International Climate Agreements Research Articles

Addressing uncertainty upstream or downstream of accounting for emissions reductions from deforestation and forest degradation

Uncertainty in emissions and emission changes estimates constitutes an unresolved issue for a future international climate agreement. Uncertainty can be addressed ‘upstream’ through improvements in the technologies or techniques used to measure, report, and verify (MRV) emission reductions, or ‘downstream’ through the application of discount factors to more uncertain reductions. In the context of Reducing Emissions from Deforestation and forest Degradation (REDD+), we look at the effects of upstream interventions on reductions in uncertainty, using data from Panama. We also test five downstream proposals for discounting uncertainty of the potential credits received for reducing emissions. We compare the potential compensation received for these emission reductions to the cost of alternative upstream investments in forest monitoring capabilities. First, we find that upstream improvements can noticeably reduce the overall uncertainty in emission reductions. Furthermore, the costs of upstream investments in improved forest monitoring are relatively low compared to the potential benefits from carbon payments; they would allow the country to receive higher financial compensation from more certain emission reductions. When uncertainty is discounted downstream, we find that the degree of conservativeness applied downstream has a major influence on both overall creditable emission reductions and on incentives for upstream forest monitoring improvements. Of the five downstream approaches that we analyze, only the Conservativeness Approach and the Risk Charge Approach provided consistent financial incentives to reduce uncertainty upstream. We recommend specifying the use of one of these two approaches if REDD+ emission reductions are to be traded for emission reductions from other sectors.

Potential of border tax adjustments to deter free riding in international climate agreements

The objective of this study is to conduct assessment of the hypothesis that trade sanctions in the form of border tax adjustments (BTAs) used by the United States against China, constitute a viable enforcement mechanism to sustain compliance with a range of emissions taxes in the context of agreements to curb global emissions of greenhouse gases (GHGs). The performance of BTAs is then compared with those of punitive tariffs on the basis of the range of emission taxes that can be successfully enforced by their implementation. Results show that BTAs are a viable enforcement mechanism for international GHG mitigation agreements. However the maximum level of carbon tax that can be enforced varies dramatically with (1) the marginal damage of pollution perceived by Chinese authorities, and (2) the legal limitations that GATT rules may impose on BTAs. Finally, while BTAs seem a promising enforcement mechanism in the context of climate agreements, punitive tariffs seem to be capable of supporting a much stricter environmental target.

Lessons from the EU’s ETS for a New International Climate Agreement

Intended nationally determined contributions (INDCs) for mitigation of greenhouse gas emissions are expected to be an important part of a post-2020 climate agreement under the UNFCCC. However, it is not certain yet what these INDCs will contain and how they will be assessed. The EU Emissions Trading System (EU ETS) faced similar challenges in its first years (2005-12). Thus, the mechanisms and lessons learned under the EU ETS could be applied to the INDCs to create a governance and assessment system that increases transparency and builds trust among parties to the UNFCCC.

Regional and sectoral impacts of climate change under international climate agreements

This article examines regional and sectoral impacts of climate change under international climate agreements for abating GHGs. Using the IAM with sub-global CO2 abatement games involving players from three regions (Japan, China and the USA), we obtain both non-cooperative and cooperative solutions. Simulated results indicate: 1) there is little discrepancy between future temperature solutions if each region responds selfishly when reducing CO2 emissions; 2) cooperation between all game participants sees an increase in GDP, whilst non-participant regions suffer greater damage; 3) all sectors in participant countries increase in value-added, with other regions experiencing higher damages for most sectors under cooperation than under the scenarios proposed by the international community.

Post-2020 climate agreements in the major economies assessed in the light of global models

Integrated assessment models can help in quantifying the implications of international climate agreements and regional climate action. This paper reviews scenario results from model intercomparison projects to explore different possible outcomes of post-2020 climate negotiations, recently announced pledges and their relation to the 2 °C target. We provide key information for all the major economies, such as the year of emission peaking, regional carbon budgets and emissions allowances. We highlight the distributional consequences of climate policies, and discuss the role of carbon markets for financing clean energy investments, and achieving efficiency and equity.

Refuelling Europe: A Roadmap for Completing the Single Energy Market

Completion of the single energy market has lagged behind integration in other areas. This is not because energy market integration has failed to make any progress—a common misperception—but because in energy the EU faces three challenges that have grown greater over the years. These challenges are for Europe to contain its energy costs so that it can remain internationally competitive, especially in relation to the US and its shale gas revolution; to maintain security of energy supply at a time of political instability among Middle East suppliers and of hostility with Russia; and to sustain its strong commitment to energy decarbonisation in the hope of leading the way to an effective international climate agreement. The new leaders of the European Council and the European Commission seek to give the EU the new dimension of an ‘energy union’. To give substance to this rhetorical label, the EU will need to keep completion of the internal energy market as its main instrument. This will involve exploiting market forces where possible, and allowing only careful state intervention to achieve specific goals for renewable energy, capacity back-up, energy efficiency and infrastructure.

Is sustainable transport policy sustainable?

This paper discusses a specific part of sustainable transport policy, namely policies to reduce greenhouse gas emissions from the transport sector. We explain how assessments of such policies will overestimate their effectiveness if market responses are not taken into account. The substantial difference between market price and extraction cost of oil means that consumption reductions will be watered down by price responses causing increased consumption in other places (spatial leakage) and in the future (intertemporal leakage). The difference between market price and extraction cost also has negative implications for the viability of alternative technologies. Leakage effects become larger when consumption reductions are only undertaken by a subset of countries: we review some theoretical evidence why strong binding international climate agreements are so difficult to reach and to enforce. All this may require rethinking climate policies for the transport sector: What policies remain cost effective for reducing greenhouse gas emissions?

The Potential of Tariff Policy for Climate Change Mitigation: Legal and Economic Analysis

This article addresses a potential role that tariff policy can play in encouraging countries to take part in a multilateral effort to mitigate climate change: it complements discussions on border tax adjustment which in law is limited to domestic taxation. It assesses whether increasing tariffs on products from polluting industries amounts to a violation of World Trade Organization (WTO) rules and whether protectionism in this case can be differentiated from genuine environmental concerns. It argues that while lowering tariffs on environmental goods may serve as a carrot to promote dissemination of cleaner technologies, tariff deconsolidation is a legitimate stick to encourage polluting countries to move towards an international climate agreement. The article further explores this view by undertaking a partial equilibrium analysis to examine the impact of a unilateral 5% tariff increase on the most carbon-intensive imports from countries not committed to climate polices. Our results, however, suggest that plurilateral action would be more effective than countries pursuing tariff policy in isolation, with the former leading to an average 1.4% net reduction in carbon-intensive imports from a 5% increase in their tariffs.

Comparability of Effort in International Climate Policy Architecture

The comparability of domestic actions to mitigate global climate change has important implications for the stability, equity, and efficiency of international climate agreements. We examine a variety of metrics that could be used to evaluate countries’ climate change mitigation effort and illustrate their potential application for large developed and developing countries. We also explain how transparent measures of the comparability of effort can contribute to the design of international and domestic climate change policy along several dimensions. For example, such measures can facilitate participation and compliance in an agreement if they can illustrate that all parties are doing their “fair share.” Second, these measures can inform the bilateral linking of domestic cap-and-trade programs in a manner akin to how nations negotiate the lowering of trade barriers more generally in trade policy. Third, assessments of the comparability of effort can affect whether to implement and, if necessary, the stringency of unilateral border measures (e.g., a border tax). Finally, such assessments demonstrate the need for a well-functioning policy surveillance regime.

A bargaining game analysis of international climate negotiations

Progress towards reaching an international climate agreement has been painfully slow and fraught with difficulty. This work presents a newly developed game theoretic model aimed at the conceptual clarification of some key obstacles in current international negotiations. The model is then used to suggest possible solutions to these obstacles.

Developing integrated explorative and normative scenarios: The case of future land use in a climate-neutral Sweden

Transition from the current oil-based world economy to an economy based on renewable resources can become a strong driving force for land use change. This paper describes the development of integrated explorative and normative scenarios for the analysis of future land use in a climate-neutral Sweden. The aim is to show how backcasting scenarios fulfilling far-reaching greenhouse gas reduction targets can be related to assumptions on possible external developments, in order to contribute to the discussion on future sustainable land use. A target-fulfilling scenario element was combined with an external scenario element, i.e. developments that cannot be influenced by the targeted actors. The scenarios were developed and analysed in collaboration with local actors. Four scenarios were used to describe how land in Sweden could be used when Sweden has achieved zero emissions of greenhouse gases in 2060. The explorative dimension stretched from a situation where there is no international climate agreement to one where there is an international agreement on reducing greenhouse gases. The backcasting dimension illustrated different strategies to achieve the target and stretches from a very influential municipal level to one where the national/EU level is most influential.

Development of Taiwanese government’s climate policy after the Kyoto protocol: Applying policy network theory as an analytical framework

Given its limited involvement in and recognition by international organizations, Taiwan is not presently a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) or the Kyoto Protocol. The objective of this study is to analyze how and the extent to which changes in an exogenous factor, namely the Kyoto Protocol and Post-Kyoto climate negotiations, affect and ultimately lead to the formulation of and changes in the Taiwanese government׳s climate policy. This study applies policy network theory to examine the development of and changes in the Taiwanese government׳s climate policy. The results demonstrate that international climate agreements and negotiations play a key role in the development of, changes to, and transformation of Taiwan׳s climate policy. Scarce evidence was found in this study to demonstrate that domestic or internal factors affect climate change policy. Despite its lack of participation in the UNFCCC and the Kyoto Protocol, Taiwan has adopted national climate change strategies, action plans, and programs to reduce greenhouse gas emissions. However, these climate policies and measures are fairly passive and aim to only conform to the minimal requirements for developing countries under international climate agreements and negotiations. This process results in inconsistent and variable climate policies, targets, and regulations.

Do individuals care about fairness in burden sharing for climate change mitigation? Evidence from a lab experiment

One of the reasons for deadlock in global climate policy is countries’ disagreement on how to share the mitigation burden. Normative theory suggests various fairness criteria for structuring burden sharing, most prominently, historical responsibility for emissions, economic capacity, and vulnerability to climate change. Governments have taken up these criteria in their rhetoric at UNFCCC negotiations. I examine whether normative criteria influence individual burden sharing preferences. This bottom-up perspective is important for two reasons. First, it is unknown if governments’ fairness rhetoric matches citizens’ actual preferences. Second, international climate agreements directly affect individuals through domestic policy measures (e.g. energy taxes), and therefore require domestic public support for successful implementation. I conducted two laboratory experiments where participants have to agree on how to share climate change mitigation costs in an ultimatum game. Treatment conditions include differences between proposer and responder in capacity, vulnerability (experiment 1), and historical emissions (experiment 2). Historical emissions are endogenously determined in a prior game. Capacity inequality strongly affects burden sharing, with richer players ending up paying more, and poorer players less. Vulnerability differences reduce the influence of fairness, leading to suggested cost distributions more unfavorable to vulnerable players. However, vulnerable responders still reject many “unfair” offers. Differences in historical responsibility result in cost distributions strongly correlated with players’ relative contributions to climate change. The results suggest that more nuanced consideration of fairness criteria in burden sharing could make ambitious climate agreements more acceptable for reluctant countries and their citizens.

Climate Policy Negotiations with Incomplete Information

We analyse bargaining over international climate agreements in a setting with incomplete information about abatement costs. Incomplete information is known as one of the key reasons why negotiations may fail more generally, and why efficiency gains cannot be exploited. We ask whether unilateral commitment to high abatement reduces or increases the likelihood for an efficient negotiation outcome. We find that such commitment behaviour reduces the gains from global cooperation and that, in turn, this reduces the probability of reaching efficient international environmental agreements.

The principal–agent model with multilateral externalities: An application to climate agreements

We consider contracting of a principal with an agent if multilateral externalities are present. The motivating example is that of an international climate agreement given private information about the willingness-to-pay (WTP) for emissions abatement. Due to multilateral externalities the principal uses her own emissions besides subsidies to incentivize the agent and to assure his participation. Optimal contracts equalize marginal abatement costs and, thus, can be implemented by a system of competitive permit trading. Moreover, optimal contracts can include a boundary part (i.e., the endogenous, type dependent participation constraint is binding), which is not a copy of the outside option of no contract. Compared to this outside option, a contract can increase emissions of the principal for types with a low WTP, and reduce her payoff for high types. Subsidies can be constant or even decreasing in emission reductions, and turn negative so that the agent reduces emissions and pays the principal.

Introduction: Normative and Conceptual Dimensions of the International Climate Negotiations

The human costs of climate change are now widespread and severe. Communities across the globe are facing adverse climate impacts--including food and water insecurity, increased prevalence of tropical diseases, and the of lives and livelihoods--that will only escalate along with escalating global temperatures. Moreover, many regions that are particularly vulnerable to climate change--from Haiti to the Philippines and from Bangladesh to Sudan--are also relatively low emitters of greenhouse gases. Calls for an international response to climate change that is not only effective but also sensitive to moral concerns are therefore reaching a crescendo. For example, the 2013 U.N. climate negotiations in Warsaw, which commenced just days after the devastating Typhoon Haiyan made landfall in the Philippines, saw a consuming focus on the issue of loss and damage--which refers to repairable damage or permanent due to the impacts of climate change--as well as demands for financial assistance from industrialized countries. Concerns about and damage and concerns about climate finance continued unabated during the 2014 climate negotiations in Lima and promise to continue as the parties to the U.N. Framework Convention on Climate Change, or UNFCCC, work toward striking an international climate agreement during the 2015 negotiations in Paris. At the same time, the normative and conceptual landscapes of the negotiations are shifting and evolving. Developing countries such as China, India, Brazil, and Indonesia are now among the world's top greenhouse gas emitters, and there is growing recognition that the UNFCCC's categorization of countries into Annex I parties and non-Annex I parties--according to their states of development as of 1992--is too outmoded to serve as an organizing principle for a new climate agreement. China and the U.S., which have been notorious antagonists in the negotiations, recently came forward with a historic joint announcement on new greenhouse gas mitigation targets. Parties such as Mexico, Peru, and Colombia are aligning themselves with parties such as Japan, the E.U., and the U.S. as contributors of international climate finance and have made pledges to the nascent Green Climate Fund, which aims to help developing countries transition to pathways of low-carbon and climate-resilient growth. And all parties to the UNFCCC are currently grappling with how to represent concepts such as national responsibility and capability in the 2015 agreement. There is therefore a great need for philosophical analysis and the clarity it provides as we head toward Paris and aim for a durable, fair, and ambitious new climate regime. This volume is part of a growing body of research that engages with the normative and conceptual dimensions of the international climate negotiations and has the potential to shape a more reflective and successful climate policy. In this volume, each author draws substantive conclusions that arise in the context of a philosophical challenge, a worry about some feature of the negotiations that calls for detailed study. For example, we might wonder about the internal structure of the UNFCCC negotiation process, which requires consensus among the parties. Some have suggested that progress is largely made not in public negotiations, but in informal conversations and backroom meetings among key players. While there are practical problems with generating unanimity, especially when there is need for quick action, the drive toward agreement through unofficial channels is worrying. Jesse Vogel examines the methodological problems associated with the reliance of the negotiations on consensus and finds that the UNFCCC procedure is inefficient and unjust. …

Difficulties in accounting for private finance in international climate policy

It is widely acknowledged that private finance has a key role to play in achieving low-carbon development and resilience to climate change. However, while there have been several studies that have closely examined the data on public climate finance, there have been few such studies of the private climate-related finance data. There is a political dimension to accounting for ‘private finance’ given the commitment of industrialized countries – enshrined in the Copenhagen Accord and the Cancun Agreements – to mobilize US$100 billion of public and private finance for developing countries by 2020, on an annual basis. The availability and quality of data for different types of private climate finance flows with climate benefits (investments, carbon market payments, and voluntary funding) are analysed, and these flows are assessed according to various criteria for inclusion in the $100 billion figure. While existing data suggest that private climate finance invested in developing countries and mobilized by industrialized countries might currently be in the range of $27–123 billion per year, this number is a questionable point of reference. Existing data are limited and of very poor quality: definitions of ‘private climate finance’ are missing and data are hardly verified. Therefore, policy makers will first have to clearly define ‘private climate finance’ and develop systems for measuring, reporting, and verifying it, before using private finance numbers in international climate agreements.

The International Dimension of Climate Change Policy

Climate change is a major challenge to international cooperation, as emphasized for instance by the Stern Review and various IPCC reports (Stern 2006; IPCC 2007) but also many others. One of the main problems of achieving cooperation under international climate agreements is free-riding. Countries have an incentive to adopt a non-cooperative behaviour. Emission reduction constitutes a public good. No country can be excluded to benefit from the emission reduction of other countries. Moreover, by not contributing to emission reduction, a country saves on abatement cost. The Kyoto Protocol ran out in 2012, but all efforts to negotiate an effective follow-up protocol have failed up to now. The reason is not that no negotiations would have taken place, but simply that no proposal was yet formally adopted which sets emission ceilings such that greenhouse gas emissions are stopped from further growing. What is required are substantial cut backs on emissions in order to meet the widely accept target of not allowing the average global temperature to increase beyond 2 ∘C. The seven papers in this special issue look at various important aspects related to the international dimension of climate policy. The first five papers are theoretical papers, the last two papers employ a climate simulation model combined with a game theoretic module to derive their results. Issues that are covered are for, instance, the problem of long-term commitment of governments to a proactive climate policy, the role of R&D in clean technologies, in terms of how they are induced through various policy instruments but also how spillovers and adoption of green technology can support international cooperation, the role of ancillary benefits for the success of climate agreements, the relationship between trade and climate policy, the design of supply-side climate policies to address the green paradox, the driving forces that support or undermine a unilateral climate policy without full participation and finally the role of fat tail distributions of uncertain damages on the performance of partially cooperative climate agreements. In the following, we summarize these papers briefly and encourage the reader to have a careful read of this excellent selection of papers, which span a wide range of important topics in the current debate about an effective way forward in addressing the climate change problem.

Climate policy and equity principles: fair burden sharing in a dynamic world

AbstractThe paper argues that negotiation costs can prevent the international community from finding a new international climate agreement. To define a feasible way of facilitating the negotiation process, I analyze basic equity principles and their relationship to climate policy and economic development. Based on the most relevant principles, I propose a general synthetic rule for burden sharing in international climate policy. The rule avoids complexity and comprises both egalitarian and cost-sharing aspects, which appears to be crucial for achieving a climate agreement. Carbon budgets for the different countries are calculated under different parameter assumptions.

Net radiative forcing and air quality responses to regional CO emission reductions

Abstract. Carbon monoxide (CO) emissions influence global and regional air quality and global climate change by affecting atmospheric oxidants and secondary species. We simulate the influence of halving anthropogenic CO emissions globally and individually from 10 regions on surface and tropospheric ozone, methane, and aerosol concentrations using a global chemical transport model (MOZART-4 for the year 2005). Net radiative forcing (RF) is then estimated using the GFDL (Geophysical Fluid Dynamics Laboratory) standalone radiative transfer model. We estimate that halving global CO emissions decreases global annual average concentrations of surface ozone by 0.45 ppbv, tropospheric methane by 73 ppbv, and global annual net RF by 36.1 mW m−2, nearly equal to the sum of changes from the 10 regional reductions. Global annual net RF per unit change in emissions and the 100 yr global warming potential (GWP100) are estimated as −0.124 mW m−2 (Tg CO)−1 and 1.34, respectively, for the global CO reduction, and ranging from −0.115 to −0.131 mW m−2 (Tg CO)−1 and 1.26 to 1.44 across 10 regions, with the greatest sensitivities for regions in the tropics. The net RF distributions show widespread cooling corresponding to the O3 and CH4 decreases, and localized positive and negative net RFs due to changes in aerosols. The strongest annual net RF impacts occur within the tropics (28° S–28° N) followed by the northern midlatitudes (28° N–60° N), independent of reduction region, while the greatest changes in surface CO and ozone concentrations occur within the reduction region. Some regional reductions strongly influence the air quality in other regions, such as East Asia, which has an impact on US surface ozone that is 93% of that from North America. Changes in the transport of CO and downwind ozone production clearly exceed the direct export of ozone from each reduction region. The small variation in CO GWPs among world regions suggests that future international climate agreements could adopt a globally uniform metric for CO with little error, or could use different GWPs for each continent. Doing so may increase the incentive to reduce CO through coordinated policies addressing climate and air quality.