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Kyoto Protocol

VIEWS: 6 PAGES: 38

									Trade and the Environment –
       Kyoto Protocol

         Bill Jones, Ph.D.

            Presentation to

    MIM 513: Pacific RIM Economies,
     International Trade, & Markets


        November 1 & 4, 2010




                                      1
 Alternative Presentation Title: Are We Really Capable of
Successfully Mitigating Climate Change & Continuing Global
                  Economic Development?




                                                       2
                       Agenda
•   Lecture goals
•   Climate change context: climate science primer
•   Brief history: Kyoto Protocol major elements
•   Global implications
•   Trade impacts
•   International Trade
•   Shipping/transport
•   Energy consumption
•   Conclusions
•   Q&A


                                                     3
                       Goals
•Climate change unique, complex, uncertain
•Impact all things global & economic
•International CC agreements create opportunities &
obstacles
   •New markets & product
   •Offset trading
   •Continued emissions
•North/south divide: developing and developed
countries
•Global trade challenges
•Energy use is key

                                                      4
Carbon Cycle 101: Anthropogenic
         Contribution




                                  5
Unprecedented Atmospheric CO2
       Concentrations




                                6
Climate Is Getting Warmer




                            7
     Contribution:
World’s CO2e Emissions




                         8
GHG Global Emission Sources


  Energy Consumption ≈ 65%




                              9
     Long-Term Forecasts Uncertain But Suggest
    High Concentrations Remain For 100s Of Years




•     Irreversibility of climate change: 1,000 year time horizon impact
•     Inability of natural syncs to absorb carbon dioxide (18% decrease last 50 yrs.)

    Source: Irreversible climate change due to carbon dioxide emissions; Susan Solomona,1, Gian-Kasper Plattnerb, Reto Knuttic, and Pierre
    Friedlingsteind, PNAS February 10, 2009



                                                                                                                                       10
Climate Change Impacts: Latest Trends




                                        11
History: Climate Change International
      Agreements (Early Years)




                                        12
History: Climate Change International
   Agreements (Kyoto 1997-2012)




                                        13
          Key Kyoto Protocol Elements
•   Signed December 1997, in force 2005, reduction period 2008-12 (140 nations
    ratified; now 192 nations)
•   Assign numerical GHG emission reduction targets
    –    35 industrialized nations (Annex I) Initially: 55% of all 1990 Annex I nations’ GHG
        emissions (currently 55 Annex I)
    –   Collective average GHG reduction 5.2% below 1990 benchmark by 2012
    –   Covered private businesses assigned reduction targets
    –   6 gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons,
        sulhpur hexifluoride
•   Mitigation methods (least cost method):
    –   Internal reductions: covered private sector businesses internal process mitigation
    –   Allowance trading: Annex I undershoot trade to Annex I overshoot
    –   Joint Implementation: Annex I nation develop GHG mitigation project in another Annex I
        nation for credit against emission allowance
    –   Clean Development Mechanism (CDM): Annex I develop “offset” projects as a credit
        against Annex I nation target in non-Annex I countries (not bound by Kyoto target)
•   Spark investment in sustainable technologies & new business sectors: phase-out
    GHG emitting sectors
•   Win Win for World: socially, environmentally, economically

                                                                                           14
Developing Countries & Kyoto Protocol:
          Why Participate?
•   No emission goals for non-Annex I nations (developing)
•   2016 responsible for 50% GHG emissions
    –    Annex I assist developing countries reduce overall emissions
•   Significant commitment of Annex I nations:
    –    Accelerate economic development in developing countries
    –    Assist nations most vulnerable to CC
    –    Minimize adverse social adverse & economic impacts
•   Article 10:
    –    “Promote facilitate & transfer”technologies, know-how, practices, processes
    –    Transfer environmentally sound technologies that are publicly owned & available to
         indigenous economies
    –    Development & transfer of education, training & knowledge programs
•   Article 12
    –    Developing countries share in project “proceeds” of CDM projects




                                                                                              15
                  Why is Kyoto Unique?
•   First to recognize CC as a global threat & need for global response
•   First to bind responsible countries to emission reductions
•   First to set up a market mechanism (allowance trading, CDM) as most efficient
    method to meet GHG reduction targets
•   Multiple goals:
    –   GHG emission reductions primary goal
    –   Developing countries cooperate: developed countries invest in economic development
        (CDM)
    –   Long term reductions
•   Impact global economy
    –   Competitiveness
    –   International trade
    –   Manufacturing
    –   Capital flows
    –   Energy supply & consumption
    –   Transport
    –   Labor supply


                                                                                        16
          Kyoto Protocol Implications
•   International trade
•   Economic relationships between countries (regulated, non-
    regulated)
•   Competitiveness
•   Manufacturing
•   Transport
•   Supply chain
•   Labor supply
•   Energy supply




                                                                17
International Trade




                      18
               Trade & GHG Emissions
•   Kyoto Protocol Article 2.3 addresses international trade
    –   Develop policies procedures that minimize adverse impacts on “international
        trade”
•   Recognizes emission targets can conflict with trade growth:
    –   Trade growth directly related to energy demand (fossil fuel main energy
        source)
    –   Trend to export manufacturing production from regulated to unregulated
        nations
    –   Potential to handicap global economic growth both developed & developing
        nations
•   Greater Trade increase economic growth: energy consumption linked to
    growth & therefore increase in GHG emissions
•   Kyoto Protocol could create Leakage: where countries with more
    stringent environmental regulations shift production weaker regulated
    country



                                                                                19
International Trade Growth




                             20
                     How Trade Impacted
•   Manufacturing
    –   Shift to developing countries
    –   Increase embodied carbon in goods (energy carbon intensity, transport)
•   Emission target impact
    –   Emission leakage (regulated to unregulated countries)
    –   Annex I meeting reduction targets
•   Opportunities:
    –   Cheaper labor developing nations
    –   Lower investment costs
    –   Economic development creates demand
    –   Create new markets for EE & RE development (CDM)
•   Challenges
    –   How do regulated countries meet reduction targets?
    –   Rapidly developing countries (BASIC) increase Share of GHG emissions
    –   Technology shift too slow (clean energy, sustainable technologies)


                                                                                 21
Embodied Carbon: Traded Goods
Balance of Emissions Embodied in Trade (BEET)




                                                22
                   GHG/GDP
CO2 Emissions Per Unit GDP




                             23
                             Implications
•   There is significant carbon embedded in export trade
•   Developing countries gain economic benefit but increase emissions
    –   Developed countries reduce GHG emissions meet targets
•   Technology transfer not rapid enough
    –   IP become a major concern (violate spirit of Kyoto Protocol)
    –   Annex I concerned with competitive loss
•   BASIC countries:
    –   Pressured to regulate future emissions
    –   Before they agree (Cancun COP/MOP 16)
        •   BASIC: want Annex I to meet reduction targets &
        •   USA: Participate in reductions (7% below 1990 by 2012)
•   Other developing countries
    –   Excluded or receive little benefit (Small Island Nations, Equatorial Africa)



                                                                                       24
Transport & Trade




                    25
      Transport Energy Forecast
Non-OECD Energy Consumption Rapid Growth




                                           26
         Freight Energy Growth
Freight Energy Use Greatest Increase




                                       27
                    Modes of Transport

Modes of Transportation: International Trade




                                               28
                     GHG & Transport
Transport Represents 24% Total GHG Emissions




                                               29
    Transportation & Trade Implication
•   GHG emissions continue to increase as trade
    increases
•   Little change in fuel carbon intensity
•   International trade will increase GHG emissions




                                                      30
International Energy Use




                           31
                  Energy Use
Non OECD countries account for 86% energy increase




                                                     32
 Economic Activity & Energy Use
Economic Activity & Population Increase Energy Use




                                                     33
Increase Petroleum Based Energy Use
Nearly All Coal Based Energy Use in Non-OECD Asia Nations




                                                            34
Renewables Increase But Remain Small
                 %
  RE Fastest Growing, But Coal Continues to Dominate Generation




                                                                  35
              Energy Use Implications
•   Continued reliance on fossil-based fuels
    –   Non OECD (mostly Annex I countries + USA) largest % increase
•   Increasing manufacture export & international trade will continue
    fossil fuel reliance
•   Kyoto Targets more difficult to achieve
    –   Overall global emissions continue to grow
•   Increasing need for more restrictive targets
    –   Political ramifications: nations unwilling to impede economic growth
    –   North/South rancor over emissions controls




                                                                          36
                           Conclusions
•   Global GHG targets increasingly difficult to achieve under Kyoto
    Protocol
•   Annex I countries concerned about:
    –   Post 2012 agreement uncertainty
    –   Pressure to impose GHG emissions targets for developing nations
    –   IP & technology transfer protections (transparency & publicly owned
        technologies)
•   Developing countries
    –   Not nations that created GHG concentrations
    –   Want Annex I to continue investment in development
    –   International trade
    –   Cannot successfully reduce fossil fuel reliance & grow
•   Bleak outlook given current state of Kyoto
    –   Need for drastic changes in global agreement


                                                                              37
QUESTIONS AND ANSWERS




                        38

								
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