Joseph E. Stiglitz, 2001 Nobel Laureate and Professor in Economics at Columbia University, concludes that world leaders at the Copenhagen climate conference failed not only to reach a binding agreement, but also to agree on how to save the planet. An entirely new strategy is needed, he says, to effectively address climate change:

“Perhaps it is time to try another approach: a commitment by each country to raise the price of emissions (whether through a carbon tax or emissions caps) to an agreed level, say, $80 per ton. Countries could use the revenues as an alternative to other taxes – it makes much more sense to tax bad things than good things. Developed countries could use some of the revenues generated to fulfill their obligations to help the developing countries in terms of adaptation and to compensate them for maintaining forests, which provide a global public good through carbon sequestration.

We have seen that goodwill alone can get us only so far. We must now conjoin self-interest with good intentions, especially because leaders in some countries (particularly the United States) seem afraid of competition from emerging markets even without any advantage they might receive from not having to pay for carbon emissions . A system of border taxes – imposed on imports from countries where firms do not have to pay appropriately for carbon emissions – would level the playing field and provide economic and political incentives for countries to adopt a carbon tax or emission caps. That, in turn, would provide economic incentives for firms to reduce their emissions.”

This is an interesting idea, as it essentially shifts the focus away from getting each country to meet hard emissions reduction targets to setting the price of carbon, a simpler proposition from an economic point of view. Agreeing to hard caps can be politically contentious. Stiglitz’ approach might be more viable.

Lawson is long-time critic of the Kyoto Protocol and, for a while at least, sided firmly with global warming skeptics. He’s nuanced his arguments in the last few years recognizing now that global warming is a reality that will have a negative, albeit moderate, impact on us. But he has little time for alarmist and apocalyptic statements from climatologists and climate change policy advocates.

Lawson proposes we “abandon the Kyoto-style folly that reached its apotheosis in Copenhagen last week, and move to plan B,” which essentially boils down to adaptation, plus modest increases in government investment in technological research and development.

This hardly amounts to much of a solution, however Lawson’s analysis of why Copenhagen failed is spot on:

1. The massive cost of decarbonizing the world’s economies because carbon-based energy is likely to remain the cheapest form of energy for the foreseeable future

2. Solving climate change is about negotiating a solution on how to share the burden between the developed world, responsible for the bulk of past emissions, and the developing world, which will likely be responsible for a sizeable chunk of future emissions.

His most insightful comment on the dilemma facing the developing world is this:

And the overriding priority for the developing world has to be the fastest feasible rate of economic development, which means, inter alia, using the cheapest available source of energy: carbon energy.

Moreover, the argument that they should make this economic and human sacrifice to benefit future generations 100 years and more hence is all the less compelling, given that these future generations will, despite any problems caused by warming, be many times better off than the people of the developing world are today.

For an interesting debate pitting Nigel Lawson and author Bjorn Lomborg on one side against Green Party leader Elizabeth May, and George Monbiot, on the other, check out the Munk Debates site.

1. Attaining the targets and
2. Verification of claims that targets were met.

For example, most countries signed onto Kyoto, but pretty much none have reached the goals set out under the document. In fact, Europe has had carbon emissions increase, so what does this say about the power of these “binding” agreements. If no one enforces the application of an agreement, there isn’t really an agreement in place. The US team seems to be pushing very hard on transparency in China and in general. My guess is that they feel that without transparency and accountability there will be a lot of fudging of the emissions numbers. Making predictions is a dangerous business, but my sense is that the only way to get countries to respect an international greenhouse gas treaty is to impose import tariffs on products from places who fail to comply. We shall see.

Aeronautics is a key high technology sector in Quebec. All in all it accounts for an estimated 250 companies and 40 000 jobs, mostly concentrated in the Montreal region. And another thing: it’s estimated that 80 per cent of its production is exported.

Has someone explained to Jean Charest that the aviation industry accounts for 4-9% of the total climate change impact of human activity?

One does get a sense that the Feds are panicking and running around with their heads cut off. In a feeble attempt to deliver a substantive comment, Prentice picked up Former PM Paul Martin’s frankly silly suggestion yesterday that the United States should share some of the burden for the environmental damage caused by Alberta’s oilsands. Right, and shall we pick up the burden of all the cars we’re importing from the U.S.?

- Margaret Matembe, MP and member of the Climate Committee of Uganda

Too bad “the staged response” was in response to the fake news release claiming that Canada had done an about turnaround on its carbon emissions targets.

The hoax has created such a stir that PMO spokesman Dimitri Soudas apparently accused eco-warrior Steven Guilbeault of being its author. François Cardinal reports that Guilbault caught up to Soudas and the two exchanged some unkind words for one another. Suffice to say that the Feds in Copenhagen are getting some pretty bad press.

So far, it seems the Yes Men are getting credit for the prank.

The logic is that large emitters will finance renewable energy through the purchase of carbon credits. If carbon credits are to be a form of financing for projects, we have big problems ahead of us. Heavy industry, with powerful lobbies, receive too many credits – which they then sell or dump on the markets. The flooded market, manipulated by traders, becomes extremely volatile. If a project developer, who needs to plan for a return of at least 15 years, cannot rely on carbon credit revenues – what use are the credits?

The Alberta energy market is a spot market, which means the price of electricity is determined by a market. In other provinces, the price of energy is set by the government. In Alberta, the price has gone from about 0,14$/kWh to 0,03$kWh – causing many renewable energy projects to be put on hold. In fact, at that price, coal based power does not even make sense. This volatility is very bad for project development. Voluntary carbon credits on the Chicago Board of Exchange have gone from 8$ to 35 cents! How can you plan a project based on revenues from carbon credits when they risk to completely collapse.

In my view, the first item to tackle carbon emissions is to remove the subsidies from the oil & gas industry. Not only will that lower carbon emissions, it will save our government valuable dollars. Secondly, let’s make large emitters pay a simple tax for the damages they cause – soil contamination, health of their workers, water pollution, …. If we keep the system simple, people might actually respect it.

The Copenhagen climate change summit opens today and will run until December 18. Depending on who you read, either the Canadian government won’t buy into “the hype” and won’t be rushed, or will “push for a binding deal.”

Though Climategate still looms in the forefront, members of the UN’s Intergovernmental Panel of Climate Change (IPCC) have released the Copenhagen Diagnosis — a review of hundreds of peer-reviewed research papers published since the IPCC’s last assessment in 2007 — which concludes that the climate situation is much worse than the IPCC has so far reported.

The lesson in all this is that it is important we continue to question the orthodoxy of scientists and deniers alike.

First, we need prices for carbon that apply over relevant planning horizons. That price cannot be fixed forever, but must change with events. But it needs to be far more stable than in the European Union’s market for permits (see chart). A tax seems more attractive to me than “cap and trade”, for this reason.

Second, where the abatement occurs must be separated from who pays for it. Abatement needs to happen where it is most efficient. That is why emissions of developing countries must be included. But the cost should fall on the wealthy. This is as much because they can afford it as because they produced the bulk of past emissions.

Finally, we need to develop and apply innovations in all relevant technologies. A paper from the Bruegel think-tank argues, persuasively, that merely raising prices on carbon emissions would reinforce the position of established technologies. We need large-scale subsidies for innovation as well.