The Big, Dirty Picture China and India Have Grown Into Major World Polluters. So Who's Going to Pay to Fix It?

All environmental battles hinge on one thing: Who will pay the bill?Given that win-lose framework, one may view Copenhagen as a giant, high-stakes poker game.It brings together envoys of the world’s top 20 economies (G-20), representing 4.4 billion people, to fight over who”ll pay the bill for cleaning the earth.

“It will be brinksmanship to the end, but they’ll finally put their cards on the table, because they have to,” says Andrew Light, a senior fellow in international climate policy at the Center for American Progress (CAP).

Light explains that the G-77 developing countries basically assert to industrialized nations, “You caused the problem, you fix it.” Between 1850 and 2005, the U.S. alone contributed 29% of world greenhouse gas (GHG) emissions, compared to China’s and India’s 8% and 2%, respectively, according to the World Resources Institute. Today, the two giants also use energy more efficiently: Hong Kong, for example, with a population density of about 300 per hectare, consumes 90% less energy per capita than Phoenix, Arizona, with a density of 15 people per hectare.

But last year, China passed the U.S. as the world’s number-one GHG polluter. The U.S., with a mature $14.25 trillion economy, emits about 5.9 billion tons of GHG a year, or 19.8 tons per capita. China, with a $7.9 trillion economy growing at about 9% a year, annually emits 6.02 billion GHG tons, or about 4.6 tons per capita, and could double that by 2025. India, at 1.29 billion GHG tons a year, or 1.8 tons per capita, has taken the number five spot from Japan (1.25 billion), and with its $3.3 trillion economy growing at nearly 9% a year, could also double its GHG output by 2025. Indonesia, with a “small,” $433 billion economy, has deforested its way into the number-three polluter spot at nearly 3.0 billion GHG tons, muscling out Russia, now number four at 1.7 billion. And this does not count GHG outputs of these countries’ armed forces—their largest single fossil fuel consumers.

Altogether, the top six countries are responsible for 68% of the 28 billion tons of GHG that pollute Earth’s atmosphere each year.

Pollution and Payouts

“China recognizes the drag that pollution creates on its economy—almost 6% of GDP,” says Kevin Wilhelm, CEO of Seattle-based Sustainable Business Consulting, citing a 2007 World Bank-China government study. “It also recognizes the security and stability issues around getting 80% of its power from coal, and letting its coal mine fires burn. It’s not sustainable.”

But the G-20 economies are not sustainable, either. They all run on pollution-generating energy, and are based on a neo-classical model, which assumes unlimited market growth, profit maximization, market self-regulation and businesslike management of the environment. Because this model ignored and failed to anticipate environmental limitations, it’s forced the G-20 to start thinking outside the box.

China and India are moving in that direction, as they work simultaneously to cut GHG outputs and pull their populations out of poverty, says Julian L. Wong, senior energy and climate policy analyst at CAP. “China’s program could reduce its CO2 output by one billion tons per year by the middle of next decade, and peak its GHG emissions by 2030,” he says. It is replacing inefficient power plants with efficient ones, creating demand-side energy programs, developing mandatory energy efficiency benchmarks for industry, and turning down thermostats in government buildings. India is taking similar steps, and has embarked on the world’s most ambitious solar photovoltaic development.

The big challenge for the G-20 is funding these ambitious GHG reduction efforts. India and China, members of both the G-20 and G-77, oppose Britain’s proposal that each party pay its own costs. Rather, they want technology and costs shared proportionally. But a recent report from McKinsey & Company found that the cost of cutting India’s carbon emissions in half by 2030 was $1.1 trillion (about 2.3% of GDP). All await U.S. leadership, but Congress is reluctant to act until India and China sign a climate treaty, which no party will sign if it might slow its economic growth, or give competitive advantage to another country.

“With economies suffering, new, enticing public-private financing deals must be created to get the private sector to pony up, and to reduce the begrudging way we’ve been making progress,” says Light. “There is no alternative.”