Challenges for hydropower-based nationally determined contributions: a case study for Ecuador

Hydropower is the dominant renewable energy source to date, providing over two-thirds of all renewable electricity globally. For countries with significant hydropower potential, the technology is expected to play a major role in the energy transition needed to meet nationally determined contributions (NDCs) for greenhouse gas (GHG) emission reductions as laid out in the Paris Agreement. For the Republic of Ecuador, large hydropower is currently considered as the main means for attaining energy security, reducing electricity prices and mitigating GHG emissions in the long-term. However, uncertainty around the impacts of climate change, investment cost overruns and restrictions to untapped resources may challenge the future deployment of hydropower and consequently impact decarbonization efforts for Ecuador’s power sector. To address these questions, a partial equilibrium energy system optimization model for Ecuador (TIMES-EC) is used to simulate alternative electricity capacity expansion scenarios up to 2050. Results show that the share of total electricity supplied by hydropower in Ecuador might vary significantly between 53% to 81% by 2050. Restricting large hydropower due to social-environmental constraints can cause a fourfold increase in cumulative emissions compared to NDC implied levels, while a 25% reduction of hydropower availability due to climate change would cause cumulative emissions to double. In comparison, a more diversified power system (although more expensive) which limits the share of large hydropower and natural gas in favour of other renewables could achieve the expected NDC emission levels. These insights underscore the critical importance of undertaking detailed whole energy system analyses to assess the long-term challenges for hydropower deployment and the trade-offs among power system configuration, system costs and expected GHG emissions in hydropower-dependent countries, states and territories.

Key policy insights

• Ecuador’s hydropower-based NDC is highly vulnerable to the occurrence of a dry climate scenario and restrictions to deployment of large hydropower in the Amazon region.

• Given Ecuador’s seasonal runoff pattern, fossil-fuel or renewable thermoelectric backup will always be required, whatever the amount of hydropower installed.

• Ecuador’s NDC target for the power sector is achievable without the deployment of large hydropower infrastructure, through a more diversified portfolio with non-hydro renewables.

     

Is India pulling its weight? India’s nationally determined contribution and future energy plans in global climate policy

Ahead of the Conference of Parties (COP) 24 where countries will first take stock of climate action post Paris, this paper assesses India’s progress on its nationally determined contribution (NDC) targets and future energy plans. We find that, although India is well on track to meet its NDC pledges, these targets were extremely modest given previous context. Furthermore, there is considerable uncertainty around India’s energy policy post 2030 and if current plans for energy futures materialise, the Paris Agreement’s 2 degrees goal will be almost certainly unachievable. India’s role in international climate politics has shifted from obstructionism to leadership particularly following the announcement of withdrawal by the United States from the Paris Agreement, but analysis reveals that India’s ‘hard’ actions on the domestic front are inconsistent with its ‘soft’ actions in the international climate policy arena. Going forward, India is likely to face increasing calls for stronger mitigation action and we suggest that this gap can be bridged by strengthening the links between India’s foreign policy ambitions, international climate commitments, and domestic energy realities.

Key policy insights

• India’s NDC pledges on carbon intensity and share of non-fossil fuel capacity are relatively modest given domestic context and offer plenty of room to increase ambition of action.

• India’s ‘soft’ leadership in global climate policy can be matched by ‘hard’ commitments by bringing NDC pledges in line with domestic policy realities.

• There is significant uncertainty around future plans for coal power in India which have the potential to exceed the remaining global carbon budget for 2 degrees.

     

Zero carbon energy system pathways for Ireland consistent with the Paris Agreement

The Paris Agreement is the last hope to keep global temperature rise below 2°C. The consensus agrees to holding the increase in global average temperature to well below 2°C above pre-industrial levels, and to aim for 1.5°C. Each Party’s successive nationally determined contribution (NDC) will represent a progression beyond the party’s then current NDC, and reflect its highest possible ambition. Using Ireland as a test case, we show that increased mitigation ambition is required to meet the Paris Agreement goals in contrast to current EU policy goals of an 80–95% reduction by 2050. For the 1.5°C consistent carbon budgets, the technically feasible scenarios' abatement costs rise to greater than €8,100/tCO₂ by 2050. The greatest economic impact is in the short term. Annual GDP growth rates in the period to 2020 reduce from 4% to 2.2% in the 1.5°C scenario. While aiming for net zero emissions beyond 2050, investment decisions in the next 5–10 years are critical to prevent carbon lock-in.

Key policy insights

• Economic growth can be maintained in Ireland while rapidly decarbonizing the energy system.

• The social cost of carbon needs to be included as standard in valuation of infrastructure investment planning, both by government finance departments and private investors.

• Technological feasibility is not the limiting factor in achieving rapid deep decarbonization.

• Immediate increased decarbonization ambition over the next 3–5 years is critical to achieve the Paris Agreement goals, acknowledging the current 80–95% reduction target is not consistent with temperature goals of ‘well below’ 2°C and pursuing 1.5°C.

• Applying carbon budgets to the energy system results in non-linear CO₂ emissions reductions over time, which contrast with current EU policy targets, and the implied optimal climate policy and mitigation investment strategy.

     

Measuring whether municipal climate networks make a difference: the case of utility-scale solar PV investment in large global cities

With cities being responsible for up to 70% of energy-related carbon emissions, municipal governments worldwide are becoming increasingly aware of their responsibility to act. Many large cities have committed to mitigation by becoming member of a municipal climate network, such as the C40 or the Compact of Mayors. However, there is no consistent assessment of whether membership of such networks translates into measurable outcomes. To fill this gap, we propose the use of novel outcome variables, combining financial data with geospatial information. As a starting point, this paper compares utility-scale investment in photovoltaics (PV) within the administrative boundaries of large global cities, combining the Bloomberg New Energy Finance database with information from Google Maps. We analyse 512 global cities with a population of above 1 million, and consider the impact of 5 networks and 2 reporting platforms. The results suggest that membership of the C40 network has a positive effect on utility-scale solar PV investment, while no such evidence is found for any of the other networks or reporting platforms under study. Based on our findings, we recommend that municipal climate networks increase their efforts to trigger city regulation that is conducive to solar PV investment. More generally, measuring early indicators, such as low-carbon investment, can help municipal climate networks in their role as ‘commitment brokers’ for climate action on the ever-more important city level.

Key policy insights

• Cities have considerable policy space to foster utility-scale solar PV investment within their administrative boundaries.

• While some large global cities exhibited significant growth in utility-scale solar PV, many others with good solar potential did not have a single project by the end of 2016.

• Outside of China (where city boundaries often include rural areas), Tokyo tops the list with utility-scale solar PV projects by far, followed by San Diego and Rome.

• Membership of the C40 network appears to make a positive difference to PV investment, unlike other networks or reporting platforms.

• Outcome measures like low-carbon investment can be used more generally to assess the climate action performance of cities.

     

Combining low-carbon economic development and oil exploration in Brazil? An energy–economy assessment

Brazil's nationally determined contribution (NDC) pledged under the Paris Agreement has marked a new stage in its climate policy towards strengthening low-carbon economic development beyond the recent drastic cuts in emissions from deforestation. Brazil especially means to limit oil consumption driven by future economic growth and to increase energy efficiency and biofuel use in the transport sector. On the other hand, Brazil still aspires to become a major petroleum province given its huge reserves of ‘pre-salt’ oil. This article aims to clarify under what conditions low-carbon economic development and oil exploration can possibly be combined in Brazil and what would be the energy system, environmental and macroeconomic implications of enabling policies for doing so. To address these questions, an energy–economy computable general equilibrium (CGE) model of the Brazilian economy is used to simulate alternative scenarios up to 2030. The results first show that implementing the most recent energy plans, which take into account the new economic reality in Brazil, should lead to over 20% lower domestic CO₂ emissions in 2030 than the indicative NDC target, and to the export of the bulk of newfound crude oil. Second, with the same level of oil production, deeper domestic decarbonization, triggered by additional carbon pricing and sustainable efficiency measures, appears achievable with very small gross domestic product (GDP) loss and maximum oil exports, while being aligned with a 2°C emission pathway. However, (i) extra oil exports may induce net additional emissions outside Brazil and be seen as a perverse incentive and (ii) the economic growth strategy based on high oil exports may hinder the necessary diversification of the Brazilian economy.

Key policy insights

• Low-carbon development goals will strongly interact with oil policy in Brazil.

• The 2030 NDC target should be easy to achieve considering the new economic reality in Brazil.

• Deeper domestic decarbonization is achievable with very limited GDP loss and significant oil exports, while being aligned with a 2°C emission pathway.

• A broad strategic vision is needed to reconcile climate policy, energy policy and other economic development objectives.

     

Russian industry responses to climate change: the case of the metals and mining sector

Globally, the metals and mining sector is a major contributor to GHG emissions. Climate change also poses significant challenges for the industry in a number of ways, including risks to infrastructure and equipment, transport routes and the cost of energy supplies. The sector is of particular importance to Russia, and yet very little is known about how the sector positions itself in relation to this key issue. This article conducts an in-depth look at the response of the Russian metals and mining sector to climate change. It looks at the key actors, their willingness to engage with the issue of climate change, preferred policy options and the strategies adopted to further their interests. The role of companies, prominent individuals and business associations is considered. The evidence suggests that, although there is widespread acceptance of climate change as a phenomenon, there is significant variation within the sector, with some companies proactive on climate policy, and others more reluctant. Different responses are attributed to reputational factors and the disproportionate influence of international and domestic policy developments on companies. Russian coal companies, directly threatened by any international attempts to reduce coal consumption, display the strongest opposition to efforts aimed at curbing emissions. The Russian government, far from thinking of transitioning to a low carbon future, is vigorously trying to expand the coal industry.

Key policy insights

• Understanding how Russia’s domestic position on climate policy is formed is fundamental for understanding the factors driving its international engagement on climate policy.

• The Russian government has no plans to phase out coal and is instead actively seeking to expand the coal industry. This highlights the obstacles to Russia’s commitment to climate policy at both the domestic and international levels.

• The socio-economic consequences of climate policy for the Russian coal industry are a key consideration for the government, with some regions heavily dependent on the industry for employment and electricity generation.

     

How to operationalize accounting under Article 6 market mechanisms of the Paris Agreement

The role of market mechanisms was far from certain in the lead up to the 2015 Paris Climate Conference. The use of ‘constructive ambiguity’ led to Article 6 of the Paris Agreement, with Article 6.2 specifying a mechanism with limited international oversight, and Article 6.4 establishing a ‘Sustainable Development Mechanism’ (SDM) subject to detailed rules. Clear operationalization of these mechanisms remains a challenge, especially regarding the critical accounting issue that could not be resolved at the 2018 Katowice Climate Conference (COP24) – how to apply corresponding adjustments, especially regarding sectors not covered by targets under nationally-determined contributions (NDCs). By using fictitious examples, we explain two possible approaches to using Internationally Transferred Mitigation Outcomes (ITMOs) under Article 6.2 for achieving NDCs: a ‘target-based’ one where the acquiring Party adds the ITMO amount to the target level of its NDC; and a ‘tally-based’ one where the acquiring Party removes the ITMO amount from the final tally of its NDC. We discuss how these approaches influence the way to make corresponding adjustments and to avoid ‘double counting’. The first one leads to ‘target/budget-based accounting’, the second one to ‘emission-based accounting’. For mitigation outside the scope of the host Party's NDC, we propose using a tally-based interpretation of ITMO use, as opposed to the target-based variety used in the 1997 Kyoto Protocol, and stress the need for additionality testing. This interpretation allows for mandatory corresponding adjustments for all ITMO usage, while the host Party NDC level remains unchanged. A buffer registry is created for corresponding non-NDC adjustments of the selling party.

Key policy insights

• Under the Paris Agreement, transfers of emissions units between two countries through the Article 6 mechanisms need a corresponding adjustment on both sides to prevent double counting.

• Corresponding adjustments can be applied either to emissions targets under NDCs or measured emissions levels.

• The transfer of emissions reduction credits generated outside an NDC should lead to a corresponding adjustment of a buffer registry of the selling country, but not its emissions level/NDC target. Such credits should only be generated if additionality of the reductions is shown.

     

The cost of achieving South Africa’s ‘fair share’ of global climate change mitigation

Global climate change mitigation action is hampered by systematic under-assessment of national ‘fair shares’, largely on the basis of perceived national interests. This paper aims to inform discussions centred on South Africa’s nationally determined contribution (NDC) by estimating (1) emissions reduction pathways for the country using the Climate Equity Reference Calculator (CERC) assuming a maximum 2°C aggregate warming target and (2) the likely economy-wide net mitigation costs or savings associated with reaching these pathways if known lower-cost mitigation measures, identified through the national mitigation potential analysis, are prioritised. The cumulative net savings associated with achieving the CERC ‘fair share’ emissions pathway, assuming the moderate use of low carbon power generation measures, would reach $5.3 billion by 2030. Net savings could be substantially greater reaching $46.8 billion by 2030 assuming power generation focuses on moving towards full decarbonisation. An unconditional commitment to the mitigation action implied by the ‘fair share’ emissions pathway therefore seems reasonable and prudent purely from the point of view of net country-wide savings. Only if power generation moves towards full decarbonisation would there be a reasonable chance of achieving the more ambitious CERC domestic emissions pathway. However, the significant additional cost associated with achieving the domestic emissions pathway should be conditional on international assistance.

Key policy insights

• South Africa can only achieve its ‘fair share’ of the global mitigation effort if greater use is made of renewable energy options, and can realise significant net savings if it does so.

• Further emissions reductions would incur costs and require significant upscaling of the share of renewable energy and full implementation of all non-power generation mitigation measures available.

• Committing to this further mitigation action contingent on international finance would both strengthen the nation’s position in climate negotiations and support the provision of finance for those vulnerable developing nations that bear little or no responsibility for climate change.

     

Exploring optimal mitigation and adaptation investment strategies in China

After the successful conclusion of the Paris Climate Conference (Conference of the Parties (COP) 21), countries are now attempting to identify implementation measures. An important consensus has been reached on the necessity of putting in place both mitigation and adaptation measures. In this context, this article builds a three-sector China and rest of the world model based on the DE-carbonization Model with Endogenous Technologies for Emission Reductions (DEMETER) and World Induced Technical Change Hybrid (WITCH) models. It assesses China’s mitigation and adaptation investment strategies by 2050 with an optimization including climate externalities. By making the 450?ppm target and China’s 2030 CO₂ emissions peak exogenous, it assesses two scenarios: (1) investment only in mitigation and (2) investment in both mitigation and adaptation. The article finds the following: First, the policy package with investment in both mitigation and adaptation can ensure lower CO₂ emissions and avoid more climate damage. Second, investment in adaptation should be massively injected by around 2040, whereas mitigation efforts should be continuous. Third, the CO₂ emissions peak in the tertiary sector should come prior to 2030 while the emissions pathway of the secondary sector could be allowed to increase slowly until 2035.

POLICY RELEVANCE

• The necessity of engaging in both mitigation and adaptation has been widely accepted since the Paris Climate Conference (COP21), yet few studies exist in this regard concerning China.

• Substantial investment in adaptation needs to be introduced by 2040 while the investment on mitigation should peak by 2030.

• The CO₂ emissions peak in the tertiary sector would be reached prior to 2030 while the peak in the secondary sector is achieved around 2035.

• This provides an alternative in China to the existing argument of an earlier peak in the secondary sector.

     

Reducing fugitive methane emissions from the North American oil and gas sector: a proposed science-policy framework

The shale gas boom in the United States spurred a shift in electricity generation from coal to natural gas. Natural gas combined cycle units emit half of the CO₂ to produce the same energy as a coal unit; therefore, the market trend is credited for a reduction in GHG emissions from the US power sector. However, methane that escapes the natural gas supply chain may undercut these relative climate benefits. In 2016, Canada, the United States and Mexico pledged to reduce methane emissions from the oil and natural gas sector 40–45% from 2012 levels by 2025. This article reviews the science-policy landscape of methane measurement and mitigation relevant for meeting this pledge, including changes in US policy following the 2016 presidential election. Considerable policy incoherence exists in all three countries. Reliable inventories remain elusive; despite government and private sector research efforts, the magnitude of methane emissions remains in dispute. Meanwhile, mitigation efforts vary significantly. A framework that integrates science and policy would enable actors to more effectively inform, leverage and pursue advances in methane measurement and mitigation. The framework is applied to North America, but could apply to other geographic contexts.

Key policy insights

• The oil and gas sector’s contribution to atmospheric methane concentrations is becoming an increasingly prominent issue in climate policy.

• Efforts to measure and control fugitive methane emissions do not presently proceed within a coherent framework that integrates science and policy.

• In 2016, the governments of Canada, Mexico and the United States pledged to reduce methane emissions from the oil and natural gas sector 40–45% from 2012 levels by 2025.

• The 2016 presidential election in the United States has halted American progress at the federal level, suggesting a heavier reliance on industry and subnational efforts in that country.

• Collectively or individually, the countries, individual agencies, or private stakeholders could use the proposed North American Methane Reduction framework to direct research, enhance monitoring and evaluate mitigation efforts, and improve the chances that continental methane reduction targets will be achieved.

     

How to reach an elusive INDC target: macro-economic implications of carbon taxation and emissions trading in Turkey

This paper employs a computable general equilibrium model (CGE) to analyse how a carbon tax and/or a national Emissions Trading System (ETS) would affect macroeconomic parameters in Turkey. The modelling work is based on three main policy options for the government by 2030, in the context of Turkey’s mitigation target under its Intended Nationally Determined Contribution (INDC), that is, reducing greenhouse gas (GHG) emissions by up to 21% from its Business as Usual (BAU) scenario in 2030: (i) improving the productivity of renewable energy by 1% per annum, a target already included in the INDC, (ii) introducing a new flat rate tax of 15% per ton of CO₂ (of a reference carbon price in world markets) imposed on emissions originating from carbon-intensive sectors, and (iii) introducing a new ETS with caps on emission permits. Our base path scenario projects that GHG emissions in 2030 will be much lower than Turkey’s BAU trajectory of growth from 430 Mt CO₂-eq in 2013 to 1.175 Mt CO₂-eq by 2030, implying that the government’s commitment is largely redundant. On the other hand, if the official target is assumed to be only a simple reduction percentage in 2030 (by 21%), but based on our more realistic base path, the government’s current renewable energy plans will not be sufficient to reach it.

• Turkey’s official INDC is based on over-optimistic assumptions of GDP growth and a highly carbon-intensive development pathway;

• A carbon tax and/or an ETS would be required to reach the 21% reduction target over a realistic base path scenario for 2030;

• The policy options considered in this paper have some effects on major sectors’ shares in total value-added. Yet the reduction in the shares of agriculture, industry, and transportation does not go beyond 1%, while the service sector seems to benefit from most of the policy options;

• Overall employment would be affected positively by the renewable energy target, carbon tax, and ETS through the creation of new jobs;

• Unemployment rates are lower, economic growth is stronger, and households become better off to a larger extent under an ETS than carbon taxation.

     

Challenges in financing public sector low-carbon initiatives: lessons from private finance for a school district in British Columbia,Canada

Governments are major investors in climate change mitigation, but aversion to public indebtedness has led to reliance on private finance to deliver public assets. Compounding this challenge, financing through Energy Service Contracts is ruled out by accounting rules. With public and traditional private funding avenues closed, government departments have sought contracts that do not disclose the full cost of borrowing, such as the Public–Private Partnership (PPP) described in this case study. We unpack the utility contract filed with the provincial regulator to show that circumventing budgetary constraints cost the Delta School Board (DSB) 8.75% per annum on borrowed private funds while public finance would have cost 4%pa. All levels of the public sector are keen to play their role in climate mitigation. Climate policy is about not passing our burden of unbridled fossil fuel use and greenhouse gas emissions to future generations. If we do not exempt public sector capital investments for decarbonization from deficit regulations, we risk passing an unnecessary economic burden to future generations.

Key policy insights

• Transition to a low-carbon economy requires public sector investments that exceed budget deficit regulations and political aversion in many jurisdictions;

• Private–Public Partnerships are currently viewed as the solution to this self-imposed fiscal constraint;

• PPPs without clear performance targets or contractual templates will expose less experienced public sector investors to high costs and emissions above expectations.

     

Nationally Determined Contributions under the Paris Agreement and the costs of delayed action

Current country-level commitments under the Paris Agreement fall short of putting the world on a required trajectory to stay below a 2°C temperature increase compared to pre-industrial levels by the end of the century. Therefore, the timing of increased ambition is hugely important and as such this paper analyses the impact of both the short and long-term goals of the Paris Agreement on global emissions and economic growth. Using the hybrid TIAM-UCL-MSA model we consider the achievement of a 2°C target against a baseline of the Nationally Determined Contributions (NDCs) while also considering the timing of increased ambition of the NDCs by 2030 and the impacts of cost reductions of key low-carbon technologies. We find that the rate of emissions reduction ambition required between 2030 and 2050 is almost double when the NDCs are achieved but not ratcheted up until 2030, and leads to lower levels of economic growth throughout the rest of the century. However, if action is taken immediately and is accompanied by increasingly rapid low-carbon technology cost reductions, then there is almost no difference in GDP compared to the path suggested by the current NDC commitments.

Key policy insights

• Delaying the additional action needed to achieve the 2°C target until 2030 is shown to require twice the rate of emissions reductions between 2030 and 2050.

• Total cumulative GDP over the century is lower when additional action is delayed to 2030 and therefore has an overall negative impact on the economy, even without including climate change damages.

• Increased ratcheting of the NDC commitments should therefore be undertaken sooner rather than later, starting in conjunction with the 2023 Global Stocktake.

• Early action combined with cost reductions in key renewable energy technologies can reduce GDP losses to minimal levels (<1%).

• A 2°C future with technological advancements is clearly possible for a similar cost as a 3.3°C world without these advances, but with lower damages and losses from climate change.

     

The global impacts of US climate policy: a model simulation using GCAM-TU and MAGICC

To assess the potential impacts of the US withdrawal from the Paris Agreement, this study applied GCAM-TU (an updated version of the Global Change Assessment Model) to simulate global and regional emission pathways of energy-related CO₂, which show that US emissions in 2100 would reduce to ?2.4?Gt, ?0.7?Gt and ?0.2?Gt under scenarios of RCP2.6, RCP3.7 and RCP4.5, respectively. Two unfavourable policy scenarios were designed, assuming a temporary delay and a complete stop for US mitigation actions after 2015. Simulations by the Model for the Assessment of Greenhouse-gas Induced Climate Change (MAGICC) indicate that the temperature increase by 2100 would rise by 0.081°C–0.161°C compared to the three original RCPs (Representative Concentration Pathways) if US emissions were kept at their 2015 levels until 2100. The probability of staying below 2°C would decrease by 6–9% even if the US resumes mitigation efforts for achieving its Nationally Determined Contribution (NDC) target after 2025. It is estimated by GCAM-TU that, without US participation, increased reduction efforts are required for the rest of the world, including developing countries, in order to achieve the 2°C goal, resulting in 18% higher global cumulative mitigation costs from 2015 to 2100.

Key policy insights

• President Trump’s climate policies, including planned withdrawal from the Paris Agreement, cast a shadow on international climate actions, and would lower the likelihood of achieving the 2°C target.

• To meet the 2°C target without the US means increased reduction efforts and mitigation costs for the rest of the world, and considerable economic burdens for major developing areas.

• Active state-, city- and enterprise-level powers should be supported to keep the emission reduction gap from further widening even with reduced mitigation efforts from the US federal government.

     

Additionality revisited: guarding the integrity of market mechanisms under the Paris Agreement

ABSTRACT

The Paris Agreement requires mitigation contributions from all Parties. Therefore, the determination of additionality of activities under the market mechanisms of its Article 6 will need to be revisited. This paper provides recommendations on how to operationalize additionality under Article 6. We first review generic definitions of additionality and current approaches for testing of additionality before discussing under which conditions additionality testing of specific activities or policies is still necessary under the new context of the Paris Agreement, that is, in order to prevent increases of global emissions. We argue that the possibility of ‘hot air’ generation under nationally-determined contributions (NDCs) requires an independent check of the NDC’s ambition. If the NDC of the transferring country does contain ‘hot air’, or if the transferred emission reductions are not covered by the NDC, a dedicated additionality test should be required. While additionality tests of projects and programmes could continue to be done through investment analysis, for policy instruments new approaches are required. They should be differentiated according to type of policy instrument. For regulation, we suggest calculating the resulting pay-back period for technology users. If the regulation generates investments exceeding a payback period threshold, it could be deemed additional. Similarly, carbon pricing policies that generate a carbon price exceeding a threshold could qualify; for trading schemes an absence of over-allocation needs to be shown. The threshold should be differentiated according to country categories and rise over time.

Key policy insights

• Without additionality testing, market mechanisms under the Paris Agreements might lead to an international diffusion of ‘hot air’. To avoid this, an independent assessment of NDC ambition is in order. Otherwise, activities under the mechanisms need to undergo specific additionality tests.

• Additionality testing of projects and programmes should build on the experience developed under the Kyoto Protocol mechanisms.

• Bold approaches are needed for assessing additionality of policies. To avoid cumbersome assessment of all activities triggered by such policies, highly aggregated approaches are suggested, ranging from payback period thresholds for technologies mandated by regulation to minimum price levels triggered by carbon pricing policies. Over time, the stringency of threshold values should increase.

     

Quantifying barriers to decarbonization of the Russian economy: real options analysis of investment risks in low-carbon technologies

Russia has significant potential for reducing its carbon emissions. However, investment in new low-carbon technologies has significant risks. Ambiguous energy and climate policy in Russia, along with deterioration of the country's investment climate, create investment barriers that are well described in qualitative terms in the literature. This paper attempts to provide a quantitative analysis of these barriers. For this numerical experiment, we apply the RU-TIMES model. Using a real options methodology, we estimate the risk-adjusted cost of capital in the Russian energy sector (including energy production and consumption technologies represented in the TIMES framework) to be approximately 43% (including a risk-free interest rate) and demonstrate the high risk of investment into energy-efficient and low-carbon technologies. Any future low-carbon emissions pathway depends on the ability of the Russian government to reduce climate and energy policy uncertainties, and to reduce financial risks through improvements of the general investment climate.

Key policy insights

• The high cost of capital investment into Russian energy production and consumption may prevent the adoption of new energy-efficient and low-carbon technologies.

• These investment risks, if not addressed, will delay Russia's low-carbon transition for the coming decades.

• Adopting a clear and unambiguous long-term climate and energy policy is important to reduce these risks and alleviate some of the barriers to the new technologies.

• The first step could be ratification of the Paris Agreement and adoption of a long-term emission target for the period up to 2050.

     

Reducing wind power curtailment in China: comparing the roles of coal power flexibility and improved dispatch

Renewable energy curtailment is a critical issue in China, impeding the country’s transition to clean energy and its ability to meet its climate goals. This paper analyzes the impacts of more flexible coal-fired power generation and improved power dispatch towards reducing wind power curtailment. A unit commitment model for power dispatch is used to conduct the analysis, with different scenarios demonstrating the relative impacts of more flexible coal-fired generation and improved power dispatch. Overall, while we find both options are effective in reducing wind power curtailment, we find that improved power dispatch is more effective: (1) the effect of ramping down coal-fired generators to reduce wind power curtailment lessens as the minimum output of coal-fired generation is decreased; and (2) as a result, at higher wind capacity levels, wind curtailment is much more significantly reduced with improved power dispatch than with decreased minimum output of coal-fired generation.

Key policy insights

• China should emphasize both coal power flexibility and dispatch in its policies to minimize renewable power curtailment and promote clean energy transition.

• China should accelerate the process of implementing spot market and marginal cost-based economic dispatch, while making incremental improvements to the existing equal share dispatch in places not ready for spot market.

• A key step in improving of dispatch is incorporating renewable power forecasts into the unit commitment process and updating the daily unit commitment based on the latest forecast result.

• China should expand the coal power flexibility retrofit programme and promote the further development of the ancillary service market to encourage more flexibility from coal-fired generation.

     

Representation and participation in formulating Nepal’s REDD+ approach

ABSTRACT

REDD+ is an international policy aimed at incentivizing forest conservation and management and improving forest governance. In this article, we interrogate how newly articulated REDD+ governance processes established to guide the formulation of Nepal’s REDD+ approach address issues of participation for different social groups. Specifically, we analyse available forums of participation for different social groups, as well as the nature of their representation and degree of participation during the country’s REDD+ preparedness phase. We find that spaces for participation and decision-making in REDD+ have been to date defined and dominated by government actors and influential civil society groups, whereas the influence of other actors, particularly marginalized groups such as Dalits and women’s organizations, have remained limited. REDD+ has also resulted in a reduction of influence for some hitherto powerful actors (e.g. community forestry activists) and constrained their critical voice. These governance weaknesses related to misrepresentation and uneven power relations in Nepal cast doubt on the extent to which procedural justice has been promoted through REDD+ and imply that implementation may, as a consequence, lack the required social legitimacy and support. We discuss possible ways to address these shortcomings, such as granting greater prominence to neglected civil society forums within the REDD+ process, allowing for an increase in their influence on policy design, enhancing capacity and leadership of marginalized groups and institutionalizing participation through continued forest governance reform.

Key policy insights

• Participation is a critical asset in public policy design.

• Ensuring wide and meaningful participation can enhance policy legitimacy and thus its endorsement and potential effective implementation.

• Fostering inclusive processes through dedicated forums such as multi-stakeholder groups can help overcome power dynamics.

• While REDD+ is open to participation by different actors through a variety of formal means, many countries lack a clear framework for participation in national policy processes.

• Nepal’s experience with representation and participation of non-state actors in its REDD+ preparedness programme provides useful insights for similar social and policy contexts.

     

Addressing regional disparities in allowance allocation in China’s national emissions trading scheme

China's national emissions trading scheme (ETS) is expected to be operational in 2017. Effectively addressing regional disparities at the provincial level in allowance allocation will greatly affect the acceptance of the allocation approach and thus deserves careful consideration. This article aims to explore possible approaches for addressing regional disparities, by introducing regional adjustment factors (RAF) in free allowance allocation. Based on the principle of ‘national unified rules?+?stricter adjustment by provincial authorities’, four single factorial and three multi-factorial methods are proposed to calculate the RAFs, through a normalization process. These methods are associated with the most acknowledged factors dealing with regional disparities, including per-capita GDP; per-capita CO₂ emissions; industrial sector contribution to GDP; economy-wide emissions control targets and CO₂ emissions per unit GDP, per unit power and heat output and per unit industrial added value. A comparative analysis is made for the seven methods, in regard to value distribution and level of matching regional political demand.

Key policy insights

• ‘Allowing stricter regional adjustment’ represents a dominant feature for China's national ETS, which aims to address regional disparities and government demands.

• How the adjustment plan is designed will have a major influence on the operation of the national ETS and regional business competitiveness. Provincial governments need to consider the trade-off between auction revenue and local business competitiveness.

• Applying the different methods leads to more scattered results for some regions, for whom the choice of adjustment approach will therefore have a greater impact.

• Based on the analysis, four adjustment methods that generate similar results – the per-capita GDP-based method, the intensity reduction target-based method, the 12th FYP target-based method and intensity-based grandfathering – are recommended for most provincial-level regions, with some exceptions.

     

Including animal to plant protein shifts in climate change mitigation policy: a proposed three-step strategy

Strong and rapid greenhouse gas (GHG) emission reductions, far beyond those currently committed to, are required to meet the goals of the Paris Agreement. This allows no sector to maintain business as usual practices, while application of the precautionary principle requires avoiding a reliance on negative emission technologies. Animal to plant-sourced protein shifts offer substantial potential for GHG emission reductions. Unabated, the livestock sector could take between 37% and 49% of the GHG budget allowable under the 2°C and 1.5°C targets, respectively, by 2030. Inaction in the livestock sector would require substantial GHG reductions, far beyond what are planned or realistic, from other sectors. This outlook article outlines why animal to plant-sourced protein shifts should be taken up by the Conference of the Parties (COP), and how they could feature as part of countries’ mitigation commitments under their updated Nationally Determined Contributions (NDCs) to be adopted from 2020 onwards. The proposed framework includes an acknowledgment of ‘peak livestock’, followed by targets for large and rapid reductions in livestock numbers based on a combined ‘worst first’ and ‘best available food’ approach. Adequate support, including climate finance, is needed to facilitate countries in implementing animal to plant-sourced protein shifts.

Key policy insights

• Given the livestock sector’s significant contribution to global GHG emissions and methane dominance, animal to plant protein shifts make a necessary contribution to meeting the Paris temperature goals and reducing warming in the short term, while providing a suite of co-benefits.

• Without action, the livestock sector could take between 37% and 49% of the GHG budget allowable under the 2°C and 1.5°C targets, respectively, by 2030.

• Failure to implement animal to plant protein shifts increases the risk of exceeding temperate goals; requires additional GHG reductions from other sectors; and increases reliance on negative emissions technologies.

• COP 24 is an opportunity to bring animal to plant protein shifts to the climate mitigation table.

• Revised NDCs from 2020 should include animal to plant protein shifts, starting with a declaration of ‘peak livestock’, followed by a ‘worst first’ replacement approach, guided by ‘best available food’.