Global climate change is one of the main challenges to humanity in the 21st century and promises to be a pillar of the international agenda for the next few decades. The growing COVID-19 pandemic has taught humanity two important lessons already. First, a focus on economic growth should not undermine the ability of states to provide their populations with vital social goods, or of humanity to solve global problems. Second, the speed of response is important. The countries that promptly introduced restrictions managed to “flatten the curve” of new cases.
Climate change is like the long-term version of the coronavirus: decisive action to decarbonize the economy will be expensive today but will make it possible to bend the curve of growing emissions and avoid even greater damage in the future
Alas, despite growing concern over climate change, humanity is still nowhere near solving the climate crisis. The pandemic and the associated economic recession will reduce emissions for some time but they will resume growing eventually. People, businesses and governments in Western countries support transitioning to a low-carbon economy, but these countries only account for about a third of the world’s greenhouse gas emissions. And this share is set to rapidly decline in the future regardless of climate policy due to slower economic and population growth compared with the rest of the world. The dynamics of global emissions are now determined by the leading developing economies, primarily the BRICS countries. They are the first countries trying to raise living standards from low to medium and high in the era of global climate crisis. If they do so by following the growth models and consumption patterns of Western countries, the world can forget about the goal of curbing emissions; instead it will be full speed ahead to climate disaster. The key issue of the global efforts to counter climate change is not how many small European countries will become carbon neutral. What matters most is whether the huge BRICS economies will be able to find sustainable ways of achieving economic prosperity and to provide a model for developing nations that follow them - from Indonesia and Pakistan to the countries of tropical Africa.
BRICS countries have always declared that climate change is a top priority but their cooperation has mostly been limited to joint statements expressing their commitment to the values of green development and to discussing opportunities for technological exchange and joint funding of green projects. All this is important but can be carried out on a bilateral basis or by current international institutions. As a dialogue venue for countries with over 40 percent of the world’s population and almost a third of global GDP (PPP), BRICS would be better served addressing a more important challenge: forging a common vision and approach to the climate threat and the global transition to low-carbon development.
It is important for the BRICS countries to make this transition inclusive and consonant with other goals of sustainable development: fighting poverty, reducing inequality and improving public access to social goods, including energy. The traditional climate policy toolkit, which has been rather successfully introduced in advanced nations, is hardly responsive to these needs. Thus, the relatively poor are shouldering the biggest burden of climate policy in the form of more expensive electricity and gasoline which are becoming more expensive as a result of hydrocarbon regulation
. The yellow vests movement in France has shown that even in advanced countries inequality is becoming an obstacle to ambitious climate measures. In the BRICS countries the degree of social stratification is much higher. It will be even more difficult to pursue a similar model of climate policy, especially considering the inevitable growth of public polarization once the pandemic recedes.
The alternatives to traditional climate policy required by the BRICS countries probably lie outside the scope of what the West is discussing: how – and by how much – to raise the cost of hydrocarbons while compensating the most vulnerable strata in society for these expenses.. For the BRICS countries it is more important to revise the goal-setting of climate policy. The most important step on this path will be to reorient the focus of emissions cuts from production to consumption.
International agreements, from the Kyoto Protocol to the Paris Agreement, count the emissions on a country’s territory, or production-based emissions. International trade is the dividing line between production- and consumption-based emissions. Higher consumption of carbon-intensive products may not be accompanied by an increase in territorial emissions but may contribute to their growth in the countries supplying these products. To a large extent, the success of the Western countries in reducing emissions in the past several decades have come from increasingly importing carbon-intensive products instead of producing them domestically
. The imports primarily originate in the BRICS countries. Four members of the association (China, Russia, India and South Africa) are the world’s leaders in emissions related to export products
. In all of these countries, a not insignificant share of their emissions comes from producing goods that are shipped abroad.
To correct for this, the calculation of consumption-based emissions considers the emissions that go into producing the goods consumed in a country, no matter where the emissions physically occurred
. Under such an approach, a considerable part of emissions from production in the BRICS countries will be reclassified as emissions from consumption in Western states. This raises the question of the responsibility for emissions from the production of goods that are bought and sold. Who should be responsible for them – the exporter or the importer
? It also raises the matter of revising the carbon customs taxes that the EU is going to introduce on carbon-intensive imports. While important issues in themselves, however, they exceed the scope of this article. There is a more important aspect for BRICS: the emphasis on emissions from consumption is creating a different system of incentives and goals for the members of the association. Instead of focusing on the secondary aspects of the problem (such as the localization of carbon-intensive production) it makes it possible to concentrate on the main reason
behind higher emissions – the growth of consumption.
In practical terms, the move to calculate consumption-based emissions is giving the BRICS countries a broader set of acceptable instruments of climate policy than the traditional approach of calculating production-based emissions.
To begin with, in addition to the traditional emphasis on technological solutions on the supply side (energy efficiency and renewable energy), calculating consumption-based emissions makes it possible to widely deploy means of cutting emissions on the demand side, which concern consumption patterns, lifestyle, infrastructure and provision of services
. These ideas challenge the consumption model established in the West and have never been popular there for this reason. But they are the basis for the new development models that are required by the BRICS countries. These means of reducing emissions are particularly in demand for China as it turns to domestic consumption as to a new driver for growth and large-scale construction of infrastructure under the Belt and Road Initiative.
Second, by moving to calculate emissions based on consumption, the BRICS countries can adopt a fiscally progressive climate policy. While traditional carbon pricing mechanisms employed in advanced countries put most of the burden on the relatively poor members of society, the emphasis on consumption-based emissions and demand-side climate policy is making it possible to start deploying political instruments aimed at countering the excessive consumption by the wealthiest in society.
In other words, the carbon tax is being transformed into a tax on the consumption of carbon-intensive products. This tax is progressive a priori and synchronizes the goals of reducing emissions and fighting poverty and inequality.
This is opening the road to inclusive low-carbon development in the BRICS countries.
The proposed move to calculating consumption-based emissions will not be easy. It may be described as a paradigm shift that requires strong political will. The traditional approaches are based on an almost 30 year history of Western countries building the international climate regime. But this history has been one of disappointment for the most part. The BRICS countries have always wanted the global governance system to better reflect their interests and distinguishing features. However, it is important to go beyond criticizing Western-centric institutions to formulating what the world order should look like. This is the right time to take this step on the climate agenda.