Mar 28, 2012

This carbon business

There is enough literature on Green house gases and global warming, the efforts to curb warmingCarbon trading, the old Kyoto and the Latest Conference of parties (COP 17) on the internet. So I won't go into the general discussion about climate change talks and India's stand. I recommend Google for more. There's so much information about the 6th element of the periodic table that I would recommend it for the 1st place. If ever they create a periodic table based on the popularity on the internet, that is!

What I am going to talk is slightly off topic. But not irrelevant. I will work backwards. Suppose there comes a time when the following comes true. 

There is a consensus among a group of developed countries to impose a measurable Carbon labeling or say an Ecolabel, on all the products. It's imposed irrespective of whether the product is manufactured locally or internationally. All products need to strictly mention the amount of carbon emissions during making of the product, and the customer is given a choice to choose products based on, say, a number that tells how much is (s)he harming the environment by choosing it. Something like the Bureau of Energy Efficiency star rating system we have. We know how much the device is inefficient. Also, there is a foodmiles for food stuff, and service-miles for services consumed. All processes involved in manufacturing need to be measured for carbon footprints mandatorily. 

What would happen? 

My take is this (you are welcome to comment!) :

1. There will be a huge demand for Carbon auditors, carbon lawyers, carbon process experts and carbon consultants. They certify processes, measure carbon emissions, consult organizations and nations on how to benefit out of it, split hair over legal carbon provisions, and hang around in general, over the matters carbon in nature. 

2. Developing countries will suddenly find a huge carbon barrier for merchandise trade, which would seem initially impossible to cross. Slowly some of the aggressive and agile organizations, and nations, will learn, cope, understand and will reclaim some of the lost trade by adhering to standards. However, the process might blunt the competitive edge irreparably. 

3. The biggest damage would be due to the lack of technology to cope with the carbon requirements. Who would buy a two star air conditioner, when you see a five starred one sitting next to it. A little premium would not be minded. And what if the market bans the two starred ones altogether. It's similar analogy here. Developing countries would make noise about common but differentiated stuff, but then, there's this excuse of  Green climate fund that never helped much. 

4. The Indian IT/BPO/Offshore services sector will first look puzzled. But smart as it is, it will produce overnight experts on Carbon-'everything'. You name it, we have it in carbon. And these carbon professionals will make a mark. 

5. All that WTO and related efforts achieved over a period of time will come to a naught. The developed world, perceiving that it was losing the competitive advantage, will regain the lost ground through the back door. The trade might shrink overall, but then, between North and South, it might simply wind up for all practical purposes. 

6. The primary foodstuff being exported from developing countries will show up having huge food-miles on the supermarket shelves. Would one still consume them or prefer to replace with the local substitutes? I would say, it would depend on perception of people. And given that people are very sensitized (and can be sensitized through advertisements and information in text books in schools), I would go with the substitution theory. 

If this shouldn't happen, then, it makes a lot of sense to ensure that trade and climate issues are not mixed up. Developed world is trying it's best to get it into WTO (21st century issues) and UNFCCC.  Global warming is an important issue, but trade barriers are not the answer to reduce emissions. And implementing uniform reduction  targets and fixing equal responsibility on all countries, is akin to behaving like the schoolmaster who punishes the entire class when a small group of kids explode a cracker in the class.