Tuesday, December 04, 2007

Another Way to Get to Carbon Caps

We've long since lost our understanding of the genuinely positive aspects of tariffs and duties. The free trade mantra has led us to see tariffs as counterproductive and of no social utility whatsoever. Of course we've shown ourselves willing to believe almost any line if enough people say it often enough - remember dot.coms or weapons of mass destruction or subprime derivatives or Iran's covert nuclear weapons programme?

Maybe we need to take a fresh look at what tariffs might actually do to sort out some of the world's problems.

How about a carbon tariff? Strike a deal. It doesn't matter if certain countries refuse to take part. The remainder would take a global carbon emissions pie and divvy it up, nation by nation. Canada would be allowed so many tonnes of GHG emissions, Germany would have another number, India and China would get theirs too. It could be negotiated equitably taking into account the state of development of each country and its historical contribution to the mess we're in today. The developed world would be expected to do more but the emerging economies would also have to do their bit.

The carbon tariff would come into effect when a particular nation exceeded its quota. A cost would be assigned to the excess emissions which would be recovered by tariffs on that nation's exports. The tariff would then be remitted to be used in carbon reduction projects.

The idea is that the offending nation would see fairly quickly that it could use the tariff penalties to clean up its own act at home, doing itself and the world a big favour. This is, perhaps, a carrot and stick approach that might actually work.

I certainly claim no expertise on tariffs and trade but I think the basic principle would be workable with the consent of a suitable majority of the community of nations. I have often wondered why the West has allowed China to fuel its economic miracle with dirty coal power (really primitive plants) while it has amassed enormous foreign reserves which could have and, in my view, should have been reinvested in that nation's infrastructure in the form of energy-efficient power plants. If they want us to buy their goods, and they surely do, why not remember the line about the customer always being right?

No comments: