Arizona Chamber of Commerce and Industry

How do you say Chutzpah in Mandarin?

The world's largest emitter of greenhouse gases, China, just released its climate change plan.  One would expect that it would provide solutions on how China could reduce its emissions.  After all, China's emissions are growing much faster than the United States, and between 1996 and 2006 its greenhouse gas (GHG) emissions doubled.  

Rather, the Chinese plan places the burden for reducing global GHG emissions fully on the United States and other developed nations. It is a recipe for economic calamity for developed nations such as the United States.  Further, it will result in a scenario where manufacturing activity will continue to relocate to nations with less stringent (or non-existent) greenhouse gas requirements, such as China. The result will likely be an increase in global emissions at the expense of U.S. manufacturing jobs.

The Chinese plan (view here) released by the Chinese National Development and Reform Commission states that:  "Developed countries shall reduce their GHG emissions in aggregate by at least 40 percent below their 1990 levels by 2020 and take corresponding policies, measures and actions....and developed countries shall undertake measurable, reportable and verifiable legally-binding deeper quantified emissions reduction commitments."

The Chinese paper also calls for developed countries to give 0.5 to 1.0 percent of their annual economic worth to help other nations cope with global warming and reduce greenhouse gas emissions. This is a staggering request.  The GDP of the U.S. is about $14 trillion.  Transferring 1 percent of our wealth to fight global warming adds up to about $140 billion, which would represent a quadrupling of the entire U.S. foreign aid budget!

It is not as if the United States and the European Union have been quiet.  The new President and the Congress are busily working to regulate GHG emissions.  The U.S. Congress is currently debating a bill that calls for a cap-and-trade program that would reduce our country's GHG emissions by 17 percent by 2020 and 83 percent by 2050.  The EPA recently ruled that carbon dioxide was a threat to human health and began the process to regulate it.  These plans have serious economic consequences.  The Coalition for Affordable American Energy (CAAE) conducted a study which found that the emission targets in the Administration's budget would cost a net of 3.2 million jobs by 2030 (You can read that study here).  Europe already has a goal in place of 20 percent reductions by 2020.  The Chinese plan makes even more dramatic and unrealistic demands.

It is clear that China will do all that it can to protect its ability to provide growth and economic prosperity to its citizens.  The U.S. would be foolish to enact any plan unless there is a global plan in place that requires developing countries such as China, India and Brazil to take responsibility for reducing their own emissions in an aggressive manner.  In a recent Financial Times column, former U.S. Secretary of State James Baker advises that the Congress make any cap-and-trade program contingent upon an international agreement:  "[Any] bill that Congress approves must be expressly conditioned upon successful execution by the president....[of ] an agreement with the rest of the world.  The major defect of Kyoto, and the reason that George H. W. Bush administration rightly refused to agree to it, was that big greenhouse gas emitters such as China, India, Brazil and Indonesia were excluded.  They all must be party to any eventual agreement."

If the U.S. goes forward with a plan without similar requirements for developing nations, two things are certain:  The U.S. economy - particularly energy intensive industries - will be harmed as production moves to less regulated nations, and greenhouse gases will actually increase as production is moved to developing nations, which use more carbon than developed nations in producing goods.  That is what I would call a lose-lose proposition.

Glenn Hamer is president & CEO of the Arizona Chamber of Commerce & Industry.