Block’s Indicator of Sustainable Growth

By Ray Block

 

The US House of Representatives in passing the American Clean Energy and Security Act (ACTS) added to it a tariff measure, which has created predictable outcries by China and India.

 

As it stands, were the US Senate to go along with it, the US would impose import tariffs on goods from countries that do not take sufficient steps to control carbon emissions.

 

President Barack Obama has already rejected the House’s would be retaliatory tariff measure in the form of a border adjustment tax to equalise carbon emissions between  domestic production and imports from countries that do not cap emissions.

 

Obama said in an Oval Office interview quoted by International Energy (June 29 in-en.com).“At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals.

 

“I think there may be other ways of doing it than with a tariff approach,” the US President added.

 

The new Indian environment minister, Jairam Ramesh is quoted  by the Financial Times June 30 as lambasting the US climate and energy bill “that would allow the imposition of import tariffs on goods from countries that do not take sufficient steps to control emissions.”

 

Jairam Ramesh said “India will not accept any emissions targets-period. This is not something that India is going to budge on, under any circumstances.”

 

Binding emissions targets for developing countries are not part of the UN climate negotiations. As the FT correspondent in New Delhi, Amy Kazmin put it, developing countries are being asked to draw up “national action plans.”

 

Mr Ramesh denounced as “pernicious” the US effort to impose “trade penalties” on countries that do not match its carbon reduction efforts.

 

“We reject the use of climate as a non-tariff barrier. And we categorically reject any attempt to introduce climate change as an issue at the World Trade Organisation.”

 

India, with near to one sixth of the world population, has one of the lowest per capita emissions, with 1.2 tonnes per head, about 4.6 per cent of total global emissions. However, the per capita emissions will rise as India over the next decade will increase coal generation of electricity from 450,000 tonnes to about one billion tonnes.

 

The Indian environment minister said “there is no turning away from our karma- without coal, we have no economic future.” India needed access to new technologies-including clean coal- to help reduce the environmental impact of its dependence on coal and to deal with other climate change issues.

 

China has joined the Indians in protest. Their Copenhagen position is that the developed countries should be cutting carbon emissions by 40 per cent below 1990 levels by 2020, as well as paying for clean technology to be available to developing countries.

 

The Washington Post editorial (July 5 2009) says the non-tariff protection measure is “redundant. The bill already provides ample compensation to ‘trade-vulnerable industries’ through at least 2026, devoting as much as a whopping 15 per cent of allowances- valuable pollution rights created under the bill’s cap and trade regime- to shelter firms from foreign competition.”

 

But in case someone in the US or in Europe gets too excited about the need for trade protection to compensate for the cap and trade, they should be reminded of the Smoot-Hawley tariff act of 1930, when the misguided American politicians increased nearly 900 import duties and a trade war ensued, at a time of the great depression.

 

None of the developed countries are going to offer 40 per cent emissions reduction by 2020. But at least UK Prime Minister Gordon Brown has called for US$100 billion a year by 2020 to be set aside in a climate fund for use by developing countries. He said that both developed and advanced developing countries should contribute, according to their ability and emissions.

 

Brown said: “The UN negotiations on the arrangements for financial assistance in the post-2012 agreement are not moving at the pace we need. We cannot allow this to drift- when every year of delay retards investment, locks us into a higher emissions pathway, worsens the impacts on the poorest and most vulnerable, and increases the costs of eventual reduction.”

 

 

 

 

 

 

Posted under Carbon Abatement Scheme, Climate Change, Renewable Energies