Bali: A New Beginning

Bali: A New Beginning

January 2, 2008

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

It may be the final stretch of the Bush presidency. But it's just the beginning of new discussions to achieve more aggressive greenhouse gas cuts -- ones that would reach beyond the Kyoto Protocol that ends in 2012.

Talks among 192 nations ended last month in Bali, Indonesia that lay out a broad framework by which they would cut their heat trapping emissions. While no hard targets were set, the agreement does compel all nations to negotiate more precisely their plans beginning in 2009. For their part, developing countries such as India and China that have increasing emissions would receive assistance from richer nations as well as easier access to Western technologies to increase power plant efficiencies and reduce auto emissions.

The goal of the just completed round in Bali was to ensure that not only the spirit of Kyoto -- requiring 37 industrial nations to cut their greenhouse gases by 5 percent by 2012 -- continued but that it also goes further. Indeed, Bali has been inspired by a series of reports by the world's leading scientists who have warned of environmental devastation resulting from hotter temperatures. To avoid consequences ranging from rising sea levels to severe droughts, the experts said that emissions must be cut by 25 percent to 40 percent by 2020 from 1990 levels.

The European Union embraced those findings and therefore urged industrialized nations to commit to those objectives. But the U.S., Canada and Japan, along with some developing countries, balked. They say that the technologies to achieve such rapid reductions are not yet commercially available and that mandatory rules would hurt their economies. Collectively, all the nations there agreed to nonbinding reductions that will try to achieve "deep cuts in global emissions."

The roadmap sets the tone for the next global roundtable that will occur in Denmark in 2009. Besides hoping to reach a more precise definition of the level of emission cuts, those subsequent talks will specifically address how poorer nations can cope with tougher rules. For example, developed countries could earn carbon credits for paying Latin American and Asian nations not to cut down their tropical forests, which serve as a nutrient for their local ecologies.

UN Secretary General Ban Ki-moon acknowledged "there is a divide of position between and among countries." While he gave a nod to "the spirit of flexibility," he emphasized that "global warming is an issue which affects the whole humanity (and that) we must have coordinated and concerted efforts to address this issue."

"I think we have come a long way here," adds Paula Dobriansky, head of the U.S. delegation. "In this, the United States is very committed to this effort and just wants to really ensure we all act together. We will go forward and join consensus."

Bargaining Table

Other advanced nations have criticized the United States as being a laggard when it comes to doing more to cut carbon emissions. Simply, the position of the Bush administration is that any commitment to hard targets sets not only a foregone conclusion as to how future negotiations will unfold but also it sets unrealistic expectations that those objectives could even be accomplished. It says that until the enabling technologies are widely disseminated, all future cuts should be voluntary and flexible.

But, President Bush's second term in office ends in January 2009 when a new leader will be sworn in. If the Democrats win, it is widely expected that the country would back mandatory targets and then pass legislation to create a system whereby companies could trade carbon credits. Such a scheme sets emissions limits. If companies exceed them they could then bank credits to use later or sell them to those who are unable to achieve the desired results.

Interestingly, several American enterprises want the United States to take a leading role, albeit they prefer a slower and more cautious approach. That's because many of them fear the economic ramifications of doing too little. At the same time, they are concerned that absent leadership at the federal level, the states would take control. That, in turn, would lead to a patchwork of laws that would make business life more difficult.

The biggest users of coal for electric generation in this country, Duke Energy and American Electric Power, have also agreed to comply with future carbon legislation. But those utilities say that it would only work if the goals are longer term and allow for the successful development of the tools to minimize such emissions. Exelon Corp, which owns the nation's biggest fleet of nuclear power plants, favors more aggressive and mandatory cuts in carbon emissions. Ironically, neither Kyoto nor Bali recognizes nuclear power -- at this point -- as a means to bring down the level of heat trapping emissions.

The Pew Center on Global Climate Change works with Fortune 500 companies as well as several environmental organizations. The center's position is that early emissions reductions are possible through cap-and-trade programs, which will spread the cost of compliance while encouraging the development of new technologies.

"In the medium and longer term, steeper reductions will be made possible through deployment of more advanced technologies, such as highly efficient vehicles, improved nuclear power plants, renewable energy combined with enhanced electricity storage capacity, and carbon capture and storage," says Eileen Clausen, president of the Pew Center on Global Climate Change.

While the Bali talks failed to produce commitments to achieve precise cuts in carbon emissions under a definite timetable, it did achieve a compromise. It brought scores of countries to the bargaining table -- nations with diverse interests and varying means to achieve meaningful reductions. National policies will assuredly evolve and adapt to changing times. In two years at the next roundtable, the global tenor will be revealed.