C. Economics and Ecology

Environmental pollution is one of the major hazards facing the world in the current decade. The industrialized nations have for years been burning fossil fuels to provide energy as consumer demand has gradually increased. As Third World countries develop, they are likely to continue this trend. But the emissions from power stations and the burning of wood from forests lead to the buildup of carbon dioxide in the atmosphere. Carbon dioxide is one of the main gases contributing to the greenhouse effect and the depletion of the ozone layer, the layer of the atmosphere that protects the Earth from the effects of harmful rays from the Sun. The so-called “greenhouse gases” contribute to global warming that threatens to change the future. Don’t be fooled by that nice little name. The deadly effect of these gases is commensurate with the lethal weapon.

At the Kyoto conference, plans were laid to tackle global warming. But who will pay for clean air? Asian countries are belligerent. The financial crisis made Asian countries think about immediate survival, not of expensive new commitments to save the world from an arguably uncertain disaster. Moreover some Asians are suspicious that the environmental movement masks a subversive form of "economic colonialism ". It’s imperative in this context to find a way to dissipate the concerns of developing countries with the need to cut emissions within the tight timetable.

Can Asia afford to combat global warming or at least to mitigate its consequences? Of course. In the worst case, average annual growth rates in Asia will fall from around 7 percent to a normal 3 or 4 percent. Whether they'll choose to afford it is another thing.

If they don't so choose, prospects at Kyoto are grim. Under pressure from its own industrialists and from Congress, Washington won't cut a deal which doesn't include Asia. But in Asia itself nations, which before the currency crisis seemed ready to agree to tough emission controls, are now backing away. They try to vindicate themselves alluding to their favourite argument that environment is what people think about when they're rich.

Furthermore the factory towns of East Asia are latter-day reflections of Pittsburgh or Essen in the 1950s, soot-darkened zones of concentrated manufacturing might. Many officials in East Asia say the blame lies not with them but with the West's dirty past. "Our industrial history is too short to have made any changes in global climate," says Cho Han Jin, an assistant director at South Korea's Ministry of the Environment.

No one disputes that the West is largely to blame for the existing greenhouse cover. But it's equally clear that the future trouble lies in Asia with its unprecedented growth of carbon dioxide production in the industrial world.

By the way countries classed as “developing” have no obligation to reduce their emissions under the protocol as it stands. A few suggestions have been proposed such as a system of rewarding poor countries if their emissions fall below a certain threshold but not penalizing them if they rise above it.

But the emissions of several of these countries have been soaring in tandem with their economic growth. It is believed that it is China that holds the key to climate change. According to prognosis by 2020 it will have displaced the United States as the world's leading producer of noxious greenhouse gases.

Kyoto addressed several ways to leap the funding hurdle. One is supposed to create partnerships in which developing nations set up emission-reducing projects, like natural-gas power plants, while developed nations provide financing and technology. Another scheme is to create a global market in emissions quotas, allowing rich nations to meet their responsibilities by paying poor nations to cut their pollution.

In the years after Kyoto the scientific consensus on climate change – that the warming of the earth can be traced largely to human activity and our ever-increasing yen for more material possessions – has increased. But the political will to take actions to reduce the output of these gases, by measures such as switching to new sources of energy and using fuel more efficiently, appears still to be lacking.

The implementation of the protocol has deepened the divide between the US and the rest of the developed world which has accepted the agreement. The European Union has toyed with the idea of a carbon tax. The US, however, rejects the idea of new taxation. The US supports the idea of international trading in carbon dioxide permits, distributed to countries and companies, which would achieve reductions as cheaply and as flexibly as possible. Trading in emission quotas is believed to have two main advantages over traditional environmental regulation. It gives companies a financial incentive to reduce emissions for less than it would cost to buy permits. And, by leaving it to companies to decide how and when to cut emissions, it reduces not just the cost of compliance but the bureaucracy required to enforce environmental legislation. The country alludes to its own successful experience in this sphere to demonstrate the workability of this scheme.

And finally, trading could prove the best mechanism for drawing developing countries into the fight against global warming without asking them to sacrifice their right to economic development.

While the White House remains implacably opposed rather than nonchalant to the Kyoto protocol, mayors across the country are signing up to the climate-change agenda in the most utilitarian way – committing to cut the greenhouse gas emissions generated by their own towns and cities.

Cutting the world’s emissions of greenhouse gases would involve a shift away from the fossil fuels that powered the industrial revolution and provided cheap energy for more than a century. As this implies massive disruption at a potentially huge cost, businesses must be at the forefront of any attempt to curb the gases. But while some business lobbies have resisted international action on climate change for precisely these reasons, a growing number of high-profile companies are calling for stiffer regulation of carbon dioxide. These businesses are seeking greater regulatory certainty for future investment decisions. Some also have an eye to the possibility of future legal actions by environmental groups holding them responsible for damaging the planet.