If a product is consumed in one country, and it is manufactured in another, which country is responsible for the carbon emissions from manufacture? And if one country outsources manufacturing to a country with more lax environmental regulation, who’s responsible for the extra carbon? These will be part of the discussion in Bali when representatives of the world’s countries gather next month to negotiate a successor to the Kyoto Protocol.
In 2006, the idea that outsourcing industry meant outsourcing pollution was already well developed. A think tank report at the time suggested that “when trade between China and its partners exerts an environmental impact, the responsibility should be borne by all parties, including manufacturers, traders and consumers in the product chain,” according to the China Daily.
In The Wall Street Journal, Jane Spencer reports that this concept is back, and may play a role in Bali.
Past accords like Kyoto have looked at emissions on a country-by-country basis, requiring participating nations to reduce greenhouse gases released within their borders. In other words, the manufacturing nation pays for the pollution. But in a twist that could put more pressure on industrialized nations like the U.S., academics, environmentalists and some policy makers argue the next global climate treaty should take into account a nation’s emissions “consumption.” They argue the emissions are embedded in goods that move around the world through trade — so if the U.S. imports iPods from China, Americans should share some responsibility for the pollution produced in making them.
“As China’s emissions rise, everyone is pointing the finger of blame at China,” says Andrew Simms, policy director of the New Economics Foundation, a think tank and environmental-advocacy organization based in London. “The real responsibility for rising emissions should lie with the final consumers in Europe, North America and the rest of the world.”
The article notes that some in the U.S. dispute this idea, but I find it pretty persuasive. If U.S. or other consumers didn’t buy products, they wouldn’t be made. The essential cause of emissions is the consumer. It doesn’t make sense to blame the venue of the proximate cause: coal burning in China.
This shouldn’t let China off the hook, though. China’s manufacturing is indispensible in the world economy, but we could do without the inefficient energy practices. The rub is that, without proper government intervention and assistance, more efficient practices could make products more expensive in the short term.
In the United States, the government has used a variety of means to encourage efficiency. Once efficient practices are mandated, manufacture actually gets cheaper: Factories buy less energy. But the innovation costs money at first. That’s why governments develop rebate programs to offset higher consumer prices or other incentives to offset higher costs of manufacture.
What this question raises, in my view, is whether it’s the exclusive responsibility of the Chinese government to back efficiency in China. If foreigners consume the products, shouldn’t they pay to reform the industries? Imagine China charged a carbon tax on all products and put the money into efficiency programs. Would the WTO allow China to charge a carbon export tax? Maybe Bali will help solve all this.