Wednesday, November 25, 2009

Obama Has Decided to go to Copenhagen! - What does this mean for US?

On our last day of classes, President Obama will be making a speech at Copenhagen.

So what? What is the significance of Copenhagen? Heard different rumors about it? I'll try to answer some questions which I think are relevant...

And if I didn't get some of your questions? Come to EcoAction's Danishes for Copenhagen study break on Friday, December 11th from 11am - noon in ICC 203.

What is Copenhagen?
Copenhagen is the capital of Denmark. (Haha, sorry. Couldn't resist!)

I've heard a lot about some conference in Copenhagen that's supposed to be a big deal. What's up with that?
The United Nations is hosting the United Nations Climate Change Conference 2009 in Copenhagen, Denmark. It's a meeting of UNFCCC (United Nations Framework Convention on Climate Change) members. It's also called the Earth Summit. It is a meeting where the world, essentially, can come to talk about the effects on climate change and to create actions to diminish these effects.

When is it being held?
It's to be held from December 7th through December 18th.

What does it have to do with COP 15?
Although Copenhagen starts with the letters "COP," it does not have to do with the city name. COP stands for Conference of the Parties. The meeting in Copenhagen is the 15th annual meeting.

What are its predecessors?
It was preceded by the famous Kyoto Protocol (COP 3 - 1997). This is probably one of the most famous Earth Summits because it created a legally binding agreement for signatories to reduce their emissions from 6-8% of 1990 levels between 2008-2012. It's been somewhat successful; responsible for a huge amount of decreased carbon emissions and, undoubtedly, the increase of clean energy throughout much of Europe. However, it was also notable for the huge failure of the United States to ratify this treaty. (Technically, the US signed it, but it was never sent to Senate for ratification, making their signature worthless.)
The other ones were located in Berlin (COP 1); Geneva (COP 2); Buenos Aires (COP 4); Bonn, Germany (COP 5); the Hague (COP 6); Marrakech, Morocco (COP 7); New Delhi (COP 8); Milan (COP 9); Buenos Aires (COP 10); Montreal (COP 11); Nairobi, Kenya (COP 12); Bali, Indonesia (COP 13); and Poznan, Poland (COP 14).

Why didn't the US ratify the Kyoto Protocol?
A lot of reasons, which can't really be pinpointed. There was the fear of being held responsible of our own action (gee... what a concept!) and how other countries would implement this. Additionally, there were some issues with the Kyoto Protocol that the Senate didn't really feel comfortable with, such as the iffy timetables. Also, they wanted to be sure that other countries, at the time China, would be held to as high a standard as the US.

So if it's an annual event, why is it such a big deal this year?
Because the US and China, who have recently been in somewhat serious talks regarding carbon emissions - something which has never happened before, are being pressured to take a stand on climate change. There's a huge hope that all the major countries in the world, the ones that actually contribute the most to carbon emissions (i.e. the US).
Additionally, in Bali (COP 13), the participating nations decided to finalize their next binding agreement in two years - for COP 15. It's important now especially because 2012 is rapidly approaching. (The time when Kyoto expires.)

What about the cap-and-trade agreement? Does this have any effect on it?
Yes and no. The agreements decided upon at these COP meetings are a total agreement. Therefore, if by some miracle the Senate passed the Kerry-Boxer bill, then it would be in concurrence with whatever is agreed upon at Copenhagen. It was the original hope of the administration that they would be done with cap-and-trade before Copenhagen, so the US could show up at COP 15 and not be so embarrassed about their state of affairs and have something to show for it - i.e. well, we basically screwed up Kyoto- but we have been able to rein ourselves in on our own. However, the current healthcare debate has pushed cap-and-trade to the side for now.

How does cap-and-trade even work?
Okay, not really directly related to Copenhagen, but I know there are people confused about it, especially with all the propaganda that's been floating around lately. Cap-and-trade is a policy plan which prices carbon emissions and puts them on the trading market. It is pretty simple.
So say there are 10 million units of carbon. Each company would get a certain amount and be able to sell their surplus in the open market. If a company was going to emit more carbon, it would have to buy more carbon. Ultimately, the hope would be that the supply of the carbon would decrease and therefore total carbon emissions would decrease.

Why is it so controversial?
The government's role is super important. The government must decide how many units of carbon emissions each company gets and then must buy back the carbon emission allowances from the open market, ultimately decreasing total emissions.
Conservative members claim 1) that this doesn't work and 2) that it will be expensive - and essentially a tax. To rebut that, I say that as anyone who has taken a basic economics class knows, it will work if implemented correctly. Furthermore, as someone who has worked at a brokerage firm, I can confidently say that carbon emissions are ALREADY trading on the open market, though more popular in other countries, and companies have been making buckets of money off of them. (Yes, I'm very much MSB.) Number 2, yes, it will be expensive. And I don't really think there's any way to get around that. You have to consider the alternatives (anyone who has taken basic economics or finance, again, knows these as opportunity costs). What's the cost of inaction? What's the cost of a Katrina 2.0? What's the cost of waiting a few more years with a couple million more people clamoring for the same limited resources in addition to the monstrous populations of both India and China who want to consume as much as Americans do?
Liberal members claim that 1) it's not the best solution and 2) it doesn't go far enough. There have been other solutions floating around the blogosphere, such as a flat carbon tax, which would be straightforward and easy-to-understand, but difficult to pass. There was also another idea floating around called cap-and-dividend, which I think may have been mentioned on this blog but never really discussed. Cap-and-dividend essentially caps carbon emissions, much like in cap-and trade. So every company would get a certain amount of carbon credits, but essentially the public would own the carbon credits, versus the government like in cap-and-trade. Therefore, whenever a company buys carbon credits, the money would be distributed equally to the public (i.e. a dividend).
I believe that it's going to be vastly difficult for any Senate to pass any sort of act on climate control, especially with this economy. Mostly, people are fearful of the inconvenience it will cause to them. I say that it's in fact necessary for something to be done. I think that cap-and-trade will pass much easier than cap-and-dividend. Seeing where the Kerry-Boxer bill is and where Waxman-Markey was, that isn't saying much. I think we have to accept that cap-and-dividend is way too difficult for people to understand right now - and therefore won't be passed. (Though Rep. Van Hollen (D-MD) wrote a cap-and-dividend bill earlier this year... which seems to currently be in limbo.) As an ex-science major (i.e. a believer in science) and someone who has studied carbon emissions and believes in global warming and a current finance major, I think the time is now to address these issues that will only hurt us more if left unaddressed.

How does that fit into Copenhagen?
Regardless on the agreement that's made in Copenhagen, a strong climate law will help the US reach its part of the agreement. It's expected that at COP 15, much like in Kyoto, the nations will agree on a specific cap on carbon emissions. Having a strong cap-and-trade agreement in place (or any policy limiting emissions for that matter), will only help the US reach the UN decided levels.

What are the implications for the US?
It depends a lot on what is agreed upon at Copenhagen, since they're essentially writing a bill. From what I've read, the world's nations are getting ready to really address these issues and to put a specific goal out there. Also from what I've read, the Obama team has been reluctant to agree to a specific goal, instead pushing for guidelines and suggestions. Though I think it's time for the Obama administration to wake up and to put its money where its mouth is (what happened to all the we're-going-to-save-the-world rhetoric we heard during campaigning??), the fact that Obama is going, and may be ready to commit, is a big deal. Though it is worrisome that he was hesitant to go in the first place - seeing as this is the biggest event regarding climate change all year.

How is it going to affect me?
If all goes well, i.e. if the US realizes that it can not continue to steamroll over the rest of the world and instead starts to act in accordance with other nations, we should see a lot of changes. There will be a new emphasis on clean energy. There will be an influx of green-collar jobs, a relatively new term to describe engineering and mechanic jobs related to building solar panels and wind panels, etc. We can look to countries like Switzerland, Norway, and Sweden, all known to have low carbon emissions. But more importantly, in my opinion, we can look to a country like Germany, who has greatly lowered its carbon footprint in recent years yet still has one of the highest GDPs in the world, and is arguably in a better economic position than the US.

My final two-cents...
The time is now for Obama and the US to show the world that it's a leader. If you believe in global warming, this could be the most important meeting since Kyoto. If you don't believe in global warming, I suggest you take a basic chemistry class and then come talk to me.