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THE prospect of an international agreement to halt dangerous climate change may seem more remote than ever following the talks that ended last week in Bonn, Germany. The delegates there appeared to be more interested in being cordial than in delivering on science-based targets (see "Is it time to say goodbye cool world?").

Despite this, I believe progress has been made, and existing international agreements contain an important and hitherto overlooked mechanism that can do much to regulate carbon emissions.

International agreements contain an overlooked mechanism for regulating carbon emissions

Such optimism might seem surprising. Many observers remain gloomy in the aftermath of the failure of last December's Copenhagen climate summit to come up with a successor to the Kyoto protocol agreed in 1997 - the first time industrialised countries committed themselves to a reduction in greenhouse gas emissions. The failures of Copenhagen were the result of serious organisational issues, accompanied by glaring and often naive political errors. These included the destructive negativity of the NGOs and the Danish government's attempt to devise a climate agreement without the involvement of poorer nations. In the end, we witnessed the victory of unambitious realpolitik over correct, but wishful, thinking.

Yet there are at least three positive messages from Copenhagen. First, despite the lack of agreement, we know the issue of climate change now has the full attention of the world. The anger of poorer nations is a powerful and lucid expression of their full appreciation of the scale of the problem.

Second, the meeting's disappointments have made plain the folly of attempting to craft a successor to Kyoto in a single, collective leap.

Third, as a result of the negotiations, we now have a global target to avoid a dangerous 2 °C average temperature rise. Deforestation, which accounts for one-fifth of emissions, is now part of agreements.

Most importantly, we have alternative ways to regulate carbon, thanks to national and regional commitments to emissions trading.

The European Union already has its Emission Trading System, the largest of its kind in the world. The US may now introduce its own version: Mexico's president, Felipe Calderón, is keen to join and wants to see Canada sign up too, forming a North American trading group. Another emissions trading market may emerge among the Association of Southeast Asian Nations. Harmonisation between parallel markets may be a challenge - not least for international trade policy - but in the long run it is likely to be easier to solve a coordination problem across a small number of commodity markets than across a large number of sovereign states.

I have been sceptical about attempts to create multibillion-dollar funds to help poorer nations adapt to climate change, since it is not obvious that the pledges of the developed world are credible. A better approach would be to extend existing trading schemes to these nations. This would encourage them to develop lower-carbon economies and generate income through taxes on high-carbon imports. It would also unify emissions trading, overtaking troubled efforts to devise a global trading scheme with a single carbon dioxide price. Regardless of the details of the mechanism, it is plain that one of the central challenges for climate policy is to find a credible way to meet the concerns of the poorest countries while offering the right development incentives.

These factors, alongside the increasing confidence of the growing economies of Brazil, Russia, India and China, will set the scene for a meeting in Rio de Janeiro, Brazil, in 2012, the 20th anniversary of the Earth Summit in the same city that started the Kyoto process.

Copenhagen's failure to deliver a single universal deal opens up space for smaller regionally based deals. Coordinating these will be hard, but not as hard as what we have tried in the past. We are all custodians of a global commons, and we have moral responsibility to future generations to curb our greenhouse emissions. I am optimistic that Rio can deliver.



Extpub | by Dr. Radut