Comments on: Developing countries, border taxes & distributive justice

By: conrad

conrad — Tue, 07 Jul 2009 10:15:28 +0000

I’m still not clear whether pumping more money into China via this sort of scheme is really going to do anything.

At a guess (you surely know better than me on this), I would think that China is already investing as much as it can into renewables (it’s certainly a high priority if you read the Chinese/HK papers), and that the reason we are not seeing more is that for their energy needs, they are already at point of diminishing returns, so any more money is not going to get used effectively. Surely, given their energy needs and the gargantuan pollution problems that already exist, which you have probably noticed trying to look at birds through smog, if there was a decent method for generating clean energy that was even close to the cost of coal, they would be trying to use it rather than building all these new power stations. Thus, what I think will reduce their pollution will be new technologies that allow really cheap energy production that will be developed in many different countries, and subsidies will really only affect their purchases of these at the margin.

By: hc

hc — Tue, 07 Jul 2009 09:43:32 +0000

Conrad, China is actively promoting renewables and seeking to restrain growth in its emissions. This proposal would reward intensified efforts in this regard and might fund things such as non-carbon based sources of energy. Chinese emissions based on energy consumption are of the order of 6 billion tons of C02. Reducing this by 5% – roughly the assumed annual growth in Chinese emissions under say the Garnaut emissions proposal – would require reductions of 500 million tons. At a carbon price of $20/ton that would cost about $12 billion. This would not seem an impossible burden to keep China’s emissions constant. (My arithmetic deserves checking here!)

It certainly does not look impossible.

I am unclear how these transfers might be disbursed to consumers in China who would have to bear enhanced energy costs as a consequence of this charging.

By: conrad

conrad — Tue, 07 Jul 2009 03:55:55 +0000

“If China and other developing countries are to be goaded into imposing carbon taxes then they should be compensated for this imposition given the vast inequalities”……”Developed countries could buy quotas from China and then, if desired, not use them providing incentives for better than planned GGE reductions”
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Surely, if this did happen, it would increase unemployment (one of China’s pet hates), since it means China would have to get out of some dirty human-capital intensive industries, and they would end up with an even greater amount of foreign reserves, which they already have too much of (and would the industries simply shift to other countries like Indian which would produce stuff even less efficiently than China?).
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On a practical level, it also seems to me that most rich countries that matter at the moment are so broke, it’s hard see where they would get the money to buy carbon credits from poor countries anyway. Is the US government going to cough up $100 billion so that China doesn’t pollute as much, even though they already owe them a trillion? I don’t think so. I therefore can’t see that being a viable solution to try and cap the emissions of poor countries.