Basic Principles of a Global Agreement

We’re talking about the concepts of the climate change negotiations. It’s a more abstract lecture than the others. The numbers that I’m giving are made up. Of course I’m trying to use numbers that are illustrative but they’re mainly illustrative of concepts. And though it’s somewhat abstract, I think these concepts are important.

We discussed in chapter one the concepts of Pareto improving negotiations, the concepts of efficiency and of fairness or equity as distinct aspects or gauges of a negotiating agreement.

I want to review many of what you could call as the headings or the chapter titles of a negotiation agreement. Again, not in the literal sense of how the negotiations will be written down, that we’re going to do in the global online negotiations next semester, but more in the conceptual sense.

What are the headings that negotiators need to be attentive to to reach a fair, efficient, meaningful agreement?

So let’s start with the essence of this course. The agreement has to move the world to deep decarbonization. Our theme is that when one looks at the costs of mitigation and the benefits of mitigation, staying under the 2-degrees Celsius limit is absolutely imperative. The damages of going beyond that are so great, the risks are so high that the marginal benefits of mitigation drive us to ensure that we stay within the limit.

And the technologies that we have available and that we can develop to reduce carbon emissions are sufficiently good that it makes sense for the world to negotiate on the basis of its commitment to 2-degrees C as absolutely the upper bound, the limit of climate safety. A second standard which we introduced in last lecture is efficiency. And that is that if we’re going to undertake deep decarbonization, this should be done in the least cost way.

The world shouldn’t waste resources arbitrarily in reducing carbon emissions, it should find the way to move from the business-as-usual to a safe, deep decarbonization pathway in an overall, least cost manner.

But we also discovered that simply applying a naive efficiency criterion alone isn’t enough because efficiency might leave the burden of adjustment unfairly on one particular group of countries.

So we need to introduce concepts of fairness alongside concepts of efficiency.

Efficiency think of as low cost, least cost, but fairness is who actually bears that cost in the end? And since countries can make financial transfers to each other, that’s one way of reallocating across countries some of the economic costs associated with climate mitigation.

Now a phrase that has been central to these negotiations from the very start of the U.N. Framework Convention on Climate Change is common but differentiated responsibilities.

This is the concept that the world as a whole has a shared responsibility of climate safety. All countries signed onto that from the poorest to the richest. But these are differentiated responsibilities and CBDR, (common but differentiated responsibilities) conveys within it not only different capacities, different marginal costs of mitigation, but also fairness, that countries have different responsibilities to justice, globally.

Rich countries have more financial capacity, more economic capacity, more historical responsibility and therefore they should pay their fair share. That’s not the end of the negotiations.

If this were a one-time exercise, one moment of negotiating, say a purchase and sale of a house, we might stop there, what’s efficient, what’s equitable?

But we’re talking about a complex process over many, many decades and therefore it’s not surprising that there are other headings of the negotiations. One key concept is that what we know about what to do and how much to do and the ways to do it will evolve over time.

Our understanding of the science, our understanding of the risks and crucially our technological options are going to evolve over time.

So one heading of the negotiations is about updating. We have to go into these negotiations understanding that this is a dynamic process, it’s an adaptive process. Adaptive not in the sense of adapting to climate change, but in the sense of adapting to change in global realities more generally, new information, new technologies, new awareness, new science, new understanding of what should be done. So we need systematic updating.

As the climate science changes, we may come to understand that 2-degrees centigrade is too much. Maybe we really have to aim for one and a half degrees Celsius for the true margin of safety. This is something that climate science might reveal to us in the coming years. Alternatively, we may find that 20 billion tons of CO2 emission relative to the baseline per year is too low because wonderful breakthroughs occur in solar or wind power and electric vehicles or in carbon capture and sequestration or fourth generation nuclear power that allows us to go even farther than that.

And so we need that kind of updating, resolution of uncertainties, learning and investing in new knowledge, especially investing in new technology.  And a technology blueprint process, creating a roadmap and investing in the research and development and the demonstration and the diffusion of these improved technologies will be a crucial part of any successful agreement.

More generally the parties to the Framework Convention talk about the means of implementation. They say, okay, this is all fine concepts. Two degrees no problem. They don’t say, no problem, but they say, yes we understand the concepts, we understand the concepts of sharing the burdens. But what are the real means of implementation? What do they mean by that?

They mean first, what policy instruments are going to be chosen? Will there be common worldwide instruments? It’s been a dream of some, not one that I share, but it’s been a dream of some that there should be one global market of emissions permits. And that that would set one social cost of carbon and that would drive an efficient, low-cost solution. That is an example of trying to put one single policy instrument inside the negotiating framework perhaps to reach a desirable outcome.

Another example that’s suggested is a single price on carbon in the form of a carbon tax. Or it could be a single regulatory standard which says, no country shall engage in the construction of new coal fired power plants unless they are fully equipped with carbon capture and sequestration technology.

So policy tools are one part of implementation. Leave them to the countries or have them at a global scale.

A second of course is financing, who’s going to pay for all of this? What’s going to happen with the poor countries? How can countries that need technologies that are owned by businesses in other countries access those technologies? Do they have to pay large royalties? Do they have to pay monopoly rents to a monopoly holder of such technologies?

Then another aspect of implementation, absolutely central is of course developing the technologies that enable us to stay below the 2-degree C limit as Emmanuel Guerin has emphasized and put into tremendous detail in earlier lectures. There’s also the question of capacity building which has been part of all of the agreements.

Some countries simply need help technologically, not in the form of what’s embodied in machinery, but in the form of training of local engineers, local regulators and so forth in order to be able to implement a program or a new system or a new technology of low-carbon energy. And then finally one needs to remember that these negotiations cover not only mitigation, not only moving from the business-as-usual trajectory to the 2-degree centigrade limit, but also must cover all of the challenges of adaptation. Increasingly the treaty has incorporated concerns of adaptation. How to help countries adapt to the ongoing climate change? How to become more resilient? How countries can be insured in a way for losses and damages that they incur when they’re hit by a massive tropical cyclone or a massive inundation, or a terrible drought that, whose frequency and intensity is being increased by the ongoing climate change?

So the adaptation agenda is another chapter of the full agreement. You see we have the hands full, with all of this countries are asking what does this mean for us? What are we going to have to do? What burdens are we signing up to? Can we actually meet those responsibilities technically, legally, economically? And who’s going to pay for all of this? Just ourselves? Will we get help? What’s the basis for that kind of sharing of the economic and the financial costs? We now turn in more detail in the next chapter to this question of fairness.

 

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