The not so good news is that numerous forces may prevent the door from being opened. Openness itself, despite easing access to technology, also makes it harder for firms to pass on the associated costs to domestic consumers and therefore increases the likelihood that they will lobby against environmental regulation and in favour of trade protection. Successful lobbying for protection will result in stricter environmental standards, but will simultaneously reduce innovation incentives and global economic efficiency. Lobbying will be stronger in countries with larger coal reserves, where abatement standards are likely to be weaker as a result – not good news if China alone proves this prediction right. This regulatory weakness will be compounded by governments that value political contributions over consumer welfare – a force that will vary in strength across different political structures, although not necessarily in a predictable way.
Returning to the good news, the findings that more densely populated countries will regulate sooner (because of the proximity of residents to power plants and therefore the value they place on abatement) and that a 10% increase in per capita income growth increases adoption rates by 36% bodes well for the densely populated and rapidly growing economies of China and India. Moreover, political rights are found to be an insignificant determinant of regulation, despite the expectation that these might strengthen consumer voices.And the dirtier the coal, the greater the pollution problems, and hence the earlier that regulations will be adopted. That’s two (small) silver linings for two of China’s clouds, and hence two (small) silver linings for the world. As for saving the planet, perhaps it’s more like pie in the sky.