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Book Review
Study on climate change policy
K. S. KAVI KUMAR
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Addresses the role of MNCs in the shaping and implementation of climate change agreements
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THE CORPORATE GREENHOUSE — Climate Change Policy in Globalizing World: Yda Schreuder; Books for Change, 139 Richmond Road, Bangalore-560025.
Rs. 325.
This book discusses the political economy of the climate change negotiations in the context of changing geopolitical order. Significantly, it addresses the role of the multinational corporations (MNCs) in the shaping and implementation of climate change agreements.
Arguing that some of the multinational corporations wield greater power than many of the small nations, it presents a case for bringing the MNCs into the greenhouse gas (GHG) mitigation regime.
Climate policy
In the absence of such a strategy, it is argued that there could be widespread relocation of the corporations to countries that do not have the emission mitigation obligations, undermining the overall objective of climate policy — namely, significant reduction in the GHG emissions worldwide. This is an important dimension that climate policy should be concerned about as nations negotiate a post-Kyoto agreement on GHG reduction.
The first chapter presents the evolution of the climate policy from the 1992 Earth Summit to the signing of Kyoto Protocol in 1997. Apart from explaining the various features of the Kyoto Protocol, it provides a brief analysis of emissions data and goes on to question the climate effectiveness of the Kyoto agreement. In the second chapter, the author introduces to the reader the equity and sustainability issues underlying the North-South debate in the climate change context.
The next chapter focusses on trade liberalisation debate and discusses the inter-linkages between trade liberalisation and the global environment.
The role of MNCs in the climate policy is discussed in the fourth chapter. The analysis questions the reliability of national economic and emission accounting practices in the light of significant intra-firm trade that characterises today’s world dominated by the large multinational firms.
Using the European Union (EU) Emissions Trading Scheme as an example, the author examines the consequences of carbon constraint on the corporate investment strategies and global production patterns. He highlights the growing concern among the EU nations about the wisdom of ‘going alone’ in meeting the Kyoto commitments, especially in the light of the expansion of energy-intensive production in countries such as China.
While the penultimate chapter discusses the potential misuse of the Kyoto mechanisms like the Clean Development Mechanism by the large firms, the last chapter underlines the limitations of the current GHG mitigation policies, especially in the context of the important role the MNCs play in the increasingly globalising world, and makes the point that their part in the future climate regimes must be even greater.
Relevant issues
It is well recognised that the carbon embodiment in global trade is fairly complex and that the national climate policies may not be effective if a significant proportion of the domestic consumption is based on offshore manufacturing. For instance, a recent study (cited in the book) estimated that during 1997-2003, the U.S.’s CO{-2} emissions would have increased from three per cent to six per cent if the goods imported from China had been produced in the U.S.
For effectively addressing CO{-2} emission allocation issues such as this, it is important to know how much CO{-2} is added to the national GHG pool at every step of the production process. Equivalent amount of CO{-2} could then be subtracted from the GHG emissions of the country where the production takes place and added to the country to which the multinational company originally belongs, and/or to the country to which the MNC ships the product for final consumption. All this requires considerably improved international accounting practices, especially of the MNCs.
While the book does not offer comprehensive strategies for dealing with the multinational corporations while designing the future climate policies, it has succeeded in highlighting a number of relevant issues and contributed a lot by way of sensitising the reader to the complexity of designing climate policy, especially in the rapidly globalising world dominated by the MNCs.
The end-note format adopted for listing ‘notes’ and ‘references’ militates against easy reading. But then, it is a small price one has to pay for the reasonably good material presented in the book.
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