The annual U.N. climate negotiations, currently under way in Poznan, Poland, have stalled. Here's why: Rich countries want a commitment from poor countries to cut their greenhouse-gas emissions. Poor countries want a commitment from rich countries to pay for those cuts. Those competing claims have long posed a major obstacle for any kind of global climate deal. But the negotiators face another big handicap of their own making: The list of who's rich and who's poor that would be used for any final agreement is hopelessly out of date.
The United Nations first divvied up the developed and developing world for climate talks in 1992, with the goal of using that split to apportion responsibilities for cutting emissions. But distinctions that once made sense are no longer tenable. Ukraine, for example, is considered rich. In 1992, it was reflexively lumped together with the countries that once comprised the powerful Soviet Union; by 2007, its citizens had fallen to 97th richest in the world by GDP per person. (All wealth figures cited here are from The CIA World Factbook.) At the same time, Singapore (now the sixth-richest nation in the world) was designated as poor. Unless the climate regime overhauls its wealth labels, a country like Singapore could reap the benefits of financial aid, while Ukraine would be burdened with emissions caps. Needless to say, that kind of nonsensical setup won't get you very far in international talks.
The original climate negotiators had a simple way of defining wealth. First, they took the list of 24 countries that were part of the Organisation for Economic Co-Operation and Development, a pre-eminent club of wealthy, democratic, free-market states that was formed in 1961; these included the United States, most of Western Europe, Japan, and a few others. Then they added several states of the former Soviet Union, like Russia and Belarus, as well as a handful from Eastern Europe, like Poland and Slovenia. This was basically Cold War logic on cruise control: First World and so-called Second World countries were rich; Third World countries were poor. The Kyoto Protocol, concluded six years later, maintained the same division. Rich countries agreed to institute caps on their greenhouse-gas emissions while poor countries agreed to do nothing.
The resulting deal had its flaws then. It makes absolutely no sense today. Belarus, for example, is lumped together with the rich countries, despite a GDP per person of about $10,000. As a result, it has an emissions cap like those in place for Europe and Japan. Kuwait, meanwhile, is considered poor. That means the oil-rich emirate is spared any obligations, despite the fact that its residents are about five times wealthier than the Belarussians.
And that's only the simplest distortion. Under the Kyoto protocol, developed (rich) countries have two ways of meeting their caps. They can, of course, cut their own emissions. But they can also pay for emissions-cutting projects in poorer countries, like China or Peru. Under that approach—called the Clean Development Mechanism—they earn credits for those projects. They can then use those credits to offset their emissions at home.
This leads to some extraordinarily odd—and unfair—outcomes. Any "poor" country can get in the game. Even Qatar, which has a higher per-person GDP than any other country on earth, is eligible. Not surprisingly, it has exploited the opportunity. Last year, Qatar teamed up with the U.K.-based firm EcoSecurities on a project to capture natural gas that was going to waste in operations at its Al-Shaheed oil field. According to estimates filed with the U.N. Framework Convention on Climate Change, Qatar Petroleum expects sales of carbon credits from the project to generate $128 million. Meanwhile, according to a new EU analysis, "wealthy" Portugal (GDP per person: $22,000) looks like it won't be able to cut its emissions enough to satisfy its Kyoto target. Instead, it will have to spend about $500 million paying for the sorts of credits Qatar is generating.