a system of national taxes.

Whichever emerges, it is going to be a very busy year in 2009. While the Obama administration re-engages the international negotiations, there will be a flurry of activity in Congress on domestic legislation to create some kind of cap-and-trade system for carbon emissions. Lorrie Schmidt, a Congressional staffer , says, “Congress and the executive [branch] will go in parallel; neither will get too far ahead of the other.” With good reason. During the Kyoto talks in the 1990s, the Clinton administration negotiated a deal without sufficiently including Congress. The treaty was dead on arrival at the U.S. Senate.

This time around, Congress will be much more involved, as demonstrated by the bi-partisan staffers here representing chairs of key committees such as House Energy and Commerce (Waxman), Senate Environment and Public Works (Boxer), and Foreign Relations (Kerry).

Can the United States approve a cap-and-trade law before the international treaty negotiations next December in Copenhagen? That will be a stretch, to say the least, given the complexity of measuring, trading and verifying an entirely new market and political opposition in some states. One possibility is for the U.S. Congress to approve a set of principles next fall that empower the U.S. negotiating team to cut a deal that can get through the Senate.

However they do it, they need to get it right. A lot is at stake. As Rajendra Pachauri, chair of the Intergovernmental Panel on Climate Change, says. “This is our defining moment.”


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