Framing the Post-Kyoto Debate:
Options for Climate Policy After 2012
STEP Seminar Series
Princeton University
Princeton, NJ
April, 2006
Jonathan Pershing
Climate, Energy and Pollution Program
World Resources Institute
http://www.wri.org
Overview
•
•
•
•
•
•
An update on the science
Greenhouse gases and related indicators
Policy options
The international process: reviewing the state
of play
Framing the debate on next steps
Conclusions
An update on the science
2005 Temperature Records
(Deviation from 1951- 1980 mean)
Source: NASA Goddard Institute for Space Studies Surface Temperature Analysis
at data.giss.nasa.gov/gistemp/
Changes in Ocean Circulation
• Transect at 23º N
latitude
– Measurements
taken in 1957,
1981, 1992,
1998, 2004
Source: Ocean current figure: www.NASA.gov
Transect information: Bryden, Harry L. et al. "Slowing of the Atlantic
meridional overturning circulation at 25° N." Nature 438: 655-657. 1
December 2005
• Indicates a 30%
reduction in
ocean circulation
volume since
1957
DEPLETION OF SUMMER SEA ICE
Observed sea ice September 1979
Observed sea ice September 2003
These two images, constructed from satellite data, compare arctic sea ice concentrations in
September of 1979 and 2003. September is the month in which sea ice is at its yearly minimum and
1979 marks the first year that data of this kind became available in meaningful form.
Source: ACIA, Impacts of a Warming Arctic, Climate Impact Assessment Report, Cambridge University Press, 2004
Hurricane Trends
Impacts follow temperature trends
Source: WashingtonPost.com, September 16, 2005, after Science Magazine
9
Scenario of damages in 2050
Source: The Guardian, based on Pentagon report, February 2004
Greenhouse Gases and
Related Indicators
Near- and Longer-Term Trends
World GHG Emissions (2000)
Source: WRI, CAIT: http://cait.wri.org
National GHG Emissions, 2000
Per Capita Emissions, 2000
Largest Emitters: Developed & Developing
Projected Future GHG Emissions Growth
% Percent change from 2000
Source: Baumert et al, 2005
World Primary Energy Demand
7 000
Oil
6 000
Mtoe
5 000
Natural gas
4 000
Coal
3 000
2 000
Other renewables
Nuclear power
Hydro power
1 000
0
1970
1980
1990
Source: IEA WEO 2004
2000
2010
2020
2030
Electricity generation: fuel mix
% Share of Fuel Mix
100
Renewables
Hydro
75
Nuclear
50
Gas
25
Oil
Coal
0
Brazil
China
India
Source: IEA Statistics, 2002 data
France
South
Africa
United
States
World
20
GLOBAL CO2 EMISSIONS FOR
IPCC/SRES SCENARIO GROUPS
(a) A1
40
(b) A2
40
30
A1F1 30
20
20
A2
A1B
10
10
A1T
0
1990
2010
2030
2050
2070
0
1990
2090
(c) B1
40
2010
2030
30
20
20
10
10
2070
2090
(d) B2
40
30
2050
B2
B1
0
1990
2010
2030
2050
2070
2090
0
1990
2010
2030
2050
2070
2090
Policy options
What will it take to stabilize the
atmosphere?
Need to reduce greenhouse
gases globally by
60-80 percent over the
century
Population is likely to
increase from 6 billion
today to 10-12 billion
Economic growth is
likely to expand, perhaps
by a factor of 10
Dealing with Climate Change
• Policies cover all gases and all sectors -- but
emissions are not evenly divided among these
– Energy and CO2 are key
• Policy Choices:
–
–
–
–
–
Emit less (be more efficient)
Emit differently (switch fuels or processes)
Sequester
Do without (change behavior)
Adapt (learn to live with it)
• Policy actions include:
–
–
–
–
–
Market approaches (taxes, subsidies, cap-and-trade)
Regulations
R&D
Processes/outreach
Foreign Assistance
Policies by Instrument (1999-2004)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Fiscal
Tradable Permits
Regulatory Instruments
Voluntary Agreements
RD&D Process/Outreach
Source: IEA (http://www.iea.org/dbtw-wpd/textbase/envissu/pamsdb/index.html)
USA
UK
Turkey
Switzerland
Sweden
Spain
Portugal
Norway
New Zealand
Netherlands
Luxembourg
Korea
Japan
Italy
Ireland
Hungary
Gree ce
Germ any
France
Finland
EU
Denmark
Czech Repu blic
Canada
Belgium
Austria
Australia
0%
GHG Flow Diagram: Global Greenhouse Gas Emissions
Buildings
Energy Production
Indus try
Trans port
Source: IEA (http://www.iea.org/dbtw-wpd/textbase/envissu/pamsdb/index.html)
USA
UK
Tur key
Switzer land
Sweden
Spain
Portuga l
Norway
New Zealand
Netherland s
Luxembourg
Korea
Japan
Italy
Ireland
Hungar y
Gre ece
Ger many
Fra nce
Finland
EU
Denmark
Czech Republic
Canada
Belgium
Austria
Australia
Policies by Sector (1999-2004)
100%
80%
60%
40%
20%
0%
The International Process
Reviewing the state of play
International Agreements:
The UN Convention and Kyoto Protocol
• Targets: national caps on greenhouse gas emissions;
collective reduction of 5.2% below 1990 levels by the
2008-2012 timetable…for 38 industrialized countries
and economies in transition (i.e. “Annex I”)
• Market-based mechanisms: designed to achieve
global emission reductions at the least possible cost
(involves private entities, not just governments.)
• Compliance mechanisms: Emissions measurement
standards; reporting requirements; review provisions;
mandatory consequences for countries that do not
comply.
UNFCCC – State of Play
• 1992: UNFCC
• 1997: Kyoto Protocol
• 1998 – 2001: Following Kyoto, negotiators spend
several years developing rules to implement Kyoto
agreement (i.e., Marrakech Accords)
• 2004: Ratification and entry into force (with
attendant agreement from Russia on gas and WTO)
• Beginning of post-Kyoto discussions
– 2003: New Delhi (Cop 9): focus on adaptation
– 2004: Buenos Aires (Cop 10): consideration of post Kyoto
commitments
– 2005: SB 22: Seminar of Government Experts (SOGE)
• Nov/Dec 2005: Montreal: COP/MOP 1
Montreal Outcomes
• Annex I parties continue discussions on post Kyoto
regime – based on emissions markets
– US and Australia largely oppose talks
– However, at the state/local level, both US and Australia
experimenting with emissions trading regimes
• Non-Annex I parties reject any discussion of
accepting binding emissions caps (language
allowing discussion of next steps explicitly states it
will “not open any negotiations leading to new
commitments.”
• Marrakech Accords adopted (with ET, JI, and CDM
as well as rules governing forest activities).
– News rules opening CDM to “programmatic” as well as
“project” activities
International Politics: the EU
• “Climate Change is a major threat”
• “While the Kyoto Protocol takes us in the right
direction, it is not enough. We need to cut
GHG emissions radically, but Kyoto doesn’t
even stabilize them. It won’t work as
intended unless the US is part of it.”
• There are huge opportunities in
environmental technology, and huge
possibilities in sustainable development.”
-- Prime Minister Tony Blair, 2005
International Politics: Developing
Countries
• “Climate change has, and for the foreseeable future will
continue to have a profound impact on the development
prospects of our societies.”
• “The UNFCCC and the Kyoto protocol establishes a
regime that adequately addresses the economic, social
and environmental impacts of sustainable
development.”
• “The regime rests on differentiation of obligations
among Parties…developed countries should therefore
take the lead in international action to combat climate
change.”
• “The convention establishes economic and social
development and poverty eradication as the first and
overriding priorities of developing countries.”
-- Joint Declaration, Gleneagles, 2005
Brazil, China, India, Mexico, S. Africa
International Politics: The US
• “Climate change, with its potential to
impact every corner of the world is an
issue that must be addressed by the
world.”
• “The Kyoto Protocol was fatally flawed
in fundamental ways.”
• “We’re creating a National Climate
Technology Initiative…”
-- President Bush, 2001
Framing the debate on next steps
Form and Stringency Are NOT
the Same
Form
Stringency
Fiscal Measures
(taxes, fees…)
What level of effort is
required?
Market and regulatory
(cap-and-trade, standards...)
Size of tax or subsidy
Level of cap
Industry agreements
Stringency of technical
standard…
Stringency is about how much…
Risk of increased temperature
Meinshausen, Malte. "On the Risk of Overshooting 2°C."
Proceedings from International Symposium on Stabilisation of Greenhouse
Gas Concentrations -- Avoiding Dangerous Climate Change,
Exeter, 1-3 February 2005 at www.stabilisation2005.com/programme.html.
…which presumes a cost for action as
well as a risk from inaction…
Source: IPCC TAR
…and when.
Implications of delayed action
Source: Meinshausen, 2005
Form is everything else
Institutions
Greenhouse gas markets
Policies & Measures
Project mechanisms
Emissions
Trading
(binding
targets)
supply &
demand
demand
No-regrets targets
demand
Action targets
supply & demand
Sector approaches
Technology agreements
Adaptation
Source:http://www.chicagoclimatex.com/mktdata_ccfe/sfi/hi
$0.00
storical/Historical_Prices.xls
2/27/2006
2/20/2006
2/13/2006
2/6/2006
1/30/2006
1/23/2006
1/16/2006
1/9/2006
1/2/2006
12/26/2005
12/19/2005
12/12/2005
12/5/2005
11/28/2005
11/21/2005
11/14/2005
11/7/2005
10/31/2005
10/24/2005
10/17/2005
10/10/2005
10/3/2005
9/26/2005
9/19/2005
0
9/5/2005
25.00
9/12/2005
1,000,000
8/29/2005
1,500,000
8/22/2005
ec
ov
Total Volume
8/15/2005
14
D
23
N
ov
2,500,000
8/8/2005
8/1/2005
7/25/2005
7/18/2005
7/11/2005
7/4/2005
6/27/2005
6/20/2005
6/13/2005
02
N
$3.00
6/6/2005
5/30/2005
5/23/2005
US CCX Price
5/16/2005
ep
ug
ug
12
Oc
t
21
S
31
A
09
A
ul
un
19
J
28
J
un
ay
pr
2,000,000
07
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16
M
22
A
EU and US emission market trends
ECX/ICE FUTURES Price and Volume
35.00
Settlement
30.00
20.00
EU ECX Price
15.00
500,000
10.00
5.00
$3.50
0.00
$2.50
$2.00
Vin 2003
Vin 2004
$1.50
Vin 2005
Vin 2006
$1.00
$0.50
CDM growing
• Data based on 919
projects (compare
with 716 in
December 2005)
• Strong growth
started in last Q05
and continues
• 1.3 billion credits
expected pre-2012
Source: Scharf & Ellis (OECD), 2006
But setting new post-2012
targets is difficult…
% Contributions to CO2 Changes
CO2 Change
1990–2002
MtCO2
GDP per
capita
(GDP/Pop)
Population
(Pop)
Energy
Intensity
(E/GDP)
Fuel Mix
(CO2/E)
China
1247
122
15
-96
8
United States
863
23
16
-20
-1
2
17
5
-6
-15
United Kingdom
-36
24
3
-20
-13
Russian Federation
-453
-5
-3
-12
-3
Country
France
Source: Baumert et al, 2005
…even for a single country
China
USA
10,000
9,000
Difference of 1,990
MtCO2 or approx 25%
MtCO2 (from energy)
8,000
2025
Emissions
7,000
6,000
2002
Emissions
5,000
Kyoto style target 2012
4,000
Low
Medium
3,000
High
2,000
2002
(EIA
Projections
Reference
Case)
Year
2025
Expectations for the Market Post-2012
• Some Annex I Parties continue with market development
(likely to include US, but to exclude Russia)
– Key is institutional capacity to manage market compliance,
including adequate assurance of integrity of emissions
reductions
– Politics will dictate level of effort; US engagement critical
• Some developing countries adopt market approaches
and participate in global emissions trading market (e.g.,
Korea, Mexico)
– China, depending on rate of institutional development, may
engage over medium term (e.g., by 2020)
• Other countries continue to participate in CDM/project
offset systems, including with “programmatic” CDM
The alternative to markets:
A policy approach
Source: David Victor, Presentation at RFF, February 2006
Policies may not focus on climate…
Global Energy Poverty
Source: IEA WEO, 2002
Other development challenges exist…
Motor vehicles per 1000 people, selected countries
Source: Bradley and Baumert, 2005, “Growing in the Greenhouse”
…and are multifaceted…
Motor Vehicle Shares of Criteria Pollutants in Chinese
Cities
CO (%)
HC (%)
NOx (%)
Beijing
(2000)
77
78
40
Shanghai
(1996)
86
96
56
Guangzhou 84
(2000)
50
45
City
Source: Schipper and Ng, 2005
…including energy security as well
as environmental issues
in China
and Exports
Consumption,
Figure 2. Oil Production,
Production,
Consumption
and Imports
for China
Consumption
250
Production
200
Exports
150
100
50
0
-50
Source & Notes: IEA, 2004b, with estimates for 2003 and 2004 based on BP, 2004 and 2005. Negative
Source:
and Ng, 2005
indicate imports.
valuesSchipper
2004
1999
1994
1989
1984
-150
1979
-100
1974
Millions of tons of oil equiv.
300
Three scenarios for China:
Electric Cars
0.1
90.0
CNG
0.09
80.0
Oil
0.08
70.0
Carbon/km
0.07
Carbon Emissions (Mt)
100.0
60.0
0.06
50.0
0.05
40.0
0.04
30.0
0.03
20.0
0.02
10.0
0.01
0.0
0
d
oa
03
20
:R
05
20
10
20
15
20
d
20
20
2003 Road
O
e
av
S
il
05
20
10
20
15
20
20
20
Oil Saved
ed
Year
Source: Schipper and Ng, 2005
te
In
at
gr
a
Tr
po
ns
rt
05
20
10
20
15
20
20
20
Integrated Transport
Carbon(kg)/km
Carbon from Motor Vehicles
Considering a Sectoral Agreement
Source: Baumert et al, 2005
Sectoral “Fit” for Agreement
• ICAO has failed to reach conclusions
on emissions reduction plan
• EU proposals being considered
include:
–
–
–
–
–
Fuel tax
Ticket tax
Slot auctioning
Emissions charge
Modal transfer incentives
Sectoral “Fit” for Agreement
• Voluntary agreement through International
Aluminum Institute (26 members with 80% of
global production)
• Key climate change targets include an 80%
reduction in PFC emissions and a 10% reduction
in smelting energy per ton of aluminum produced;
to be reached by 2010 (using a 1990 base year).
• To date have already achieved PFC reduction of
73%
The technology chain
Government
Policy Interventions
Market Pull
Research
Basic
R&D
Applied
R&D
Demonstration
Commercial
Diffusion
-isation
Consumers
Product/ Technology Push
Investments
Business and Investors
Grubb, M. and R. Stewart, 2003. “Promoting Climate-Friendly Technologies: International
Perspectives and Issues.” Introductory paper for the INTACT High-Level Transatlantic
Dialogue on Climate Change
Technology Penetration
Source:
http://www.aimpowergen.co
m/wind_power.html
Thoughts on the PAMs approach
• Moving to scale is possible, but policies likely to
differ from country to country.
• Policies that incorporate development priorities can
garner near-term engagement by developing
countries, particularly large emitters such as India
and China
• Comparing level of effort will be difficult; no single
metric is likely to provide robust method for
evaluation.
– Political agreements, involving complex negotiations, may
address this concern
– Public awareness to support national policies will likely
require significant reporting on policies adopted– which,
in turn will require international assistance.
• Once sufficient capacity is built, countries may
move to adopt GHG market systems
A brief comment on adaptation
Global Impacts of Natural Disasters, 1980 - 2004
Adaptation in a future regime
• Money, money, money
– Expected damages amount to several percent of global
GDP, with preponderance of damages in developing
nations
• New international agreement(s) may provide “steer”
for development assistance, but seems, at present,
unlikely to establish significant new institutional
arrangements to pay for impacts or their
amelioration
• Policies are mostly unlikely to be climate specific;
key will be links to development
–
–
–
–
Water resources
Health care
Coastal zone management
Infrastructure development
Conclusions
The post-Kyoto architecture (1)
• New scientific information compels more
aggressive action
• The Kyoto structure WILL continue
– Emissions trading with new more stringent
targets and some additional countries
– Markets will provide stimulus to new technology
research, development and diffusion
– Current systems for financial transfer to
developing countries will remain – albeit unlikely
to grow significantly
The post-Kyoto architecture (2)
• Kyoto is not likely to be the sole mechanism for future
efforts
• In parallel to the Kyoto market-based regime, countries
(developed and developing) will adopt policies
(including for sectoral and technology based
approaches) driven by other concerns:
– Energy security (leading to aggressive focus on energy
efficiency, focus on indigenous supply and development of
alternative fuel options such as biomass, nuclear, RE)
– Local air quality (technologies such as IGCC, replacement of
gasoline vehicles with hybrids and EVs or H2)
– Key is how “climate friendly” these policies will be
• Independent of international agreement, we are likely to
see increasing energy investment – including some
financial transfers to developing countries
– Some new investment in climate friendly technology such as
CCS
The post-Kyoto architecture (3)
• We are not on a
path to avoid
significant climate
change
• The question is
how hot things will
get…
• Adaptation will
become a more
central policy
imperative over
time
?