In the Hindustan Times, trade lawyer RV Anuradha has an op-ed entitled "EU’s CBAM, US Carbon Tax undermine international climate and trade laws." What particularly interested me was the description of an alternative focus for climate change mitigation efforts. Whereas the EU and U.S. are emphasizing a shift away from manufacturing that involves high carbon emissions, some people in India are emphasizing reductions to per capita carbon emissions:
The EU plans to start implementation of CBAM in a phased manner from 2023. It runs the risk of derailing hard-won gains of the rules of international climate policy, as well as international trade. India and other developing countries should consider engaging in discussions that seek to address the problems with innovative solutions that have equity, accountability and effectiveness at its core.
Raghuram Rajan’s proposal for a “global carbon incentive” (GCI) is one such innovative solution that merits deeper understanding. Rajan explains that GCI is premised on the principle that every country that emits more than the global average of around five tonnes per capita of CO2, would pay annually into a global incentive fund, with the amount calculated by multiplying the excess emissions per capita by the population and GCI.
He notes for example, that if GCI started at $10 per tonne, the US would pay around $36 billion, and Saudi Arabia would pay $4.6 billion; and that countries below the global per capita average would receive a commensurate payout. For instance, he estimates that Uganda would receive around $2.1 billion. The underlying principle, Rajan explains, is that every country would face an effective loss of $10 per capita for every additional ton that it emits per capita, regardless of whether it started at a high, low, or average level.
So why are the U.S. and EU emphasizing manufacturing, while India is emphasizing per capita emissions? That's easy: They are both highlighting the areas where they are relatively better about carbon emissions. U.S. and EU manufacturing tends to emit less carbon; India has lower per capita carbon emissions.
Which aspect of carbon emissions deserves to be the focus? The answer is probably both. What would be nice is if both sides agreed with that, and went along with the proposals of the other side. What worries me, though, is that both sides will dig in their heels and assert that only the aspect that favors them should be taken up.
