How climate agreements and trade measures go together
Casual observers of the recent United Nations Climate Change Conference in Dubai (COP28) can be forgiven for attributing high stakes to the event. "We are on the brink of a climate disaster, and this conference must mark a turning point," UN Chief Antonio Guterres warned during the proceedings. Then, when a final agreement was reached, Canadian Environment Minister Steven Guilbeault hailed its "breakthrough commitments on renewable energy, energy efficiency, and the transition away from fossil fuels."
But the truth is that neither the contents of the Dubai agreement, nor what was left out of it, will have much impact on climate change. We have seen this movie many times before, starting with the 1992 treaty that created the UN Framework Convention on Climate Change. Back then, all countries committed to preventing "dangerous" climate change, which would have required dramatic cuts in annual global greenhouse-gas (GHG) emissions. But emissions have continued to rise, albeit at a lower rate than they might have otherwise. Voluntary commitments have proven mostly hollow.
For all latest news, follow The Daily Star's Google News channel. 
To be clear, we are not suggesting that fevered warnings about climate risks and the need for action are misguided. As economists who have spent decades studying climate change, we recognise that some of the economics literature has too often been used by those opposing a meaningful response. Moreover, economists have let their admiration for a single policy solution, carbon taxes, get the better of them. This has given rise to misleading claims that relying on carbon prices alone is the most cost-effective way to reduce emissions.
In a world of urgent challenges, policymakers and the public have limited attention for climate change. Rather than focusing so much on international conferences that require unanimous support, entail no accountability, and ultimately have little effect on emissions, we should be directing our energies towards negotiating agreements that can achieve transformational progress in narrow, but crucial, economic sectors.
We already know that this more targeted approach works. Consider the Montreal Protocol (which protects the stratospheric ozone layer) or the International Convention for the Prevention of Pollution from Ships (MARPOL). Unlike the voluntary commitments made at each COP, these two treaties established binding obligations that can be enforced through international trade markets. The Montreal Protocol bars participating countries from trading in chlorofluorocarbons (ozone-depleting chemicals) with non-participating countries; and under MARPOL, access to ports is restricted to ships that meet certain technical standards.
These two treaties have worked because they create positive feedback effects: the more countries that agree to participate, the higher the pressure on others to join. As a result, the ozone layer will return to its pre-1980 level in a few decades, and over 99 percent of oil is now shipped according to MARPOL specifications, virtually eliminating a major source of marine pollution.
The same approach has already worked for climate agreements. The Kigali Amendment to the Montreal Protocol phases down hydrofluorocarbons, a powerful greenhouse gas. Like the examples above, the amendment incorporates a trade measure designed to create a positive feedback effect once a critical threshold of participation has been met. Owing to this structure, ratification is in every country's interest.
We should now do the same for other major emissions sources. Aluminium production, for example, is responsible for about two percent of global GHG emissions each year. Yet by replacing carbon anodes with inert anodes, the industry could dramatically reduce its emissions. An aluminium treaty might require that parties both switch to inert anodes and import aluminium only from other participating parties.
In contrast to unilateral threats of trade measures, this approach to international climate agreements is fundamentally cooperative and multilateral. It differs from unilaterally imposing domestic regulations on foreign production, as the European Union is doing, or from imposing carbon-based tariffs on certain imports without any corresponding domestic regulations, as some in the US have proposed. These methods may only invite retaliation.
To succeed, international climate agreements must be compatible with countries' economic strategies, not least those of lower-income countries, where most future emissions will occur. That is why the Montreal Protocol and Kigali Amendment include provisions whereby richer countries agree to help poorer countries pay the costs of compliance.
The international community took the wrong lesson from the Kyoto Protocol. It should be obvious by now that relying on voluntary commitments and aspirational targets does not work. The problem with Kyoto was that it did not get the incentives right.
By focusing climate agreements on individual sectors, linking obligations to trade access, and addressing the "common but differentiated" roles of rich and poor countries in international negotiations, the world will have a better chance to achieve the goals outlined in the Dubai agreement: a rapid and equitable transition to net-zero emissions.
Then, future climate-change COPs can focus on other consequential issues, rather than on crafting the right mix of hollow words that everyone can agree on.
Scott Barrett is Lenfest-Earth Institute Professor of natural resource economics at Columbia University's Climate School.
Noah Kaufman is senior research scholar at the Center on Global Energy Policy at Columbia's School of International and Public Affairs.
Joseph E Stiglitz is university professor at Columbia University and a Nobel laureate in economics.
Views expressed in this article are the author's own.
Follow The Daily Star Opinion on Facebook for the latest opinions, commentaries and analyses by experts and professionals. To contribute your article or letter to The Daily Star Opinion, see our guidelines for submission.
Comments