Climate Change:

RFF's Bell examines possible problems with CO2 cap-and-trade efforts

Many climate experts feel that a cap-and-trade plan for carbon dioxide is one of the most efficient ways to reduce greenhouse gas emissions. But who will verify claims of emissions reductions in a global CO2 market? And will developing nations be willing to tackle greenhouse gas reductions instead of more pressing environmental problems? During today's OnPoint, Ruth Greenspan Bell, resident scholar at Resources for the Future, talks about these questions and more as she addresses some of the challenges facing emissions trading plans. Bell, director of RFF's program for International Institutional Development and Environmental Assistance, also draws on her experience helping several Asian and European nations implement new environmental laws.

Transcript

Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining me today is Ruth Greenspan Bell, resident scholar of Resources for the Future, where she is director of the program for International Institutional Development and Environmental Assistance. Ruth thanks a lot for being here today.

Ruth Greenspan Bell: I'm really pleased to be here. Thank you.

Brian Stempeck: Now you just published a paper in the latest issue of Foreign Affairs taking a look at basically the global plan to cap and trade greenhouse gas emissions under the Kyoto Protocol. One of the things you talk about in this article, which I thought was really interesting, is that basically the cap-and-trade plan has been based on sulfur dioxide trading in the United States. And there's some real flaws with trying to do that. Explain why that is.

Ruth Greenspan Bell: I'd be happy to. The sulfur dioxide program works quite well in United States, but it works very well because it's in the context of a rule of law country with good enforcement provisions, with courts that are independent and free, with extremely good accountability. You have to understand that the SO2 trading system in the United States has instant monitoring of SO2 that goes straight to EPA computers. And there's a great deal of transparency in the system. And ultimately the main thing is the purpose of all of this is to achieve a set cap and a cap that is reduced. It's very hard to replicate those kinds of conditions in an international situation, much less country by country in many of the countries that would have to participate in this activity.

Brian Stempeck: This seems like one of the big unanswered questions about the Kyoto Protocol. When you're talking about some of the Western European countries, they seem to be doing a pretty good job of tracking their emissions and knowing what they're doing. But as you branch out to some of the smaller countries, some of the developing nations it doesn't seem as clear. I mean who's going to be enforcing that?

Ruth Greenspan Bell: At an international level? We don't have mechanisms to enforce it internationally. The best that this particular Kyoto Protocol regime has been able to figure out is to basically have a device that would exclude participants from participating in the flexible, the so-called Kyoto flexible mechanisms if they violated the rules. That doesn't strike me as a very really effective type of remedy. And if you were going toward real remedies you have to really consider the problem that countries are very jealous of their sovereignty and don't want to give that up. And a real enforcement system might be perceived as infringing on that. So we're going to have to think of something that really does work as a substitute for what we think of as sort of classical enforcement.

Brian Stempeck: Now you've worked with a number of countries in developing their environmental laws, a lot of the Eastern European countries, kind of at the ground level, helping them develop these laws and to begin to enforce them. And in your article what you said was basically in a lot of these areas they're not even dealing with kind of local major pollution problems yet. How can we really expect them to deal with greenhouse gas emissions?

Ruth Greenspan Bell: That's a sad and difficult question. Probably one of the $64,000 questions in this. The difficulty is that an awful lot of countries around the world do have environmental laws and they have environmental ministries. These started popping up after the Stockholm Conference in 1972. The difficulty has been that the environment ministry is probably the weakest ministry in the government; that it isn't taken very seriously; that the finance ministries and the heads of government may see a trade-off in their mind between environment and growth or environment and the economy. So it gets kind of short shrift. And there hasn't been very good, I'd say, implementation or enforcement of these rules. You know in the past we could say, oh, well, that's somebody else's problem. You can go visit China and maybe see some interesting things, come back with your lungs hurting for a couple weeks, but it was left behind. Now we realize with climate change that just isn't the case. It isn't left behind. It's a global problem and we all have to think about how environmental regulation and enforcement works on a local level globally.

Brian Stempeck: Can you give us an example of some of the things you're talking about. You were in Romania, Bulgaria, Ukraine. Give us an example of an environmental law that you have in one of these countries that's on the books, but we're not really seeing being enforced?

Ruth Greenspan Bell: I think there are quite a number of these. I think if you look at the standards for air pollution, for air quality in any of these countries, they're actually quite optimistic. But if you look at whether their filter is on the discharge pipes, it's another question. We actually had an experience when I worked in Russia in the early '90s where we did a project localized on Volgograd, which used to be, I guess, Stalingrad. And we found that actually many of the industries in question actually had decent technology at the end of their pipes. It wasn't being maintained. It wasn't being cleaned. So you need a whole system to make all of this work. You need good laws, but you need good technology. You need good practices and you need somebody sitting on top of it making sure that the rules are enforced, that's there's some cost to not cleaning the bag house for example.

Brian Stempeck: You talk about this in the paper as well, kind of directly affecting the Kyoto Protocol. One of the new projects going into effect is some Western European countries working with India on some new technology there. I think in the paper you said basically what's happening is the Indian environmental ministry did a study seeing what would happen in terms of reducing their CO2. And basically coming to the conclusion that it's not really working. Like you said, a lot of the technology isn't actually being put into place or if it's in place it's not being used properly.

Ruth Greenspan Bell: Yeah, that situation is just slightly different, but I think you've got it mostly right. This involved an emissions trading situation, one of the clean development mechanism arrangements. And the local environmental group, a very well respected group in Delhi that looked at it, found that in fact it looked like the safeguards of the CDM had been met, but in fact they had not been. And the government, the review of the arrangement that was supposed to take place really didn't take place because the reviewers took it as faith that the auditing company that did the initial review was a good auditing company. And so they didn't have to take a second look at it. That was just one example of some of the problems that were encountered.

Brian Stempeck: How do you deal with something like this? I mean right now in Europe we have the European emissions trading scheme where there is basically a cap-and-trade plan affecting thousands of industrial facilities. You have all these countries basically taking part in this. But who's kind of overseeing? Who's the watchdog here making sure that as millions of dollars are changing hands on this CO2 market, that these are actually verified emissions reductions or emissions gains?

Ruth Greenspan Bell: I feel a little bit better about the European system because I think there's a mechanism there are to deal with it, the European Union. There have been a number of statements that they really are very concerned that the reductions be real reductions. My focus in this article and my concern is based on my knowledge of the developing world and many of the countries in economic and political transition in which the assurances are not so clear that this can really work. But whoever's system it is there has to be constant monitoring. There has to be compliance monitoring to know what the emissions look like. They have to be continuous over time or else we don't, there's no point to this whole exercise. And there has to be some remedy for violating the rules. And all those have to be conditions to make this work.

Brian Stempeck: Whose responsibility is that? Is this something that we should see a United Nations agency doing? Is it an independent, like you said, a third-party auditor doing that? I mean with so much money on the line here are we going to see new companies spring up to do the auditing? I mean who exactly is going to take care of so many of these things that you're mentioning?

Ruth Greenspan Bell: Yeah, I'm not sure I actually know the answer to that question. I think this is going to take some substantial rethinking. And what I try to say in the article is that I think we have to, rather than thinking of it as kind of one-size-fits-all type of solutions or centralized solutions, we really have to think more about what the real incentives and what the real situations look like country by country in these countries that really have to be part of the solution.

Brian Stempeck: What would you like to see from the White House? Obviously they talk about, quite a bit, working with technology development; their bilateral partnerships with some countries. Is this just a question of putting more money in the foreign aid budget for working with say Romania on developing their environmental laws? Is that what you'd like to see?

Ruth Greenspan Bell: I think that would be some part of it. I think technology is certainly going to be a part of it, but technology has to be, the people who are thinking about installing the technology have to be convinced it's worth doing relative to other things they're doing. They have to finance it. They have to install it. They have to maintain and run it. There are examples in China, to pick one example, of turnkey plants that are being built to very high environmental specifications. And then when they're turned over, very frequently, the folks running the plant don't run the pollution control technology at times that are inconvenient, their running cost to running the technology. So they may turn it off at night. So just having the technology there isn't sufficient. You have to have a commitment to making the technology work and to running it consistently. I don't think that, I'm not sure that the U.N. can provide that assurance. I think we have to find some other ways of doing that. I do think we could help other countries become better environmental regulators. And that may be part of what's necessary here.

Brian Stempeck: One last question for you because we're running out of time. What needs to happen at the local level? I mean right now in China for example we've seen a lot more Chinese dissidents kind of stepping up and opposing some of the government projects, some of the government development projects, new energy plans, things of that nature. How much of that are you seeing in the countries you're working in where all of the sudden you have some local citizens, people banding together, mimicking almost the environmental movement as you saw in the United States may be 20 or 30 years ago?

Ruth Greenspan Bell: That's something I see as really the hopeful sign here. I think you see NGOs all over, for example Asia, that are really pushing on the government to try to get some environmental change. If you look at India for example the same groups, CSC that did the study on CDM has been just extremely active in trying to improve the air quality of Delhi for example. Building on a lawsuit that was brought by another NGO, that was brought to the Supreme Court of India to seek cleanup of the air quality in Delhi, they proceeded to work very patiently with the court bringing forth evidence, working hard, sometimes making it a public issue to create a little bit more pressure. My hope is that that will be one of the levers, the increased activity in the NGO sector. Now China we have to think a little bit about because China is a different kind of society than India. India is a democracy. It has a very open and free press. China is really just moving toward a goal, but it's nowhere near it. And so the role of the NGO community is simply going to be different in China than it is in India for example.

Brian Stempeck: All right. Ruth, we're out of time. Thanks so much for being here today.

Ruth Greenspan Bell: Thank you.

Brian Stempeck: I'm Brian Stempeck. This is OnPoint. Thanks for watching.

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