Rich Countries' Carbon Debt: $23 trillion

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Developed countries would need to reduce their emissions by 213% by 2050, for developing countries to maintain their current per capita emission level

By Martin Khor
Malaysian Star, August 3, 2009

High-polluting developed countries have already used up much of the world’s “carbon space,” and should pay up their carbon debt to facilitate in fair global deal on climate change.

Next week, climate negotiations resume in Bonn in an attempt to reach a global deal in Copenhagen in December. There are intense pressures to get developing nations like China, India, Brazil and Asean countries to commit to reduce greenhouse gas emissions.

But the promised financial and technology transfers to help them move are still nowhere in sight.

The western media seems to blame developing countries for holding up a deal.

“India rejects green agenda with refusal to cut emissions for decade,” is the headline of a front-page article in the Financial Times on Aug 1.

But it is unfair to expect developing countries to commit to emission reduction before they are assured of the funds and technology they need to change from one production system to another.

Developed countries have a historical responsibility to help developing countries because they have already taken up most of the “atmospheric space” available.

The atmosphere can only absorb so much carbon dioxide and other climate-dangerous gases. Above the danger level, the average global temperature will rise by more than 2° Celsius, with disastrous consequences.

Greenhouse gas (GHG) concentrations in the atmosphere have to be limited to 450 parts per million (ppm) or even 350ppm, and global emissions must be cut by 50% to 85% by 2050 compared to 1990 levels.

The key question for the Copenhagen “global deal” is how to assign the emission-reduction task fairly between developed and developing countries.

Developed countries are proposing a 50% global GHG emission cut by 2050 (from 38 billion in 1990 to 19.3 billion tonnes in 2050). They are willing to take a 80% cut from 18.3 billion to 3.6 billion tonnes which implies that developing countries would have to accept a 20% cut from 20 billion to 15.7 billion tones.

As the population of developing countries is expected to double during that period, they will end up with a 60% cut per capita. And since population size is projected to remain the same in developed countries, their per capita reduction will be the same as their overall reduction at 80%.

It is unfair to ask developing countries to undertake a per capita emission cut just slightly below the cut that developed countries are prepared to make.

If developed countries were to make a 100% cut, developing countries would still be required to make a 52% cut per capita.

Developed countries would need to reduce their emissions by 213% by 2050, for developing countries to maintain their current per capita emission level.

Developed countries would, in other words, need to cut emissions to 0% and create sinks to absorb greenhouse gases equivalent to another 113% of their 1990 emissions.

To both developed and developing countries, this may seem impossible. For developing countries it may seem impossible to achieve economic development while maintaining (instead of increasing) their current, low per-capita level of emissions.

For developed countries it may seem impossible to go beyond a 100% emission cut. But it may need two impossibles to make a possible deal.

In order not to exceed the danger level, the world has around 600 billion tonnes of emission of carbon (equivalent to around 2,200 billion tonnes of carbon dioxide) to budget between 1800 and 2050.

Given their ratio of world population, the equitable share of the carbon budget for developed countries is 125 billion tonnes while developing countries would be 475 billion tonnes.

The developed countries, however, have already emitted 240 billion tonnes of carbon between 1800 and 2008. This is far above their “fair share” of 81 billion tonnes in that period.

And, given the scenario of a 50% global cut and an 85% developed country cut by 2050, they will emit another 85 billion tonnes of carbon between 2009 and 2050.

Thus, their total emission would be 325 billion tonnes of carbon from 1800 to 2050.

Since their fair share is 125 billion tonnes, they have a “carbon debt” of 200 billion tonnes, which they owe to developing countries.

On the other hand, if carbon space were allocated fairly, developing countries would have a share of 475 billion tonnes of carbon emissions between 1800 and 2050.

However, the situation till now, plus the scenarios for now to 2050, would mean that developing countries in actual fact would only emit 275 billion tonnes of carbon which is 200 billion tonnes less than their fair share.

In a fair climate deal, developed countries would compensate developing countries the equivalent of 200 billion tonnes of carbon. This is equivalent to 733 billion tonnes of carbon dioxide.

Economist Nicholas Stern in his book The Global Deal gives a value of carbon dioxide of US$40 (RM141) per tonne in the carbon trade. From 1800 to 2008, developed countries have a carbon debt of 159 billion tonnes, or 583 billion tonnes of carbon dioxide.

At US$40 (RM141) per tonne, the value of this carbon debt would be US$23 trillion (RM81 trillion). The carbon debt can be put in a global climate fund to help developing countries take action to cut their emissions.

Although US$23 trillion (RM81 trillion) may seem like a lot, it is only a little more than the US$18 trillion (RM63.4 trillion) that developed countries have reportedly set aside for bailouts and provisions of banks and companies in trouble during the present financial crisis.

Though saving the banks may be important, saving the world from climate catastrophe is even more important and necessary.

If this approach and the fund can be agreed to, we would be well on the road to a global deal in Copenhagen.

2 Comments

  • Having read Martin Khor’s article and Fraser Durham’s blog post, it seems to me that converting the “developed” nations’ carbon debt into money and paying it to the “developing” countries is just another form of “carbon offsets” writ large.

    By all means, let’s make imperialist countries pay for their exploitative extraction of wealth from the rest of the world, and yes, the money could be put into a trust fund to finance emission-reduction programs in the global south. But let’s not pretend that paying $40 (or whatever the current “value” of a tonne of carbon dioxide is) to a third-world country will make a tonne of “developed counties'” CO2 emissions go away.

    As Kevin Smith of Carbon Trade Watch says, “the only effective way of dealing with climate change is to dramatically decrease our current rates of fossil fuel consumption.”

  • Hi,

    I follow your argument, yet I have approached it in a slightly different way which you can see at my blog http://ecologicaleconomics.wordpress.com/.

    Essentially if you say that the world formally acknowledged climate change politically in 1992, and take a market price of approximately $19 (see note on blog) then the over-emitting countries owe approximately $3.9 trillion.

    This is similar in size to the developing world’s monetary debt and so one could argue either for:

    a) an adaptation fund of $3.9 trillion, or
    b) a complete swap of monetary debt for carbon debt

    It is worth noting that under-emitters since 1992 are owed a carbon credit of $1.295 trillion as well…..

    Fraser
    fraser.durham@carbonsense.com