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An oft repeated concern about domestic climate policy is that it will be ineffective and anti-competitive in a world where other major polluters, especially rapidly developing countries (such as India and China), take little or no action to curb their own GHG emissions.

There are two assumptions behind this concern, and the severity of both is often inflated by those who which to stall action on climate legislation. Ill address both below:

1. Emissions constrained domestic firms will not be competitive against firms that aren’t required to address their emissions.

As I discuss here, the trade distorting effects of emissions targets will be relativly minor for all but the most energy intensive industries, many of which will be given fortunes in free allowances under Waxman-Markey to more than offset their troubles.

Also, remember that decreases in emissions often arise from increases in efficiency, which can prove very profitable for implementing firms as they reduce waste and operating expenses.

2. Emissions reductions from “island” domestic regulation will be ineffectual in a world where rapidly developing countries do nothing to address their emissions.

First of all, as the 2nd largest emitter of CO2 (and the largest per capita), the U.S. has a disproportionate impact on world emissions. In 2006, the last year comprehensive data is available from the EIA, the U.S. emit 5.9 GT of CO2, 20% of the world total (29GT of CO2). A 50% reduction in U.S. CO2 emissions from this baseline, assuming no other country did anything, would reduce world CO2 emissions by 10%, not too shabby.

Remember that preventing climate change requires reducing cumulative CO2 emissions, meaning that timing is an issue. If we don’t reduce emissions at all until 2049, and somehow manage to hit the 80% reduction targets in 2050, this is not a sucess, because all of the CO2 we put into the atmosphere from 2009-2049 will still be there, warming the planet. As a major contributor to global CO2 emissions today, the U.S. has a responcibility to reduce it’s emissions today, regardless of what other countries are doing.

Secondly, developing countries are actively addressing their CO2 emissions reductions. China, surprisingly, is the best example. While it has not committed to strict emissions reductions goals, the country has set ambitious energy intensity (Unit of Energy/Unit of GDP) reduction goals. The current target calls for energy intensity to fall 20% by 2010, relative to 2005 levels. Because so much of China’s energy comes from coal, this target directly affects CO2 emissions.

Depending on how quickly the country grows, and how aggressive their emissions intensity targets become, these goals alone may or may not significantly reduce the country’s CO2 emissions. However, for a country that has proclaimed it will not directly sacrifice economic growth to address a problem largely caused by other countries, energy efficency goals are the next best thing.

China also has a raft of other emissions reduction strategies, outlined in an article by the Center for American Progress, which you can read here.

Developing countries like China will need help from the developed world to drastically reduce their CO2 emissions. However, thy are making progress on their own. Despite Chinese leaders noting that they expect investment in expensive CO2 emissions technologies (like Carbon Capture and Storage) to come from rich countries,  China is already forging ahead with it’s own CCS project GreenGen.

Halting domestic climate regulation by citing the developing world’s “recalcitrance” is both inaccurate and dangerous in a world where we need to reduce CO2 emissions now.

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