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 levelized cost of carbon: a practical,if imperfect,method to compare CO2 abatement projects*

Calculating the cost effectiveness of projects and policies with respect to reducing carbon emissions provides a simple way for local government agencies to consider the climate impacts of their actions. Yet, defining a metric for cost-effectiveness in relation to climate change is not straightforward for several reasons. In this paper, we focus primarily on dynamics, reflecting the time value of money and how the benefits of reducing carbon emissions may change over time. We define a cost-effectiveness metric called Levelized Cost of Carbon (LCC) that carefully accounts for these dynamics. We also investigate the theoretical and practical implications and limitations of using a cost-effectiveness metric as an approach to rank projects. We apply our metric to a set of transportation projects to illustrate the insights that can be gained by such a process.

Key policy insights:

• Levelized Cost of Carbon (LCC) provides a simple way for local governments to consider climate change mitigation in decision making.

• LCC is a cost-effectiveness metric that carefully accounts for the time value of money and possible changes in the value of reducing emissions through time, thus helping local governments to make better decisions.

• LCC can be used to rank projects, with some caveats, even in the absence of a specific value for the benefits of reducing GHG emissions, thus providing flexibility in the face of uncertainty and political constraints.

     

Would different methodologies for assessing carbon leakage exposure lead to different risk levels? A case study of the Brazilian industry

Energy-intensive industries play an important role in low-carbon development, being particularly exposed to climate policies. Concern over possible carbon leakage in this sector poses a major challenge for designing effective carbon pricing instruments (CPI). Different methodologies for assessing carbon leakage exposure are currently used by different jurisdictions, each of them based on different approaches and indicators. This paper aims to analyse the extent to which the use of different methodologies leads to different results in terms of exposure to the risk of carbon leakage, using the Brazilian industry sector as a case study. Results indicate that carbon leakage exposure is an expected outcome of eventual CPI implementation in Brazilian industry. However, results vary according to the chosen methodology, so the definition of the criteria is paramount for assessing sectoral exposure to the risk of carbon leakage.

Key policy insights

• Despite increasing discussion about the implementation of carbon pricing on the Brazilian industrial sector, the evaluation of carbon leakage risks is still neglected.

• Assessments of the risk of carbon leakage are directly related to the indicators and criteria used by each methodology. Thus, a given subsector may present different levels of exposure to carbon leakage depending on the methodological choice.

• More than a purely technical discussion, the methodological definition of carbon leakage risk is a political discussion – it can be well-conducted, leading to the success of a CPI, or even sabotaged, by implicitly subsidizing energy-intensive industries.

     

Mapping and clustering the adoption of carbon pricing policies: what polities price carbon and why?

Carbon pricing, including carbon taxes and emissions trading, has been adopted by different kinds of polities worldwide. Yet, beyond the increasing adoption over time, little is known about what polities – countries as well as sub- and supranational entities – adopt carbon pricing and why. This paper explores patterns of adoption (both implemented policies and those scheduled to be) through cluster analysis, with the purpose of investigating factors that could explain polities’ decisions to adopt carbon pricing. The study contributes empirically by studying carbon taxes and emissions trading together and by ordering the polities adopting carbon pricing into clusters. It also contributes theoretically, by exploring constellations of variables that drive the adoption of carbon pricing within individual clusters. We investigated 66 adopted policies of carbon pricing, which were divided into five clusters: early adopters, North-American subnational entities, Chinese pilot provinces, second-wave developed polities, and second-wave developing polities. The analysis indicates that the reasons for adopting carbon pricing have shifted over time. While international factors (climate commitments or influences from polities within the same region) are increasingly salient, domestic factors (including crises and income levels) were more important for the early adopters.

Key policy insights

• Carbon pricing has become a global mainstream policy instrument.

• Economic and fiscal crises provide windows of opportunity for promoting carbon pricing.

• The international climate regime can support the adoption of carbon pricing through mitigation commitments and international financial and technical assistance.

• Learning between polities from the same region is a useful tool for promoting carbon pricing.

• Carbon intensive economies tend to prefer emissions trading over carbon taxes.

     

Modelling innovation and the macroeconomics of low-carbon transitions: theory,perspectives and practical use

Energy and climate policies may have significant economy-wide impacts, which are regularly assessed based on quantitative energy-environment-economy models. These tend to vary in their conclusions on the scale and direction of the likely macroeconomic impacts of a low-carbon transition. This paper traces the characteristic discrepancies in models’ outcomes to their origins in different macro-economic theories, most importantly their treatment of technological innovation and finance. We comprehensively analyse the relevant branches of macro-innovation theory and group them into two classes: ‘Equilibrium’ and ‘Non-equilibrium’. While both approaches are rigorous and self-consistent, they frequently yield opposite conclusions for the economic impacts of low-carbon policies. We show that model outcomes are mainly determined by their representations of monetary and finance dimensions, and their interactions with investment, innovation and technological change. Improving these in all modelling approaches is crucial for strengthening the evidence base for policy making and gaining a more consistent picture of the macroeconomic impacts of achieving emissions reductions objectives. The paper contributes towards the ongoing effort of enhancing the transparency and understanding of sophisticated model mechanisms applied to energy and climate policy analysis. It helps tackle the overall ‘black box’ critique, much-cited in policy circles and elsewhere.

Key policy insights

• Quantitative models commissioned by policy-makers to assess the macroeconomic impacts of climate policy generate contradictory outcomes and interpretations.

• The source of the differences in model outcomes originates primarily from assumptions on the workings of the financial sector and the nature of money, and of how these interact with processes of low-carbon energy innovation and technological change.

• Representations of innovation and technological change are incomplete in energy-economy-environment models, leading to limitations in the assessment of the impacts of climate-related policies.

• All modelling studies should state clearly their underpinning theoretical school and their treatment of finance and innovation.

• A strong recommendation is given for modellers of energy-economy systems to improve their representations of money and finance.

     

Effect of reciprocity on public opinion of international climate treaties: experimental evidence from the US and China

This study reports survey results of American and Chinese citizens administered to determine the effect of reciprocity and the absence of reciprocity on public support of international climate treaties. American and Chinese college students and adults were surveyed about their support for signing an international climate treaty including commitments to reduce their greenhouse gas emissions, conditional on the other country signing the same treaty or not. This study finds knowledge of other-country non-support on average decreases cooperative behaviour among all age groups in both the US and China. Knowledge of China’s support for the treaty is found on average to increase support among American adults, while having no noticeable effect on average support among American college students. Chinese citizens are found to not respond positively to reciprocity. Although not statistically significant at conventional significance levels, knowledge of the US’s support is found on average to decrease support among Chinese college students and adults.

Key policy insights

• To increase support for international climate treaties, knowledge that another major emitter will sign the treaty does not unanimously increase domestic support.

• Knowing the other country will not sign the treaty decreases domestic support for signing an international climate treaty for both Americans and Chinese, relative to not being told about the other country’s decision to sign the treaty.

• Knowing China will sign an international climate treaty on average increases American adult support for signing the same treaty, while American college student support is unaffected.

• Although not statistically significant at conventional significance levels, knowing the US will sign an international climate treaty on average decreases Chinese support for signing the same treaty.

• Policy-makers pursuing increased international support of climate treaties by first getting support from countries with substantial historical emissions might deter international support if little attention to fairness concerns is given.

     

Perceived fairness and public acceptability of carbon pricing: a review of the literature

While carbon pricing is widely seen as a crucial element of climate policy and has been implemented in many countries, it also has met with strong resistance. We provide a comprehensive overview of public perceptions of the fairness of carbon pricing and how these affect policy acceptability. To this end, we review evidence from empirical studies on how individuals judge personal, distributional and procedural aspects of carbon taxes and cap-and-trade. In addition, we examine preferences for particular redistributive and other uses of revenues generated by carbon pricing and their role in instrument acceptability. Our results indicate a high concern over distributional effects, particularly in relation to policy impacts on poor people, in turn reducing policy acceptability. In addition, people show little trust in the capacities of governments to put the revenues of carbon pricing to good use. Somewhat surprisingly, most studies do not indicate clear public preferences for using revenues to ensure fairer policy outcomes, notably by reducing its regressive effects. Instead, many people prefer using revenues for ‘environmental projects’ of various kinds. We end by providing recommendations for improving public acceptability of carbon pricing. One suggestion to increase policy acceptability is combining the redistribution of revenue to vulnerable groups with the funding for environmental projects, such as on renewable energy.

Key policy insights

• If people perceive carbon pricing instruments as fair, this increases policy acceptability and support.

• People’s satisfaction with information provided by the government about the policy instrument increases acceptability.

• While people express high concern over uneven distribution of the policy burden, they often prefer using carbon pricing revenues for environmental projects instead of compensation for inequitable outcomes.

• Recent studies find that people’s preferences shift to using revenues for making policy fairer if they better understand the functioning of carbon pricing, notably that relatively high prices of CO₂-intensive goods and services reduce their consumption.

• Combining the redistribution of revenue to support both vulnerable groups and environmental projects, such as on renewable energy, seems to most increase policy acceptability.

     

Interaction between CO2 emissions trading and renewable energy subsidies under uncertainty: feed-in tariffs as a safety net against over-allocation

We study the interactions between a CO₂ emissions trading system (ETS) and renewable energy subsidies under uncertainty over electricity demand and energy costs. We develop an analytical model and a numerical model applied to the European Union electricity market in which renewable energy subsidies are justified only by CO₂ abatement. We confirm that in this context, when uncertainty is small, renewable energy subsidies are not welfare-improving, but we show that when uncertainty is large enough, these subsidies increase expected welfare because they provide CO₂ abatement even in the case of over-allocation, i.e. when the cap is higher than the emissions which would have occurred without the ETS. The source of uncertainty is important when comparing the various types of renewable energy subsidies. Under uncertainty over electricity demand, renewable energy costs or gas prices, a feed-in tariff brings higher expected welfare than a feed-in premium because it provides a higher subsidy when it is actually needed i.e. when the electricity price is low. Under uncertainty over coal prices, the opposite result holds true.

Key policy insights

• Due to the possibility of over-allocation in an ETS, subsidies to renewable energies can increase expected welfare, even when climate change mitigation is the only benefit from renewables taken into account.

• In most cases studied, a feed-in tariff brings a higher expected welfare than a feed-in premium.

• The European Commission guidelines on State aid for energy, which incentivize member States to replace feed-in tariffs by feed-in premiums, should be reconsidered based on these results.

     

Beyond carbon pricing: policy levers for negative emissions technologies

This paper explores policies for Negative Emissions Technologies (NETs), in an attempt to move beyond the supply-side focus of the majority of NETs research, as well as the current dominance of carbon pricing as the main NETs policy proposal. The paper identifies a number of existing policies from four key areas – energy/transport, agriculture, sub-soil, and oceans – which will have an impact on three NETs: Bioenergy with Carbon Capture and Storage (BECCS), Direct Air Capture (DAC), and terrestrial Enhanced Rock Weathering (ERW). We propose that non-climate co-benefits may be valuable in terms of the policy ‘demand pull’ for NETs; in particular, we find that ERW may provide multiple co-benefits which can be mandated through existing policy structures. However, interaction with numerous policy areas may also create barriers, particularly where there is tension between the priorities of different government departments. On the basis of existing and analogous policies from a range of geographical contexts and scales, this paper proposes four options for NETs policy that could be reasonably implemented in the near-term. We also argue that ERW demonstrates the importance of scale and framing, because the policy environment depends on whether it is framed as a soil amendment at local scales or as a climate stabilization technique at international scale.

Key policy insights

• Co-benefits may assist the ‘demand pull’ for novel technologies by providing multiple policy angles for incentivisation rather than relying on a ‘fix-all’ policy such as a high carbon price.

• DAC with storage might be overly reliant on a high carbon price, because it only provides one core benefit – that of atmospheric carbon reduction.

• ERW may provide multiple co-benefits which can be mandated through existing policy structures, but should focus on using waste rock rather than mining virgin material.

• We propose four near-term options for NETs policy: funding for small-scale BECCS demonstration and an international biomass certification mechanism; small-scale loans for ERW on farms and promotion of locally-sourced rock residues; amendment of fertilizer subsidy schemes to include silicate rock; and a clearer framework for licensing sub-soil access for CO₂ storage.

     

Narratives in REDD+ benefit sharing: examining evidence within and beyond the forest sector

REDD+ was designed globally as a results-based instrument to incentivize emissions reduction from deforestation and forest degradation. Over 50 countries have developed strategies for REDD+, implemented pilot activities and/or set up forest monitoring and reporting structures, safeguard systems and benefit sharing mechanisms (BSMs), offering lessons on how particular ideas guide policy design. The implementation of REDD+ at national, sub-national and local levels required payments to filter through multiple governance structures and priorities. REDD+ was variously interpreted by different actors in different contexts to create legitimacy for certain policy agendas. Using an adapted 3E (effectiveness, efficiency, equity and legitimacy) lens, we examine four common narratives underlying REDD+ BSMs: (1) that results-based payment (RBP) is an effective and transparent approach to reducing deforestation and forest degradation; (2) that emphasis on co-benefits risks diluting carbon outcomes; (3) that directing REDD+ benefits predominantly to poor smallholders, forest communities and marginalized groups helps address equity; and (4) that social equity and gender concerns can be addressed by well-designed safeguards. This paper presents a structured examination of eleven BSMs from within and beyond the forest sector and analyses the evidence to variably support and challenge these narratives and their underlying assumptions to provide lessons for REDD+ BSM design. Our findings suggest that contextualizing the design of BSMs, and a reflexive approach to examining the underlying narratives justifying particular design features, is critical for achieving effectiveness, equity and legitimacy.

Key policy insights

• A results-based payment approach does not guarantee an effective REDD+; the contexts in which results are defined and agreed, along with conditions enabling social and political acceptance, are critical.

• A flexible and reflexive approach to designing a benefit-sharing mechanism that delivers emissions reductions at the same time as co-benefits can increase perceptions of equity and participation.

• Targeting REDD+ to smallholder communities is not by default equitable, if wider rights and responsibilities are not taken into account

• Safeguards cannot protect communities or society without addressing underlying power and gendered relations.

• The narratives and their underlying generic assumptions, if not critically examined, can lead to repeated failure of REDD+ policies and practices.

     

Implications of Japan’s long term climate mitigation target and the relevance of uncertain nuclear policy

Achieving long-term climate mitigation goals in Japan faces several challenges, starting with the uncertain nuclear power policy after the 2011 earthquake, the uncertain availability and progress of energy technologies, as well as energy security concerns in light of a high dependency on fuel imports. The combined weight of these challenges needs to be clarified in terms of the energy system and macroeconomic impacts. We applied a general equilibrium energy economic model to assess these impacts on an 80% emission reduction target by 2050 considering several alternative scenarios for nuclear power deployment, technology availability, end use energy efficiency, and the price of fossil fuels. We found that achieving the mitigation target was feasible for all scenarios, with considerable reductions in total energy consumption (39%–50%), higher shares of low-carbon sources (43%–72% compared to 15%), and larger shares of electricity in the final energy supply (51%–58% compared to 42%). The economic impacts of limiting nuclear power by 2050 (3.5% GDP loss) were small compared to the lack of carbon capture and storage (CCS) (6.4% GDP loss). Mitigation scenarios led to an improvement in energy security indicators (trade dependency and diversity of primary energy sources) even in the absence of nuclear power. Moreover, preliminary analysis indicates that expanding the range of renewable energy resources can lower the macroeconomic impacts of the long term target considerably, and thus further in depth analysis is needed on this aspect.

Key policy insights

• For Japan, an emissions reduction target of 80% by 2050 is feasible without nuclear power or CCS.

• The macroeconomic impact of such a 2050 target was largest without CCS, and smallest without nuclear power.

• Energy security indicators improved in mitigation scenarios compared to the baseline.

     

Swimming upstream: addressing fossil fuel supply under the UNFCCC

Reducing fossil fuel supply is necessary to meet the Paris Agreement goal to keep warming ‘well below 2°C’, yet the Agreement is silent on the topic of fossil fuels. This article outlines reasons why it is important that Parties to the Agreement find ways to more explicitly address the phasing out of fossil fuel production under the UNFCCC. It describes how countries aiming to keep fossil fuel supply in line with Paris goals could articulate and report their actions within the current architecture of the Agreement. It also outlines specific mechanisms of the Paris Agreement through which issues related to the curtailment of fossil fuel supply can be addressed. Mapping out a transition away from fossil fuels – and facilitating this transition under the auspices of the UNFCCC process – can enhance the ambition and effectiveness of national and international climate mitigation efforts.

Key policy insights

• The international commitment to limit global average temperature increases to ‘well below 2°C’ provides a strong rationale for Parties to the Paris Agreement and the UNFCCC to pursue a phase-down in fossil fuel production, not just consumption.

• Several countries have already made commitments to address fossil fuel supply, by agreeing to phase down coal or oil exploration and production.

• Integrating these commitments into the UNFCCC process would link them to global climate goals, and ensure they form part of a broader global effort to transition away from fossil fuels.

• The Paris Agreement provides a number of new opportunities for Parties to address fossil fuel production.

     

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.

     

Engineering climate debt: temperature overshoot and peak-shaving as risky subprime mortgage lending

Despite the ambitious temperature goal of the 2015 Paris Agreement, the pace of reducing global CO₂ emissions remains sluggish. This creates conditions in which the idea of temperature ‘overshoot and peak-shaving’ is emerging as a possible strategy to meet the Paris goal. An overshoot and peak-shaving scenario rests upon the ‘temporary’ use of speculative solar radiation management (SRM) technologies combined with large-scale carbon dioxide removal (CDR). Whilst some view optimistically the strategic interdependence between SRM and CDR, we argue that this strategy comes with a risk of escalating ‘climate debt’. We explain our position using the logic of debt and the analogy of subprime mortgage lending. In overshoot and peak-shaving scenarios, the role of CDR and SRM is to compensate for delayed mitigation, placing the world in a double debt: ‘emissions debt’ and ‘temperature debt’. Analogously, this can be understood as a combination of ‘subprime mortgage’ (i.e. large-scale CDR) and ‘home-equity-line-of-credit’ (i.e. temporary SRM). With this analogy, we draw some important lessons from the 2007–2009 US subprime mortgage crisis. The analogy signals that the efficacy of temporary SRM cannot be evaluated in isolation of the feasibility of large-scale CDR and that the failure of the overshoot promise will lead to prolonged peak-shaving, masking an ever-rising climate debt. Overshoot and peak-shaving scenarios should not be presented as a secured feasible investment, but rather as a high-risk speculation betting on insecure promises. Obscuring the riskiness of such scenarios is a precipitous step towards escalating a climate debt crisis.

Key policy insights

• The slow progress of mitigation increases the attraction of an ‘overshoot and peak-shaving’ scenario which combines temporary SRM with large-scale CDR

• Following the logic of debt, the role of CDR and SRM in this scenario is to compensate for delayed mitigation, creating a double debt of CO₂ emissions and global temperature

• Using the analogy of subprime lending, this strategy can be seen as offering a combination of subprime mortgage and open-ended ‘line-of-credit’

• Because the ‘success’ of peak-shaving by temporary SRM hinges critically on the overshoot promise of large-scale CDR, SRM and CDR should not be discussed separately

     

Taking stock of Climate Change Acts in Europe: living policy processes or symbolic gestures?

Since the UK introduced a Climate Change Act (CCA) in 2008, similar legislation has followed in a number of states, with each having a slightly different take. What unites these examples is that they all represent framework legislation that aims to facilitate climate change mitigation by creating continuous policy processes whereby mechanisms for the reduction of greenhouse gas (GHG) emissions are developed and implemented. This article is concerned with the extent to which they are living policy processes or rather symbolic gestures. We analyse seven European CCAs with regard to GHG emission reduction targets, planning/implementation mechanisms, and feedback/evaluations prescribed by the laws. These three features correspond with three aspects of climate policy integration (CPI): interpretations of CPI as a norm; CPI as a process of governing; CPI as a policy outcome. We show that CCAs address all three aspects of CPI and constitute living policy processes, although to varying extents. However, CCAs are also policy processes in that they are part of a political system, affected by political forces external to the legislation, positively and negatively.

Key policy insights

• CCAs can provide a normative basis for policymaking on climate change at the national level, especially through quantitative emission reduction targets.

• Whilst CCAs can bring some stability and predictability to policymaking on climate change (mainly because legislation is more difficult to amend or remove than policy strategies), they are still vulnerable to political developments.

• Most CCAs lack either short/medium-term (Denmark, Finland, Ireland, Sweden) or long-term (Austria) targets. Given EU Member States’ aim to decarbonise in the next three decades and the Paris Agreement's global goal of pursuing efforts to limit warming to 1.5°C, states need to find ways to guide this process. One approach could be the inclusion of short-term, medium-term and long-term targets in their CCAs.

• Since sanctioning mechanisms are lacking across all the CCAs analysed here, it is not clear what will happen if legally binding targets are not met. Just as it is difficult to imagine speed limits and speed cameras without accompanying penalties, it is hard to imagine how CCAs without sanctions can deliver decarbonization.

     

Environmental integrity of international carbon market mechanisms under the Paris Agreement

The Paris Agreement establishes provisions for using international carbon market mechanisms to achieve climate mitigation contributions. Environmental integrity is a key principle for using such mechanisms under the Agreement. This paper systematically identifies and categorizes issues and options to achieve environmental integrity, including how it could be defined, what influences it, and what approaches could mitigate environmental integrity risks. Here, environmental integrity is assumed to be ensured if the engagement in international transfers of carbon market units leads to the same or lower aggregated global emissions. Four factors are identified that influence environmental integrity: the accounting for international transfers; the quality of units generated, i.e. whether the mechanism ensures that the issuance or transfer of units leads to emission reductions in the transferring country; the ambition and scope of the mitigation target of the transferring country; and incentives or disincentives for future mitigation action, such as possible disincentives for transferring countries to define future mitigation targets less ambitiously or more narrowly in order to sell more units. It is recommended that policy-makers combine several approaches to address the significant risks to environmental integrity.

Key policy insights

• Robust accounting is a key prerequisite for ensuring environmental integrity. The diversity of nationally determined contributions is an important challenge, in particular for avoiding double counting and for ensuring that the accounting for international transfers is representative for the mitigation efforts by Parties over time.

• Unit quality can, in theory, be ensured through appropriate design of carbon market mechanisms; in practice, existing mechanisms face considerable challenges in ensuring unit quality. Unit quality could be promoted through guidance under Paris Agreement Article 6, and reporting and review under Article 13.

• The ambition and scope of mitigation targets is key for the incentive for transferring countries to ensure unit quality because countries with ambitious and economy-wide targets would have to compensate for any transfer of units that lack quality. Encouraging countries to adopt ambitious and economy-wide NDC targets would therefore facilitate achieving environmental integrity.

• Restricting transfers in instances of high environmental integrity risk – through eligibility criteria or limits – could complement these approaches.

     

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.

     

The nexus between nationally determined contributions and technology needs assessments: a global analysis

The role of technology in combatting climate change through mitigation and adaptation to its inevitable impacts has been acknowledged and highlighted by the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). In the developing world, this has received particular attention through the technology needs assessment (TNA) process. As Parties put forward their national pledges to combat climate change, the scarcity of resources makes it important to assess (i) whether national processes designed to tackle climate change are working together and (ii) whether existing national processes should be terminated with the initiation of new ones. This study presents an assessment of the existing TNA process and its linkages to the nationally determined contributions (NDCs) under the Paris Agreement. The conclusions stem from an assessment of the TNAs completed to date, as well as 71 NDCs from developing countries at various stages of the TNA process. The analyses show that further developing the TNAs could play a vital role in filling gaps in the existing NDCs, specifically those relating to identifying appropriate technologies, their required enabling framework conditions and preparing implementation plans for their transfer and diffusion.

Key policy insights

• The full potential of the TNAs has still to be rolled out in many countries.

• Developing countries can maximize the potential of their TNAs by further developing them to explicitly analyse what is needed to implement existing NDCs, including by better aligning their focus, scope and up-to-dateness with the priority sectors included in the NDCs.

• Requests of developing countries for international assistance, through technology transfer, will be better guided by the completion of the TNA process.

• Policies for strengthening the NDCs will benefit from the results of completed, ongoing and future TNA processes.

     

Power,coalitions and institutional change in South African climate policy

This paper examines power relations, coalitions and conflicts that drive and hinder institutional change in South African climate policy. The analysis finds that the most contested climate policies are those that create distributional conflicts where powerful, non-poor actors will potentially experience real losses to their fossil fuel-based operations. This finding opposes the assumption of competing objectives between emissions and poverty reduction. Yet, actors use discourse that relates to potentially competing objectives between emissions reductions, jobs, poverty reduction and economic welfare.

The analysis relates to the broader questions on how to address public policy problems that affect the two objectives of mitigating climate change and simultaneously boosting socio-economic development. South Africa is a middle-income country that represents the challenge of accommodating simultaneous efforts for emissions and poverty reduction.

Institutional change has been constrained especially in the process towards establishing climate budgets and a carbon tax. The opposing coalitions have succeeded in delaying the implementation of these processes, as a result of unequal power relations. Institutional change in South African climate policy can be predominantly characterized as layering with elements of policy innovation. New policies build on existing regulations in all three cases of climate policy examined: the climate change response white paper, the carbon tax and the renewable energy programme. Unbalanced power relations between coalitions of support in government and civil society and opposition mainly from the affected industry result in very fragile institutional change.

Key policy insights

• The South African government has managed to drive institutional change in climate policy significantly over the past 7 years.

• Powerful coalitions of coal-related industries and their lobbies have constrained institutional change and managed to delay the implementation of carbon pricing measures.

• A successfully managed renewable energy programme has started to transform a coal- and nuclear-powered electricity sector towards integrating sustainable energy technologies. The programme is vulnerable to intergovernmental opposition and requires management at the highest political levels.

• Potential conflict with poverty reduction measures is not a major concern that actively hinders institutional change towards climate objectives. Predominantly non-poor actors frequently use poverty-related discourse to elevate their interests to issues of public concern.