Developing Insights for Post 2012 climate Regime by goodbaby


									Developing Insights for Post 2012 climate Regime Harvard project: - politically pragmatic: US would sign on and ratify, sufficient number of developed and developing countries would sign on… - scientific - economic Key Principles for new International Agreement - some of these are obvious but have key implications - Climate change is a global commons problem o Cooperation of countries is essential: but doesn’t mean need cooperation 197 countries  Although wonderful have 197 countries get together and agree, about 20 countries account for 80% of the emissions, and 50 of the 197 countries make only trivial contribution  So could be through UNFCCC (all 197 countries) or just G20 or bilateral negotiations o Since sovereign nations cannot be compelled to act, treaties must create incentives for participation and compliance  Mostly treaties are self enforcing, so need way induce compliance - A credible climate change agreement must be equitable o Importance politically and in terms of welfare o Industrialized countries should accept responsibility for historic emissions (accumulated stock CO2 and greenhouse gases) o Key rapidly growing developing countries will need to take on increasingly meaningful roles o In both cases, the scope of the attention and action should include all greenhouse gasses, not just fossil fuels - A credible agreement must be cost-effective o If not cost-effective, then agreement not credible, because will be very costly to address o Needs to bring about technological change and transfer o Must be consistent with international trade regime  See Frankel paper - A credible agreement must be practical and realistic o Build on existing institutions and practices where possible o Negotiations must attend to short term achievements and long term goals  Action happens in short term but must take long term goals into account o No single approach guarantees a sure path to ultimate success, so best pursue multiple approaches, simultaneously

Potential Global Climate Policy Architectures

Harvard project not endorse a signle approach, 4 architectures considered, under 4 categories: Most centralized - Targets and timetables (as in Kyoto Protocal) o 1. Formulas for evolving emission targets for all countries (Frankel)  addresses shortcomings of Kyoto Addressed - Harmonized National Policies o 2. A portfolio of International Treaties (Barrett) o 3. A system of National Taxes (Cooper) - Independent National Policies (would think inconsistent with global commons problem o 4. Linkage of National and Regional Tradable Permit Systems (Jaffe and Stavins) Least Centralized 1. Formulas for Emmissions Targets for All Countries Approaches problem from political constraints, see whats feasible then evaluate in terms economic factors Political Constraints: - need US - need key developing countries as part - US wont politically unless China agrees, but china will not agree unless US goes first - if costs more than 1% GDP/year in any one country, country will drop out What program can meet these political constraints and be cost-effective and reach goals? - Core: key principles lead to design of targets o Formula used to set national emission caps to 2100 using three key elements  Appealing to use formulas: resonates politically  Negotiation about setting formula o Progressvity factor: richer countries make more severe cuts Reduction Req Kyoto was progressive: just way, it turned out from negotiations - graph is logarithmic relationship

Wealth Countries o Latecomer factor: nations that did not achieve targets under Kyoto make emission cuts to account for post-1990 emissions

Not rewarded for not complying with Kyoto Protocal  So not reward those that didn’t achieve targets, or US that didn’t sign on o Equalization factor: moves targets of all countries in direction of global average per capita emissions  Developing countries favored - Formulas assign quantitative emission caps to countries to 2100 o Developing countries not asked bear any cost in early years o Developing countries are not asked to make any sacrifice different from sacrifices of developed countries, accounting for differences in income o No countries have targets costing more than 1% of GDP - every country can feel that its not contributing more than its fair share Outcome - Run formula results in 500ppm concentration, still more than 450 scientific target, and attempting to model formula’s to attempt to get to target: very difficult - 450 ppm is incredibly difficult to achieve 2. Portfolio of International Treaties a. Should read the report to get an idea about it b. Argument is that efficiently complex problem, so no need think of it as requiring only one agreement c. May need whole portfolio of agreements to address the complexity 3. System of National Carbon Taxes a. Politically it has no promise at all b. But interesting because could be very simple or straightforward c. Could be revenue neutral in each country d. But tax subject to international agreement so could be cost effective i. Poorest nation could be exempted e. Biggest advantage is that its simple f. Institutions already exist: only require tax collective institutions in each country g. China has signaled that it would use a domestic tax if it chose to enact a domestic policy h. But need same tax in each country to be cost effective, but this is extremely progressive 4. Linkage of National and Regional Tradable Permit Systems a. Positive statement: this is actually happening- de facto policy actually evolving currently - cap-and-trade systems are preferred domestic approach in many countries and regions o linking these cap-and-trade systems reduces overall costs market power, and price volatility  tremendous pressure industry, and private interests to link  remember link means that can use allowances from other countries cap-and-trade systems  mutual recognition of allowances


 but can be unilateral or bilateral o but linking causes automatic propagation of cost-containment design elements: banking, borrowing, and safety valve  when link can have many elements that differ and there is no problems  some differences dont matter ex. Level: what part stream regulating: don’t matter, just use “exchange rate”  but some differences do matter: the cost containment elements  ex. Cost cap in one country automatically applies to another o therefore, advance harmonization required (so now not really decentralized, individual policy) Positive: if cap and trade systems links unilaterally with a common emission reduction credit system, then allowances match, and system indirectly linked o All benefits of linking achieved o But propagation of design elements across systems greatly diminish o Every program allows offsets such as CDM, so its happening o Even though independent, unilateral, it is functioning as an international policy architecture


Future US participation in an International Agreement? Bush Administration - Plan of “slow, stop and reverse” emissions made sense, but needed dates and targets for stop and reverse (instead took models but removed numerical targets and dates) “Slow, stop & reverse” – econ models say best Emission Q

Time in Years Plan’s embrace (in principle) of market- based instruments was good, but need real cap-and trade in US, not just voluntary programs o Voluntary programs don’t work Bush criticized KP as highly flawed international approach, but what was the administration’s proposed alternative? o They didn’t have one, and later came up with one. o Bring together small set of countries that account for 80% of emissions: Major Emitters Meetings (MEM) begin




o Obama administration see this is making sense, but change the name to Major Emitters Forum so not seen as criticizing or attempting to substitute UN framework on climate change and Kyoto Does everything change with president Obama in the White House? No o – US senate passed Byrd Hagel resolution 95-0 against the KP approach o President Clinton did not submit KP to senate, nor would have Vice President Gore had he been elected president, nor would have senator Kerry had he been elected, and Obama has said the same thing  KP excludes key countries, and is flawed o No matter who occupies the White House a KP type treaty (targets and timetables for only limited number of countries) will not be submitted to the US senate for ratification Do somethings change with President Obama in the White House? YES o State level and regional initiative will advance in the US, and there will quite possible be a comprehensive national cap and trade system in place by end of 2010, and … o In 2009, US beginning to work with other nations on a better international agreement

Two bottom lines: “Mankind in spite of itself is conducting a great geophysical experiment, unprecedented in human history” Roger Revelle (1957) Economist’s bottom-line: The fundamental problem is that “climate-change externality,” that is a “global public good.” Therefore, economic participants, millions of firms, billions of people, trillions of decisions, need to face realistic “carbon prices” if their decisions about consumption, investment, and innovation are to be correct (appropriate and helful) To be effective, a market price of carbon is needed that reflects social costs: it will not be cheap and it will not be easy SLIDES

“Nature never gives anything to anyone; everything is sold. It is only in the abstraction of ideals That choice comes without consequences” - Emerson

To top