The Breakthrough Institute

by Michael Shellenberger

In his speech announcing his new climate initiative, George Soros criticized emissions trading because it allows financial firms to manipulate the process. He announced a policy advocacy center, funded at $10 million per year, to be headed by Thomas Heller, a legal scholar who wrote a long critique, 'Beyond Kyoto,' criticizing the treaty framework as largely unworkable for Pew in 2003.

Heller criticizes the framework for being inadequate to engage developing countries, faults offsets as unable to solve the additionality problem, and promotes a sector-based alternative similar to the one advocated by Gwyn Prins of the London School of Economics and Roger Pielke, Jr. of the University of Colorado. Such an approach arrives at a time when negotiators are looking to a different set of metrics for developing nations -- emissions reductions equivalents like investments in technology -- to shape the Copenhagen agreement.

Soros' speech and Heller's role give new momentum to those who have argued that the focus on emissions targets and timetables is fundamentally flawed in that it fails to recognize the development needs of poor countries and the lack of cheap clean energy technology to replace fossil fuels.

Heller writes:

"In summary, the present climate regime adopts an architecture centered on emission outputs, with little consideration of inputs closely tied with fundamental development needs; creates a market-based mechanism with only limited potential to channel private investment toward large-scale climate-friendly endeavors; and provides no assurance of significant or stable assistance from developed country governments. In these circumstances, it is understandable if there is little sentiment or incentive among developing countries to expend serious effort in exploring the road beyond Kyoto."

Heller recognizes climate will not be a top priority for developing nations:

"However, to the extent that developing nations regard climate concerns as no more than potential barriers to their ability to reduce poverty and increase income levels, climate issues will not command the attention of core political actors."

He acknowledges the tech gap between fossil fuels and clean energy and points to what we have called the "Gordian knot" problem in trying to price our way to emissions reductions:

"it remains unclear that climate outputs have sufficient salience as a political driver to motivate the implied constraints on inputs deemed essential to achieving overriding development objectives."

Heller says that the CDM (Clean Development Mechanism) cannot solve the additionality problem.

A new treaty focus should be on economic development and technology "inputs" rather than emissions "outputs." However, developed countries are unlikely to invest significantly in developing nation inputs. It would put development and technology, not science based targets and timetables, at the center of the agenda:

"First, we should note that up to now the search for cooperative solutions has been rooted in climate change science and policy. At best, high-priority development goals might be served by the ancillary benefits of climate actions. An alternative strategy is to ground analyses and programs in priority development objectives and to work out from this foundation to climate objectives. Second, in many developing countries climate-favoring activities are emerging as ancillary benefits of sound development programs. This suggests that it may often be possible to build environmental policy upon development priorities and interests that are of central concern to responsible public and private actors in the still evolving political economies of developing nations. This reversal of conceptual framework to place development before climate assumes that there are alternative, clean paths to politically salient development goals."

See the article "Soros to Invest $1 Billion in Clean Energy, Form Advisory Group" in Bloomberg...