The Baptist and the Bootlegger

An unlikely coalition for climate control

Ronald Bailey | November 16, 2006

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All of the climate coalition members were eager to explain the precipitous drop in carbon prices in the ETS in May as growing pains. It turns out that most European governments allocated more emission permits than there were actual emissions. When the actual level of emissions was verified in May and it turned out that companies emitted 66 million tons of carbon less than allowed in 2005. This provoked, as they say, a correction of about 50 percent. Of course, both the climate Baptists and Bootleggers are keen to get climate bureaucrats to more strongly restrict the number of permits that are issued in the future. That would give the climate Baptists lower emissions they want and the climate Bootleggers the higher prices they crave. A win/win for everyone, except for perhaps the hapless consumers who have to pay more for the energy and products they buy.

 

If Europe does go it alone with its carbon market, Europe's manufacturers will argue that they can't compete with foreign companies that don't have to pay for their carbon. Already the European Commission has convened a High Level Group to consider imposing border taxes to level the playing field. Hampton warned, "What signal does this send--that carbon markets are so onerous that you have to build a fortress around yourself."  Nevertheless, she did note that such countervailing CO2 import tariffs could be compatible with World Trade Organization rules. She pointed out that after the United States banned ozone depleting chemicals in the 1970s, it began imposing tariffs on such imports and no one objected that it violated free trade rules.

 

All of the participants on the UN conference side panels are impatient to get the United States to join the carbon market. However, the World Resource Institute's Jonathan Pershing said, "I don't think that there will be a common integrated market in the next commitment period." The next commitment period means between 2012 and 2020.

 

On the other hand, Hampton declared, "This is the decade in which we will find out if the world is capable of setting and reaching goals that will keep the rise in average temperatures below 2 degrees Celsius."  And if that happens, the planet may benefit, but the climate Baptists and Bootleggers certainly will.

 

Tomorrow—The 12^th Conference of the Parties (COP-12) to the United Nations Framework Convention on Climate Change and 2^nd Meeting of the Parties (MOP-2) to the Kyoto Protocol comes to an end. I will report whatever decisions the diplomats make and reactions by other participants to those decisions.

 

Disclosure: I gratefully acknowledge that the International Policy Network in Britain is paying my expenses to cover the conference in Nairobi. Here’s what the folks at Exxonsecrets say about IPN and here’s what they say about me.

 

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.