Dirty South, Clean It Up

Developing nations are now the world's biggest polluters. Are they finally ready to help fight climate change?

The latest report from the United Nations climate change body, released Tuesday, makes clear the good, the bad, and the ugly about one of the world's most intractable problems.

As things stand today, the world will be hard pressed to limit greenhouse-gas emissions and avoid the worst effects of global warming during the rest of the century. That's the ugly.

In the twenty-odd years since global warming leapt on the international stage at the Earth Summit at Rio de Janiero global greenhouse-gas emissions have not only kept growing, they're growing at an ever-faster clip. That's the bad.

Now, the world's hopes for limiting temperature increases and minimizing catastrophes such as rising sea levels and devastating droughts depend to a large extent on what steps developing economies take to fundamentally change the way they use energy. And that, curiously enough, could be the good.

On Tuesday, the final, full draft report from Working Group III of the Intergovernmental Panel on Climate Change came out. (U.N. officials had released tidied up, trimmed down summaries of that latest consensus among climate scientists over the weekend.) The report's purpose is not to dive into all the contentious and sometimes controversial science behind climate change, but rather to lay out what the world can do about it. And in dense, committee-edited prose, the sprawling report makes clear that the world is still headed very much in the wrong direction.

"The current trajectory of global annual and cumulative emissions of [greenhouse gases] is inconsistent with widely discussed goals of limiting global warming at 1.5 to 2 degrees Celsius above the pre-industrial level," the report found.

"We need to decrease the [carbon dioxide] in the atmosphere, and to do that, we need to bring emissions down dramatically, but right now global emissions are increasing," explained Gernot Wagner, an environmental economist at the Environmental Defense Fund, which advocates market-based solutions for climate change. "This is a freakishly big problem."

While computer models show that the world could conceivably slash carbon emissions and stabilize temperatures, that would require prompt, unanimous, radical action by nearly all nations. That, to say the least, is unlikely: "The assumptions needed to have a likely chance of limiting warming to 2 degrees are very difficult to satisfy in real world conditions," the report found.

That is due, in large part, to the fact that global greenhouse gas emissions just keep rising, despite growing awareness in most countries that pumping more carbon dioxide and other greenhouse gases into the atmosphere leads to rising temperatures. Global emissions rose an average of 2.2 percent per year from 2000 to 2010, up sharply from an annual average growth rate of 1.3 percent from 1970 to 2000.

Global emissions keep rising because over the last decade, the center of gravity of the world economy has shifted away from developed, relatively efficient economies such as Europe and the United States toward fast-growing, relatively inefficient economies such as China and India. The problem is compounded, in part, because factories in countries such as China now produce a host of goods for export that rich countries use to make themselves; that means that, in essence, the rich world has outsourced a portion of its own greenhouse-gas emissions to developing countries.

Since the last big UN climate report came out in 2007, developing countries have passed developed countries to become the biggest emitters of greenhouse gases. The global emissions total in 2010 hit 49.5 billion tons of carbon dioxide equivalent (which translates other greenhouse gases such as methane into carbon dioxide), the highest level to date, the report found. That makes it more difficult, and more expensive, to meet climate goals.

"If you're trying to stabilize 2 degrees Celsius in this century, then every five years it's going to get more difficult, because the rate of decrease has to be greater and there's already a larger accumulated stock in the atmosphere," said Robert Stavins, a climate-policy expert at Harvard University's Belfer Center and a contributor to the latest IPCC report.

Going forward, that means that the developing world will have to bear the brunt of responsibility for curbing emissions, if the world is to come anywhere close to its target of limiting carbon concentrations in the atmosphere to around 450 parts per million (compared with just over 400 parts per million today).

On the surface, that could be worrisome. Developing countries have spent years arguing that since rich countries are responsible for centuries' worth of greenhouse-gas emissions, they shouldn't have to do the heavy lifting of curbing pollution now when they are prioritizing economic development and trying to combat poverty. That blame game is responsible, in large part, for the lack of progress that has plagued international climate negotiations over the last decade. Meanwhile, China's breakneck growth has fueled a massive increase in consumption of coal, oil, natural gas, and other fossil fuels.

And to date, rich countries have been more active in trying to tackle emissions. Europe has a cap-and-trade scheme meant to rein in emissions from the power sector, as well as a host of other rules such as hefty taxes on motor fuels and mandates to use renewable energy, all meant to make economies less dirty.

While the United States has not been able to pass comprehensive, European-style climate legislation, it has taken a spate of actions, such as emissions limits on power plants and tough state rules to limit greenhouse-gas emissions. The natural-gas boom (as well as the recession) has also helped the United States cut energy-sector emissions levels to the lowest levels in two decades.

But there are tantalizing hints in the latest IPCC report that developing countries could make emissions reductions dovetail with things they actually want to do or need to do. That includes improving air quality and reducing deadly pollution, enhancing energy security, and unwinding fiscally disastrous energy subsidies that encourage profligate use of dirty energy.

Air quality, for instance, is the principal driver of China's efforts to clean up its energy sector, which will have as a byproduct fewer greenhouse gas emissions. The notorious smog that blankets Beijing and other northern Chinese cities doesn't just cost billions of dollars in health care and shorten lives; by sparking popular unrest, air pollution also represents a potentially direct threat to the Chinese Communist Party's hold on power.

All that explains official Chinese efforts to cap national coal consumption, heavily underwrite the expansion of renewable energy such as wind and solar power, and increase the use of nuclear power and natural gas in the electricity system. China has also launched a handful of regional cap-and-trade programs, putting a price on pollution. (Of course, there are fears that China's anti-smog push could lead to the use of even worse alternatives, from a climate-change standpoint, such as synthetic gas from coal.) India, for its part, has slapped a small tax on each ton of coal.

Energy security is another way that tackling climate change could bring additional benefits, the report concludes. By reducing the role that imported, dirty fuels play in an economy, policymakers can kill two birds with one stone. Chinese leaders, for example, are obsessed with the security of their energy supplies. China is now the world's biggest oil importer; much of that oil goes through sea-lanes controlled by other navies. Volatile prices for imported fuels can also wreak havoc with consumers and upend growth plans.

As the IPCC report puts it, "the majority of mitigation scenarios show improvements in terms of the diversity of energy sources and reduction of energy imports, resulting in energy systems that are less vulnerable to price volatility and supply disruptions."

One of the best ways to spur reductions in carbon emissions, economists agree, is a carbon tax. That would penalize carbon emissions, and give businesses and consumers an incentive to use less energy, or to use cleaner energy. Politically, though, a carbon tax has proven contentious in many countries.

Ironically, instead of penalizing the use of dirty energy, the world heavily subsidizes it to the tune of more than half a trillion dollars a year. That leads to wasteful use of fuel for transportation and power generation, undercuts energy efficiency, and costs governments huge sums of cash.

Part of Egypt's fiscal woes, for instance, are due to heavy energy subsidies given to the population, which eat up about one-quarter of the budget. Governments across the Middle East and North Africa face a similar dilemma: Energy subsidies are eating up government cash and gobbling up precious energy reserves, but rolling them back could spark popular unrest.

Last week in Washington, the heads of the International Monetary Fund, the World Bank, and the U.N. all called for an end to fossil fuel subsidies and the use of a carbon tax to tackle both fiscal challenges and rising emissions. That double-whammy could end up going a long way toward meeting global climate goals and restoring some fiscal sanity to cash-strapped governments.

"Right now, the average price per ton of CO2 globally is minus $15" due to the subsidies. "It's the wrong sign; forget all the quibbles about just how high the price of carbon should be, let's get the sign right first," said Wagner of the Environmental Defense Fund.

Ed Jones - AFP - Getty


Leaky Borders

Millions collected on goods coming into Afghanistan isn’t making it to state coffers.

Corruption at border crossings in Afghanistan is so rampant that it threatens the customs revenue on which the government depends, raising questions about whether the country will be able to fund itself after U.S. troops withdraw.

Even though the United States spent $120 million to improve the Afghan customs system over the past three years, a new report by the watchdog overseeing U.S. reconstruction efforts in Afghanistan says corruption is still the biggest threat to the import system, and it could grow.

Fees and taxes on goods crossing the Afghan border make up nearly half of all the revenues (44 to 48 percent) that the Afghan government brings in. But the government could be making twice as much if fraud were eliminated, according a report released Tuesday by the Special Inspector General for Afghanistan Reconstruction (SIGAR).

"Afghanistan remains poorly positioned to develop a self-sustaining economy because of corruption, mismanagement, and continuing instability along its borders," the report said.

The watchdog has long pressed the U.S. government to make cleaning up fraud and abuse in the Afghan government a higher priority in Afghanistan. "Allowing corruption to continue unabated will likely jeopardize every gain we have made over the last 12 years," Inspector General John Sopko said in a speech last month.

The report highlights graft as one of the key problems facing Afghanistan's new leadership, as the country faces a post-war future with a lot less international money flowing into state coffers. Import duties that could contribute more to the state budget are being syphoned off by corrupt officials. One Afghan governor made as much as $4 million a month collecting unauthorized taxes at a major border crossing in 2012, the Wall Street Journal reported. That money could go a long way toward helping the Afghan government stand on its own. Kabul has at times over the past 10 years generated as little as 10 percent of its own budget, while the rest has been made up from outside donors, principally the United States. Those contributions are expected to dwindle as international forces leave the country.

President Hamid Karzai didn't build a track record for rooting out corruption, and it's unclear whether his successor, who is expected to be in place by this summer, will make it a priority, either. Many U.S. officials see the election as an opportunity to redefine Washington's relationship with Kabul, but that could be difficult considering many of the experienced diplomats in Afghanistan are packing it in and heading home.

It's difficult to know exactly how much revenue is lost through goods smuggled into the country without paying official taxes and fees at the border; customs data is so unreliable that it's hard to tell what goods are coming in and out of the country, according to the report's authors. Goods smuggled into the country illegally through one checkpoint alone cost the government about $25 million a year, according to the report.

A mentorship program administered by U.S. Customs and Border Protection made some progress teaching Afghan customs agents how to properly collect fees, the report found. But that didn't stop some agents who followed the U.S. advice from being kidnapped or threatened by smugglers.

U.S. efforts to automate customs payments hit a snag when an Afghan official wanted to allow only one bank to process electronic transactions, creating further opportunity for abuse, the report found. Attempts to streamline the customs system by requiring fewer steps in the process "met with resistance because each step allows for the associated official to demand payment from an importer."

The report said that U.S. programs run by Customs and Border Protection, as well as the U.S. Agency for International Development, could be further stymied by the deteriorating security situation after the U.S. leaves. It's already made it harder for auditors to measure the extent of graft and corruption. In the course of collecting information for their report, SIGAR inspectors were unable to visit some customs sites because of bombings or the threat of violence.

In response to the report, USAID acknowledged that reforming the Afghan customs system still faced "major challenges." The agency said it would direct the contractor charged with improving the system, Chemonics Inc., to "put forth its best effort" to combat corruption. After past reports, the State Department and Pentagon have complained that SIGAR's criticism is unwarranted.