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A climate change collision course

A proposed climate change bill in the US ruffles feathers in China.

“The emissions would still be happening,” said Robert Heilmayr, a climate change analyst at the World Resource Institute, a Washington-based environmental think tank. “You’ve just moved them to another country.”

The solution floated by Chu — and denounced by the Chinese — is to raise a tariff on imports from countries that don’t put a price on carbon, effectively raising the price of competing products as they cross the border.

Such a policy, the thinking goes, would not only level the playing field, but would also nudge countries like China into cooperating in the fight to cut global emissions.

And indeed, the draft climate change bill introduced Tuesday includes language authorizing the U.S. president to levy a charge on goods from countries that haven’t agreed to put a price on emissions.

But the proposed legislation also reflects a new way of thinking, one that maintains that punitive measures like import duties might be less effective than simply protecting the domestic industry from the brunt of the cost of compliance.

“The tariffs are there as a kind of backup,” Heilmayr said.

After all, duties imposed at the border don’t help a company that sells its products overseas. Nor do they protect other companies that source their material domestically. For instance, a car manufacturer would still have to pay a high price for steel. And many question the leverage tariffs would have in pushing the Chinese to the table.

Instead, the draft bill relies primarily on rebates — reductions in the price of carbon for energy-intensive industries exposed to global competition. Companies would receive credit for 85 percent of the industry average, allowing the cleanest among them to avoid paying anything at all for their carbon.

The result is a trade-off. Immediate cuts in carbon are sacrificed in order to preserve a domestic industry as it gradually cleans up.

Reconciling China’s point of view with those of industrialized countries will be one of the major challenges in forging an international accord to combat climate change.

Until then, however, the answer to the question of who pays for the emissions associated with its products will likely remain very simple: nobody.

Stephan Faris is the author of "Forecast: The Consequences of Climate Change, from the Amazon to the Arctic, from Darfur to Napa Valley."

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