Dieter Helm: Climate-change policy: why has so little been achieved? [PDF]
Abstract: While the scientific evidence for climate change grows, the policy responses have so far had little or no impact on the build-up of emissions. Current trends in emissions are adverse. The paper considers why the disconnect between science and policy exists and, in particular, why the Kyoto Protocol has achieved so little. Some contributing factors considered are: the focus on carbon production rather than consumption in the architecture of Kyoto; the flaws in the analysis presented in the Stern Report (notably on the impacts of climate change on economic growth, on the costs of mitigation, and on discounting); and the political economy of the choice of policy instruments, the politics of the rents that arise, and the technology bias. The challenges facing the Copenhagen conference are noted, and it is concluded that, with a recasting of the economics of climate change, the prospects for closing the gap between the science and policy are grim.
Scott Barrett: Climate treaties and the imperative of enforcement [PDF]
Abstract: The emission limits in the Kyoto Protocol are too generous. Simply tightening these limits, however, will not make a new climate treaty any more effective at addressing climate change unless the other problems with Kyoto are also addressed. A new climate treaty arrangement must enforce both participation and compliance. This might be done by applying an enforcement mechanism, such as a trade restriction, to a new treaty styled after Kyoto. Potent trade restrictions, however, may lack credibility and legitimacy. An alternative approach recommended here is to break the problem up, with separate (but linked) agreements addressing individual gases and sectors, using the most appropriate means to enforce each component of the system. In bundling together all sectors and greenhouse gases in a single agreement, Kyoto has aimed to achieve cost-effectiveness at the expense of enforcement, which depends on the treaty's weakest enforcement link. The imperative must be to ensure that any future treaty arrangement can be enforced.
Cameron Hepburn and Nicholas Stern: A new global deal on climate change [PDF]
Abstract: A global target of stabilizing greenhouse-gas concentrations at between 450 and 550 parts per million carbon-dioxide equivalent (ppm CO2e) has proven robust to recent developments in the science and economics of climate change. Retrospective analysis of the Stern Review (2007) suggests that the risks were underestimated, indicating a stabilization target closer to 450 ppm CO2e. Climate policy at the international level is now moving rapidly towards agreeing an emissions pathway, and distributing responsibilities between countries. A feasible framework can be constructed in which each country takes on its own responsibilities and targets, based on a shared understanding of the risks and the need for action and collaboration on climate change. The global deal should contain six key features: (i) a pathway to achieve the world target of 50 per cent reductions by 2050, where rich countries contribute at least 75 per cent of the reductions; (ii) global emissions trading to reduce costs; (iii) reform of the clean development mechanism to scale up emission reductions on a sectoral or benchmark level; (iv) scaling up of R&D funding for low-carbon energy; (v) an agreement on deforestation; and (vi) adaptation finance.
Kjell Arne Brekke and Olof Johansson-Stenman: The behavioural economics of climate change [PDF]
Abstract: This paper attempts to bring some central insights from behavioural economics into the economics of climate change. In particular, it discusses (i) implications of prospect theory, the equity premium puzzle, and time-inconsistent preferences in the choice of discount rate used in climate-change cost assessments, and (ii) the implications of various kinds of social preferences for the outcome of climate negotiations. Several reasons are presented for why it appears advisable to choose a substantially lower social discount rate than the average return on investments. It also seems likely that taking social preferences into account increases the possibilities of obtaining international agreements, compared to the standard model. However, there are also effects going in the opposite direction, and the importance of sanctions is emphasized.
Robert Stavins: Addressing climate change with a comprehensive US cap-and-trade system [PDF]
Abstract: There is growing impetus for a domestic US climate policy that can provide meaningful reductions in emissions of carbon dioxide (CO2) and other greenhouse gases. I describe and analyse an up-stream, economy-wide CO2 cap-and-trade system which implements a gradual trajectory of emissions reductions (with inclusion over time of non-CO2 greenhouse gases), and includes mechanisms to reduce cost uncertainty. Initially, half of the allowances are allocated through auction and half through free distribution, with the share being auctioned gradually increasing to 100 per cent over 25 years. The system provides for linkage with emission-reduction credit projects in other countries, harmonization over time with effective cap-and-trade systems in other countries and regions, and appropriate linkage with actions taken in other countries, in order to establish a level playing field among domestically produced and imported products.
David Victor: On the regulation of geoengineering [PDF]
Abstract: New evidence that the climate system may be especially sensitive to the build-up of greenhouse gases and that humans are doing a poor job of controlling their effluent has animated discussions around the possibility of offsetting the human impact on climate through ‘geoengineering’. Nearly all assessments of geoengineering have concluded that the option, while ridden with flaws and unknown side effects, is intriguing because of its low cost and the ability for one or a few nations to geoengineer the planet without cooperation from others. I argue that norms to govern deployment of geoengineering systems will be needed soon. The standard instruments for establishing such norms, such as treaties, are unlikely to be effective in constraining geoengineers because the interests of key players diverge and it is relatively easy for countries to avoid inconvenient international commitments and act unilaterally. Instead, efforts to craft new norms ‘bottom up’ will be more effective. Such an approach, which would change the underlying interests of key countries and thus make them more willing to adopt binding norms in the future, will require active, open research programmes and assessments of geoengineering. Meaningful research may also require actual trial deployment of geoengineering systems so that norms are informed by relevant experience and command respect through use. Standard methods for international assessment organized by the Intergovernmental Panel on Climate Change (IPCC) are unlikely to yield useful evaluations of geoengineering options because the most important areas for assessment lie in the improbable, harmful, and unexpected side effects of geoengineering, not the ‘consensus science’ that IPCC does well. I also suggest that real-world geoengineering will be a lot more complex and expensive than currently thought because simple interventions—such as putting reflective particles in the stratosphere—will be combined with many other costlier interventions to offset nasty side effects.
Paul Collier, Gordon Conway, and Tony Venables: Climate change and Africa [PDF]
Abstract: The impact of climate change on Africa is likely to be severe because of adverse direct effects, high agricultural dependence, and limited capacity to adapt. Direct effects vary widely across the continent, with some areas (e.g. eastern Africa) predicted to get wetter, but much of southern Africa getting drier and hotter. Crop yields will be adversely affected and the frequency of extreme weather events will increase. Adaptation to climate change is primarily a private-sector response and should involve relocation of people, changes in the sectoral structure of production, and changes in crop patterns. The role of government is primarily to provide the information, incentives, and economic environment to facilitate such changes. Adaptation will be impeded by Africa's fragmentation into small countries and ethnic groups, and by poor business environments. On the mitigation side, there is a need to design emissions-trading frameworks that support greater African participation than at present, and that include land-use change. Mitigation undertaken elsewhere will have a major impact on Africa, both positive (e.g. new technologies) and negative (e.g. commodity price changes arising from biofuel policies).
Jiahua Pan, Jonathan Phillips, and Ying Chen: China's balance of emissions embodied in trade: approaches to measurement and allocating international responsibility [PDF]
Abstract: International trade is characterized not only by the flow of capital and goods, but also by the energy and emissions embodied in goods during their production. This paper investigates the evolving role that Chinese trade is playing in the response to climate change by estimating the scale of emissions embodied in China's current trade pattern and demonstrating the magnitude of the difference between the emissions it produces (some of which are incurred to meet the consumption demands of the rest of the world) and the emissions embodied in the goods it consumes. Estimating China's emissions on a consumption rather than a production basis both lowers its responsibility for carbon-dioxide (CO2) emissions in 2006 from 5,500 to 3,840mtCO2 and reduces the growth rate of emissions from an average of 12.5 per cent p.a. to 8.7 per cent p.a. between 2001 and 2006. The analysis indicates that a reliable consumption-based accounting methodology is feasible and could improve our understanding of which actors and states are responsible for emissions. For example, recent emissions reductions by developed countries may lack credibility if production has merely been displaced to countries such as China. Moreover, in the current institutional context, production methodologies encourage leakages through trade that may do more to displace than to reduce emissions. Both equity and efficiency concerns therefore suggest that emissions embodied in trade should receive special attention in the distribution of post-Kyoto abatement burdens.
Ross Garnaut, Stephen Howes, Frank Jotzo, and Peter Sheehan: Emissions in the Platinum Age: the implications of rapid development for climate-change mitigation [PDF]
Abstract: Rapid global economic growth, centred in Asia but now spread across the world, is driving rapid greenhouse-gas emissions growth, making earlier projections unrealistic. This paper develops new, illustrative business-as-usual projections for carbon dioxide (CO2) from fossil fuels and other sources and for non-CO2 greenhouse gases. Making adjustments to 2007 World Energy Outlook projections to reflect more fully recent trends, we project annual emissions by 2030 to be almost double current volumes, 11 per cent higher than in the most pessimistic scenario developed by the Intergovernmental Panel on Climate Change (IPCC), and at a level reached only in 2050 in the business-as-usual scenario used by the Stern Review. This has major implications for the global approach to climate-change mitigation. The required effort is much larger than implicit in the IPCC data informing the current international climate negotiations. Large cuts in developed country emissions will be required, and significant deviations from baselines will be required in developing countries by 2020. It is hard to see how the required cuts could be achieved without all major developing as well as developed countries adopting economy-wide policies.