Towards a Workable and Effective Climate Regime

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Climate change is a formidable and unprecedented challenge. Clearly, the commitments and pledges adopted in Paris will be just the first step in a long journey. The approach likely to be adopted in Paris, at the 21st conference of the parties to the Framework Convention on Climate Change (COP 21), will rely on a combination of “top-down” and “bottom-up” measures. In Paris, countries are likely to reaffirm the global goal of limiting temperature change to 2 degrees Celsius. They are also likely to adopt arrangements for measuring, reporting, and verifying what countries actually do. However, and in contrast to the Kyoto Protocol, the parties to a new Paris Agreement will not be negotiating the contributions of individual countries. Instead, they will recognize the INDCs submitted by countries, and evaluate whether these suffice in the aggregate to meet the agreed collective goal. Over time, the agreement will track progress in meeting this goal, and determine whether countries fulfill their pledges. However, the Paris Agreement will not incorporate explicit penalties for countries that fail to meet their own pledges. The agreement likely to be adopted in Paris will rely on countries’ voluntary efforts.

We believe Paris will be a useful first step down a new path for global cooperation on limiting climate change. However, whether collective action in limiting emissions ultimately succeeds will depend on whether a broader climate change regime can be built around and on top of the foundation laid in Paris. Climate stabilization requires a truly profound transformation in the world’s energy system.

This is why our new book, which incorporates contributions from 49 experts, looks not only to Paris, but beyond Paris as well. The premise of our book is that the world needs a climate change regime that is both workable and effective—“workable” in the sense that it can be accepted by sovereign states; and “effective” in the sense that it ultimately stabilizes the global climate. The Paris Agreement will be workable, but it will also be insufficiently effective. Proposals for an “ideal” agreement, such as one that allocates a fixed carbon budget to individual countries, would be more effective if adopted, but is unlikely ever to be adopted. What we need, therefore, are proposals that make Paris more effective, or that supplement what Paris can achieve, while at the same time being as workable as the Paris Agreement. These proposals and ideas are what we asked all authors who contributed to the book (see list below).  Most chapters contain indeed workable and effective proposals to implement more ambitious reduction targets in Paris and beyond Paris.

Such a regime must be built on the belief that, by cooperating, every country can be made better off. It must also recognize that different countries have different priorities, and that the measures they agree to undertake must be compatible with states’ national self-interests. Rather than force countries to change their behavior, as might be true of a top-down arrangement, a workable climate regime must change the incentives states have to emit greenhouse gases, possibly by helping to change their perceptions of what their self-interests really are.

Our book suggests a number of ways in which this can be done, each of which can be pursued independently, but all of which are likely to be needed to bring about the scale of change that is needed to stabilize the climate. The most important reinforcing measures discussed in the various chapters of the book are the following:

First, financing of energy R&DD (both public and private) must be scaled up dramatically, so as to lower the cost of alternative energy sources. Although the costs of solar and wind power have come down in recent years, further progress is needed if these and other energy technologies are to realize their full potential and displace fossil fuels. Cooperation with developing countries on energy R&D and technology transfers is also essential.

Second, carbon pricing must be encouraged. Carbon pricing promotes substitution away from fossil fuels and the adoption of technologies that can capture and store the carbon associated with fossil fuel combustion.  It also has the additional attraction of favoring cost-effective emission reductions—an important consideration given that climate stabilization will not be inexpensive. Finally, carbon pricing provides a means for raising revenues. In the book, several chapters discuss innovative and diverse ways to introducing mechanisms to price carbon.

Third, fast-growing developing countries must be put onto a new and different growth path, one that contributes to their development in the short-to-medium term, but that also limits climate change, and so protects the continued development of these countries, in the long term. This transformation will need to be financed by the developed economies. Equity issues aren’t separate from effectiveness but part and parcel with it. Benefits in terms of economic development, lower local pollution levels, and improved health and education are at least as important as the direct benefits of lowering greenhouse gas emissions.

Fourth, and related to the above point, the most vulnerable countries must be helped to adapt to climate change. This calls again for adequate funding, but also better governance and risk assessment. This calls again for adequate funding, but also better governance and risk assessment. A section of the book is devoted to climate change and development and another one to climate finance, both with new ideas and proposals.

Finally, to overcome free rider incentives, a robust system for measuring, reporting, and verifying emission reductions must be supplemented by additional measures, whether “building blocks” that exploit other opportunities for emission reductions, or measures that can enforce agreed reductions in emissions. Globalization limits what countries can achieve by acting independently, providing a channel for “trade leakage.” However, it may also provide opportunities for leveraging the trade system to enforce agreed actions to limit climate change. These issues are explored in depth in the book, from an economic, legal and political viewpoint.

Cooperation must therefore occur in a multiple of areas simultaneously – for undertaking R&DD, for carbon pricing, for financing investment and adaptation, and for enforcing agreements to limit emissions. The scale, breadth, and complexity of the task at hand is unprecedented, but the world has no alternative than to face this challenge directly. The UNFCCC process will remain central to any global effort, but it will not be the only game in town. The climate problem is too complex, too far-reaching, and too important to be left to any one institutional arrangement to solve on its own.

Endorsement

“Even if the Paris COP21 proves to be successful in yielding a successor agreement to the Kyoto Protocol, it will still be necessary to do much more than what conceivably would be enshrined in that instrument. This volume is an important contribution for thinking about those additional steps and the substantial predicaments that policy makers are bound to confront as they persevere -- as they must -- in dealing with climate change. Bravo for the timing and content of this book!”
Ernesto Zedillo Ponce de León
Ancien président du Mexique et directeur du Centre d’études sur la Globalisation à l’université de Yale

Authors

AKIMOTO Keigo; ALDY Joseph E.; ANGELSEN Arild; BANGALORE Mook; BARRETT Scott; BHASIN Shikha; BIGIO Anthony G.; BODANSKY Daniel; BOSETTI Valentina; BONZANIGO Laura; BUCHNER Barbara; BURTRAW Dallas; CARRARO Carlo; COLLIER Paul; de CONINCK Heleen; de MELO Jaime; EDENHOFER Ottmar; FAY Marianne; FEI Teng; FISCHER Carolyn; FLANNERY Brian P.; GUESNERIE Roger; GUILLAUMONT Patrick; HALLEGATE Stephane; HOURCADE Jean-Charles ; KADNER Susanne; KANE Tamaro; KAUDIA Alice; KEOHANE Robert O.; KÖHLIN Gunnar; KOTCHEN Matthew J.; MASSETTI Emanuele; MAVROIDIS Petros C.; MEKONNEN Alemu; MORENO-CRUZ Juan; MINX Jan Christoph; MURISIC Maja; NARLOCH Ulf; OPPENHEIMER Michael; PIZER William A.; ROZENBERG Julie; RUDYCK Bryce; SOMANATHAN Eswaran; STAVINS Robert N.; VON STECHOW Christoph; STERNER Thomas; STEWART Richard B.; STOCKER Thomas F.; TAVONI Massimo; TOMAN Michael; TREGUER David; VICTOR David G.; VOGT-SCHILB Adrien; WANG Xueman; WIENER Jonathan B.; WILKINSON Jane; YAMAGUCHI Mitsutsune

References

Barrett, Scott, Carlo Carraro and Jaime de Melo eds. (forthcoming) Towards a Workable and Effective Climate Regime , VoxEU.org eBook, CEPR and FERDI

 

Table of contents

1- Introduction – Scott BARRETT, Carlo CARRARO, Jaime de MELO
 
PART I: The Challenge/Landscape
2 - Implications of climate science for negotiators - Thomas F. Stocker
3 - Beyond the 2°C limit: Facing the economic and institutional challenges - Ottmar Edenhofer et al.
4 - The state of climate negotiations - Brian P. Flannery.
 
PART II: The View from Different Parts of the World.
5 - A view from Africa - Alemu Mekonnen.
6 - A view from China - Teng Fei
7 - A view from India - Eswaran Somanathan.
8 - A view from Japan - Mitsutsune Yamaguchi and Keigo Akimoto.
9 - A view from Europe - Roger Guesnerie.
10 - A view from the United States - Matthew J. Kotchen.
 
PART III: Architecture and Governance.
11 - Legally binding vs Non-Legally Binding Instruments - Dan Bodansky.
12 - Comparing Emission Mitigation Pledges: Metrics and Institutions – Joseph E. Aldy and William  A. Pizer.
13 - Toward an effective system of monitoring, reporting and verification - Jonathan B. Wiener.
14- After the Failure of Top-Down Mandates:  The Role of Experimental Governance in Climate Change Policy - David G. Victor and Robert O. Keohane.
15 - A building blocks strategy for global climate change – Richard B. Stewart, Bryce Rudyck and Michael Oppenheimer.
16 - Climate Change Policies and the WTO: Greening the GATT, Revisited Petros Mavroidis and Jaime de Melo.
 
PART IV: Policy Options.
17 - The regulatory approach in U.S. Climate Mitigation Policy - Dallas Burtraw.
18 - Pricing Carbon: The Challenges - Thomas Sterner and Gunnar Köhlin.
19 - Taxing Carbon: Current state-of-play and prospects for future developments - Xueman Wang and Maja Murisic.
20 - Linkage of Regional, National, and Sub-National Climate Policies in a Future International Climate Agreement - Robert N. Stavins.
21 - Options for avoiding carbon leakage - Carolyn Fischer.
 
PART V: Technology Options.
22 - International Cooperation in Advancing Energy Technologies for Deep Decarbonisation Michael Toman.
23 - The role of renewables in the pathway towards decarbonisation - Valentina Bosetti
24 - Carbon capture and storage (CCS): promise or delusion - Massimo Tavoni
25 - The Alternatives to Unconstrained Climate Change: Emission Reductions versus Carbon and Solar Geoengineering - Scott Barrett and Juan Moreno Cruz.
 
PART VI: Burden Sharing and Finance.
26 - Poverty and climate change: Natural disasters, agricultural impacts, and health shocks Stephane Hallegate, Mook Bangalore et al.
27 - Policy options in low-income countries: Achieving socially appropriate climate change response objectives - Alice Ankinyi Kaudia.
28 - REDD+: What should come next? - Arild Angelsen.
29 - Curbing Carbon without Curbing Development - Paul Collier.
30 - Towards resilient and low-carbon cities - Anthony Bigio.
31 - Meaningful technology development and transfer: a condition for involving developing countries for a viable climate regime - Heleen de Coninck et al.
 
PART VII: Climate Finance.
32 - The Macroeconomics of Climate Policy: Investments and Financial Flows - Emanuele Massetti –.
33 - Pros and cons of alternative sources of climate change financing and prospects for ‘unconventional’ finance” - Barbara Buchner and Jane Wilkinson.
34 - Harnessing the animal spirits of finance for a low carbon transition - Jean-Charles Hourcade.
35 - Measuring vulnerability to climate change for allocating funds to adaptation - Patrick Guillaumont

 

Summary

For the first time ever, in less than a month in Paris at COP 21, almost all of the world’s countries will pledge to reduce or control their own greenhouse gas emissions. As of October 1, submissions totalling 86% of global greenhouse gas (GHG) emissions have been made by 147 countries. These pledges, if implemented, are expected to limit the increase in emissions well below the “business as usual” forecast, though not to prevent emissions from increasing through 2030 relative to 2010. This appears to be an unprecedented success, even though much more will need to be done beyond 2030 if the world is to limit the increase in mean global temperature below 2°C relative to the preindustrial level. Since limiting temperature change below 2°C will require reducing carbon dioxide (CO2) emissions to zero, and/or removing CO2 directly from the atmosphere, we face an unprecedented challenge. Contributions by 49 experts in this ebook recognize that what we need is a regime for limiting climate change that is both workable and effective, rather than workable and insufficiently effective (as might be the case with Paris) or effective if implemented but politically unacceptable (as would be true of an ‘ideal’, top-down climate agreement). Read more

 

Interview with Jaime de Melo