Transcript Without appendices. - Harvard Kennedy School

After the Cancun Agreements:
What is the Politically Feasible Path
to Comprehensive Targets
for Greenhouse Gas Emissions?
Jeffrey Frankel
Harpel Professor, Harvard Kennedy School
Lecture, Boston College, March 28, 2011
•
The recent Cancun Conference of the Parties to
the UN Framework Convention on Climate Change
(Dec. 2010) was considered a success,
in part because expectations had been so low.
•
The preceding year’s Copenhagen meeting
(Dec. 2009) was considered a failure, because
expectations had been so high.
2
What is the definition of progress?
It is useless to evaluate negotiations
by whether they produce
a sweeping communiqué,
– such as Bali or G8 agreement
to limit warming to 2°C
• at L’Aquila, Italy, in 2009:
• They are just words.
– Modest targets, if short-term & credible,
are worth far more than aggressive targets,
if long-term & non-credible.
3
Definition of progress?
• Keep in mind the Herculean tasks of bridging
• the gap between rich countries & poor,
• the gap between environmental aspirations
& economic costs that people are willing to pay,
• the gap between what leaders say, &
what commitments are enforceable/credible.
–
• Progress ≡ steps toward specific credible
commitments by a large number of countries.
4
Assume that the climate regime
will continue to follow Kyoto
• Features of the Kyoto Protocol worth building on -– Politics: Quantitative limits maximize national sovereignty
– Economics: Market mechanisms, esp. international permit trading
– Thus (2001) “You’re Getting Warmer: The Most Feasible Path
for Addressing Global Climate Change Does Run Through Kyoto.”
• What was sorely missing from Kyoto:
– Participation by US, China, & other developing countries
– A mechanism for setting targets further into the future, past 2012
– Any reason to expect compliance.
5
Progress
• Most countries (>80) responded to the Copenhagen Accord
in 2010 by submitting plans for reducing emissions.
• By the time of Cancun, 21 countries had
associated themselves with specific quantitative targets
• counting the EU27 as one
• and including 7 big non-Annex-I countries.
• Of course some, like China or US, are vague
• about seriousness of commitment.
• Also India & China’s 2020 target ≈ BAU (Business as Usual).
• But that is not a problem.
6
My Proposal:
formulas for pragmatic targets,
based on what emission paths are possible politically:
• unlike other approaches based purely on:
– Science
(concentration goals),
– Ethics
(equal emission rights per capita),
– or Economics
(cost-benefit optimization).
• Why the political approach?
– Countries will not accept burdens they view as unfair.
– Above certain thresholds for economic costs, they will drop out.
7
“An Elaborated Proposal For Global Climate Policy
Architecture: Specific Formulas and Emission
Targets for All Countries in All Decades” (2009)
suggested a framework
of formulas that produce precise
numerical targets for CO2 emissions in
all regions for the rest of the century,
subject to political constraints:
No country suffers loss (PDV) > Y=1% GDP, by signing up ex ante,
nor in any one period suffers a loss > X=5% GDP, by abiding ex post.
8
“Is it economics?”
• Define economics as maximization
of objectives subject to constraints.
• That applies not just to private agents maximizing
expected utility subject to budget constraints,
• but also to how policy-makers can maximize
objectives subject to political constraints.
• Not the same as what other climate modelers do:
– cost-benefit analysis (Integrated Assessment models),
– or minimizing economic costs subject to
the constraint of attaining a given environmental goal.
9
Maximizing the credibility of agreement,
for any given environmental goal
Credibility of
an agreement,
Vs. probability
that it will unravel because
(e.g.) some key
players find
that complying
imposes huge
economic costs,
relative to
dropping out.
Frankel (2009)
•
•
•
Bosetti & Frankel (2010)
Some proposals
500 ppm
|
450 ppm
|
•
350 ppm
|
Aggressiveness of targeted cut in CO2 concentrations by 2100
10
•
Proposal
Stage 1:
• Advanced countries commit to the post-2012 targets
that their leaders have already announced.
• Others commit immediately not to exceed BAU.
•
Stage 2:
When the time comes for developing country cuts,
targets are determined by a formula incorporating
3 elements, designed so each is asked only to take actions
analogous to those already taken by others:
– a Progressive Reduction Factor,
– a Latecomer Catch-up Factor, and
– a Gradual Equalization Factor.
11
The three factors in the formulas
• Progressive Reduction Factor:
– For each 1% difference in income/cap =>
target is γ % greater emissions abatement from BAU.
• Latecomer Catch-up Factor:
– Gradually close the gap between the latecomer’s starting point
& its 1990 emission levels at λ per year.
(Goal: avoid rewarding latecomers for ramping up emissions).
– Baseline probably now moved from 1990 to 2005.
• Gradual Equalization Factor:
– In the long run, rich & poor countries’ targets converge
in emissions per capita at δ per year. (Goal: equity)
12
Where do the parameters come from?
• They would be negotiated.
• But a good start is to use parameters implicit
in targets that have already been agreed.
• The degree of progressivity in the PRF
can be estimated from observed pattern
– in allocations among countries already agreed (γ=.14).
• We estimated Latecomer Catch-up parameter from the speed
with which US targets close the gap: current vs. 1990 emission levels
– in Lieberman-Warner (2008) & Waxman-Markey bills (2009) => λ =.3 per 5-yr. period.
• Initially we set speed of Gradual Equalization δ=.1, per 5-yr. budget period
(which comes to dominate per capita targets toward the end of the century).
13
Cuts ↑
Percent reduction from 2010 business-as-usual .
The targeted reductions from BAU agreed to at Kyoto
in 1997 were progressive with respect to income.
50%
40%
30%
20%
10%
γ =.14
0%
-10%
-20%
-30%
500
2.699
1,000
2,000
5,000
10,000
20,000
3.699
1996 GDP per capita (1987 US dollars, ratio scale)
50,000
4.699
Incomes →
14
This is how we set the parameter in the Progressive Reductions Factor
The resultant paths for emissions targets,
permit trading, the price of carbon,
GDP costs, & environmental effects
are estimated by means of
the WITCH model of FEEM, Milan,
co-authored & applied by Valentina Bosetti.
15
◙ In 2009 version, CO2 concentrations level off
at 500 ppm in the latter part of the century.
◙ Constraints are satisfied:
-- No country in any one period suffers
a loss as large as 5% of GDP by participating.
-- Present Discounted Value of loss < 1% GDP.
W orld Industrial Carbon Emissions
25
bau
15
10
Sim ulated
Em is s ions
5
0
20
05
20
20
20
35
20
50
20
65
20
80
20
95
GtC
20
Global peak
date ≈ 2035
16
The last completed paper (2010)
co-authored with Valentina Bosetti
was an attempt to see if we could
hit CO2 concentrations = 450 ppm
– by assuming more aggressive parameters in the formulas.
17
Latest study, currently underway (2011)
• updates all the estimates
• to reflect recent developments in
the economy, environment, & negotiations,
– particularly the Copenhagen-Cancun country targets,
– and to reflect new technologies, including
• Wind, separate from solar
• Carbon Capture & Storage (CCS) for gas
• Bio-energy (BE) with CCS in most runs .
• and again tries to attain more aggressive targets.
• “A Politically Feasible Architecture
for Global Climate Policy: Specific Formulas and Emission
Targets to Build on Copenhagen & Cancun”
– with Bosetti
– for the UN.
18
EU27 + 20 other countries
Country
Pledge at COP15
Australia 1, 3
Belarus
Canada
Croatia
Euro 27
Iceland
Greenhouse Gases Emissions (GT CO2-eq) 11
Copenhagen Pledges 12
Excluding LULUCF
LULUCF
Total
1990 2005 2020
1990 2005 2020
1990 2005 2020
LC
HC
LC
HC
LC
HC
LC
HC
0.02
0.00
0.02
0.00
0.02
0.00
0.02
0.00
0.00
0.00
0.06
0.00
0.00
0.07
0.89
0.44
0.14
0.62
0.03
5.59
0.00
1.29
0.36
0.06
0.05
3.38
0.05
0.93
6.18
1.61
0.48
0.13
0.65
0.03
4.47
0.00
0.98
0.31
0.06
0.03
2.83
0.04
0.74
5.90
1.68
0.37
0.13
0.65
0.03
3.91
0.00
0.98
0.31
0.05
0.03
2.50
0.04
0.74
5.90
1.61
11%
-6%
6%
-5%
-20%
-30%
-24%
-16%
-9%
-32%
-16%
-23%
-20%
-5%
4%
-15%
-11%
6%
-5%
-30%
-30%
-24%
-16%
-19%
-42%
-26%
-32%
-20%
-5%
0%
-11%
56%
-16%
-2%
-13%
-36%
-29%
29%
-28%
-36%
31%
-22%
75%
-17%
-34%
-32%
48%
-16%
-2%
-24%
-36%
-29%
29%
-36%
-46%
16%
-31%
75%
-17%
-37%
-23%
29%
-26%
-20%
-27%
-44%
-38%
18%
-37%
-44%
22%
-32%
44%
-28%
-37%
-41%
22%
-26%
-20%
-36%
-44%
-38%
18%
-44%
-52%
8%
-40%
44%
-28%
-40%
-26%
-6%
-34%
19
-30%
-41%
-30%
-34%
-30%
Brazil
-0.97 / -1.05 GtCO2-eq wrt BaU
China
2, 6
reduce carbon intensity of output
by 40-45% wrt 2005
3.72 7.61 10.75
0.04 0.03 -0.28
3.76 7.64 10.47
10.47 10.47
179% 179%
37% 37%
2, 8
reduce carbon intensity of output
by 20-25% wrt 2005
1.33 2.05 2.59
0.05 0.04 0.01
1.38 2.09 2.60
2.60 2.60
89% 89%
24% 24%
Indonesia 1
Mexico 1
South Africa 1
South Korea 1
-26% / -41% wrt BaU
0.45
0.45
0.34
0.30
0.41
0.03
0.00
0.00
0.86
0.48
0.35
0.30
1.20
0.82
0.34
0.55
40%
71%
-2%
84%
-24%
26%
-23%
-18%
-17% wrt 2005
-5% wrt 1990
-20% / -30% wrt 1990
-30% wrt 1990
1
-25% wrt 1990
Japan
Kazakhstan 4
New Zealand 1
Norway
Russian Federation
Switzerland
Ukraine
United States
India
-15% wrt 1992
-10% to -20% wrt 1990
-30% / -40% wrt 1990
1
-15% / -25% wrt 1990
-20% / -30% wrt 1990
-20% wrt 1990
-17% wrt 2005
-51 Mt CO2-eq / -30% wrt BaU
-34% wrt BaU
-30% wrt BaU
0.73
0.61
0.44
0.67
1.13
0.84
0.51
0.79
0.02
0.00
0.04
0.00
0.01
0.00
0.02
0.00
0.00
0.00
0.04
0.00
0.00
0.03
1.45
0.84
0.04
0.00
0.00
0.01
0.00
0.04
0.00
0.02
0.00
0.02
0.00
0.00
0.00
0.01
0.00
0.00
0.00
1.13
0.49
0.03
0.00
0.00
0.54
0.09
0.77
0.03
5.13
0.00
1.38
0.24
0.08
0.05
2.16
0.05
0.42
7.13
2.56
1.57
0.65
0.44
0.67
0.63
0.10
0.88
0.04
6.15
0.00
1.57
0.26
0.09
0.06
2.32
0.06
0.52
8.23
2.66
wrt 2005 (%)
1, 7
-5% / '-10% wrt 1990
0.62
0.10
0.83
0.04
6.13
0.00
1.54
0.26
0.09
0.06
2.31
0.06
0.52
8.23
1.53
wrt 1990 (%)
0.42
0.14
0.59
0.03
5.57
0.00
1.27
0.36
0.06
0.05
3.32
0.05
0.93
6.11
0.72
-5%, -15% to -25% wrt 2000
0.53
0.08
0.73
0.03
5.12
0.00
1.35
0.24
0.08
0.05
2.12
0.05
0.42
7.10
1.11
Target
2011
1.62
0.87
0.51
0.79
0.96
0.61
0.34
0.55
12%
27%
-2%
84%
-39%
-6%
-23%
-18%
wrt BaU (%)
Progressivity in the Cancun numbers
2011
setting “hot air” to 0 for 6 FSU countries
% cut wrt baseline
Cuts ↑
The implicit progressivity coefficient is almost exactly
the
same as the one we had been using: .13 ≈ .14 !
60%
=> external validation of the political economy of approach
a
50%
40%
30%
a
γ =.13
t =3.9
20%
Emissions 10%
targets
for 2020
expressed 0%
vs. BAU
500
R2=.44
Regression line
5,000
50,000
(WITCH model)
GDP per capita
20
Our 11 regions:
• EUROPE =
– Old Europe
– New Europe
+
• US = The United States
• KOSAU = Korea & S. Africa
& Australia (3 coal-users)
• CAJAZ = Canada, Japan &
New Zealand
• TE = Russia & other
Transition Economies
• MENA = Middle East
& North Africa
• SSA = Sub-Saharan Africa
• SASIA= India +
the rest of South Asia
• CHINA = PRC
• EASIA = Smaller countries
of East Asia
• LAC = Latin America
& the Caribbean
21
Figure 2: Global emission targets
resulting from the formulas & parameters
under the 500 ppm goal
Using Cancun targets, near-term cuts are bigger than in our earlier work.
80.00
70.00
BaU
60.00
50.00
40.00
Proposed
Architecture no
BECCS
30.00
20.00
10.00
0.00
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
Energy related CO2 Emission (Gton CO2)
90.00
22
Fig.3: Targets & emissions by OECD countries
under the 500 ppm goal
20.00
BaU
Actual Emissions
15.00
Assigned Amount
10.00
5.00
}
Predicted actual
emissions exceed
caps, by permit
purchases.
0.00
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
Energy related CO2 Emission (Gton CO2)
25.00
23
Fig.4: Targets & emissions, developing countries
under the 500 ppm goal
60.00
50.00
BaU
Actual Emissions
40.00
Assigned Amount
30.00
20.00
}
Predicted actual
emissions fall
short of caps,
by permit sales.
10.00
0.00
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
Energy related CO2 Emission (Gton CO2)
70.00
24
Figure 8: Effect on energy prices,
under 500 ppm goal
400
350
300
250
200
Carbon price climbs steeply in 2nd half of century,
but < earlier estimates, presumably due to new technologies.
Carbon Price per ton CO2
(LHS axis)
3
2.5
$ per gallon motor
gasoline (RHS axis)
2
1.5
150
1
100
0.5
50
0
2000
3.5
0
2020
2040
2060
2080
2100
25
Figure 5: Global economic costs (% of income)
500 ppm goal (without BE-CCS)
2100
2095
2090
2085
2080
2075
2070
2065
2060
2055
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
Global cost < 1% of income
0.5%
0.0%
GWP Losses
-0.5%
-1.0%
-1.5%
Economic losses
Contemporaneous
Series1 value
Series2
Discounted at 5%
-2.0%
-2.5%
-3.0%
-3.5%
26
Economic cost to each country/region
(Net Present Value of income losses)
• Regional Cost
measured with respect to baseline (no global climate policy)
USA EU KoSAu CaJaZ TE MENA SSA SAsia China EAsia LAm India
0.7% 0.3% 0.7% 0.9% 1.6% 3.1% -0.2% -0.3% 1.2% 0.5% 0.8% 0.2%
• Regional Cost measured with respect to case where
individual country free rides, but coalition continues.
USA EU KoSAu CaJaZ TE MENA SSA SAsia China EAsia LAm India
0.8% 0.4% 0.9% 0.7% 1.2% 1.2% -0.2% 0.1% 1.2% 0.9% 0.7% 0.5%
Cost is particularly high to oil producers – even if they drop out.
But it is almost down to 1% even for them.
27
Figure 7a: Economic losses of each region,
relative to dropping out alone
(% of income) under 500 ppm goal, 2010-2045
0.40%
0.20%
USA
0.00%
EU
-0.20%
2005 2010 2015 2020 2025 2030 2035 2040 2045
KOSAU
-0.40%
CAJAZ
-0.60%
TE
-0.80%
MENA
-1.00%
SSA
-1.20%
-1.40%
Costs stay under 2% of income
during the 1st half of the century.
SASIA
CHINA
-1.60%
EASIA
-1.80%
28
Figure 7b: Economic losses of each region,
relative to dropping out alone
(% of income) under 500 ppm goal, 2050-2090
3.00%
USA
2.00%
EU
1.00%
KOSAU
0.00%
-1.00%
CAJAZ
2050 2055 2060 2065 2070 2075 2080 2085 2090
MENA
-2.00%
SSA
-3.00%
SASIA
-4.00%
-5.00%
-6.00%
TE
CHINA
For every country in every year,
costs stay under 5% of income.
EASIA
29
Figure 11: Path of concentrations
hits the 500 ppm CO2 goal
800
600
500
400
300
200
BaU
Proposed Architecture
with BECCS
100
0
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
CO2 concentrations (ppm)
700
First environmental goal is achieved
30
Figure 12: Rise in Temperature
under the 500 ppm CO2 goal
4.00
3°C vs. 4° C under BAU
3.50
3.00
2.50
BaU
2.00
1.50
Proposed Architecture
with BECCS
1.00
0.50
0.00
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
Temperature increase above preindustrial levels (°C)
4.50
31
Summary
• Our framework allocates emission targets across countries
in such a way that every country feels it is doing its fair share:
– corresponding to what others have done before it,
• taking due account of differences in income,
– and avoiding that any country will bear a cost above threshold.
• Specifically, every country expects cost < 5% GDP in every year,
– and PDV of costs of participating (almost) < 1% of GDP.
• Otherwise, announcements of distant future goals
would not be credible, will not have the desired effects.
– This framework—in providing for a decade-by-decade sequence of emission
targets, each determined on the basis of a few principles and formulas—
– is flexible enough to accommodate changes in circumstances
during the century, by changes in the formula parameters
• as more is learned about climate, economic growth, & technology.
32
Papers available at: http://ksghome.harvard.edu/~jfrankel/currentpubsspeeches.htm On Climate Change