Transcript 슬라이드 제목 없음 - World Resources Institute

Reducing Uncertainty
Through Dual-Intensity Targets
28 October, 2002
COP 8 Side Event
Building on the Kyoto Protocol: Options for protecting the climate
Yong-Gun Kim and Kevin A. Baumert
Korea Environment Institute / WRI
Korea Environment Institute
Contents
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Background
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Challenges
Intensity Targets
Dual Targets
Dual-Intensity Targets
Potential Benefits from Dual-Intensity
Targets
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I. Background
 Uncertainty is inherent in forecasting future economic situation
and therefore future GHG emissions.
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Forecast error is inevitable.
Major part of GHG emissions is closely related with economic
variable, particularly GDP.
 Rigid targets, such as fixed emission targets, generate risk (cost)
of unintended ‘hot air’ or severe economic burden.
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Hot air, in the case of lower-than-expected economic growth, harms
environmental effectiveness
Severe economic constraints, in the case of higher-than-expected
economic growth, could result in non-compliance
 Necessity to allow emissions to grow, but in a less carbon
intensive way for ‘sustainable development.’
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II. Approach (i): Intensity Targets
 Intensity target: ratio of GHG emissions to GDP
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Allowable Emissions
Intensity Target 
GDP 
GDP: actual GDP during the commitment period
Alpha = GDP coefficient: determines how the allowable emissions
level changes in response to GDP changes
 Supporting arguments
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Compatibility with sustainable development
Reduction of risk from uncertainty (hot air or undesirably severe
constraints on economy)
Environmental effectiveness: more aggressive targets, better
compliance and wider participation
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II(2). Analysis and Proposals on Intensity Targets
Proposal
Target indicator
Baseline / Criteria or other
Base year characteristics
CCAP(1998)
Growth Baseline: BAU
Emission/GDP
Intensity target between
BAU and no-regret baseline
Argentine
Emission /GDP
Republic (1999)
BAU
No more than 10%
reduction; No hot air
Baumert et. al.
(WRI, 1999)
Emission/GDP
Historical
base year
Philibert (IEA,
2001)
Emission/GDP
Lutter (2000)
Emission/[(lagged emission)0.5(lagged GDP)0.6(lagged
GDP/capita)0.06]
Price cap; longer-term
commitment period
Frankel (1999) Emission/GDP, ‘Break –even’ approach
US Administration (2002)
Emission/GDP
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BAU /
2002 – 2012
Voluntary reduction of
intensity by 18%
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III. Approach (ii): Dual Targets
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Take a target band to further reduce risk from
uncertainty
• Selling Target (more stringent)
• Compliance Target (less stringent)
Creates a ‘safe zone’ – a range of future scenarios
where country is neither out of compliance not able to
sell emission allowances.
• Could be simpler than intensity targets
• Or, could be combined with intensity targets
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IV. Dual-Intensity Targets
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Two intensity targets
• Selling target:
Emission I1  GDP
• Compliance target:
Emission I 2  GDP , I1  I 2
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A country can sell extra emission allowances if its
emission is less than ‘selling target.’
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A country faces penalty if its emission is greater than
‘compliance target.’
 Neither incentive nor penalty applies between the two
targets.
• Emissions trading is allowed
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IV(2). Graphical Illustration of “Dual” Targets
GHG Emissions
Compliance Target
Uncertainty
in future
emissions
Historical
Trend
Selling Target
Negotiation
Date
Compliance Period
Time
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V. Potential Benefits from Dual-Intensity Targets
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Flexibility
• Includes fixed targets(alpha=0), single intensity
targets(I_1=I_2), non-binding or incentive-only
targets(I_2=infinity), etc. as special cases.
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Sustainable Development
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Lower Cost

Environmental Effectiveness
• Allows emissions to grow, but in a less carbon intensive way
• Reduce risk and therefore insurance cost
• Promote stronger targets
• Better compliance
• Wider participation
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VI. Challenges
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Lack of Environmental Certainty
• Overall stringency of reduction target is more important than
short-term certainty in the long-term climate change issue
Linkage to Market Mechanisms
• Counter measures such as post-verification trading,
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commitment period reserve, buyer liability and/or financial
instruments (forwards, futures, options).
Compatibility is possible: e.g., UK trading Scheme
Not more serious than fixed targets
 Potentially lower risk of overselling
GDP issue
• Inter-temporal consistency can be guaranteed via PPP, $US
or local currency
• Infrastructure is better than GHG emission: e.g., IMF
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