EU leaders will gather today and tomorrow in Brussels to sign off on the European Commission's proposals to cut carbon emissions by 20% by 2020 -- with the added bait of a 30% reduction if the U.S. and other countries make meaningful commitments. For the U.S., it appears that the question is no longer about whether it will adopt targets, but rather about how and what.

To some this all looks like good progress. Yet it is based upon the very shaky arithmetic of the Kyoto Protocol and its legacy. The Kyoto framework looks at the emissions that countries produce within their borders, and this is seductively flattering. Both the U.S. and Europe have seen their CO2 output growth slowing even as economic growth has marched on. It might appear that economic growth and emissions have been decoupled.

Barbara Kelley

The 2006 Stern report seemed to confirm this rosy scenario, suggesting that additional emissions cuts could be achieved at the comparatively trivial cost of around 1% of gross domestic product.

But this is just smoke and mirrors. The projected growth of global emissions clearly tracks the growth of energy demand. The world's CO2 output is likely to increase by some 50% by 2030, paralleling the growth of energy demand and economic growth. There is no global decoupling.

But, say the U.S. and the Europeans, this is because of China and India and their failure to match our emissions reductions. The U.S. in particular insists that any post-Kyoto agreement must, at a minimum, involve emissions caps on China as well. And in one sense the Americans are right: There will be no solution to global warming if China builds 1,000 new coal power stations in the next couple of decades.

This is, however, only half right. The critical question is: Who "owns" the emissions? China is an energy-intensive, export-oriented country. It makes many of the highly polluting industrial products which used to be made in the U.S. and Europe. We exported our smoke-stack industries to developing countries like China and import their products. 

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