No one could make a greater mistake than hewho did nothing because he could do only a little

Edmund Burke

Scientists tell us that we are facinga global catastrophe from globalwarming caused by theaccumulation of greenhousegases, primarily carbon dioxide

(CO2), in the atmosphere. It is thereforeimperative that the nations of the worldunite in controlling the emissions of thesegases. Unfortunately, as is evident from theCopenhagen conference held in December2009, countries are far from agreeing onhow to share responsibility for making thenecessary emissions reductions.

This article sets out a framework forsharing such responsibility in the case ofcarbon dioxide emissions from fossil fuel, andsuggests a process by which eventualagreement on such a framework might bereached. While it does not address the veryimportant issues of non-CO2 greenhouse gasesor emissions from land use and deforestation,the ideas could be adapted for those purposes.

Between 1990 and 2007, carbon dioxideemissions rose from 20.1 billion tonnes to28.4 billion tonnes.1 This increase wasdriven by three main factors:

an increase in population from 5,283million to 6,662 million

an increase in average GDP per capitafrom US$7,082 to US$9,856

an improvement in the relationshipbetween GDP and carbon dioxideemissions of 1.5 per cent per year, whichhas taken this income–carbon factor fromUS$1,795 per tonne of carbon dioxide in1990 to US$2,309 per tonne in 2007.

Looking 50 years ahead, by 2057 theworld’s population is expected to reachnearly 9.5 billion, while GDP per capita isexpected to grow by 2.4 per cent per yearto hit US$32,000. Assuming a continuationof the improvement of 1.5 per cent per yearin the income–carbon ratio to US$4,800,these three factors would result in totalcarbon dioxide emissions of 61 billiontonnes. At that level, the average globaltemperature would have risen by 3.8˚Cover the pre-industrial level and would berising by 0.06˚ each year.

There is now fairly widespreadagreement that we need to reduce globalemissions by at least 50 per cent by 2050compared to 1990 levels, which indicatesa target of 10 billion tonnes or less thanone-sixth of that indicated on present

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public policy research – March–May 2011 49

Peter Howard proposes an ‘income–carbon convergence’formula, as a means of measuring and weighting therelative carbon reduction obligations and performance ofall countries – wealthy, developing and poor alike – inthe hope that such a framework might achieve a greaterlevel of global political and popular support.

Global warmingFinding a compromise on the sharingof responsibility

1 The statistics used in this paper come from the Human Development report of the United Nations DevelopmentProgramme (UNDP) for the year 2009, which give tonnes of CO2 and GDP per capita for 2007 on a Purchasing PowerParity (PPP) basis in constant money terms. The carbon dioxide emissions are however confined to those ‘stemming fromconsumption of solid, liquid and gaseous fossil fuels as well as from gas flaring and the production of cement’. They there-fore do not include the substantial emissions from deforestation and land use.

trends. There is little we can do to restrictpopulation growth significantly and mostof us welcome increases in our income. Itis therefore apparent that the burden ofreducing emissions must fall on theefficiency with which we use carbon:there needs to be a step-change in therate of improvement in theincome–carbon ratio, to reach a level ofabout US$30,000 in current money terms.This would entail an increase in the rateof improvement from 1.5 per cent to 5.2per cent per year.

But how feasible is this, in practice?

Unified targets,differentiated responsibilitiesAlthough it is important to set globaltargets for action on emissions reductions,these will only be achieved if they arebroken down country by country, and ifeach country takes actions to meet itsshare of the targets as are appropriate toits circumstances. One view is that thisresponsibility for reducing globalemissions to 10 billion tonnes should beshared equally on a per capita basis. Theproblem with this is that there is a strongcorrelation between income andemissions: higher income countriesgenerally have higher emissions.Furthermore, the income–carbon ratiodoes not improve with higher incomes. An

equal per capita allowance wouldtherefore impose a huge cost ondeveloped countries, which would impacttheir economies negatively to a politicallyunacceptable level.

However, the correlation betweenprosperity and carbon dioxide emissionsis not absolute, and there are substantialdifferences in the ratios of GDP toemissions amongst countries.2 Theapproach recommended by this article isbased on exploiting this lack ofcorrelation, in particular by requiringcountries to improve their ratios of GDPto CO2 to a common high standard.Appendix 1 shows the income–carbonratios of the 40 largest-emitting countries,3

with France topping the list at US$5,423per ton of CO2 and Uzbekistan sitting atthe bottom on only US$564 per ton.4

Appendix 2 relates the income–carbonratios of a larger pool of 125 countries tothe ratio of France.

The higher this ratio, the better thecountry is performing in emission terms.And while increases in emissions mightbe excusable in order to reduce poverty,they are less easily justified if the cost interms of emissions is too high in relationto the benefit gained in income terms.While there is an understandablereluctance to pressure low-incomecountries to reduce their CO2 emissions,there should be fewer problems withdemanding that poor performers on theincome–carbon ratio be set targets formaking improvements against thismeasure. Essentially, targets for wealthycountries to reduce their absoluteemissions should be replaced with targetsfor all countries to improve theirincome–carbon ratios.

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It is apparent that theburden of reducingemissions must fall on theefficiency with which weuse carbon

2 The reasons why different countries perform poorly or well on this measure are not well understood, and more research isrequired to into why countries in otherwise similar positions have very different income carbon ratios. For example,France has a ratio of US$5,423, compared with Germany at US$3,517. Sweden’s ratio is US$6,639, compared with Finlandat US$2,744. Brazil has a ratio of US$5,159, compared with Chile at US$3,834. Notably, the oil producers all cluster at thebottom of the rankings, but is this a function of the production of oil or a consequence of oil products being so cheap inthose countries?

3 These countries account for 88 per cent of world emissions, 92 per cent of world GDP and 77 per cent of the world’s population.4 There are a number of very low income countries which have much higher income carbon ratios, but that is a

reflection of an almost total lack of development. Their emissions are likely to increase rapidly as soon as they beginto develop.

The eight best-performing countries5

among the largest-emitting 40 produce inaggregate a GDP of US$4,044 per tonnewhile the eight worst performers produceonly US$1,196. If the world average(presently US$2,309) could be raised to thatof the eight best performers, total emissionswould be reduced by 43 per cent (12 billiontonnes at present GDP levels).

Ideally, a programme to reduce globalcarbon dioxide emissions should be based onsetting a single target for the income–carbonratio to which all countries should commit.However, as a concession to the developingworld and to encourage poorer countries to

participate, the income part of the ratioshould be scaled back. In order to achieve atarget of 10 billion tonnes we need to replacethe target income–carbon ratio of US$30,000referred to earlier with a factoredincome–carbon (FIC) ratio so that poorercountries aspire to an easier target, andwealthy countries to a tougher one.

The proposal here is for the incomeelement of the equation to be reduced byraising it to the power of 0.7. By contrast,applying the power of 1.0 would produce atarget FIC ratio of US$30,000; applying apower of 0.0 would take relative income outof the equation altogether and produce anequal per capita emissions target for allcountries. A factor of 0.7 produces acompromise between the positions of thedeveloped, the developing and the poorworlds which might be acceptable to theirrespective constituencies. The followingtable shows the target FIC ratio at differentpower factors and the allowed tonnes ofemissions per capita for countries atdifferent income levels in 2057.

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public policy research – March–May 2011 51

5 France, Brazil, Spain, Italy, Netherlands, UK, Germany and Turkey.

Table 1: Target FIC ratio

Typical country Typical GDP GDP per capita Allowed CO2 per capita

per capita factored

Factored at a power of

0.5 0.7 0.9

Very poor 10,000 631 0.7 0.5 0.4

Poor 20,000 1,025 0.9 0.8 0.7

Lower developing 40,000 1,665 1.3 1.4 1.4

Upper developing 60,000 2,212 1.6 1.8 2.0

Developed 80,000 2,705 1.9 2.2 2.5

Wealthy 100,000 3,162 2.1 2.6 3.1

World tonnes of CO2 10,000 10,000 10,000

Target FIC 152 1,227 10,204

Based on assumed increases in incomesand populations and a target of emitting10 billion tonnes of CO2, by 2057 the

position of the 10 current largest emittersand of the world as a whole would be asfollows:

Targets for wealthy countries toreduce their absolute emissionsshould be replaced with targetsfor all countries to improvetheir income–carbon ratios

Moving forwardThe first step in working towards this goalwill be to obtain significant intellectualsupport for the proposals and a specific setof targets, and then to report the progress,or lack thereof, made towards these targetsby particular countries. The media couldplay an important role here by publishingdetails of the variations across countries intheir income–carbon ratios. This couldevolve into acceptance by a broad groupof countries of their particular targets andpolitical pressure on non-accepting andnon-achieving countries. For poorachievers, sanctions could include theimposition of financial penalties on thosecountries, with the proceeds of thesepenalties distributed amongst poorercountries. And while poorer countries willtend to have less onerous targets, pressurecould be exerted on poor performers inthis group by linking development aidmore closely to their global warming

performance. In practical terms, thepublication of the income–carbon ratiosstatistics set out in Appendices 1 and 2 bya leading country such as the UK, and acommitment to meet the 50-year targetimposed on that country, would send apowerful message.

Setting targets for a date as far intothe future as 50 years has someimportant advantages. It is difficult for anyset of politicians to claim that theircountry is not able to meet such targets,which after all are beyond their ownperiods in office and likely lifetimes. Acountry such as China would find itpolitically uncomfortable to argue that itcannot match the United States in incometerms over the next 50 years. However,once countries accept such 50-year targetsfor their income–carbon ratios they couldbe held accountable for theirperformance against their intermediateannual targets.

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Table 2: Projected emissions

Country Population GDP per capita Total CO2 tonnes CO2 tonnes

(millions) (US$000) (millions) per capita

2007 2057 2007 2057 2007 2057 2007 2057

China 1,329 1,581 5 47 6,103 2,400 4.6 1.5

United States 309 404 46 109 5,752 1,107 18.6 2.7

Russia 142 127 15 44 1,565 185 11.0 1.5

India 1,165 1,698 3 14 1,510 1,130 1.3 0.7

Japan 127 119 34 73 1,293 246 10.2 2.1

Germany 82 78 34 78 805 168 9.8 2.2

UK 61 71 35 84 569 163 9.3 2.3

Canada 33 44 36 87 545 102 16.6 2.3

South Korea 48 52 25 98 475 132 9.9 2.5

Italy 59 62 30 67 474 121 8.0 1.9

Total 3,355 4,236 19,092 5,753 5.7 1.4

50.4% 45.1% 67.1% 57.5%

Other countries 3,306 5,164 9,340 4,247 2.8 0.8

World total 6,662 9,400 9,856 31,594 28,432 10,000 4.3 1.1

Increase/decrease 41% 221% –65% –75%

Increase/decrease 0.69% 2.36% –2.07% –2.74%per annum

In summary, this paper proposes an‘income–carbon convergence’ formula,entailing the following steps:

1. Setting a target for global annualemissions in 50 years’ time of 10 billiontonnes.

2. Recognising the clear relationshipbetween income and carbon, and basingthe allocation of responsibility on thatrelationship.

3. Agreeing a factor to moderate theincome element of that relationship sothat higher-income countries accept agreater and lower-income countries alesser share of responsibility – this paperproposes that this could be achieved byapplying a power factor of 0.7 to incomeper capita.

4. Projecting forward the populations andincome per capita of each of the world’scountries over the next 50 years.

5. Applying the power factor to theincomes per capita and using iterationto identify the factored income–carbonratio which would allow countries tomeet the target tonnage of emissions –using the projections assumed in themodel underlying this paper, thisproduces a target ratio of US$1,227.

6. Dividing the projected factored incomeby the target ratio to determine theallowed tonnes per capita after 50 yearsfor each country.

7 Calculating the annual rate at whicheach country must improve itsincome–carbon ratio and using this toset interim targets.

8. Creating an international commission tomonitor country populations, incomesand emissions, to check and reportprogress against emission targets, andcontinually to update projections and thetargets themselves.

The main advantage of this proposal isthat it brings all countries into a commonframework of targets, so that no countrycan claim that it is being discriminatedagainst – an important argument forgovernments to be able to make in sellingthe approach domestically. The targets,while objected to by some parties as notfair to the poorest countries, represent areasonable compromise between wealthyand poor countries and one which canbe justified to the citizens of suchcountries. The targets can also be phasedin a sensible way and – subject to theaccurate measurement of incomes,population and emissions – variationsfrom the targets can be objectivelyassessed and reported.

This proposal does not on its ownpresent a solution to the problems ofgreenhouse gas emissions and globalwarming. But it does suggest a way oflooking at these problems which marriesthe desire for higher standards of livingwith the need to preserve theenvironment. It is to be hoped that itwill lead to fresh thinking andapproaches which will contribute to theoverall solution.

Peter Howard is a retired chartered accountantwith 30 years’ experience as finance andexecutive director of a number of largemanufacturing and mining companies in severalcountries.

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public policy research – March–May 2011 53

The main advantage of thisproposal is that it brings allcountries into a commonframework of targets, so thatno country can claim that it isbeing discriminated against

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Appendix 1: Income–carbon ratios, 40 largest emitters, 2007

Country % of best Total CO2 GDP per CO2 per GDP per

m tonnes capita capita tonne CO2

France 100% 383 33,674 6.2 5,423

Brazil 95% 353 9,567 1.9 5,159

Spain 73% 352 31,560 8.0 3,951

Italy 70% 474 30,353 8.0 3,796

Netherlands 70% 169 38,694 10.2 3,789

United Kingdom 69% 569 35,130 9.3 3,763

Germany 65% 805 34,401 9.8 3,517

Turkey 65% 269 12,955 3.7 3,510

Mexico 64% 436 14,104 4.1 3,476

Belgium 63% 107 34,935 10.2 3,422

Japan 61% 1,293 33,632 10.2 3,313

Greece 61% 96 28,517 8.7 3,284

Pakistan 56% 143 2,496 0.8 3,030

Argentina 56% 174 13,238 4.4 3,013

Nigeria 55% 97 1,969 0.7 2,990

Romania 50% 98 12,369 4.6 2,700

Egypt 47% 167 5,349 2.1 2,569

South Korea 46% 475 24,801 9.9 2,505

Indonesia 46% 333 3,712 1.5 2,501

United States 45% 5,752 45,592 18.6 2,447

Canada 40% 545 35,812 16.6 2,163

Czech Republic 39% 117 24,144 11.4 2,126

India 39% 1,510 2,753 1.3 2,123

Vietnam 39% 106 2,600 1.2 2,109

Thailand 37% 273 8,135 4.1 2,000

Algeria 36% 133 7,740 3.9 1,977

Venezuela 36% 172 12,156 6.2 1,962

Australia 36% 372 34,923 17.8 1,962

Poland 35% 318 15,987 8.4 1,914

Malaysia 35% 188 13,518 7.1 1,914

United Arab Emirates 32% 140 54,626 31.7 1,722

Iran 31% 467 10,955 6.4 1,698

Kuwait 30% 87 47,812 29.9 1,601

Saudi Arabia 27% 382 22,935 15.4 1,485

Russia 25% 1,565 14,690 11.0 1,332

China 22% 6,103 5,383 4.6 1,172

South Africa 21% 413 9,757 8.4 1,163

Ukraine 18% 319 6,914 6.9 1,003

Kazakhstan 16% 194 10,863 12.6 865

Uzbekistan 10% 116 2,425 4.3 564

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public policy research – March–May 2011 55

Appendix 2: Income–carbon ratios relative to France, 2007

Upper income Middle income Lower income

(Above US$12,156) (US$3,236 to US$12,156) (Up to US$3,236)

Switzerland 134% Angola 165% Chad 729%

Sweden 122% Congo 159% Mali 436%

Norway 115% Sri Lanka 131% Burkina Faso 387%

France 100% Paraguay 125% Burundi 248%

Latvia 93% Costa Rica 115% Central African Republic 227%

Ireland 83% Colombia 111% Uganda 221%

Austria 80% Panama 108% Cameroon 201%

Lithuania 78% Peru 107% Malawi 193%

Portugal 74% Bolivia 106% Rwanda 191%

Singapore 73% El Salvador 101% Ethiopia 188%

Spain 73% Uruguay 99% Niger 174%

Chile 71% Guatemala 96% Tanzania 171%

Italy 70% Brazil 95% Laos 171%

Netherlands 70% Albania 94% Nepal 169%

New Zealand 69% Philippines 82% Mozambique 159%

United Kingdom 69% Armenia 74% Guinea 148%

Denmark 67% Namibia 71% Sudan 144%

Germany 65% Honduras 70% Zambia 125%

Turkey 65% Georgia 69% Cambodia 117%

Mexico 64% Tunisia 61% Haiti 114%

Belgium 63% Dominican Republic 60% Madagascar 113%

Japan 61% Ecuador 58% Cote d'Ivoire 91%

Greece 61% Morocco 52% Kenya 88%

Hungary 60% Egypt 47% Bangladesh 87%

Argentina 56% Indonesia 46% Senegal 86%

Croatia 55% Thailand 37% Togo 75%

Slovakia 53% Algeria 36% Sierra Leone 68%

Finland 51% Venezuela 36% Mauritania 66%

Romania 50% Azerbaijan 36% Benin 65%

Israel 48% Bulgaria 33% Nicaragua 61%

South Korea 46% Iran 31% Ghana 61%

United States 45% Macedonia 31% Pakistan 56%

Canada 40% Belarus 28% Nigeria 55%

Czech Republic 39% Jordan 26% Papua New Guinea 53%

Australia 36% Syria 25% Yemen 45%

Poland 35% Jamaica 25% India 39%

Malaysia 35% China 22% Vietnam 39%

United Arab Emirates 32% South Africa 21% Kyrgyzstan 35%

Kuwait 30% Bosnia 20% Tajikistan 34%

Oman 27% Ukraine 18% Moldova 22%

Saudi Arabia 27% Mongolia 16% Uzbekistan 10%

Russia 25% Kazakhstan 16%

Note: The apparent very high performance of several of the very poor countries is very largely a reflection of

inadequate development. Amongst the third group of countries there is a strongly declining trend in the

income–carbon ratio as incomes increase.