2022 14.8 C
20th-century average 13.9 C
1880 13.7 C
* National Oceanic and Atmospheric Administration, www.climate.gov
In PPI’s newest policy paper, PPI’s Paul Bledsoe and Ed Gresser look at global industrial carbon emissions, commiserate over transatlantic climate policy arguments (European carbon fees vs. American subsidies and local-production tax breaks) that though (a) steadily more fractious are (b) steadily less relevant to the main question of how to reduce global carbon emissions, and suggest a way forward. This is an “Alliance for Clean Trade” in which the U.S. and EU (or the G7, or the OECD members generally) agree on standards for emissions levels by industry, and fees for locally produced and imported goods whose production entails emissions above this standard. The hope would be to cool the arguments, speed up emissions reductions, and create more effective incentives for big middle-income countries to participate.
Background, and then a quick summary:
Humans now put just under 38 billion tons of carbon into the air per year. This compares to 0.2 billion tons in 1850 as Victorian steam technology took off; 6 billion tons in 1950; and 25 billion tons in 2000. The rise in emissions, especially in the last 50 years, has unbalanced a natural cycle in which volcanoes, forest fires, etc. put about 100 billion tons into the air annually, while carbon sinks such as oceans, forests, and phytoplankton pull it back. As a result, the “average surface temperature” worldwide is up by 1.1 degrees Celsius so far. Beleaguered climate scientists hope to stabilize this rise at 1.5 C, which entails bringing the current +38 billion tons to ‘net zero by 2050, and warn that failure to do so risks impacts ranging from the elimination of the 4-million-year-old Arctic sea ice and steadily escalating flood and fire impacts, to drier agricultural lands, alterations in ocean currents, and “feedback” effects from tundra melt that can accelerate the whole thing.
“Net zero” obviously requires reducing emissions by tens of billions of tons annually (and to the extent of possibly amplifying natural “sinks” and creating artificial ones that remove more carbon from the air). A look at current emissions by country provides a starting point for thinking about figures on this scale. Per “Our World in Data”, country totals in 2021 (counting the European Union as a single economy) looked like this:
World 37.1 billion tons
China 11.5 billion tons
U.S. 5.0 billion tons
European Union 2.8 billion tons
India 2.7 billion tons
Russia 1.8 billion tons
Japan 1.1 billion tons
Iran 0.7 billion tons
Saudi Arabia 0.7 billion tons
Indonesia 0.6 billion tons
Korea 0.6 billion tons
Canada 0.6 billion tons
Brazil 0.5 billion tons
South Africa 0.4 billion tons
Turkey 0.4 billion tons
Mexico 0.4 billion tons
All other 7.3 billion tons
Looking ahead, European and American emissions (along with Japanese, Canadian, Australian, etc. emissions) are falling. The U.S. for example peaked at 6 billion tons in 2005, and with a push from last year’s Inflation Reduction Act are likely to drop to 3 billion by 2030. Nonetheless, the divergence between the EU’s carbon price programs, and the more recent U.S. subsidies and tax credits, are sparking steadily angrier trans-Atlantic debates, with retaliations and countervailing duty cases possibly ahead. Meanwhile, China’s 12 billion tons are about a third of the world’s total and rising. Emissions from the four other “BRICS” (Brazil, India, Russia, and South Africa) added 5.4 billion tons more, and are also rising. If these countries — or more abstractly, big middle-income countries and oil exporters — do not start cutting emissions very soon, the world in general will not only fail to hit net-zero on the scientists’ hoped-for schedule but may not cut emissions at all.
So the steps “developed” economies are taking are important but insufficient, and they should try to settle their quarrels over diverging national reduction strategies, improve them to the extent possible, and find ways to induce large middle-income countries to join. This is the point of the paper’s “Alliance for Clean Trade” idea and its hopefully catchy ACT acronym. The goal would be to reduce worldwide emissions from industrial sources, which in total produce about a quarter of world emissions. The basic points:
(1) ACT participants would set a common “standard” for carbon emissions released in the course of producing selected relevant goods (beginning with the six products chosen to launch the EU’s carbon border adjustment program — steel, aluminum, cement, fertilizer, hydrogen, and electricity) and collect identical fees for emissions above the standard. This would apply to both locally produced and imported products, and so be consistent with the WTO “national treatment” principle.
(2) The ACT would supersede the European Union’s CBAM, while the U.S. would authorize full participation in tax credits for minerals and automobiles (as Canada and Mexico now receive) produced in ACT-compliant countries, and consider eligibility for participants in additional clean energy subsidies.
(3) Original participants would at minimum be the U.S. and EU, or in more ambitious versions the G7 countries or the 37 OECD members. Once launched, the group would consider creating “on-ramps” for countries at different stages of development.
Gresser/Bledsoe’s report on climate change, trade, and a different approach.
Background and data:
NOAA’s summary of worldwide surface temperature change since 1880.
The International Energy Agency reports on carbon emissions in 2022.
Our World in Data tracks emissions by country, industry sector, etc.
And the Energy Information Administration’s International Energy Outlook 2021 looks ahead with projections by region and major country through 2050 (now a bit dated; EIA will publish a new version in September).
And some science:
NASA explains the natural “fast” (air to plants) and “slow” (rocks to air) carbon cycles, and the impact of human-caused emissions. Dates to 2011, so the human emissions totals are badly dated, but the basic science remains useful.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank Progressive Economy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
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