A Global Warning

Global warming is now accepted by reputable scientists as a genuine
and severe threat. The ten hottest years on record have all occurred
since 1980, and the five hottest consecutive years began in 1991.
In late 1995, the world's leading 2,500 climate scientists, reporting
to the United Nations, declared that the recent heating of the
atmosphere is caused by carbon emissions from oil and coal combustion,
not by the natural variability of the climate.

As the heating of the atmosphere intensifies, it will increase
sea levels by as much as three feet in the next century, causing
disastrous floods. Warming surface waters will also fuel dramatically
more powerful hurricanes, cyclones, and windstorms. The early
stages of increased warming have already altered rainfall patterns.
Spreading droughts are projected to threaten food-growing regions
of continental interiors. And a number of infectious diseases
are spreading as the world's insect populations—one of the most
sensitive of all nature's systems to temperature change—migrate
beyond traditional boundaries.

Global warming need not require a reduction of living standards,
but it does demand a rapid shift in patterns of fuel consumption—reduced
use of oil, coal, and the lighter-carboned natural gas to an economy
more reliant on solar energy, fuel cells, hydrogen gas, wind,
biomass, and other renewable energy sources. It is doubtful that
market forces can bring about this shift, since the market price
of fossil fuels does not incorporate their environmental costs.
Nor can this adjustment be successfully delayed until its impacts
become too disruptive to ignore. The most prevalent of all greenhouse
gases—carbon dioxide—has an atmospheric lifetime of between 100
and 200 years. Even were the world to stop all coal and oil burning
tomorrow, the new era of climatic instability would persist well
into the next century.

The globalization of the economy, and attendant problems
of its governability, have gotten much attention lately. But governance
of the global environment may be the more serious challenge. For
there is neither a political consensus about how rapidly to reduce
carbon emissions, nor agreement on the appropriate regulatory
mechanism.

The question of how to temper global warming divides along two
axes. Commercially, it is pitting oil and coal industries against
those that will bear the cost of inaction, notably the world's
insurers. Geopolitically, it pits the developed countries—especially
those dependent on oil and coal—against many developing nations
and a few of the more enlightened European countries.

Negotiating under the United Nations Framework Convention on Climate
Change, 153 countries hope to draft an international treaty to
limit fossil fuel emissions in time for a final session scheduled
for Kyoto, Japan, in December 1997. But there is a yawning disjunction
between what may be politically feasible and the natural requirements
of the planet's inflamed atmosphere. The most interventionist
proposals on the diplomatic table call roughly for emissions cuts
by the industrial nations of 10 or 15 percent below 1990 levels
by the year 2010. Even those proposals are far greater than anything
the Clinton administration is willing to endorse. By contrast,
atmospheric scientists generally agree it will require emissions
cuts of more than 60 percent to stabilize the global atmosphere
at current climatic levels.



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CORPORATIONS TO THE RESCUE?

The resistance to any mandatory emissions cuts has been led by
the two-trillion-dollar oil and coal industry, in league with
the governments of OPEC and other coal- and oil-exporting nations.
While the fossil fuel lobby has fought to discredit each new scientific
confirmation of the climate trend, the world's property insurance
giants—who will pay the cost of global warming damage—are becoming
more vocal in their advocacy of immediate and dramatic cuts in
the burning of oil and coal.

In this decade, a series of floods, hurricanes, and other severe
storms has sent property insurance losses to unprecedented levels.
Insurance payouts for weather-related (non-earthquake) losses
averaged less than $2 billion a year in the 1980s, totaling $17
billion for the decade, according to the German reinsurance firm
of Munich Re. But between 1990 and 1995 just 16 floods, hurricanes,
and storms destroyed more than $130 billion in property and insurers
paid $57 billion in covered losses.

In the last 2 years, 61 of the world's largest insurance giants
have signed a "Statement of Environmental Commitment,"
pledging themselves to incorporate considerations of climate impacts
into their decisionmaking. There are early signs that the banking
community is also beginning to take notice of the devastating
potential of climate disruptions. At a 1995 conference on climate
change for leaders of financial institutions, Sven Hansen, vice
president of the Union Bank of Switzerland, called climate change
the "single most important environmental problem for the
world today." At the same conference, Hilary Thompson of
Britain's National Westminster Bank urged bankers to "support
businesses that are going to create sustainable wealth that will
actually not only redress the historic harm that has [occurred]
but also finance the research and development that is necessary
to bring about change."

Her remarks were underscored by a recent report by London's Delphi
Group, which advises large institutions on their investment policies.
Delphi recommended that banks, insurers, and other large institutional
investors begin to withdraw their investments from oil and coal
companies, with their traditionally lucrative returns. The report
noted that continuing disturbances in the global climate could
easily lead to high carbon taxes and enforced reductions on oil
and coal use. "As a result," noted the report's author,
Mark Mansley, a former financial analyst for Chase Manhattan Bank,
"climate change presents major long term risks to the carbon
fuel industry [that have] not been adequately discounted by the
financial markets." At the same time, the Delphi Group noted,
"The alternative energy industry offers greater growth prospects
than the carbon fuel industry. Diversification into this sector
also offers substantial scope to offset the risks of climate change.
. . ."

Last year, the Business Council for a Sustainable Energy Future
took steps to position itself prominently in the international
climate negotiations in order to promote development of climate-friendly
alternative energy technologies. While it represents an array
of small renewable energy producers, the Business Council also
includes some major corporations—Honeywell, Enron, Maytag, Brooklyn
Union Gas, and a number of concerned utilities.

A much more influential business group, the International Climate
Change Partnership (ICCP), counts among its members such giants
as General Electric, AT&T, Allied Signal, Dow Chemical, 3M,
Dupont, Enron, and Electrolux. Unlike the fossil fuel industry,
the ICCP accepts the findings of the world's scientists and agrees
on a need for an enforceable set of carbon dioxide reductions.
"The fundamental science of global warming is pretty basic,"
the ICCP's executive director, Kevin Fay, said in an interview.
"There is some uncertainty about specific effects and impacts,
but we understand that there is a long lag time for atmospheric
greenhouse gases—and that it also takes a long time to develop
remedies for the problem."

The ICCP wants to trade on the success of its earlier incarnation.
In the 1980s its predecessor organization, composed of leading
chemical companies, worked with the world's governments to achieve
the Montreal Protocol, which resulted in phasing out and developing
substitutes for CFCs—a class of refrigerant chemicals responsible
for depleting the ozone layer. As a public-private partnership
dealing with a major global environmental problem, it was a remarkable
success. Unfortunately, that same formula is not applicable to
the climate crisis. For one thing, the ozone-depleting chemicals
constituted a small fraction of the chemical business. Fuel for
heat, energy, and transportation, by contrast, are central to
our collective economic existence. For another, the same chemical
companies that agreed to the ban on ozone-depleting chemicals
were able to develop and market their replacements. But the world's
coal and oil companies are not positioned to produce and distribute
solar panels, fuel cells, hydrogen gas production facilities,
and windmills.

The ICCP, unlike the world's extractive industries, thinks it
can profit from the development of renewable energy technologies.
But though it supports specific targets and timetables to reduce
greenhouse gas emissions, it shares with the oil and coal industries
a general distaste for government regulation and a preference
for private-sector solutions. "Our group envisions a process
that produces good information on what alternative energy technologies
are out there, what developments are in the pipeline, and what
the deployment of those energy sources will do to the global greenhouse
gas profile," according to Fay. "The next step we need
to take is to assist those technologies to become competitive."

However, market forces alone are unlikely to generate a shift
to renewable, non-carbon energy, because of the global fault line
between rich and poor nations. Even if the United States, Europe,
and Japan were able to dramatically reduce their own oil and coal
use, those reductions would shortly be overwhelmed by the next
pulse of carbon from China, India, Mexico, Brazil, and all the
developing countries, which need energy to feed and house their
expanding populations and to keep themselves beyond the undertow
of deepening poverty.

Virtually all the market-based mechanisms currently being considered
by international negotiators involve, in one form or another,
the sale of climate-friendly energy technologies to developing
countries that are barely able to feed and house their populations.
These countries, not surprisingly, observe that the industrial
north did not pay much attention to the niceties of pollution
control until after they attained high levels of consumption.
So the world's poor countries, not unreasonably, want either free
technology transfer or other forms of subsidy from the north in
order to finance an energy transition without increasing the burden
on their poor populations.


YOU ARE WHAT YOU HEAT

In the climate negotiations, the postures of even the most pro-environment
governments are guided by pure self-interest. The strongest position
was taken by a group of small island nations calling themselves
AOSIS, an acronym for Alliance of Small Island States, including
the Philippines, Jamaica, the Marshall Islands, and Samoa—states
that understandably fear being flooded into oblivion. AOSIS proposed
a stringent emissions standard for the industrial nations of the
world—a reduction by 20 percent of their 1990 greenhouse gas emissions
levels by the year 2005.

Among the rich nations, Germany and Britain have proposed emissions
cuts in the industrialized countries by 10 percent below 1990
levels by the year 2005 and 15 percent by the year 2020. But the
United States, Australia, and OPEC charge Germany with cynically
playing to its domestic constituency, which includes the largest
Green Party in Europe. Germany, critics say, can readily afford
to sustain a large emissions cut by virtue of West Germany's reunification
in 1989 with East Germany, which is far less industrial and emits
far less carbon dioxide—bringing German emissions nearly within
the limits of that target with no additional hardship.

Britain, likewise, readily supports the emissions targets at no
cost to British consumers, critics say. In 1991 the U.K. decided
for budgetary and political reasons to terminate its program of
coal subsidies and to switch, instead, to far cheaper and cleaner
North Sea natural gas. So the seeming German and British high-mindedness
actually involves no sacrifice, according to their critics. Even
worse, they charge, the German and British positions allow room
for other, poorer countries of the European Union to increase
their burning of fossil fuels under an aggregated European Union
cap. That situation would allow some of the less affluent European
countries—Ireland, Portugal, Spain, and Greece—relatively high
emissions margins so they can continue to develop their own economies
with no cuts to their own fossil fuel consumption. And if, as
anticipated, the E.U. expands by another 15 countries to include
a number of former communist nations in eastern Europe, the combined
cap for an enlarged E.U. would also provide them even more latitude
to increase greenhouse emissions.

German officials counter that their citizens are bearing a significant
tax burden to help finance an environmentally friendly reindustrialization
of East Germany, costs that would be unacceptable to Americans.
And British officials say that, whatever their initial motivations,
they have in the last two years come to regard the climate crisis
as very real and worthy of strong international action. Britain's
environmental secretary, John Gummer, went so far as to call for
an emissions reduction target of 50 percent beginning with an
end to all subsidies for oil and coal use. "There is no point,"
he said, "in seeking to mitigate the effects of carbon dioxide
while providing an inducement for people to use more."

Other members of the E.U. have gone their own ways. Denmark has
already enacted a carbon tax as well as efficiency standards for
its utilities in order to attain a 20 percent emissions reduction
below 1990 levels by 2005. And the Netherlands has declared it
intends to stabilize its emissions at 1990 levels by 2000 and
reduce them by 3 percent five years later. By contrast, Norway,
with its lucrative North Sea oil reserves, wants no emissions
limits at all.

But the divisions within Europe pale before the yawning
split between the wealthy world and the poverty-stressed, less-developed
giants like India, China, Brazil, and Mexico. While the United
States, Europe, and Japan can afford to give at least lip service
to the high priority of the climate issue, the large developing
countries, fighting to keep their economies above water, cannot.
And until the issue of international equity between the world's
wealthy and poor countries is addressed with some degree of authenticity,
no developing country will adhere to any agreement that restricts
its energy consumption.

Many Western diplomats attribute the recalcitrance of countries
like China and India to an attitude of indifference to the planet.
But that cynical dismissal lets the northern countries off the
hook in two respects. It ignores the fact that industrial countries
consume the lion's share of fossil fuels. And it minimizes the
leadership that the United States and its developed allies could
exert if they chose to make a priority policies that reconcile
economic development of poor countries with concerns for the global
environment. The developing nations will likely reject any international
agreement that does not address their own overriding issues of
poverty and underdevelopment.


PROGRESS AND POVERTY

Under the terms of the United Nations Climate Convention, any
target for reducing coal and oil emissions would apply, initially,
to only the world's industrialized countries. But diplomats envision
subsequent similar restrictions for the world's poor countries,
since it is clear the developing world will not be able to continue
the potentially catastrophic growth of their own fossil fuel burning.

The climate crisis requires both measures by the industrial north
to reduce fossil fuel consumption, as well as a transfer of wealth—in
the form of new energy technologies—to assist the poorer countries
to leapfrog beyond carbon fuels to an industrialization powered
by renewable energy sources. Without such assistance, there is
very little hope of avoiding a doubling—and probably a tripling—of
atmospheric carbon dioxide concentrations. Today, for instance,
as it staggers under the pressure of an increasingly fragile food
supply and diminishing water resources, the government of China
at this point sees no alternative to promoting its own economic
growth as rapidly as possible. While energy consumption in the
United States, Europe, and Japan rose by about 28 percent between
1970 and 1990, it rose by almost 10 times that amount—208 percent—during
the same period in China. Under current estimates, moreover, Chinese
coal consumption—which equaled that of the United States in 1990—will
more than double America's ten years from now.

The situation in China is so bad it is sparking alarm even among
its government researchers, despite the regime's commitment to
rapid growth powered by conventional energy. Oceanographers with
China's State Oceanic Administration estimate that rising sea
levels will trigger massive flooding if current trends continue.
"Sea levels will rise up to three feet during the twenty-first
century,"' said Du Bilan, an agency official. Without a massive
program to build coastal-protection bulwarks and seawalls, the
researchers project that economic losses from a 12-inch rise in
sea level would be devastating "since coastal areas are home
to about half of China's cities and 40 percent of the country's
total population of 1.2 billion," Du said.

And China, as large as it is, is only one of many sources of the
emerging Asian boom in greenhouse gas emissions. In May 1996,
the environment ministry of Japan estimated that emissions of
carbon dioxide and other greenhouse gases from 15 Asian nations
will more than double in 30 years—a projected increase of 150
percent of 1990 levels by the year 2025. Using data from other
Asian countries as well as from the World Bank, the Japanese report
noted that the greenhouse emissions from the region will account
for 36 percent of the world's emissions by the year 2025 and for
50 percent by the end of the next century.

The massive gap in economic pressures and priorities between northern
and southern countries is more than the source of diplomatic deadlock.
It has provided a most useful wedge for those who most want the
negotiations to fail. Throughout the ongoing negotiations, the
OPEC nations and their industry allies have warned the large developing
nations that the "climate scare" is based on flawed
science and is basically a plot by the wealthy countries to keep
them relatively poor. Consequently, they have urged those large
developing giants to accept nothing but the most minimal future
restrictions. At the same time, the OPEC nations and the representatives
of the oil and coal industry have put the United Nations on notice
that they will accept no restrictions that do not fall equally
heavily on the developing world. Anything less, they argue, is
fundamentally unfair to fossil fuel producers, whose income depends
on their sales of oil and coal.

It is a strategy designed to guarantee the failure of the climate
negotiations. The rich nations have built their industrial wealth
on fossil fuel consumption. Any attempt to impose the same restrictions
on the poor countries—whose per capita consumption of coal and
oil has been but a fraction of ours—amounts to "environmental
colonialism," according to Sunita Narain, an Indian researcher
and co-author of a report titled, "Global Warming in an Unequal
World." This idea of environmental colonialism, of course,
is precisely what the fossil fuel lobby pitches to developing
countries. The success of the negotiating tactics of Saudi Arabia
and Kuwait, in league with representatives of the U.S. oil and
coal industry, has, in effect, precluded negotiators from moving
forward on any truly meaningful measures.

Given this backdrop of nearly stalemated diplomatic and
economic agendas, it is understandable that U.S. Undersecretary
of State Timothy Wirth called it a "big deal" last July
when he announced that the United States would support some level—albeit
minimal—mandatory emissions reductions. It is not only Wirth who
thinks so paltry a response to the disruption of the global climate
is a "big deal." Clearly the oil and coal lobby think
so as well. That is why they are feverishly mobilizing key leaders
in Congress to defeat the ratification of any treaty that requires
those mandatory cuts.

All of this, in the end, leaves the resolution of perhaps the
most ominous environmental problem ever confronting humanity to
the mercy of the global marketplace. Under the current scenario,
our ability to avert a climate disaster may well depend on whether
we can get China to buy our conservation technologies, whether
we can sell our solar panels to Brazil and our windmills to India,
and whether our marketing experts can persuade the poor governments
of the world to put the nutritional and medical and educational
needs of their people on hold and divert their overstretched resources
to revamping their national energy systems with technologies we
will sell them at the right price.

Meanwhile, the world's glaciers are melting, the world's oceans
are warming, plants and insects are migrating northward, the zooplankton
are dying in the Pacific Ocean, the Antarctic ice shelves are
breaking up, and the planet continues to heat at a faster rate
than at any time in the last ten thousand years.


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