At the World Economic Forum in Davos, Switzerland, last January, British Prime Minister Tony Blair announced that one of his top priorities as chairman of the Group of Eight industrialized countries would be to rally the G8 to action on global warming. Unspoken in that announcement, but obvious to all, was Blair's intention to target President George W. Bush, who in 2001 withdrew the United States from the Kyoto Protocol regulating greenhouse gas emissions.

As world leaders convened last July, there was much anticipation over what kind of agreement the G8 would reach. By the end of the summit, it was clear that Blair's hopes had been dashed. The White House succeeded in so watering down the G8's communiqué on global warming that it ended up being weaker than the statement President Bush's father had signed 13 years before.

Then, in August, the White House announced its alternative to the Kyoto Protocol: the Asia-Pacific Partnership for Clean Development and Climate. A Downing Street official characterized the agreement -- secretly negotiated by the United States, China, India, Japan, South Korea, and Australia -- as “a slap in the face” designed to undermine Kyoto.

But rather than continuing to duke it out publicly with Bush, Blair changed his tune. In late September the prime minister said that he hoped the nations of the world would “not negotiate international treaties” in the future -- a 180-degree change of rhetoric in less than 60 days.

For environmentalists and others, the episode was evidence of Blair's weakness and Bush's isolationism. As with his support for the invasion of Iraq, Blair had once again failed in his attempts to finesse the Bush administration. Bush, for his part, had once again demonstrated a brazen disregard for multilateral action, the international community, and the future of the planet.

But the stalemate over addressing global warming highlights the failure of neither Blair nor Bush but rather of environmentalism and the politics of limits. Global warming did not have to be, a priori, an “environmental” issue. It was made so by environmentalists who understood global warming originally not so much as an impending global crisis that needed to be addressed by any means necessary but rather as a powerful new argument for restricting activities (e.g., driving cars and burning fossil fuels) that they already wanted to restrict. As such, the solutions to global warming were, from the very start, conceived of as limitations and restrictions -- the approach that lies at the heart of the Kyoto Protocol and virtually every other effort to address global warming.

There is a different way to think and act on global warming. Truly addressing the ecological crisis will, by all accounts, require a dramatic transformation of the global energy economy. In that transformation lies the possibility of enormous economic growth and the potential to lift living standards around the world. Economists have known for decades that investments in innovative new energy sources, from solar to biomass, from biodiesel to wind as well as in energy efficiency have a multiplier effect on the economy.

Nobody should understand this better than Blair. It was, after all, Blair's idol, Prime Minister Winston Churchill, who first suggested in the year after World War II that Britain and Europe invest in a joint energy and manufacturing venture to heal the wounds and unite the continent. Four years later, the European Coal and Steel Community -- precursor to the European Union -- was born.

Blair's environmentalist critics are correct that Bush's Asia-Pacific Partnership on Clean Development and Climate was cynically conceived to undermine Kyoto and Blair. But their myopic insistence that Kyoto and the environmental ethos of limits must be at the center of the debate has been counterproductive.

Bush's bluff is an opportunity for a true third way on global warming. The prime minister should call Bush's bluff, and up the ante. When world leaders meet this week in Montreal to discuss Kyoto, Blair should embrace the Asia-Pacific Partnership on Clean Development and propose that the United States and other G8 countries fund it to the tune of $30 billion per year, creating an Opportunity Fund for Clean Development.

Blair should see this Opportunity Fund not simply as an “environmental” solution but also as a central strategy in the global campaign to “make poverty history.” To underscore the central role that economic development must play in places like China, Blair should call for global leaders to negotiate the Opportunity Fund in Beijing.

The British prime minister should also speak out about the Opportunity Fund in the United States. The timing is right. The public is increasingly outraged by high gas prices, the record-breaking $100 billion in oil industry profits, and the collapse of the U.S. auto industry.

To be sure, Kyoto will remain an important framework for gradually ratcheting down emissions, but if we are to give countries a reason to care about and invest in the new energy economy, the old politics of limits must take a back seat to a new politics of possibility.

Ted Nordhaus and Michael Shellenberger are managing partners of American Environics and directors of The Breakthrough Institute. Their book, The Death of Environmentalism and the Birth of a New American Politics will be published by Houghton Mifflin in early 2007.

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