Formulas for Quantitative Emission Targets
Jeffrey Frankel, Harvard University
Summary:
Jeffrey Frankel has proposed a climate policy architecture that builds on the quantitative
targets and timetables infrastructure of the UNFCCC and Kyoto Protocol. He calls for a
sequence of negotiations (one per decade) to determine the global greenhouse gas
emissions cap and a formula for allocating this global cap among all participating
countries. The formulas for setting national-level targets would reflect historic emissions
(e.g., 1990 levels), current emissions, population, income, and other relevant factors
(such as resource endowment), but in the long-term the formulas would converge on a
per capita allocation. Targets derived from the formulas would be progressive, with
higher income countries required to undertake more ambitious mitigation relative to
business as usual than lower income countries. To insure against unintended stringency
or laxity, quantitative targets also could be indexed to economic growth. Emission
allowances allocated through the national targets could be traded among countries and
banked for future use. Developing country quantitative targets would initially be set at a
level so that in expectation they would be on net a winner with emission trading: the
economic benefits of selling unused emission allowances would exceed the costs of
mitigating their emissions. As an insurance policy against unexpectedly high costs,
Frankel also supports a safety valve that effectively puts a ceiling on the price of tradable
allowances. He rejects setting a century-long goal as impractical and impossible to
enforce on future world leaders.
Pros:
This proposal rests on the existing multilateral policy foundation established by the
Kyoto Protocol, and is thus recognizable and salient to many stakeholders. It provides a
mechanism for integrating developing countries and the United States into the future
architecture, and offers an approach to setting targets that may be more transparent than
the ad hoc target-setting at the Kyoto Conference. Focusing on emission trading – across
countries and across time – can promote least-cost mitigation. Employing a suite of
mechanisms to address concerns about high costs – such as emission trading, banking, a
safety valve, indexing targets to economic growth – could promote compliance by
reducing the probability of adverse outcomes that could result in non-compliance.
Setting targets one decade at a time may allow for learning about climate science,
economics, and R&D to inform subsequent goals.
Cons:
Developing countries have previously rejected the offer of generous emission targets and
the potential gains under a well-functioning international emission trading system. This
proposal does not provide any additional carrots for their participation. Along a similar
line, Frankel does not propose a compliance mechanism to create incentives for countries
to live up to their agreed commitments. The flip side of flexibility in setting targets over
time is the concern that long-term goals should be enumerated to create the incentive for
long-term climate-friendly R&D. Finally, some countries may not find a target-setting
formula as a desirable substitute for negotiations. Instead, such formulas may serve as a
starting point or focal point for negotiations.