The Kopenhagen circus.

Kopenhagen is currently witnessing two comic relief shows. One is regularly seen in the amusement area known as Tivoli, and the other is the climate change conference. The core element of pure humour in the second circus is that the actions of many governments are diametrically opposed to their words, mainly for the benefit of a watching population that wants tough words but no real action. It is like watching one clown after the other pretending to be sad whilst laughing if the rest of the clowns’ backs are turned.

Let us over the fold once more review the core elements of the actions and the words in this debate, and let us start at home.


The actions of the Australian Federal and State governments are to prepare for more energy use in the future. Highways are being broadened around the country, tunnels are dug in Brisbane and elsewhere, and low petrol prices are being lauded as a good thing. Note for instance what the Australian Institute of Petroleum argues:  “Australian consumers clearly benefit from our highly competitive fuel market where retail petrol and diesel prices are among the lowest in the developed world”. These highways are not just built for tomorrow: they are built to accommodate the expected increased traffic flow for the next 20 years. With the current technology this inevitably means more energy usage: whether they run on oil, benzene, gas, or electricity, they ultimately produce carbon emissions because even the electricity is generated by fossil fuels. If a decision were made to go nuclear, this wouldn’t change the energy mix in use the next 10 years at least because it simply takes a long time for these reactors to be built. According to ANSTO (Australian Nuclear Science and Technology Organisation) Researcher Pat Mahony, “given the long construction times required for nuclear power plants, as well as the time required to find a suitable site, conduct rigorous environmental impact studies, etc, it is unlikely that Australia would have a functioning nuclear power plant until at least 2025”.
It is not just in infrastructure that ‘we’ are preparing to use more energy. The desalination plant in Tugun, a major electricity guzzler, is now all but ready to start using more fossil-fuel generated power. According to the Federal Department of the Environment, Water, Heritage and the Arts a desalination plant similar to Perth’s, even with energy recovery capability, will consume about 24 megawatts of electricity to produce about 45 gigalitres of water per year. This represents about 185,000 megawatt hours of energy per year. Desalination plants are also on the table or already being build in various other states, with proposals to build plants in Sydney, Wollongong, Melbourne and Adelaide and a plant under construction at Kwinana.
What goes for energy usage via water and roads, also goes for most other areas of major energy use: airconditioning is only going to be used more in the future since more houses are built in the warm north rather than the cooler south. Agriculture is in no way facing the threat of constraints to keep generating emissions. Airports are planning expansion, not reduction. Industry too has now been all but promised that it won’t have to do much.
So where is the action in terms of emissions reduction? In what should be termed pure window-dressing areas, such as solar panels on the roofs of urban households. Large subsidies are used to put these solar panels up, even though urban private household energy consumption consists of only10% of total energy usage in Australia. According to the ABS total energy usage in Australia has increased by 15 per cent over the last six years (roughly in line with GDP which is set to double again the next 30 years), and households account for 12 per cent of our country’s energy usage.
The main ‘con trick’ that Australian politicians are playing at the moment is of course to pretend that it is none of our business that much of the planned additional energy consumption of the rest of the world would happen in the shape of burning Australian coal. If Australian politicians (or its public) were serious about wanting to do something about climate change via emission reductions, then the number one thing it can implement tomorrow is to ban the export of coal and coal related products. This would quite probably increase the world price of coal and other fuels (which are substitutes), leading to higher incentives for other countries to truly reduce their usage of energy. That would consistitute ‘doing our bit’ and could be sold as ‘helping other countries reduce their dependency on coal’. It wouldn’t even cost Australia that much because the total export of coal is worth only around 3% of total GDP. Better still, one could see it as a form of savings because it keeps the coal in the ground for the future. There are thus plenty of good environmental and economic reasons to simply stop exporting coal. Hence, you should understand the eagerness of the government to be seen to support an ETS more as a smokescreen to protect the coal exports rather than as a genuine attempt to help the planet, though I doubt very much that the involved government ministers realise that this is the actual effect of their actions. They probably truly believe they are trying to do the right thing.
What goes for Australia is true around the world. My country of birth, the Netherlands, pays tomes of lip service to the idea of emission reductions but is meanwhile planning 4 more coal-fired power stations to fuel the economic growth its public is still eager on! China is building roads, air conditioning, airports, and coal-fired power stations like there is no tomorrow. India and the other rapidly growing major states of Asia are close behind, and much of the coal they plan to burn to fuel their economies is expected to be dug up here. The idea that all these long-term investments into future energy consumption are going to be undone any time soon belongs to fantasy land.
Hence, what is really driving the agenda at Kopenhagen? The main thing to note is that world opinion has been convinced that emissions are something to be feared and that humanity should do something about it. Yet world opinion does not really translate into ‘green’ votes. One might naively think that the strong public support for ETS schemes means the population really wants to reduce their personal energy usage and that of the country as a whole, but woe betide any mainstream politician who doesn’t promise more growth and doesn’t support planned increases in energy use! The same people who claim to worry about climate change have 4-wheel cars, fly around, have extensive air conditioning, and vote for politicians who promise to get them out of recession and into more energy usage. Hence the realist should drily note that there is a great demand amongst the general populace (seemingly around the world, not just in the Western countries) to pretend to do something about emissions, whilst the support to truly reduce emissions is minimal. We are in the fairly incredible situation where the world population virtually demands that their politicians perform a ritualistic ‘rain dance’ in favour of emission reductions as long as nothing truly changes.
Hence the circus we now see in Kopenhagen. The watching public gets what it demands of the politicians: American, Chinese, and other ministers are making beautiful speeches about the need to preserve the planet and the dire consequences if real action is not decided upon now. Some of the small Island nation ministers actually seem to mean it too. Yet the big governments are at this very moment planning ever more emissions for the next 20 years. It is a circus show solely meant for the consumption of the home viewers who clearly demand a circus show. I challenge anyone who believes that the world will truly reduce emissions (whether a half-baked agreement is reached or not) to a bet on the actual growth of emissions in the next 15 years.

The one interesting aspect that may come out of this circus is that some of the truly interested nations, i.e. the pacific island nations, may learn from this conference that they have been duped and that the rest of the world will happily see their islands sink beneath the rising ocean rather than truly change their own way of life in terms of energy usage. The interesting thing then will be if these pacific islands (and some other, more powerful countries with large areas of low-lying vulnerable coastland) will decide their only real chance is to implement some desperate technological plan to cool the planet down (see: here). It may seem far-fetched at the moment but I wouldn’t be surprised if we would quite quickly see a push towards experimentation with geo-engineering initiated by the Association of Small Island States. As I argued before, geo-engineering is the only realistic way forward if you’re really worried about global warming.

Author: paulfrijters

Professor of Wellbeing and Economics at the London School of Economics, Centre for Economic Performance

25 thoughts on “The Kopenhagen circus.”

  1. The Economist’s “Democracy in America” blog mentions another potential way forward – carbon tariffs. So long as a reasonably large economy implements carbon pricing they can gradually force the rest of the world to follow suit.
    And politicians love tariffs.

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  2. Hayek wrote in the Fatal Conceit that intelligence is highly overrated. Most really smart people, which includes the central-planners who design climate mitigation policies, are socialists. What many smart people lack is wisdom. People of average intelligence can have wisdom and make better decisions than smart people who lack it. Of course, when you add wisdom to very high intelligence, you get people like Mises and Hayek.

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  3. Please tell, which geoengineering scheme is the “only realistic way forward”? <a href=”http://www.atmos-chem-phys.net/9/5539/2009/acp-9-5539-2009.pdf”>Good analysis</a> shows that even in the best case, geoengineering can only mitigate about half the radiative forcing of human greenhouse emissions and this is before we really know which techniques are feasible and which are likely to have deleterious side-effects.
    Considering that global treaty negotiation is only just getting back on its feet after a lost decade under the likes of Bush and Howard, it seems a little early to pronounce it dead.

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  4. Matt,

    carbon tarriffs are interesting but they do open Pandora’s box. The amount of energy used to create something aint easy to ascertain and the potential for abuse seems great.

    djm,
    see my previous blog titled “”How far are we in the science of geo-engineering?”” for my reading of that debate. I by the way dont buy the assessment that geo-engineering’s potential has been found (by ‘good analysis’, no less!) to be limited to 50% of the greenhouse warming phenomenon.

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  5. When it comes to carbon tariffs I like the idea of an across-the-board tariff against offending nations. The rate could be set based on the carbon price multiplied by the country’s total emissions minus an acceptable per-capita quota, divided by the value of their exports in the last year. That way the “innocent” low-carbon exporters in the offending country would lobby for domestic restrictions.

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  6. Nice article, Paul.
     
    I´m simply not convinced that the truth about the required policy to deal with climate change is as politically suicidal as our leaders think. People appreciate straight-talking politicians.
     
    If Penny Wong was to say: ¨petrol prices will be 40% higher next year; please take this into account when buying your next car, or: we are trying to phase out coal mining within 15 years, please don´t be deluded about the industry´s viability¨ this would send a straight message, and individuals would make better choices. Instead, we are seeing fights about whether or not electricity bills will increase—of course they will!
     
    The biggest friction we have in changing our behaviour, though, is that our cities have been built from the ground up on cheap energy. People buying into the Craigyburns etc. must face the real cost of living in `cheap´ places.

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  7. You seem to share with the Greens the view that emissions reductions implies wearing a hair shirt, cycling everywhere and drinking water from puddles.   So any government building new highways or desal plants must be acting in bad faith when it professes climate change concerns.
    The truth is that emissions can be reduced substantially at moderate cost and with limited change to existing lifestyles.  With a carbon price, technologies will emerge which will allow more substantial longer-term emissions reductions.
    I don’t really understand why you have so much faith in these geo-engineering technologies (so simple that the Pacific Islands can knock one up) and so little faith in the more mundane low-carbon technologies.
    I love your iconoclastic posts, but the best ones are those built on logical consistency and economic principles, not on contrarianism and rhetoric.

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  8. Your blogpost shows why the new approach of the Australian Liberal Party won’t work. Taking some actions like increasing energy efficiency initiatives or renewable energy targets likely will only slow the growth of emissions in the face of the kind of things you list in the article. So we do need to save ourselves from our desires by imposing carbon restrictions and pricing (preferably via either an ETS or a carbon tax rather than administratively fixed quotas).  Will the world’s governments eventually agree to a serious move of this sort. I think that eventually they will though more serious damage from climate change might be neccessary before they really get a move on. My best guess is that global carbon emissions in 2050 will be the same as today. This is backed up a small and unscientific poll I ran on my blog. In other words, emissions will grow slower than under business as usual but not slow enough to stabilize the climate. All the serious economic analysis of the costs of acting on climate change show that the costs are not that high – i.e. GDP would be 4-5% lower in 2050 than otherwise. Yet the public, business, and governments don’t seem to believe the economic analysis. It’s hard to believe that they think that that cost is too high.

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  9. Dave,

    I suppose I indeed do agree with the Greens that it is virtually impossible to think of major CO2 emission reductions while we all drive around in 4-wheel cars, live an hour away from where we work, fly often to exotic locations, use airconditioning, eat things requiring huge amounts of fodder, and use many appliances and chemicals that themselves take a lot of energy to run and construct. Yes, I suppose I am a real greeny.
    The mythical ‘easy energy savings’ have eluded the Europeans for the last 15 years. I am basically sceptical that they exist. Perhaps you can tell me what they are though?
    As to this blog being over-the-top, I put down the clear challenge of a bet to all those who say there is an easy way out. Care to take it up? I am willing to bet that the world’s emissions in the next 15 years will be higher than those of the last 15 years.

    David,

    I agree with your prediction and I have also noted the low costs that most economic modellers have come up with as the ‘cost’ to deal with emissions. To some extent, this means that climate change is a small economic issue in terms of cost and mainly a political issue in the sense of organisation. Where we perhaps might disagree is in our assessment of the strength of the growth fetish? My assessment that this force is very strong is what leads me to think a globally-adopted ETS an impossibility. Too much free-riding.

    As to the carbon tarriff mentioned, what goes for tarriff in the textbooks surely also goes for this one:  simply because someone else imposes a tariff doesnt make it optimal to impose one oneself.

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  10. Paul,
    OK, one example. Let me run some simple physics past you (this shouldn’t hurt too much).  The aerodynamic drag on a typical car driving at 80kph is around 200newtons  (20kg).  So, the energy dissipated is 20MJ per 100km.  (I’ve discounted rolling resistance for simplicity.)
    A petrol car driven in a city has a fuel consumption of around 11 litres per 100km.  That petrol has an energy value of  about 600MJ.
    So, the car has an energy efficiency of around 3%.  Contrast that with the efficiency of a  combined-cycle gas turbine of over 50%.
    So, there is potential for improving the energy efficiency of a car – by using an electric car running on electricity generated by a CCGT – by a factor of 16.  Of course, there are lots of other energy losses in an electric car: electrical resistance in the electric motor and in the electricity grid, charging losses in the battery, rolling resistance of the car and so on. So, the most efficient car possible may only be 25% efficient (say), but that is still 8 times better than where we are now.
    And that is without even considering other opportunities such as renewable generation, lower drag cars, improved public transport and so on.
    Look what technology has brought us in the last 40 years and then think what technology could bring us in the next 40 years, if there is a focus on reducing energy intensity.  I would guess that many current forms of energy use could potentially be around 10 times more efficient.  Think about waste heat recovery, thermal insulation, efficient lighting, low standby usage etc.
    The potential is there.  All that is missing is the economic incentives.
     
     

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  11. Dave,

    I see you will not take up the bet but still wish to show you believe massive savings are just around the corner.

    I looked up some of your numbers. You seem to be missing a really important source of inefficiency in the electrical car: the inefficiency of the generator at the coal-fired plant making the electricity. From what I have been able to gleam, about 2/3 of the coal-enery is lost when translated into electrical energy, reducing your potential efficiency saving by another factor of 3. If I then think of what a more fuel efficient car is capable of, which is about 25 kilometers per liter, and re-considering the additional forces you presumed were not there when calculating the fuel-efficiency, the I easily regain a factor of 8 such that there is basically no difference in fuel efficiency between a petrol-driven car and one fueled by batteries fed on coal.

    By the way, stop using phrases like ‘this shouldnt hurt too much’.

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  12. Ok, sorry for the silly phrases.
    I allowed for generating efficiency: a CCGT is 50% efficient.  A coal-fired plant is indeed around 35% efficient: another example of us using 19th century technology because there is no incentive to change.  But I am assuming that a carbon price will drive us to best practice (and, incidentally, a CCGT can run on diesel, so it has a fairly direct comparison to petrol-driven cars in terms of carbon emissions.)
    I took the fuel consumption figure from the average US city driving consumption for mid-sized cars.   Indeed there are more efficient cars, but we are not driving them.  This does not detract from my argument.
    I think your bet is essentially about whether or not a global ETS agreement is reached.  That is not where I am disagreeing with you; indeed, you may well be right.  My point is that, were a global ETS agreed, the highways that the governments are building will still be needed.
    My bet would be that, were emissions reduced by 90% by 2050,  we would not be riding bicycles everywhere and we would not be drinking from puddles.
     
     
     

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  13. I’m with Dave on this one. We’ve seen enormous technical progress in many areas of economic activity over the past 40 years, little of which was widely predicted at the time (changes in computing and telecommunications technologies anyone?) and the next 40 are unlikely to be different. We shouldn’t have expected to see much of a shift to low-carbon technologies over that period because we have never sent consistent long-term price signals, or marshalled large-scale public R&D resources in that direction. Even so, new coal-fired power stations are far more efficient, and also less polluting than they were a few decades ago.

    Decarbonisation does not mean deindustrialisation. I don’t know where you got the notion that it did. It means changing the sources and making low-carbon technologies more viable. Total energy use will increase, it will just have a much lower carbon component. A by-product will probably be denser cities and more energy efficient buildings – but neither will imply building no more roads or ceasing to use air-conditioning. Lifestyle changes don’t occur overnight. The precise changes in our lifestyles are impossible to predict, because they will depend on the how expensive low-carbon technologies turn out to be.

    I won’t take your bet for the world as a whole, because I think it will take some time before China and some other important developing countries agree to reduce their emissions. But I would be willing to take a bet that the total emissions of OECD countries in 2025 is lower than in 2010. Indeed, I’ll wager they will be at least 20% lower. Even under a global agreement that fairly apportions long-term per-capita allowances across countries, many developing countries will be able to increase their per-capita emissions for some time, because they are incredibly low now. For those developing countries that are larger emitters (China), I doubt they will agree to binding emission reductions during the current round of negotiations, but I expect things to be different by 2020.

    I’m a longer term optimist….

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  14. Labor outsider,

    in some areas there has been immense improvements, but not in others. An important example is that air flight has hardly gotten any faster or more fuel efficient over the last 30 years, despite huge competitive pressures to reduce costs (I believe about half of the overall cost is fuel: a pretty hefty incentive I would say).
    It is simply untrue that we havent had periods of high energy prices. The technological drive eminating from the oil crises has simply not given us the alternatives that were then dreamed of. Of course, we may be luckier second time round but forgive me for not being overly hopeful.

    I never said anything about deindustrialisng. The puddle and the goat hair were not my words!

    I am willing to entertain a bet on the OECD emissions being more than just 80% of 2010 emissions by 2020. The bet would have to be on all emissions by the whole of the OECD in 2010 versus all emissions by the whole of the OECD in 2020? The stats would have to be best-guess of course because they would include agriculture and other emission producing industries whose outputs are poorly measured, but i am sure we can agree on the figures of some agency. Game?

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  15. Paul,
     
    that’s an interesting factoid about air travel, but is it true I wonder.  A quick dig on the internet reveals that fuel efficiency (MJ/available set kilometre) increased around 26% between 1980 and 2000 (it’s an old paper; I am not cherry picking the dates).  Load factors also increased from around 60% to 75%.  So, overall fuel efficiency increased by nearly 60% over 20 years.  Not trivial, although the graphs do seem to suggest that efficiency is approaching an asymptote, so one might not get the same gains again in the next 20 years.
     
    There is a simple reason why flights have not got any faster: the speed of sound.  Concord was supersonic, but very thirsty, I think.
     

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  16. “It is simply untrue that we havent had periods of high energy prices. The technological drive eminating from the oil crises has simply not given us the alternatives that were then dreamed of. Of course, we may be luckier second time round but forgive me for not being overly hopeful.”

    There is some evidence floating around for why this is the case, and it points to the fact that the earlier oil shocks proved temporary rather than permanent. Another way of saying this is that both the demand and supply elasticities are higher in the long-run than in the short-run.

    Again, this makes clear how important price signals are – particularly a credible signal that the short and long run relative price will be on an upward trajectory.

    Anyway, I am willing to take the bet in the form that you suggested!

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  17. There is another factor driving (distorting?)  energy price signals in the First World at least – we export our energy-intensive industries to cheaper Third World nations. Manufacturing as a % of GDP is declining and therefore energy costs as a % of GDP are declining. One advantage of a services-based economy…

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  18. Labor outsider,

    excellent. Let’s make it a gentleman’s bet, shall we? A 1000 dollars to be given to the winner or the charity of the winner’s choosing. If I win you can send it to Amnesty International.

    Let’s try to be as clear as we can about the bet because definitional issues will arise. How about we look at the ratio:

    ” The total of CO2 emissions from the whole of the OECD in 2020 / The total of CO2 emissions from the whole of the OECD in 2010″

    You win if this ratio is below 0.8, I win if it is above 0.8.

    There will be various measurements of such a thing, so I propose we simply use the most authorative that comes closest to this definition that is available in 2020. The general idea is to look for the total of emissions related to human organisation (anything in the economy and in households). If you have a measurement of emissions in mind that already exists to base our bet on, just mention it.

    Agreed?

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  19. Dave,

    I beg to differ about your assessment of efficiency gains in aircrafts. The first hit I found when looking for this was a paper written by some Dutch engineers on this issue. You can find it at http://www.transportenvironment.org/Publications/prep_hand_out/lid/398

    The abstract reads:

    This report assesses how the fuel efficiency of commercial aircraft has developed since their introduction in the 1930s. Existing estimates, such as the oft-cited 70% improvement from the IPCC Special Report on Aviation and the Global Atmosphere, ignore the record of the pre-jet era. Based on bottom-up micro) and top-down (macro) analyses of aircraft fuel efficiency, it can be concluded that the last piston-powered aircraft were as fuel-efficient as the current average jet. This result was obtained by comparing several large piston-engined aircraft with both old and new jet airliners and was confirmed by the macro analysis, which reveals a sharp increase in fuel consumption per seat-kilometre as piston-engined aircraft were replaced by jet-engined. The last piston-powered airliners were at least twice as fuel-efficient as the first jet-powered aircraft.
    Aircraft fuel efficiency is just one of the design parameters of interest to aircraft designers and the market. The common practice of defining future cuts in energy consumption per seat-kilometre in terms of a constant annual percentage reduction is therefore not very accurate. It ignores the fact that current aircraft configurations can never achieve zero fuel consumption. Nor does it take into account that the annual reduction rate is not a constant, but is itself also falling, as clearly demonstrated by both macro and micro analysis. This means that many studies on predicted future efficiency gains are rather optimistic.

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  20. Moving away from the technical discussions taking place and towards the political aspect, I read in today’s Australian that Penny Wong got booed during her speech and that fun-loving demogogue Chavez got rapturous applause for castigating Western nations – that purchase his nation’s crude oil and fund his one-man state. The hypocrisy is overwhelmingly depressing.

    Maybe the West should deal with China, India, Brazil and leave the rest behind if that’s the best developing nations can contribute to the debate. The West hasn’t covered themselves in glory in this negotiation but I can’t see any diplomatic and technological solutions likely to come from the Third World. And I don’t count China and acquaintances as Third World.

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  21. Paul, I accept that bet under two conditions:
    a) We exclude Turkey and Mexico (they may well not have binding emission reductions in any international agreement before 2020);
    b) credits purchased through the JI and CDM are included – that is, emissions will be calculated as own emissions minus emissions offset elsewhere.
    Agreed?
    My charity is Medicins Sans Frontieres

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  22. Paul,
     
    thanks for your response.  I found exactly the same paper as you and reached the opposite conclusion!  Perhaps we both suffer from confirmation bias.
     
    FYI, I based my comments on the numbers on P13 and the graph on P29.
     
    Anyway, you were spot on with your headline.  Copenhagen is a circus.
     

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  23. Dave,

    yes, I think we came to different conclusions because we had different time frames in mind. However, since we are both clearly just second-guessing the same engineers, their point that there are no easy energy pickings available in air freight is surely now something we both can agree on?

    One circus indeed has just left Kopenhagen. The outcome was even weaker than I expected, but they are bound to keep trying so its too early to write off the possibility of a weak ETS emerging. The notion that these 200 countries are all going to see the light and voluntarily agree to reduce emissions by 50% must surely now be seen by most observers as a non-flier, making them more open for the idea of more unilateral options towards global cooling?

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  24. Labor Outsider,
    I can agree on a) though you are of course cherry-picking here, but not on b) for the obvious reason that I expect the main fudge in the ETS to be that rich countries buy off-sets which are then not truly reflective of reductions in emissions elsewhere.
    I think my point is already conceded that you neither think the world will reduce emissions (because you refused that bet), nor that the OECD as a whole will reduce it by much. It tells me that you too do not have much faith in the ETS process either.

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  25. “I expect the main fudge in the ETS to be that rich countries buy off-sets which are then not truly reflective of reductions in emissions elsewhere.”

    If the offsets are genuine and verifiable, then I don’t see what the problem is – emissions reductions should take place wherever it is cheapest to do so. Excluding off-sets would make it impossible for me to win the bet because the EU-ETS, the proposed bill in the US and the proposed legislation in Australia all allow for off-set to count towards the total.

    Given that there has never been any intention of developed countries to exclude off-sets from counting toward their targets, and these off-sets will certainly be allowed in any international agreement (they were allowed under Kyoto), I’d suggest that you are doing the cherry-picking here.

    What I think is likely is that developed country emissions, including off-sets will be 20% lower than 2010 levels by 2020. I do not expect developing countries to reduce their emissions by enough over this period for global emissions to fall over this short period – indeed I don’t think anyone expects this to happen.

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