An Editorial on ACES Bill,2009 : From Economic Times

During her recent visit, the US secretary of state Hillary Clinton forcefully urged India to contribute to carbon-emission reductions to combatglobal warming. India’s environment minister Jairam Ramesh responded with equal force stating that emission caps would not cut ice in India. Widespread criticisms of this response in the western press notwithstanding, Ramesh is on a strong wicket when refusing to accept mitigation obligations.

The push secretary Clinton has made for emission reductions by India partially reflects a switch in the US policy towards climate change under President Obama. The Congress, which has also come to be dominated by the Democratic Party following the November 2008 elections, reinforces this switch. Specifically, the House of Representatives recently passed the American Clean Energy and Security (ACES) Bill of 2009, which provides for a “cap and trade” program that would place an annual cap on the overall carbon emissions in the US.

The cap would progressively tighten to 80% of 2005 emissions in 2020, 58% in 2030 and 17% in 2050. Each year, the government would issue tradable permits matching the amount of the carbon cap. Companies would be required to acquire permits for every tonne of carbon they emit either from the government or the marketplace. To become law, Senate must also pass the ACES Bill.

While “cap and trade” programs have existed in Europe as a part of the Kyoto Protocol, an international treaty negotiated under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC), the proposed US program differs from them in one key respect: beginning in 2020, it requires the US President to impose tariffs on selected carbon-intensive goods from countries that do not introduce caps on carbon emissions. It specifically targets India and China by requiring the US Trade Representative to annually certify that these countries are adopting emission standards at least as vigorous as those prevailing in the US.

According to legal opinion, the import tariff is likely to violate some key World Trade Organisation (WTO) provisions. Even President Obama who has actively sought the passage of the ACES Bill has expressed disappointment with the insertion of the import duty provision. Nevertheless, if the Bill does become law, India will have to eventually challenge any carbon tariffs the US imposes on it in the WTO dispute settlement body and be willing to retaliate in a WTO-consistent manner.

But a more immediate and perhaps bigger battle on climate change looms in Copenhagen in December. According to the UNFCCC, which came into force in 1994 and is currently subscribed to by 192 countries, developed countries must periodically negotiate mitigation commitments to avoid “dangerous anthropogenic interference” with the climate system. The convention explicitly exempts developing countries from similar mitigation commitments. Consistent with this provision, the Kyoto Protocol, ratified in 2005, requires only developed countries to mitigate.

The US, which had refused to ratify the Kyoto Protocol but is now keen on a post-Kyoto climate change treaty, insists, however, that China and India undertake binding mitigation commitments. It reasons that these countries are among the world’s four largest emitters in absolute terms.

But beyond this size-based argument, there is little else on which the US case can be pegged, especially against India. Given India has the second largest population in the world with the US being a very distant third, it is hardly surprising that India is among the top four emitters in absolute terms. But in per-capita terms, it ranks a low 137th. Forty percent of the households in the country are even without an electricity connection. And there are 300 million people living in abject poverty. If India were to agree to even cap its emissions at current levels, let alone mitigate, its growth process will be crippled. And with it, the country would lose any hope of bringing electricity to all households or of eliminating poverty.

Therefore, from the viewpoint of its own citizenry, India has every reason to refuse mitigation commitments for some decades to come. It also has a good moral case. Rich countries have been responsible for more than 70% of the emissions between 1850 and 2000. India’s contribution to emissions during these same years was a paltry 2%. Even setting aside this history, Canada, US, Europe, Eurasia and Japan together account for more than 50% of the current emissions and India only 4.4%. If environment were to be viewed as a common resource, which it is, almost any principle of moral philosophy would say that developed countries must bring their emissions down very substantially before they demand similar reductions from the poor countries. The fact that they have emitted a lot in the past and they continue to do so today ought to give them rights to less, not more, future emissions than the poor countries.

The exemption to the developing countries from mitigation commitments unless they choose to voluntarily undertake them is also enshrined in the UNFCCC to which developed countries are signatory. In its preamble, the convention explicitly recognises that “the largest share of historical and current global emissions of greenhouse gases has originated in developed countries, that per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and development needs.” The UNFCCC requires mitigation commitments only from developed countries.

The US knows that it is on thin ice when it insists on mitigation commitments from India in the near future. The principal reason it targets India is that it is ill-at-ease targeting China alone. It can be scarcely unaware that mitigation by India from its current low emission levels would do little to alleviate global warming problem.

At Copenhagen, India should clearly indicate to the US that it would not sign an unjust and inequitable treaty permitting trade sanctions against other countries; that it would challenge any attempt at enforcing such sanctions against non-signatories in the WTO dispute settlement body; and that if necessary it would exercise its right to retaliate in WTO-legal fashion.

source: economic times