What is Fair?

We’re discussing climate negotiations, but at an abstract level. The concepts of efficiency, of fairness, of uncertainty, learning, adaptability of the framework.

In this chapter we talk a little bit more about fairness. Fairness is a big important concept and it’s a loaded one because of course fairness is in the eye of the beholder very often.

What’s fair, by what standards? How can we judge? And when it comes to climate there has been no shortage of debate over these concepts.

I suppose the most intuitive and basic standard of fairness that has been presented is that countries should share equally in some sense, perhaps equal per person in the amount of the atmosphere that they fill with greenhouse gases.

So if we have a carbon budget, that carbon budget should be an equal allocation across countries. We saw in the first chapter of this lecture that as a strict operational guideline, that could be quite problematic, because if each country is imposed upon, to have a very particular level of emissions per capita or an equal level of emissions per capita or an equal budget of rights for emission, the costs of honoring the 2-degree Celsius carbon budget could be extraordinarily high, much higher than they otherwise would be. So we already modified the strict equality of emissions which of course needs a lot of more detailed definition to account for the fact that negotiations should aim in some way to minimize the economic costs incurred in reducing the carbon load, but at the same time there should be side payments from some countries to other countries in order to share the burden in a fair way.

Perhaps some equal sharing per person could be viewed as fair. On the other hand, there are so many footnotes to defining equal emissions that we quickly enter a quite complicated and though well-trodden terrain. For example it was pointed out by the government of Brazil and others many, many years ago that since the greenhouse gases are long-lived, the flow of emissions is not really a measure of allocation, rather the cumulative emissions or the stock of carbon dioxide associated with emissions from one country or another should be taken into account.

And this means that many countries and I think it’s a, plausible argument though one not accepted on the other side that countries like the United States which historically have been the very large emitting countries is terms of fairness have a historical responsibility that reflects the fact that the U.S. has used up a significant part of the carbon budget in the past. But there are other complications as well.

Today, many of the major emitters are industrialized middle income countries, of course China is the world’s largest emitting country. And one can point to China and say, It’s only fair now for China to cut emissions significantly.

Now this is certainly true from an efficiency point of view because without reductions of China’s emissions there’s no way to stay within the 2-degree Celsius limit. But China has another point in terms of the burden and that is China says, yes we are emitting lots of CO2 when we produce the products that you like so much and that we export to you. Why do you attribute the carbon dioxide of our industrial products that are for your use, to us?

Why not attribute the carbon dioxide from our products to the ultimate beneficiaries of those products? This has given rise to two columns of classification of CO2 emissions, those on the basis of geography of production and those on the basis of end use.

They say that if Americans import an industrial product from China and enjoy that industrial product, the emissions that were part of the process of producing that product should go into the tally of the U.S. column, U.S. responsibility, as, as opposed to China’s column. So already we can see from historical responsibility, physical geography the net trade that countries have somewhat different ideas about what is fair.

Some countries say, look we have no way to undertake this, these emissions reductions because we lack the kinds of renewable energy. Our mitigation curve is very, very steep. Don’t ask us to do much of anything. That may be again, part of an efficiency argument.

What responsibility do those countries have however from a financial transfer point of view? This again shows the difference of who undertakes which technology and systems measures and who pays for them?

That can be two distinct concepts. Many developing countries say, you miss the whole point, this is all very particular and rather arbitrary to judge fairness on the basis of accounting of carbon emissions, whether by production or consumption, historical cumulative or annual flows. We demand in fairness our right to develop. Here are rich countries that are saying we need a more expensive energy system, but we’re poor. And we feel that fairness ultimately is about our right to develop, not our sharing of a particular level of burden of mitigation.

And there’s also a strong point here and that’s why putting the climate change negotiation within the broader framework of sustainable development and within the broader framework of the sustainable development goals is important because the right to develop is part of sustainable development.

Poor countries need to be assured that the climate negotiations are not slamming the door on their ability to get out of poverty or to narrow the income gaps with the rich countries.

But there are many, many other areas of fairness that need to be considered. What about the fairness between the present generation and the future? You might say that the current generation is being unfair in leaving a very dangerous climate to future generations. There is a lot of truth in that. On the other hand, members of the current generation, that would be us, might say, well why should we undertake all of the costs of emissions for an improved environment for future generations? Let the future pay part of the costs that we incur today. Is that possible that we incur the costs, but the future pays for them? Well it is in part, if we finance some of the mitigation efforts through public debt rather than through current outlays. In that case, future generations through their own taxes will be servicing the debt that was used to finance the current mitigation. So we have a question of fairness between the present and the future which goes in two directions.

The argument about who’s really being fair to whom, or unfair to whom is a very interesting and, and obviously extremely pertinent question.

There’s another question that’s almost not asked at all by many countries but it’s of great concern to a few and that is what about fairness to countries that produce and export oil or gas or coal? Is it really fair just to close up our market, to crush our economy? Don’t we need some kind of compensation?

If you say, that the world can all benefit from climate mitigation, what about us in the Arabian Peninsula where we have an economy that depends on oil and gas? Or what about Australia or Canada or the United States? Or Venezuela? Or Angola? Or Mozambique? Or other fossil fuel producing and exporting countries, should there be fairness for them? Or should the mitigation efforts which will limit the demand for fossil fuels and thereby lower their market price, at least in tendency, just leave those countries worse off, maybe even crushing their economies? Or should fairness also apply to the balance of gains enjoyed by the consuming countries and the producing countries? When we allocate rights as it were per person, we’re not taking into account that issue at all. And many oil exporting countries say, no thank you.

They’re also saying by the way, we’re not even going to agree on this unless there is a Pareto improving outcome of the negotiations. Why should we absolutely suffer massively for the sake of other countries? Let’s enjoy the spirit of global cooperation where we can all benefit. So this is a kind of fairness that typically is not being discussed. What about the fairness regarding companies? We have a couple of dozen oil, gas and coal giants that are responsible for a huge proportion of the emissions in terms of the fossil fuels that they produce.

They’re often just on the sidelines. What is the fairness vis-á-vis Exxon Mobil? What’s the fairness vis-á-vis Chevron? What’s the fairness vis-á-vis any of these big companies, BHP Billiton or Peabody Coal and others? Don’t they have responsibilities? Isn’t it fair for them, these companies that have reaped huge profits over past decades, vast shareholder wealth, but imposing huge costs, or at least their products are imposing huge costs to bear some of the burden? It could turn out even to be a legal burden, not only a moral negotiating burden.

Often companies that have products that cause large damages, say the asbestos companies in the end face huge liabilities. These cigarette companies have paid huge damages, rightly so, it’s a killer product. And they’ve ended up paying very large taxes as what’s deemed to be both efficient in reducing cigarette smoking and fairer in terms of allocating the costs and compensating some of those who have had family members die as a result of smoking addiction or lack of awareness and, and so forth.

So the questions of fairness also come in at the individual country level. And poor countries have a different position on fairness. Their argument is we’re poor, we need help. There is a lot of merit in that. I would say every great religion in the world for 2,000 years or more has emphasized the moral commitment to help the poor. And here we have a challenge of higher costs or additional efforts needed to have a cooperative global agreement. The poor countries need help, the rich countries have acknowledged this. They’ve already promised a $100 billion dollars per year by 2020 in transfers from the rich countries to the poor countries, but they haven’t said yet, how, in what way, what specificity.

And interestingly, recent, in a recent meeting a delegate from China said in the context of negotiations, well many countries are calling for legally binding commitments on mitigation, what about legally binding commitments on financial transfers? Isn’t that also part of the fairness? So you can see that that also adds of course a, a huge layer of complexity.

Now if you are the Philippines or Haiti or Honduras or other parts of the world in the line of fire of tropical cyclones, hurricanes, typhoons, or if you are a country like Syria or, which has faced human disaster, geopolitical disaster, ecological disaster, because of increased drought frequency, all this talk about fairness limited to who is emitting what and who is mitigating what also seems beside the point. What about the damages? What about the costs? Some countries will face costs that are rather modest. Other parts of the world will face enormous costs, even within a 2-degree Celsius limit.

And that’s why at COP19 in Warsaw at the end of 2013, governments said that part of fairness is compensation for losses and damage. But they haven’t defined the mechanisms and the specificity. All of this is to suggest that when we enter into the hardcore negotiations that are coming up and we’re looking at efficient ways to stay within the 2-degree Celsius limit, we’re looking at effective ways to learn, to adapt, to develop new technologies and we are looking for standards of fairness.

We’re going to have to keep an open mind because fairness has many different dimensions, many different aspects. It includes the right to development, it includes the right for compensation of losses and damages. It includes responsibilities of companies, not only countries. It includes historical responsibility. It includes the obligation towards the poor. And all of these aspects of fairness are legitimate, they’re part of the global discourse and they will absolutely be part of the negotiations in the coming year up to COP21

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