Evaluating the Bonn–Marrakesh agreement

This article evaluates the environmental effectiveness and economic efficiency of the Kyoto Protocol after the Bonn Agreement and the Marrakesh Accords. The US withdrawal has by far the greatest impact in reducing the environmental effectiveness, lowering the price of traded emission permits and reducing Annex I abatement costs. The decisions on sinks imply that the Annex I CO₂-equivalent emissions without the US will come out at about 1/2% below base-year level, instead of over 4% below base-year level. Without US participation, the emission permit price is estimated to be low. Therefore, banking hot air by Russia and the Ukraine is of absolute importance for the development of a viable emissions trading market, and would also enhance the environmental effectiveness of the Kyoto Protocol.     

Rethinking the Kyoto Emissions Targets

The overall targets for greenhouse gas emissions of the Kyoto Protocol are not based on a specific objective for the future world climate. Moreover, the allocations of emissions restrictions among countries do not have a principled logic and impose arbitrary differences in costs. Calculations arepresented of the costs of alternative guidelines for emissions restrictions, each of which has a plausible ethical basis: equal per capita reductions, equal country shares in reductions, equalized welfare costs, and emulation of the United Nations budget allocations. All of these would result in far lower total costs of reaching the Kyoto targets. The alternatives would also eliminate the wholly capricious accommodations given to the Former Soviet Union and Eastern Europe. The lower cost alternativeswould permit the Annex B countries to make unequivocal commitments for cost reimbursement to the non-Annex B countries to induce them to participate in emissions reductions. Everyone would gain from that.     

Evaluating the Bonn—Marrakesh agreement

Abstract

This article evaluates the environmental effectiveness and economic efficiency of the Kyoto Protocol after the Bonn Agreement and the Marrakesh Accords. The US withdrawal has by far the greatest impact in reducing the environmental effectiveness, lowering the price of traded emission permits and reducing Annex I abatement costs. The decisions on sinks imply that the Annex I CO₂-equivalent emissions without the US will come out at about 1/2% below base-year level, instead of over 4% below base-year level. Without US participation, the emission permit price is estimated to be low. Therefore, banking hot air by Russia and the Ukraine is of absolute importance for the development of a viable emissions trading market, and would also enhance the environmental effectiveness of the Kyoto Protocol.     

‘Bubbling’ and the Kyoto mechanisms

The Kyoto Protocol allows a group of Annex B countries to fulfill their emissions limitation commitments jointly by forming a “bubble” equal to their collective commitment. Annex B countries, whether members of a bubble or not, can use the Kyoto mechanisms to help meet their emissions limitation commitments. I argue that Kyoto mechanism rules should be applied to Parties individually regardless of their membership in a bubble. This means there are virtually no advantages to joining a bubble, but it is not clear that the option to form a bubble should confer benefits on the members relative to other Annex B Parties that do not join a bubble.     

Implementing the Kyoto Protocol without Russia

Abstract

This paper examines implementation of the Kyoto Protocol without Russia. It concludes that implementation without Russia is possible, although it requires political will on the part of the countries that wish to proceed with the Protocol. It would lead to higher compliance costs for Annex B buyer regions, but other regions, except Russia, would benefit financially. Russia would forego revenue of at least $20 billion for the first commitment period. Implementation without Russia could improve the environmental performance of the Protocol. It would reduce reliance on Annex B sinks, use of surplus assigned amount units (AAUs) for compliance, and the quantity of Kyoto units banked for subsequent commitment periods. Actual emissions by Kyoto Protocol Parties would fall, but the reduction may be offset by leakage to the US and Russia.     

‘Bubbling’ and the Kyoto mechanisms

Abstract

The Kyoto Protocol allows a group of Annex B countries to fulfill their emissions limitation commitments jointly by forming a “bubble” equal to their collective commitment. Annex B countries, whether members of a bubble or not, can use the Kyoto mechanisms to help meet their emissions limitation commitments. I argue that Kyoto mechanism rules should be applied to Parties individually regardless of their membership in a bubble. This means there are virtually no advantages to joining a bubble, but it is not clear that the option to form a bubble should confer benefits on the members relative to other Annex B Parties that do not join a bubble.     

Viable responses to the equity-responsibility dilemma: a consequentialist view

This paper aims at clarifying some conceptual flaws blurring the equity-efficiency debates involved in the setting of objectives of GHGs emissions control beyond 2012. To this end, it carries out numerical experiments that test the viability of agreements grounded on two contrasting target allocation rules: a “Soft Landing” rule prolonging a Kyoto-type agreement; and a “Convergence” rule progressively re-directing Kyoto towards a per capita emissions endowment. The numerical results demonstrate the sensitivity of the impact to the metric used to assess it and to assumptions regarding the interaction between the cap and trade system and accompanying measures such as domestic policies (characterised as simple fiscal reforms) and international public funding. In a further step, the paper derives some lessons about how to reconcile two political imperatives: (a) an ex-post or “consequentialist” approach to equity, which however cannot fully avoid relying on ex-ante rules, and (b) the necessity of an agreement on such stable ex-ante rules to set up emissions targets and efficient emissions trading. Such reconciliation suggests a coming back to the environment/development “Gordian Knot”, which underpins all global environmental affairs since the Stockholm Conference in 1972: the equity-efficiency dilemma has to be set in a broader sustainable development perspective whereby climate policies are integrated with development priorities of the poorest countries so as to create a leverage effect on development.     

《京都议定书》第二承诺期森林管理基准线分析

基于各附件I缔约方2011年提交的年度国家温室气体排放清单、《京都议定书》第一承诺期森林管理活动的温室气体源/汇数据,以及森林管理活动的基准线数据,分析了森林管理活动在第一承诺期履约中的贡献,以及按各方提交的基准线,预计森林管理活动在未来承诺期履约中的作用。结果表明,《京都议定书》第一承诺期的最初两年（2008—2009年）,附件I缔约方可从合格的森林管理活动中获得年均2.46亿t CO2当量（CO2-eq）的信用额,相当于相应缔约方基准年（1990年）源排放的2.3%,对减限排目标的贡献率达53%,不合理的规则使一些缔约方在履约中可过度地利用森林管理的汇清除。各附件I缔约方提交的2013—2020年森林管理活动的基准线（约2.52亿t CO2-eq/a的净汇清除）远低于目前和过去的水平,使其可从中获得的用于抵消减排目标的信用额约为第一承诺期的4倍,对未来承诺期履约的贡献率将更大,一些缔约方提交的减排目标中的大部分可通过森林管理活动的信用额来抵消。因此,本文建议在未来的谈判中,要严格控制可用的森林管理活动的信用额,避免森林管理活动被滥用。     

Values for a post-Kyoto discourse

Environmental policy, including the Kyoto Protocol, is laden with values. Recognizing this fact can help UNFCCC parties come to agreement. Much of the contention surrounding the post-Kyoto negotiations can be explained through a framework of values. This article summarizes the arguments used by proponents and critics of emissions trading of greenhouse gas emissions under the Kyoto Protocol through such a framework of values. Proponents and critics of emissions trading espouse common values, such as achievement, to work toward ameliorating climate change; there is less agreement on emissions trading seen through values such as responsibility and fairness. As non-Annex I parties are expected to take a more active role in the second commitment period, identifying values held by those working on their behalf will facilitate negotiations and help develop a discourse that is inclusive of their interests. Annex I parties can also benefit from the identification of the values to better convey their interests. All parties can use the values framework identified here to construct a more durable climate change regime.     

Thirteen plus one: a comparison of global climate policy architectures

We critically review the Kyoto Protocol and thirteen alternative policy architectures for addressing the threat of global climate change. We employ six criteria to evaluate the policy proposals: environmental outcome, dynamic efficiency, cost-effectiveness, equity, flexibility in the presence of new information, and incentives for participation and compliance. The Kyoto Protocol does not fare well on a number of criteria, but none of the alternative proposals fare well along all six dimensions. We identify several major themes among the alternative proposals: Kyoto is “too little, too fast”; developing countries (DCs) should play a more substantial role and receive incentives to participate; implementation should focus on market-based approaches, especially those with price mechanisms; and participation and compliance incentives are inadequately addressed by most proposals. Our investigation reveals tensions among several of the evaluative criteria, such as between environmental outcome and efficiency, and between cost-effectiveness and incentives for participation and compliance.     

A decision aid tool for equity issues analysis in emission permit allocations

Abstract

In the long term, the Kyoto Protocol will be insufficient to stabilize the greenhouse gas (GHG) concentrations in the atmosphere; quantified commitments will also be essential for major developing countries (and the US). International cooperation mechanisms, such as permit trading systems, can help achieve global economic efficiency. However, the initial allocation of emission permits raises many debates on equity. The main objective is to propose a decision aid tool for decision makers, which is capable of providing relevant information on various equitable permit allocation schemes and burden sharing. A dynamic multicriteria model is proposed to share the global quantity of permits among 15 regions, taking into account multiple definitions of equity and regional interests. The World-MARKAL energy model is used to compute the gross reduction cost (before permit exchanges) for each region. Afterward, it is possible to calculate their net reduction costs (after permit exchanges) according to different allocation schemes. A realistic simulation of the tool provides examples of results, i.e. ranges of permit allocations and net costs for each region. Finally, some recommendations are proposed to policy makers to design a decision process adapted to the global context of negotiations.     

Economic consequences of the US withdrawal from the Kyoto/Bonn Protocol

Abstract

The US decision not to ratify the Kyoto Protocol and the recent outcomes of the Bonn and Marrakech Conferences of the Parties have important implications for both the effectiveness and the efficiency of future climate policies. Among these implications, those related with technical change and with the functioning of the international market for carbon emissions are particularly relevant, because these variables have the largest impact on the overall abatement cost to be borne by Annex B countries in the short and in the long run. This paper analyses the consequences of the US decision to withdraw from the Kyoto/Bonn Protocol both on technological innovation and on the price of emission permits (and, as a consequence, on abatement costs). In particular, the analysis highlights mechanisms and feedbacks related to technological innovation, technological spillovers and R&D which could be relevant and which modify some policy relevant conclusions. First, we identify two feedback effects which explain why our results lead to a less significant fall in the price of permits than in most empirical analyses recently circulated. We show that the US defection from the Kyoto Protocol, by inducing a decline in the demand and price of emission permits, lowers the incentives to undertake energy-saving R&D. As a consequence, emissions increase and feed back on the demand and supply of permits, thus implying a lower decline in the price of permits than previously estimated. At the same time, as a result of the reduced R&D investments and the augmented emissions, climate change damages intensify and require an increase in investments that are again coupled with a growth of emissions. By thus again increasing the demand for permits and reducing their supply, this effect enhances the previous mechanism. Notwithstanding the lower decline in the price of permits, the paper still identifies a smaller price than would occur with a US participation. Therefore, we emphasise in a second step the crucial role of Russia in climate negotiations due to a large increase in Russia's bargaining power.     

Economic consequences of the US withdrawal from the Kyoto/Bonn Protocol

The US decision not to ratify the Kyoto Protocol and the recent outcomes of the Bonn and Marrakech Conferences of the Parties have important implications for both the effectiveness and the efficiency of future climate policies. Among these implications, those related with technical change and with the functioning of the international market for carbon emissions are particularly relevant, because these variables have the largest impact on the overall abatement cost to be borne by Annex B countries in the short and in the long run. This paper analyses the consequences of the US decision to withdraw from the Kyoto/Bonn Protocol both on technological innovation and on the price of emission permits (and, as a consequence, on abatement costs). In particular, the analysis highlights mechanisms and feedbacks related to technological innovation, technological spillovers and R&D which could be relevant and which modify some policy relevant conclusions. First, we identify two feedback effects which explain why our results lead to a less significant fall in the price of permits than in most empirical analyses recently circulated. We show that the US defection from the Kyoto Protocol, by inducing a decline in the demand and price of emission permits, lowers the incentives to undertake energy-saving R&D. As a consequence, emissions increase and feed back on the demand and supply of permits, thus implying a lower decline in the price of permits than previously estimated. At the same time, as a result of the reduced R&D investments and the augmented emissions, climate change damages intensify and require an increase in investments that are again coupled with a growth of emissions. By thus again increasing the demand for permits and reducing their supply, this effect enhances the previous mechanism. Notwithstanding the lower decline in the price of permits, the paper still identifies a smaller price than would occur with a US participation. Therefore, we emphasise in a second step the crucial role of Russia in climate negotiations due to a large increase in Russia’s bargaining power.     

Differentiating Future Commitments on the Basis of Countries’ Relative Historical Responsibility for Climate Change: Uncertainties in the ‘Brazilian Proposal’ in the Context of a Policy Implementation

During the negotiations on the Kyoto Protocol, Brazil proposed allocating the greenhouse gas emission reductions of Annex I Parties according to the relative effect of a country’s historical emissions on global temperature increase. This paper analyses the impact of scientific uncertainties and of different options in policy implementation (policy choices) on the contribution of countries’ historical emissions to indicators of historical responsibility for climate change. The influence of policy choices was found to be at least as large as the impact of the scientific uncertainties analysed here. Building on this, the paper then proceeds to explore the implications of applying the Brazilian Proposal as a climate regime for differentiation of future commitments on the global scale combined with an income threshold for participation of the non-Annex I regions. Under stringent climate targets, such a regime leads to high emission reductions for Annex I regions by 2050, in particular for Europe and Japan. The income threshold assumptions strongly affect the Annex I reductions, even more than the impact of another burden-sharing key. A variant of the Brazilian Proposal, allocating emission reductions on the basis of cumulative emissions since 1990, would lead to a more balanced distribution of emission reductions.     

Implementing the Kyoto Protocol without the USA: the strategic role of energy tax adjustments at the border

Abstract

This article explores options for countries that have ratified the 1997 Kyoto Protocol to the UN Framework Convention on Climate Change and that intend to implement ambitious climate protection strategies—the ‘Kyoto coalition’—to deal with possible comparative disadvantages vis-à-vis third parties, in particular industrialized countries that do not adhere to the Kyoto Protocol. Specifically, the article focuses on the instrument of border adjustments for energy taxes. We outline the rationale for such adjustments and examine in detail whether certain border adjustments for energy taxes would be permissible under world trade law, in particular the General Agreement on Tariffs and Trade and the Agreement on Subsidies and Countervailing Measures. We conclude that despite remaining ambiguity in both the legal provisions and the pertinent case law, border tax adjustments are under certain circumstances compatible with world trade law. Yet, given persisting legal uncertainty, it seems likely that affected members of the World Trade Organization would challenge such energy tax adjustments at the border before the WTO dispute settlement mechanism.     

Stabilization of Atmospheric Concentrations of Greenhouse Gases

Given the present commitment of the developed countries according to the Kyoto Protocol, most published scenarios demonstrate that global greenhouse gases concentrations would not be stabilized at any level. In order to stabilize these concentrations, a deeper global involvement is needed. Taking Israel as an example of a `recently-developed' country, we assess the role that such countries could play by assuming voluntary commitments in strengthening global involvement. This case as a model may encourage a global scheme for curbing carbon emissions, in which the more developed countries assume a stronger role and the less developed countries participate according to the principle of common but differentiated responsibility. The scheme builds on the inverse relation that exists between the per capita gross domestic product and the rate of increase of emissions due to economic growth. According to this theoretical scheme, the voluntary commitments assumed by the `recently-developed' countries encourage the more developed countries to deepen their involvement by assuming more stringent reductions of emissions at home and transferring technological and financial means to the less developed countries. The proposed scheme would enable non-Annex I countries, both `recently-developed' countries and less developed countries, to participate much earlier in the net mitigation of greenhouse gases.     

The emperor's new clothes: redressing the Kyoto Protocol

Abstract

US President Bush repudiated the Kyoto Protocol because, in his view, it is ‘fatally flawed in fundamental ways’. This paper evaluates seven proposals to redress the protocol according to their potential to deal with three key issues that have reinforced US intransigence: hot air, cost uncertainty and developing country participation. It argues that negotiations on intensity targets hold the most promise. Because intensity targets limit hot air, but do not limit economic growth, and a high variance of carbon intensity exists among countries with similar GDP per capita, intensity targets based on best practice levels might be agreeable to developing countries and the US. If a protocol specifying such targets were implemented, less warming would be associated with larger world GDP than would otherwise be the case, and countries' carbon intensity and emissions per capita would tend to converge to best practice levels at every stage of development.     

第二承诺期LULUCF有关议题谈判进展与对策建议

自2005年作为《京都议定书》缔约方会议的《联合国气候变化框架公约》（以下简称《公约》）缔约方会议第一届会议（CMP.1）决定启动《京都议定书》第二承诺期进程以来,国际社会通过《京都议定书》缔约方特设工作组（AWG-KP）针对第二承诺期的谈判紧锣密鼓地进行。在第二承诺期如何利用LULUCF活动（包括与LULUCF活动有关的清洁发展机制项目）,也是谈判中的主要议题之一。通过调研,概述了AWG-KP的谈判进展,结合第一承诺期LULUCF有关规则的不足,对LULUCF有关的关键问题进行了综合分析,提出了关于第二承诺期LULUCF规则的建议。     

An equity first, risk-based framework for managing global climate change

This paper presents an alternative framework to the approach currently embodied in the Kyoto Protocol for managing global climate change post-2012. The framework has two key provisions. The first is that each person in the world would be ‘allowed’ an equal amount of greenhouse gas (GHG) emissions. This is labeled the equity-first provision. The second provision focuses on incorporating risk concepts into the setting of GHG emission reductions. It is proposed that the global climate be managed as to avoid three categories of risks: (I) Substantial regional economic, political, and/or biological impacts; (II) Severe global economic, political, and/or biological impacts; and (III) Extinction of humans. Acceptable risk thresholds are suggested to be one-in-a-million, one-in-one-hundred-million, and one-in-ten-billion, respectively. This equity-first, risk-based framework overcomes many criticisms of the current Kyoto Protocol: it explicitly involves all countries on earth; it avoids several administrative issues that are anticipated to plague a global carbon emissions trading market; and it avoids several contentious issues associated with pegging carbon emission reductions to 1990 levels. Because the framework is risk-based and emissions are tied to population and not historic emission levels, the basic framework would not have to be frequently renegotiated, as will be needed for the Kyoto-style approach to take the world past that agreement's 2012 endpoint.     

Estimating the CDM market under the Marrakech Accords

Abstract

The agreement on implementation of the Kyoto Protocol achieved at COP7 in Marrakech has important implications for investment in greenhouse gas emission reduction projects in developing countries through the Clean Development Mechanism (CDM). The required actual emission reductions for participating Annex B countries overall will be relatively small, as the United States do not intend to ratify the protocol and significant amounts of carbon sequestered in domestic sinks can be credited. In addition, the potential supply of surplus emission permits (hot air) from Russia and other economies in transition may be as high as total demand in the first commitment period. Thus, even under restraint of hot air sellers, CDM demand will be limited, and a low demand, low price carbon market scenario appears likely.

The magnitude of the CDM will be influenced by a host of factors both on the demand and the supply-side. We analyse these using a quantitative model of the global carbon market, based on marginal abatement cost curves. Implementation and transaction costs, as well as baseline and additionality rules affect the CDM's share in the carbon market. Demand for the CDM is sensitive to changes in business-as-usual emissions growth in participating Annex B countries, and also to crediting for additional sinks. Permit supply from Russia and other economies in transition is possibly the most crucial factor in the carbon market.