have to become negative around the middle of the next century! Even a total ban on all use of fossil fuels in all developed nations within a few decades would not do the job. Of course, if the richer nations continue to reduce emissions over time some voluntary abatement by non-Annex I nations would probably occur. Over the coming decades, some nonAnnex I nations will no doubt become wealthy enough to join the Annex I emissions reduction club voluntarily. But the countries most likely to do this account for only a small fraction of projected non-Annex I emissions. In China, India, Indonesia, Brazil, and other high-population, high-emissions countries, income growth seems unlikely to stimulate voluntary abatement much before the end of the next century. Until then, these nations will be more concerned with feeding themselves and their children than with protecting their grandchildren from potential global warming. Thus, if the rich countries want to stabilize greenhouse gas concentrations, they will have to pay poor countries to reduce their emissions. Rough estimates of the costs that would be involved, even assuming fully efficient abatement policies and neglecting costs of monitoring and enforcement, imply massive international transfers of wealth on a scale well beyond anything in recorded history. What Should We Do Now? There is little or no political support today for a long-term commitment to such a Herculean effort. Moreover, since climate change could turn out to be relatively harmless, making such a commitment now would make little economic sense. On the other hand, since climate change may also be a significant threat, it would make no more sense to do nothing. Unfortunately, there are no simple rules that can be relied upon to tell us what to do. We must consider costs and risks and take actions in the face of profound uncertainty about their consequences. In such a setting, it is important not to lose the long-term perspective. Today's actions should aim to reduce the costs of massive global emissions reductions, in case advances in climate science show such reductions to be desirable. Investments in new technology and in the development of policy architectures and institutions are particularly attractive in this regard. While it is almost certainly too late to agree on investments of this sort before December's Kyoto meeting, that meeting is but one step in what will very likely be a long political and diplomatic process. Whatever else happens there, the participants will produce some sort of "Kyoto Mandate" to guide the next round of international negotiations. That Mandate should focus the process on investments with long-term benefits. The potential value of investments in new technology is clear. It may well prove impossible to slow warming appreciably without condemning much of the world to poverty unless carbon-free energy sources become roughly competitive with conventional fossil sources. Further, a serious attempt to produce important new technological options would be cheap relative to the cost of controlling emissions resulting from the use of current technologies. The range of possible options is wide, stretching from solar electricity to the continued use of fossil fuels with capture and sequestration of the CO, their combustion produces. Unfortunately, we know too little about what produces fundamental technical change. The available evidence points to the importance of marketplace incentives for private sector research and development and (with somewhat more controversy) to public expenditure on basic research and fundamental technologies. Politicians love to call for more research instead of more regulation, but we see only a tiny and diminishing commitment to the development of greenhouse-friendly technology by those countries most capable of performing it. It is at least as important to begin the development of an institutional structure for managing global emissions agreements that can evolve easily over time. Such a structure must be able to adjust the stringency of abatement effort to the evolving science, giving incentives for national participation but accommodating failures along the way, and to provide compensation to induce participation by the developing world. This is a tall order, and we do not pretend to know the best design. Some useful insight and perspective can be gained from the international trade regime developed under the General Agreement on Tariffs and Trade (GATT), now the World Trade Organization. This regime has grown and evolved over time, adding countries and goods along the way, peacefully resolving substantial conflicts in national economic interests, contributing importantly to global economic growth, and producing a stunning success by the standards of international affairs. But it has taken 50 years of hard work to do this! In this connection, experimenting with national emission ceilings of the type that are the neartotal focus of the Berlin Mandate process may be of long-term value. Naturally, one objective of such an effort is to make actual reductions in the quantities of greenhouse gases we would otherwise put into the atmosphere over the next decade or two. We do not belittle this motivation. But it should not be allowed to completely dominate the design of international agreements in this area. Such experiments will be of long-term value only to the extent that they facilitate development of sets of possible policy measures, a policy architecture if you will, that can, if necessary, contribute to effective and cost-efficient stabilization of greenhouse gas concentrations. This architecture would need to address all important sources and sinks of significant greenhouse gases, not just CO, produced from fossil fuels. Such a system would need to provide for reliable emissions monitoring and for some system of sanctions for those who violate their obligations. A host of other important issues must also be confronted. For example, since global participation will be necessary if global emissions are to be reduced, it is important to structure any Annex I targets and timetables to facilitate the inclusion of nonAnnex I countries. This involves, at a minimum, development of a regime to govern climate-related international wealth transfers. In this regard, the Berlin Mandate's exclusive focus on Annex I countries is a double-edged sword. On the one hand, unless the rich nations control their emissions first and support abatement by poor nations, the latter are unlikely even to slow their emissions growth. On the other hand, CO, emissions controls will raise the cost of producing energyintensive goods in Annex I countries, tending to encourage the development of energy-intensive industries in non-Annex I nations. (This is sometimes referred to as “emissions leakage.") Once this has happened, non-Annex I nations will be more reluctant to take actions to curb the CO2 emissions that have become a more important source of wealth. Attempts by the rich Annex I countries to use trade policies to slow the migration of energy-intensive industries to poorer nations may create major international tensions. In order to minimize the global cost of CO2 emissions reductions, the cheapest abatement opportunities should be exploited first. In principle, a regime involving emissions trading, like that used to control sulfur dioxide pollution in the U.S., could contribute substantial savings. But this approach, which has been advanced by the U.S. in the ongoing negotiations, runs into a problem if participation is restricted to Annex I countries. Trading can only work effectively among countries that have agreed to emissions caps. Without the participation of the developing countries, where most observers agree that many of the cheaper emissions reductions are to be found, the advantages of trading are drastically reduced. Finally, agreeing to lower future emissions may increase incentives to develop energy-saving consumer devices, along with low-carbon energy sources. But commitments to modest, short-term emissions reductions may focus R&D efforts on small advances over current technologies. Credible commitments to substantial, long-term reductions may be necessary to stimulate the fundamental research necessary to produce needed breakthroughs in energy technology. Lack of adequate political support seems to rule out making such commitments now, however, and the inability of any government to bind its successors would limit the credibility of any long-term commitments that were made. Unless climate scientists discover soon that greenhouse warming is definitely not a threat, the struggle to devise a global response will occupy our children, along with their children and grandchildren. We have discussed three legacies that our generation could leave that would make this struggle easier: (1) an international climate agreement that could, if necessary, reduce greenhouse gas emissions substantially, at least cost, while being responsive both to changes in our scientific understanding and to evolving political and economic conditions, (2) enhanced technical options that could, if necessary, ease the task of maintaining economic growth while controlling greenhouse gas emissions, and (3) an international system that could, if necessary, transfer substantial sums to developing countries to assist their participation in an emissions control effort. Building these legacies is a huge challenge, but this task merits at least the same sense of urgency that has motivated pre-Kyoto negotiations about short-term CO2 emissions reductions. |