The economics of climate change in Mexico: implications for national/regional policy

The recent Mexican government study, The Economics of Climate Change in Mexico (ECCM), which has largely influenced Mexico's stance on climate change issues and international negotiations, is critically reviewed. Whilst the importance of such government-supported national studies as a first attempt to provide estimates on the anticipated costs of climate change is recognized, there is scope to strengthen the underlying analysis. It is argued that some of the key policy recommendations of ECCM are weakly supported by its analysis, that it has some methodological weaknesses, and that there are inconsistencies with the approach adopted in the Stern Review. Furthermore, it is likely that the estimated costs severely under-represent future climate change damages in the case of Mexico, which could deter drastic mitigation and adaptation efforts. New estimates of the costs of climate change are presented based on the impact functions of two integrated assessment models.

Policy relevance

Due to its large influence in building a regional view of what climate change could imply for Latin America, the analysis of the ECCM highlights the need to strengthen the analysis of national climate documents to ensure they properly support national/regional policy making. The academic evaluation of national climate change documents is a necessary prerequisite for the development of sound climate policy.     

Investment risk and return under renewable decarbonization of a power market

How does financial performance risk affect investments in low-carbon electricity-generating technologies to achieve climate policy targets? A detailed risk simulation of price formation in the Great Britain wholesale power market is used to show that the increasing replacement of fossil facilities with wind, ceteris paribus, may cause a deterioration of the financial risk–return performance metrics for incremental investments. Low-carbon investments appear to be high risk, low return, and as such may require a progressively higher level of support over time than envisaged by the conventional degression trajectories. The increasing riskiness of the wholesale market will to some extent offset the benefits of lower capital costs and operational efficiencies if investors need to satisfy cautious debt coverage ratios alongside positive expected returns. This increased risk is additional to the well-known ‘merit order effect’ of low-carbon investments progressively depressing wholesale prices and hence their expected investment returns.

Policy relevance

Policy support for renewable technologies such as wind is usually based upon levelized costs and is expected to reduce over time as capital costs and operational efficiencies improve. However, levelized costs do not take full account of the risk aversion that investors may have in practice. Expected policy support reductions may be moderated to some extent by the increased financial performance risk that intermittent technologies bring to the power market. The annual risk-return profiles for incremental investments deteriorate for all technologies as wind replaces fossil fuels. This extra risk premium will need to be incorporated into evaluating policy incentives for new investments in a decarbonizing power market.     

Is the Uncertainty about Climate Change too Large for Expected Cost-Benefit Analysis?

Cost-benefit analysis is only applicable if the variances of both costs and benefits are finite. In the case of climate change, the variances of the net present marginal costs and benefits of greenhouse gas emission reduction need to be finite. Finiteness is hard, if not impossible to prove. The opposite is easier to establish as one only needs to show that there is one, not impossible representation of the climate change with infinite variance. The paper shows that all relevant current variables of theFUND model have finite variances. However, there is a small chance that climate change reverses economic growth in some regions. In that case, the discount rate becomes negative and the net present marginal benefits of greenhouse gas emission reduction becomes very large. So large, that its variance is unbounded. One could interpret this as an indication that cost-benefit analysis is invalid. Alternatively, one could argue that the infinity is present in both the base case and the policy scenario, and therefore irrelevant; in that interpretation, cost-benefit analysis is a valid tool.     

The (ir)relevance of transaction costs in climate policy instrument choice: an analysis of the EU and the US

This article assesses the relevance of ex post transaction costs in the choice of climate policy instruments in the EU (focusing mainly on the example of Germany) and the US. It reviews all publicly available empirical ex post transaction cost studies of climate policy instruments broken down by the main private and public sector cost factors and offers hypotheses on how these factors may scale depending on instrument design and other contextual factors. The key finding from the evaluated schemes is that it is possible to reject the hypothesis that asymmetries in ex post transaction costs across instruments are large and, thus, play a pivotal role in climate policy instrument choice. Both total and relative ex post transaction costs can be considered low. This conjecture differs from the experience in other areas of environmental policy instruments where high total transaction costs are considered to be important factors in the overall assessment of optimal environmental policy choice. Against this background, the main claim of this article is that in climate policy instrument choice, ex post transaction cost considerations play a minor role in large countries that feature similar institutional characteristics as the EU and the US. Rather, the focus should be on the efficiency properties of instruments for incentivizing abatement, as well as equity and political economy considerations (and other societally relevant objectives). In order to inform transaction cost considerations in climate policy instrument choice in countries that adopt new climate policies, more data would be desirable in order to enable more robust estimates of design- and context-specific transaction-cost scaling factors.

Policy relevance

The findings of this study can help inform policy makers who plan to set up novel climate policy instruments. The results indicate that ex post transaction costs play a minor role for large countries that feature similar institutional characteristics as the EU and the US. For instrument design the focus should rather be on efficiency properties of instruments in incentivizing abatement, as well as equity and political economy considerations (and other societally relevant objectives).     

Health co-benefits and the development of climate change mitigation policies in the European Union

The 2015 Paris Agreement requires increasingly ambitious emissions reduction efforts from its member countries. Accounting for ancillary positive health outcomes (health co-benefits) that result from implementing climate change mitigation policies can provide Parties to the Paris Agreement with a sound rationale for introducing stronger mitigation strategies. Despite this recognition, a knowledge gap exists on the role of health co-benefits in the development of climate change mitigation policies. To address this gap, the case study presented here investigates the role of health co-benefits in the development of European Union (EU) climate change mitigation policies through analysis and consideration of semi-structured interview data, government documents, journal articles and media releases. We find that while health co-benefits are an explicit consideration in the development of EU climate change mitigation policies, their influence on final policy outcomes has been limited. Our analysis suggests that whilst health co-benefits are a key driver of air pollution mitigation policies, climate mitigation policies are primarily driven by other factors, including economic costs and energy implications.

Key policy insights

• Health co-benefits are quantified and monetized as part of the development of EU climate change mitigation policies but their influence on the final policies agreed upon is limited.

• Barriers, such as the immediate economic costs associated with climate action, inhibit the influence of health co-benefits on the development of mitigation policies.

• Health co-benefits primarily drive the development of EU air pollution mitigation policies.

• The separation of responsibility for GHG and non-GHG emissions across Directorate Generals has decoupled climate change and air pollution mitigation policies, with consequences for the integration of health co-benefits in climate policy.

     

Future Effects of Ozone on Carbon Sequestration and Climate Change Policy Using a Global Biogeochemical Model

Exposure of plants to ozone inhibits photosynthesis and therefore reduces vegetation production and carbon sequestration. The reduced carbon storage would then require further reductions in fossil fuel emissions to meet a given CO₂ concentration target, thereby increasing the cost of meeting the target. Simulations with the Terrestrial Ecosystem Model (TEM) for the historical period (1860–1995) show the largest damages occur in the Southeast and Midwestern regions of the United States, eastern Europe, and eastern China. The largest reductions in carbon storage for the period 1950–1995, 41%, occur in eastern Europe. Scenarios for the 21st century developed with the MIT Integrated Global Systems Model (IGSM) lead to even greater negative effects on carbon storage in the future. In some regions, current land carbon sinks become carbon sources, and this change leads to carbon sequestration decreases of up to 0.4 Pg C yr⁻¹ due to damage in some regional ozone hot spots. With a climate policy, failing to consider the effects of ozone damage on carbon sequestration would raise the global costs over the next century of stabilizing atmospheric concentrations of CO₂ equivalents at 550 ppm by 6 to 21%. Because stabilization at 550 ppm will reduce emission of other gases that cause ozone, these additional benefits are estimated to be between 5 and 25% of the cost of the climate policy. Tropospheric ozone effects on terrestrial ecosystems thus produce a surprisingly large feedback in estimating climate policy costs that, heretofore, has not been included in cost estimates.     

Analysing the interaction between emission trading and renewable electricity support in TIMES

As the number of instruments applied in the area of energy and climate policy is rising, the issue of policy interaction needs to be explored further. This article analyses the interdependencies between the EU Emissions Trading Scheme (EU ETS) and the German feed-in tariffs (FITs) for renewable electricity in a quantitative manner using a bottom-up energy system model. Flexible modelling approaches are presented for both instruments, with which all impacts on the energy system can be evaluated endogenously. It is shown that national climate policy measures can have an effect on the supranational emissions trading system by increasing emission reduction in the German electricity sector by up to 79 MtCO₂ in 2030. As a result, emission certificate prices decline by between 1.9 €/tCO₂ and 6.1 €/tCO₂ and the burden sharing between participating countries changes, but no additional emission reduction is achieved at the European level. This also implies, however, that the cost efficiency of such a cap-and-trade system is distorted, with additional costs of the FIT system of up to €320 billion compared with lower costs for ETS emission certificates of between €44 billion and €57 billion (cumulated over the period 2013–2020).

Policy relevance

In order to fulfil ambitious emission reduction targets a large variety of climate policy instruments are being implemented in Europe. While some, like the EU ETS, directly address CO₂ emissions, others aim to promote specific low-carbon technologies. The quantitative analysis of the interactions between the EU ETS and the German FIT scheme for renewable sources in electricity generation presented in this article helps to understand the importance of such interaction effects. Even though justifications can be found for the implementation of both types of instrument, the impact of the widespread use of support mechanisms for renewable electricity in Europe needs to be taken into account when fixing the reduction targets for the EU ETS in order to ensure a credible long-term investment signal.     

The role of money and the financial sector in energy-economy models used for assessing climate and energy policy

This article outlines a critical gap in the assessment methodology used to estimate the macroeconomic costs and benefits of climate and energy policy, which could lead to misleading information being used for policy-making. We show that the Computable General Equilibrium (CGE) models that are typically used for assessing climate policy use assumptions about the financial system that sit at odds with the observed reality. These assumptions lead to ‘crowding out’ of capital and, because of the way the models are constructed, negative economic impacts (in terms of gross domestic product (GDP) and welfare) from climate policy in virtually all cases.

In contrast, macro-econometric models, which follow non-equilibrium economic theory and adopt a more empirical approach, apply a treatment of the financial system that is more consistent with reality. Although these models also have major limitations, they show that green investment need not crowd out investment in other parts of the economy – and may therefore offer an economic stimulus. Our conclusion is that improvements in both modelling approaches should be sought with some urgency – both to provide a better assessment of potential climate and energy policy and to improve understanding of the dynamics of the global financial system more generally.

POLICY RELEVANCE

This article discusses the treatment of the financial system in the macroeconomic models that are used in assessments of climate and energy policy. It shows major limitations in approach that could result in misleading information being provided to policy-makers.     

Climate change adaptation cost in the US: what do we know?

Researchers and policy makers increasingly recognize the need to adapt to future changes in climate, given that past emissions of greenhouse gases have already committed the world to some level of climate change. However, the current understanding of the costs and benefits of adaptation measures is still fairly rudimentary, and far from comprehensive. An assessment is presented of the current state of knowledge on the magnitude of adaptation costs in the United States. While incomplete, the studies suggest that adaptation cost could be as high as tens or hundreds of billions of dollars per year by the middle of this century. Key studies are identified in each sector, and the cost estimates and approaches to cost estimation are surveyed. Methodological issues are highlighted in interpreting, comparing, and aggregating adaptation cost estimates. Policy recommendations are made along with appropriate steps to make future adaptation cost studies more comparable within and across sectors and more accessible and relevant to policy and decision makers.

Policy relevance

Designing and implementing climate change adaptation policy requires good information about the effectiveness and cost of available adaptive options. The current state of knowledge on adaptation costs in the United States is assessed and significant gaps in the literature are highlighted – particularly in terms of sectoral and geographic coverage – as well as inconsistencies in methodologies and assumptions that hamper comparison across studies. Critical steps are identified that can be taken to make adaptation cost studies more accessible and useful to decision makers. The findings and recommendations are relevant to adaptation cost studies globally, not just in the United States.     

Prospects for steam coal exporters in the era of climate policies: a case study of Colombia

Continued global action on climate change has major consequences for fossil fuel markets, especially for coal as the most carbon-intensive fuel. This article summarizes current market developments in the most important coal-producing and coal-consuming countries, resulting in a critical qualitative assessment of prospects for future coal exports. Colombia, as the world’s fourth largest exporter, is strongly affected by these global trends, with more than 90% of its production being exported. Market analysis finds Colombia in a strong competitive position, owing to its low production costs and high coal quality. Nevertheless, market trends and enhanced climate policies suggest a gloomy outlook for future exports. Increasing competition on the Atlantic as well as Pacific market will keep coal prices low and continue pressure on mining companies. Increasing numbers of filed bankruptcies and lay-offs might be just the beginning of a carbon bubble devaluing fossil fuel investments and leaving them stranded. Colombia largely supplies European and Mediterranean consumers but also delivers some quantities to the US Gulf Coast, and to Central and South America. Future coal demand in most of these countries will continue to decline in the next decades. Newly constructed power plants in emerging economies (India, China) are unlikely to compensate for this downturn owing to increasing domestic supply and decreasing demand. Therefore, maintaining or even increasing mining volumes in Colombia should be re-evaluated, taking into account new economic realities as well as local externalities. Ignoring these risks could lead to additional stranded investments, aggravating the local resource curse and hampering sustainable economic development.

Key policy insights

• The climate policies of most of Colombia’s traditional trade partners target steam coal as the more emission-intensive fossil fuel, with many countries implementing or considering a coal phase-out.

• Coal exporters should re-evaluate their operations and new investments taking into account this new policy environment.

• To prevent a race to the bottom among coal producers that would favour weak regulation, climate policy makers should also consider the local social and external costs of coal mining, including on health and the local environment.

     

Aligning emissions trading and feed-in tariffs in China

In 2013, China launched its domestic pilot emissions trading scheme (ETS) as a cost-effective strategy to reduce CO₂ emissions. Theoretically, the ETS can interact with the feed-in tariffs (FITs) applied to renewable energies (REN). This article presents a simple method to demonstrate how FITs can be adjusted based on the evolution of ETS carbon prices in order to provide a cost-effective climate policy package in China. First, by using provincial data and wind and solar power as examples, it calculates the implicit carbon prices that FITs generate in different Chinese provinces and finds that they are much higher than current carbon prices in the pilot ETS. This shows the necessity of using both instruments to guarantee current level incentives to develop REN for climate change purposes, at least in the short and medium terms. Second, by keeping the annual total carbon price level stable (the sum of the implicit FIT carbon price and the ETS carbon price), and taking into account the cost evolution of REN development, this article demonstrates, for the 2018–2020 period, that FIT should decrease at an annual rate of 3.04–4.63% (for wind) and 7.84–8.87% (for solar) based on different growth rates for progressive national ETS carbon prices.

Policy relevance

There are a number of studies and debates on the interactions between climate policies in Europe in particular, ETS and subsidies for REN. The key issue is that a climate policy package should be cost-efficient and the implementation of one policy should not jeopardise the performance of another. For a country like China, a considerable scale effect on climate target achievement and total cost savings could be produced by the careful design of the climate policy package. FIT and ETS, which are cost-efficient policies if implemented separately, will very probably constitute a major climate policy package in the future in China, which is aiming to limit the use of command-and-control policies. So far, there is some debate on how to reduce FIT for wind power in China due to development cost changes. But discussions are lacking on the linkage between FIT and ETS. This paper fills this gap.     

Health and environmental co-benefits and conflicts of actions to meet UK carbon targets

Many actions to reduce GHG emissions have wider impacts on health, the economy, and the environment, beyond their role in mitigating climate change. These ancillary impacts can be positive (co-benefits) or negative (conflicts). This article presents the first quantitative review of the wider impacts on health and the environment likely to arise from action to meet the UK's legally-binding carbon budgets. Impacts were assessed for climate measures directed at power generation, energy use in buildings, and industry, transport, and agriculture. The study considered a wide range of health and environmental impacts including air pollution, noise, the upstream impacts of fuel extraction, and the lifestyle benefits of active travel. It was not possible to quantify all impacts, but for those that were monetized the co-benefits of climate action (i.e. excluding climate benefits) significantly outweigh the negative impacts, with a net present value of more than £85 billion from 2008 to 2030. Substantial benefits arise from reduced congestion, pollution, noise, and road accidents as a result of avoided journeys. There is also a large health benefit as a result of increased exercise from walking and cycling instead of driving. Awareness of these benefits could strengthen the case for more ambitious climate mitigation action.

Policy relevance

This article demonstrates that actions to mitigate GHG emissions have significant wider benefits for health and the environment. Including these impacts in cost–benefit analysis would strengthen the case for the UK (and similar countries) to set ambitious emissions reduction targets. Understanding co-benefits and trade-offs will also improve coordination across policy areas and cut costs. In addition, co-benefits such as air quality improvements are often immediate and local, whereas climate benefits may occur on a longer timescale and mainly in a distant region, as well as being harder to demonstrate. Dissemination of the benefits, along with better anticipation of trade-offs, could therefore boost public support for climate action.     

Seasonal and Inter-Annual Climate Forecasting: The New Tool for Increasing Preparedness to Climate Variability and Change In Agricultural Planning And Operations

Climate variability and change affects individuals and societies. Within agricultural systems, seasonal climate forecasting can increase preparedness and lead to better social, economic and environmental outcomes. However, climate forecasting is not the panacea to all our problems in agriculture. Instead, it is one of many risk management tools that sometimes play an important role in decision-making. Understanding when, where and how to use this tool is a complex and multi-dimensional problem. To do this effectively, we suggest a participatory, cross-disciplinary research approach that brings together institutions (partnerships), disciplines (e.g., climate science, agricultural systems science, rural sociology and many other disciplines) and people (scientist, policy makers and direct beneficiaries) as equal partners to reap the benefits from climate knowledge. Climate science can provide insights into climatic processes, agricultural systems science can translate these insights into management options and rural sociology can help determine the options that are most feasible or desirable from a socio-economic perspective. Any scientific breakthroughs in climate forecasting capabilities are much more likely to have an immediate and positive impact if they are conducted and delivered within such a framework. While knowledge and understanding of the socio-economic circumstances is important and must be taken into account, the general approach of integrated systems science is generic and applicable in developed as well as in developing countries. Examples of decisions aided by simulation output ranges from tactical crop management options, commodity marketing to policy decisions about future land use. We also highlight the need to better understand temporal- and spatial-scale variability and argue that only a probabilistic approach to outcome dissemination should be considered. We demonstrated how knowledge of climatic variability (CV), can lead to better decisions in agriculture, regardless of geographical location and socio-economic conditions.     

Costs and global impacts of black carbon abatement strategies

Abatement of particulate matter has traditionally been driven by health concerns rather than its role in global warming. Here we assess future abatement strategies in terms of how much they reduce the climate impact of black carbon (BC) and organic carbon (OC) from contained combustion. We develop global scenarios which take into account regional differences in climate impact, costs of abatement and ability to pay, as well as both the direct and indirect (snow-albedo) climate impact of BC and OC. To represent the climate impact, we estimate consistent region-specific values of direct and indirect global warming potential (GWP) and global temperature potential (GTP). The indirect GWP has been estimated using a physical approach and includes the effect of change in albedo from BC deposited on snow. The indirect GWP is highest in the Middle East followed by Russia, Europe and North America, while the total GWP is highest in the Middle East, Africa and South Asia. We conclude that prioritizing emission reductions in Asia represents the most cost-efficient global abatement strategy for BC because Asia is (1) responsible for a large share of total emissions, (2) has lower abatement costs compared to Europe and North America and (3) has large health cobenefits from reduced PM₁₀ emissions.     

The implications of ignoring smallholder agriculture in climate-financed forestry projects: empirical evidence from two REDD+ pilot projects

ABSTRACT

Changes in agricultural practices can play a pivotal role in climate change mitigation by reducing the need for land use change as one of the biggest sources of GHG emissions, and by enabling carbon sequestration in farmers’ fields. Expansion of smallholder and commercial agriculture is often one of the main driving forces behind deforestation and forest degradation. However, mitigation programmes such as REDD+ are geared towards conservation efforts in the forestry sector without prominently taking into account smallholder agricultural interests in project design and implementation. REDD+ projects often build on existing re- and afforestation projects without major changes in their principles, interests and assumptions. Informed by case study research and interviews with national and international experts, we illustrate with examples from Ethiopia and Indonesia how REDD+ projects are implemented, how they fail to adequately incorporate the demands of smallholder farmers and how this leads to a loss of livelihoods and diminishing interest in participating in REDD+ by local farming communities. The study shows how the conservation-based benefits and insecure funding base in REDD+ projects do not compensate for the contraction in livelihoods from agriculture. Combined with exclusive benefit-sharing mechanisms, this results in an increased pressure on forest resources, diverging from the principal objective of REDD+. We note a gap between the REDD+ narratives at international level (i.e. coupling development with a climate agenda) and the livelihood interests of farming communities on the ground. We argue that without incorporating agricultural interests and a review of financial incentives in the design of future climate finance mechanisms, objectives of both livelihood improvements and GHG emission reductions will be missed.

Key policy insights

• REDD+ is positioned as a promising tool to meet climate, conservation and development targets. However, these expectations are not being met in practice as the interests of smallholder farmers are poorly addressed.

• REDD+ policy developers and implementers need more focus on understanding the interests and dynamics of smallholder agriculturalists to enable inclusive, realistic and long-lasting projects.

• For REDD+ to succeed, funders need to consider how to better ensure long-term livelihood security for farming communities.

     

Innovation benefits from nuclear phase-out: can they compensate the costs?

This paper investigates whether an inefficient allocation of abatement due to constraints on the use of currently available low carbon mitigation options can promote innovation in new technologies and have a positive impact on welfare. We focus on the case of a nuclear power phase-out and endogenous technical change in energy efficiency and alternative low carbon technologies. The research is inspired by the re-thinking about nuclear power deployment which took place in some countries, especially in Western Europe, after the Fukushima accident in March 2011. The analysis uses an Integrated Assessment Model, WITCH, which features multiple externalities related to greenhouse gas emissions and innovation market failures. Our results show that phasing out nuclear power stimulates R&D investments and deployment of technologies with large learning potential. The resulting technology benefits that would not otherwise occur due to intertemporal and international externalities almost completely offset the economic costs of foregoing nuclear power. The extent of technology benefits depends on the stringency of the climate policy and is distributed unevenly across countries.     

Policies for reducing agricultural sector vulnerability to climate change in Mali

Abstract

The Mali agricultural sector and the country's food security are potentially vulnerable to climate change. Policies may be able to mitigate some of the climate change vulnerability. This article investigates several policy changes that may reduce vulnerability, including climate-specific and other policies. The policy set includes migration of cropping patterns, development of high-temperature-resistant cultivars, reduction in soil productivity loss, cropland expansion, adoption of improved cultivars, and changes in trade patterns. When all policies are considered together, results under climate change show an annual gain of $252 million in economic benefits as opposed to a $161 million loss without policy adjustment. Simultaneously, undernourishment is reduced to 17% of the Malian population as compared with 64% without policy adjustment. We also find tradeoffs in cases between economic benefits and undernourishment. Policies are also studied individually and collectively. Overall, the results indicate that policy can play an important role in reducing climate change vulnerability in Mali.     

Accounting for flexibility against uncertain baselines: lessons from case studies in the eastern European energy sector

Abstract

The Kyoto Protocol defines two project-based flexibility mechanisms: joint implementation (JI) and the cleandevelopment mechanism (CDM). The main methodological problem associated with both these mechanisms isthe choice of an appropriate baseline: since the baseline is, by definition, counterfactual, it imposes considerable uncertainty on the accounting framework. Little work to date has been carried out on trying to estimate how largethis uncertainty might be for particular project types. This paper aims to fill this gap by proposing an approach to baseline construction which explicitly acknowledges this uncertainty. This approach is illustrated through theexamination of pilot JI projects in the energy sector in eastern Europe, and then discussed in terms of its implicationsfor climate policy. The results presented are estimates of the range of counterfactual uncertainty in greenhouse gas emission reductions based on the construction of a number of possible baselines for each project. This range is found to be about ±35% for demand side projects, ±45% for heat supply projects, ±55% for cogeneration projects, and ±60% for electricity supply projects. Estimates of uncertainty in the costs of the pilot projects are also found to be high. The paper discusses the problems arising from such large uncertainty and starts to indicate how this uncertainty may be managed.     

Targeting carbon dioxide removal in the European Union

In principle, many climate policymakers have accepted that large-scale carbon dioxide removal (CDR) is necessary to meet the Paris Agreement’s mitigation targets, but they have avoided proposing by whom CDR might be delivered. Given its role in international climate policy, the European Union (EU) might be expected to lead the way. But among EU climate policymakers so far there is little talk on CDR, let alone action. Here we assess how best to ‘target’ CDR to motivate EU policymakers exploring which CDR target strategy may work best to start dealing with CDR on a meaningful scale. A comprehensive CDR approach would focus on delivering the CDR volumes required from the EU by 2100, approximately at least 50 Gigatonnes (Gt) CO₂, according to global model simulations aiming to keep warming below 2°C. A limited CDR approach would focus on an intermediate target to deliver the CDR needed to reach ‘net zero emissions’ (i.e. the gross negative emissions needed to offset residual positive emissions that are too expensive or even impossible to mitigate). We argue that a comprehensive CDR approach may be too intimidating for EU policymakers. A limited CDR approach that only addresses the necessary steps to reach the (intermediate) target of ‘net zero emissions’ is arguably more achievable, since it is a better match to the existing policy paradigm and would allow for a pragmatic phase-in of CDR while avoiding outright resistance by environmental NGOs and the broader public.

Key policy insights

• Making CDR an integral part of EU climate policy has the potential to significantly reshape the policy landscape.

• Burden sharing considerations would probably play a major role, with comprehensive CDR prolonging the disparity and tensions between progressives and laggards.

• Introducing limited CDR in the context of ‘net zero’ pathways would retain a visible primary focus on decarbonization but acknowledge the need for a significant enhancement of removals via ‘natural’ and/or ‘engineered’ sinks.

• A decarbonization approach that intends to lead to a low level of ‘residual emissions’ (to be tackled by a pragmatic phase-in of CDR) should be the priority of EU climate policy.

     

Interactions between European agricultural policy and climate change: a Slovenian case study

This article analyses the interactions between agricultural policy measures in the EU and the factors affecting GHG emissions from agriculture on the one hand, and the adaptation of agriculture to climate change on the other. To this end, the article uses Slovenia as a case study, assessing the extent to which Slovenian agricultural policy is responding to the challenges of climate change. All agricultural policy measures related to the 2007–2013 programming period were analysed according to a new methodological approach that is based on a qualitative (expert evaluation) and a quantitative (budgetary transfers validation) assessment. A panel of experts reached consensus on the key factors through which individual measures affect climate change, in which direction and how significantly. Data on budgetary funds for each measure were used as weights to assess their relative importance. The results show that there are not many measures in (Slovenian) agricultural policy that are directly aimed at reducing GHG emissions from agriculture or at adaptation to climate change. Nevertheless, most affect climate change, and their impact is far from negligible. Current measures have both positive and negative impacts, but overall the positive impacts prevail. Measures that involve many beneficiaries and more budgetary funds had the strongest impact on aggregate assessments. In light of climate change, agricultural policy should pay more attention to measures that are aimed at raising the efficiency of animal production, as it is the principal source of GHG emissions from agriculture.

Policy relevance

Agricultural policy must respond to climate challenges and climate change impact assessment must be included in the process of forming European agricultural policy. Agricultural policy measures that contribute to the reduction of emissions and adaptation, whilst acting in synergy with other environmental, economic and social goals, should be promoted. The approach used in this study combines qualitative and quantitative data, yielding an objective assessment of the climate impact of agricultural policy measures and providing policy makers with a tool for either ex ante or ex post evaluations of climate-relevant policy measures.