Lethal Heating: 07/29/17

29/07/2017

How Trade Policies Can Support Global Efforts To Curb Climate Change

The Conversation - Adrian Henry Macey

Eliminating trade barriers on green technologies could help countries to shift away from fossil fuels. From www.shutterstock.com, CC BY-ND

Climate change will have a big impact on the global economy as nations seek to adapt to a warmer world and adopt policies to keep global warming below two degrees. In the wake of the US withdrawal from the Paris Agreement, it is important that policies around trade and investment support national efforts to adapt to global warming while trying to curb it. Four issues stand out:

1. Border tax adjustments
Border tax adjustments, or BTAs, refer to import taxes on goods from countries where companies do not have to pay for their emissions.
This is highly controversial and problematic for practical reasons and difficult to reconcile with World Trade Organisation (WTO) compliance requirements. The arguments in favour rest on punishing free riders and protecting the competitiveness of national firms subject to climate change costs in their home country. Such taxes are also held up as a way of avoiding “carbon leakage” caused by production shifting to countries with more lax climate change policies.
The latter two arguments are similar to those that have been applied in the past to environmental protection regulations. The problem with them is that there is very poor empirical evidence for either competitiveness risk or for carbon leakage. They also rest on the assumption that combating climate change is always a net cost. This is being increasingly challenged.
The argument against BTAs centres on the potential of unilateral measures being used to coerce developing countries. The sensitivity of such measures is shown by the fact that, until very late in the negotiations of the Paris Agreement, developing countries insisted on including the following clause.
“Developed country parties shall not resort to any form of unilateral measures against goods and services from developing country parties on any grounds related to climate change.”

2. Trade liberalisation in climate-friendly goods and services
Eliminating trade barriers on solar panels and other green technologies could help countries to shift away from fossil fuels. This is fully within the scope of the WTO and indeed the mandate of the current Doha trade round. There are several work streams within the WTO covering this area, though progress is slow.

3.International carbon trading and offsets
The Kyoto Protocol includes several mechanisms (Clean Development Mechanism, Joint Implementation and Emissions Trading) that can be used by countries that have tabled a 2020 target (European countries and Australia).
International market mechanisms beyond 2020 have not yet been created under the Paris Agreement but its Article 6 foresees them. Such mechanisms are being developed bottom-up by groups of countries, which can make much faster progress than is possible within the United Nations Framework Convention on Climate Change (UNFCCC).
However, any new mechanisms are likely to be linked in some way to the UNFCCC. There is no coverage of carbon trading under the WTO at present and there appears to be no appetite for bringing it within WTO disciplines.

4. Compatibility of climate measures and trade rules
One fear is that WTO rules will have a chilling effect on climate change measures such as subsidies, technical regulations or bans on certain products. However, Article 3.5 of the UNFCCC (which applies to the Paris Agreement as it does to the earlier Kyoto Protocol) is clear.
It uses WTO language to state that “measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade”. The UNFCCC, like the WTO, acknowledges the legitimate purpose of climate measures, including that they may involve restrictions on trade.
There is ample and growing WTO jurisprudence on measures taken for environmental purposes which confirms their legitimacy in WTO law. The jurisprudence is not static; it evolves with international thinking as expressed in treaties and less formal agreements.
Helpfully the WTO Treaty (1994) included an objective relating to protection and preservation of the environment that went further than the earlier General Agreement on Tariffs and Trade (GATT). This provision has already been used in interpretation by the highest WTO jurisdiction, the Appellate Body.

Conclusions
I expect that some carbon markets will develop amongst carbon clubs. Trading rules will be determined by those countries involved and will rest on the environmental integrity of the units traded.
Border tax adjustments (BTAs) are problematic. Some commentators have predicted a climate change trade war, arguing that countries are vulnerable if their climate measures are seen as inadequate.
This is now an improbable scenario. Any attempt to impose BTAs against countries which have signed up to the Paris Agreement would face enormous practical difficulties. It would also risk undoing the international consensus.
Transparency, peer review and naming and shaming of countries with inadequate pledges (Nationally Determined Contribution or NDCs), or countries that fail to implement an adequate one, may prove more effective than any of these unilateral measures. Evidence from the climate change negotiations is that countries do care about their reputation.
A further resource to encourage countries to act would be carbon clubs, where countries wanting to accelerate their transition to a low-carbon economy would link their climate measures through a common carbon price via their emissions trading schemes.
The threat of BTAs - clearly foreseen by major American companies after the Trump Administration’s decision to leave the Paris Agreement - may be a useful political lever to gain cooperation. But there are other ways of achieving similar ends.
One example is to require all goods, domestic or imported, to meet sustainability standards. This is potentially allowable under the WTO Technical Barriers to Trade agreement (TBT) as a type of processing and production method. But even if not, the existence of the Paris Agreement – a universal agreement with clear objectives and requirements on all parties to act on climate change – would be a useful reference in any dispute settlement proceedings.

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How The Climate Crisis Could Become A Food Crisis Overnight

Washington Post - Elizabeth Winkler

(Chris Ratcliffe/Bloomberg News)

In the summer of 2010, Russia faced a severe drought, a heat wave and a series of catastrophic wildfires, destroying a third of the country's wheat harvest. Half a year later, the Arab Spring began.
The two are connected: The Middle East and North Africa, among the most food-insecure regions in the world, rely heavily on grain imports from the Black Sea, especially Russia, one of the world's largest wheat exporters. But the Russian government banned grain exports amid the dismal harvest, looking to protect its own food supply.
Sapped of a major supplier, countries across the two regions saw bread prices skyrocket. And while many other factors fueled the political unrest characterized as the Arab Spring, the high cost of food fueled the broad popular discontent that prompted a string of attempts to overthrow illiberal regimes — some successful, some violently suppressed.
The episode illustrated the fragile nature of the network the world uses to feed its approximately 7 billion people. Now a new report by Chatham House, a London-based think tank, details how climate change further threatens that network, as the type of extreme weather event that knocked out the Russian harvest becomes all the more common.
Global food security depends on trade in just four crops: maize, wheat, rice and soybeans. The first three account for 60 percent of the world's food energy intake. The fourth, soybeans, is the world's largest source of animal protein feed, making up 65 percent of global protein feed supply. Their production is concentrated in a handful of exporting countries, including the United States, Brazil and the Black Sea region, from which they are flowing at ever-greater volumes. Between 2000 and 2015, global food trade grew by 127 percent to 2.2 billion metric tons — and growth rates are projected to keep increasing.
But the movement of these crops hinges on just 14 "choke-point" junctures on transport routes through which exceptional volumes of trade pass.
Such choke points have been perilously overlooked, said Rob Bailey, research director for energy, environment and resources at Chatham House and co-author of the report.

The fate of wheat prices can have an effect on geopolitical tensions. Photo: Craig Abraham

Trouble ahead
Imagine the following frightening-yet-plausible scenario: What if the next time Russia's wheat harvest is devastated by drought, other major food producers are also facing struggles with severe weather and wrecked harvests? In the United States, that could mean a freak flood season that wipes out inland waterways or overwhelms coastal ports.
Brazil, the world's other heavy-hitter, accounts for 17 percent of global wheat, maize, rice and soybean exports. But its road network is crumbling. Extreme rainfall could knock out a major transport route. If this happened together with a U.S. flood and a Russian drought, there would be global food shortages, riots and political instability, starvation in areas that are heavily dependent on imports, and recessions everywhere else.
The Panama Canal, linking Western and Asian markets, is one of the most critical maritime choke points: Thirty-six percent of U.S. maize exports and 49 percent of U.S. soybean exports pass through it each year.
Another is the Turkish Straits, which connect Black Sea producers to global markets — including, critically, the Middle East. Seventy-seven percent of wheat exports from Russia, Ukraine, and Kazakhstan pass through these waters.
Inland waterways, roads, and railways are critical too. Sixty percent of U.S. agricultural products make their way from farms to ports via the 12,000-mile Inland Marine Transportation System (IMTS), which comprises a network of rivers and tributaries. Similarly, 60 percent of Russian and Ukrainian wheat exports rely on the Black Sea rail network — a choke point that, along with its ports, the report calls the most volatile of the 14 choke points thanks to conflict with Crimea, diplomatic tensions over Syria and Yemen, and unstable trade relations with Europe.
Disruption at any of these choke points would mean trouble, but if several jammed at once, it could be disastrous.
Climate change makes such a scenario more likely. While it's difficult to connect any specific weather event to climate change, models suggest the shifting climate is making such events more common.
For the United States, the could mean a lot more episodes like the one in August 2012, when Hurricane Isaac closed ports and suspended barge traffic on parts of the Mississippi River.

A frightening cycle
Political instability can also cause choke point disruptions. In 2015 and 2016, tensions between Russia and Turkey fueled power plays in the Turkish Straits, and an attempted internal coup led to a temporary shutdown of the Bosporus.
And disruption of key arteries due to political instability can lead to a self-reinforcing cycle, as food shortages breed further instability. In the Middle East and North Africa, statistical analyses show that food security is a particularly high indicator of political stability. Over a third of grain imports for the region pass through a maritime choke point for which there is no alternate route. But the problem is widespread. The 2007-2008 global food crisis was accompanied by protests in 61 countries and riots in 23.
To make matters worse, chronic underinvestment in infrastructure has weakened critical networks. Extreme weather and increased trade flows put them at risk of failing. The McKinsey Global Institute places the world's infrastructure investment deficit — the gap between funding available and funding needed — at $250 billion a year through 2040. (The United States has one of the largest deficits among G-20 countries, according to Chatham House.) But even where there is infrastructure investment, governments often fail to factor in climate risks: A 2016 survey by the Organization for Economic Cooperation and Development found that, with very few exceptions, they are largely overlooked even in rich countries.
"It is a glide path to a perfect storm," said Bailey.
In fact, 13 of the 14 choke points have seen some form of temporary disruption or closure in the last 15 years, according to the report. (The only one that hasn't, the Strait of Gibraltar, may now come under pressure in Brexit negotiations.) This should prompt policymakers to prepare for worst-case scenarios. But as Bailey observed, "We're not very good at conceptualizing risks which we haven't yet experienced." The mentality is very different when it comes to the oil market, where past oil embargoes make the idea of a supply shock more tangible. "People obsess about choke points there," he said.
One solution is for countries to invest in individual emergency stores. But this risks creating an international "Hunger Games" — encouraging hoarding and scrambling behaviors in the event of a crisis and a death spiral of declining market confidence.
"What is needed is a coordinated international approach like you have in energy markets," Bailey said. In 1974, the International Energy Agency established emergency response mechanisms to minimize the risk of oil and gas disruptions. Governments and international responders, like the Food and Agriculture Organization of the United Nations and the U.N. World Food Program, should model this with rules on coordination during acute food disruptions. This would include emergency food supply sharing arrangements and smarter strategic storage — where choke points can't cut off supply.
But they also needed to take preventive measures, like diversifying production so countries aren't dependent on a handful of mega-crops and exporters. Funding should support alternative sources and supply routes around the world, as well as climate-resilient infrastructure. But all of this requires long-term planning. It needs to start now — before extreme weather becomes even more frequent.

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Britain To Ban New Diesel And Gas Cars By 2040

New York Times - Stephen Castle

Victoria Embankment in London. There are rising concerns over air pollution in Britain, particularly in large cities. Credit Daniel Leal-Olivas/Agence France-Presse — Getty Images

LONDON — Scrambling to combat a growing air pollution crisis, Britain announced on Wednesday that sales of new diesel and gas cars would reach the end of the road by 2040, the latest step in Europe's battle against the damaging environmental impact of the internal combustion engine.
Britain's plans match a similar pledge made this month by France, and are part of a growing global push to curb emissions and fight climate change by promoting electric cars. Carmakers are also adjusting, with Volvo notably saying recently that it would phase out the internal combustion engine in the coming years and BMW deciding to build an electric version of its popular Mini car in Britain.
But the shift to electric vehicles will be a gradual one, and the target set by Britain is less ambitious than some of the efforts elsewhere. President Trump's decision to withdraw the United States from the Paris climate accord has also dented optimism.
Britain's new clean air strategy, published on Wednesday, calls for sales of new gas and diesel cars and vans to end by 2040. The government will also make 255 million pounds, or $332 million, available for local governments to take short-term action, such as retrofitting buses, to reduce air pollution.
"It is important that we all gear up for a significant change which deals not just with the problems to health caused by emissions, but the broader problems caused in terms of accelerating climate change," Michael Gove, the country's environment secretary, told the BBC.
Chris Grayling, the transport secretary, promised a "green revolution in transport," adding that the government wanted nearly every car and van on Britain's roads to have zero emissions by 2050.
The strategy document was published after a protracted legal battle in which ministers were ordered by the courts to produce new plans to tackle illegal levels of nitrogen dioxide.
In France, the promise to end sales of traditional cars was made as part of a renewed commitment to the Paris accord.
In Britain, which is also committed to the Paris treaty, the measures have particular political significance because of rising concern over the level of air pollution, particularly in large cities like London. Poor air quality, much of it a result of pollution from vehicles, is estimated to cause between 23,000 and 40,000 deaths nationwide every year.
Frederik Dahlmann, assistant professor of global energy at Warwick Business School, described Wednesday's announcement as "an important step" that set a clear long-term target, and "also gives car buyers an incentive to consider the different types of engine options available in light of the long-term development of the market."
Still, he said, the long-term nature of the announcement left a significant question hanging: "How does the government intend to improve air quality and reduce transport related emissions in the short term?"
Critics, including Ed Miliband, a former leader of the opposition Labour Party leader and an ex-environment secretary, argued that the government was failing to tackle the current pollution crisis.

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Another former environment secretary, Ed Davey of the centrist Liberal Democrats, described the government's failure to commit to a plan to compensate diesel car owners who scrap or retrofit highly polluting vehicles as a "shameful betrayal."
Others also say the country's efforts are not aggressive enough — France has also set 2040 as its target, but Norway intends to sell only electric cars from 2025, and India wants to do so by 2030.
Cars typically have a life span of around 15 years, so even if Britain follows through with its target, conventional engines are likely to be on the country's roads more than a decade later.
Britain's decision is, however, the latest indication of how swiftly governments and the public in Europe have turned against diesel and internal combustion engines in general.
Automakers, though reluctant to abandon technologies that have served them well for more than a century, are increasingly resigned to the demise of engines that run on fossil fuels. They are investing heavily in battery-powered cars as they realize their traditional business is threatened by Tesla or emerging Chinese companies, which have a lead in electric car technology.
The shift away from internal combustion engines is in large part a result of growing awareness of the health hazards of diesel.
Cities like Madrid, Munich and Stuttgart are considering diesel bans. Sales of diesel cars are plunging. Political leaders are under pressure to end the de facto subsidies of diesel fuel that prevail in Europe.
European countries kept taxes on diesel lower than on gasoline in the belief that it was kinder to the planet. Diesel engines do spew less carbon dioxide, a cause of global warming, than gasoline engines. But they produce more nitrogen oxides, a family of gases that cause asthma and are responsible for the smog that sometimes blankets London and other major cities.
Rather than encourage a shift back to gasoline cars, governments and automakers are focusing increasingly on electric cars. They are the only vehicles that emit neither nitrogen oxides like diesel nor large amounts of carbon dioxide like gasoline.
But the impending shift has raised doubts about whether countries like Britain will be able to create the infrastructure, and generate the electricity, needed for such a radical change in the way people travel.
Jack Cousens, a spokesman for Britain's largest motoring organization, the AA, said there would need to be "significant investment in order to install charging points across the country, especially fast-charge points," and added that it was questionable whether the electricity grid "could cope with a mass switch-on after the evening rush hour."

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