CANCUN, Mexico — The official communique from the Cancun climate-change conference cannot disguise the fact that there will be no successor to the Kyoto Protocol when it expires at the end of 2012. Japan, among others, has withdrawn its support for efforts simply to extend the Kyoto treaty. This sounds like bad news, because it means that there will be no international price on carbon. Without a market price, it is difficult to see how the reduction of carbon emissions can be efficiently organized.

But appearances can be deceiving. Even as the top-down approach to tackling climate change is breaking down, a new bottom-up approach is emerging. It holds out better prospects for success than the cumbersome United Nations negotiations.

Instead of a single price for carbon, this bottom-up approach is likely to produce a multiplicity of prices for carbon emissions. This is more appropriate to the task of reducing carbon emissions than a single price, because there is a multiplicity of sectors and methods, each of which produces a different cost curve.