Climate negotiatiors need to overhaul their list of who's rich and who's poor.

News and commentary about environmental issues.
Dec. 11 2008 11:42 AM

The Problem in Poznan

According to the U.N. climate negotiators, Singapore and Kuwait are among the poorest countries in the world.

Kuwaiti shoppers. Click image to expand.
How poor is Kuwait?

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of their own making: The list of who's rich and who's poor that would be used for any final agreement is hopelessly out of date.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.

These problems have not gone unnoticed by negotiators. In response, Australia recently proposed (PDF) that countries wrongly categorized as poor be reclassified and forced to assume the same responsibilities as the wealthy. (It helpfully includes a "Ukraine List" of 44 countries with higher per-person GDP than the "wealthy" Ukraine.) Japan has offered its own scheme, which would divide the world into three groups: a much larger set of wealthy countries than has been used in the past, an intermediate group of rapidly developing countries, and a third set of substantially poorer states.

Resistance has, predictably, been strong. Negotiators from the "poor" nations of China and Brazil have objected loudly  (Word file). Perhaps most galling is the outspoken opposition of Singapore, which ranks ahead of the United States, Sweden, and Japan in per-person wealth. But even legitimately poor countries, worried about maintaining solidarity, have toed the line.

It's a dangerous situation. So long as negotiators insist on treating Singapore, China, and Togo as part of the same group of poor countries, they are not going to be able to find a set of rules that works for all of them. And if they continue to pretend that Ukraine and Switzerland are economically comparable and both wealthy, they're going to have a hard time coming up with a formula for rich countries' shared obligations, too.

If negotiators allow for new shades of gray, that might change. Acknowledging that there is a middle group of countries, including China and Brazil, would be a particularly important breakthrough. (The precise definition of this middle group would need to be negotiated—GDP per person would probably have to be supplemented by other measures of wealth and development.) Those countries are rich enough to have some capacity to cut their emissions on their own but poor enough that they need help doing more. They have no natural place in the current climate regime's taxonomy. If reforms freed negotiators to focus on the particular challenges those countries pose, though, progress might be more forthcoming.

To be certain, changing the way countries are classified would not be a panacea. Diplomats from big developing countries would still try to avoid making commitments, regardless of what category their countries were in. And some countries can't readily be classified under any scheme.In particular,India, whose citizens are the world's 136th wealthiest (behind Nicaragua and Iraq), is poor by most measures. But letting that justify an exemption from all emissions-cutting rules would be dangerous, since it is also the world's third- or fourth-largest greenhouse-gas emitter. It won't be sufficient to replace one rigid set of categories with another; negotiators will have to make difficult adjustments on the margin.

But that should not deter the United States and others from attempting to press forward on reform. The next year of negotiations will be challenging; failure is a significant possibility. If proposals for a new agreement don't reflect the many ways the world has changed since the 1990s, though, it's a guarantee.

Michael Levi is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations. He blogs at CFR.org.