Climate Talks Echo 50-Year Bretton Woods Process

Climate Talks Echo 50-Year Bretton Woods Process
After the talks failed to produce a treaty in Copenhagen in December 2009, despite the attendance of world leaders including U.S. President Barack Obama and Chinese Premier Wen Jiabao, investors scaled back bets on wind and solar power andon carbon-reduction technologies. Photographer: Chris Ratcliffe/Bloomberg

It took decades for negotiators to write treaties that curb nuclear warheads and settle trade disputes between nations, and by that measure, efforts to limit global warming may just be getting started.

United Nations climate talks starting in Mexico next week will resemble “sitting in Bretton Woods in 1944,” said Harvard University Environmental Economics Director Robert Stavins, referring to meetings that devised a new world financial system and envisioned an agency governing international trade.

“Climate negotiations are going to be an ongoing process, much like trade talks, not a single task with a clear endpoint,” Stavins said in a telephone interview. “It took 50 years to build the institutions that led to the World Trade Organization. It wasn’t something that was done in a moment.”

Momentum, even minimal, is needed to underpin global carbon-dioxide markets as well as the $5.7 trillion that should be invested in clean energy projects by 2035, according to International Energy Agency estimates.

Trading in carbon-dioxide permits, which aims to curb fossil fuel combustion that releases gases blamed for warming the planet, will shrink 4 percent this year to $122 billion, Bloomberg New Energy Finance has forecast,

After the talks failed to produce a treaty in Copenhagen in December 2009 -- despite the attendance of world leaders including U.S. President Barack Obama and Chinese Premier Wen Jiabao -- investors scaled back bets on wind and solar power and on carbon-reduction technologies. The WilderHill New Energy Index of 87 companies developing or using low-carbon technologies has slid about 18 percent this year, erasing $500 billion in market value.

‘Signal’ for Investors

Investors failed to get a “signal” from Copenhagen that global rules would favor their investments, Fatih Birol, chief economist at the IEA, said at a Nov. 11 conference. That “casts a shadow over clean-energy technology prospects,” he said.

“Expectations are incredibly low regarding any kind of meaningful outcome” this year, said Robert Clover, global head of clean energy research at HSBC Holdings Plc in London. “People are looking at the talks to see how they might drive national policies and regulation.”

Prospects were bleak for completing an arms control accord in 1979 after the Soviet Union invaded Afghanistan. The U.S. responded by refusing to ratify the second Strategic Arms Limitation Treaty. President Ronald Reagan withdrew from the accord in 1986, halting discussions that dated to 1964.

Bretton Woods

Talks were revived with the collapse of the Soviet Union in 1991. Two treaties since then allowed U.S. and Russian arms inspectors access to each other’s nuclear arsenal to verify reductions in warhead stockpiles. Obama is now trying to push through Congress a new arms treaty with Russia after the last one expired in December.

The summit in Bretton Woods, New Hampshire, in 1944 set up the International Monetary Fund and led to the creation of the World Bank. It envisioned a trade agency but didn’t complete the charter. It took five more decades of talks to establish the WTO, which has adjudicated trade disputes between nations since it opened in 1995.

Global warming talks accelerated in 1992 when the Earth Summit in Rio de Janeiro set up the United Nations Framework Convention on Climate Change, which coordinates annual conferences including last year’s Copenhagen summit and this year’s round in Cancun. Now with 194 members, the body agreed in Kyoto, Japan, in 1997 to limit CO2 output from developed nations. The U.S. signed the treaty but never ratified it.

‘Smaller Pieces’

“We’ve been at it for 18 years on climate change, but that’s not unique,” Duncan Hollis, an associate professor at Temple University’s Beasley School of Law in Philadelphia and editor of the “Oxford Guide to Treaties” to be published next year. “Breaking this up into smaller pieces and trying to knock off one piece at a time is certainly worth trying.”

The UN talks seek to curb greenhouse gas emissions to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit). Envoys have proposed as much as $100 billion a year to aid poor nations for clean energy and spur low-carbon technologies such as wind, solar power and electric cars.

When negotiators in Copenhagen fell short of a treaty to replace Kyoto when its targets expire in 2012, Obama and Wen were among about 30 leaders that formed the non-binding Copenhagen Accord. The agreement, now joined by 140 nations, included pledges to limit emissions from all the world’s biggest emitters.

‘Hole-in One’

“The realization is we can’t have a hole-in one, we can’t agree the big deal in one go,” Danish Climate and Energy Minister Lykke Friis said in an interview. “That’s not the same as saying the process is broken. Let’s focus on what we can agree upon and not on what we cannot agree to.”

Christiana Figueres, the UN diplomat leading the talks in Cancun, says she’s aiming for progress on a package of measures covering forest protection, climate aid and technology sharing. A full-blown treaty isn’t on the agenda.

“It is unrealistic to expect governments to move in one big step toward a legally binding treaty,” Figueres said at a press conference in Bonn on Nov. 15. She told the UN General Assembly in New York on Nov. 1 that “a silver bullet-solution to climate change is not an option” and “progress has to be made one step at a time.”

Climate talks may be more complex than Bretton Woods because they include developing countries such as China, India, Russia and Brazil -- not just the U.S. and its allies. And the divisions that prevented an agreement in Copenhagen remain.

U.S. View

The U.S. says it won’t sign a treaty unless all major emitters including developing nations are bound by it. China, which spews the most greenhouse gases, says it’s not ready to enshrine its domestic goals in international law.

“You cannot build a system premised on the notion that China should be treated the same as Chad, when China is now the world’s largest emitter,” U.S. Special Envoy for Climate Change Todd Stern said Oct. 8 in a speech at the University of Michigan Law School in Ann Arbor.

Elections on Nov. 2 that cut the representation of Obama’s Democratic Party in Congress make U.S. action on climate change even less likely for now. The Paris-based IEA estimates inaction on climate change since Copenhagen raised the cost of curtailing carbon emissions by $1 trillion to $18 trillion by 2035.

Stavins said a treaty is unlikely to be written in either Cancun or at next year’s UN climate conference in South Africa. That’s a view shared by Trevor Houser, a U.S. State Department negotiator at the Copenhagen summit who’s now a visiting fellow at the Peterson Institute for International Economics.

‘Running Out of Time’

“A treaty may not even be the right near-term approach,” Houser said in an interview. “Rather than wasting valuable time waiting for the stars to align behind a new treaty, the international community has an opportunity to get down to business implementing the finance, transparency, adaptation and technology cooperation provisions of the Copenhagen Accord.”

The Copenhagen agreement pledges may lead to 3 to 3.9 degrees Celsius of warming by 2100, the Pew Center on Global Climate Change says. That could lead to sea levels rising more than 2 meters (7 feet), which would submerge much of nations such as the Maldives and Tuvalu, according to the UN Intergovernmental Panel on Climate Change’s 2007 global warming assessment. Up to 30 percent of species would be in danger of extinction and hundreds of millions of people would face water shortages, it said.

“We’re running out of time,” said Alden Meyer, director of policy at the Cambridge, Massachusetts-based Union of Concerned Scientists. “The atmosphere doesn’t negotiate with politicians.”

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