Net Zero

The UN’s game

The UN is never going to solve this. The failure is not because of a lack of commitment by the signatories, or a lack of earnest moral intent. They mean well. The problem is altogether more fundamental. There is never likely to be a legally binding international treaty, with the teeth to enforce and punish those who fail to deliver on their commitments. The UN works (a bit) when the ‘Big 5’ permanent members of the Security Council – the US, China, the Russian Federation, the UK and France – force smaller countries into line, or when the problems are precise and well defined and it is in everyone’s interests to fall into line. The UN has never resolved the Israel–Palestine dispute, and it has not driven nuclear disarmament. It is not going to crack the Brazilian rainforest crisis. It can be a very good mediator, and it can deploy peacekeepers, but unless all the Big 5 are on board, it struggles to get any traction. Nor does it have enough money to do the bribing.

The Big 5 do not agree on climate change, and they do not include emerging major polluters such as India and African nations. They don’t cover any of the world’s great rainforests. The positions of the Big 5 are clear: Russia’s elite has some interest in climate change actually happening in the short term, and, as noted, the US is never going to cede sovereignty. China talks a good talk but does not walk the walk. Of the two other smaller UN players, the UK is increasingly a bit-part player, especially after Brexit, and France is just not big enough and is in any event an outlier with its large nuclear energy system. The EU, the other really big bloc, is only indirectly at the table through France, but not Germany.

The UN Security Council is not and has never been the main act in global diplomacy, and has been a minor player of convenience in global crises. The action is bilaterally between the powers as they try to jockey among themselves for hegemony, and when important matters need cooperation it is typically the G7, G8 and G20 that provide the forums.

Notwithstanding the stony ground of geopolitics, the idea behind Kyoto was a grand one. Despite all the obvious cartel problems discussed above, and the interests of the big polluters, Kyoto was to be the first step in a process towards a global legally binding treaty, and that treaty would limit total global emissions to a level consistent with the IPCC’s 2°C target. To do this would involve the parcelling-out of emissions reductions between countries. Since some were richer than others, and since the developed countries are responsible for most of the stock of carbon pumped into the atmosphere since the Industrial Revolution, the rich countries should take on targets, and the developing countries should take measures only. Amazingly, the architects thought it would actually work, and all this naive optimism is there in the speeches and papers.

The UN was encouraged by the now largely forgotten fact that the US was all in favour initially. Yet this proved a false dawn: it rapidly became apparent to Bill Clinton that Americans did not buy into this approach. He did not risk trying to ratify the Kyoto Protocol because there were no votes for it in the Senate. The objections were dressed up as concern about China not having to have targets, and hence creating an uneven playing field. But in reality, as the only superpower left, the US was not about to cede sovereignty to the UN, and not about to find itself paying developing countries to decarbonise. No US president since Clinton has tried, and that is why the Copenhagen COP ended up with the Copenhagen Accord, and why Barack Obama could not sign up to a legally binding treaty at Paris. For all the very different styles and political outlooks, Clinton, George W. Bush, Obama and Trump have all taken the same US position. This is not about to change, and indeed at the time of writing it is being further reinforced by Trump in the run-up to the 2020 election.

Activists often present the US as the great villain of climate change, and understandably find it easy to demonise Trump. That bit is not difficult – Trump does on occasion dispute the science and give oxygen to the idea that it is some kind of hoax, or worse, a conspiracy against the US. A more mature reflection on the other great players critical to reaching an agreement tells a more general story. None of them is going to sign up to international intervention in their economies, to cede sovereignty over their conduct. Neither Russia nor China would tolerate the sort of international supervisions which would be required to make tough limits stick. And then there is India and Africa, and those countries that are content to wait for others to act first.

The miracle solution

Despite such obvious structural flaws, and despite no progress on limiting the rise in emissions, the advocates of the Kyoto- and Paris-type processes have not let up. Maybe it has failed so far, and maybe lots of the optimistic rhetoric was misguided, but with one more heave will it work? The way the advocates put it now is that the difficulties are going to be overcome not by threats and bribes, but by the changes in the underlying costs of decarbonising. It is widely claimed that renewables are cost-competitive with fossil fuels already. Hence the problems dissolve: decarbonisation is no more expensive than sticking with fossil fuels. Wind and solar electricity generation, electric cars, hydrogen ships and planes, and biofuels and biomass are the future anyway.

This is the miracle solution. We can decarbonise and it won’t cost us any more than not decarbonising. Even better, if we don’t decarbonise we will end up with higher costs, because the fossil fuels will be more expensive than the wind turbines and solar panels that we will all be rushing to install. Decarbonisation is a win–win strategy: we get to mitigate climate change and we get cheaper energy too. What’s not to like?

The trouble is, it is unlikely to be true, at least for the next crucial 30 years. Eighteenth-century philosopher David Hume, the religious sceptic, wrote that, when confronted with someone claiming to have witnessed a miracle, there are two possible responses. The first is to believe this person; the second is to seek some other rational explanation. In the climate change case, the believers turn out to be activists and some European political leaders. But, as Hume pointed out, belief does not make something true.[7]

Think what the consequences of the miracle scenario would be. Just for a moment, assume that renewables are cheaper than fossil fuels, or will be in the very near future. There is no benefit for any country from not acting now. What could we expect? The most immediate change is relief from all the subsidies paid to renewables and for the other decarbonising measures. There is no need for intervention: the transition will happen anyway, and quickly as the great polluters will find themselves out-competed in world markets. It will be the Europeans and the UK who will be the shining economic successes of the future. Financial markets will clobber any fossil fuel producer as the value of their investments will nose-dive with the collapsing demand for fossil fuels. Russia, Saudi Arabia and the US, the three big producers, will face ruin.

There are many reasons why some might be delighted to see Russia and Saudi Arabia, with their authoritarian regimes, under severe economic pressure.[8] Some activists might also relish a setback on this scale for the US’s new energy independence, built on cheap shale oil and gas. But the fact, as opposed to the desire or the belief, is that none of this is happening. It might, with new technologies from mid-century onwards, but not any time soon and certainly not soon enough. In fact, the news from the great fossil fuel producers is almost all good: Covid-19 aside as a temporary shock, the demand for oil, gas and coal keeps on going up, and all the mainstream forecasts and projections reinforce this message. As noted, the renewables (except hydro and some biomass and biofuels) have yet to make much of a dent. Just look at the market valuation at flotation placed on Saudi Aramco.

Nor are the activists campaigning outside parliament to end renewables subsidies. What they want is more, not less, money to compensate for their lack of competitiveness. The big 10 mbd oil producers – the US, Russia and Saudi Arabia – are not suffering from pursuing their narrow national interests. On the contrary, many of their problems stem from the falls in oil prices due to the superabundance of fossil fuels.

The UN’s role in this miraculous new world would wither away too. What is the point of all the theatre and spectacle and all the COPs and speeches (and all the air miles too) if the problem is going to solve itself anyway? If it is all already cost-competitive, what exactly is its role? It could campaign against the claimed fossil fuel subsidies, but such a fiscal matter is probably best handled through the International Monetary Fund and the World Bank. It could focus on development, but again this is a crowded field of international organisations. It might focus on the one bit that the miracle does not properly address – the destruction of natural capital and the capacity for natural carbon sequestration – and turn its efforts more to this natural capital agenda and biodiversity. Rightly, it already is. But in the round the miracle would push the UN back to its otherwise declining significance, reduce its staff, and further lower its profile.

The implication is pretty clear. The climate change question is: what to do, in the expectation that the top-down global agreement approach is not going to work, and even if it eventually does, not in time to avert significant climate change? And what to do, given the wall of economic growth – and therefore consumption – to come in China, India and Africa?

Europe takes the lead

If this is the question, it is one Europe chose to ignore, and is continuing to do so with some remarkably inefficient consequences. As Kyoto unfolded (it took until 2005 to come into force – 15 years after the 1990 baseline), it rapidly became a Europe-driven protocol.[9] The EU had three separate reasons for its enthusiasm. First, many Europeans took the challenge of climate change very seriously. Second, the EU institutions and their leaders were looking for new ways to engage with their electorates and especially the young, and wanted to co-opt the burgeoning green movements into the core of mainstream political parties. Finally, they knew that the targets would be easy to achieve and there would be few costs. The reason for this last point was the baseline – 1990. This was when the Soviet Union collapsed, and hence the new Eastern European members would have steeply falling emissions from 1990. The Western EU member states were also well into their own structural deindustrialisation. However, because of poor domestic policies, Germany would struggle to meet its own 2020 target; for many it was a cruise.

The baseline of 1990 had one other advantage. Of all the countries whose emissions could be assumed to fall sharply from 1990, Russia stood out. The Soviet heavy industries collapsed with the regime that supported and subsidised them. Emissions plummeted, and indeed Russia itself went bankrupt in 1998. The EU needed Russia to sign up to Kyoto to make the Protocol operational – to pass the minimum requirements. Russia needed something else which the EU could gift: support for joining the World Trade Organization (WTO). The deal was done: the EU got the Kyoto Protocol to come into force; Russia was accepted as a member of the WTO; and nothing changed in Russia at all in respect of climate mitigation policies.

The need to have Russia on board was all the more pressing because others were dropping out. Two very new countries in emissions terms saw their domestic carbon production rise sharply. Canada bust the limits early on and formally left in 2012, and Japan struggled to comply, and dramatically so after the 2011 Fukushima Daiichi nuclear disaster triggered the closure of all its nuclear power stations, and a dash for coal and gas to fill the gap. Japan was second only to France in terms of the size and share of nuclear in its energy mix. With nuclear gone, it was hopeless to try to meet the Kyoto targets.

From within the European climate change political bubble, it was quite difficult to get a perspective on what was going on in the rest of the world. The crucial and disappointing fact is that no other country was seriously trying to control emissions, except for very specific reasons like air quality in cities, or because large hydro dams solved the burgeoning electricity demand challenge. China saw the Kyoto Protocol through the prism of its industrial strategy. If the Europeans were going to buy lots of wind turbines and solar panels, here was a new industry it could master. It duly did, on a large scale and with massive state subsidies. There were two consequences: it largely wiped out the European competitors; and it got to produce the steel and materials using its overwhelmingly coal-based heavy industries. A not inconsiderable side benefit was that the cost of solar panels fell.

The debacle at Copenhagen

Kyoto was always meant to be a step in the direction of an all-embracing international treaty, and the UN pushed on through the mechanisms of the COP to try to create such an agreement. The arrival of Obama in place of George W. Bush gave the process a new vigour, on the mistaken assumption that his rhetoric could be matched by votes in the US Senate. The stage was set for the Copenhagen COP in 2009.

On display were all the fundamental flaws in the process, replicated at every subsequent COP. It pitched the activists and campaigners against the politicians. It brought in thousands of people, many by air. The negotiations followed the usual UN pattern. As much as could be agreed in advance was, but this turned out to be very little. The negotiators were locked into late-night sessions picking over draft texts. The politicians turned up at the end, to take credit for the ‘agreement’ and to sort out the final issues. Except they didn’t. So little of substance was agreed that by the time the key politicians turned up, the showcase event – Obama meeting Wen Jiabao – turned out to be the point at which it was recognised that there would be no Kyoto 2.

To save face, and avoid a clear rupture with the UN process, the ambitions were replaced by an ‘accord’. This listed the voluntary pledges and offers made by those attending. And that was it: allowing the UN process to live another day, and have another go at getting a legally binding agreement. The pledges, in the unlikely event that they would actually be delivered, did not add up to the 2°C target requirements, and by a wide margin. The major world polluters were not prepared to do what it would take. Failure led to a doubling-down on the approach. One more heave, and the UN assumption was that they could get a legally binding agreement over the line.

The next big event was the Durban COP in 2011. The UN team arrived with the same old book. Durban was supposed to pave the way for a legally binding agreement, to be agreed at Paris in 2015. The delegates went through the same process. Just keeping the process alive was declared an achievement in itself. The summit concluded with an agreement to try to get an agreement in Paris.

The denouement at Paris

The gathering at Paris was supposed to bring Obama, coming to the end of his term in office, the Chinese Premier and the rest of the key polluters together, finally, to sign up to a legally binding agreement.

The UN teams had spent the time since Durban flying from capital to capital, trying to cobble together an agreement. The EU pitched in early, and it was the EU that clearly led on ambition. It could, because Europe continued its deindustrialisation, whereas China and India were industrialising, and the US remained an industrial economy.

The outcome at Paris repeated what had gone before, with a few extra fixes.[10] There would of course be no legally binding targets, as intended since Durban. Countries would again make their pledges, this time called ‘nationally determined contributions’ (NDCs), but if they missed them there would be no repercussions. There is no credible top-down enforcement mechanism, because no sovereign nation is going to allow others to impose their wishes on it. It would not be UN First, but rather continue to be China First, India First, Russia First and America First, as it always has been and probably always will be.

The UN team might have been relaxed about this if the perverse incentives could be ignored. What if it was economic to meet the pledges anyway? What if renewables and all the other measures, like protecting rainforests and stopping the depletion of the soils, were cheaper than fossil fuels, logging and intensive agriculture? What if the miracle solution outlined above is true? Lots of activists and some politicians repeatedly make this claim. Even if it cost a bit, it would not be much. Given that the IPCC had spelt out the dire warning of Armageddon just around the corner, and activists proclaimed that ‘extinction’ was coming, would not the world’s big polluters decarbonise anyway?

This is where the pack of negotiating cards hit the floor. For if all this were true, if it was all economic, there would be no need for an international agreement, or protocol, or even a treaty. There would be no need for Paris or the continuing UN process.

Having failed to secure the legally binding targets, the UN’s climate bureaucracy fell back on a second-best. Instead, the parties would be legally bound to come up with further NDCs by 2020, and these would be compatible with the overall 2°C. It could then be claimed that there was a legally binding agreement, a triumph for Paris. If the current NDCs did not add up, at least there was a pledge to make sure they did in the future.

The trouble with this fig leaf is that that is all it is. How exactly is the UN to make sure that the new NDCs at future COPs are going to be in line with the overall 2°C? What happens if, say, China offers a certain reduction, and let us for the moment imagine this is close to zero? Does everyone else have to take this as given, and reduce their emissions accordingly? This is the nature of the game, and of the enforced carbon cartel the UN is trying to create. Countries can make all sorts of pledges, and they could even be made ‘legally binding’, but what exactly is the UN going to do when (a) the pledge is not deemed adequate from one particular country; and (b) it is breached? Send in the UN peacekeepers to Washington or Beijing or New Delhi? Invade the Philippines? Of course not. That is obvious. And what is also obvious is that there are never going to be credible legally binding and credible legally enforceable national carbon targets.

Think about how Paris stands up against other global agreements. Take the WTO and trade agreements. The WTO is a set of rules, not a set of outcomes. It is ultimately about contracts, state aids and competition policy. It is a global version of the EU’s competition regime and customs union. Members agree to abide by the rules. Except many do not. The current trade wars between the US and China are all about the flagrant and very public violations of the rules of fair trade. China grants massive state aids to its big companies, insists on technology transfer, and lacks an independent judiciary to enforce contract and property law. It is China First. The WTO is very limited, as the UK has found out in contemplating a hard Brexit path. Trade is governed by trade agreements, and mainly on a bilateral basis. Further trade rounds after Doha have got nowhere, and the WTO is going through dark days in the face of America First and China First. Its perilous state reflects the general retreat from multilateralism.

Take another global threat – nuclear war. The UN could lead on arms-reduction negotiations, telling the parties what weapons they can have and inspecting them. It does some of this: UN inspectors were sent into Iraq, for example. Yet this role is confined to what the UN does best: inspection, expertise and information. The UN cannot tell Russia to get rid of its nuclear weapons, and it cannot regulate the nuclear arsenals of France, the UK, China, Israel, India, Pakistan and the US. Indeed, the very institutional structure of the UN is designed to prevent this sort of interference through its Security Council and the deeply embedded veto powers. All its members are nuclear powers.

Having failed to get the parties to come up with pledges that add up to 2°C, the Paris Agreement instigated the new target of 1.5°C. As long as it is an aspiration, the parties could happily agree that this is ideally what all the parties together would like. All of them know there is no chance of it happening. Recall that global temperatures have already gone up by nearly 1°C, and the UN’s own IPCC scientists have spelt out the momentum that is climate change. Trying to halt the further temperature increases to 0.5°C is like trying to stop and turn around a supertanker. It takes time for the full impacts of what we have already done to the atmosphere to work through. It would take something like a major volcanic eruption such as that of Mount Tambora in 1815 to sufficiently darken the skies and throw the inbuilt warming momentum into sudden reverse. Yet even this was temporary as is the shock to global GDP from Covid-19. Nevertheless, 1.5°C is now the new target. Paris is not going to deliver it. We need something else.

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