The Durban Climate Deal Inkblot Test

After going into sudden-death overtime, the UN climate conference in Durban, South Africa wrapped up this weekend with an agreement that only a climate diplomat could love. Constituting in effect an agreement to agree to some future agreement, the outcome is open to interpretation. Is this the failure that was widely predicted, the breakthrough indicated by some involved, or just a fig leaf to perpetuate a seemingly endless series of climate conferences in the only manner possible, by avoiding a breakdown that might have ended the entire effort for good? From what I have read in the last day, it's probably a bit of all three. The reactions from environmental groups have certainly been a mixed bag.

Briefly, it appears that the participants agreed to begin negotiating toward a new global climate "protocol, another legal instrument or a legal outcome"--the key compromise wording that saved the day--to be adopted by 2015 and take effect by 2020. In the meantime, the Kyoto Protocol, which was due to expire at the end of next year, will be extended through 2017, even though three of the largest emitting countries, Canada, Japan and Russia, will apparently not take on binding commitments on emissions for that period, nor will the US, which never ratified Kyoto. Still, this should be sufficient to keep international emissions trading and the Clean Development Mechanism for capitalizing on projects to reduce emissions in developing countries, going in the interim. While the delegates had the good grace not to call this result another roadmap--two years after the deadline of the Bali roadmap--that's pretty much what the "Durban Platform for Enhanced Action" amounts to.

Even in a global fiscal and economic environment that made any outcome more ambitious than this a virtual non-starter, the Durban Platform doesn't inspire confidence in the UN climate process. The most notable aspect of the agreement is that for the first time emitters from both the developed and developing world have signed up to a process under which they would all be asked to take on more or less legally binding commitments to reduce emissions. As the Economist notes, this "promises to break a divisive and anachronistic distinction", and one that makes little sense when developing countries now account for more than half of global greenhouse gas emissions. US climate envoy Todd Stern was quoted as saying that the US had been seeking this kind of "symmetry...since the beginning of the Obama administration." In fact, that has been the consistent goal of US climate policy since the Clinton administration. The problem is that this all remains contingent on the details of a future negotiation and subject to ratification by future governments, many of which will change between now and the COP-21 in late 2015.

Ever since the debacle in Copenhagen two years ago, the UN climate process has looked like a weak reed. Whatever the optimum size of a committee might be, it is not one made up of 194 countries, particularly when the top 20 accounted for nearly 80% of global CO2 emissions in 2009. Even if you don't share my conclusion, reinforced by the aftermath of the recession and financial crisis, that international agreements are unlikely to result in enough emissions reductions to materially alter the trajectory of global warming, it ought to be abundantly clear that if climate change is as big a problem as the folks meeting in Durban believed, then we had better have a Plan B in mind. For some that means a much stronger focus on innovation, while for others, including myself, it also suggests we should get a lot more serious about both adaptation to climate change and the exploration of geoengineering options. Or perhaps the horse will learn to sing, after all.

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Message to Durban: It's The Economy

What if they held a UN climate conference and no one came? That's certainly not the case at this year's COP-17 (Conference of the Parties) meeting now underway in Durban, South Africa, but with expectations for dramatic progress low, and a breakthrough on the scale needed to salvage the expiring Kyoto Protocol nearly unimaginable, it could be where the UN-led process is headed. If Durban fails to deliver the goods, it won't be because the participants were any less concerned about climate change than those at past sessions. Nor will it be because of the latest release of Climategate emails, as embarrassing as some of them should be for the scientists involved. The reason is much simpler, and it's the same one that helped Bill Clinton unseat George H.W. Bush in 1992: "It's the economy, stupid." The solution to climate change is unlikely to be found in Durban or any future COP site until the leaders in Brussels, Washington and other capitals come to grips with the massive economic challenges they face and create the framework for a return to robust growth.

That observation might seem paradoxical, given the linkage between economic growth and the growth of greenhouse gas (GHG) emissions. One climate change expert at Shell recently questioned whether it's even possible to reduce these emissions, because the expansion of low-emission energy sources is merely displacing fossil fuels into other markets where the appetite for them remains insatiable. We've also seen the rebound in emissions that occurred once the US economy began to recover from the worst effects of the financial crisis and recession that began in 2008, and a new report from the International Energy Agency projects a similar result globally. Yet it's also the case that prosperity and concern for the environment go hand in hand, along with the capacity to afford the costs and penalties that a massive global reduction in GHGs would entail. It's no coincidence that the UN climate process and parallel US efforts lost most of their previous momentum during the Great Recession.

Although the "road map" that came out of 2007's Bali climate conference was ambitious, its timetable for developing a new set of binding emission-reduction commitments to dovetail with the end of the 2008-12 "first measurement period" of Kyoto looked achievable, allowing for some slippage. Just two years later, the delegates to Copenhagen were lucky to come away with a last-minute set of voluntary, non-binding commitments that, even if they were all implemented, would barely shift the trajectory of rising emissions. Nor did last year's meeting in Cancun restore the Bali road map.

At this point, even the less ambitious proposals on the agenda in Durban ultimately depend on developed countries that are grappling with high unemployment, crippling deficits and debt, and political turmoil underwriting large investments in the developing world. The present structure of the European Union--the primary supporter of action on climate change--is itself in jeopardy, and European economies are facing an oil price shock arguably as large as that of 2008. It's questionable that the EU can even pay for its own future emissions reductions, let alone subsidizing reductions and climate adaptation in the developing world. Meanwhile, support for Kyoto among other large emitting countries is flagging, and the US appears little closer to taking on binding emissions commitments than it was in 1997.

I don't dismiss the possibility that the Durban talks may accomplish more than just punting the ball to next year's session in Qatar. However, if they don't, then the folks that are footing the bills for this seemingly endless succession of sprawling confabs--wonderful for local chambers of commerce and tourism, but practically meaningless for tackling global emissions--should consider calling a hiatus pending the resolution of the global economic problems that will undermine any agreement they could reach in the interim. There might even be a scientific justification for that, in the form of a new, peer-reviewed paper in Science suggesting that the global climate's sensitivity to increasing concentrations of CO2 might not be as strong as previously thought. If Schmittner, et al, are correct, then we might have a bit more time before extreme climate change becomes imminent. Let's hope so, because it looks a lot more fruitful to reboot this whole effort once the global economy is back on an even keel.

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The Post-Kyoto World

Saturday's conclusion of the Cancun climate talks yielded modest agreements that allowed the meeting to be described in positive terms by its hosts and organizers, but at least on the major question of a globally-binding treaty to extend or replace the expiring Kyoto Protocol, it merely kicked the can down the road to the late-2011 session in Durban, South Africa. As low as the expectations going into Cancun were, keeping the UN climate process on life support looks like a good result, compared to last year's fiasco in Copenhagen. However, in light of the objections raised by Japan, Russia, Canada and others, it's difficult to see how the Durban meeting could succeed where Cancun and Copenhagen failed. It looks increasingly likely that the replacement for Kyoto might appear face-savingly similar, but will lack that document's cohesiveness and global authority.

As I read the portion of the "Cancun Agreements" dealing with the extension of the Kyoto Protocol beyond its previously-set 2008-2012 term, the delegates mainly agreed to keep talking and to try to come up with a framework in time to avoid a "gap between the first and second commitment periods." Considering that last year's session in Copenhagen was widely viewed before its start as the last, best chance to accomplish that goal based on the timeline set in Bali two years prior, the end of 2011 looks pretty late in the game to deliver on that. Moreover, while Cancun was able to get by on low expectations, Durban will be unable to repeat that trick and avoid the kind of set-up that helped doom the Copenhagen talks.

The chasm that remains to be bridged doesn't seem to have changed much: the developing countries still insist on binding emissions reduction targets from the developed countries, to which the UN process attributes the majority of emissions under the "principle of historical responsibility, their emissions debt and addressing the needs of developing countries", but won't commit to binding targets themselves. (I've discussed this notion of "emissions debt" previously.) But while the US has signed up for voluntary emissions reductions under the Copenhagen Accord, it won't agree to binding cuts unless the world's largest emitter, China, also does. And all China appears willing to agree to, based on its Copenhagen commitments, is the sort of productivity-based reductions that the rest of the developed world rejected when the US advanced this idea for managing our emissions in the first term of the Bush administration. Even if China succeeds in cutting its emissions per GDP by 40-45% while its economy continues on its present growth trend, its overall emissions would still increase in absolute terms. Japan and some other Kyoto signatories are understandably reluctant to sign up for deeper cuts themselves, unless the world's two biggest emitters commit to sharing their pain.

And this is where the timing of any substantive Kyoto extension hits the wall of US politics. If the administration wasn't able to pass cap and trade legislation in the last Congressional session, when its party had an effective majority of 60 seats in the US Senate in 2009 and 59 in 2010, the prospect of ratifying a climate treaty with a majority of just 53 next year--including one who campaigned vocally against cap and trade--is nearly non-existent. The administration is struggling just to get the new strategic arms treaty with Russia ratified in the Lame Duck session--a treaty with solid bi-partisan endorsements from the foreign policy leadership of past administrations. The likely reception for a new climate treaty would be much less favorable than that until at least 2013 and probably beyond, in light of the ratio of seats up for reelection in 2012.

Unless I'm missing something major, without the US and China on board for binding cuts Japan and others won't agree to deeper reductions in the next round of Kyoto. That doesn't mean that the Durban Climate Conference won't cobble together an eleventh-hour agreement that looks like an extension of Kyoto, in order to avoid an irreparable rupture between the developed and developing world parties to the talks. The subtext for that is already in place in the Cancun outcome. However, it seems highly unlikely that such a document would actually do what Kyoto was intended to do. As a result, the UN process seems to be consigned to focusing on the secondary areas that progressed in Cancun, relating to funding for adaptation and technology transfer, and emissions reductions from sectors like land-use changes and forestry. With the economies of the developed world looking as weak as they do, and with domestic expenditure cuts in the EU having generated noisy and sometimes violent protests, coming up with the funding for those efforts looks more than challenging enough for now.

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What Now for Cap & Trade?

In the course of a single month, from the conclusion of the Copenhagen climate conference to yesterday's special election in Massachusetts, the anticipated global response to climate change has shifted dramatically. What had once seemed a likely scenario of coordinated, mandatory cuts in global greenhouse gas emissions suddenly looks unattainable, at least any time soon, and the whole approach to addressing climate change is in urgent need of a rethink. While much of the attention in last night's election was focused on the prospect of a 41st Senate vote to block pending health care legislation, the same dynamic almost certainly applies to cap & trade, at least along the lines of the Waxman-Markey bill passed last June by the House of Representatives.

I'll leave it to others to comment on the extent of the political upheaval that the voters of Massachusetts have created by sending a Republican to fill the US Senate seat held for decades by the late Senator Kennedy, and by his brother before him. Whatever this means for the administration's health care agenda, you only need to view a short video clip from Senator-elect Brown's campaign to realize that President Obama's plans for cap & trade, on which only one chamber had acted while the Democrats held a 60-vote super-majority in the Senate, look like further collateral damage from last night's result. While supporting more energy from renewables and nuclear power, Mr. Brown opposes cap & trade, or at least the version now on the table.

I'm probably in a minority of those concerned about climate change who welcome the demise of the Waxman-Markey approach. As I've noted before, it made little sense to adopt a methodology designed to create a level playing field for energy technologies based on their emissions, if it was established on such an intentionally-uneven foundation of excessive free allowances handed out to favored sectors and constituencies. And on top of its basic flaws, Waxman-Markey exemplified the recent Congressional tendency to load up any big bill with mountains of pork and reams of tangential provisions.

Does this mean cap & trade itself is now dead? I hope not, because I believe its underlying concept remains the most efficient way to recognize the cost of the environmental externalities associated with our use of fossil fuels--which cannot be replaced overnight--and to shift our energy habits toward greater efficiency and a growing reliance on more sustainable energy sources. But the politics of that now look challenging, particularly in an election year that is shaping up so unpredictably. Democrats still hold commanding majorities in the Senate and House, but no bill without bi-partisan support could get past a cloture vote in the Senate. That gives greater leverage to the negotiations of Senators Lindsey Graham (R-SC) and John Kerry (D-MA) for a bi-partisan climate bill incorporating much broader support for domestic energy production--something that might be marketed as a genuine jobs bill without the cynicism of "green jobs" hype.

It also shifts attention to the EPA's Endangerment Finding on CO2 and that agency's proposals for regulating CO2 emissions. Last week the Washington Post was shocked by the apparent involvement of lobbyists in drafting proposed legislation to block any action by the EPA. Did their editors ever bother to scrutinize Waxman-Markey, which read like a lobbyist bonanza? Either way, extending the regulations of the Clean Air Act to CO2 would be a very expensive bad idea. CO2 is only a pollutant in the traditional sense by legal courtesy, and regulating the primary result of all carbon combustion in the same way we regulate much more easily managed fuel impurities and combustion byproducts like SOx and NOx--for which the term "Best Available Control Technology" actually has some meaning--looks orders of magnitude more expensive than a system that channels emissions reductions to the lowest-cost sources.

With a 52-47 election victory for Scott Brown, voters in Massachusetts have completed the work begun in Copenhagen of upending the best-laid plans for dealing with climate change. Instead of a binding global treaty to replace the expiring Kyoto Protocol, we have the voluntary goal-tallying of the Copenhagen Climate Accord, and instead of legislative momentum towards mandatory cap & trade in the US, we have renewed uncertainty and the necessity of a scaled-back bi-partisan approach--if any at all this year--that must focus more on what we should add than on what should be taken away--with the threat of EPA regulations and endless legal wrangling over them lurking in the background. I'll be very interested to see what emerges from this.

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Reconciling Emission Baselines

As the nations represented at Copenhagen debate proposals for reducing their absolute emissions or carbon intensity, I was reminded that we shouldn't just focus on the percentages being offered, but also on the reference year emissions on which these proposals are based, since these aren't necessarily comparable. That's particularly true for the US and EU, which have consistently referred to 2005 and 1990 base years, respectively. This distinction is crucial in understanding how much of what each party might commit to has already been achieved and how much remains to be accomplished.

Start with the EU, which has proposed a reduction of 20% versus its 1990 emissions levels. Based on a recently-issued report by the European Environment Agency, the 27 countries constituting the European Union today have already reduced their emissions by 10.7% as of last year, compared to 1990. According to this report their collective emissions in 2005 were 9.3% below 1990, so that 20% figure for 2020 really translates to roughly 12% below 2005--and only a bit more than 10% below where they are now--which is substantially less than the 17% reduction that the US has put on the table. However, the US proposal should also be put into context, because of the divergent emissions trends of the two regions since 1990, which was the base year for the Kyoto Protocol that has guided EU policy in the intervening years, but which the US never ratified.

Between 1990 and 2005 total US greenhouse gas emissions increased by 16.5%. After counting net emissions including all sources and sinks--mostly natural processes such as forestry that absorb these gases--the increase was about 14%. So either way, that 17% cut that US negotiators were authorized to take to Copenhagen is really 1990 less about 3-5%. At the same time, 17% vs. 2005 is no slam dunk, even if it appears that the recession helped ax 2% of our emissions as of last year, and this year could be down a bit more. A recovering economy will use more energy and emit more GHGs, even if only from the work commutes of millions of re-employed people.

While I don't expect nearly as much controversy over the choice of baseline years as surrounded the Kyoto negotiations, 1990 and 2005 represent very different worlds, with the former largely pre-dating the collapse of the high-emission Soviet bloc economies, giving rise to all those Russian "hot air" allowances and a major portion of Germany's cuts post-reunification, along with a big shift in UK power generation away from coal and toward natural gas. Although the EU has certainly instituted comprehensive policies to reduce its emissions, including a cap on industrial emissions and a union-wide Emissions Trading System, a large chunk of the reductions for the current membership were achieved before any of these policies went into effect, through the rationalization of the inefficient economies of formerly-communist Central and Eastern Europe. 1990 looks even less relevant to the current economies of large developing countries like Brazil, China and India.

On the other hand, while 2005 has much to recommend it as probably the most recent year for which fully-audited emissions data are available globally, it also represents nearly the high-water mark of a world of easy money and massively-globalized supply chains that may never return in quite the same form. Choosing it might also appear to let the US off the hook for a decade of relative inactivity on climate change, though that ignores the fact that our actual emissions have grown by much less than the 33% business-as-usual increase that was expected in the late 1990s, presumably because of the discipline imposed by the steadily-rising energy prices that accompanied our bubble economy of recent years.

Whatever emerges as the baseline for an agreement or framework coming out of Copenhagen, it ought to be a single year that provides both ease of comparison and a reasonable congruence with the realistic starting point for any actions that countries will commit to undertaking in the years ahead.

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"Carbon Debt"

A new term has entered our lexicon without much fanfare, but that is about to change. When the Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC) meets next month in Copenhagen, we will hear a lot more about "carbon debt" and the obligation that developing countries believe the developed world owes them for having used the atmosphere as a sink for CO2 and other gases since the Industrial Revolution. From my perspective, this approach looks counterproductive and risks scuttling the principal process for coordinating the actions of independent nations in addressing the most global of problems. The issues of international and inter-generational environmental equity raised by the accumulation of greenhouse gases (GHGs) are serious and complex, but framing them in this way will make it much harder to find acceptable middle ground, unless the delegations show restraint and common sense about how far to reach back into history to assess blame for a warming earth.

It was always going to be tricky reconciling the competing interests of the developed and developing worlds sufficiently to craft a new global climate agreement to replace the expiring Kyoto Protocol. In addition to large differences in per-capita wealth and income, many of the main players fall into one of two key categories: countries with large historical and current emissions of GHGs that are now moderating or even decreasing, and countries with relatively much smaller historical emissions but large and/or rapidly-growing current emissions. The nature of the cumulative climate impact of these GHGs makes that distinction a crucial one and the source of much rancorous debate. I've been thinking about the resulting issues of equity for some time, but I am extremely concerned by the turn that I see the negotiating process that started in Bali two years ago having taken.

The UNFCC doesn't make it easy to follow what's going on. Of all things it took a visit to a climate change skeptic's website to track down a reasonably current version of the negotiating draft that is being prepared for consideration in Copenhagen. That enabled me to locate the document on the UN site once I had its file name. Having scanned through it for references to carbon debt, I can see why they might have wanted to make it hard to find, since the principles embodied there are bound to strike most Americans as at least counter-intuitive. For starters, the notion of carbon debt is introduced early in the draft as a "guiding principle of the Convention", and described as, "historical responsibilities in greenhouse gas emissions and the related historical ecological debt generated by the cumulative greenhouse gas emissions since 1750 and the most recent scientific information." That word "debt" crops up many times in the document, with repeated references to the "emissions debt", "historical climate debt" and "adaptation debt" that developed countries "owe" to developing ones.

Lest you think that this is merely intended as an abstraction governing philosophical discussions of equity, the document makes it abundantly clear that this is about money and who shall pay whom. One of several examples in the text puts this in admirably concrete terms:

"Developed country Parties shall provide financial resources and transfer technology to developing country Parties to make full and effective repayment of climate debt, including adaptation debt, taking responsibility for their historical cumulative emissions and current high per capita emissions."

Unfortunately, as I noted in a lengthy posting on this topic a year-and-a-half ago, matters aren't nearly as clear-cut as this wording suggests. While the consequences of many decades' worth of emissions of CO2 and other long-lived GHGs certainly appear to be putting an unfair burden on developing countries, it would be equally unfair to the citizens of developed countries to tax them for emissions that occurred before the scientific consensus on global warming emerged in the last couple of decades. Arrhenius may have worked out that CO2 could warm the planet a century ago, but the relative importance of that effect amidst the many complex factors influencing the climate was anything but obvious then, and it is still not fully understood. It makes no more sense to burden modern Europeans and Americans for the emissions of our parents, grandparents, and great-to-the-nth grandparents going back 10 generations than it does to tax modern Chinese, Indians and Brazilians for the entire edifice of Western technology that has enabled their present and future development.

We are all in this together, and the only emissions we have control over are those that occur from here on out. Having said that, it's clear that without some recognition that developing countries didn't create this problem--no matter how much they might be contributing to it now--there will be no deal in Copenhagen. The only viable middle ground I see, if not from the standpoint of the inter-governmental delegations, then for the citizenry they represent, would be to recognize the disparities in historical emissions but impose an effective statute of limitations on them. No emissions prior to the establishment of the Framework Convention on Climate Change at the Second Earth Summit at Rio de Janeiro in 1992 should be counted for purposes of allocating emission targets or financial assistance. While such a compromise would greatly diminish the imputed carbon debt of the developed world and allocate a bigger portion of it to large developing countries like China and Indonesia--particularly when changes in forestry and land-use are factored in--it would hardly let the rich world off the hook. The countries of the OECD have collectively emitted on the order of 200 billion tons of CO2-equivalent GHGs since then--roughly half the world's total emissions in that interval.

It would be tragic if the Copenhagen climate conference could only arrive at a new global agreement on emissions by relying on a principle that American voters would ultimately find as unacceptable as the allocation of national emission-reduction targets in the Kyoto Protocol. It is challenging enough for our elected representatives to attempt to match federal tax revenues to our existing obligations, foreign and domestic. I can't imagine any President or Congress wanting to explain to the electorate--particularly with so many of them already exercised over growing deficits and the current tax burden--why they must pay higher taxes to send carbon-debt payments to some of the same countries that are competing for our jobs and industries, on the basis that previous generations of Americans put more CO2 into the atmosphere than past generations of Chinese, Indians and Brazilians. That sounds like political suicide to me.

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The Road to Copenhagen

The road to Copenhagen goes through Poland. If you know what that geographically-dubious statement refers to, then you must follow the news relating to climate change pretty closely. This week and next, the UN Framework Convention on Climate Change (UNFCCC) is holding its fourteenth Conference of the Parties (COP-14) in Poznan, Poland. Along with conducting the ongoing business of the UNFCCC, the main goal of the meeting is to table a first draft of the replacement for the Kyoto Protocol, which expires in 2012. A new agreement is meant to be finalized in a year's time, at COP-15 in Copenhagen, Denmark. While this is all consistent with the "road map" agreed at last year's conference in Bali, the current conference is taking place in a remarkably different context, with financial uncertainties that were never contemplated in Bali.

Two changes, in particular, will affect the effort to develop a new set of international commitments on the emissions contributing to climate change, and for addressing the consequences of further warming. The election of a US President with a very different approach to climate change alters the negotiating dynamic, even though he has not yet taken office. The official US delegation is accompanied by a Congressional delegation headed by Senator John Kerry (D-MA.) Although Sen. Kerry does not officially represent the President-Elect, he certainly brings a point of view much closer to that of the incoming US administration than to the outgoing one, reflecting a shift back toward greater harmony with the positions of the EU members, Japan and other countries that adopted the Kyoto targets. Considering the views on climate change of Senator McCain, however, this change since Bali is not nearly as surprising as the one that ultimately may overwhelm it: the evolution of a US housing slump and already-nascent recession into a global financial and economic crisis.

We don't know what lies ahead, but we can make some reasonable guesses. Unemployment will continue to increase in the US and EU, and even if the recession in Asia proves less severe than the one in the late 1990s, as a recent article in the Economist suggested, China and India will face the prospect of millions of people falling back into poverty, after having risen close to middle class status. That will make it harder for their governments to devote resources to reducing CO2 or to be seen to sacrifice future economic growth to slow emissions. Nor will it be easy for Western governments to agree to terms on delayed targets and generous technology transfers benefiting countries that many of their citizens worry are competing for their jobs.

It was always going to be tricky for the delegates following the Bali road map to design an agreement that would reconcile the divergent emissions histories and economic growth rates of the developed and developing countries in a way that left all parties feeling fairly-treated, while still making meaningful progress on stabilizing and ultimately reducing global greenhouse gas emissions. Attempting this against the backdrop of a major global recession complicates matters greatly, going beyond the question of whether economic priorities will trump environmental challenges for the next few years. Depending on the ultimate duration of the current crisis and the manner in which it is resolved, the future mechanisms of our international system might look quite different, and the scope for a global response to climate change could alter significantly. Simply put, the delegates to Poznan cannot assume that the world in which a Copenhagen Protocol would be implemented will resemble the one in which the process for negotiating its terms was outlined a year ago.

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Slowing Growth and Lower Emissions

Even before the global economy began to stumble, 2009 was set to be a milestone year for climate change policy. A new US administration will take office with a decidedly more pro-active attitude toward addressing climate change, and international negotiations are expected to culminate in a new agreement to replace the Kyoto Protocol, which expires in 2012. But while efforts to address climate change have always had to contend with their possible impact on the economy, we are receiving a vivid reminder that this relationship also works in reverse: a slowing economy will emit fewer greenhouse gases than if growth continued at previous rates, and the financial burden of emergency fiscal stimulus and capital injections will hamper governments' ability to dedicate large sums to addressing climate change.

This morning I was looking at the most recent oil market estimates from the International Energy Agency in Paris. In January the IEA had expected global oil demand for 2008 to average 1.7 million barrels per day (MBD) higher than in 2007, or +2%, exceeding the 1.5% growth in 2007 that had helped to push oil prices from the $50s into the $90s per barrel. As of October 10, however, their estimate for 2008 has fallen to 86.5 MBD, a scant 0.5% increase over last year. Nor do they expect growth to pick up much next year. Their current 2009 forecast is for an average of 87.2 MBD, down from 87.7 MBD in July, and growth will almost certainly fall further--perhaps below zero. We see the tangible echoes of these expectations in falling oil prices and in the 1.5 MBD production cut announced by OPEC on Friday.

Each million barrels per day of global oil demand equates to about 160 million metric tons of greenhouse gas emissions per year. The consequences of high oil prices and slowing economic growth have thus reduced 2008 emissions by around 200 million tons of CO2, and the OPEC cuts should take a comparable slice out of next year's emissions, with the total slashed by even more, when consumption of other fossil fuels is taken into account. Of course, this represents only about 0.5% of global GHG emissions, and it falls far short of the kind of reductions that climate experts have called for.

What can we conclude from this simple observation? First, it shouldn't surprise anyone that the relationship between economic growth and energy consumption--and hence emissions--should work in both directions. But simply cutting growth can't be a desirable way to tackle climate change, not least because the reduction in growth necessary to achieve the desired emissions levels would be catastrophic for both developed and developing countries. Nor are countries in deep recession likely to spend as much on environmental protection, notwithstanding all the recent euphoria about "green jobs." And if the pessimists are right, merely slowing our emissions growth won't even buy us time for improving our responses, because we've already passed the sustainable level of atmospheric CO2 concentration. If that's true, then no realistically-achievable climate treaty is going to solve the problem before it gets much worse.

Because I still view climate change in terms of risks and trade-offs, however, I see one bright spot in the current economic difficulties. With their governments and trans-national institutions such as the G-8, IMF and World Bank scrambling to forestall a global financial and economic collapse, the negotiators following the Bali Roadmap towards a new climate agreement to be announced in Copenhagen next December must focus on approaches that deliver the largest emissions reductions at the least cost, with the least damage to an already fragile economy. That seems likely to produce the most sustainable result, in any case, and thus the response that is best suited to endure the financial instability that the further progress of climate change, itself, could still deliver, on top of the boom-bust cycles of markets.

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