Greater Good

Limit Your Carbon Emissions for Honourable Reasons, But Don’t Expect the World to Follow.

Listener: 11 August, 2007.

Keywords: Environment & Resources;  Globalisation & Trade;

It will not be easy for the world to solve the threat of global warming. It requires collective action, but there is no supranational political entity to enable it.

The Kyoto Agreement is between sovereign states who may or may not fulfil their promises to meet the given targets. It is no good saying that if they fail in the first commitment period (to 2012), their target reductions become even more onerous in the following one. They can choose to fail to meet those, too. Governments were allowed to join the European Monetary Union on the condition that they kept their budget deficits below a certain level – but when the bigger economies didn’t, the penalties for failure were simply not enforced.

You may feel passionately about the dangers of global warming, and personally reduce your emissions. What you do will have little effect. The same is equally true for New Zealand. Why then bother?

There is, of course, a moral reason: the fifth learning in Robert Fulghum’s All I Really Need to Know I Learned in Kindergarten is “clean up your own mess”. However, morality does not have much force in international relations. New Zealand abandoned its subsidies to farmers but no other country followed. It went anti-nuclear – alone. So, yes, limit your carbon emissions for honourable reasons, but don’t expect the world to follow.

The international game is even worse. The optimum strategy is to convince everyone else to take measures, but for your country to free-ride. So everyone has an incentive to cheat, and the world will warm.

Here is a more optimistic scenario. In the European Union there is a strong lobby of what might be called “moral greens” (not just those who vote for green parties) who, fearful of the consequences of global warning, want action. At least three national premiers – Gordon Brown (UK), Angela Merkel (Germany) and now Nicolas Sarkozy (France) – have similar commitments for personal or political reasons.

Crucially, unlike New Zealand, if the EU – one of the world’s biggest polluters – took action, there would be a perceptible reduction in global warming.

But European businesses are nervous about raising their costs by limiting their emissions while becoming uncompetitive against foreign businesses that don’t bother. Sarkozy, pressured by them and his moral greens, has announced that he will tax and restrict imports from countries that do not reduce their emissions enough. It’s a moot point whether World Trade Organisation rules allow such actions: if they don’t, do not be surprised if the rules get changed. The European Union could then follow France.

So if New Zealand does not meet its Kyoto targets we could find our exports to the EU further levied and excluded. Thus we, and many other parts of the world keen to export to the EU, have a real incentive to reduce carbon emissions, adding to the EU reductions. (This is in addition to the moral greens affecting purchasing patterns. “Food miles” is hysteria but EU retailers may evolve a more coherent approach, where New Zealand’s reputation and achievements will affect whether they sell our products or not.)

This process works because the EU is big enough and cohesive enough and because it can, to some effect, punish cheats. The US, under its next President, would probably join with it, which would give even more leverage against such possible recalcitrants as China, India, Korea and Mexico.

There are a couple of strategic implications for New Zealand. First, the most important thing our moral greens might do is strengthen their European compatriots. Personal and national actions set an example, but they may also more directly support the political activities of the moral greens of Europe.

Second, our most problematic greenhouse-gas emitters are pastoral farmers who have the most to lose if the EU penalises recalcitrants. (It is difficult to stop livestock emitting the most damaging methane and nitrous-oxide greenhouse gases.)

Undoubtedly we should go for the easy reductions first – cutting emissions from transport and electricity generation. But the survival of our pastoral industry and New Zealand’s standard of living may depend on how we reduce all our greenhouse emissions.