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Cooking the Books 2: International non cooperation

In the December Socialist Standard we dismissed as quite unrealistic the claim put forward by Sir Nicholas Stern in his report to the government on the economic impact of global warming that, despite measures to cut carbon emissions affecting the competitiveness of different countries differently, this "should not be overestimated and can be reduced or eliminated if countries or sectors act together".

Perhaps, if countries and sectors could be got to act together. But that's precisely the problem. Companies from different countries and within different sectors are in competition with each other for a share of world profits. It is not in their nature or interest to act together or let one of their rivals get a competitive advantage over them. If one country or company feels that the adoption of some measure would result in this they won't agree to it and will try to sabotage its adoption.

Stern's pet measure to try to reduce carbon emissions was not, as might be expected in view of how serious he says the problem is, coercive legislation to force companies to comply, but carbon trading, or the buying and selling of a decreasing number of permits to emit carbon dioxide. The EU has already established such a scheme which has been functioning, not too successfully, since 2005. It is due to be renewed, in theory in a beefed-up form, from 2008 for a further four years.

At the moment it is essentially only power stations that are covered but the EU Commission is now proposing to extend it to other sectors, including air transport. Under a draft proposal published on 20 December, as from 2010 airlines would be required to record their carbon dioxide emissions and from 2011 would either have to keep their emissions down below a set level or purchase permits to emit more. This would initially apply just to flights within Europe but from 2012 will be extended to all flights leaving or entering Europe.

The airlines are not happy (except with the rather generous levels of emissions permitted). British Airways says that applying the scheme to flights going outside Europe will undermine its competitiveness. A BA spokesman declared: "It would disadvantage all EU long-haul carriers against their competitors around the world. All our flights would be covered but, for a US carrier, it would only be a small proportion" (Times, 16 November).

The Association of European Airlines predicted it would lead to "trade wars" while the US Air Transport Association said it "violated international law". The US association added that such a scheme was unnecessary anyway as airlines were already taking adequate steps to reduce emissions.

That's more like capitalism. Trade wars. International disputes. Denials that there's a problem. If Stern's warning in his report about what will happen if nothing or too little is done is not just scare-mongering, capitalism offers a truly disturbing future: "Our actions over the coming decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression.