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In the last two years the international community shared the objective  to limit the increase of  mean global temperatures to 2°C above pre-industrial levels in order to prevent the risks and effects of climate change. This agreement was made in a number of international meetings: G8 2009/2010, G20 2009, UN General Assembly 2009/2010, Copenhagen Conference 2009.
The Council of the European Union, on October 29, 2010, acknowledged that to stay below 2ºC would require global greenhouse gas emissions to peak at least by 2020.  In order to limit the atmospheric carbon dioxide (CO2) concentrations to less than 450 parts per million (ppm), global greenhouse gas emissions are reduced by at least 50% compared with 1990 by 2050 and continue to decline thereafter.  The developed countries as a group should reduce their greenhouse gas emissions by 80% to 95% by 2050, through an intermediate legally binding quantified emission reduction commitment of 30% by 2020, with respect to 1990.
The developing countries as a whole should achieve a substantial deviation below the currently predicted emissions growth rate by 15-30% by 2020.
Furthermore, estimates based on available information such as current population projections by 2050, calculate that global average greenhouse gas emissions per capita should be reduced to around two tons  CO2 equivalent. A  gradual convergence of national per capita emissions between developed and developing countries would be necessary considering the national circumstances.

Feasible Targets? Atmospheric CO2 concentration and global emissions

The present atmospheric level of CO2 is approximately 390 ppm (NOAA, 2010).
Taking into account all the greenhouse gases, the CO2 equivalent is already 448 ppm  (EPRI, 2009, pdf) and it is expected to rise in the next years.

Until now,  efforts to reduce  carbon emissions through international legally binding agreements have not worked..
Ten years after the agreement of  the Kyoto Protocol, 1998-2007, the global emissions rose by an average of 2.5% a year. Although emissions fell in USA, Canada, Japan, EU, between 2008-2009 as the global recession took hold, they continued to grow in China, India and in the most of the developing countries. With 1.86 billion tons of CO2 emissions in 2009 (25% of the global emissions)China succeeded the USA as the world’s biggest carbon emitter.
Meanwhile India’s, emissions  have been growing at about a 5% yearly rate in the last decade,  succeeding Russia as the world’s third largest emitter.

The energy scenarios of 2030  project a significant increase in the demand for global fossil fuels as well as CO2 emissions. According to IEA World Energy Outlook 2009, the global demand grows by 40%  between 2008-2030, with coal use rising in absolute terms. The global energy demand is increasing mostly in the emerging and developing world, to sustain their economic growth and social development. CO2 emissions continue to grow (+45% in 2030) mostly from the emerging and developing world.

Nevertheless, per capita emissions in emerging and developing economies are far below those of most in  the developed world.
In 2010, per capita emissions in USA are three times larger than in China and 15 times larger than India.
Per capita emissions are a sensible indicator of the energy and social divide between the countries considering that 2 billion people in the developing world do not have access to energy.

The IEA Business As Usual scenario suggests  that after 2030, the global energy demand will continue to grow. In the Business As Usual (BAU) scenario, the “carbon neutral” energy sources (renewables, biofuels, nuclear),  combined with energy efficiency and the technology of carbon capture and storage are not sufficient to replace the fossil fuels  to meet the increasing energy demand, and fossil fuels will continue to supply more than two-thirds of the world’s energy.
Therefore, the global emissions will be larger than+ 130% with respect to 1990.

The “energy revolution” to meet the stabilization target

According to the ‘Blue Map’ scenario in 2010 Energy Technology Perspectives (IEA/ETP, pdf)

• global greenhouse gas emissions should peak by around 2020, and decline steadily towards the 50 % cut in carbon emissions by 2050;
• investments (public and private) in clean technologies should rise from the present $165bn a year, to $750bn in 2030 and $1.6 trillion in 2050;
• renewables should account for 48% of power generation, nuclear 24% and plants equipped with carbon capture and storage 17%;
• the widespread use of next-generation biofuels should replace gasoline and diesel;
• a huge improvement in energy efficiency should reduce the energy demand growth by only  32%, compared with 84 % under the BAU;
• the widespread introduction of electric, hybrid or fuel cells cars should account for at least 80% of all vehicles on the road;
• stable, long-term incentives such as feed-in tariffs, loan guarantees and tax credits must be introduced to encourage the adoption of low-carbon technologies, while market barriers such as planning obstacles, building codes and red tape must be cut.

The “Blue Map”, with the convergence of the “Per Capita Emissions” issue (2 tons  in 2050, as suggested by EU)  demand immediate global action to address :

• the “burden sharing” of 2020 peak and 2050 per capita emissions,  taking into account the present and predicted  gaps in carbon intensity and per capita between the countries;
• the energy technologies “revolution”  in terms of  agreed and mandatory
  • international standards ( in energy efficiency, sustainable biofuels, renewable performances…..);
  • international  rules to shift the energy system towards the “carbon neutral” technologies (for example phasing out the existing fossil fuel energy infrastructures not equipped with Carbon Capture&Storage technologies and forbidding  new plants, like in the case of  CFCs under Montreal Protocol);
• the international and domestic trade and fiscal rules, both to support low carbon technologies investments and to  avoid unfair competition and carbon leakage;
• the establishment and the management of international financial mechanisms to support the energy security in the developing world.

The challenge is new, complex and unprecedented. An international agreement to address the issues that are needed to tackle climate change, carbon intensity of the economies,and energy security has not yet been made. The traditional format of the agreements under the Climate Change Convention (Kyoto Protocol, Copenaghen Accord) is not adequate to meet the challenge.

The “test” of complexity lies within the combination of the low carbon strategies and measures with the existing and forecasted investments in oil and gas infrastructures. Is it possible to design and manage the exit strategy from fossil fuels while tens of  trillions of dollars are invested in new energy infrastructures based on oil, sand oil, natural gas and shale gas? How will it be possible to meet the long-term lifetime of such infrastructures with the 2020 peak?
Is the combination of international regulations  and the Environmental Social Responsibility of the private energy companies enough to address the exit strategy from fossil fuels?

Another test is the “parallel” case of China and USA

According to the head of the International Energy Agency, Nobuo Tanaka, “China’s emissions need to peak by 2020. Without such commitment from China, halving CO2 emissions by 2050, is simply impossible”.
According to the Chinese government, the 2020 peak target  combined with a projected 36 % cut in coal consumption by 2050, will force China to sacrifice economic growth.
China has already pledged to reduce energy intensity (CO2 emissions/GDP) by 40-45 % by 2020.  Today China is the biggest global investor in renewables, nuclear and carbon capture&storage technologies.
In addition, China’s per capita emissions , in comparison with USA, are 3 times lower in 2010, and are predicted to be 2,5 times lower in 2020.

As noted by Amy Heinzerling of the Earth Policy Instituter, 22% of China emissions come  from the production of exported goods, while goods imported by USA are responsible for 190 million tons of emissions per year.

Further domestic and international commitments made by China can be considered only if USA and the most developed countries make proportional and comparable commitments.  These commitments also depend on the efforts supported by multilateral/bilateral technology and financial cooperation in China.
Otherwise  China’s peak of emissions will be reached between 2030-2040,  under the present domestic policies and measures.

The United States have not been able to make commitments  to reduce emissions and shift from fossil fuel to a low carbon economy.
In September 1999, the US Senate rejected the ratification of the Kyoto Protocol, proposed by the Clinton Administration, considering that the international treaty would affect the energy security and the national sovereignty of USA.

In 2010, the US Senate refused to examine the draft law for the introduction of limits to CO2 emissions through a mechanism similar to the European one. This occurred because of missing cost estimates and serious concerns regarding the effects on energy security and on the national sovereignty.
Furthermore, US Senate expressed its uneasiness to accept commitments that emerging economies, such as China and India, have not shared.

Meanwhile, in 2010, the EU countries and Japan, with comparable standards of life in  USA, emit only half per capita CO2. This is a case of unfair competition by  USA with EU and Japan because of unequal commitments for the emissions reduction.

A new leadership for Europe?

The European Council on October 28 suggested  “a second commitment period under the Kyoto Protocol, as part of a wider outcome including the perspective of the global and comprehensive framework engaging all major economies “
Perhaps it is time that the EU  acknowledge that the Kyoto format is not adequate to meet the multiple challenges of climate change, low carbon economy and energy security.
Rather than focusing on complex legal structures and the construction of a new international bureaucracy on climate change, Europe should focus on promoting international projects. These projects will face the global technological challenge using the great potential of the European integrated economy, which has already achieved important levels of efficiency and innovation.
Europe should test the possible rules and measures necessary to promote a global “de-carbonized” economy able to sustain growth and reduce emissions, building a European “Global Platform” based on the three technological pillars: energy efficiency, renewable energy and nuclear energy, also including forestry management.

In this perspective, it is necessary to work at two levels:

The national level: through common EU policies and strategies on technologies and financing measures.  In spite of the framework established by the “climate and energy package” the lack of harmonized measures for energy efficiency, efficiency standards for renewables, nuclear, energy fiscal policy, agriculture and animal husbandry, forestry management, financing for research and development, hinder the valorization and development of the European potential to build a “green” and “de-carbonized” economy;

The international level: through a new and structured European initiative for the technological cooperation with emerging economies and with USA/Canada/Japan in order to use the European platform as a “Hub” for the global innovation and dissemination of low-carbon technologies. The technological initiative could represent an evolution of the Kyoto Protocol JI and CDM mechanisms.

The Threat of Climate Change: the Need of Adaptation Measures

Waiting for USA and China,  no agreement will be effective, and tackling global climate change will be more difficult, also because of the increasing CO2 concentration in the atmosphere.
The Atmosphere CO2 stabilization at 450 ppm is difficult to achieve.
Some scientific institutions suggest the consideration of more realistic targets, taking into account that the CO2 concentration, due to carbon cycle, is the result of both the emissions and the carbon dioxide already “stored” in the atmosphere.
According to EPRI (2009), two stabilization targets could be considered, taking into account the radiative forcing and the relative increasing in the mean global temperature.

Click to enlarge

Stabilization at 550 ppm  (target 3,7) which corresponds to + 2,5 °C,  requires too strong of a commitment even if postponed, in the deviation from the emissions baseline.
Stabilization at 650 ppm ( target 4,5) which corresponds + 3 °C,  requires challenging global measures  which address the emissions reduction and the adaptation to the effects of the temperature increasing above 2°C

However, as the temperature is increasing, extreme events may occur with greater frequency and intensity.

Last summer many regions and countries  were affected by extreme events, worse than any other in the historical record, with high economic costs and the loss of thousands of lives: flooding in Pakistan, Western China, and India; heat waves in eastern USA, parts of Africa and  Asia, and Russia with unprecedented drought and fires.

According to the National Oceanic and Atmospheric Administration, in the first six months of the year 2010, the average temperatures were the warmest on record, in accordance with the trend of the recent decades.
Statistics show that the added heat in the atmosphere in the last decades is the driving force for the worsening of the extreme events.

Locally, “some extreme events occurring over a relatively short time period, especially in close proximity, could mutually reinforce each other in such a way that the resulting cascade of consequences becomes a global catastrophe.” Other extreme events can have secondary consequences that generate additional, substantial damage.   Secondary consequences, in turn, can trigger tertiary consequences that further amplify the adverse consequences, and so on” (“Responding to Threats of Climate Change Mega-Catastrophes”, Carolyn Kousky and others, 2009).

Pitcure from  “Climate Change and its possible security implications” – Report of the Secretary General to the General Assembly (September 2009) Click to enlarge

Drought and/or flooding, are the best examples of extreme events, which generate multiple effects: food and water shortage, loss of cultivated areas, devastation of urbanized areas in the coastal zones, migration of the populations, regional conflicts, and political instability in some of the most volatile regions of the world.
Projected climate change will seriously exacerbate already marginal living standards in many Asian, African, and Middle Eastern nations, causing widespread political instability and the likelihood of failed states.
According to UN secretariat (2009) the multiplier threat of climate change should be addressed while considering the adaptation (prevention policies) and the international assistance in the case of the extreme events.
Until now, such policies  have not been put in place.
This is an additional and urgent task for the international community.

References

• Geoffrey J. Blanford, International Participation in Post-Kyoto Climate Policy, Epri 2009
• Amy Heinzerling, Global Carbon Dioxide Emissions Fall in 2009 – Past Decade Still Sees Rapid Emissions Growth, Earth Policy Institute, July 2010
• International Energy Agency  – World Energy Outlook 2010
• International Energy Agency  – 2010 Energy Technology Perspectives (pdf)
• International Energy Agency  – World Energy Outlook 2009
• Martin I. Ioffert, Climate Change: Farewell to Fossil Fuels?, Science, 10 september 2010
• Carolyn Kousky, Olga Rostapshova, Michael A. Toman, Richard Zeckhauser, Responding to Threats of Climate Change Mega-Catastrophes, RFF Discussion Paper 09-45, November 2009
• Richard Richels, Feasible Climate Targets, Epri 2009 (pdf)
• UN General Assembly, Climate Change and its possible security implications – Report of the Secretary General to the General Assembly, September 2009

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“The first issue is that anything that results in foreign policy from any particular government whether it’s a developed country or a developing country is really based on the domestic policies of those countries. You can’t have foreign policy without a foundation of domestic policy. Basically what is this going to cost to deal with it? I think that’s true in the US, it’s true in the EU, and it’s certainly true in the Brics countries”.

To achieve a new climate agreement we need both domestic and global policy, Ray Kopp (Resources for the Future – RFF) says in this video interview to Climate Science&Policy

Challenges for a Post-Kyoto Agreement

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USA and Developing Countries. Domestic and International Initiatives in Climate Policy

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Resource for the Future and the Think Tank’s Role in Climate Change Policy

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The Oil Spill and Its Impact in the American Debate

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International structure affects the foreign policy issues and the domestic politics; you can’t just prioritise one or the other you have to do both sequentially and simultaneously.
Prof. Robert Keohane (Princeton University) talks about international relations, cap-and trade and a “dual-leadership world” where Usa and China have to take the lead, but you can’t say to say which players can determine the outcomes in the system. How can we get action from people and leaders in climate negotiations?
“In the presence of a deadlock on the traditional ways of solving climate change questions, may be the Economy of Esteem could help us” Prof. Keohane argues in this interview to Climate Science&Policy.

A Two Level Game

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Climate Change and the Economy of Esteem

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Incentives, Credible Actions and Binding Limits for a Global Climate Policy Architecture

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Interrelated Topics for a Multilevel Issue

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USA and China Potential Leadership for Important Players

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It could be described as the ability to shape the preferences of others and attract them so that they want what you want. It is Soft Power and it is crucial in order to create a narrative of climate change which is widely accepted. But soft power alone isn’t enough: we need smart power, a combination of soft power and hard power.
Prof. Joseph S. Nye (Harvard’s Kennedy School of Government) talks about the role of transnationl institutions, the new american course on climate policy  and “How could we get everybody into the act and still get action”. “We are going to have to use a variety of international institutions and focus the European phrase, Variable Geometry”, Prof. Nye says to Climate Science&Policy.

Soft, Smart, and Hard. A Combination of Power for International Climate Politics

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Obama and the New American Course on Climate Politics

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Variable Geometry. A Useful Definition for Climate Institutions

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Narratives and Transnational Institutions

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USA/China: Are We Coming Back to a Bipolar World?

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Get Everybody into The Act. International Relations and Climate Change

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We have learned great deal at Copenhagen: whatever agreement we will come to, it has to be about the quality of economic growth and the way that it goes forward.
Interviewed by FEEM, Prof. Thomas Heller (Stanford University and Executive Director at Climate Policy Initiative) explains why, after the Cop15, we have now a better sense of what the problem is and where the solutions lie.
“It’s the same for all policy – Prof. Heller says – no matter how well it is designed, no matter how well it is intended, there are always questions about how it is implemented or how effective will it be”.

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Evaluating sustainability in a general equilibrium framework

The discussion on climate policy costs usually focuses on GDP losses or other monetary measures  of the effort of reducing GHG emissions. Let us introduce a new element in this discussion by considering the implications of achieving an ambitious climate target on sustainability rather than on GDP. We do this by combining economic, social, and environmental indicators onto a unique measure of sustainability, the FEEM Sustainability Index – FEEM SI¹ . The main novelty of the FEEM SI is that it is built within a dynamic Computable General Equilibrium (CGE) model, which allows projecting sustainability indicators in the future. Thanks to this framework, the FEEM SI is able to summarize current and future sustainability performances for 40 countries up to the year 2020. It is also possible to obtain projections for the FEEM SI relative to the different policy choices that countries may undertake. These can then be compared in order to study the consequences of climate policies in terms of sustainability.

The effect of a stringent climate policy on sustainability is not straightforward. Although environmental sustainability is bound to increase, a climate policy will also request resources that will negatively impact economic sustainability. Furthermore, it is likely that investment will be taken away from socially relevant sectors such as education and health, thereby having a negative impact on social sustainability. The FEEM SI, as a unique measure of sustainability, contributes to understanding the trade-off between these different aspects, and to finding the final effect of climate policy on sustainability.

With the scope of assessing the effects of efforts to curb GHG emissions within a sustainability framework, we consider two scenarios:

Global Commitment: all countries in the world participate to a global emission trading scheme and agree to limit growth of global GHG emissions to 19% with respect to 1990. Individual targets for leading countries are set to respect the proposals included in the Copenhagen Accord. The rest of the world instead, reduces emissions by 30% with respect to the baseline scenario at 2020;

Global Sustainability: A revenue recycling process is added to the climate policy described in the Global Commitment scenario. The revenues obtained from the sales of emissions quota are reinvested partly domestically, and partly as a transfer from industrialised countries to the rest of the world. These resources are invested to increase research and development, education and health expenditures.

Improving sustainability while reducing GHG emissions

Figure 1. World sustainability (%change wrt baseline in 2020) click to enlarge

The expected effect of climate policy in the Global Commitment scenario is to induce a strong increase in environmental sustainability, but a decrease in economic and social sustainability. If we consider the aggregate effect of the policy on the world, this is exactly the outcome we obtain. However, the negative effects are mostly in the social sphere rather than in the economic one. The negative effects on social and economic sustainability also induce a small decrease in overall sustainability. Figure 1 illustrates these results, showing that the consistent increase in the environmental pillar does not offset the decrease in the social one, leading to an overall decrease in sustainability. The main reason is that the necessary efforts to curb GHG emissions (for instance through investments in energy efficiency, or in renewable energy) also reduce investments in other sectors, including education and healthcare.

Figure 2. Percentage changes in the FEEM SI with respect to baseline in 2020 click to enlarge

However, when social policies are implemented simultaneously to the climate ones, such as in the Global Sustainability scenario, results improve consistently. When a policy is undertaken in order to limit the impact on social sustainability, the negative effects are limited and overall sustainability is almost unchanged with respect to the baseline case.

The effects for the single countries are also crucial. Figure 2 illustrates the regional changes in the FEEM SI under the two scenarios considered. In the Global Sustainability scenario, the FEEM SI improves for almost all regions and to a greater extent than in the Global Commitment scenario. The effects are positive in most countries in both scenarios.

Improving sustainability while reducing GHG emissions

Figure 3. Percentage changes in the Social Pillar of the FEEM SI with respect to baseline in 2020 click to enlarge

As the main cocern is that social sustainability should not be reduced, particularly in developing countries, we analyse the effect of climate policy on the social component of our sustainability index. Results are illustrated in Figure 3. Comparing the results relative to the two scenarios, it is clear that the social sustainability is greatly improved in the Global Sustainability scenario. When additional financial resources generated from the revenue recycling are invested in education and health social sustainability improves, and only a few regions are left with a consistent decrease in social sustainability.

Looking for the right balance

Whereas environmental sustainability is greatly improved at regional and world level thanks to the GHG emission reductions achieved by implementing a global emissions trading scheme, economic and social sustainability may be negatively affected by climate policy. The implementation of climate policy may indeed take resources away from sectors that increase social and economic wealth, such as education, healthcare, and R&D. In the policy debate, the concern is usually with the negative effects of climate policy on economic growth and competitiveness. Here, we demonstrate that the social component of sustainability is likely to be most negatively affected.

This means that a global climate policy will more likely lead to an overall improvement in sustainability if it is implemented together with policies aimed at improving social and economic wealth. Furthermore, if revenues related to emission abatement are invested in sectors related to the achievement of the Millennium Development Goals, strong improvements in social sustainability can be obtained. To conclude, we find that GHG emission reductions are not sufficient to improve world sustainability, unless an adequate balance between economic, social, and environmental outcomes is maintained. Ideas and strategies for the achievement of these objectives are at hand, but the right incentive scheme still needs to be designed and implemented.

1. A detailed description of FEEM SI is available at www.feemsi.org

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The Copenhagen conference is a bitter disappointment for European countries. While environment is one of the domains in which European integration is deepest, European countries failed to build and support a common position that would have weighed on the outcome of the conference, the Copenhagen Accord. Significantly, this outcome has been negotiated and signed at the national level and European countries had different position on its content. Moreover, this Accord appears at odd with the expectations of most European countries. In particular, this agreement gives up the “global governance” approach of the Kyoto Protocol, which set a collective goal in terms of reduction in greenhouse gas emissions and translated this collective goal into individual targets for each member country. In the Copenhagen accord, instead, each country announces unilaterally an individual target for its 2020 emissions, and the accord introduces a simple verification of individual commitments.

Compared to the Kyoto approach, four essential elements are lost. Firstly, the agreement is not legally binding and there is no provision in case of non compliance. Secondly, in a system where each country unilaterally announces its commitment to reduce emissions, there is no guarantee that individual efforts are of comparable magnitude, and we can only note that the Russian and American proposals are more modest than European ones. Thirdly, although the Copenhagen agreement recalled the objective of maintaining global warming below 2°C, there is no guarantee that the sum of individual commitments is sufficient to achieve this collective goal. And we know that in the current situation, the efforts announced drive us toward a 3°C-or-more warming. Finally, the Copenhagen agreement was negotiated by 28 countries only, and has not been validated by the 192 member countries that are parties to the Climate Convention of the United Nations. It is therefore a partial agreement to a problem that concerns all countries, and the way this agreement has been reached threatens the Climate Convention, a unique 17-year international negotiation process.

Forget Kyoto: Four European Answers

For all these reasons, the outcome of the Copenhagen conference is disappointing. But today, it appears that it was simply impossible to maintain the Kyoto approach. Instead of distributing blames and accusations to explain this failure, it seems more reasonable for Europe to forget the Kyoto Protocol and its philosophy and to recognize that it is an important progress to have included the United States and China in a unique agreement. From there, Europe could try to (re)construct a common position on how to build on the Copenhagen Accord to make it more ambitious and credible. Such a common European position could be based on answers to the four limitations mentioned above.

First, progress is needed on the fact that the accord is not legally-binding and lacks credibility. In the current situation, building a legally-binding framework seems impossible. But if all countries wish to fulfil their obligations, and their reluctance to accept stronger commitments suggests they do, then they can accept a control that is stronger than what is currently agreed on. To do so, an international organization could be created to control emissions of each country and verify that commitments are respected. This proposal was already supported by France and others at Copenhagen, but it met strong opposition. It could now be supported by the European Union, its chance of success increasing if a cap-and-trade law passes the US Congress in 2010. Of course, such an international organization would not make the agreement legally-binding, but it would give weight to the political agreement signed in Copenhagen.

Then, it seems clear that no country can agree to make efforts that are much greater than what other countries are doing, at the risk of disadvantaging its industry and losing jobs and market shares. From an ethical point of view, moreover, it seems unfair that the most ambitious countries suffer from their desire to protect a global public good. In absence of an international mechanism to share emission reduction efforts in a fair manner and in the framework of unilateral commitments, it appears unavoidable to recognize the right to establish fiscal compensation mechanisms. Countries with most ambitious climate policies, whose production costs would increase, would be allowed to introduce a border tax to maintain their competitiveness on their domestic market. The most publicized risk associated with such a tax, namely its use for pure and simple protectionism, could be mitigated if the commitment-control international organization were required to authorize the tax before its introduction. At a later stage, such fiscal mechanisms could even be used to ensure compliance: in practice, a border tax could be applied to exports of countries that do not meet their commitments, after proper analysis and control by the international control organization.

Third, a solution needs to be found to ensure that the sum of individual national efforts is sufficient to achieve the collective objective of maintaining global warming below 2°C. The lack of consistency between the collective goal and individual commitments is undoubtedly the most glaring weakness of the Copenhagen Accord. As the philosophy of this agreement makes it inadequate to impose additional emission reductions, an incentive-based system should be favoured. To do so, the Climate Convention or the IPCC could make a systematic evaluation of the sum of national commitments – in developed and developing countries – and provide an estimate of future emissions trajectories and of the corresponding climate projections. A comparison of these climate projections against the 2°C collective objective would allow to announce a “commitment shortfall,” i.e. the need for additional action to achieve the collective objective. Such an analysis has been done by Carlo Carraro and Emanuele Massetti, and published in Climate Science&Policy (“Two good news from Copenhagen?” January 7th, 2010). They show that the abatement plans proposed by major emitters in Copenhagen are inconsistent with the 2°C target, even if all the climate international finance proposed in the Accord is dedicated to mitigation in developing countries, and they discuss the need for additional effort, i.e. the commitment shortfall. From this type of information, a further mission of the annual Climate Convention conferences could be to announce this commitment shortfall, and to invite all countries to do more to reduce this deficit. The shortcomings of such a process are obvious, but it now seems difficult to do better, and hopefully public opinion pressure will encourage countries to make the necessary commitments.

Finally, it is essential to bring the Copenhagen Accord under the UN Climate Convention and ensure that all countries join its new approach. It could be possible to give up this global approach and work only among big emitters, like in the Major Economies Forum on Energy and Climate. But this approach is inadequate because the climate change issue will not be settled if the most vulnerable countries are not at the negotiation table. And even if mitigation commitments could be discussed in such a group, it is inappropriate to discuss mitigation and adaptation in different arenas, since these two topics are interlinked through financial flows, technology exchanges, and infrastructure design. The Copenhagen approach, based on the selection of a few “representative” countries is also flawed: on which basis should the Maldives be considered as representative of all small islands? In absence of any better solution, therefore, it is urgent to reinstall the Copenhagen agreement within the Climate Convention. And today, acknowledging the impossibility to save the Kyoto Protocol, it may be possible to convince all countries to join a new approach, provided that the three preceding issues are treated properly and that the Copenhagen Accord reaches an acceptable level of credibility.

The Financial Fluxes Issue

In addition to these four questions, it will be necessary to specify as rapidly as possible the modalities of the financial transfers planned by the Copenhagen agreement, i.e. $30 billion for the 2010-2012 period, and annual flows increasing to $100 billion per year in 2020. To make the agreement acceptable to all developing countries, these transfers will have to support emission reduction and adaptation to climate change effects. Supporting emission reductions in developing countries can be done through the financing of the additional costs due to climate policies. These fluxes will be mainly directed toward big emerging economies. Adaptation support, on the other hand, should target in priority the poorest countries through the financing of their infrastructure deficit, i.e. the required infrastructures to manage water, waste, energy, and natural hazards. Adaptation funding should help pay the cost of these basic infrastructures, and not only the additional cost due to climate change, since a poor country that cannot finance any dike system would have little use of a funding source that pay only the cost of upgrading it.

Furthermore, the Copenhagen Agreement puts on an equal foot the adaptation of Bangladesh to rising sea level and the adaptation of Saudi Arabia to climate-policy-driven reductions in oil consumption. Without reconsidering this agreement, financing arrangements have to be developed in such a way that oil-exporting countries do not capture too much funding, to ensure that aid is effective and directed towards the most vulnerable populations.

These five points provide for the year 2010 a European roadmap that is simple, realistic and potentially acceptable by all countries: the creation of an international institution to control country-level commitments, the recognition of the right for countries with particularly ambitious climate policies to introduce fiscal border-adjustment mechanisms, the annual publication of the commitment shortfall, the reinstatement of the strengthened Copenhagen Accord within the Climate Convention, and the development of efficient and fair financial transfer modalities. Rebuilding a European position could help make significant progress on these points over the year, and turn the Copenhagen failure into a Mexican success.

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As largely predicted by many analysts, the Fifteenth Conference of Parties (COP 15) held at Copenhagen from the 7th to the 18th of December, did not lead to the signature of a legally binding agreement to replace the Kyoto Protocol after 2012.

The outcome of COP 15 could have not been different and hopes for a different result did not take into account the reality of facts. First, it would have been impossible for the United States to sign a binding agreement without first having the Senate pass the Boxer-Kerry Bill that, coupled with the already approved American Clean Energy and Security Act (Waxman-Markey Bill), would give President Obama the credibility to propose more ambitious steps internationally. Second, without the commitment of fast-growing developing countries to reduce emissions – not necessarily immediately, more realistically after a “grace” period – any attempt of developed countries to contain temperature rise below safe levels would be vain.

Fast-growing developing countries are reluctant to take on any legally binding commitment on the grounds that their primary objective is to reduce poverty and to widen economic well-being, and that the responsibility for the high concentrations of Greenhouse Gases (GHGs) in the atmosphere is only marginally attributable to their emissions. Hence, their refusal to sign any legally binding agreement when the major world economies are not ready to do so is largely comprehensible.

These are in the essence the basic ingredients of the so-called “climate deadlock” that prevented to sign a real substitute for the Kyoto Protocol and pushed the climate summit in Copenhagen to “take note” of a more modest Copenhagen Accord on the morning of Saturday, December 19th.

Effectiveness and consistency of the Copenhagen Accord

Let us analyse the first one. Are the domestic abatement plans announced in Copenhagen sufficient to significantly reduce global GHG emissions and to contain temperature increase below the proposed 2°C target?

Table 1 – The Copenhagen Emissions Reductions Commitment. Click the picture to enlarge

Table 1 summarizes the emissions targets that major countries have announced in Copenhagen. Unfortunately, the Annex I to the Copenhagen Accord, in which abatement targets were listed for each country, was empty in the official version released by the UNFCCC. We gathered the national targets from a variety of sources, including the unofficial Annex I to the Copenhagen Accord, and we homogenized them to reflect changes of emissions with respect to 1990. For those countries that have used the Business as Usual (BaU) scenario as a reference, we employed the WITCH model BaU scenario to calculate future emission reductions. China and India have indeed announced an intensity target: they pledge to reduce the carbon intensity – the ratio between carbon emissions and GDP – of their economies by 45% and 20-25%, respectively. Both these targets appear to be non-binding according to the BaU scenario of the WITCH model (which predicts autonomous carbon intensity reductions of 53% for China and 42% for India). The recently published World Energy Outlook (WEO) 2009 also confirms that China might have chosen a BaU scenario and India might have simply underestimated the BaU improvement of its carbon intensity (WEO 2009 predicts a 45% reduction of carbon intensity for China and a 38% reduction for India). Accordingly, for both India and China we substituted the announced targets with BaU emissions of all GHGs.

As a group, the Copenhagen commitments for the biggest emitters, if confirmed, would imply a 28% increase of emissions above the 1990 level. With respect to the BaU scenario for those countries, emissions would be reduced by 21%. Assuming that the rest of the world continues on a BaU path, global emissions would increase to about 48 GT CO2-eq by 2020. This represents a 29% increase with respect to 1990, a 5% increase with respect to 2005 and a 16% reduction with respect to BaU.

Are the promised emissions reductions sufficient to control global warming? The stabilization scenarios presented in the Fourth Assessment Report of the IPCC show that emissions of CO2 need to peak before 2015, to decrease by roughly 5-10% at 2020, and then decline steadily to limit temperature rise above the pre-industrial level to 2.0-2.4°C by 2100; if emissions peak before 2020, the temperature rise will be of 2.4-2.8°C¹. Therefore, although not negligible if compared to the BaU, the emissions reduction declarations proposed in Copenhagen are clearly insufficient to control global warming below 2°C.

Hence, the first seemingly good news – the Copenhagen emission reduction declarations – is largely inconsistent with the 2°C temperature target re-stated in the Copenhagen Accord². What about the second important news, i.e. that additional, predictable and adequate funding, and improved access to technologies, will be provided to developing countries to enable and support action on mitigation and adaptation?

Financial adequacy of the Copenhagen Accord

The commitment contained in the Copenhagen Accord is to set-up a fast track fund that will consist of USD 10 billion per year from 2010 to 2012 (totalling USD 30 billion). If there is sufficient and transparent action towards mitigation, developed countries commit to mobilize, jointly, USD 100 billion dollars a year by 2020. This funding will come from private and public sources, bilateral and multilateral, including alternative sources of finance. A significant portion of such funding will flow through a newly established Copenhagen Green Climate Fund (CGCF).

The distribution of funds between mitigation and adaptation efforts is not yet defined and it deserves careful consideration. Even though it is now clear that both mitigation and adaptation will be needed to reduce the negative impacts of climate change, the optimal timing of investments is not the same. Recent research with an enhanced version of the WITCH model – designed to quantify the optimal time profile of investments in adaptation and in mitigation – clearly shows that while it is optimal to invest immediately in mitigation actions, most investments in adaptation could be delayed to later in the future³. The reason is that while it is imperative to control GHG emissions as soon as possible to attain low temperature targets, in the short term climate change impacts are still moderate and adaptation measures can be put in place relatively fast later on in the future.

Table 2 - The Mitigation Potential of the Copenhagen Green Climate Fund. Click the picture to enlarge

Let us therefore suppose that the financial resources mobilised in Copenhagen will be used to mitigate GHG emissions, at least from 2011 until 2020. We also assume that these emissions reductions will be additional to those already announced, including the Clean Development Mechanisms (CDMs). Are these resources sufficient to fund the investments which are necessary to restructure the energy system, reduce deforestation, improve land use, in order to close the gap between the announced emissions reductions and the optimal trajectories towards a safe GHG concentrations stabilization pathway?

Our estimates, again using the WITCH model, show that, by directing about 60% of the CGCF to financing low cost abatement actions in developing countries, global emissions could peak in 2020, as shown in Table 2⁴. About 50 billions per year from 2011 until 2020 would reduce emissions by 2.9 GT CO2-eq between 2011 and 2015 and by 2.4 GT CO2-eq from 2016 to 2020, for a total of 26.4 GT CO2-eq⁵. It is hard for emissions to peak before 2015 with this financing scheme. The emissions trajectory would thus show a remarkable contraction with respect to the BaU, but the abatement effort would still be insufficient to achieve the announced temperature target.

Figure 1 - Historical and BaU Scenario Emissions, Copenhagen Commitment and the role of the CGCF for Mitigation. Click the picture to enlarge

The transformation of the CGCF into a full mitigation fund (100% for abatement actions) would allow to reduce emissions by 3% with respect to 2005, it would limit to 18% the increase with respect to 1990 and it would reduce emissions by 22% with respect to BaU. With smooth rapid mitigation action, it is in principle possible to have the peak of emissions around 2015, but in order to achieve the required emissions reductions in 2020 (-5% -10% wrt 2005), additional funding would be needed. A graphical representation of the abatement potential of a mitigation-driven CGCF is given in Figure 1.
Therefore, even if all financial resources were devoted to mitigation, they would not be sufficient to direct carbon emissions along a path consistent with the 2°C target. A much bigger financial effort seems to be necessary.

Conclusion

A first analysis of the mitigation targets to which major world economies informally committed for the year 2020 in Copenhagen, reveals that the expected impact on global emissions is not negligible if measured with respect to BaU, but it is still insufficient to curb emissions below 2005 levels by 2020, a necessary condition to contain global warming within safe levels. GHGs will continue to grow and concentrations in the atmosphere will easily pass 450 ppm CO2-eq at 2020, a threshold above which it will be almost impossible to keep temperature increase below 2°C.

It would therefore be necessary to invest in the development of low carbon technologies and their diffusion, on energy efficiency, avoided deforestation, carbon capture and storage, etc. If all the Copenhagen Green Climate Fund is used to finance cheap, additional, mitigation actions in developing countries, this would make emissions peak before 2020. With steady emissions cuts in the following decades, it would be possible to limit temperature increase to about 2.5°C, above the 2°C threshold but well below the temperature level that would be achieved without strong mitigation action.

There seems to be mixed news coming from Copenhagen. Announced mitigation targets are far from being adequate to control climate change. However, if all financing to developing countries is directed towards mitigation, there are chances to put the world on the right trajectory to reduce global warming significantly. Therefore future negotiations rounds should devote a great attention on how to shape the Copenhagen Green Climate Fund.

Carlo Carraro: University of Venice, Fondazione Eni Enrico Mattei (FEEM), and Euro-Mediterranean Center for Climate Change (CMCC):
Emanuele Massetti: Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Center for Climate Change (CMCC).

1. IPCC, Fourth Assessment Report, WG3, Chapter 3, Table 3.10. In order for temperature increase to be contained between 2.0 and 2.4 °C CO2 concentrations should not exceed 350-400 ppm, all GHG concentrations should not exceed 445-490 ppm CO2-eq; in order for temperature increase to be contained between 2.4-2.8 °C, CO2 concentrations must remain below 400-440 ppm and GHGs concentrations below 490-535 ppm CO2-eq. In our estimates we assume that all GHGs are abated in equal proportions.
2. For an analysis of the chances to achieve the 2°C target please see Carraro and Massetti, “The Improbable 2°C Target,” voxeu.org, 3 September 2009
3. Bosello, F., C. Carraro and E. De Cian (2009). “An Analysis of Adaptation as a Response to Climate Change.” University of Venice, Working Papers of the Department of Economics, No. 2 6 /WP/2009, Sept 2009.
4. Emissions reductions do not include the abatement to which Brazil has already committed at Copenhagen. Reducing emissions by 36% below BaU is a challenging task for Brazil that requires strong action against deforestation.
5. These estimates are based on marginal abatement costs at the year 2015 and 2020, and thus represent an upper bound to average abatement costs. On the other hand, we assume smooth and costless transactions, which is clearly optimistic.

After Copenhagen,
which prospect for climate negotiations?

The answer by
Christa Clapp, OECD Environment Directorate
"A twofold mission for the next year: strangthening signals from Copenhagen with an effective international regime and domestic policy frameworks” (read more)

The answer by
Manfred Fischedick, Vice-President and Director Wuppertal Institute for Climate, Environment and Energy
and
Wolfgang Sterk, Project Co-ordinator Wuppertal Institute for Climate, Environment and Energy
“Don't tie horses to the US waggon: for a green coalition leaded by EU” (read more)

The answer by
Emilio Lèbre La Rovere, Coordenador Executivo, Centro de Estudos Integrados sobre Meio Ambiente e Mudanças Climáticas – CentroClima and Universidade Federal do Rio de Janeiro
“Climate negotiations will have to promote additional mitigation commitments from both Annex I and emergent countries” (read more)

© PhotoXpress.com

At COP 15 in Copenhagen, China has announced that the country carbon emissions per unit of gross domestic product (GDP) will be reduced in 2020 by 40–45% with respect to 2005 levels (this commitment is in the Annex to the so called Copenhagen Accords). This has marked a point of departure from the long standing reference to the UNFCCC principle of “common but differentiated responsibilities”, which requires Annex 1 countries to take on the initial responsibility in reducing carbon emissions. China’s appeal to the historical responsibility of developed countries and their higher per casame pita emissions remains a very valid point, but its now undisputed role as the largest emitter in the world –with 25% more emissions than the second one, the US– doesn’t get unnoticed. Before and during COP 15, many countries have pressed China to take on action in controlling their very rapid emission growth.

An important political statement with an elusive metric

Although China has resisted demands from American and European negotiators to adopt binding limits on its emissions, arguing that environmental concerns must be balanced with economic growth and that developed countries must first demonstrate a significant commitment to reducing their own emissions, its -40-45% proposal can be considered an important political statement. However, the assessment of its implications in terms of emissions reductions has generated less consensus, given that specific assumptions are needed to convert the somewhat elusive metric of carbon intensity into the conventional one of quota targets.

Economic and emissions projections can be used to provide some intuition of how demanding is the intensity proposal. According to the Energy Information Agency of the US Department of Energy (EIA-IEO09), in 2020 China will have an economy of 16.9 Trillions USD (measured in 2005$, PPP) and energy related emissions equal to 9.4 GtCO2, and thus a carbon intensity of 0.56 tCO2/’000$; with an intensity in 2005 just above 1, the country is thus assumed to achieve the 45% reduction target in the so called Business as Usual scenario, without any additional effort.

Another well known energy outlook, provided by the International Energy Agency (IEA-WEO09), foresees a very close carbon intensity figure (0.55), reinforcing the argument that the Chinese proposal would not entail measures that are additional to the ones considered as baseline. What China commits to do is therefore its business as usual.

However, this interpretation is at odds with declarations that suggest that significant action will be required to achieve a decarbonization of the economy of this sort, released for example by the same IEA¹. Chinese commentators² have suggested that the objective will require significant investments and increased taxes on energy or emissions. Yet, looking at Chinese own forecasts doesn’t provide a different picture from the ones of foreign agencies: in the report that forecasts energy and emissions to 2050, produced by China’s Energy Resource Institute, the carbon intensity in the baseline is expected to fall within the 40-45% band. Indeed, and contrary to other countries such as India, the main sources of projections seem to agree on similar growths in emission (3% per year) and in the economy (8% per year), which yield the rate of decarbonization set forth in the Chinese proposal in Copenhagen.

It should be noted that Business as Usual scenarios incorporate significant investments in low carbon technologies: for example, according to the IEA, 114 GW of wind and nuclear will be in place in 2020, as compared to today’s 14. China has also committed to a significant energy efficiency improvement before 2010. Yet, coal is expected to continue to dominate the energy mix, with the astonishing installed capacity in 2020 of almost 1000GW, twice as much as today. It thus remains unclear whether the proposed climate policy will achieve more than the already demanding “natural” evolution of baseline.

Economic development and carbon intensity

History provides some, though partial, guidance over the future. In the 15 years preceding 2005, China’s carbon intensity has decreased by roughly 44%, the same number that is forecasted to 2020, either as baseline or policy. Yet, significant variations can be detected over time. In Figure 1, we plot the historical carbon intensity for China, as well as for South Korea and Taiwan³. China achieved a remarkable drop from its initially extremely high carbon intensity, but then experienced a sudden reverse of this trend in the early 2000’s, that has ceased only after 2004. Though this well noticed fact can be imputed to a swift reallocation of the economic activity towards energy intensive sectors such as cement and aluminum, and to potential misreporting of emission inventories around the turn of the century, it also serves as a reminder that steady intensity improvements should not be given for granted.

Figure 1. Carbon intensity versus per capita gdp (log scales). Historical data for China (1988-2008), South Korea (1980-2005) and Taiwan (1975-2006), and projections to 2020 from EIA IEO09, IEA WEO09 and ERI. The two horizontal lines indicate the carbon intensity reduction target of 40-45% with respect to 2005 – click the picture to enlarge

Indeed, looking at a sufficiently large panel of countries doesn’t provide an unequivocal relation between economic development and carbon intensity⁴. Carbon efficiency gains are observed in many circumstances, but in widely varying relation to the economy. Figure 1 provides some evidence for two neighboring countries. Both Taiwan and Korea started from lower levels of intensity than China for similar level of income, potentially because both countries rely almost exclusively on imported energy and do not have significant coal resources. Over time, both managed to improve their intensity, though at rates lower than the historical (and projected) one for China. Other coal rich countries in transition through similar levels of intensity or wellbeing provide different evidence. Poland managed to decrease its intensity roughly one to one with its economy. South Africa didn’t essentially get any efficiency gain.

Therefore, the historical evidence provide us with only limited confidence to believe that naturally, as China’s economy develops from the roughly 5000$/per capita of today to the 11500 $/per capita in 2020, the carbon intensity will be driven down by a growing role of the service sector and of technology. That is, the projections reported in Figure 1 indicating a baseline straightly approaching the climate target might well be correct, but it also plausible that deviations from the historical rates of decarbonization would result in a much more demanding job.

Assessing the challenge of the carbon intensity target

By regressing per capita GDP on carbon intensity (in logs), we can estimate the carbon elasticity of per capita income for different countries and time spans. Looking at the past 20 years (1988-2008), China’s carbon elasticity is about -0.5, meaning that every 1% of increase in per capita income has been accompanied by 0.5% decrease in carbon intensity. This value is also true for Taiwan, for the 5-11.5 K$/cap range assumed to be for China between now and 2020. Using this value for projecting forward, would result – as noted above – in a carbon intensity reduction in line with the climate proposal, of about 41% with respect to 2005. Indeed, despite using a much richer modeling approach, this is what international and national scenarios are projecting.

Table1. Implications of different elasticities on carbon intensity and emissions in China in 2020 – click the table to enlarge

Using lower elasticities would alter the picture. For example, since 2004 (and according to provisional emission estimates to 2008) China’s carbon elasticity has been around -0.3. Estimates for South Korea – for a similar range of per capita income – yields a value of -0.25. In Table 1 we show what would happen if China follows such rates of decarbonization. The carbon intensity reductions for these two lower values would be lessened, consequently, to 27% and 23% respectively. Such lower rates would result in higher emissions, or equivalently in more emission reduction had the climate proposal of 40-45% to be attained. Table 1 also shows that an elasticity value of -0.3 would result in a mitigation effort of -26%, and that would exceed -33% for the lower case.

These results indicate that assessing the challenge of the carbon intensity target proposed by China is not an easy task. If China were to continue on its long term historical trend, then the 40-45% objective would essentially yield nothing more than the baseline. No additional effort. No leadership to fight climate change. The Copenhagen Accords would be even emptier than what is now perceived. This is what energy scenarios seem to predict to be the most likely case. Yet, the significant variations over time and across countries suggest that the proposal could turn into a serious mitigation policy, and possibly a very challenging task, even for somewhat lower rates of decarbonization of the Chinese economy.

1. The IEA Chief Economist, Fatih Birol, told Nature that “if the target is met, it would have significant implications for China and the rest of the world.” Nature, “China’s climate target: is it achievable?”, Vol 462|3 December 2009
2. See for example http://www.chinadaily.com.cn/china/2009-12/04/content_9113522.htm
3. Data sources for GDP, population and emissions: World Development Indicators, CDIAC, Penn World Tables
4. Similar suggestions hold for economic development and per capita emissions, a topic widely analyzed in the so called environmental Kuznets curve literature