Transcript After Copenhagen

After Copenhagen:
What is the Politically Feasible Path
to Comprehensive Targets
for Greenhouse Gas Emissions?
Jeffrey Frankel
Harpel Professor, Harvard Kennedy School
Mossavar-Rahmani Center for Business & Government
Luncheon Seminar, March 11, 2010
Questions
1. Did the “Copenhagen Accord”
(Dec. 2009) constitute progress?
2. How should we proceed, so as to get
comprehensive country targets
for emissions of GreenHouse Gases?
2
1. What is the definition of progress?
• It is useless to evaluate negotiations
by whether or not they produce
a sweeping communiqué,
– such as Bali agreement
to limit warming to 2°C
• or G-8 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. internatnl. 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 far into the future
– Any reason to expect compliance.
5
The best recent news
• 102 countries (81% of global emissions), responded to the
Jan.31, 2010, deadline of the Copenhagen Accord
by submitting plans for reducing emissions.
• Six big non-Annex I countries named quantitative targets
– even though they didn’t have to.
– Of course many, like China, are vague
• about base year and seriousness of commitment
• India & China’s 2020 target ≈ BAU.
– But that is not a problem. (BAU is what I had proposed.)
• It is an important step forward,
– suggesting that Pres. Obama’s in-person breakthrough
on the last day of COP15 may indeed lead somewhere.
6
Emissions targets taken on under
Copenhagen Accord (Jan 31, 2010 deadline)
.
Reduction
Country
by 2020
Australia 5 to 25%
Canada
China
17%
40 to
45%
EU27 20% /
30%
India 20% to
25%
Indonesia 26%
Reduction
Share of CO2 Emissions
Reduction
Base
World
per capita
Type
1
Year
GHGs
(tCO2eq)1
2000
1.30%
27.4
2005
1.86%
24.9
N/A
16.64%
5.5
1990
11.69%
10.3
2005
4.32%
1.7
N/A
4.73%
9.3
.
Emission Reductions. A target which reduces a country's overall greenhouse gas emissions.
Business As Usual (BAU). A commitment to reduce emissions from the projection of the future if actions were not taken.
7
Carbon intensity. How much fossil fuels you have to burn to produce an economic unit. Reducing carbon intensity means
7
a country's GDP will continue to rise without carbon emissions rising at the same rate due to greater energy efficiency.
Emissions targets taken on under
Copenhagen Accord (Jan 31, 2010 deadline)
.
Reduction
Share of Emissions
Reduction
Base
World per capita
Type
Year
GHGs (tCO2eq)
Country
Reduction
by 2020
Japan
25%
1990
3.14%
10.6
Mexico
30%
N/A
1.58%
6.6
Russia
15 to
25%
34%
1990
4.64%
14.0
N/A
0.98%
9.0
30%
N/A
1.3%
11.8
17%
2005
South
Africa
South
Korea
US
.
15.78% 23.1
8
8
Lessons from Copenhagen
• Progress is not possible in the UN meetings
– Small member countries will obstruct.
• Delays due to walkout;
• 6 trouble-maker countries blocked
adoption of “Copenhagen Accord.”
– The UNFCCC Secretariat is not up to it:
– Leaving 38,000-44,000 registrees
out in the cold is unforgivable incompetence.
• The important decisions can only be made
by a small steering group, like the old G-7.
9
2009’s good global governance development:
• Big emerging market countries
finally have representation,
– now that the G-20 has supplanted the G-8.
• Korea chairs the G-20 in 2010,
and may be able to bridge between
Annex I & developing countries.
– and in the Major Economies Forum
10
2. 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 that they view as unfair.
– Above certain thresholds for economic costs, they will drop out.
11
“An Elaborated Proposal For Global Climate Policy
Architecture: Specific Formulas and Emission
Targets for All Countries in All Decades,”
in 2009 Aldy-Stavins book,
suggested a framework
of formulas that produce
precise numerical targets for
CO2 emissions in all regions
for the rest of the century.
The goal:
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.
12
•
Proposal
Stage 1:
• Annex I 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.
13
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).
• Gradual Equalization Factor:
– In the long run, rich & poor countries’ targets converge
in emissions per capita at δ per year. (Goal: equity)
14
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 agreed among Annex I countries in 1997 (γ=.14).
– Now will update with numbers volunteered by countries Jan. 31, 2010.
• 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.
– Will now update to Obama goals (2010) & switch to 2005 benchmark.
• Initially we set speed of Gradual Equalization .1 = δ, per 5-yr. budget period
(which comes to dominate per capita targets toward the end of the century).
15
The targeted reductions from BAU agreed to at Kyoto
Cuts ↑
Percent reduction from 2010 business-as-usual .
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 →
16
This is how we set the parameter in the Progressive Reductions Factor
The numbers submitted by countries,
Jan. 31, 2010, under the Copenhagen Accord,
were also progressive
120%
Chinaa
100%
- BAU -
India
Emissions
targets
for 2020
expressed
vs. BAU
Russia
USA
Canada
80%
EU
S. Korea
Mexico
Japan
60%
Australia
a
Jan 31, 2010 numbers
under Copenhagen Accord
Regression line
(WITCH model)
Series1
Linear (Series1)
40%
Cuts ↓
20%
Income per capita
0%
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
17
The resultant paths for emissions targets,
permit trading, the price of carbon,
GDP costs, & environmental effects
• estimated by means of the WITCH
model of FEEM, Milan, co-authored
& applied by Valentina Bosetti.
18
The 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
• LACA = Latin America &
the Caribbean
19
Dates at which developing countries were asked
•
to limit
emissions
to BAU:
• to cut
below BAU,
• for 500
ppm goal:
• to cut emissions
below BAU,
• for 460
ppm goal:
– Lat Am 2010
– MENA 2010
– China 2010
– 2035
– 2025
– 2030
– 2020
– 2025
– 2025
– India
2010
– SEAsia 2010
– Africa 2025
– 2050
– 2050
– 2050
– 2025
– 2025
– 2050
20
◙ In one version, concentrations level off at 500 ppm
in the latter part of the century.
◙ Constraints are satisfied:
-- No country in any one period suffers
Co-author: V.Bosetti
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
21
Emissions path for rich countries
Fig. 2b
OECD Emissions
7
6
GtC
5
BAU
Simulated Emissions
4
CAP
3
}
2
1
0
10
0
2
25
0
2
40
0
2
55
0
2
70
0
2
85
0
2
00
1
2
Predicted actual
emissions exceed
caps, by permit
purchases.
A property I have come to regard as useful:
permits are a relatively small share of reductions.
22
Emissions path for poor countries
Fig. 4b
NON OECD Emissions
20
BAU
13
GtC
Simulated Emissions
CAP
}
7
21
00
20
85
20
70
20
55
20
40
20
25
20
10
0
Predicted actual
emissions fall
below caps, by
permit sales.
23
Price of Carbon Dioxide
Fig. 6b
Price of Carbon Permits
1000
600
rises slowly over 50
years, then rapidly.
FRANKEL
Architecture
400
200
0
2005 2020 2035 2050 2065 2080 2095
Zoom on Price of Carbon Permits
$/tCO2e
$/tCO2e
800
180
160
140
120
100
80
60
40
20
0
FRANKEL
Architecture
2005
2015
2025
2035
2045
24
Concentrations stay below 500 ppm goal
Fig. 7b
Carbon Conce ntrations (CO2 only)
800
bau
750
700
600
550
500
450
FRANK
EL
Archite
cture
400
350
300
20
05
20
15
20
25
20
35
20
45
20
55
20
65
20
75
20
85
20
95
21
05
ppmv
650
25
Paper: http://ksghome.harvard.edu/~jfrankel/SpecificTargetsHPICA2009.doc
Available at: http://ksghome.harvard.edu/~jfrankel/currentpubsspeeches.htm#On%20Climate%20Change
Temperature rises 3° rather than 4°
Fig. 8b
Temperature increase (above pre-industrial)
4
3.5
bau
3
°C
2.5
2
FRANKEL
Architecture
1.5
1
0.5
0
05 0 15 0 25 0 35 0 45 0 55 0 65 0 75 0 85 0 95 1 05
0
2
2
2
2
2
2
2
2
2
2
2
Yes, I know.
The pay-off is
a let-down.
27
Appendices
• 1) Trying to hit more aggressive targets
• 2) Extensions for future work:
– Updating
– Uncertainty
• 3) Trade policy: In the meantime, before all
countries participate, what border measures are
appropriate regarding carbon-intensive imports?
28
1) The latest paper
co-authored with Valentina Bosetti
• See if we can hit concentrations = 450 ppm
– Assumes EU target in 2015-2020 is 30 % below
1990 levels, rather than 20 %.
– Developing country starting dates moved up.
– Parameters in LCF & GEF tightened.
29
Bottom line
• The best we can do is attain 460 ppm
• Even then, we had to loosen our
political/economic constraints:
– We had to raise the threshold of costs
above which a country drops out,
as high as Y =3.4% of income in PDV terms,
– and X =12 % in the worst budget period.
30
Target allocations to hit goal of 460 ppm
source: Bosetti & Frankel (Nov. 2009)
6
Figure
2: Actual Emission per capita throughout the century, for 11 regions
5
USA
EURO
tonC/cap per year
4
KOSAU
CAJAZ
TE
3
MENA
SSA
SASIA
CHINA
2
EASIA
LACA
World
1
0
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100
31
Figure 3:
Assigned targets & actual emissions for industrialized countries, aggregate
460 ppm (Note: Predicted actual emissions exceed caps by permit purchase amounts.)
7
6
GtC
5
4
3
BaU
Actual Emissions
Assigned Amount
2
1
0
2005 2015 2025 2035 2045 2055 2065 2075 2085 2095
32
Figure 4:
Assigned targets & actual emissions for poor countries, aggregate
GtC
460 ppm (Note: Predicted actual emissions fall below caps by permit sales amounts)
18
16
14
12
10
8
6
4
2
0
BaU
Actual Emissions
Assigned Amount
2005 2015 2025 2035 2045 2055 2065 2075 2085 2095
33
Figure 5:
Assigned targets & actual emissions for all countries, aggregate
Goal: 460 ppm concentration of CO2 in year 2100
25
GtC
20
15
BaU
Assigned Amount
10
5
0
2005 2015 2025 2035 2045 2055 2065 2075 2085 2095
34
2.00%
7 a) 2010- 2045
1.00%
USA
Figure 7:
Income
Losses by
Region and
Period over
the Century
(460 ppm)
EU
0.00%
KOSAU
CAJAZ
TE
-1.00%
MENA
SSA
SASIA
-2.00%
CHINA
EASIA
LAM
-3.00%
-4.00%
2010
2015
2020
2025
2030
2035
2040
2045
25.00%
20.00%
7 b) 2050- 2100
USA
15.00%
EU
KOSAU
10.00%
CAJAZ
TE
5.00%
MENA
SSA
0.00%
SASIA
CHINA
-5.00%
EASIA
LAM
-10.00%
-15.00%
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
35
Figure 8: Global Income Loss
-- by Budget Period, 2010-2100, and PDV (discounted to 2005)
2005
2015
2025
2035
2045
2055
2065
2075
2085
2095
0.0%
-0.5%
GWP % Change wrt BAU
-1.0%
-1.5%
-2.0%
-2.5%
-3.0%
-3.5%
-4.0%
-4.5%
Global Losses
Discounted Global Losses (5%)
36
Figure 9:Losses by Region
-- PDV (discounted to 2005 at 5% discount rate), 2010-2100
4.0%
Net Present Value Income Losses wrt BAU
3.0%
2.0%
1.0%
0.0%
USA
EU
KOSAU CAJAZ
TE
MENA
SSA
SASIA CHINA EASIA
LAM
-1.0%
-2.0%
-3.0%
-4.0%
37
Figure 10: CO2 concentrations
to achieve year-2100 goal of 460 ppm
800
750
700
ppmv
650
600
550
500
450
bau
Frankel Architecture
400
350
300
38
Figure 11: Rise in temperature
under proposed targets (460ppm) vs. BAU
4
3.5
3
2.5
2
bau
Frankel Architecture
1.5
1
0.5
2105
2095
2085
2075
2065
2055
2045
2035
2025
2015
2005
0
Even though the 460 ppm target is achieved by mid-century, the pay-off in further
temperature moderation, relative to 500 ppm, is not large. There are diminishing
returns to CO2 abatement in two senses: The marginal cost of abatement rises in
39
dollar terms, and the marginal cost of temperature moderation rises in terms of CO2.
Figure A1. Choosing country targets
to minimize threshold for PDV country costs
loses the simplicity of a common formula for all,
(green triangles)
without much gain in reducing PDV of global losses
Present Value GWP Loss
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
450
460
470
480
ppm CO2 only
490
500
510
40
Figure A2. Varying the developing country start dates
tightens or loosens the CO2 concentration objective
Maximum National Income Loss in any
Period
(blue diamonds)
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
450
460
470
480
490
500
510
ppm CO2 only
41
Conclusions
• Some may conclude that the goals of 380
or 450 ppm in CO2 concentrations are not
attainable in practice,
– and that our earlier proposal for 500 ppm
is the better plan (Frankel, 2009).
– We take no position on the best environmental goal.
– Rather, we submit that, whatever the goal,
our formulas will give targets that are more
practical economically and politically than
approaches that have been proposed by others.
42
Conclusions,
continued
• Our framework allocates emission targets across
countries
– in such a way that every country feels it is only doing its fair share and
– in such a way as to build trust as the decades pass.
• Otherwise, announcements of distant future goals are
not 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, by small changes in the formula
parameters, changes in circumstances during the century.
43
2. Future research
• Update to fit Copenhagen Accord
– Change Latecomer Catchup base year from 1990 to 2005.
– Re-estimating parameters to fit latest numbers
• Most important extension: introduce uncertainty, re:
– Economic growth rates
– Technological progress (carbon intensity at a given price)
– Weight placed by political process on enviro objective
• Robustness in design of framework regarding losses:
– Periodic renegotiation of parameters
– & within-decade indexation of numerical targets to GDP.
44
3. Trade
•
Will the global climate regime
collide with the global trade regime?
45
Leakage and lost competitiveness
= what “unfairness” means in rich countries
Could border measures (tariffs, permit requirements
for imports…) give non-participants an incentive to
join, and level the playing field in the meantime?
– Yes, in theory.
– If properly designed, they could even be WTO-consistent,
• building on precedents: Montreal Protocol, shrimp-turtle decision,
Brazil tires, and D-G Lamy speeches (2 Nov., 2009).
– In practice, however, border measures written
by politicians will almost certainly be discriminatory,
WTO-inconsistent, and undermining of climate goals.
46
What form should border measures take?
1. Best choice: multilateral sanctions. (Not likely.)
2. Next-best: national sanctions
adopted under multilateral guidelines
1. Penalties can only be applied by participants-in-good standing
2. Judgments to be made by technical experts, not politicians
3. Penalties only in 6 or 8 of the most relevant sectors (aluminum…).
3. Third: No border measures.
4. Each country chooses carbon tariffs as it sees fit.
5. Worst choice: national measures are subsidies
(e.g., free permits) to adversely affected firms.
47