TCS Daily

Yes to Growth; No to Kyoto

By Alan Oxley - August 2, 2005 12:00 AM

Japan's decision to join the new Asian Pacific Partnership for Clean Development and Climate will raise anxiety in Europe's leading capitals, for overnight it transforms the European Union from climate change cock of the walk to climate change feather duster.

But the implications go beyond just that for Europe. The Kyoto Protocol, with its caps on emissions and limits on growth, has been Europe's focus for dealing with climate change. Now that anti-technology, anti-growth attitude threatens to further marginalize Europe in global affairs.

The new Asian Pacific Partnership is a Bush administration initiative. Japan's decision to join the USA China, India, Korea and Australia strengthens this conclave of economies, which are the world's leaders in economic growth and technology.

Details of the pact have yet to emerge, but its focus is clear. The pact is an alternative to Kyoto. Rather than regulation of energy, it will focus on research on new technologies.

The contrast lays Kyoto bare. Its supporters have been urginggovernments in Asia to ratify Kyoto and "invest" in loss-making, renewable energies, depicting them as first mover strategies for a 'carbon-constrained' future.

That strategy carries the burden of higher costs.

The Asian Pacific strategy supports growth and promotes research in new technologies to manage emission of carbon dioxide. That itself makes it more appealing.

It also has the advantage of buying time, as the science of greenhouse warming is far from established.

This is disconcerting for some. Greens in Australia have already denounced the new pact as a "convention of polluters".

But while Greens lament, a more ominous scenario will be looming in the minds of Europe's leaders. This Asia Pacific grouping includes the world's best performing economies and the drivers of the world economy. It includes the economies with the requisite energy and dynamism to develop and commercialize new technology.

While the scope of the pact is climate change, it is the sort of arrangement that can engender a habit of cooperation. All of these economies are interested in the new technologies that will drive growth in future such as information technology, biotechnology and nanotechnology. And Europe is not part of this.

The secret fear of leaders in Europe as they grapple with low growth and poor productivity fear is that the rest of the world might be passing it by. The strategy to turn the European Union into the "United States of Europe" and global leader has stalled. Strategies to build a strategic relationship with Asia, such as through ASEM, the Asia European Economic Meeting, have flopped.

Climate change was arguably Europe's grand, global initiative. The EU attacked refusal of the Bush administration to ratify Kyoto as undermining "multilateralism." Now Kyoto is in tatters, reduced to a regional program to shape Europe's climate change policies - a now ineffective and very costly program as Kyoto only made sense as a global strategy.

How did Europe get this so badly wrong?

Two reasons. First, Europe pursues policies the rest of the world does not want. It believes growth should be compromised to protect the environment. Every directive from the European Commission must have environmental goals and reflect Europe's "no risk" version of the precautionary principle.

Second, Europe has become guilty of provincial thinking globally. That is, there is a belief in European capitals that what is acceptable in Europe is right for the rest of the world. Thus, European environmentalists never understood that Kyoto did not represent to developing countries so much a green future as an anti-growth strategy. That's why developing countries signed up for Kyoto only on condition that they had no obligations to regulate energy and in return for promises of aid.

European Greens spun this highly qualified support as "a first step." They missed the point. They never understood there would be no "second step." The alignment by China and India with the U.S. strategy now surely has made this abundantly clear in London, Bonn, Brussels and The Hague.

Many in Europe might be content to become green provincial. But for so long as Europe continues to project its preoccupations on the rest of the world, to promote regulation over free markets and push environmental protection over growth, its influence will continue to wane.

Alan Oxley is Chairman of the Australian APEC Centre at Monash University, Melbourne. In November the Centre produced an analysis of the impact of the Kyoto Protocol on APEC economies in East Asia.


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