UNDP wants climate justice through trade

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dramatically enhanced if a post-2012 Kyoto framework incorporates mechanisms for finance and technology transfers.

Energy related carbon dioxide emissions have increased sharply since 1990, the reference years for reductions agreed under the Kyoto Protocol, it said and added that not all developed countries ratified the Protocol's targets, which would have reduced their average emissions by around 5%. "Most of those that did are off track for achieving their commitments," it said.

The UNDP report noted that Kyoto Protocol did not place any quantitative restrictions on emissions from developing countries. "If the next 15 years of emissions follows the linear trend of the past 15 years, dangerous climate change will be unavoidable," it said.

"Negotiations on emissions limits for the post-2012 Kyoto Protocol commitment period can – and must – frame the global carbon budget." Saying so it noted most developed countries like Canada fell short of the targets. Though the European Union and UK have both embraced their targets, they are likely to fall far short of the goals set unless they move rapidly to put climate mitigation at the center of energy policy reform. Two major OECD countries like US and Australia are not bound by Kyoto Protocol.

The report suggested two ways to mitigate climate change, one is to directly tax carbon dioxide emission and the other is cap-and-trade. Under cap-and-trade system, the government sets an overall emissions cap and issues tradable allowances that grant business the right to emit a set amount. Those who can reduce emissions more cheaply are able to sell allowances. One potential disadvantage of cap-and-trade is energy price instability while the potential advantage is environmental certainty, it noted.

While the transition to climate protecting energy and life styles will have short-term costs, there may be economic benefits beyond what what is to be achieved by stabilizing temperatures. These benefits are likely to be realized through Keynesian and Schumpeterian mechanisms with new incentives for massive investment stimulating overall demand and creative destruction leading to innovation and productivity jumps in a wide array of sectors, the foreward to the report said.