Reviewing The Weather Makers, by Tim Flannery, The Economist writes:
'[Tim Flannery] mercilessly dissects the alternatives [to Kyoto] —particularly the idea of replacing hydrocarbon fuels with hydrogen, which he regards as expensive and probably technically unfeasible. And he dismisses the hydrogen-economists' idea of “sequestering” the carbon dioxide generated underground or in the oceans as both impractical and environmentally catastrophic. The answer, according to Mr Flannery, lies in revamping the way electricity is generated. That means abandoning coal, the most carbon-intensive fuel around, and employing sunlight, wind, geothermal power (which he believes is an under-appreciated resource) and also nuclear power. Having done that, the problem of dealing with petroleum-consuming transport becomes one of storing electrical energy in a sufficiently dense form that vehicles can use it. Here, he thinks, hybrid petrol/electric cars point the way forward.'
That's a good summary of the alternatives currently on offer and for what it's worth I agree with most of it. The problem is that it's one man's view and one man, however well-informed, cannot possibly investigate every alternative to Kyoto, nor anticipate future technology, nor take into account our rapidly expanding knowledge of the causes and consequences of climate change, nor the ever-changing economics of climate change, its prevention and mitigation. As a statement of where we are it's fine. As a prognosis for the future it's as dangerous as Kyoto, and that's as dangerous as the central planning that brought the Soviet Union to its knees.
Policymakers need a certain humility. Climate change is a potential catastrophe, and policymakers can help us deal with it. But they are as poorly placed to tell us how to deal with it as the Soviet or Chinese central planners were when they thought they knew best how to stimulate economic growth. Kyoto assumes that it knows what's causing climate change - anthropogenic greenhouse gas emissions - and on this it may well be right. But it's short-sighted to then assume that the only feasible way of dealing with the problem is to cut these emissions. If Mr Flannery's alternatives were prescriptive they would be similarly misguided. The best cost solution will be an array of diverse, adaptive approaches, which cannot be pre-judged by any single person or institution, however well-funded.
A Climate Stability Bond regime would not prejudge the most likely solutions to the climate change problem; it would not even prejudge the size of the problem. Instead it would allow the market to judge the scale of the problem and to allocate resources to most efficiently achieve whichever climate stability target policymakers agree we should aim for. The anti-market approach led to the environmental disasters of the Soviet Union. And the anti-market approach, in the shape of perverse subsidies to energy, agriculture, water and transport is also responsible for a great deal of today's global environmental degradation. Markets are not perfect, but their inventiveness and efficiencies can be channelled into the public good. Climate Stability Bonds would create incentives to solve what is probably our most urgent environmental problem. Kyoto will fail because it's central planning, which stifles efficiency, imagination and inventiveness.