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Climate Change and Trade - from Evidence to Action

2 July 2013|Op-ed

Op-ed by Osvaldo Rosales, Director of the ECLAC Division of International Trade and Integration (published in ECLAC Notes Nº 76, July 2013).

Our civilization has been built on the basis of fossil fuels. Before the oil crisis in the 1970s and the microelectronics and telecommunications revolution, the DNA of our productive paradigm was based on the theory of cheap and abundant oil. This explains the ongoing resistance to accepting scientific evidence of climate change and its repercussions for the plant and humankind.

According to a recent article by journalist Martin Wolf in the Financial Times (Global inaction shows that the climate sceptics have already won), 1991 to 2011 saw the publication of 11,194 scientific articles on climate change by 29,083 authors: 98.4% of authors support the idea of global warming as the result of anthropogenic actions; 1.2% reject this; and 0.4% are uncertain. 

The fact that the opinion of that 1% continues to prevail represents a major veto exercised by a tiny majority over the scientific community and humanity. 

International negotiations on such matters are clearly complex. It is not easy to reach effective, implementable and measurable global agreements on controlling emissions in all countries. This is particularly true where the analysis to be used for such calculations must first be defined: whether it is a flow analysis (or who pollutes more in a calendar year), or a stock analysis (indicating who emitted more greenhouse gases over two centuries).

According to a flow analysis, China (which is home to 20% of the world population) was responsible for 24% of global emissions in 2009 (which was more than the United States, which has 4% of the world population and accounted for 17%). In other words, each Chinese citizen emits one third of that emitted by a United States national. 

As emerging economies have larger populations and less energy efficiency than the industrialized world, the fast growth they have experienced this century is being reflected in increased emissions per capita. However, measuring the damage to the ozone layer accumulated over two centuries of industrialization, the main responsibility clearly lies with the most industrialized economies.

Chinese leaders believe there are no good arguments for accepting a much lower cap on their citizens' emissions than the one defended by the United States for its own. Despite this, they are involved in actively decarbonizing their energy mix, while improving the efficiency of their thermal energy plants and making significant progress in unconventional renewable energy sources. However, their solar panel exports are coming up against trade barriers in Europe and the United States.  It is hoped that a trade war can be avoided in key sectors for technological change and climate change.

People no longer state that "financial markets are efficient, rational and self-regulating", as was the belief that led us into crisis. No sensible person could claim that earth temperature markets are efficient, rational and self-regulating without denying the existing evidence. This appears inconvenient when the United States is experiencing the worst tornado season on record and when floods in several European countries have also reached record levels.

In the first half of the year, Latin America and the Caribbean has faced severe flooding and landslides in Rio de Janeiro (Brazil), Buenos Aires and La Plata (Argentina), Bolivia, Puerto Rico, Colombia, Cuba, Ecuador, Guatemala and Peru.

In the international debate, the low-carbon economy is still interpreted by many as synonymous with deprivation and a return to past times of economic backwardness.  This prejudice ignores the evidence showing that businesses and activities that have taken global warming seriously enough to adapt their production, technologies and value chains quickly recover their investment, improve profitability and become more competitive.

This constitutes a paradigm change in business management that goes far beyond maximizing short-term profits, and one that in practice is a new way of competing in global markets.