The House that Copenhagen Built

Effective climate policy must be created brick by brick from the bottom up.

The results are in. December’s Copenhagen Accord asked countries around the world to submit their proposals to reduce their greenhouse gas emissions by the end of January.

And so they did. There were proposals to make steep cuts (Europe), to reduce emissions intensity (China and India), to slow business-as-usual emissions (Brazil and South Africa), and to wait for U.S. Congressional action (U.S. and Canada).

These pledges sound more like bids in a silent auction that nobody wants to win than a globally coordinated response to climate change. But this new jumble of non-binding targets may not be such a bad thing.

For the first time since the United Nations Framework Convention on Climate Change was signed in 1992, national commitments are starting to reflect reality. China, India, Brazil, and South Africa are no longer lumped together with Mongolia, Nepal, Ecuador, and Chad. Instead, the major developing economies have put forward their own, relatively ambitious targets.

More importantly, the Copenhagen Accord signals that a successful global response to climate change must be built from the ground up.

Sure, a globally coordinated effort looks good on paper: Every country would do its part. No one would get a free ride. A single price on carbon emissions would be a worldwide currency.

But over 20 years of pushing for this ideal has shown that cooperation is hard to achieve. A truly global agreement has not materialized, in large part because the U.S. and China, the world’s two largest emitters, have not committed to binding reductions.

But beneath the surface, action on climate change is coming together, albeit at different speeds. Individual governments are starting to adopt their own climate policies such as fuel economy standards, energy efficiency programs, and cap-and-trade systems. China’s installed wind capacity doubled in each year between 2004 and 2009.

The world seems to be adopting what has been called a “Madisonian Approach to Climate Policy” in reference to James Madison’s vision of U.S. federalism where states act as laboratories for policy innovation. The hope is that local and regional initiatives will lay an effective foundation for coordinated international regulation.

Why will this bottom-up approach be more successful?

First, at the regional level, stakeholder interests are more closely aligned and agreement among them is more easily reached. As Environment Minister Jim Prentice has made clear, Canada and the U.S. can find common ground on cap-and-trade. Canada and China, however, may not, especially given the risk that companies operating in the oil sands could ship bitumen to Asia for upgrading.

Second, individual governments can use their resources for programs tailored to local concerns and opportunities. India may crack down on the theft of electricity, Indonesia may discourage deforestation for palm oil plantations, and Spain may further harness its potential for wind energy.

Most importantly, local governments can also tap existing institutions to enforce their programs. If there is one Achilles heal of international environmental agreements, it is the world’s inability to enforce them.

The bottom-up approach can work in Canada too.

In 1995, Harvard Business School’s James Sebenius asked, presciently, “If serious actions are proposed … will the Canada that pumps oil, cuts forests, and builds cars really just go along?” Well, perhaps not the entire country. The federal government will be hard-pressed to find an agreement that is acceptable to both fossil-rich Alberta and Saskatchewan and to hydro-powered Quebec and B.C.

Yet in the absence of a federal deal, many provinces are forging ahead.

Premiers Jean Charest and Dalton McGuinty have attacked Prime Minister Harper on Canada’s performance in Copenhagen. Their provinces have set aggressive greenhouse reduction targets. Ontario is looking to shut down its coal-fired generators by 2014. It now guarantees a premium price for new renewable electricity.

Quebec and Ontario, along with B.C. and Manitoba, are also part of the Western Climate Initiative. Together with seven U.S. states, they plan to implement a cap-and-trade system that limits regional greenhouse gas emissions by 2012.

And as individual provinces pursue more aggressive emissions reductions than they would under the likely national policy compromise, they will develop the institutions necessary for measuring, reporting, verifying, and trading greenhouse gas emissions. This is the kind of expertise the entire country will need if and when Canada participates in a cap-and-trade system.

Discussing the future of pollution control in the 1980s, Professors Bruce Ackerman and Richard Stewart wrote, “We believe that completely uniform goals are seriously dysfunctional, producing too much control in some regions, too little in others, and completely missing special problems in still other regions.” Their recommendation was to first construct stronger regional institutions.

It’s the same lesson from Copenhagen. The world must build a bottom-up response to climate change, one that rests on a solid and nuanced foundation of local, regional, and national policies and institutions.

Linking these various policies and institutions together will admittedly be challenging. But the alternative to laying brick by brick is to keep wishing for a prefabricated house of cards.