Post-2020 Climate Change Regime Formation [1 ed.] 9781135974107, 9780415826068

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Post-­2020 Climate Change Regime Formation

The fate of the climate change regime hangs in the balance as the UN-­led negotiations try to forge a new international strategy for the post-­2020 period. Since 1992, the UNFCCC and its Kyoto Protocol has been the primary legal instrument to respond to the climate challenge. However, the intergovernmental process has been riddled with problems that have rendered it ineffective. The changing economic landscape has further made the country grouping problematic as some developing countries now emit more than some of their advanced counterparts. Such problems have crippled the existing regime in adequately addressing climate change. Building upon the expertise of the contributors of this volume, this ground-­breaking collection aims to show the way forward for the intergovernmental process. It is the first of its kind to explore the key features of the regime, featuring meticulously researched pieces from leading experts in the field. Each chapter responds to the questions surrounding the political and structural limitations of the current top-­down approach taken in climate negotiations and proposes various alternatives countries can take to overcome such limitations in the process of building the post-­2020 climate change regime. In particular, this collection underscores the concept of low-­carbon development or low-­carbon green growth to make the climate change regime more effective. Suh-­Yong Chung is an Associate Professor in the Division of International Studies at Korea University and Director of Center for Climate and Sustainable Development Law and Policy, Republic of Korea.

Routledge Advances in Climate Change Research

1 Local Climate Change and Society Edited by M. A. Mohamed Salih 2 Water and Climate Change in Africa Challenges and community initiatives in Durban, Maputo and Nairobi Edited by Patricia E. Perkins 3 Post-­2020 Climate Change Regime Formation Edited by Suh-­Yong Chung

Post-­2020 Climate Change Regime Formation

Edited by Suh-­Yong Chung

First published 2013 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2013 selection and editorial material, Suh-­Yong Chung; individual chapters, the contributors The right of Suh-­Yong Chung to be identified as author of the editorial material, and of the individual authors as authors of their contributions, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-­in-Publication Data Post-2020 climate change regime formation / edited by Suh-Yong Chung. pages cm – (Routledge advances in climate change research ; 3) 1. Climatic changes–Government policy–International cooperation. 2. Climatology–International cooperation. I. Chung, Suh-Yong. QC903.P784 2013 363.738′74561–dc23 2012049757 ISBN: 978-0-415-82606-8 (hbk) ISBN: 978-0-203-38335-3 (ebk) Typeset in Sabon by Wearset Ltd, Boldon, Tyne and Wear

Contents



List of illustrations Notes on contributors Acknowledgments



Introduction and overview

vii ix xii 1

S uh - ­Y ong C hung

1 Why the world has failed to slow global warming

10

D a v id G . Victor

2 Is an international climate treaty worth fighting for?

32

Y v o de B oer

3 Post-­2020 climate change regime building: an advanced developing country’s perspective

48

S uh - ­Y ong C hung

4 Post-­Durban prospects for low-­carbon green growth

68

P aul E kins

5 Climate negotiations: how to break the impasse and deliver

92

J uan Z ak and M yung K yoon L ee

6 China’s transition toward a low-­carbon economy: a review of the 11th Five Year Plan Y e Q i and H ui - ­min L i

112

vi   Contents 7 Moving forward in the climate change policies and practices

131

W an P ortia H amzah



Conclusion

166

S uh - ­Y ong C hung



Index

173

Illustrations

Figures 1.1 National interests and emissions 4.1 The temporal relationship between emissions and atmospheric concentrations of greenhouse gases 4.2 The economy as a subsystem of the biosphere 4.3 Proposed model of UK feed-­in tariff, contract-­for-difference 4.4 Carbon price support proposed in the UK 4.5 Potential of different low-­carbon technologies 4.6 GDP percentage changes—UK MARKAL MACRO 4.7 The potential contribution of environmental tax reform to human well-­being  4.8 The effects of environmental tax reform (ETR) on greenhouse gas emissions in ETR countries 4.9 The effects of environmental tax reform (ETR) on GDP in ETR and non-­ETR countries 4.10 The effect of environmental tax reform (ETR) on global CO2 emissions, GINFORS 4.11 Results for GDP and greenhouse gas emissions (GHG) for different environmental tax reform (ETR) scenarios 4.12 Scatter plot of model cost projections 6.1 Growth rate of light industry and heavy industry (1990–2010) 6.2 Change of energy intensity in China (1980–2010) 6.3 Comparisons between China and Japan of gross coal consumption rate and net coal consumption for fossil-­fired power plant (2005–2010) 6.4 Change of non-­fossil energy generating capacity (1995–2010) 6.5 Energy intensity and CO2 emission intensity of the manufacturing industry sector (2005–2010) 6.6 CO2 emission and CO2 emission intensity in the energy industry sector, the manufacturing industry sector, and the nation (2005–2010)

16 70 73 77 78 79 81 81 82 83 85 85 86 113 114 115 116 117 125

viii   Illustrations

Tables 4.1 GDP and domestically produced emissions indices, selected OECD countries, 2005 4.2 Results from the environmental tax reform (ETR) in the PETRE project 5.1 Emission rights and commitments 2008–2020, Annex 1 parties 5.2 Per-­capita emissions 2008–2020, non-­Annex 1 parties 7.1 Energy policy and regulatory responsibilities

74 84 98 99 138

Contributors

Yvo de Boer joined KPMG in July 2010 as Special Global Advisor, Climate Change and Sustainability. He is responsible for thought leadership and strategy development, and acts as a global ambassador for KPMG worldwide. Prior to joining KPMG, he was Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC)—the body responsible for a multi-­lateral response to the climate change challenge. He has been involved in climate change policies since 1994 and seeks broad stakeholder involvement in all issues relating to the challenge. Alongside his work for KPMG he is a Professorial Fellow at the University of Maastricht. Suh-­Yong Chung is an Associate Professor in the Division of International Studies at Korea University and is an international expert on sustainable development law and policy. His research covers various emerging issues in the environment and sustainable development such as climate change, marine environment, and biodiversity both at global and regional level. His most recent works focus on internationalization of Green Growth policy, post-­2020 climate change regime formation, and regional environmental institution building in Northeast Asia. He holds degrees in law and international relations from Seoul National University, the London School of Economics, and Stanford Law School. Paul Ekins has a PhD in Economics from the University of London and is Professor of Resources and Environmental Policy at, and Director of, the UCL Institute for Sustainable Resources, University College London. He is also a Fellow of the Energy Institute and a co-­Director of the UK Energy Research Centre, in charge of its Energy Systems theme. From 2002–2008 was a Member of the Royal Commission on Environmental Pollution. From 1997–2005 he was a special advisor to the Environmental Audit Committee of the House of Commons, from 2003–2007 he was a Member of the Government’s Sustainable Energy Policy Advisory Board, and in 2007 was a Specialist Advisor to the Joint Parliamentary Committee on the Climate Change Bill. He also has extensive experience consulting for business, government, and

x   Contributors international organizations. In 1994 he received a Global 500 Award for Outstanding Environmental Achievement from the United Nations Environment Programme. Wan Portia Hamzah is currently a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia, where she has worked since 1991. She has served in various national, regional, and Commonwealth working groups on science and technology for development. Her main responsibility within ISIS currently relates to the nexus-­oriented approach to better understand the interlinkages between the water, energy, and food sectors as well as the influence of climate policies. Her most recent publication is “The Environment and Human Security in Southeast Asia” in Carolina G. Hernandez (ed.) Mainstreaming Human Security in ASEAN Integration—Vol. 1: Regional Public Goods and Human Security (ISDS, 2012). She is currently a member of the International Advisory Board of the Center for Climate and Sustainable Development Law and Policy. Myung Kyoon Lee is the Senior Economist and Director of Green Growth Planning and Implementation (GGPI) Unit in the Global Green Growth Institute (GGGI) located in the Republic of Korea. He studied Economics at Seoul National University in Seoul, Korea and did his MA and PhD of Environmental Economics at Brown University in the USA. As the Director of GGPI he supervises various country projects which the GGGI conducts with developing country partners. He has been a professor at Keimyung University in the Faculty of Environment as well as Senior Economist at UNEP Risoe Centre on Energy, Climate and Sustainable Development, where he managed its “Capacity Development for the CDM (CD4CDM)” programme and led its Climate Change cluster. Hui-­min Li is a Postdoctoral Fellow of Climate Policy at Tsinghua University, School of Public Policy and Management, Beijing. He received his PhD in Environmental Science in 2009 from Beijing Normal University. His major fields of interests are climate policy, low-carbon economy, and environment management. Ye Qi is a Cheung Kong Professor of Environmental Policy at Tsinghua University School of Public Policy and Management and Director of the Climate Policy Initiative at Tsinghua, Beijing. He serves on the Science Steering Committee of the Global Carbon Project and advises governments, NGOs, and international organizations on climate change, clean energy, and environmental policy issues. Before he returned to China, he taught Environmental Science, Policy, and Management at University of California, Berkeley from 1996 through 2003. He received a PhD in Environmental Science in 1994 from the State University of New York of Environmental Science and Forestry and Syracuse University.

Contributors   xi David G. Victor is a Professor at the School of International Relations and Pacific Studies at the University of California, San Diego. He leads the International Law and Regulation Laboratory which studies why some international laws are highly effective and others founder. Prior to joining UC San Diego, he served as Director of the Program on Energy and Sustainable Development at Stanford University where he was also a Professor at Stanford Law School. He has also directed the Science and Technology Program at the Council on Foreign Relations (CFR) in New York where he led the organization’s task force on energy security. Victor earned his PhD in Political Science from the Massachusetts Institute of Technology (1998) and his AB in History and Science from Harvard University (1987). Juan Zak is a Senior Energy Scientist at UNEP Risoe Centre on Energy, Climate and Sustainable Development, Denmark. Main activities during his career at the Centre have included energy-efficiency financing, small renewable energy enterprises, renewable energy strategies, capacity building on wind energy, and support on National Communications to the UNFCCC. He has recently developed a special interest in the links between climate change, technology transfer, and equity. At present he dedicates most of his time to developing and maintaining the Centre’s websites, and to IT coordination. He is a mechanical engineer with further specialization in energy efficiency, sustainable energy development, and information systems.

Acknowledgments

I would like to thank the Global Green Growth Institute for hosting the International Expert Series on Post-­2012 Climate Change Regime Formation on which this book is based. This lecture series would not have been possible without the Center for Sustainable Development Law and Policy for organizing the event. I am grateful to all the contributors of this volume for their tireless efforts in producing meticulously researched pieces. I am also thankful to my Research Assistants Sieun Lee, Min Ho Youn, Sung Yeon Kweon, and Ardie B. Ermac for assisting me throughout this project.

Introduction and overview Suh-­Yong Chung

Since the international community recognized the serious threat climate change poses to the world, various efforts have been made at different levels by diverse actors. Among them, the UN process mainly focusing on the United Nations Framework Convention on Climate Change (UNFCCC) has been the center of discussions. In 1992, states adopted the UNFCCC on the occasion of the Rio Conference. As the first global mechanism to address climate change, the UNFCCC has tried to mobilize various resources to tackle climate change. Based on the UNFCCC, the Kyoto Protocol was adopted in 1997 as an implementation tool to further the efforts of international community. The Kyoto Protocol contains more detailed rules and procedures on how to curb the amount of greenhouse gas emissions. Utilizing the top-­ down approach, which emphasizes the implementation of legally-­binding commitments to reduce greenhouse gases (GHGs), the Kyoto Protocol introduced legally binding emission targets to developed Parties, the so-­ called Annex I countries, based on their historical responsibility. The Kyoto Protocol also introduced innovative market mechanisms as a complementary means to help Annex I countries meet their obligations as well as to aid developing countries achieve sustainable development. These Kyoto Mechanisms (often referred to as Flexibility Mechanisms) became an integral part of the implementation mechanisms within the UNFCCC regime. As the first commitment period for Annex I countries under the Kyoto Protocol was set to expire by the end of 2012, states agreed on the Bali Road Map in 2007 to engage in another set of negotiations to design a post-­2012 climate change regime with the aim of completing by 2009. This was not only to deal with the issues of the second commitment period for Annex I countries, but also to encourage mitigation actions by developing countries. As some advanced developing countries such as China and India have become large emitters of GHGs, it has become critical to engage them constructively during the course of mitigating GHG emissions. However, for various reasons such as the two-­track approach of the UNFCCC, states failed to agree on a new regime by 2009, rather they took note of a

2   S.-Y. Chung political agreement—the Copenhagen Accord. As a result, another series of negotiations have been undertaken without much progress. In 2011, however, Parties made an important progress by agreeing to initiate a new set of negotiations in Durban, South Africa. In other words, states decided to launch a new negotiation process based on the so-­called Ad Hoc Working Group on the Durban Platform (ADP), wherein they need to finish the negotiations and agree on the post-­2020 climate change regime by 2015. With the future of the climate change regime hanging in the balance, it could not be more timely to explore prospective options that could bring about a more effective global architecture to respond to the climate challenge; effective in terms of raising the level of ambition to close the mitigation gap and in terms of mobilizing reluctant countries in making pledges. In designing a new international framework, this volume recognizes the need to reassess the current climate regime. The limitations of the existing regime create the pretext to seek ways or viable policy frameworks that could augment the capacity of the regime to effectively respond to the challenges posed by climate change. Since climate change is a global problem that warrants an eclectic set of solutions, this volume highlights an interdisciplinary approach to understanding important factors key to the realization of an effective climate change regime for post-­2020. By bridging lessons learned from past negotiations and by analyzing viable policy architectures, this book can serve to shed light on the many issues facing the international policy community in the hopes of achieving real progress for the post-­2020 climate change regime.

Two decades of negotiations: what have we learned? Need for enhancing effectiveness The past climate change regime has predominantly utilized a top-­down approach or a command-­control approach being complemented by a bottom-­up approach based on Kyoto mechanisms. This effort, however, has failed to tackle climate change and its adverse effects effectively. Considering the fragmented nature of the international community, a top-­down approach may not be able to bring adequate results in achieving the objectives of the climate change regime. Without effective enforcement mechanisms at the international level, any attempt to implement climate change policy by imposing obligations of reducing GHGs on the states would fail. States that need to implement the given obligations may face serious challenges domestically if additional costs are incurred to implement the obligations. This would lead states to opt out of implementing their obligations. Therefore, a more effective climate change regime entails a much more efficient approach that ensures opportunities for the states, thereby reducing GHG emissions. In this sense, as demonstrated in this

Introduction and overview   3 volume, a market-­based bottom-­up approach may better appeal to designing post-­2020 climate change regime. Furthermore, in order to enhance the effectiveness of the climate change regime, wider participation of states in mitigating GHG emissions is important. Currently, the Kyoto Protocol targets only about one-­quarter of the global emissions (Bodansky 2009). Together, the top 25 GHG emitters account for approximately 83 percent of global emissions, with 13 Annex-­I countries, 11 non-­Annex I countries, and the EU (Baumert et al. 2005). In particular, the rapidly growing economy of advanced developing countries is matched by an increase in aggregate GHG emissions (Cosbey 2009). As of the time of writing the introduction, China has already become the largest emitter, while India is expected to take over the China’s position in 2030. Indeed, it is really critical for the future climate change regime to find a way of encouraging developing countries to be more active in the global efforts to combat climate change in order to broaden the scope of participation in mitigating GHG emissions. In this sense, a market-­based, bottom-­up approach would be more attractive. If the emerging climate change regime can provide benefits to states that implement a low-­carbon development strategy, it would certainly encourage not only developed countries but also developing countries to actively participate in implementing relevant low-­carbon policies. More flexibility The Kyoto Protocol was a high-­water mark for the UN-­led climate change regime as it signaled the regime’s first serious step to address climate change, but more importantly, the Protocol was praised for its Flexibility Mechanisms designed to aid Parties, particularly Annex-­I countries, to meet their commitments. As opposed to imposing particular policies and measures, Article 2 of the Protocol provides states the freedom (to some extent) to choose how to meet their national emission targets. However, the Protocol remains to prescribe internationally defined emissions targets. As states, particularly developing countries, are concerned about the possible repercussions of legally binding emissions targets on their economies, it is imperative to accord countries the flexibility to define their commitments in their own terms. In other words, providing states the ability to determine commitments that reflect what they are willing and are able to do. Furthermore, since varying national circumstances and strategic interests necessarily call for different types of policies, it is also crucial to provide Parties with greater flexibility to chart their own national mitigation strategies that run parallel not only with their national interests but also with the broader international interests in responding to climate change. In this context, a plethora of approaches or policies have been

4   S.-Y. Chung considered. This volume for example, highlights the concept of low-­carbon development strategy as a bottom-­up approach that advances both development interests and climate action. A number of advanced developing countries such as China, Korea, Indonesia, and Brazil have resorted to this strategy as it allows them to contribute to mitigation efforts while promoting economic growth.

Issues in designing the post-­2020 regime At the Durban climate change meeting in 2011, the international community laid out the path to negotiate a new global architecture for the post-­2020 period. The success of the negotiations for the post-­2020 climate change regime will depend on how to prepare for a policy platform where countries with different interests may find a middle ground where they can participate more actively in efforts to reduce GHG emissions. In this sense, two issues of legal formality and approaches will be important in crafting the post-­2020 climate change regime. Legal formality The challenge of reaching an agreement over the legal form of the eventual climate change agreement was first officially addressed when the UN climate negotiations in 2007 adopted the Bali Road Map which launched a process to reach an “agreed outcome” on long term cooperative action on climate change. The question over the legal nature of the “agreed outcome” of the climate negotiations under the UNFCCC has been a polarizing issue. Some argue that a legally binding instrument, be it a protocol or another treaty, will provide a sense of predictability and accountability, but others suggest that the difficulty of deciding which counties should be bound by what specific commitments, and by when, creates a pretext for unilateral, non-­binding pledges from Parties. This lack of agreement on legal form culminated at Durban when Parties agreed to build upon the process set by the Bali Road Map by establishing the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) to work on crafting a “protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all parties” (Decision 1/CP.17 Par 2) which will oversee and manage future climate actions. However, the phrases that comprise the sentence remain ambiguous, and beg for scrutiny. The terms “Protocol” and “another legal instrument” run parallel to the 1995 Berlin Mandate which initiated the process that led to the Kyoto Protocol. However, others argue that in the context of the Durban Platform decision, “legal instrument” does not automatically signify a “legally binding instrument” and could refer to any of the legal instruments the COP could adopt—amendments, amendment to Annexes and Protocols (Rajamani 2012). As the terms “Protocol” and

Introduction and overview   5 “another legal instrument” conjure up images of a legally binding agreement, a more ambiguous term “agreed outcome with legal force” was added to accommodate some Parties, such as China and India. Considering the increasing popularity of soft law instruments in the international law-­ making process, several options such as decisions of the Conference of Parties could be favored by these states. No matter what type of legal formality will be used for post-­2020 climate change regime, ultimately, the level of effectiveness of a new regime will depend more on what type of approaches will adequately utilized in promoting the implementation of climate change policies by the states. Approaches Building upon the realization that the top-­down approach has yielded little results in terms of reducing emissions and of reaching an agreement, this volume offers compelling arguments for the need for shifting the emphasis from a top-­down approach to a bottom-­up approach such as the low-­ carbon development strategy (LCDS) for the emerging international architecture for post-­2020. Although LCDS has only recently gained prominence, it is not something new. The current climate change regime has long recognized the potential of low-­carbon development strategies in promoting mitigation actions that are consistent with sustainable development.1 Sometimes referred to as low-­carbon green growth policy, LCDS generally refers to national strategies that envision a low-­emission, climate-­resilient economic growth (Clapp et al. 2010). This concept transcends both development and climate change policies. Since LCDS does not presume quantified emissions targets and is domestically defined, it could potentially bring about more participation from big emitters that are wary about taking legally binding emissions targets. This volume emphasizes low-­carbon development strategy as an approach that could enhance existing climate change policies and measures or serve as the basis for new policies to address climate change. In this context, the main challenge for the emerging climate change architecture therefore is to create an international institutional framework that enables low-­carbon growth. Among the many issues to be addressed to create such a framework is how to generate enough incentives for individual countries to pursue ambitious low-­carbon strategies. One of the options considered will be to develop a registry or a system of recognition, which will be important in quantifying the results of respective LCDS. This way, credits could be generated to incentivize countries for their respective efforts. Since a registry will make information available to the public, it quells doubts and fear that some states may free ride on the efforts of others by not putting forward their fullest efforts. The transparency that a registry engenders encourages reciprocity and coordination of national efforts. Another key issue is

6   S.-Y. Chung financing. Some developing countries do not have the necessary resources to implement or develop national low-­carbon development strategies on their own. Funding or support can come in different forms and from different channels including development aid from developed countries or international institutions or from private funds through public–private partnerships. At the crux of introducing LCDS as a vital approach within the UNFCCC regime is the overriding challenge of gaining political support from both developed and developing countries, as well as addressing the possible implications of LCDS for existing climate policies.

Structure of the book Our research essentially seeks to provide interdisciplinary perspective for the budding climate change architecture for post-­2020. The main focus is placed on finding new strategies that prove to be more effective. This volume begins with an analysis of the existing climate change regime in order to identify the main factors behind its failure to adequately respond to climate change. In Chapter 1, “Why the world has failed to slow global warming,” David G. Victor of the University of California, San Diego argues that the UN-­led negotiations on climate is stuck in gridlock as governments try to raise the level of ambition for emission reductions. He attributes this lack of progress to the complexity of the problem and the failure to adopt a workable policy strategy. He argues that the diplomatic toolbox used over the last two decades to manage earlier global environmental problems is not suitable for climate change. This toolbox contains canonical elements including legally binding treaties which are based on emission targets and timetables. However, Victor believes that, to improve the effectiveness of global efforts to address climate change an international agreement should offer governments the “flexibility” to adopt highly diverse policy strategies. Furthermore, Victor suggests that cooperation should start in smaller groups, commonly referred to by the international relations experts as clubs. As opposed to larger negotiations, smaller forums make it easier to agree on contingent deals and to incentivize members, which make it highly likely for the deals to hold. These smaller groups provide an avenue for governments who care most about mitigating climate change to make progress by creating benefits that will entice other governments to do more. In Chapter 2 “Is an international climate treaty worth fighting for?” the former Executive Secretary of the UNFCCC Yvo de Boer echoes Victor’s analysis on the limitations of the UNFCCC. He argues that despite the complexity and the perceived lack of progress, an international legally binding treaty on climate change is worth the fight. He makes his case by arguing that an international agreement will be beneficial for business as it provides predictability and stability; for civil society as it facilitates

Introduction and overview   7 ­ articipation and balances the climate change agenda; for governments as p it allows for a coordinated action. Rather than focusing on legal formality, de Boer argues that successfully responding to the climate challenge lies in making the case for green growth. In this chapter he proposes three related courses of action to enable green growth. In Chapter 3, “Post-­2020 climate change regime building: an advanced developing country’s perspective,” Suh-­Yong Chung of Korea University builds upon the previous chapters’ assessment of the existing climate change regime and explores the key issues to be addressed in the post-­2020 regime formation from an advanced developing country’s point of view. This chapter begins by assessing the current top-­down approach that has guided international actions to tackle climate change. His assessment reveals that the current approach has yielded little in curbing emissions. In order to achieve progress, Chung argues the regime is in need of alternative options that will ensure greater participation. In this chapter, the concept of LCDS is highlighted as a viable option to move the climate talks forward. As opposed to explicit reduction targets set at the international level, this approach helps Parties, particularly developing countries, to advance mitigation actions and development goals in a much more coordinated fashion. However, Chung recognizes the absence of an institutional framework for LCDS, hence this chapter explores key issues that need to be addressed for this international framework to materialize in the post-­ 2020 climate change regime. Moreover, due to the prevalent notion that there is an inherent trade-­off between economic growth and addressing climate change, developing countries have incessantly expressed their worries about the risk mitigation actions might pose to their economic growth. In Chapter 4, “Post-­Durban prospects for low-­carbon green growth,” Paul Ekins of University College London presents evidence this is no longer the case and that emission reduction is compatible with continued economic growth and development. In his chapter, Ekins, from an economist point of view, explores the potential for low-­carbon green growth as an integral part of the post-­2020 international framework. He maintains that the hope of affordable economic cost rests on three hypotheses: first, emission reductions can be achieved by changing human behavior that have essentially zero cost; second, improved energy efficiency in households, companies, and transport that are available at low or nil cost can produce substantial emission reductions; lastly, renewable and low-­carbon energy sources are already available at low cost as a percentage of GDP. To further support the notion that there is no necessary trade-­off between economic growth and the environment, this chapter argues that it is imperative for committed industrial countries such as the UK and South Korea to demonstrate that deep emissions control can be consistent with continued economic growth and development. In Chapter 5, “Climate negotiations: how to break the impasse and deliver” Juan Zak of the UNEP Risoe Centre for Energy, Climate, and

8   S.-Y. Chung Sustainable Development and Myung-­Kyoon Lee of the Global Green Growth Institute maintain that sharing the burden of emissions reduction has turned into a permanent impasse between developed and developing Parties to the Climate Convention, which is crippling its effectiveness. As opposed to putting emphasis on states and holding them accountable for their GHG emissions, they argue that emissions are largely driven by richer individuals globally and not by developed countries per se. Hence, for the post-­2020 period, they suggest a system of per-­capita emissions allowances to be the basis for the new international framework to break the impasse in climate negotiations and achieve substantial results. The last two chapters of this volume provide a real-­life account of how the theories and concepts discussed in the preceding chapters translate into practice. Through Chapters 6 and 7, the volume seeks highlight the experience of developing countries that will inform policy makers on how to engage developing countries in taking on more ambitious pledges. In Chapter 6, “China’s transition toward a low-­carbon economy: a review of the 11th Five Year Plan,” Ye Qi and Hui-­min Li of Tsinghua University reflect upon China’s experience in moving toward a low-­carbon development path during the period of the 11th Five Year Plan (2006–2010). According to Qi and Li, the country’s low-­carbon development can be characterized by two things. First, despite a dramatic decrease in carbon dioxide emissions intensity, the total CO2 emissions continues to rapidly increase. The “x-­shaped” curve, which demonstrates a decreasing intensity and increasing total emissions, has been the primary feature of China’s low-­carbon development. If the current export-­oriented growth and rate of industrialization continues, the “X-­shaped” curve will remain the key feature of China’s low-­carbon development in the future. This chapter maintains that transitioning to a low-­carbon economy in the midst of rapid industrialization and urbanization is probably the biggest challenge the country faces. Second, the transition was spurred mainly by the central government through its policies. On the one hand, it employed its administrative powers through a performance evaluating system ensuring that lower governments and state-­controlled enterprises improve their structures and implement innovative policies. On the other hand, the government mobilized resources through “financial transfer and subsidy, incentives, interest discount and favorable loans.” In Chapter 7, “Moving forward in the climate change policies and practices,” Wan Portia Hamzah, a Senior Fellow with the Institute of Strategic and International Studies (ISIS) Malaysia explores the implications of moving toward a low-­carbon development path for one of Southeast Asia’s rapidly growing economies, Malaysia. The overriding challenge for Malaysia is how to strike a balance between its efforts to contribute in the global battle against climate change and achieving sustainable development. Hamzah recognizes that ASEAN countries are highly diverse in terms of their adaptive capacity, vulnerability to climate change and levels of

Introduction and overview   9 development. Therefore, for countries in the region, flexibility to make the transition to a low-­carbon economy at a rate consistent with their capacity is paramount and should be allowed. In order to ground the theoretical discussion, this chapter highlights Malaysia’s experience in setting the country toward a low-­carbon development pathway. Hamzah examines the various initiatives the Malaysian government enacted for a low-­carbon future and its implications for Malaysia’s economy. Moreover, to fully overcome the challenges of climate change, she recognizes the country’s need to search for new forms of regional cooperation within ASEAN.

Note 1 For example, the Cancun Agreement Para 65 states, “[it] Encourages developing countries to develop low-­carbon development strategies or plans in the context of sustainable development.”

Bibliography Kevin A. Baumert, Timothy Herzog, and Jonathan Pershing, Navigating the Numbers: Greenhouse Gas Data and International Climate Policy, World Resources Institute, Washington, DC, 2005. Daniel Bodansky, “Creating a more flexible architecture for climate change governance” (September 29, 2009), Climate Finance: Regulatory and Funding Strategies for Climate Change and Global Development, Richard B. Stewart, Benedict Kingsbury, and Bryce Rudyk (eds.) NYU Press, 2009—UGA Legal Studies Research, online, available at: http://ssrn.com/abstract=1480222. Christa Clapp, Gregory Briner, and Katia Karousakis, Low-­Emission Development Strategies (LEDS): Technical, Institutional and Policy Lessons, OECD, Paris, November 2010. Aaron Cosbey, Developing Country Interests in Climate Change Action and the Implications for a Post-­2012 Climate Change Regime, UNCTAD/DITC/ BCC/2009/2, United Nations, New York/Geneva, 2009. Decision 1/CP.13, ‘The Bali Action Plan’, in FCCC/CP/2007/6/Add.1 (March 14, 2008). Decision 1/CP.1, The Berlin Mandate: Review of the adequacy of Article 4, paragraph 2(a) and (b), of the Convention, including proposals related to a protocol and decisions on follow-­up’, FCCC/CP/1995/7/Add.1 (June 6, 1995). Decision 1/CP.17, ‘Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action’, in FCCC/CP/2011/9/Add.1 (March 15, 2012). Lavanya Rajamani, “The Durban Platform for Enhanced Action and the Future of the Climate Regime,” International and Comparative Law Quarterly, 61(2): 501–518, 2012. The Kyoto Protocol to the United Nations Framework Convention on Climate Change, UN Doc FCCC/CP/1997/7/Add.1, Dec. 10, 1997; 37 ILM 22 (1998).

1 Why the world has failed to slow global warming David G. Victor

In the late 1980s the United Nations began the first round of formal talks on global warming. Over the subsequent two decades the scientific understanding of climate change has improved and public awareness of the problem has spread widely. These are encouraging trends. But the diplomacy seems to be headed in the opposite direction. Early diplomatic efforts easily produced new treaties, such as the 1992 UN Framework Convention on Climate Change (UNFCCC) and the 1997 Kyoto Protocol. Those treaties were easy to agree upon yet had almost no impact on the emissions that cause global warming. As governments have tried to tighten the screws and get more serious, disagreements have proliferated and diplomacy has stuck in gridlock. My argument is that the lack of progress on global warming stems not just from the complexity and difficulty of the problem, which are fundamental attributes that are hard to change, but also from the failure to adopt a workable policy strategy, which is something that governments can change. Making that change will require governments, firms, and NGOs that are most keen to make a dent in global warming to rethink almost every aspect of conventional wisdom. In this chapter I will summarize my argument in six steps. My ultimate goal is Step 6—a suggestion for a new international strategy—but the first five steps are crucial for making the right moves in Step 6. For the last twenty years, diplomats focused too much on ideas for diplomatic strategies that were not rooted in a proper understanding of the underlying political, economic, and technological forces that drive real policy on climate change.1

Step 1, why the science of global warming matters Any serious effort to slow global warming must start with one geophysical fact. The main human cause of warming is carbon dioxide (CO2). Other gases also change the climate, but compared with CO2 they are marginal players.2 Making a big dent in global warming requires making a big dent in CO2. Most of the economic and political challenges in slowing global warming stem from the fact that CO2 lingers in the atmosphere for a

The world’s failure to slow global warming   11 century or longer, which is why climate policy experts call it a “stock pollutant.” The stock of CO2 builds up from emissions that accumulate in the atmosphere over many years. As the stock rises global warming follows in tandem. Because the processes that remove CO2 from the atmosphere work very slowly, big changes in the stock require massive changes in emissions. Just stopping the build-­up of CO2, for example, requires cutting worldwide emissions by about half. Lowering the stock, which is what will ultimately be needed to reverse global warming, demands even deeper cuts. Exactly how much of a cut will be needed is hard to pin down because the natural processes that remove CO2 are not fully understood. There is a chance they will become a lot less effective as the stock of CO2 rises, which would imply the need for even deeper cuts. The most important geopolitical attribute of global warming—that the problem is global—follows directly from the fact that CO2 is a stock pollutant. Emissions waft throughout the atmosphere worldwide in about a year, which is much faster than the hundreds of years needed for natural processes to remove the excess CO2. Politically, this means that every nation will evaluate the decision to cut emissions with an eye on what other big emitters will do since no nation, acting alone, can have much impact on the planetary problem. Even the biggest polluters, such as China and the US, are mostly harmed by pollution from other countries that has wafted worldwide. Society has addressed global stock pollutants before—such as the very successful efforts to control chlorofluorocarbons and other long-­lived gases that deplete the ozone layer. What makes CO2 harder to manage is that it is intrinsically tied up in how society uses fossil fuels. Burning fossil fuels is a chemical reaction that releases CO2, and thus there is no easy way to fix the problem. Because our chief pollutant is CO2, we know that serious regulation will mainly focus on energy policies. Tinkering at the margins of the energy system will not make much of a difference. Deep cuts in CO2 will probably require a massive re-­engineering of modern energy systems. Such an effort will alter how utilities generate electricity and the fuels used for transportation, among many other implications. Such a transformation is not impossible; in fact, over history it has happened several times.3 But no country—let alone the world community—has ever planned such a transformation in energy infrastructure. At this stage nobody knows what it will cost, but most likely it will be expensive. Some studies suggest the cost will be in the range of 1–2 percent of global GDP, but if policy is implemented poorly or troubles arise then that fraction could be even larger.4 Because energy systems are based on complicated infrastructures it is likely to unfold slowly. And because this transformation will require new technologies and business models that do not yet exist at scale the cost and complexity are hard to fathom. The pace of this transformation will be impossible to plan and predict to exacting timetables.

12   D.G. Victor That is the first step. CO2 is a stock pollutant, and from that simple geophysical fact comes two important political insights: one is that regulation will require international coordination, and the other is that governments will have a hard time making credible promises about exactly how quickly they can make deep cuts in CO2. Because CO2 is interwoven with energy systems that are costly and sluggish to change, when governments tighten the screws on emissions—something that has not yet happened except in a very small number of countries—they will find it increasingly difficult to plan and adopt the policies needed to make a difference. As the cost of this transformation rises, what every country does will depend on confidence that other countries are making comparable efforts. Yet even governments working in good faith will be in the dark about what they can really deliver. Of all of the six steps I discuss in this chapter, this first step is the one that is most widely known; yet its profound implications for geopolitics and economics are still not properly appreciated. Climate change requires costly global collective action, and that is very hard to organize.

Step 2, myths about the policy process Second, international coordination on global warming has become stuck in gridlock in part because policy debates are steeped in a series of myths. These myths allow policy makers to pretend that the CO2 problem is easier to solve than it really is. They perpetuate the belief that if only societies had “political will” or “ambition” they could tighten their belt straps and get on with the task. The problem is not just political will. It is the imaginary visions that people have about how policy works. One is the “scientist’s myth,” which is the view that scientific research can determine the safe level of global warming. Once scientists have drawn red lines of safety, then everyone else in society optimizes to meet that global goal. The reality is that nobody knows how much warming is safe, and what society expects from science is far beyond what reasonable scientists can actually deliver. One consequence is that the science around global warming looks a lot more chaotic and plagued by disagreement than is really true. The climate system is intrinsically complex and does not lend itself to simple red lines; “safety” is a product of circumstances and interests. The result is an obsession with false and unachievable goals. Over the last decade many scientists and governments have set the goal of limiting warming to 1.5 or 2 degrees, which has now become the benchmark for progress on global warming talks. Two degrees is particularly attractive because it is a simple number and it seems to be achievable; so far, actual measured warming is about one degree so it would seem that stopping at two is within reach. Unfortunately, this goal bears no relationship to emission controls that most governments will actually adopt. And it is not based on much science either since we do not really know what level of warming is safe; for some societies and fragile ecosystems the

The world’s failure to slow global warming   13 warming that is already built into the climate system is probably already dangerous. What worries me most, however, is the disconnect between abstract goals like 1.5 to 2 degrees and how real policy is likely to emerge in this field. Serious policies to control emissions will emerge “bottom-­up” with each nation learning what it can and will implement at home. Just as countries learn how to control emissions they will also look at the science, along with their own national vulnerabilities to climate change, and determine the level of warming they can stomach. It is highly unlikely that countries will arrive at the same answers. It is important to puncture the “scientist’s myth” because it creates a false vision for the policy process—one that starts with global goals and works backwards to national efforts. When pollutants such as CO2 are the concern, real policy works in the opposite direction. It starts with what nations are willing and able to implement. A similar myth explains much of diplomacy. Environmental diplomats imagine that progress toward solving problems of international cooperation hinges on the negotiation of universal, legally binding agreements that national governments then implement back at home. While the scientist’s myth starts with scientific goals and works backwards to national policy, diplomats make the same kind of error and start with binding international law and draw the same backward conclusion. Events like the Copenhagen Conference are the pinnacle of this mythical legal kingdom. When these events fail to produce consensus the diplomatic community does not shift course but merely redoubles its efforts to find universal, binding law. The reality is that universal treaties are a very bad way to get started on serious emission controls. Global agreements make it easier for governments to hide behind the lowest common denominator. Binding treaties work well only when governments know what they are willing and able to implement. Universal binding law has played a useful role in some areas of international environmental cooperation, but the attributes of the climate change problem require a different approach.5 Finally, we must have a smarter perspective on technology. The “engineer’s myth” holds that once inventors have created cheaper new technologies, these new devices can quickly enter into service. This belief is appealing because it offers hope for quick and cheap solutions. It is also appealing because many engineers believe that the needed technologies already exist. Energy efficiency, for example, is widely believed to be a readily available option for making deep cuts in emissions at no cost. The reality is that much of the exciting potential for using energy more efficiently is not presently practical because the needed technologies are not yet married to how real firms and households use energy. Technological transformation is a slow process because it depends on a lot more than engineering. New business models and industrial practices are needed. The more radical (and useful in cutting the use of fossil energy and CO2)

14   D.G. Victor the innovation is, usually the greater the technological and financial risks. Putting those innovations into practice hinges on creating the policies and business practices to manage the risks—especially financial risks—that accompany new technologies. Even when those policies are written in treaty registers and in national laws and regulations, firms that invest in new technology and practices must believe they are credible. Pretending that engineering innovation is the key step leads to policy goals that are overly ambitious and divorced from the realities of what determines whether these new technologies will actually enter into service quickly. The engineer’s myth also allows governments to avoid grappling with the kinds of technology policies that will be needed to encourage radical innovation and deployment of new technologies to lower emissions. My assessment of the experience with energy policy to date is that fundamental innovation is relatively easy to steer. Creating the credible policy environment to encourage widespread adoption of innovations is almost always the weak link.6 That is the second step: we must clear away false models of the policy process and focus on how policy processes actually work. The first step laid bare the essence of the warming problem; the second step helps clear the landscape of confusing ideas. The rest of the chapter outlines a new vision.

Step 3, regulating emissions The third step in the logic is the most important. Slowing global warming requires a big reduction in emissions of CO2. Achieving that goal will require international coordination. Before I focus on how to make effective international coordination, I must look closely at what individual national governments are willing and able to implement. Oddly, most studies of international coordination on global warming ignore national policy and treat governments as “black boxes.” Few analysts of international relations and international law peer inside the box to discover how it works; most just imagine that the national policy process will behave as needed once people have political will. Black boxing national policy is convenient because it makes it easier to focus just on the simpler and sexier topic of international diplomacy. Such studies start by imagining various ideal mechanisms for international coordination and then expect that the black boxes will follow along with implementation. The reality is that the black boxes are prone to produce certain kinds of policies. Ignoring those tendencies raises the danger that international coordination will become divorced from what real governments can implement at home. These dangers were not much apparent in the early years of global warming diplomacy because international agreements were not very demanding. The black boxes could comply without doing much beyond what they would have done anyway. But as governments have tried to tighten the screws on emissions of warming gases, a huge gap has opened

The world’s failure to slow global warming   15 between the agreements that diplomats are trying to craft at the international level and what their own governments can credibly implement at home. That gap produces gridlock. It lowers confidence that international law is relevant, and as confidence declines governments become less willing to make risky, costly moves to regulate emissions. In the extreme, the result are agreements such as the Copenhagen Accord—legal zombies that have no relationship to what governments will actually implement yet are hard to kill or ignore. Crafting a more effective system of international coordination requires a vision for how to avoid such international outcomes. The third step builds a simple theory of national policy. This theory begins with the interests of individuals, their beliefs, and how well they are organized. Politically viable policies to control emissions must avoid imposing high costs on politically well-­organized large groups and also avoid making high costs evident to poorly organized but potentially dominant groups, such as voters. Policies that are politically viable will therefore not be identical with policies that are economically optimal, and in some cases the dispersion between the viable and the optimal will be huge. The result is that most countries have very strong incentives to adopt policies that look like they are having a practical impact on emissions when, in fact, they avoid imposing harm on well-­organized interest groups. Since those interest groups often include the same activities that result in high emissions the result is a big gap between what countries promise to their electorates (and to each other in international negotiations) and what most of them can actually deliver. Knowing this, we need visions for international cooperation that are more likely to mesh with policies that real governments can actually implement at home. One way to start analyzing the prospects for international cooperation is to focus on power, interests, and capabilities. Power tells us which countries really matter and must be engaged in coordination. Interests reveal what those countries will be willing to do. And capabilities are what they are actually able to do. In global warming, power is first and foremost a function of current and future emissions. China and the United States are the most powerful countries on global warming because they have the largest emissions and thus the greatest ability to inflict global harm and avoid harm through their actions. Although the United Nations (UN) officially registers 192 countries on the planet, when it comes to emissions only a dozen or so really matter. I show those big emitters in Figure 1.1. Eventually, all governments will need to play a role in controlling emissions because even the big emitters will be wary about adopting costly policies if small countries become pollution havens. China, for example, will not be keen to control its emissions if the outcome is much higher costs of doing business in China and investments (along with jobs and incomes) “leak” to Vietnam, Thailand, Malaysia, or other countries that would become more formidable

16   D.G. Victor economic competitors without the burden of costly emission controls. I will deal with that problem in time, but getting started on controlling emissions requires a vision that is connected to the reality of how the most powerful countries—the biggest emitters—might actually control emissions at home. Whether big emitters actually control emissions is a function of their interests and capabilities. The full list of factors that determine interests is long, and scholars should spend more time trying to explain and predict the variation in national interests. Some countries are highly vulnerable to global warming, such as the low-­lying island states; others, such as frigid Russia, are less worried or might even welcome a thaw. Rich countries are usually more worried than poor ones because wealth brings the luxury of

Figure 1.1  National interests and emissions. Note 1 The figure shows the most recent complete inventory for emissions of CO2 from burning fossil fuels and changes in land use. “Enthusiastic” countries are shown in black. “Reluctant” nations are shown in dark grey. Together, those twelve countries (treating the EU as one) account for 77 percent of emissions. Excluded from that group is the very large number of small countries (mainly low-income, developing countries) and countries that are large carbon exporters and under little public pressure to regulate emissions, such as Russia and the largest OPEC members. This data set includes full data for CO2 emissions from fossil fuels (drawn from the Carbon Dioxide Information and Analysis Center at Oak Ridge National Laboratory (Boden, et al. 2010) augmented with nationally reported data on emissions (and sinks) from land use (including forestry and agriculture) as reported in official emission inventories (see unfccc.int and also UNFCCC 2010). The land use data are 2006 for UNFCCC Annex I countries (i.e., industrialized nations); for non-Annex I countries land use data are 1994 except Mexico (2002) Korea (2001), and Kazakhstan (2005); failures to report data by Angola, Iraq, Kuwait, Libya, and Qatar led me to exclude those countries from the analysis.

The world’s failure to slow global warming   17 focusing on more than just immediate survival. Democracies seem to be more concerned than non-­democracies because the ability to organize interest groups and a free press are empowering to NGOs that carry the messages about warming dangers to people and governments around the world. Parliamentary systems are often more energized about warming than presidential governments when green parties become members of ruling coalitions. A nation’s interests also depend on what it thinks other countries will do. If one country thinks that emission controls at home will inspire other nations to follow suit it will be more keen to make the move. My home state of California is on the cusp of adopting costly state controls on CO2 with that theory in mind. A full-­blown theory of national interests would need to look at all these factors. I start by dividing the world into two categories: enthusiastic and reluctant countries. Enthusiastic countries are willing to spend their own resources to control emissions. These countries are the engine of international cooperation. The bigger that group and the more resources they are willing to spend on controlling emissions, the deeper the cuts in global emissions. Some of the troubles with global warming diplomacy during the last two decades simply reflected that the group of enthusiastic countries was pretty small and consisted of little more than a few EU members and Japan. But that group is getting bigger and now includes the US and essentially all members of the OECD. Not all these countries have the same interests, of course. What the US is willing to do is a lot more modest these days than the French, German or British effort. And what countries actually do is often not formally labeled climate policy. The US has struggled with national political gridlock on a federal global warming policy, but through direct regulation and many state policies it is making an effort— albeit one that falls short of what it should pursue. The reluctant nations, such as China and India, also matter. They are already big emitters, and most studies suggest that such countries will account for essentially all growth in future emissions. Because these countries do not put global warming high on the list of national concerns, they will not do much to control emissions except where those efforts coincide with other national goals. Outsiders can change how these countries calculate their national interests by threatening penalties such as trade sanctions or offering carrots such as funding for investments that lower emissions. Outsiders can also provide information on global warming dangers, which will (in time) help reluctant countries see their interests differently. A country whose government and NGOs are better informed about the perils of unchecked climate change will be more likely to mobilize for change— especially if there is an international framework that would allow their national efforts to be magnified through efforts by other big emitters. So far we have examined power and interests. Now let us focus on capabilities. In general, the enthusiastic countries have well-­functioning systems of administrative law and regulation and can control all manner of

18   D.G. Victor economic activities within their borders. In reluctant nations those systems are generally much less well developed. Typically in the reluctant countries some sectors are under tight administrative control and others march to the beat of their own drummer. Enthusiastic countries have lots of options for regulating their emissions. They could use market-­based strategies, such as emission taxes or “cap and trade” schemes. Or they could use traditional regulation that, for example, forces companies, farmers, and consumers to utilize particular technologies and practices that reduce emissions. In the book on which this essay is based I show that the most likely outcome is a hybrid of emissions trading and regulation. Emission trading systems are attractive because they create extremely valuable assets (emission permits) that can be awarded to politically well-­connected interest groups. Once the initial awards are made, those same groups become a powerful lobby to keep the system in place. Where these lobbies are well organized to manage a market that channels resources to themselves and prevent new entrants, emission trading is the policy instrument of choice. Where regulated firms have close ties to their regulators, then direct regulation is even better. Many environmental NGOs also like regulation because that approach makes it easier to hide and shift the cost of policy. The political viability of policies rises when the cost can be imposed on groups that are highly diffused and often unaware of what they are paying. Within this range of hybrid outcomes, every nation will make a different choice because each government faces differently arrayed interest groups and different relationships between organized group and government. I will call these hybrid outcomes “Potemkin markets” because on the surface they look like emission-­trading-markets market solutions yet are designed, exactly contrary to the principle of markets, to hide the costs of action and to channel resources only to well-­organized groups. This is a prediction of what governments will actually do in the real world as they start getting serious (or pretending to get serious) about controlling emissions. It is on full display today in the European Union which has allowed a region-­wide market (the Emission Trading Scheme) to persist even though prices are so low that it has practically no effect on actual emitting behavior. What I am suggesting is not that Potemkin markets are good economic policy. In fact, as a policy analyst, I find that outcome deeply unsettling. A simple economy-­wide cap and trade program would be more cost-­effective, and even better than that would be a simple economy-­wide emission tax. Ideal theory often clashes with political realities. One of the key insights is that international accords must be designed with flexibility for governments to adopt different kinds of Potemkin markets since that untidy outcome is unavoidable. Reluctant nations are different. So far, these countries have not done much to control emissions for two reasons. One is that the enthusiastic nations have dithered in creating carrots and sticks that will convince these countries to see the world differently. The biggest existing carrot is the

The world’s failure to slow global warming   19 Kyoto Protocol’s Clean Development Mechanism (CDM), which is badly administered and creates perverse incentives for reluctant nations to avoid serious emission controls.7 Sticks, such as border adjustments and trade sanctions, are barely used at all. Better sticks and smarter carrots are needed. The second argument is that much more can be done to encourage these countries to implement policies that satisfy local goals, such as energy security and lower local pollution, while also fortuitously reducing emissions of warming gases. In other research, including the book, I have looked in detail at a sample of such opportunities, such as the deployment of more efficient technologies in coal-­fired power plants, fuller use of natural gas (which has much lower emissions than coal), and better management of endangered forests. The idea that there are huge “win–win” opportunities is hardly new. A big study organized by the World Bank, for example, has documented lots of ways that countries can meet their own local interests while also reducing emissions of warming gases.8 The options are numerous; many of them individually can save hundreds of millions of tons of CO2 emissions per year—numbers that are comparable with the entire worldwide effort under the Kyoto Protocol. Adding these up can result in perhaps 10–20 percent global reductions in emissions while putting the planet on a trajectory to lower future emissions. That is not enough to stop warming, which will require cuts of 50 percent over the next few decades, but it is a way to make tangible progress that is aligned with national interest. It is also a way to build credibility into international efforts on this important problem; such credibility, in turn, will make it easier for nations to coordinate on the harder task of cutting emissions in areas that do not immediately align with national self-­interest and will require true collective action. Oddly, the existing literature is largely silent on the question that matters most for policy: which “win–win” opportunities that exist in theory will actually be feasible in the real world? There are lots of things that governments can do in an imaginary world of perfect information, foresight, and ability, and most analysis of win–win options operates in that imaginary world. But the real world is different. For students of international cooperation, what is most striking is that, often, “win–win” policies are not pure winners on their own merits; they require outsiders to help with financing, technology, diplomatic support, or other assets. The problem is that the existing sticks and carrots are nearly always irrelevant to encouraging countries to implement these kinds of policies. Notably, the CDM encourages governments and investors to find marginal projects whose exact impact on emissions is easy to measure. Yet the biggest opportunities for “win–win” policies are those where the emissions impact is hardest to predict and where no rational CDM investor will tread. (Nor does it help that many CDM projects have no impact on emissions, which floods the market with CDM credits and discourages more costly investments that could actually make a difference.) A different system is needed.

20   D.G. Victor Rather than thousands of small CDM projects, efforts to engage the reluctant countries should focus on a small number of huge opportunities where there is large leverage on emissions and where the opportunity aligns with the administrative abilities of the host government. A reformed CDM can play a subsidiary role, but the real diplomatic effort should focus where leverage is greatest. Reluctant countries should compile their opportunities; declare the external resources they will need for each, and let enthusiastic countries compete for the privilege of playing a role. Eventually the reluctant nations will have to do more and spend their own resources on emission controls, but a big effort to seize “win–win” opportunities is the right way to start. Not only will it make a dent in emissions, but it will also establish a track record of credible engagement that will be needed for the future when global warming politics will get a lot tougher to manage and stiffer incentives will be needed—including bigger sticks to punish recalcitrant nations. In global warming, like most areas of international diplomacy, it is better to lead with positive engagement before bringing out the big sticks. This step in the logic leads to one simple conclusion about emission controls. The tighter the screws on emissions the harder it will be to plan regulation according to exact targets and timetables. And the tighter the screws, the more that efforts by one government will depend on what others do as well. This helps explain some of the gridlock from Kyoto to Copenhagen. International negotiations have been organized mainly to encourage governments to coordinate around emission targets and timetables. But no government that is serious about making credible promises actually knows the emission levels that will emanate from its economy. The simple conclusion from this step in the logic is that international cooperation should be designed differently. It should revolve around what governments can credibly promise to implement. Moreover, cooperation should elicit contingent promises—that is, governments should outline what they will do on their own merits as well as the schedule of additional efforts they will adopt if other governments make comparable efforts. A more realistic sense of what enthusiastic and reluctant nations can really implement at home can guide serious efforts to design international cooperation that meshes with what governments will be willing and able to implement at home. That is Step 3.

Step 4, investing in innovation Steps 4 and 5 are detours. I include them in this essay because ignoring them leads to a global warming plan that does not work over the long term and leaves the planet highly vulnerable. Step 4 deals with technology. As the cost of emitting CO2 rises and as regulations tighten, companies and governments will know that they should find technologies that can lower the cost of compliance. Those

The world’s failure to slow global warming   21 built-­in incentives for innovation go a long way, but not far enough. Really deep cuts in emissions will require radically new technologies but few companies can justify spending the resources on that kind of innovation because the benefits are so uncertain and difficult to internalize. So an active “technology policy” is needed. Getting started on technology policy requires focusing on the countries that matter most. Luckily, that list is short: about 95 percent of innovative activity occurs in only ten countries.9 A big push is needed not only within these countries but also through collaboration between those governments. Increasingly, the market for technology is global. Good ideas in one country diffuse quickly, which means that individual countries will under-­ invest in new technology unless they are confident they can create new markets for innovation around the world. In the past there has been almost no serious international collaboration on technology policy. The world has experimented with some partial models—for example, international collaboration on large science experiments and the “peer review” that OECD conducts on science and innovation policy. As with emission controls, how every country tackles the innovation challenge is likely to vary with its own national circumstances. Even more than with emission controls, the innovative process does not lend itself to strict targets and timetables; outputs are unpredictable. Technology policy has become a poor cousin of serious efforts to slow global warming. Nearly everyone agrees that massive innovation is needed. Oddly, very few studies actually examine the question that matters most for policy: how to design a big push on innovation. A growing number of advocates call for a “Manhattan project” on global warming but that model is exactly wrong for global warming. In the Manhattan project, the US crash program to develop nuclear weapons, there was just one customer (the US military); commercial competition was irrelevant and costs were no object. “Putting a man on the Moon,” another common refrain, followed the same model and is equally poorly suited for global warming. These are inspiring goals that signal the scale of the needed effort, but they are terrible metaphors for policy. Almost as dangerous are wild ideas for quickly and radically increasing R&D spending without any serious plan for how new money can be spent well. Ramping up spending too quickly will just raise the price of R&D without much affecting what really matters, which is innovative output. Getting serious about technology policy starts with realizing just how dreadful governments have been over the last generation. From the early 1980s through 2008 world spending on energy technology innovation appears to have plummeted. There has been an uptick since 2008, notably in the US, but most of that mainly reflects a huge pulse of “stimulus” money that will soon disappear as governments grapple with their fiscal poverty and struggle to provide funding to other national projects that are politically more popular. As this blip in funding fades, what should be

22   D.G. Victor done? I argue that good answers to that question have been hidden by a series of fallacies about technology policy. One fallacy is that government is unable to do the job because it will squander resources on white elephants rather than the viable technologies. A second fallacy is that carbon markets will encourage and pay for technology innovation. In Potemkin markets, well-­organized interest groups make sure there is not much money left over for other purposes; they channel most of the resources to themselves and invest it mainly with incumbent technologies. And carbon prices are so volatile the special grants of emission credits do not have a value that is reliable enough over the long term to finance the slow commercial gestation of new technology. The only serious way to fund technology innovation is with reliable funding, mainly from government, and credible guarantees that new technologies will find viable markets. In the US, especially, there has been a historical wariness about technology strategies because it is often assumed the nation’s record with government-­led energy innovation is a string of unmitigated disasters. The real record is actually a lot better than commonly assumed, and looking outside energy there are many other useful models where the track record is even better. Government is essential and its track record with technology policy is encouraging. Dangers loom, of course, because an active technology policy can also become industrial policy. The right models—with clear sunrises and sunsets—can help avoid those well-­known pitfalls. Economists argue that technology policy is needed to overcome a market failure. That is true, but an equally important role for technology policy is to help manage a political failure. Governments under-­invest in innovation because innovators are usually political orphans. Nearly always, the invention of a radically new way of doing things arrives on the scene with no natural political constituency. And the innovation creates many incumbents who are politically well organized and unfriendly to change. Technology policy helps fix these problems; it also helps build confidence that emission controls will not be impossibly costly to implement. All that reinforces the central task for policy, which is the adoption of credible emission controls that will pull new technologies into the market. The problem of political orphans is getting slightly easier to solve for two reasons. One is the growing interest in green jobs—an area where politicians are making reckless claims about the prospects for job creation, but those claims help build a political coalition that so far has been supportive of spending on low-­carbon innovation.10 The other is the possible merging of information technology (IT) with energy. The innovation model in IT and a few other areas such as biotechnology is based on “blockbuster” inventions—that is, new ideas that spread rapidly and generate massive returns to innovators. The belief that energy is shifting to that mode of innovation makes it somewhat easier for private firms and governments to mobilize the resources needed for energy innovation. These

The world’s failure to slow global warming   23 are political arguments; whether a new dawn of green jobs or the integration of IT with energy are actually real remains to be seen. (I think most green jobs claims are largely baseless, and I doubt it will be easy to measure “green” versus “brown” job creation.) Politically, though, such arguments are changing the landscape and making it easier to muster the political support for innovation policy. That is Step 4. A technology policy is essential to overcoming market and political failures. But it would not happen without good models for how government can be most effective.

Step 5, bracing for change Step 5 is my other detour. Even a serious effort to control emissions is unlikely to stop global warming. The climate system and the energy system that emits CO2 are big, complicated systems that are laden with inertia. They are pointed in the wrong direction, and they would not change course easily. Worse, so far the most important emitters have not created a viable international scheme to coordinate policies to cut warming gases. Once such a system is in place, but the benefits of slower warming will be felt only after perhaps twenty years of sustained effort and another few decades will be needed actually to stop warming. Even more time will pass before the stock of CO2 declines decisively from its peak and warming abates. These timetables will be seen by experts, who have invested heavily in efforts to set “safe” goals for warming such as limiting warming to two degrees, as too pessimistic. (And technology wildcards, such as devices that can remove CO2 and other warming gases directly from the air, might indeed accelerate the ability to stop and reverse warming.) My sense is they are about as fast as serious regulatory and technology deployment efforts will run. And this optimistic scenario assumes that governments actually launch serious, prompt efforts to control emissions and invest in new technologies. Even under the best scenarios the world is in for probably large changes in climate. Societies need to brace for the changes. For many years, this subject was taboo in most circles because many of the most ardent advocates for global warming policy feared that talking about the need to prepare for a warmer world would signal defeat. Worse, it might signal that warming was tolerable, and that might lead governments to lose focus on the central task of regulating emissions. It is much sexier to imagine bold schemes that stop global warming rather than the millions of initiatives that will be needed to cope with new climates. Yet the unsexy need to brace for change is unavoidable. Humans are intelligent and forward-­looking, and those qualities make them adaptive so long as they can anticipate the needed changes and have the resources required to adjust. Farmers, for example, can plant different seeds and switch to new crops. Real estate markets can adjust to the likely effects of rising sea levels and stronger storms that could inundate

24   D.G. Victor ocean-­front properties. Water planners can anticipate rainfalls of different levels and variability. The central role for policy is to lubricate these natural human skills in adaptation. More timely information about climate impacts can help; more efficient markets for scarce resources such as water can be created; funding for infrastructures that are less sensitive to changing climates can be mobilized. For rich, capable societies, success in adaptation is hardly guaranteed but at least it is a familiar task. Much tougher issues arise in less wealthy countries where climate-­ sensitive agriculture dominates the economy and people are already living on the edge. Small changes in climate can have a big human toll. When I began this project I expected to conclude that rich countries, which are most responsible for climate change, should create huge funds to help poor countries adapt. Instead, I have arrived at a much darker place. Such efforts are well meaning, but they are unlikely to make much difference. Adaptation does not arise as a discrete policy. It comes from within a society and its governing institutions, and there is very little that outsiders can do to help. Most so-­called “adaptation projects”—for example, building sea walls or creating a national weather service to provide farmers with more useful climatic information to help them adapt—make no sense unless implemented within institutions that can actually deploy and utilize these resources efficiently. I will call these “adaptation-­friendly contexts.” One of the hard truths about global warming is that these contexts are self-­reinforcing. When they exist, the list of discrete adaptation projects where outsiders can be helpful is short because societies invest in adaptation on their own. When these contexts do not exist, adaptation spending is not very useful. Readers will recognize this problem as analogous to the problem of economic development. Foreign assistance for development can be extraordinarily important when applied under the right circumstances, but only a subset—perhaps a small subset—of countries actually enjoy those circumstances. The same is true for adaptation. The Copenhagen Accord includes promises of massive new funding for adaptation, and it appears that most of those promises will be broken. More money can assuage guilty feelings that rich polluters feel, having imposed climate harms on poor societies that already have enough troubles. But more money, alone, probably will not do much to make those countries less vulnerable and to boost their welfare. This insight raises troubling questions of international justice. So far, most of the theories of international justice that have been applied to the climate problem have focused on how to divide the burden of controlling emissions; they have not much grappled with the more practical and immediate challenge of how the rich industrialized societies that are most responsible for the buildup of warming gases can help the most vulnerable societies cope with these inevitable changes in climate. My answer is that the rich countries need to be more diligent in controlling their emissions while, in tandem, working harder to facilitate adaptation-­friendly contexts across the developing world. In practice, creating those contexts means

The world’s failure to slow global warming   25 investing more in the economic development. All of that is hard to do and in many developing countries, if not most, will not work perfectly. If the news about adaption for humans is dark, the news for nature is even more troubling. Unlike humans, nature responds to changing circumstances mainly through natural selection. That means that a changing climate is likely to bring a lot of extinction to species that are already living on the edge while promoting hardier plants and critters such as weeds and cockroaches. The impacts will be felt not just in individual species but whole ecosystems. Avoiding these unwanted outcomes will require a more active human hand. Because humans can look ahead and behave strategically they can implement projects such as installing corridors between ecosystems so that plants and animals can more readily march to cooler climates. Through such efforts, humans might help steer nature away from unwanted nasty outcomes. If climate changes in extreme ways, this will turn humans into zookeepers. Huge areas of wild landscapes will be put under environmental receivership, and managing them will require human handling on a scale never imagined. Doing all this across nature will probably cost a lot more than people are willing to pay, and in many ecosystems human management may be worse than letting nature sort itself through the Darwinian method. The need for triage will appear. So far, barely any such discussion is under way. The last century has seen a sharp rise in international funding for nature, much of it managed by NGOs and focused on preserving gems of nature. In a world of changing climates, these NGOs will be on the front lines of nature’s triage. They will probably have a difficult time accepting this mission because zookeeping and triage run counter to their core historical missions, which center on protecting nature in its original state. The most successful international nature NGOs are steeped in a culture of protection—they buy lands, create parks, erect fences where possible, and do their best to keep humans away and to lighten the human footprint. Triage will require more or less the opposite strategy. If all that is not dark enough, I also look at some worst case scenarios. Barely a month goes by without a publication of new research suggesting that climate could change more rapidly than previously expected. For example, there is striking news from glaciologists about possible more rapid melting of ice sheets as well as news from the Arctic about the unexpectedly rapid thinning of that ice cap. Once such changes are under way the effects on things that matter could be more horrendous than earlier thought. The unknown unknowns of global climate change might hold pleasant surprises or horrors. The evidence at the horror end of the spectrum is mounting.11 Thus I also argue that bracing for change also requires readying some emergency plans. Those will include intervening directly in the climate to offset some of the effects of climate change, which is also known as “geoengineering.” Volcanoes offer a model, for their periodic eruptions spew particles into the upper atmosphere that cool the planet for a time.

26   D.G. Victor Man-­made efforts along the same lines might include flying airplanes in the upper atmosphere and sprinkling reflective particles that might crudely cool the climate.12 So far, most of the public discussion about geoengineering treats the option as a freak show of reckless Dr. Strangeloves tinkering with the planet. Yet it is hard to digest the most alarming scenarios from climate science without concluding that serious preparations are needed on the geoengineering front. I argue for a research program in this area so that some of the most viable options can be tested. I also argue that such a program needs to follow special rules such as transparency, publication of results, pre-­announcement of tests, and careful risk assessments that focus on the possible side effects. That approach is needed so that if governments ever get to the stage where they might actually deploy geoengineering systems, a set of norms and practices are in place about how to treat these technologies. There are two big dangers with geoengineering. One is that the technology will be so controversial that the countries with the best scientists do not invest in testing the options and readying them in case of need. The other is that a desperate country will launch geoengineering without preparing for the side effects. A dozen or so nations probably already have the ability to deploy geoengineering and the list is growing. A race is on between building a responsible research program that can lay the foundation for good governance of geoengineering technologies and the desperate “hail Mary” pass of a country that could not stomach the extreme effects of warming and is disillusioned with the lack of serious efforts to stop global warming through regulation of emissions.

Step 6, a new international strategy The sixth and final step is a redesign of the international diplomatic strategy. It will seem odd in an essay that is about overcoming the gridlock in international diplomacy to wait so long before a new diplomatic vision arrives fully on the scene. I have started with national policy because international agreements that do not align with national interests and capabilities are unlikely to be effective. To develop a new international strategy we must understand, first, why diplomatic efforts so far have led to gridlock. My argument is that the diplomatic toolbox used over the last two decades is the wrong one for the job. That toolbox comes from experience in managing earlier international environmental problems, which have little in common with the costly, complicated regulatory challenges that arise with warming gases. Indeed, all of the canonical elements in that toolbox are wrong for global warming. Those elements include global agreements, which diplomats cherish because they believe they are more legitimate than smaller more exclusive accords. They include binding treaties, which most analysts wrongly think are more effective because governments always take binding law more seriously. And they include emission targets and timetables, which are a

The world’s failure to slow global warming   27 mainstay of environmental diplomacy because most diplomats and NGOs think targets and timetables are the best way to guarantee that governments actually deliver the environmental protection they promise. These conventional wisdoms are deeply ingrained in environmental diplomacy; many are rooted in the experience of the Montreal Protocol where targets were used effectively because the gases that were regulated were relatively easy to control and the regulations included safety valves in case firms discovered that new substitutes would not be ready in time. None of that history applies directly to regulation of CO2 since alternative energy systems are much harder to plan and install to exacting timetables. An alternative approach starts with one central insight: effective international agreements on climate change will need to offer governments the flexibility to adopt highly diverse policy strategies. Instead of universal treaties, I suggest that cooperation should begin with much smaller groups—what international relations experts often call “clubs.”13 It should begin with non-­binding agreements that are more flexible. And it should focus on policies that governments control rather than trying to set emission targets and timetables since emission levels are fickle and beyond government control. Cooperation challenges of this type are rare in international environmental diplomacy, but they are much more common in economic diplomacy where governments often try to coordinate their policies in a context where no government really knows exactly what it will be willing and able to implement. The closest analogies are with international trade and the model I offer draws heavily from the experience with the GATT and WTO. The backbone of this new approach would be a series of contingent offers. Governments would outline what they are willing and able to implement as well as extra efforts that are contingent on what other nations offer and implement. Negotiations within the club would concentrate on the package of offers that are acceptable to participating nations. By working in a small group—initially about a dozen nations or fewer, as suggested in Figure 1.1—it would be easier to concentrate on which offers were genuine and to piece together a larger deal that takes advantage of the contingencies. As individual countries gain confidence that others will honor their commitments then they, too, will be willing to adopt more costly and demanding policies at home. As part of this process, enthusiastic nations would also scrutinize the many bids from reluctant nations and offer resources to those that were most promising. Early in the UNFCCC talks the Japanese government backed an idea called “Pledge and Review” that would have pursued this strategy—I thought it was a good idea then and I still support it. Sadly, most other nations did not pick it up because they have been too seized by the conventional wisdom of global agreements focused on targets and timetables rather than a better system of diplomacy focused on what countries could really implement.

28   D.G. Victor Deals created in this small group would concentrate benefits on other club members—for example, a climate change deal might include preferential market access for low-­carbon technologies and lucrative special linkages between emission trading systems in exchange for tighter caps on emissions. Concentrating benefits on other club members will create stronger incentives for participating governments to deepen their cooperation. Focusing cooperation on contingent offers, each club member will see its efforts multiplied, which will help ensure that the offers are not too modest. In time, this approach of offering benefits that are exclusive and contingent will make club membership more attractive to potential new members. Such club approaches often fare better than larger negotiations when dealing with problems, such as global warming, that are plagued by the tendency of governments to offer only the lowest common denominator. Clubs make it easier to craft contingent deals and channel more benefits to other members of the club, which creates stronger incentives for the deals to hold. The logic of clubs underpins many efforts and proposals in recent years to focus on warming policy in forums that are smaller and more nimble than the UN. Those include the G20, the “Environmental 8,” the Major Economies Forum (MEF ), and similar ideas. These are all good ideas; what is missing is a strategy that will make such smaller forums relevant. Governments that care most about slowing global warming need to invest in these small forums and focus their efforts on creating benefits that will entice other governments to do more. I am cautiously optimistic that such club approaches will regain favor in the wake of the troubles at Copenhagen, but I am not blind to the power of conventional wisdom. The conventional wisdoms that have created gridlock on global warming remain firmly in place and are hard to shake. Creating a club that works will require leaders who will make the first contingent offers that create incentives for other countries to act. The EU has not been a leader on this front because it is overly invested in the UN approach. Japan has not because it is too timid to swim against the current of conventional wisdom. And the US has not played the leader role because what America says these days on most matters is so volatile that it is not seen as credible. A smarter EU, a more credible US or a big move by China or India could be very helpful. Clubs are a way to get started, but they are not the final word. Eventually the clubs must expand. Indeed, the global UNFCCC will remain as an umbrella under which many global efforts unfold. The advantage of starting with a club is that the smaller setting makes it easier to set the right norms and general rules to govern that expansion. In practice, this will be a lot easier than it seems because international emission trading can be a powerful force working in the same direction. With the right policies, the international trade in emission credits creates a mechanism for assigning prices to efforts. It rewards countries with strict policies by giving higher prices to their emission credits. Over the history of the GATT/WTO, the

The world’s failure to slow global warming   29 most powerful mechanism for compliance was the knowledge that if one country reneged on its promises, others could easily retaliate by targeting trade sanctions and removing privileges to punish the deviant. With the right pricing policies, emission trading could provide the same kinds of incentives. There is no shortage of institutions already working on climate change. In fact, one of the defining characteristics of international legal institutions in this area is their high dispersion—rather than a single, integrated legal regime there is a “complex” of partially overlapping legal obligations.14 What is missing is a strategy focused on getting countries to make reliable promises about what they can and will implement. The central diplomatic task in the coming years will be to couple those national promises to the efforts that other nations will undertake so that, over time, each major country sees growing incentives to implement more effective policies to control emissions. I have drawn on models from international economic cooperation where these diplomatic challenges are much more familiar. Indeed, the challenges that climate diplomats face today are analogous to those that have defined much of the history of international efforts to create a rule-­based system for advancing international trade. Those same models are the best guides for getting serious about global warming. In some respects, the climate system is already evolving in the direction I advocate—not by design but through default. The UN efforts are stuck in gridlock, and that has left smaller clubs as one of the few places where progress is emerging. While that shift is encouraging, climate strategy by default will not solve the problem of global warming. For the club strategy to work it will require active efforts to build institutions and focus on practical policies. So far, there is not yet much evidence of that kind of heavy lifting. Hopefully this new book will offer a roadmap for the countries that care most about slowing global warming to lead the world in doing a better job of actually protecting the planet.

Notes   1 This essay is adapted from Victor (2011, Chapter 1).   2 To be sure, these marginal players can help slow the rate of warming and shift the most intense periods of warming by decades. A big effort to regulate strong but short-­lived warming gases such as black carbon or methane can help slow the rate of warming, but there is no viable strategy for stopping warming altogether without a central focus on CO2. For multi-­gas studies that explore such issues see, among many, notably Wigley et al. 2009; Ramanathan and Xu 2010; Ramanathan and Victor 2010.   3 This point has been made by many other scholars. For a brief but deeply historical view see Grübler et al., eds (1998).   4 See Stern (2007) and Nordhaus (2010) among many other studies.   5 This is an important area for better collaborative research between political scientists and international lawyers. For a recent review see Hafner-­Burton et al. (2012).

30   D.G. Victor   6 This view that a technology-­focused policy strategy can solve the political problem of climate change is one that persists. See for example Shellenberger et al. (2008). I am enormously sympathetic to the need for technology investments, as discussed below, but technologies strategies do not work unless they also include a market incentive—a “pull” from the market, such as through a carbon tax or regulatory requirements—that encourage adoption of the technology (see Victor, 2011, Chapter 6).   7 For more see Wara and Victor (2008).   8 For example, see World Bank (2009).   9 This assessment is based on R&D spending (inputs to innovation) and especially patent outputs. For more detail see Victor (2011). 10 For more on how smart green technology strategies can make it easier to manage problems like climate change see Chung (2011). 11 For a recent survey see Schiermeier (2011). 12 The geoengineering intelligentsia actually call this “solar radiation management (SRM)” because their definition of geoengineering is much broader and includes any large-­scale intervention in the climate system. Here I will use the term in a narrow way to mean climate interventions that produce quick results, such as sprinkling reflective particles in the stratosphere to mimic the behavior of volcanoes. What matters is that these systems produce very rapid and large-­scale climate impacts—that is why they are interesting to investigate as options in case a climate emergency appears on the horizon and why they are also scary. Whenever one messes with a complex system in ways that produce large-­scale and rapid change it is hard to predict all the consequences. 13 The relevant theory is rooted in the economic theory of clubs, notably Buchanan (1965); see also Keohane and Victor (2011). 14 For a more detailed assessment see Keohane and Victor (2011).

References Boden, T.  A., G. Marland, and R.  J. Andres. 2010. “Global, Regional, and National Fossil-­Fuel CO2 Emissions.” Carbon Dioxide Information Analysis Center, Oak Ridge National Laboratory, US Department of Energy, Oak Ridge, TN. doi 10.3334/CDIAC/00001_V2010. Buchanan, James M. 1965. “An Economic Theory of Clubs.” Economica 32(125): 1–14. Chung, Suh-­Yong. 2011. “Green Technology: New Environmental Costs?” International Conference on Practising Green Growth, Paris, May 30, 2011. Grübler, Arnulf, N. Nakicenovic, and A. McDonald, eds. 1998. Global Energy Perspectives. Cambridge, UK and New York, NY: Cambridge University Press. Hafner-­Burton, Emilie, David G. Victor, and Yonatan Lupu. 2012. “Political Science Research On International Law: The State of the Field.” American Journal of International Law 106(1): 47–97. Keohane, Robert O. and David G. Victor. 2011. “The Regime Complex for Climate Change.” Perspectives on Politics 9(1): 7–23. Nordhaus, William D. 2010. “Economic Aspects of Global Warming in a Post-­ Copenhagen Environment.” PNAS 107(24): 11721–11726. doi: 10.1073/ pnas.1005985107. Ramanathan, Veerabhadran and David G. Victor. 2010. “To Fight Climate Change, Clear the Air,” New York Times, November 27, p.  WK-­9, online, available at: www.nytimes.com/2010/11/28/opinion/28victor.html?pagewanted=all&_r=0.

The world’s failure to slow global warming   31 Ramanathan, Veerabhadran and Yangyang Xu. 2010. “The Copenhagen Accord for Limiting Global Warming: Criteria, Constraints and Available Avenues.” PNAS 107(18): 8055–8062. Schiermeier, Quirin. 2011. “Extreme Measures: Can Violent Hurricanes, Floods and Droughts be Pinned on Climate Change?” Nature 477: 148–149. Shellenberger, Michael, T. Nordhaus, J. Navin, T. Norris, and A. Van Noppen. 2008. “Fast, Clean and Cheap: Cutting Global Warming’s Gordian Knot.” Harvard Law and Policy Review 2(1): 93–118. Stern, Nicholas. 2007. The Economics of Climate Change: The Stern Review. Cambridge, UK and New York, NY: Cambridge University Press. UNFCCC (United Nations Framework Convention on Climate Change). 2010. “National Inventory Submissions 2010,” Annex I Party GHG Inventory Submissions, online, available at: http://unfccc.int/national_reports/items/ 1408.php. Victor, David G. 2011. Global Warming Gridlock: New Strategies for Protecting the Planet. Cambridge, UK and New York, NY: Cambridge University Press. Wara, Michael W. and David G. Victor. 2008. A Realistic Policy on International Carbon Offsets. Working Paper #74. Program on Energy and Sustainable Development, Stanford University, April. Wigley, T. M. L., L. E. Clarke, J. A. Edmonds, H. D. Jacoby, S. Paltsev, H. Pitcher, J. M. Reilly, R. Richels, M. C. Sarofim, and S. J. Smith. 2009. “Uncertainties in Climate Stabilization.” Climatic Change 97(1/2): 85–121. World Bank. 2009. Climate Change and the World Bank Group, Phase I: An Evaluation of World Bank Win–win Energy Policy Reforms. Independent Evaluation Group. Washington DC: IBRD/The World Bank.

2 Is an international climate treaty worth fighting for? Yvo de Boer

In recent years there has been an increasing sentiment expressed that an international legally binding treaty on climate is unlikely to be agreed and therefore not worth fighting for. Several reasons are behind this pessimism. Most refer to the slow pace of the international negotiations and difficulty of reaching a consensus agreement among 197 countries as the main obstacle. Which is imaginable: we have been negotiating since 1992, and we are still not close to anything that resembles a real solution. Others point to the current political difficulties around the issue of climate change in the United States and the fact that the conditions laid down by this country for a legally binding treaty (acceptance of a legally binding target by China and other major developing countries) are unlikely to be met. And yes, there is a huge conflict of interest amongst countries indeed. At the same time, many hold the view that current economic circumstances make it highly unlikely that governments will be willing to take on international obligations that are seen as an expensive constraint on economic growth. It is important to ask the question if the drawn out and complex multilateral negotiations are really worth the effort. Should we not instead focus on national action and regional cooperation as a much more realistic way forward, at least in the short term? What actually is the added value of an international legally binding treaty? Should we give up on multilateralism? Should we focus on smaller groups that can deliver, for example the G20? Or should we rely on bottom-­up action for now? Here, I would like to focus on three essential questions of contemporary climate negotiations. First: Is an international climate treaty worth fighting for? Second: Why is the multilateral process so complex? And third: If an international treaty is worth fighting for, what can be done to come to an agreement?

Is an international treaty worth fighting for? Is an international treaty worth fighting for? It is, certainly for business. Probably the greatest benefit of an international treaty lies in predictability

Is an international climate treaty worth fighting for?   33 and stability. Although the costs associated with addressing climate change are seldom welcomed with open arms, many companies are far more concerned by the cost associated with lack of clarity on potential climate policy, both in terms of level of ambition and time. This is relevant from at least four perspectives. If the nature of your business involves capital stock investments which may be written off over 30 to even 50 years, the long-­term direction of the policy environment is far more relevant than where policy requirements stand today. Take the example of the European Union (EU). The EU commitment to reduce emissions in 2012 by 8 percent against 1990 levels can be achieved at relatively modest cost through energy efficiency and the deployment of existing technology.1 But European leaders have also committed to reduce emission by at least 80 percent against 1990 levels by the year 2050.2 The cost associated with achieving such goals is clearly a different story. Will European leaders stick to this commitment? What interim steps will be introduced? Which mix of policies will be deployed? Making the wrong assumptions in the absence of long-­term policy clarity can result in a very expensive need to retire capital stock early. Second, the flip side of this relates to all those entrepreneurs who hope there will be profits associated with the sale and deployment of technologies necessary to achieve ambitious goals to address climate change (both mitigation and adaptation). The absence of ambitious long-­term commitments to reduce emissions almost by definition means a low cost of carbon and therefore greater difficulty for (relatively) expensive low-­emission technologies to compete in the market. If technology developers could at least hold out to investors the prospect that this will change, that politicians will meet their long-­term goals on time, things would change dramatically. Investments in climate-­friendly technologies which appear expensive under the circumstances of today would be seen in a different light in the context of longer-­term perspectives, for example, a binding commitment to remain within two degrees Celsius. A third perspective of particular relevance to the business community is predictability and stability. All too often, elections result in (dramatic) changes in policy. Fiscal policies favoring, for example, renewable energy technology may be introduced by one government and revoked by the next. Similarly, licenses for coal-­powered or nuclear electricity generation may be granted by one party only to be withdrawn by the next. Alternatively, natural disasters such as the recent earthquake effecting Japan may have political ramifications in an entirely different part of the world, as was the case when Germany abruptly decided to end its use of nuclear power. What the three perspectives described above illustrate is that whichever side of the climate debate you may be on, national political preferences are unpredictable beacons by which to plot an investment course. Regional commitments, such as the stated goal of EU leaders to reduce their

34   Y. de Boer greenhouse gas emissions by the middle of the century by at least 80 percent, may seem to provide a greater degree of predictability and stability, but certainly not anything close to certainty. “Even” in the EU, energy policy remains a national prerogative and EU policies in this area must be adopted by consensus. Similarly, the route by which to reach a long-­term goal can be the subject of many years of heated debate. A fourth perspective that is of particular relevance to the business community relates to the so-­called “level playing field.” Companies often refer to a maintained level playing field as a prerequisite for (climate) action. They argue that if action is taken in only one country or region, economic activity will simply shift to a part of the world where compliance costs are lower, without there being any net benefit to the environment (also referred to as “carbon leakage”). Of course, there is no such thing as a level playing field. There are no two countries in the world where energy costs, the cost of raw materials, labor costs or taxation rates are the same. What underpins the notion of a level playing field is the concern that climate action only makes sense if it does not alter the economic status quo in such a way that economic activity is simply displaced without any benefit in terms of emission reductions. An international treaty can help to ensure that the so-­called level playing field is maintained. It provides a mechanism whereby the actions of one country or region can be measured against that of another. It can provide politicians with the means to explain to their voters that the burden of responsibility to act is beings shared reasonably. Of course what constitutes “reasonable” is actively the subject of interpretation. But at the very least the opportunity to compare effort in an international context provides a greater sense of security than making a leap of faith on one’s own, in the hope others will follow. Recent history is littered with instances in which elections have led to a reverse in policy with negative consequences for those using fossil-­fuel technology, clean(er) (energy) technology, or even both. At the same time, the unexpected will continue to lead to the unexpected: whether it is the German decision on nuclear energy described above, the consequences of the Arab Spring in terms of oil prices, or what the conflict between Russia and Ukraine meant for the European debate on energy security. In all of these areas an international treaty—and certainly an international legally binding treaty—can make a big difference. Although national elections can dramatically change the policy landscape, an international commitment is not lightly set aside. Of course an internationally agreed target does not mean all national policies agreed to achieve it are carved in stone, but having an international legally binding target does provide significantly more predictability and stability than not having one. For all its stated shortcomings, only one country has decided to formally withdraw from the Kyoto Protocol and renege on its related commitment.3

Is an international climate treaty worth fighting for?   35 Much of the above relates to merits of international legally binding targets in terms of providing some of the predictability business needs to make climate-­friendly investment decisions. Of course international treaties are about a great deal more than setting targets and enshrining them in some kind of legal form. If predictability is what business likes best, then what does it hate most? Inconsistency. Inconsistency can relate to the chopping and changing targets and the policies designed to achieve them. There are many areas in which consistency and clarity can be provided more effectively through an international treaty than without one. To start, think of what generally comes at the end: reporting. One of the greatest frustrations of the business community relates to the myriad of reporting “requirements.” The word “requirements” has been placed between quotation marks because not all requirements are of an equal nature. There are numerous obligations companies must meet in terms of reporting on their products and production processes. These obligations are neither consistent nor uniform. In some cases deploying certain methods to accommodate interests in one part of the world may mean noncompliance with regulations in another. Even for companies operating in a single market, reporting requirements can be taxing. For those operating in multiple markets the challenge only becomes greater. Then add to this the so-­called voluntary reporting standards a company may choose to meet. Reporting may be voluntary, but the choice not to do it may have real financial implications. Being part of the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP), and the Dow Jones Sustainability Index or the FTSE4GOOD may seem like a frivolous pastime, but not being part of them can seriously affect reputation, brand, and investor appetite. An international treaty can help to bring (some) consistency into the complexity of reporting. Of course a climate treaty cannot (and should not) address reporting issues that relate to non-­climate issues. But it can at least provide clarity in the climate domain. Twenty years after the Framework Convention on Climate Change was agreed, we are still not able to say that “a tonne is a tonne is a tonne.” Companies are required to report their emissions in different countries in different ways. The number of activities subject to monitoring also varies. Thanks to the efforts of the Intergovernmental Panel on Climate Change (IPCC) the scientific community is striving to provide a consistent and increasingly comprehensive set of reporting guidelines. Without an international treaty this would be lost. If predictability and consistency are key business interests an international climate treaty can help to provide, a third key benefit worth mentioning relates to flexibility. Although the three aspects (consistency, predictability, and flexibility) may appear to be mutually exclusive, they are not. As no two individuals or countries are the same, there are no two identical companies. While companies may value enormously the

36   Y. de Boer consistency and predictability provided by national and/or international policy frameworks, flexibility in terms of how a target is achieved has great value in terms of (cost) efficiency, without compromising effectiveness. One of the key components of the Kyoto Protocol is the flexibility it offers through a market-­based mechanism. Emissions trading has become the key policy instrument of choice within the EU. The Clean Development Mechanism (CDM), which provides industrialized countries the option of achieving targets through offsets in developing countries, has been a cost-­ effective way to achieve emission reductions at lower cost. Not only are there many relatively cheap emission reduction options available in developing countries (and many economies in transition), emissions trading and the CDM can be attractive alternatives to taking measures in company. Of course market-­based mechanisms are not only possible in the context of an international treaty. Trading would happen in the EU with or without an international treaty. India has introduced a tradable energy efficiency certificate scheme, which constitutes trading in a portion of the domestic market and China plans to begin trading experiments in several provinces. But market-­based mechanisms in the context of an international treaty do offer the added benefit of a much larger market within which trading can take place or where mechanisms like the CDM can be deployed. The potential significance of this was already pointed out more than a decade and a half ago by the IPCC. The IPCC estimated it would be possible to reduce global emissions by 20 to 30 percent by implementing measures that would pay themselves back through a lower electricity bill in two to three years.4 Most of these potential measures are available in developing countries and economies in transition. In other words, an international treaty which provides a global market can significantly reduce the cost (to business) of meeting climate goals. Much of the focus of business has been on the cost of mitigation. Logical, because governments generally pass significant portions of their emission reduction goals on to the companies responsible for the emissions we are trying to reduce. Ignoring the cost to business of the impacts of climate change, as well as the cost of protection against those impacts (adaptation) can be a dangerous mistake. In general, most of the cost related to climate impacts and natural disasters are borne by companies and their insurers. Is an international treaty worth fighting for? It is, certainly for civil society. Observer organizations far outnumber government representatives at Conferences of the Parties (COPs)—environmentalists, farmers, women’s groups, youth, vegans, religions and organizations, and indigenous peoples—it is important that their voice be heard and their issues addressed. They also incentivize balance in the climate change agenda. For example, in recent years the climate negotiations have increasingly focused on adaptation. Given the international community’s failure to adequately respond to the climate challenge, there will be significant impacts of climate change, especially in developing countries. Their impacts will have

Is an international climate treaty worth fighting for?   37 consequences far beyond where they occur physically. Think, for example, of the 250 million people in Africa likely to be subject to additional water stress because of climate change as early as 2020.5 These people already live on the brink of subsistence and climate impacts are likely to push them over the edge. Will climate change directly or indirectly be a driver of mass migration? An international treaty allows for an integrated approach to the adaptation challenge. We pool knowledge to better understand challenges and pool resources to better cope with them. The Framework Convention and the Kyoto Protocol have created several financial instruments exclusively or partially intended to deal with the adaptation challenge. This is potentially much more effective than trying to cope with climate impacts or climate-­proof future investments purely on a national or regional basis. Civil society also puts the intergovernmental process and nations under a spotlight and ensures that those “playing the game” actually play the game: negotiators actually negotiate to come to an agreement. Finally, adequacy. This is not new to civil society, but the international process offers a critical opportunity to measure the overall level of commitment against necessity (science). Last, but certainly not least, governments will benefit from fighting for an international treaty. The impacts of climate change may be mainly environmental, but the solutions and interventions are fundamentally economic. Much of the political debate is about if others are doing their fair share. But purely national or regional approaches can have serious negative economic consequences, and an encompassing approach is vital to adequately answer the questions climate change poses. Modest steps can be taken alone, but ambitious steps must be taken together. Major steps can be taken together, for example to establish common frameworks for greenhouse gases to be included in reduction schemes and to come to common understanding on requirements for monitoring, reporting, and verification. Also, an agreement on means of implementation is key to both industrialized and developing countries. Industrialized countries can benefit from flexibility mechanisms and offsets, whereas developing nations can benefit from finance, technology transfer, and capacity building. A legally binding agreement provides governments more confidence that commitments will be met. So, although negotiating an international treaty is obviously slow, complex, and frustrating, giving up on the process comes with clear disadvantages and missed opportunities. After the Copenhagen climate change conference, many declared the United Nations (UN) unfit for purpose in terms of the ability to facilitate an international agreement. Even several years before Copenhagen, voices were heard in favor of shifting negoti­ ations to the G20, and the United States established the so-­called Major Economies Forum as a platform to debate climate outside the UN. The World Business Council for Sustainable Development (WBCSD) has strongly advocated abandoning the top-­down approach of international negotiations to focus instead on national and regional action.6

38   Y. de Boer I have tried to show that although multilateral treaties are extremely difficult to negotiate, and negotiating them successfully can bring very significant advantages to governments, civil society, and, not least, to the business community. If this is correct, we should perhaps devote more time and effort to understanding why treaty negotiations are so difficult and doing something about it.

Why is negotiating an international climate treaty so difficult? Negotiating an international climate treaty is difficult, and the complexity of the negotiating process itself is often given as the main reason. One-­ hundred-and-­ninety-seven countries seek to reach agreement by consensus, with every conceivable (and often contradictory) view being represented. Until recently (COP17, Durban) negotiations took place in six main streams, with many smaller working groups operating in the context of each of them. This basically means that only the larger delegations are able to follow every issue under negotiation. Given that everything under negotiation seems to be linked to everything else and a great deal of horse trading takes place, progress can be extremely slow. Having all views represented also means the presence of those who would prefer to see no progress on some of the issues under negotiations. The complexity of the process offers almost countless opportunities to slow things down or block agreement. Also, climate science is work in progress. Yes, understanding of climate change has improved over years, but gaps still remain, hence making it an easy subject to criticize. In addition, climate skeptics are well organized and well financed. Undeniably, the multilateral negotiating process is extremely frustrating. Equally undeniable is that much can be done to professionalize and streamline it. I would argue that these are investments worth making. For all their shortcomings, the climate negotiations delivered the Framework Convention, the Kyoto Protocol, the Bali Action Plan, the Cancun Agreements, and, most recently, the Durban Package. Every single COP (to the Convention and Kyoto Protocol) has involved small groups (of ministers) negotiating results on behalf of the larger community. Having everyone present does not mean everyone must be at the table and at the end of the day; consensus is not the same thing as unanimity. If there is an overwhelming majority in favor of agreement, agreement will be reached. This was demonstrated in both Kyoto and Durban. Historic responsibility (greenhouse gases remain in the atmosphere for a long time) for climate change is often used by countries (and sometimes companies) as an argument why they should not be asked to act or to act less. The bulk of greenhouse gas concentrations in the atmosphere today were caused by countries which contributed very little in the past. Although the emissions of China are greater today than those of the US,

Is an international climate treaty worth fighting for?   39 the vast majority of developing countries have emissions that are insignificant on a global scale. The fossil fuel-­related emissions of the entire African continent are less than 5 percent of global emissions.7 If historic responsibility is taken into account, then clearly the root cause of the climate-­change problem lies with industrialized countries, not developing nations. Some developing countries have used this to argue that developed countries should take their (historic) responsibility to act first, before developing countries are called upon to limit their emissions. They have also argued that any action they take should be conditional on financial support from rich nations, a concept which is enshrined in both the Climate Convention and the Kyoto Protocol. Especially in recent years the stark distinction between (rich) countries that have targets and (poor) countries that do not has become a growing source of conflict. Rich nations often use China’s status as the world’s largest emitter to argue that China (and other major developing countries) should also take on an emissions target. In turn, developing countries see this as moving the goal posts during the negotiations. They rightly point to the fact that the Convention, the Protocol, and the Bali Action Plan all clearly distinguish between those that should take targets and those that need not, as well as to the fact that some must provide financial support while others will receive it. Of course the world is a very different place than when the Climate Convention was agreed in 1992. Many of the so-­called “rich” countries that took targets upon themselves then are significantly poorer today than many of their developing counterparts at that time. Equally, negotiators often seem to forget that a target need not automatically mean a target to reduce. When the EU negotiated its internal burden sharing to meet Kyoto targets, Portugal was given a target of +27 percent, Greece +25 percent, Spain +15 percent, Ireland +13 percent, and Sweden +4 percent.8 Nevertheless, there is a strong feeling on the part of many developing countries that rich nations are failing to take their historic responsibility for having caused climate change, while trying to pass on the cost of action to them. This sense of injustice is probably one of the main obstacles to a more constructive advance in the multilateral negotiations. This situation is compounded by the perception that many obligations and commitments to provide developing countries with finance, technology, and capacity (building) remain largely unmet. Many of the Funds created under the Climate Convention and the Kyoto Protocol remain under-­resourced. There is endless haggling over what should or should not be supported financially. Developing countries often complain that the procedures applied by international financial institutions are complex, bureaucratic, and treat them as though they are inherently untrustworthy. On top of this many developing countries feel that the limited financial support being provided to them comes at the expense of shrinking rich country budgets for overseas development cooperation. In other words, that (aid) funding intended for poverty eradication is being re-­labeled to pay for a

40   Y. de Boer climate problem poor countries have not caused. For many years, there was also a strong feeling on the part of developing countries that while climate change is an issue that has risen high up the political agenda of industrialized countries, it is not something developing nations can afford to worry about, at least in the short term. For these nations the overriding concern was and is poverty eradication. As a consequence there were frequent situations in the negotiations where some developing countries felt that they could and should hold back on agreements regarding mitigation action and commitments, until other commitments, especially in the area of finance, had been met first by rich nations. As the impacts of climate change have become more noticeable around the world, this situation has begun to change dramatically. Whether it is the impacts of human-­induced climate change, or the consequences of natural disasters, nations now recognize that failure to act on climate change will have impacts that go well beyond the natural environment. Most obviously the small island developing nations, such as Maldives and Vanuatu, have long recognized that a failure to bring greenhouse gas emissions under control threatens their very existence, given related sea-­level rise. A broad range of other countries, especially those in South Asia and Africa, are also experiencing the consequences of drought, flooding, extreme weather events, and the like, with increasing frequency. This has begun to have a noticeable impact in the negotiations. The most recent agreements reached in Durban demonstrate that there is now a much broader group of countries that recognize all nations must take action to limit their emissions, while recognizing their (economic) ability to act. How this new realization is nurtured and supported through real international cooperation will determine the pace and success of international negotiations. For the time being, the overwhelming majority of developing countries does not see climate action as being their most immediate priority, and therefore make mitigation action they could take conditional on international financial support. The sentiment that action to combat climate change runs counter to national economic interests is far from exclusive to developing nations. In many rich countries, developing climate policy has been a slow and painful process. Initially, when the climate science was not as clear as it is today, most industrialized countries were unwilling to go beyond mitigation actions that could also be justified from the perspective of (energy) cost saving. There was little or no willingness to fully price the cost of emissions related with the burning of fossil fuels, especially in light of the competitiveness concerns mentioned above. This changed to some degree as the climate science became clearer and politicians began to see the potential advantage of mitigation action as a means to address other concerns such as energy prices and energy security. For example, in Europe concerns over dependence on Russian natural gas were a boost for the shift toward energy diversification, more renewable

Is an international climate treaty worth fighting for?   41 sources of energy, and greater energy efficiency. A number of countries, most notably China and Korea, also used their economic recovery packages at the time of the 2008 economic crisis to promote a cleaner and greener direction for economic growth.9 But this tendency has proven to be fragile. Certainly in Europe and the United States, the overriding preoccupation now is with the economic and financial crisis. Climate policy has been pushed onto the back burner as nations focus their limited resources on “bailing out” financial institutions or even whole countries. For all the stated belief in the importance of addressing climate change, the overriding political sentiment seems to be that this will have to wait until more pressing economic issues have been dealt with. The worry here of course is that the nature of economic recovery will be such that subsequently addressing climate change will become more difficult as investments lock in more “old” technology rather than new. The generally held perception that the Copenhagen Climate Conference failed, that the international negotiations are going nowhere, and that major developing countries are unwilling to make commitments, is not helping. Basically, the core of the issue would seem to be that most nations feel it is currently not in their national interest to act significantly to address climate change. For short-­term economic reasons they are unwilling or unable to fully price the cost of fossil fuels, they do not believe that the green growth model can be made to work—at least under current circumstances—and they believe the short-­term cost of mitigation action outweighs the cost of postponing climate action while saving the economy first. Unless this changes, it is hard to imagine how we will manage to keep average global temperature increase below two degrees Celsius and avoid severe long-­term impacts of climate change. Countries will not negotiate something they believe runs counter to their economic interests today. At least part of the reason for this situation lies in how the international climate-­change negotiations have been conducted and who holds responsibility for climate policy at home. Since their early days, the negotiations have been heavily dominated by representatives of environmental ministries. The ministerial segments which mark the conclusion of every COP are almost exclusively attended by ministers responsible for environmental issues. Finance and economy ministry representatives were in a distinct minority. They often saw climate change as an environmental policy issue and their main preoccupation was to minimize the impact of expensive climate-­policy measures. At home the reality in most countries is that ministers responsible for environmental policy are not very high up the pecking order. The short-­term costs associated with action to combat climate change must compete in national budget debates with proposed expenditures to strengthen the economy and create jobs. Under these circumstances few countries have chosen to act boldly on climate change.

42   Y. de Boer Fortunately this situation is slowly beginning to change. In 2007 (in Bali) ministers responsible for the economy, trade, and finance for the first time held a meeting in parallel to the climate-­change negotiations, a tradition the World Bank has sought to continue. Representatives of ministries of finance, economy, and transport are increasingly represented on national delegations. In the run-­up to the Copenhagen Climate Change Conference, UN Secretary General Ban organized two summits specifically for heads of state and government. This helped to put climate on the highest political agendas and broaden the realization that action to combat climate change is basically in the interest of every nation. Ultimately some 80 of those heads of state and government attended the Copenhagen Climate Change Conference. Beginning in Cancun in 2010 and subsequently in Durban in 2011 the responsibility of chairing the annual COP to the UNFCCC was taken on by ministers of foreign affairs, as opposed to ministers for the environment. This signified a growing realization that the climate negoti­ ations are related to issues of significant national interest. All of this is positive. Not only has climate-­change science come of age, but so have international political efforts to deal with it. That the long-­ term cost of failing to address the issue is significantly higher than the short-­term cost of dealing with it is now also broadly accepted. The fact remains however that there is currently very little appetite to incur cost today for the sake of significant savings tomorrow. I believe that the main reason behind this is that most people, even environmentalists, do not believe the green growth discourse deep in their hearts: the West has grown rich through dirty development, energy-­intensive industries have been exported to developing countries, and there are few strong examples of willingness to change—even the EU 30 percent is conditional. A plausible country-­specific case for green growth remains to be made and the international circumstances needed to facilitate this remain elusive. Unless this changes, addressing climate change will probably be a long and arduous uphill struggle leading to too little action, too late.

If an international climate treaty is worth fighting for, what can be done to come to an agreement? Have the negotiations delivered over the years? Yes, they have. The UNFCCC was set up, the Kyoto Protocol was negotiated in two years, an extensive reporting structure was set up, market-­based mechanisms were set up, the Copenhagen Principles were established, the Cancun Accord was agreed and the Durban Package was agreed. So although much criticized for their complexity and slow pace, the negotiations have made real progress in recent years. Although the Copenhagen Climate Change Conference “only” produced a political statement in the form of the Copenhagen Accord, this document was nonetheless essential in addressing some of the key outstanding political issues, including the long-­term goal for

Is an international climate treaty worth fighting for?   43 action and the establishment of the Green Climate Fund. Perhaps even more significantly, at the Copenhagen Conference or in the immediate aftermath of it, all 42 industrialized countries submitted targets to reduce their emissions and some 40 developing countries submitted plans to limit the growth of their emissions.10 Together these countries account for over 80 percent of global energy related CO2 emissions; in other words near global coverage. Although these commitments are not enough to avoid a more than 2° Celsius average global temperature increase, they are a multiple of what the Kyoto Protocol achieved by way of avoided emissions. Many of the important issues addressed in the Copenhagen Accord were formalized at the COP in Cancun in 2010. But Cancun went well beyond formalizing Copenhagen. It also provided a framework for implementation on which the 2011 conference in Durban was in turn able to build. While expectations for Durban were low, it nonetheless became a landmark event that has taken the battle to address climate change to new heights. Countries agreed to a second commitment period under the Kyoto Protocol, made the Green Climate Fund operational, created a mechanism for matching developing country project proposals with finance, established a technology committee, put in place procedures for reporting on emissions and efforts to reduce them, decided to develop a three-­year work program for the Adaptation Committee, and took a host of other significant decisions. Perhaps most significantly the Durban conference launched a process to develop a protocol, another legal instrument, or an agreed outcome with legal force under the Convention applicable to all Parties to the Convention. A new group was established to undertake this work and complete it no later than 2015 with a view to the outcome being implemented from 2020 on. The new group prepared a work program at the Conference of Parties in Doha. The significance of the Durban decisions many people point to lie, first, in the legal nature of the proposed outcome (a protocol, another legal instrument, or an agreed outcome with legal force) and, second, in that the obligations of all countries will be discussed in a single forum. The language on the proposed outcome is clearer than the mandate provided in Bali in 2007 (an agreed outcome), but less precise than that provided in Berlin in 1995. Some would argue, and indeed have argued, that decisions of the COPs are legally binding and would therefore be in compliance with the Durban mandate. The notion of a protocol, a legal instrument, or an agreed outcome with legal force that is applicable to all Parties is also not new. Both the Convention and the Kyoto Protocol are legal instruments that apply to all who are Party to them and that contain obligations for all Parties. A major source of contention has been that in both cases the obligations are different for different groups of countries. Consequently, there is room for interpretation on the two very issues that have been the greatest cause of contention in recent years: the legal nature of the agreed outcome and the commitments which apply to different (groups of ) countries.

44   Y. de Boer Here, what I see as the most important outcome of the Durban Conference will be crucial: the spirit of Durban. Durban was a sea change, opening doors to a global treaty in which all countries have commitments. Although the language of the decisions taken in Durban may be open to interpretation, the mood with which the Conference closed is not. Delegations refused to end the Durban Conference before it resulted in a significant agreement to take climate action to the next level. Countries agreed that the process needs to move to a next level with all countries taking obligations to act and to report on those actions, putting behind us a period in which targets only applied to industrialized countries and economies in transition. The greatest challenges will be not to focus on sanctions, but on benefits, such as finance, technology transfer, capacity building, and carbon markets; and to keep the spirit of Durban alive, and ensure that the political will expressed in Durban is turned into a fully functioning, legal regime binding all countries to a level of action in line with the challenge the scientific community has made so clear. If the key to successfully addressing the climate change challenge lies, as I believe, in successfully making the case for green growth, at least three related courses of action merit further exploration. First and foremost the case for green growth needs to be made convincingly at the national level. Global analysis undertaken by international institutions has enormous value in deepening general understanding but will neither convince a parliament nor the people that have elected it. A convincing strategy must reflect national circumstances and set out a direction rooted in real policy options that are convincingly costed. Developing such a strategy needs to be based on a broad national consultation process involving different political interests, the NGO community, and the private sector. This is important if the strategy is to enjoy true support and survive beyond the next elections. The bulk of investments in the energy sector, in industry, and in economic activity in general are private rather than public. If this is the case at present, there is no reason to assume a green growth strategy would be any different. Therefore, the private sector must play a central role. Second, many countries will require international assistance both to develop a strategy and to implement it. A wide array of international institutions exist that can help on both fronts. Part of the challenge is to ensure that their actions and interventions are placed in the context of nationally formulated goals and that delivery is coordinated and consistent. In that context I believe it is important that the Secretary-­General of the United Nations be explicitly mandated to mobilize the UN system to support national strategy development and implementation and that through him (or her) different UN organizations are held accountable for how they deliver on national needs and priorities. Of course this means that the decisions taken (and resources mobilized) by all parts of the United Nations

Is an international climate treaty worth fighting for?   45 system (including the World Bank) must be in line with this. As a consequence, the activities undertaken by different UN agencies in the context of helping to develop and implement a particular national strategy would need to be explicitly identified under the overall responsibility of a single UN agency or institution. This can only be made to work if the governing bodies of individual organizations explicitly support such an approach. The greatest battle regarding coherence of the United Nations system needs to be fought in national capitals, not New York. Third, a review is needed of the purpose the UN climate-­change negotiations can best serve. As indicated above, the scope of the negotiations has increased dramatically over the years, making them ever more complex and interrelated. To my mind the focus needs to be twofold. First, a process is needed whereby the adequacy of national and international commitment to action is made real and measured. In Cancun (2010) countries already agreed that the long-­term goal of mitigation action needs to be to limit average global temperature increase to 2° Celsius. In Durban, governments furthermore decided that this level of ambition needs to be raised, based on the outcome of the Fifth Assessment Report of the IPCC. This goal must be translated into individual national commitments that are real, measurable, and verifiable. If climate change is a global challenge, all countries must make specific commitments in terms of how they will contribute to addressing it. This obligation is already enshrined in the Framework Convention on Climate Change. To address the issues of stability and predictability referred to above, all countries should make commitments that are legally binding. Of course not all commitments can be the same for all countries, nor can the consequences of non-­compliance or the conditions under which such consequences are enacted. Especially for poorer countries, the ability to deliver on a commitment made will be partly dependent on the degree to which financial and technological support is provided. This means that not only the commitment, but also the means of implementation need to be real, measurable, and verifiable. This is where the coherent strategy support referred to above is so important. Additionally, the UNFCCC negotiations need to provide the rules for effective implementation. This includes procedures for national reporting, as well as decisions on the use of market-­based mechanisms and their supervision. In line with current practice the IPCC needs to be involved in preparing sound decision-­making to the extent possible. So, despite the complexity of the process, an international treaty is certainly worth fighting for. Business, civil society, and governments in all spheres will benefit. The process is nothing more or less than the sum total of its parts. If it works, it works because you made it work. The overriding challenge will be to ensure that multilateral negotiations are not overloaded with issues that can much more appropriately be decided at the national level, or implemented through international organizations with operational mandates. In future, the UNFCCC process needs to (1) set

46   Y. de Boer appropriate goals; (2) define modalities for implementation; and (3) monitor and ensure the implementation of agreements reached. At the same time, financial support, capacity building, access to market mechanisms, and technology need to spur greater ambition. In the end, an effective multilateral process and international agreement is vital to help governments, companies, and civil society to remain within our planet’s carrying capacity.

Notes   1 European Commission (2010).   2 European Commission (2011).   3 Although Russia and Japan have publicly stated that they would not join a “new” Kyoto agreement, these two countries have not formally withdrawn from the Kyoto Protocol, as Canada has.   4 Intergovernmental Panel on Climate Change (1995).   5 Intergovernmental Panel on Climate Change (2007).   6 World Business Council for Sustainable Development (2012).   7 United Nations Statistics Division, Millennium Development Goals Indicators.   8 European Commission (2002).   9 OECD (2009). 10 United Nations Framework Convention on Climate Change (UNFCCC), Conference of the Parties (COP) (2009).

References European Commission (2002) Council Decision 2002/358/EC of 25 April 2002 Concerning the Approval, on Behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the Joint Fulfilment of Commitments Thereunder. Brussels, April 25, 2002. European Commission (2010) COM (2010) 265 (final), Analysis of Options to Move Beyond 20% Greenhouse Gas Emission Reductions and Assessing the Risk of Carbon Leakage. Brussels, May 26, 2010. European Commission (2011) COM (2011) 112 (final), A Roadmap for Moving to a Competitive Low Carbon Economy in 2050. Brussels, March 8, 2011. Intergovernmental Panel on Climate Change (IPCC) (1995) Climate Change 1995: IPPC Second Assessment Report. Online, available at: www.ipcc.ch/pdf/climate-­ changes-1995/ipcc-­2nd-assessment/2nd-assessment-­en.pdf. Intergovernmental Panel on Climate Change (IPCC) (2007) Climate Change 2007—Impacts, Adaptation and Vulnerability: Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. OECD (2009) Beyond the Crisis: For a Stronger, Cleaner, Fairer World Economy. Remarks by Angel Gurría, OECD Secretary-­General, delivered at the China Development Forum. Beijing, March 21, 2009. Online, available at: www.oecd. org/china/beyondthecrisisforastrongercleanerfairerworldeconomy.htm. United Nations Framework Convention on Climate Change (UNFCCC), Conference of the Parties (COP) (2009) Copenhagen Accord, Appendix I—Quantified

Is an international climate treaty worth fighting for?   47 Economy-­Wide Emissions Targets for 2020 and Appendix II—Nationally Appropriate Mitigation Actions of Developing Country Parties. Online, available at: http://unfccc.int/meetings/copenhagen_dec_2009/items/5262.php. United Nations Statistics Division, Millennium Development Goals Indicators (online database): Fossil-­fuel carbon dioxide emissions (CO2), thousand metric tonnes of CO2. Data collected by CDIAC (Carbon Dioxide Information Analysis Center). Available at: http://mdgs.un.org/unsd/mdg/SeriesDetail.aspx?srid=749&crid. World Business Council on Sustainable Development (WBCSD) (2012) Changing Pace: Public Policy Options to Scale and Accelerate Business Action Towards Vision 2050. Online, available at: www.wbcsd.org/changingpace.aspx.

3 Post-­2020 climate change regime building An advanced developing country’s perspective Suh-­Yong Chung Introduction The inherent complexity of the UN-­led climate change regime is often compounded by the diverse interests and values of its Parties. Since the inception of the UNFCCC, the intergovernmental process has wrestled with the issue of equity in sharing the burden of emissions among developed and developing Parties. The current international efforts to address the climate challenge are guided by the principles of common but differentiated responsibility and historical responsibility, whereby Parties are divided into Annex-­I and Non-­Annex-I. However, the changes in the economic landscape and the rapid increase in GHG emissions by advanced developing countries—notably China and India—during the last twenty years or so poses a challenge to the current scheme. This has been a polarizing issue with some arguing that advanced developing countries should take on legally binding emissions reductions akin to those of Annex-­I countries, whereas developing Parties have consistently showed reluctance for internationally negotiated emissions targets as they interpret it as constricting economic growth. However, in December 2011, countries decided to initiate a new process to agree on the post-­2020 climate change regime by 2015. It is particularly noteworthy that countries decided to find a way of agreeing on a protocol, a legal instrument, or an agreed outcome with a legal force which will be applicable to “all parties.” A cross-­cutting challenge for the effective conclusion of a post-­2020 climate change architecture then is how to achieve progress in efforts to address climate change while simultaneously promoting the respective development goals of major developing Parties. This paper begins by analyzing from various aspects the limitations of the existing top-­down approach taken in negotiations in encouraging more participation particularly from developing countries. In order to ensure the effective conclusion of post-­2020 climate change regime building, it may require innovative approaches in order to reflect more balanced efforts between developed and developing countries. This paper explores the concept of low-­carbon development strategy as a viable policy option to

Post-2020 climate change regime building   49 overcome the constraints imposed by the top-­down approach by promoting both emissions reduction and sustainable development.

Failure of the post-­2012 climate change regime building: the challenges of the top-­down approach The initial design of the UNFCCC regime gives more emphasis on the top-­ down approach, i.e., relying on the implementation of legally binding obligations to reduced GHG emissions. Developed countries bear legally binding obligations to reduce GHG emission during the first commitment period which ends in 2012. In 2007, countries started to initiate new negotiations to agree on the post-­2012 climate change architecture, but have made little progress due to the various challenges of the top-­down approach under the UNFCCC regime. Burden sharing When countries negotiated on introducing a new treaty regime to address climate change in 1992, there were heated debates on how to share the burden of reducing greenhouse gas emissions. The Intergovernmental Negotiating Committee for Framework Convention on Climate Change was established in December 1990 to negotiate on introducing a new global treaty-­based framework to deal with climate change. While countries agreed upon the necessity of introducing a comprehensive and flexible mechanism, they were divided in regard to the issue of how to reduce greenhouse gas (GHG) emissions. In particular, developing countries emphasized the principle of common but differentiated responsibility based on which they argued that special circumstances of developing countries should be taken into consideration. They further claimed that industrialized countries needed to reduce GHG emissions to the level of 1990 by the year 2000 or 2005. One of the negotiation documents which resulted from the process of preparing for the UNFCCC demonstrates the countries’ concerns over the issue of the principles of burden sharing. While there was much disagreement over the details of the guiding principles, many countries at that stage agreed to share the burden based on their respective capabilities and historical contribution to the climate change.1 In order to reflect the different capabilities and contributions of countries to climate change, several options were considered. They include the following: . . . countries in accordance with their common but differentiated responsibility and capabilities [and different time frames be set out for implementation with a view to achieving a common per capita emission level noting that the largest part of the current emission of greenhouse gases originated in developed countries and those countries

50   S.-Y. Chung [have the main responsibility for]/[should take the lead in] combating climate change and [the adverse effects thereof]/[such pollution]] . . . Another option considered also deserves attention: [There is a [global obligation]/[need] to protect the climate for the benefit of present and future generations based on principles of equity and common but differentiated responsibilities of countries. [In this context, the efforts already undertaken by a number of countries to meet this goal are acknowledged.]] Despite some differences on the details of the principle, a common but differentiated responsibilities principle was agreed upon and included in the UNFCCC text as follows: 1. The Parties should protect the climate system for the benefits of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof. 2. The specific needs and special circumstances of developing country Parties, especially those that are particularly vulnerable to the adverse effects of climate change, and of those Parties, especially developing country Parties, that would have to bear a disproportionate or abnormal burden under the Convention, should be given full consideration. Although countries had come to an agreement upon recognizing the common but differentiated responsibility principle, however, another critical issue remained to be discussed. The greater task was how to group country Parties according to the common but differentiated responsibility principle. Some countries such as Italy proposed a multi-­country grouping as follows: a b c d e f g

Least developed countries (LDCs) Small island states Developing countries with a substantial industrial sector Oil-­producing developing countries Newly industrialized countries (NIC) Countries with economies in transition (e.g., Eastern Europe and USSR) OECD-­countries2

On the other hand, some of the newly industrialized countries such as the Republic of Korea emphasized that dividing countries into the two

Post-2020 climate change regime building   51 simplistic categories of developed or developing countries can overlook the unique situation of countries that are in various stages of development. The argument of the newly industrialized countries called for special consideration for some developing countries as they continued to expand their energy consumption to achieve economic growth.3 Despite the various proposals for country grouping by diverse countries, due to the difficulty in negotiating and setting a common standard for grouping countries in several categories to reflect their multifarious circumstances, the UNFCCC finally divided country Parties into two: developed country Parties and other Parties included in Annex-­I (hereinafter Annex-­I countries) and developing countries (hereinafter Non-­Annex-I countries). Based on the common but differentiated responsibility principle, the UNFCCC delineates some details on the commitment of developed country Parties. Annex-­I Parties bear the obligation to adopt national policies and take corresponding measures on the mitigation of climate change by limiting their GHG emissions.4 On the other hand, Non-­Annex-I Parties bear some general obligations as well but without any legally binding obligation in terms of quantified GHG emissions reduction. After the adoption of the text of the UNFCCC in the 1992 Rio Conference, country Parties discussed to provide further details on the obligations of the Parties under the UNFCCC. The ad hoc Group on the Berlin Mandate discussed how to set forth details on the obligations under Article 4 Para 2 (a) and (b) of the UNFCCC. Finally, country Parties agreed to Article 3 paragraph 1 of the Kyoto Protocol as follows: The Parties included in Annex-­I shall, individually or jointly, ensure that their aggregate anthropogenic carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A do not exceed their assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B and in accordance with the provisions of this Article, with a view to reducing their overall emissions of such gases by at least 5 per cent below 1990 levels in the commitment period 2008 to 2012. As a matter of flexibility, the Kyoto Protocol also introduced the so-­called Kyoto Mechanisms which refer to Emissions Trading, the Clean Development Mechanism and Joint Implementation. While these mechanisms may stimulate sustainable development through technology transfer and investment toward the developing countries, these mechanisms may also assist Annex-­I Parties in achieving their targets. Introduction of such mechanisms was the first attempt of the UNFCCC regime to address the climate change by depending on the market principle instead of command-­control policy of imposing legally binding obligation to the Annex-­I countries. However, the market approach only remains complementary to the overarching top-­ down approach of the Kyoto Protocol.

52   S.-Y. Chung The two-­track approach In 2005, country Parties established the Ad Hoc Working Group on Further Commitments for Annex-­I Parties under the Kyoto Protocol (AWG-­KP) to discuss the legal obligations of Annex-­I countries after 2012; the year the first commitment period ends. In 2007, Parties also adopted the Bali Road Map. The Bali Road Map includes the Bali Action Plan which has served as the basis for negotiating the post-­2012 climate change regime. Based on this action plan, the Ad Hoc Working Group on Long-­ Term Cooperative Action (AWG-­LCA) was established in order to conduct a comprehensive process to enable the full, effective, and sustained implementation of the UNFCCC beyond 2012. However, this two-­track approach which was initially established to build the post-­2012 climate change regime on the contrary became a barrier to reaching an agreement on any effective results among the Parties. While AWG-­KP specifically focused on the quantified emission reduction of Annex-­I countries, the Bali Action Plan addressed the reduction of the GHGs of both Annex-­I and Non-­Annex-I in different terms as follows: 1. (b) Enhanced national/international action on mitigation of climate change, including, inter alia, consideration of: (i) Measurable, reportable and verifiable nationally appropriate mitigation commitments or actions, including quantified emission limitation and reduction objectives, by all developed country Parties, while ensuring the comparability of efforts among them, taking into account differences in their national circumstances; (ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-­building, in a measurable, reportable and verifi­ able manner;5 Although the Bali Action Plan called for developing country Parties to take national appropriate mitigation actions, developed countries have argued that advanced developing countries should take more proactive actions to reduce GHG emissions in recognition of the present situation where some developing countries such as China now emit more GHGs than some developed Parties. Developed countries further argued that those advanced developing countries should take legally binding obligations comparable with developed countries. This position has been particularly taken by the US whose congress requires the US delegation to find a solution to impose obligations on China to reduce GHGs. On the other hand, advanced developing countries have resisted against taking

Post-2020 climate change regime building   53 legally binding obligations. In particular, China and India along with other advanced developing countries have not shown any likelihood of taking legally binding obligations in any sense. The problem of grouping countries Country grouping was under consideration since the inception of the UNFCCC in the early 1990s, and has been one of the most difficult topics. There have been various approaches to grouping countries using different standards. To make the differentiation between countries, indicators such as emissions per capita and GDP per capita are used which could result in two to seven categories for differentiating commitments/actions for both developed and developing countries.6 In fact, the classification under the UNFCCC does not provide any standard to obligate a country Party to take responsibilities in reducing GHG that is comparable to any country which may emit equal amount of greenhouse gas emissions. Some Non-­Annex-I countries such as China have increased its GHG emissions rapidly after its ratification of the UNFCCC thereby surpassing some of the Annex-­I Parties in its emissions. But due to the lack of any standard to reclassify country Parties, China still remains in the same group with small and least developed countries which do not bear any legally binding obligations to reduce GHG emissions. As a matter of fact, there are now serious gaps between the arguments of these advanced developing countries and the reality of their current global economic activities. Their arguments against taking legally binding commitments are based on the possibility of being burdened with inappropriate costs in implementing the commitments. Furthermore, these advanced developing countries have enjoyed political leadership within the G-­77 group. Once they acknowledge the differentiation of responsibility from the less advanced developing countries, they will be pressured to take legally binding commitments. Recently, there have been some attempts to reclassify countries to reflect their changed influences over the global economy. For example, the OECD suggested several new categories for country grouping to mirror the changing landscape.7 The categories are as the following: • • • •

Adjusted UNFCCC: This category consists of OECD countries including Mexico and Korea; Adjusted Kyoto Protocol: This would include the same countries as the above “adjusted UNFCCC” with the exception of Turkey and Belarus; High human development: UNDP uses the indicator of level of human development based on the Human Development Index. In 2007, seventy-­one countries were listed as having high human development. High income economies: The World Bank classifies countries into four main categories based on Gross National Income per capita:

54   S.-Y. Chung

•

high-­income, upper-­middle-income, lower-­middle-income, and low-­ income. A fifth category of LDCs may be added. High income developing countries: UNCTAD’s classification include three main groups such as developed, Southeast Europe and Commonwealth of Independent States (CIS) and developing countries. And there are three groups within developing countries: high-­income, middle-­income. and low-­income.

MRV and support According to the Bali Action Plan, country Parties have been negotiating the developing country’s nationally appropriate mitigation actions (NAMAs) undertaken “in a measurable, reportable and verifiable manner (MRV).” Based on this, countries have further negotiated more details; the plans to limit the growth of emissions which will be carried out with appropriate and adequate support from developed countries in the form of technology cooperation, finance, and assistance in capacity-­building (i.e., supported NAMAs). Such efforts may be recorded in a registry to match NAMAs with the support from developed countries. And these supported actions could be “internationally” measured, reported, and verified. This type of mitigation actions will be undertaken by most of the developing countries which are in need of support to implement those actions. On the other hand, for the advanced developing countries, which are capable of supporting those nationally appropriate mitigation actions domestically (i.e., unilateral NAMAs) may not need any international support. Unilateral NAMAs will be also implemented in a measurable, reportable, and verifiable manner but “domestically.” The actions will be reported on a regular basis but in a different manner compared to those of the developing countries, which are subject to more stringent standards. As for the advanced countries’ unilateral NAMAs, they may not be reported and assessed under sufficiently stringent standards as those countries are unlikely to welcome any third party’s involvement in any form in the process of implementation of their nationally appropriate mitigation actions. This has also posed difficulties for the UNFCCC as a whole in developing more effective standards to ensure greater commitment from the advanced developing countries in mitigation of GHG emissions. Legal framework One of the focuses of the negotiation on post-­2012 climate change regime has been about the form of legal framework. The image on the legal form has stirred great interest among countries. There were several options to the legal form of the post-­2012 climate change regime. Considering the current two-­track framework, the first option for consideration was the adoption of a protocol that reflects the results of the negotiations within the AWG-­LCA

Post-2020 climate change regime building   55 along with the extension of the present Kyoto Protocol. This option would have extended the same level of commitment of Annex-­I country Parties under the Kyoto Protocol. On the other hand, a new protocol may impose new legally binding commitments to advanced developing country Parties. However, China and India along with some other advanced developing countries have strongly resisted against this idea, noting the importance of abiding by the principle of common but differentiated responsibility. Although small and least developed countries have forcefully argued the necessity of introducing a legally binding treaty, strong influence of those advanced countries within the G-­77 Group seems to make this option unrealistic at least for now. If a set of non-­legally binding decisions are to contain the results of negotiations under the AWG-­LCA, this second option would have given more flexibility to the advanced developing countries. However, a non-­ legally binding framework might not drive sufficient emissions reduction efforts by those advanced developing countries. Furthermore, some of the countries such as the US strongly urge China to take the same level of legally binding obligations to reduce GHG emissions. Most recently, the European Union has joined small developing countries to pressure China and India to accept legally binding commitments. The third option was to give up the Kyoto Protocol and to introduce a single Protocol. This new protocol would have given more clarity to country classification as the changed level of GHG emissions will be reflected. This would have also diluted the current division of developed and developing countries either by imposing universal standards on reducing GHGs or by grouping Non-­Annex-I or developing countries into several groups for different levels of legal commitment. However, this would have been the least acceptable option for the advanced developing countries. Their unrelenting emphasis on the principles of common but differentiated responsibility and historical responsibility proves it will not be an easy task to place them in a position of taking same level of legally binding commitment as the developed countries. In fact, what is more important in designing a legal framework is not the formality but its effectiveness. If Parties can only agree on a legally binding but shallow treaty, it will be unlikely to lead to effective results in curbing GHG emissions. In other words, in order to ensure effective regime building, it is necessary to have not only legally binding rules but also precise and highly elaborate rule and delegation to a third party. In this sense, simple disagreement on the form of the legal framework on the post-­2012 climate change regime may not result in any productive result. However, the very image of taking legally binding obligations has prevented the advanced developing countries from engaging in more productive negotiations with developed countries. In a situation where the first commitment period ends in 2012, country Parties of UNFCCC had to seek more productive and effective solutions on designing the post-­2012 framework.

56   S.-Y. Chung Concluding remarks Although the importance of advanced developing countries has been underlined as their economies rapidly become larger, the division of developed and developing countries under the UNFCCC in taking legal commitment to reduce GHGs may not be easily altered. First, the common but differentiated responsibility principle along with historical responsibility still remains as an important guiding principle in the UNFCCC regime. However, the simple country grouping of Annex-­I vs. Non Annex-­I has not adequately reflected the principle of common but differentiated responsibility. Second, UNFCCC failed in providing any provision which will serve as a basis for transferring the status of some Non-­Annex-I countries to that of Annex-­I. Third, negotiations on the legal framework for the post-­2012 climate change regime have revealed that advanced developing countries are not willing to take any legally binding treaty-­based obligation in regard to their GHG emission reduction. Finally, advanced developing countries are not subject to nationally appropriate mitigation action in an “internationally” measurable, reportable, and verifiable manner. They are also not willing to be subject to the process of international consultation and analysis on the biennial update reports which was agreed upon at COP 16. All these demonstrate the difficulty and the limits of designing a legally binding treaty regime for the post-­2012 period relying on the top-­down approach.

Low-­carbon development strategy as a viable option for post-­2020 climate change regime building The Durban platform While it was increasing unlikely for countries to be able to agree on a post-­ 2012 climate change regime before 2012, countries decided to initiate a new process to agree on a new framework on climate change which will be applicable after 2020. As previous negotiations on the post-­2012 regime faced constant obstacles in making an agreement due to the issues associated with the top-­down approach, serious efforts were made to overcome the limitations of two track approach. According to the decision adopted in the Durban Conference of Parties meeting, country Parties agreed as follows: 2. Also decides to launch a process to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties, through a subsidiary body under the Convention hereby established and to be known as the Ad Hoc Working Group on the Durban Platform for Enhanced Action;8

Post-2020 climate change regime building   57 As countries need to agree on a protocol, another legal instrument, or an agreed outcome with legal force, which will be applicable to “all Parties,” it seems countries may have a better chance to agree on a regime without being constrained by the division between the countries. However, it is still noteworthy that any form of legal framework will be still guided by the UNFCCC which stipulates the principle of common but differentiated responsibility. Here, possible options including a bottom-­up approach need to be aggressively sought to enable countries to agree on a more effective climate change regime. The need for a bottom-­up approach Most developing countries are reluctant to rely on top-­down approaches with regard to mitigation of GHG emissions. In particular, advanced developing countries such as China, India, Brazil, South Africa, and Korea have increasingly expressed concerns about the possibility of taking a legally binding commitment in reducing their GHG emissions based on the common but differentiated responsibility. At this juncture where meeting the mitigation recommendations of the IPCC is ever more crucial while the traditional top-­down approach is facing challenges, an alternative approach called low-­carbon development strategy (LCDS) has gained attention. LCDS is an approach that ensures greater participation of developing countries in reducing global GHG emissions. In addition, LCDS takes note of the importance of development as the priority of developing countries. Instead of setting explicit reduction targets at the international level, the low-­carbon development strategy starts by establishing national development plans and identifies a low-­carbon development path. What is low-­carbon development strategy? Also often referred to as low-­emission development strategy (LEDS), LCDS generally refers to a forward-­looking national economic development plans or strategies that encompass low-­carbon (emission) and/or climate-­resilient economic growth.9 While it can serve various objectives, its primary focus lies in helping to advance national climate change and development policies in a more coordinated, coherent, and strategic manner. LCDS can be a pledge-­based approach to stimulate more participation from developing countries in mitigating climate change. Therefore, LCDS does not presume a quantified emissions target; rather the emission reduction would be the co-­benefit of the implementation of these policies along with facilitating economic development. As LCDS are domestically created national low-­carbon development plans, it is likely that different paths will be taken by countries according to their varied circumstances. By pursuing low-­carbon development pathway by means of LCDS, GHG emissions will be lower in comparison

58   S.-Y. Chung with what would have been emitted of GHGs if a traditional economic development path was taken. In other words, when a country seeks a low-­ carbon development path by preparing and implementing a LCDS, it may be able to avoid beforehand possible future mitigation burdens that may be extremely costly to the country. As an integrated strategy of development and mitigation and adaptation actions, LCDS can be additional to existing climate change policies and measures or newly created ones to address climate change. By definition, policies and measures include various legislative acts, regulations, and negotiated agreements. Fiscal policies such as taxes and subsidies, and regulatory policies including emission standards and industrial reforms, are also possible policies and measures. LCDS can be established to include any of those various policies and measures according to the domestic circumstances but more feasible than existing ones as LCDS will be prepared taking a bottom-­up approach at the domestic level rather than a top-­down approach at the international level. Furthermore, the various measures of the LCDS will help to advance mitigation of GHG emissions which signals that LCDS will be well-­fitted to the international dialogue of the UNFCCC regime. Legal basis The terminology of the LCDS and LEDS have already been discussed and introduced in the texts of UNFCCC negotiations. These texts provide the legal basis for preparing and for implementing LCDS as an alternative and viable method to engage the participation of advanced developing countries as well as other developing countries. Some of the legal basis on the viability of a LCDS can be found in the provisions of UNFCCC as follows: taking into account that policies and measures to deal with climate change should be cost-­effective so as to ensure global benefits at the lowest possible cost10 The Parties have a right to, and should, promote sustainable development. Policies and measures to protect the climate system against human-­induced change should be appropriate for the specific conditions of each Party and should be integrated with national development programmes, taking into account that economic development is essential for adopting measures to address climate change11 Formulate, implement, publish and regularly update national and where appropriate regional programs containing measures to mitigate climate change by addressing anthropogenic emissions by sources and removals by sinks of all greenhouse gases . . . and measures to facilitate adequate adaptation to climate change;12

Post-2020 climate change regime building   59 The Bali Action Plan also states that “various approaches including opportunities for using markets to enhance the cost-­effectiveness of, and to promote mitigation actions, which bear in mind different circumstances of developed and developing countries” need to be addressed.13 In the Copenhagen meeting, Parties discussed the necessity of preparing low-­emission plans by developing countries and included a text in paragraph 2 of the Accord that stated “low-­emission development strategy is indispensable to sustainable development.” The Cancun Agreement furthered on the issues of LCDS. Its paragraph 65 states: “Encourages developing countries to develop low-­carbon development strategies or plans in the context of sustainable development.” The most recent decision on the Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) does not contain any specific provision regarding the LCDS. However, there are several provisions that may become the basis for LCDS under the decision of the ADP including the following [Decision 1/CP 17 Paragraphs 6 and 7]: 6. Further decides that the process shall raise the level of ambition and shall be informed, inter alia, by the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, the outcomes of the 2013–2015 review and the work of the subsidiary bodies; 7. Decides to launch a workplan on enhancing mitigation ambition to identify and to explore options for a range of actions that can close the ambition gap with a view to ensuring the highest possible mitigation efforts by all Parties; Despite the already existing various legal grounds for advancing the details on the LCDS, actual negotiations have not yet sufficiently focused on it. However, in a situation where the top-­down approach faces difficulties in having advanced developing countries to take legally binding commitments in reducing GHG emission, LCDS could be a viable policy option which could bring a win–win situation for both developed and developing countries for achieving the goal of agreeing on a post-­2020 climate change framework. Existing LCDS of advanced developing countries In fact, there are already many good examples of LCDS. In the case of China, the China National Climate Change Plan has been developed and implemented. During the time frame of 2007 to 2010, the Plan addressed various sectors such as energy production and transformation, energy efficiency improvement, energy conservation, industrial processes, agriculture, forestry, and municipal wastes. China has put a lot of emphasis on developing renewable energy technologies which will represent approximately 10 percent of the total energy resources by 2010 and 16 percent by 2020.

60   S.-Y. Chung Brazil also developed its National Plan on Climate Change in 2008. As it has large forest areas, its LCDS has adopted various policy measures to address the issues of biofuels, reducing deforestation rate, and increasing forest coverage. Brazil also introduced policy measures to promote energy efficiency and uses of renewable electricity. India, which is expected to become a larger GHG emitter than China by 2030, has been also keen on the LCDS. Based on India National Action Plan on Climate Change, India has addressed issues on energy efficiency and solar energy. Its National Plan has also developed polices measures on sustainable habitat and establishing green India. Other advanced developing countries such as Chile, Indonesia, Mexico, and South Africa have been also identified as countries which have developed LCDS. Korea’s low carbon green growth policy In the case of the Republic of Korea, it has also been very active in developing its low-­carbon green growth policy.14 As the world’s seventh largest GHG emitter, Korea introduced the low-­carbon green growth policy in 2008 and has become one of the pioneers in the area of diffusing LCDS. Based on its Basic Framework Act on Low Carbon Green Growth, Korea has announced its plan on reducing GHG emission reduction by 30 percent relative to level of Business as Usual by 2020. The aim of Low Carbon Green Growth policy is to ensure sustainable economic growth by emphasizing green technologies and industries as new engines of growth while reducing GHG emissions. Thanks to this Low Carbon Green Growth Policy, Korea has achieved a positive growth in the first quarter of 2009 and recorded the highest growth rate in the second quarter of 2009 among the OECD countries. In order to ensure the effective implementation of the policy, Korea has introduced a Target Management System which sets and implements a target for GHGs emission reduction, energy conservation, and energy efficiency for 366 large businesses and was put into practice from January 2012. Furthermore, the Korean government, as the first Non-­Annex-I country, passed a bill on Emissions Trading System which will go into effect in year 2015. The need to build an international institutional framework for the low-­carbon development strategy In the process of developing LCDS, countries can better identify priority areas in domestic mitigation actions which will also contribute to the global effort of tackling climate change. So, once a country has prepared and initiated LCDS, it may take the necessary steps to pledge the strategy as nationally appropriate mitigation actions (NAMAs). From the developing country’s point of view, NAMAs through LCDS will provide a good basis to negotiate with developed countries on how to share the burden in

Post-2020 climate change regime building   61 reducing GHG emissions. This in turn signals the need to build an international institutional framework which will embody LCDS. Under the negotiations on the post-­2020 climate change regime building, there may be three options through which LCDS could be incorporated into the international framework: • • •

LCDS to generate credits, LCDS encouraged by external support (supported LCDS), and LCDS recognized by the international community without external support (unilateral LCDS).

The first option is to design an institutional framework where LCDS could generate credits. There may be several different types of credits that may be considered, including NAMA credits. This approach will facilitate quantifying the benefits of LCDS so that countries could receive credits for their efforts. However, it has proven to be difficult to calculate and to generate credits when a particular strategy may be linked to other factors that affect a country’s emissions, or when there are multiple policies that are aimed at achieving the same goal. Furthermore, constant efforts should be undertaken to avoid the double counting of the efforts of a country which may want to receive more credits. Despite the challenges inherent in generating credits from quantified emissions commitments of LCDS, such a possibility may also attract less developed countries which do not consider taking legally binding commitments at all. Supported LCDS, the second option, may be more favored by developing countries as they do not require quantifying GHGs emission reductions made through implementation of LCDS. At the international level, a LCDS serves as information provider through which the international community can better assess mitigation actions taken by developing countries. LCDS can also help to identify priority areas for funding to the developing countries. In this context, even if LCDS cannot generate credits, this option could still benefit countries as their actions would be recognized by the international community. By taking this option, actions of developing countries would be formally recognized by the UNFCCC regime, thereby encouraging all the country Parties to participate in the UNFCCC framework by taking domestic measures. In this sense, a registry will play an important role in formally recognizing developing countries’ actions as it will be discussed later. For the advanced developing countries, the third option of pursuing unilateral LCDS will be more important as they are much less likely to rely on external support to develop their LCDS. Unilateral LCDS recognized by the international community will give more flexibility to the country in taking a low-­carbon development path tailored to its specific situations. In order to encourage those advanced developing countries which may have sufficient capacity to develop its own LCDS, it is pivotal that current negotiations on the registry allow a type of registry which may recognize unilateral LCDS.

62   S.-Y. Chung Registry In order to promote LCDS under the UNFCCC regime, it is important to develop a system of recognition or credit. In this sense, a registry will be an important policy vehicle. The registry, as a system of addressing qualitative aspect of the LCDS, would be a database that may contain information on NAMAs undertaken through the implementation of LCDS pledged by governments, as opposed to LCDS implemented in order to fulfill legally binding obligations. The roles of the registry will be several. First, the registry would be a tool for exchanging information among not only the governments and but also industries, who may want to actively participate in the implementation of LCDS based on public–private partnership. The registry will provide greater certainty to the private sector and facilitate investment. Second, information available to the public through the registry would enhance public awareness on the level of implementation of LCDS and its contributions to the UNFCCC objectives of reducing GHG emissions. By this scheme, Parties, including advanced developing countries, will meet the obligation under the Article 6 of the UNFCCC which calls on Parties to promote and facilitate public access to climate change-­related information. Third, for the credit-­generating LCDS, the registry will provide the basis for generation of credits as a result of the implementation of the LCDS. For the supported LCDS, the registry will also function as a match board between the external (financial, technology, and other) support and the progress to be made through LCDS. In regard to the unilateral LCDS, the registry will be a basis for the international recognition of unilateral implementation of LCDS. Financing External support is necessary for some developing countries to develop their national LCDS. Countries in need of support can be provided with funding from domestic sources or they may receive funding through external sources. External funding sources include debt, equity, or financial assistance through available channels. According to the analysis of Project Catalyst, it was estimated that public finance of US$21–54 billion would be needed in developing countries excluding some of the advanced developed countries such as China and Korea during the years from 2010 to 2012. According to the Copenhagen Accord and the Cancun Agreements, the Fast Start Fund would be available up to 2012 with the amount of US$10 billion annually to support both adaption and mitigation actions of developing countries. And there remains further opportunity for jointly mobilizing US$100 billion annually which developed countries have promised to make available to meet the

Post-2020 climate change regime building   63 needs of developing countries. In this context, the Green Climate Fund as a financial mechanism to address climate change within the UNFCCC regime will become important to channel financial resources to support implementing LCDS both at national and international levels. There will be other sources of financing available as well for the implementation of LCDS. They include the following international sources:15 • • • •

public funds including ODA and multilateral funds, private funds including green equity finance, private investment funds, foundations, NGOs, global philanthropic foundations, and corporate social responsibility, market-­based mechanisms including tradable renewable energy certificates, carbon cap-­and-trade mechanism, green insurance contracts, and programmatic approaches such as NAMA, and innovative instruments including transaction taxes, international climate-­change finance initiative, air travel levy, global carbon tax, debt-­for-efficiency swaps, international carbon auction funds, international non-­compliance fees, and efficiency penny.

In order to have LCDS appropriately developed and implemented by developing countries, an adequate mechanism that promotes and recognizes LCDS and channels necessary funding for its implementation should be developed and incorporated into the post-­2020 UNFCCC regime. Assessment Among the various policies and measures that will be included in a country’s LCDS, assessment will be especially important for the mitigation actions undertaken that are quantifiable. To build an adequate framework for LCDS, both the aforementioned registry and an assessment system must be established as they respectively address the qualitative aspect and quantitative aspect of LCDS. An assessment system will ensure that the pledged and implemented LCDS will contribute to actual reduction of the GHG emissions. And in order for the assessment system to perform such a function, appropriate reporting and review mechanisms are critical. Reporting is a central part of the assessment system. While a reporting system for LCDS will require the submission of both national policies and measures and GHG inventories, it should focus on the former and less on the latter. Past experiences of the implementation of the obligation of national communications demonstrate that there are many Parties that have submitted national communications only once or twice. There are even Parties who have never submitted their national communications to the UNFCCC. There are several reasons for this low rate of reporting under the current UNFCCC including the technical difficulties and expensive costs of producing national GHG inventories. Therefore, more efforts

64   S.-Y. Chung will need to be taken in developing modalities on reporting policies and measures, which will include the implementation of LCDS. Based on the reporting results, appropriate review processes may be required. Currently, the UNFCCC has developed an in-­depth review of the national communications of Annex-­I Parties. Although a review process of the LCDS may utilize the existing review mechanism, this should be avoided if it discourages developing countries from the implementation of LCDS. In particular, it will be important to develop a review process which will differentiate the reporting on unilateral LCDS from the reporting on supported LCDS. Guidelines on the review mechanism should be developed which are not punitive but facilitative in nature. And the review mechanism should be managed by a body designated by the UNFCCC. It could be an already existing body of the UNFCCC, a newly created body within the UNFCCC, or an external body. On the other hand, a more stringent review mechanism may be introduced in case any developing country may want to agree on it in return for receiving external support for its LCDS. However, it should still be less stringent than the review mechanism for the developed countries. It will be also necessary to develop a separate review mechanism for supported LCDS. During the process of reviewing the results of national reports, expertise of the international organizations, individual experts, and industries may be utilized unofficially. This will generate benefits of identifying issues from diverse perspectives that may be needed to be further improved at the later stage of implementation of LCDS of developing countries. Ultimately, a review system will help developing countries enhance their ability to differentiate between the policies and measures that were more effective from those that were less or not effective. This will facilitate better decision making by policy makers in developing countries. This review system will also increase the chances for the LCDS pledged by developing countries to be effectively implemented. Consultative organizations: a case of global green growth institute While the UNFCCC will need to develop a scheme to promote LCDS in its post-­2020 climate change regime, there will be other players which are relevant to the implementation of LCDS. They include other intergovernmental organizations such as the World Bank, philanthropic foundations, and a variety of research and advocacy-­oriented NGOs both in developing and developed countries. One of the most prominent examples is the Global Green Growth Institute (GGGI) which was launched in June 2010 and became a treaty based organization in October 2012 as a result of the partnership between the Korean government and other international players. Based on the notion of public–private partnership, GGGI supports developing countries by providing a variety of assistance which includes helping to develop and implement

Post-2020 climate change regime building   65 LCDS. GGGI’s services to develop LCDS, or what GGGI terms as Green Growth Policies (GGPs), are tailored to meet the specific needs of its client country. Thus, for the advanced developing countries such as China, India, Indonesia, Brazil, Mexico, South Africa, and South Korea, GGGI’s future operation may include helping these countries to either further develop a country’s already existing LCDS or to develop new LCDS according to their needs. For countries that do not need to rely on external funding, GGGI may also provide assistance by means of a mutually agreed contract between GGGI and the client country. As for other developing countries that need external funding, GGGI may develop a LCDS which will help identify and stimulate investment from private sector and also provide similar services by utilizing available public funding mentioned above.

Conclusion When designing a climate-­change regime, we need to consider various issues which include: reducing scientific uncertainty, finding the appropriate goals and means to reduce GHG emissions, and considering the political dynamics of the stakeholders. The current top-­down approach, in this sense, has underestimated the influences of the embedded political interests of developing countries in implementing the goals of UNFCCC regime. In other words, advanced developing countries’ interest in maintaining the current two-­track approach, which ensures a better chance for them not to bear more costs in reducing GHG emissions, may surpass the necessity of sharing burdens together with developed countries. In a situation where countries initiated a new process to agree on post-­2020 climate change regime by 2015, alternative options must be aggressively sought if it can better ensure the chance of achieving the goal of the Convention. And in this context, developing and implementing LCDS can provide a meaningful breakthrough in regard to both meaningful reduction of GHG emissions and ending the deadlock in the climate-­change negotiations. This alternative option will also help to move away from the current top-­down approach to the more flexible bottom-­up approach which can open new doors in achieving the common goals of the climate-­change regime. In this fragmented global society, too much emphasis on centralized regime-­building efforts will likely face the same difficulties continuously without any significance progress. Thus, designing the post-­2020 climate-­change regime must reflect interests and concerns of major stakeholders including those of advanced developing countries.

Notes   1 Intergovernmental Negotiating Committee for a Framework Convention on Climate Change (Third Session), Working Group I Chair’s Submission, A/ AC.237/WG.I/CRP.1/Rev.1 (1991): http://unfccc.int/documentation/ documents/advanced_search/items/6911.php?priref=600005495.

66   S.-Y. Chung   2 Intergovernmental Negotiating Committee for a Framework Convention on Climate Change (Third Session), Working Group I Chair’s Submission, A/ AC.237/Misc.7 (1991): http://unfccc.int/resource/docs/1991/a/eng/misc07.pdf, p. 10.   3 Ibid.   4 Article 4 Para 2 of UNFCCC.   5 Decision 1/CP.13 Para 1 of the Bali Action Plan.   6 Baumert et al. (2005), pp. 21–24.   7 Karousakis et al. (2008).   8 COP 17 Decision on Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action.   9 For more details about LEDS, see Clapp et al. (2010), p. 11. 10 UNFCCC Article 3 Paragraph 3. 11 UNFCCC Article 3 Paragraph 4. 12 UNFCCC Article 4 Paragraph 1(b). 13 Bali Action Plan1(b)(v). 14 Note that Korea’s Low Carbon Green Growth policy focuses more on the issues related to climate change while UNESCAP’s green growth policy deals with more general issue areas related to environmental sustainability. 15 UNDP (2009).

Bibliography Bali Action Plan, online, available at: http://unfccc.int/resource/docs/2007/cop13/ eng/ 06a01.pdf Baumert, Kevin A. and Herod Winkler, “Sustainable development policies and measures and international climate agreements,” in Rob Bradley, Jonathan Pershing, and Lee Schipper (eds.), Growing in the Greenhouse: Protecting the Climate by Putting Development First, World Resource Institute, Washington, DC, USA (2005), pp. 15–23. Baumert, Kevin A., Timothy Herzog, and Jonathan Pershing, Navigating the Numbers Greenhouse Gas Data and International Climate Policy, World Research Institute, Washington, DC, USA (2005). Bhatti, Y., K. Lindskow, and L. H. Pedersen, “Burden-­sharing and global climate negotiations: The case of the Kyoto Protocol,” Climate Policy Vol. 10 No. 2 (2010), pp. 131–147. Bondansky, Daniel, International Climate Efforts Beyond 2012: A Survey of Approaches, Pew Center on Global Climate Change, Arlington, VA, USA (2004). Cancun Agreements, online, available at: http://cancun.unfccc.int/. Clapp, Christa, Gregory Briner, and Katia Karousakis, Low Emission Development Strategies (LEDS): Technical, Institutional and Policy Lessons, Organisation for Economic Co-­operation and Development, Paris, France (2010). COP 17 Decision on Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action, online, available at: http://unfccc.int/resource/ docs/2011/cop17/eng/l10.pdf. Copenhagen Agreement, online, available at: http://unfccc.int/meetings/ copenhagen_dec_2009/items/5262.php. Ding, Ding, Dongbao Dai, and Ming Zhao, “Development of a low-­carbon economy in China,” International Journal of Sustainable Development and World Ecology Vol. 15 No. 4 (2008), pp. 331–336.

Post-2020 climate change regime building   67 Heller, Thomas C. and Priyardarshi R. Shukla, “Development and climate—engaging developing countries,” in J.  E. Aldy, J. Ashton, R. Baron, D. Bodansky, S. Charnovitz, E. Diringer, T. C. Heller, J. Pershing, P. R. Shukla, L. Tubiana, F. Tudela, and X. Wang, Beyond Kyoto: Advancing the International Effort Against Climate Change, Pew Center on Global Climate Change, Arlington, VA, USA (2003). Heyward, Madeleine, “Equity and international climate change negotiations: a matter of perspective,” Climate Policy Vol. 7 No. 6 (2007), pp. 518–534. Jones, Abigail, Christian Downie, and Nigel Purvis, A Proposal for a Consultative Group for Low Emissions Development, Resources for the Future Discussion Paper 11-25 (June 2011), online, available at: www.rff.org/Publications/Pages/ PublicationDetails.aspx?PublicationID=21588 Karousakis, Katia, Burno Gay, and Cedric Philibert, Differentiating Countries in Terms of Mitigation Commitments and Actions and Support, OECD/IEA (2008), online, available at: www.oecd.org/environment/climatechange/41762372.pdf. Kyoto Protocol, online, available at: http://unfccc.int/key_documents/ kyoto_ protocol/items/6445.php. Lewis, Joanna and Elliot Diringer, Policy-­Based Commitments in a Post-­2012 Climate Framework, Working Paper, Pew Center on Global Climate Change, Arlington, VA, USA (2007). Planning Commission of India, An Interim Report: Low Carbon Strategies for Inclusive Growth, Planning Commission, Government of India, New Delhi (2011). United Nations Development Programme, Charting a New Low-­Carbon Route to Development a Primer on Integrated Climate Change: Planning for Regional Governments, UNDP, New York, NY, USA (2009). United Nations Development Programme, How to Guide: Low-­emission Development Strategies and Nationally Appropriate Mitigation Actions: Eastern Europe and CIS, UNDP, New York, NY, USA (2010). United Nations Development Programme, Executive Summary Preparing Low-­ Emission Climate-­Resilient Development Strategies, UNDP, New York, NY, USA (2011). United Nations Framework Convention on Climate Change (UNFCCC), online, available at: http://unfccc.int/2860.php. Victor, David G., Global Warming Gridlock: Creating More Effective Strategies for Protecting the Planet, Cambridge University Press, Cambridge, UK (2011). World Resource Institute, Counting the Cash: Elements of a Framework for the Measurement, Reporting and Verification of Climate Finance, Working Paper, WRI, Washington, DC, USA (2009), online, available at: www.wri.org/ publication/counting-­the-cash.

4 Post-­Durban prospects for low-­carbon green growth Paul Ekins

Introduction The point of departure of this chapter is the Climate Summit which took place in Durban, South Africa, in December 2011. The chapter starts by placing this Summit in the context of international action, and action at other levels, to mitigate climate change. While the Durban Summit had a number of positive outcomes, it remains the fact that developing countries will not embrace the emissions reduction necessary to mitigate climate change if they perceive this likely to have a negative effect on their economic growth. The chapter explores the relationship between economic growth and environmental damage. While it is clear that there has been a trade-­off between growth and the environment in the past, there is no necessity for this to be so in the future, and the paper presents some evidence that shows how already for some issues this negative link has been broken. However, for emissions of greenhouse gases, and carbon dioxide in particular, this “decoupling” has yet to be widely achieved. To do so will require stringent policies to transform the energy sector and to direct innovation toward low-­carbon development. For environmental sustainability more generally, these policies will need to encompass the whole range of environmental and resource issues. The chapter then explores the possible cost of such a fundamental change in economic activity and direction. It emerges from the evidence that, despite the transformative nature of the measures required, the macroeconomic costs that they incur are likely to be modest at worst, and there are some conditions under which they may even be negative. The final section of the chapter explores why, if this is so, governments everywhere find it so difficult to introduce policies that will substantially reduce greenhouse gas emissions and take decisive steps toward environmental sustainability more generally.

Post-Durban prospects   69

Responding to climate change The framework for climate policy is a classic case of seeking to address a problem of global dimensions through multi-­level governance. At the global level the UN Framework Convention on Climate Change (UNFCCC), with its annual Conferences of the Parties (COPs), Kyoto Protocol (1997) and its annual Meetings of the Parties (MOPs), seeks to set the global direction of both mitigation of and adaptation to climate change, supplemented by G20 processes and discussions. Supranationally there is the European Union (EU)’s 20/20/20 by 2020 Program and associated policies. Most countries now have national policies and programs related to climate change, sometimes supplemented in federal countries (for example, the United States), by State-­level policies and programs, and/or implemented at that level or at regional/city/local level, again sometimes augmented by additional ambitions or obligations. Globally, the search for an agreement to follow the Kyoto Protocol, which was to expire at the end of 2012, began at COP 2007 in Bali, with a view to reaching a new agreement at the Copenhagen COP in 2009, which those countries most concerned about climate change hoped would have a number of elements, reflecting or being associated with significant developments in the negotiating positions of major parties to the UNFCCC. Most important among these hopes was probably the taking on of new binding emission targets for 2020 by Kyoto developed country signatories (e.g., 20–40 percent below 1990 levels), together with commitments from major emerging economies to energy intensity targets, to be converted into absolute targets in due course. The taking of new target and energy intensity commitments would be facilitated by full US engagement and leadership in the process, on the basis of having passed some climate legislation through Congress, while China, as the other most important emitting party, would also make some extra gesture of commitment (e.g., carbon tax). Beyond Copenhagen, it was hoped that there would be a clear joint leadership commitment by the US and China to lead and work through a detailed deal, an important part of which would involve a substantial financing package for developing countries in relation to mitigation and adaptation. In the event, very little of this materialized. Instead there was lastminute agreement by a number of countries to the Copenhagen Accord, the most significant elements of which were recognition and acceptance of the need to limit the average global temperature rise to 2°C; acceptance by major developing countries that they must be part of any post-­Kyoto solution; and agreement by developed countries to contribute to funds for climate mitigation and adaptation in developing countries of at least US$30 billion by 2013 and US$100 billion by 2020. At the Cancun COP in 2010, the Copenhagen Accord was incorporated into the UNFCCC Treaty, with the emission reduction commitments that had by then been received from all industrial countries and major

70   P. Ekins

Figure 4.1 The temporal relationship between emissions and atmospheric concentrations of greenhouse gases (source: Malte Meinshausen, Potsdam Institute for Climate Impact Research, 2007, a version of which was published in WBGU (2007, Figure 8.2.1, p.  165), based on Meinshausen, 2006). Note 1 Emissions reductions required in order to avoid global warming of more than 2°C: The lighter and darker gray curves showing emissions reductions are the emissions pathways along which there is a 50 and 75 per cent probability respectively of achieving this target. The various SRES scenarios developed by the IPCC are shown for the purpose of comparison. These do not allow for any explicit climate change mitigation policies.

developing countries, which together accounted for over 90 percent of global energy-­related emissions. There was also progress on funding, and on reducing greenhouse gas emissions from deforestation and forest degradation (REDD+) in developing countries. But there was no agreement on the continuation of Kyoto Protocol, such that industrial countries had further bindings targets, but developing countries did not; in fact there were no post-­2012 binding international commitments from anyone except EU countries, and the voluntary emission reduction commitments that had been made were nowhere near adequate to fulfill the aspiration to keep average global warming below 2°C, which would require emissions reductions of a scale to move to an emissions trajectory such as the shaded reduction trajectories shown in Figure 4.1. The 2011 COP in Durban sought to build on the Cancun Agreement, and agreed a second commitment period for the Kyoto Protocol for some states from 2013 to 2017 and some of the details for the operationalization of the green climate fund. But undoubtedly its main achievement was to win agreement on the Platform for Enhanced Action, which requires the

Post-Durban prospects   71 194 parties to UNFCCC to develop by 2015 some instrument, to come into force by 2020, to be applicable to all parties and have legal force, and to reduce global greenhouse gas emissions, limit temperature rise and help developing countries make the transition to a cleaner energy economy. This is the first time that both developed and developing countries have agreed to put in place such an instrument with no explicit prior distinction between them, so that all countries are now committed to the prospect of legally binding emissions reduction. The situation in international climate policy in the years to 2015 therefore recognizes that curbing global warming requires international cooperation between and commitments from all countries to reduce emissions of greenhouse gases, but the fact remains that developing countries will not accept emission control if they think it will impede their development. Committed industrial countries (like the UK and South Korea) will need to show that deep emissions control is compatible with continued economic growth and development, so that the best hope for emission control is the emergence of a “green race” for low-­carbon technologies, leading to the development of a “green economy.” “Green growth” is now the strategic economic imperative if meaningful greenhouse gas emission reduction is to be achieved.

Economic growth, green growth and environmental sustainability Any aspiration for a “green” or sustainable economy, or for sustainable, or “green,” economic growth, must start from the recognition of the need for the sustainable use of resources and ecosystems, and be rooted in basic laws of physical science, which hold that indefinite physical expansion of the human economy on a finite planet is impossible; and that all use of non-­solar forms of energy creates disorder, and potential disruption, in the natural world. The laws of thermodynamics mean that, at a certain physical scale, further physical growth becomes counterproductive, and there is now substantial evidence that, except from a very short-­term perspective, there is little doubt that this scale has now been exceeded. Work by Rockström et al. (2009) suggests that this is already the case for biodiversity loss, climate change, and the nitrogen cycle, with the phosphorus cycle also fast approaching the limit. The Rockström analysis is entirely consistent with the more detailed assessments of climate science of IPCC (2007) and the Millennium Ecosystem Assessment (MEA 2005), which make clear that without a radical reform of the human–nature relation—in favor of nature—human civilization is at grave threat. Specifically, the evidence strongly suggests that 9 billion humans cannot live current Western lifestyles and maintain a habitable planet: the first thing to go will be climate stability, the whole biosphere may then start to unravel.

72   P. Ekins Bizarre as it may seem in the light of these physical challenges, representations of the economy from which the ecological dimension is completely absent are by no means unusual. As Daly (1991, p. 33) has observed, all too often the economy is conceived as an abstract flow of exchange value between households and firms, and, through taxes and transfers, between these and governments. Social and ethical issues may be considered in such a framework, through such questions as: Who should get what? Or, through what institutions should production and consumption be mediated? But issues of resources and environmental quality often do not arise. The global challenge of mitigating climate change This omission is rectified in the formulation of the relationship between the human economy and natural world shown in Figure 4.2, which emphasizes the ecological scale of the economy compared to the planetary ecosystem, or biosphere, of which it is a subsystem. It shows that human populations and economic activities extract high-­grade energy, materials, and ecosystem services from the natural environment, and discharge low-­grade energy and wastes back into it, with consequent degradation of ecosystems that produce the services. Initially (before the industrial revolution, say) the economy was relatively small compared to the global ecosystem, of which it is a subsystem, as already noted. Such an economy would be likely to experience at most local environmental constraints. However, as economic activity has expanded, so has the throughput of energy and materials. The physical requirements of, and consequent wastes from, a much bigger economy are more likely to cause global environmental disruption. Clearly such expansion cannot continue indefinitely in a biosphere of finite size. A relevant question in such circumstances is how much the human economy can expand physically, or, as Herman Daly (1991, p.  34) asks: “How big should the subsystem be relative to the total ecosystem? Certainly this, the question of optimal scale, is the big question for environmental macroeconomics.” As already noted, physical growth is growth in the amount of matter/ energy mobilized by the economy. Indefinite growth of this kind is impossible in a finite physical system subject to the laws of thermodynamics. Economic (GDP) growth is growth in money flows/incomes/value added/ expenditure. There is no theoretical limit to this kind of growth. To most economists, the physical size of the economy is not a matter of much interest and has received very little study relative to the study of financial measures. What is considered important is its size in terms of Gross Domestic Product (GDP), and the growth of GDP from year to year. What economists actually should focus on is not even growth in GDP, but growth in human welfare. All these different issues—the physical size of the economy, its monetary size, and the human welfare it produces—have a complex relation to each other (Ekins 2000).

Post-Durban prospects   73 SOLAR ENERGY

HEAT

BIOSPHERE Ecosystem services Energy

HUMAN POPULATION

Energy

AND Source functions Materials

ECONOMIC ACTIVITY

Sink functions Wastes

Materially growing economic subsystem Leaving less space for nature

Figure 4.2 The economy as a subsystem of the biosphere (source: adapted from Goodland 1992, p. 5).

Since the industrial revolution, growth in money has been positively linked to growth in physical flows, but there is no theoretical reason why this has to be the case. Indeed, for many environmental issues in a number of countries there has been “absolute decoupling” between economic growth and activity, such that the economy has grown but environmental impacts have decreased. Thus, in Table 4.1 absolute decoupling has occurred in those environmental columns where the number is less than 100, from which it is clear that this is the case for most local air pollutants, especially in the richer countries shown in the table. However, Table 4.1 also shows that policy attempts to date to break the link between GDP growth and carbon dioxide have not been particularly successful so far, and will need to be far more successful if serious environmental disruption from climate change is to be averted. Such absolute decoupling of economic growth from global systemic environmental impacts such as greenhouse gas emissions and biodiversity loss is probably the greatest challenge facing aspirations to move toward environmental sustainability. Examples of policy approaches deriving from Stern (2007) that could meet the low-­carbon part of this challenge are given in the next section.

74   P. Ekins Table 4.1 GDP and domestically produced emissions indices, selected OECD countries, 2005 (1990 = 100) GDP

SOX

NOX

Particulates

CO

VOC

CO2

France Germany Ireland Japan Portugal Turkey

132 123 258 120 135 173

35 10 38 76 69 128

66 50 95 94 104 166

67 10 106

50 33 55 67 70 92

52 35 58 88 94

98 82 126 107 143 184

UK USA

143 155

19 63

55 74

53 81

29 62

41 69

85 116

133

Source: Everett et al. 2010, p. 22. Notes 1 International aviation and shipping emissions are excluded from the ‘territorial’ emissions figures, but the economic benefits from aviation and shipping are included in GDP. 2 Shading = no absolute decoupling

Economic growth arises from applied knowledge and innovation that turn non-­resources into resources or find better ways of doing things. Fossil fuels existed for millennia before they became resources for human activity, because of lack of knowledge about how to use them. Investment in knowledge and innovation is now at an all-­time high globally. Moreover, there is no shortage of renewable energy if humans knew how to harness it (cost-)effectively for their purposes, just as there is no shortage of materials if humans knew how to manipulate and use them. However, the key insight from environmental sustainability thinking is that, to be sustainable, economic growth must be consistent with biophysical reality, and, as the Rockström et al. (2009) evidence above shows, is currently not so. In respect of climate change, achieving the levels of emission reduction required to keep global warming below 2°C, as shown in Figure 4.1, would require carbon and energy intensity (where this is defined as carbon emissions or energy use divided by GDP) to decrease at an unprecedented rate. To illustrate, Jackson (2009, pp. 79–80) notes that global carbon intensity over 1990–2008 decreased by 0.7 percent per annum on average, but this was overwhelmed by population and economic growth over the same period, so that global emissions grew by 2 percent per annum. To reach greenhouse gas atmospheric concentrations of 450 ppm (which broadly corresponds to a 50 percent chance of keeping the global temperature increase to below 2°C [Stern 2007, p. 220]) by 2050, emissions would need to fall by about 5 percent per annum. With continuing economic growth of 2.1 percent per annum, carbon intensity would have to fall by around 7 percent per annum, or about ten times faster than it has since 1990. The policy challenge to achieve these kinds of changes in energy use is enormous.

Post-Durban prospects   75

Policies for environmental sustainability The Stern Review (Stern 2007) recommended the simultaneous application of three kinds of policies to mitigate climate change. Most important was carbon pricing, which could be implemented through carbon taxes or emission trading. This needed to be supplemented with policies in two other areas. The first area was technology policy, to accelerate the development and deployment of low-­carbon energy sources and high-­efficiency end-­use appliances/buildings, to incentivize a huge investment program and to remove other barriers to technology deployment; the second area was the promotion of behavior change, to facilitate the take-­up by consumers of new technologies and high-­efficiency end-­use options, and the adoption of low-(carbon) energy behaviors (including less driving, flying, meat-­eating, and lower building temperatures in winter and higher in summer). For full environmental sustainability beyond climate change, the basic insights from the Stern Review need to be applied to the use of other environmental resources (water, materials, biodiversity [space]). As with carbon, in a market economy, pricing is the key to resource efficiency, investment, and behavior change, which emphasizes the importance of environmental tax reform (ETR), to be discussed in more detail below. Over the last fifteen years the UK has shown enormous policy innovation in relation to climate change and introduced many different policies, including the Climate Change Act in 2008, which set a greenhouse gas reduction target of 80 percent below 1990’s level by 2050, and put in place a mechanism for five-­yearly carbon budgets in the years until then, to ensure that progress toward the target was adequately monitored. As a result of such in the UK and other countries, it is now clear what policies are required to reduce greenhouse gas emissions significantly, but so far their application has had only limited effect, because they have not been applied stringently enough—the main contributions to UK emission reduction since 1990 have been the shift from coal to gas in power generation in the 1990s, and the recession in 2008–09, neither of which were the result of climate policy. Moreover, although many national policies need local implementation/ enforcement, there is no evidence of effective autonomous local policy action. This is not the place to set out UK climate policy in any detail,1 so suffice it here to note that it includes numerous examples of all four of the main types of policy instrument: economic instruments, regulation, voluntary (sometimes called negotiated) agreements, and information/education instruments. The economic instruments include energy taxes on business and transport fuels, the EU Emissions Trading System (ETS), Feed-­in Tariffs for small-­scale renewable electricity generation, a Renewable Heat Incentive, the Green Deal to improve energy efficiency in buildings, a Green Investment Bank, capital grants, and subsidies for demonstration projects (for example, in relation to carbon capture and storage, CCS).

76   P. Ekins .

Regulatory instruments include the EU-­driven target for renewables (15 percent of final demand by 2020), the Renewables Obligation, the Renewable Transport Fuel Obligation, the Carbon Emissions Reduction Target to improve household energy efficiency, and the Energy Company Obligation, which replaces it, Integrated Pollution Prevention and Control (now applied at the EU level), and Building Regulations, which are due to deliver “zero-­carbon” new homes by 2016. The most important of the voluntary agreements at the UK level are the Climate Change Agreements. At EU level they include the EU fuel efficiency agreements, now extended to 2020. Information/education instruments include energy efficiency labels for appliances and vehicles, and the projected roll-­out of smart meters to all households in the UK by 2019. There has also been an increase in government funding for energy research and development. Over the last ten years it has also become clear that the current liberalized electricity market will not deliver the large quantity of low-­carbon new power capacity that will be required to meet the UK’s emissions targets, leading to proposals for a far-­reaching electricity market reform (DECC 2010). There are four proposed elements to this: • • • •

carbon price support (a carbon tax on the fossil fuel inputs to electricity production); feed-­in tariffs for low-­carbon generation, to replace the Renewables Obligation; capacity payments (per Mw of reserve), to ensure that there is adequate back-­up capacity for the higher proportion of intermittent renewables that is expected, and an Emissions Performance Standard, to ensure that no new coal-­fired stations are built without carbon capture and storage (CCS).

There are also new arrangements for charging for transmission and distribution, to ensure that the requisite infrastructure is built to transmit and distribute the new sources of low-­carbon power. Figure 4.3 shows the form of the feed-­in tariff (FIT) that is being proposed, a Contract-­for-Difference that will guarantee low-­carbon generators a price for their power (here shown as around £70/MWh), and paying them the difference between this and wholesale price of electricity when the wholesale price is below the contract price (the shaded area above the black line in Figure 4.3), but claiming back the difference when it is above it (in Figure 4.3 only for a short period in 2008). The shaded area below the black line in Figure 4.3 shows the part of the price that is recovered through the wholesale market. Figure 4.4 shows a second element of the proposed Electricity Market Reform, the carbon price support. This is intended to guarantee a carbon price on the inputs to power generation. Electricity is included in the EU

The top-up payment or repayment is calculated as the difference between the average market wholesale price and the agreed tariff level.

0 20 0 0 20 1 0 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 10

Generators sell their electricity into the market, then receive a top-up payment (or, as the 2008 CfD payment year illustrates, may repay revenues).

140 120 100 80 60 40 20 0 –20

20

FIT with CfD

Electricity price £/MWh

Post-Durban prospects   77

Annual electricity price CfD payment Monthly electricity price

Figure 4.3 Proposed model of UK feed-in tariff, contract-for-difference (source: DECC 2010, p. 50).

ETS and the lighter part of the bars in Figure 4.4 (which comprises the whole bar for 2010, 2011, and 2012) show the projected price of the emission allowances in the EU ETS, which is thought likely to be too low to give adequate incentive for low-­carbon generation. It is therefore proposed to top-­up the EU ETS allowance price with a carbon tax on the inputs to power generation, shown by the darker part of the bars from 2013 in Figure 4.4, that will put the carbon price in electricity on a fixed rising trajectory, to give certainty to low-­carbon generators about the carbon price which their fossil-­fuel competitors will face. In Budget 2011 the carbon price was set to rise from £16/tCO2 in 2013 to £30/tCO2 in 2020 (HMT 2011, p.  32), with a further projected increase to £70/tCO2 in 2030. To achieve this price, the carbon tax was set at £4.94/tCO2 for 2013–14 (i.e., the EU ETS price was thought likely to be around £11/tCO2 at that date). The question now arises as to the likely costs of these extensive policies for carbon mitigation and, by implication, of moving toward environmental sustainability more generally. This is the subject of the next section.

The costs of moving toward environmental sustainability There is little agreement among economists as to the costs likely to be incurred by moving toward environmental sustainability. Optimists tend to stress that the “costs” are really investments, which can contribute to GDP growth; that there are considerable opportunities for zero—or even negative—cost mitigation; that a number of resource-­ efficient technologies are (nearly) available at low incremental cost over the

78   P. Ekins

£/tCO2

huge investments in the economic system that need to be made anyway; that “learning curve” experience suggests that the costs of new technologies will fall dramatically; and that resource efficiency policies can spur innovation, new industries, exports, and growth. Pessimists tend to counter that constraining resource use is bound to constrain growth, and that cheap, abundant energy and other resources have been and continue to be fundamental to industrial development. Which of these views is right, and to what extent, is an empirical matter. For the issue of climate change (but not so much other global environmental issues considered by Rockström et al. 2009), there is now a considerable body of evidence available on the basis of which a judgment between these positions can be made. The hope for affordable economic cost in the mitigation of climate change essentially rests on three hypotheses: that carbon emissions can be reduced substantially by changes in human behavior that have essentially nil cost (for example, cycling short distances instead of driving; turning down the thermostat and wearing more clothes indoors, etc.); that further significant emission reduction can come for improved energy efficiency in households, companies, and transport that is also available at low or nil cost; and that renewable and low-­carbon energy sources are available at low cost as a percentage of GDP. An oft-­cited example of the relatively low costs of substantial initial tranches of carbon abatement is the so-­called McKinsey marginal abatement cost curve (McKinsey 2007). This arranges various carbon-­reduction technologies by their marginal abatement cost (on the y-­axis) and the amount of carbon abatement which they can deliver at that cost (the x-­axis). The ­McKinsey curve shows that, globally, about 5 GtCO2e can be abated at

2010

2012

2014

2016

2018

2020

Year EU ETS Price

Carbon price support

Target price trajectory

Figure 4.4 Carbon price support proposed in the UK (source: HMT 2010, p. 17).

Post-Durban prospects   79 negative net cost, and a further 21 GtCO2e can be abated at a marginal cost of less than D40/tonCO2e. The GDP cost of such abatement would not be high. Another way of looking at the same issue is through the technological potential identified by the so-­called Socolow Wedges. Figure 4.5 illustrates this. With no abatement it is projected that global greenhouse gas emissions will increase from their 2000 level of around 8 GtCO2e to 16 GtCO2e. Socolow identified a number of technologies that he considered had the potential, if extensively deployed, to reduce these additional emissions by 1 GtCO2e. The technologies, and their required deployment, included: •

efficient vehicles: increase fuel economy for two billion autos from 30 to 60 mpg nuclear: tripling of capacity to 1,050 GW gas for coal substitution: 1,400 GW of electricity generation switched from coal to gas carbon capture and storage: introduce CCS at 800 1 GW coal stations wind power: fifty times as much wind power as at present. solar photovoltaics: 700 times 2004 capacity hydrogen: additional 4,000 GW of wind capacity or additional CCS capacity biomass fuel: 100 times the current Brazilian ethanol production

• • • • • • •

The required deployments are therefore very considerable, and would require huge investments. However, the argument is that the technologies are now available, or very close to being so, and what is now required are the incentives to cause them to be deployed at scale.

16 8 wedges are needed to build the stabilization triangle

th

g

n bli

Em

u do

s-

ion

iss

pa

Stabilization triangle 1 wedge 1 “wedge”

8 Flat path 2000

2050

avoids 1 billion tons of carbon omissions per year by 2055

Figure 4.5 Potential of different low-carbon technologies (source: adapted from Socolow 2005).

80   P. Ekins These technologies currently cost more, and in some cases significantly more, than their fossil alternatives. However, it is expected that their large-­scale deployment would cause their cost to be reduced. Some of the evidence on which such an expectation is based is cited in Stern 2007 (p. 254), which shows that a number of new low-­carbon technologies for power generation, including wind power and solar photovoltaics, have indeed experienced significant cost reduction as they are progressively deployed. In order to make calculations of the macroeconomic cost of carbon abatement from the essentially microeconomic costs of individual technologies of energy efficiency or supply, it is necessary to make use of energy and economic models, with which, again, there is now a lot of experience in respect of modeling the costs of mitigating climate change (though much less in respect of other environmental issues). Two examples of the use of such models are given here. The first is of a hybrid model, consisting of a MARKAL energy system model linked to a small macroeconomic model of the UK (Strachan and Kannan 2008). MARKAL stands for MARKet ALlocation, and the MARKAL model is a dynamic optimization model with 100+ users in more than thirty countries coordinated by the Energy Technology Systems Analysis Program (ETSAP) network of the International Energy Agency (IEA). It is a least-­cost optimization model based on the life-­cycle costs of competing technologies (to meet energy service demands). It is technology rich, depicting in detail end-­use technologies, energy conversion technologies, refineries, resource supplies, infrastructure, etc. and combining these into an integrated energy system including energy carriers, resources, processes, electricity/CHP, industry, services, residential, transport, and agriculture, and a range of physical, economic, and policy constraints to represent the UK energy system. The linkage to a macroeconomic model enables the GDP cost of energy system changes to be calculated. Figure 4.6 shows an example of such a calculation. The model was used to simulate a number of scenarios all of which entailed a 60 percent reduction in UK CO2 emissions from 1990’s level. Different scenarios incorporated central, high, and low fuel prices (the former showed the lowest reduction in GDP, about 0.3 percent, by 2050); a straight-­line trajectory (SLT) of emission reduction, which reduced GDP by about 0.8 percent by 2050; two scenarios that constrained the introduction of nuclear power and carbon capture and storage (CCS), which reduced GDP by 0.7 percent and 0.9 percent respectively by 2050; and two scenarios that constrained innovation (represented in the model by cost reduction). Figure 4.6 shows that the GDP cost by 2050 of the most expensive scenarios of carbon reduction (when no innovation was permitted) was 1.2 percent for the 2020 date limit and 1.5 percent for the 2010 limit, which is very much below the estimate in the Stern Review, for example, of the costs of unabated climate change.

Post-Durban prospects   81 0.2 0.0

2000

2010

2020

2030

2040

–0.2

% difference

–0.4 –0.6 –0.8 –1.0 –1.2 –1.4 –1.6

2050

CO2 �60% central CO2 �60% high CO2 �60% low CO2 �60% SLT CO2 �60% no nuclear CO2 �60% no CCS, nuclear CO2 �60% 2020 innovation limit CO2 �60% 2010 innovation limit

Figure 4.6 GDP percentage changes – UK MARKAL MACRO (source: Strachan and Kannan 2008, p. 2960).

The second example comes from three linked projects that investigated the economic and environmental implications of a policy instrument called environmental (or ecological) tax reform (ETR), which is the shifting of taxation from “goods” (like income, profits) to “bads” (like resource use and pollution). The basic hypothesis of ETR is illustrated in Figure 4.7, which suggests that ETR can lead to higher human well-­being (or welfare) both by improving the environment, and by increasing output and employment, and potentially also by stimulating green innovation.

ETR

Economic impacts

Increased output Higher employment

Green innovation Green technology development

Environmental impacts

Less pollution Less resource use

Higher human well-being

Figure 4.7 The potential contribution of environmental tax reform to human wellbeing.

82   P. Ekins The first project, called COMETR, investigated the competitiveness effects of environmental tax reforms.2 In the COMETR project, the environmental and economic effects of the ETRs that had been implemented in six EU countries (Denmark, Finland, Germany, Netherlands, Sweden, UK) were modeled. As would be expected, and as shown in Figure 4.8, environmental impacts in those countries were reduced by the policy measure. Perhaps more significantly, the modeling showed, as in Figure 4.9, that the ETR countries experienced slightly faster economic growth than they had without the ETR, and the non-­ETR countries in the EU showed practically no change. This suggests that, far from damaging the competitiveness of ETR countries compared to the non-­ETR countries, the ETR countries benefited economically, as well as environmentally, from the policy. The second project, called PETRE, was one of four final projects of the Anglo-German Foundation under the collective title “Creating Sustainable Growth in Europe.” PETRE explored the subject of “Resource productivity, environmental tax reform (ETR) and sustainable growth in Europe.”3 A major objective of the project was to investigate through modeling the implications of a large-­scale ETR in Europe. The project used two European macroeconometric models, E3ME and GINFORS, and explored six scenarios. The first scenario was a Baseline with a low energy price (LEP); to assess the sensitivity to energy prices, a second Baseline was created with a high energy price (HEP), and this was adopted as the Reference case. Scenario 1 (S1(L)) simulated an ETR with revenue recycling designed to meet the EU 2020 greenhouse gas (GHG) reduction target (a 20 percent reduction from 1990 levels), compared with the LEP Baseline. Scenario 2 (S1(H))

Slovenia

0

Netherlands Denmark

% difference

–2 UK

Germany

–4 Finland –6 Sweden –8 1994

1997

2000

2003

2006

2009

2012

Figure 4.8 The effects of environmental tax reform (ETR) on greenhouse gas (GHG) emissions in ETR countries (source: Barker et al. 2007, Chart 7.4, p. 46).

Post-Durban prospects   83 % difference 0.3 ETR countries

0.2

0.1

0.0

Non-ETR countries

–0.1 1994

1997

2000

2003

2006

2009

2012

Figure 4.9 The effects of environmental tax reform (ETR) on GDP in ETR and non-ETR countries (source: Barker et al. 2007, Chart 7.32, p. 67).

simulated an ETR with revenue recycling to meet the same GHG reduction target, but with high energy prices and therefore compared with the HEP Baseline). Scenario 3 (S2(H)) was as S1(H), but with a proportion of revenues spent on eco-­innovation measures. Scenario 4 (S3(H)) was S1(H) but the ETR with revenue recycling was designed to meet the EU’s 30 percent “international cooperation” GHG emission reduction target by 2020. The taxes in the ETR were a carbon tax on all non-­EU ETS sectors equal to the carbon price in the EU ETS that delivers an overall 20 percent reduction in GHG emissions by 2020 (as noted above, in the “international cooperation” scenario (S3(H)) this is extended to a 30 percent GHG reduction). Aviation is included in the EU ETS at the end of its Phase 2 in 2012. In the power generation sector EU ETS permits are 100 percent auctioned in Phase 3 of the EU ETS (from 2013) (this does not change carbon prices or emissions). All other EU ETS permits are 50 percent auctioned in 2013 increasing to 100 percent in 2020. In addition, taxes on materials are introduced at 5 percent of their total price in 2010, increasing to 15 percent by 2020. In S3(H), the “international cooperation” is implemented by imposing a carbon tax in major non-­EU OECD countries at the same rate as in the EU, and at 25 percent of that rate in emerging economies. The increased taxes are offset by reductions in income tax rates (for households) and social security contributions (for businesses) in each of the member states, such that there is no direct change in tax revenues. In S2(H) 10 percent of the environmental tax revenues are recycled through spending on eco-­innovation measures. Table 4.2 shows the results of the modeling. It shows that E3ME projects a small GDP gain from the ETR policy, while GINFORS projects a

84   P. Ekins slightly larger loss. Even the 30 percent EU CO2 reduction target is reached in GINFORS with the loss of less than 2 percent of GDP. Both models suggest that ETR will increase employment. Environmentally the S3(H) scenario has the effect of stabilizing global GHG emissions over 2010–20, as shown in Figure 4.10, while S1(H), the unilateral EU scenario with low energy prices, has a negligible effect on global emissions. The third recent body of work on ETR to shed light on the effects of this policy instrument was that of the UK Green Fiscal Commission.4 This was set up in 2007, with its major objective being to investigate the economic, social, and environmental implications of major green fiscal reform (GFR), such that the share of environmental taxes in total revenues might rise from 5 percent to 15–20 percent in 2020. A further objective was to explore public attitudes to ETR. As with the PETRE project, the environmental and economic effects of ETR were explored through scenarios, which were defined as follows: • •

Three baselines (B1, B2, B3)—medium, low, high world-­market fossil fuel prices, where the high price, B3, resulted in the same end-­user prices of energy as the two ETR scenarios, S1, S2. Two ETR scenarios (S1, S2)—increase in transport, household, and industrial energy taxes, and taxes on water and materials, reductions in income taxes (households) and social security contributions (business). The taxes in S2 were scaled to give the same end-­user

Table 4.2 Results from the environmental tax reform (ETR) in the PETRE project Scenario

CO2 price Euro02008/t

GDP % change from baseline

Employment % change from baseline

Labor productivity % change from baseline

S1(L)   E3ME   GINFORS

142 120

0.6 −3.0

2.2 0.0

−1.6 −3.0

S1 (H)   E3ME   GINFORS

59 68

0.2 −0.6

1.1 0.4

−0.9 −1.0

S2(H)   E3ME   GINFORS

53 61

0.8 −0.3

1.12 0.4

−0.3 −0.7

S3(H)   E3ME   GINFORS

204 184

0.5 −1.9

2.7 0.8

−2.1 −2.6

Source: Ekins 2009a, p. 31.

Post-Durban prospects   85 36,000 34,000

Mt CO2

32,000

BH

30,000

S1H

28,000

S3H

26,000 24,000 22,000 2005

2000

2010

2015

2020

Figure 4.10 The effect of environmental tax reform (ETR) on global CO2 emissions, GINFORS (source: Ekins 2009a, p. 48).

•

energy prices as in S1 (i.e., the taxes were higher because the underlying fossil fuel prices were lower). Two “eco-­innovation” scenarios (E1, E2)—spending 10 percent of green tax revenues on energy-­efficient buildings, renewable energy and hybrid vehicles, with the rest of the revenues being recycled as in S1, S2.

Figure 4.11 shows the results of the modeling, normalized to an index such that the results of the baseline B1 are 100 for both GHG emissions and GDP. It can be seen that the lower fossil fuel prices in B2 result, not

104 GDP (B1 = 100)

102

E2

B2

S2

100 98

E1

B1

S1

96

B3

94 92 80

85

90

95

100

105

GHG (B1 = 100)

Figure 4.11 Results for GDP and greenhouse gas emissions (GHG) for different environmental tax reform (ETR) scenarios (source: Ekins 2009b, p. 66).

86   P. Ekins

Global and US GDP difference from base (%)

surprisingly, in higher GHG emissions and higher GDP. The high world-­ market fossil fuel prices result in lower GHG emissions, but at a cost of about 6 percent of GDP. The ETR scenarios (S1, S2), on the other hand, result in substantial reductions in GHG emissions, but very little change to GDP. The reason for the large difference in the results of B3 and S1 and S2, which have the same high end-­user energy prices, is that with B3 the payments for the high prices go to energy exporting countries and companies, whereas in the ETR scenarios they are used to reduce other taxes. The “eco-­innovation” scenarios produce useful further reductions in GHG emissions and slightly higher GDP because of the investment effect of the extra innovation spending. Such results suggest that ETR is a very cost-­effective way of reducing GHG emissions and stimulating new eco-­industries which could contribute to future competitiveness. It would also result in a different trajectory for economic development. It would rule out a resource-­intensive growth path, and this would constrain growth unless it led to innovation in low-­resource and resource-­saving technologies. ETR would stimulate such innovation, but the implementation of complementary policies would probably be desirable to enhance its effect. With regard to macroeconomic modeling more broadly, Barker et al. 2006 carried out a meta-­analysis of a large number of macroeconomic modeling exercises, using different kinds, but mainly computable general equilibrium (CGE) models, that have sought to estimate the GDP costs of decarbonization. As shown in Figure 4.12, the majority of the runs estimated that an 80 percent reduction in carbon emissions would cost between 1 and 4 percent of GDP. This was one of the pieces of evidence that caused Stern (2007, p. 267) to come to the conclusion that

6 4 2 0 –2 –4 –6 –100

–80

–60

–40

–20

0

20

CO2 difference from base (%) IMCP with ITC dataset WRI dataset (USA only)

post-SRES dataset EMF-21 with multigas

Figure 4.12 Scatter plot of model cost projections (source: Barker et al. 2006, cited in Stern 2007, p. 270).

Post-Durban prospects   87 Overall, the expected annual cost of achieving emissions reductions, consistent with an emissions trajectory leading to stabilization at around 500–550 ppm CO2e, is likely to be around 1 percent GDP by 2050, with a range of +/−3%, reflecting uncertainties over the scale of mitigation required, the pace of technological innovation and the degree of policy flexibility. Returning to the discussion earlier in this paper about economic growth, the question arises as to whether ETR and complementary supporting policies to reduce the environmental impact of economic activity would lead to “sustainable growth” in Europe, and how that rate of growth would compare to those of environment-­degrading growth. Clearly there are doubts as to how long environment-­degrading growth can continue before it undermines the environmental conditions necessary for growth and slows down or comes to a halt (that, after all, is the meaning of the word “unsustainable”). Modeling by UNEP (UNEP 2011, Figure 13, p.  519) suggests that “green growth” would become faster than that in two “business-­as-usual (BAU)” scenarios by about 2017, once the environmental damage associated with the BAU scenarios was taken into account. These results suggest that “sustainable” growth will be resource-­ efficient. In the short term it may turn out to be slower economic growth than unsustainable (“brown”) growth, unless: • • • • •

•

there are widespread negative net cost resource efficiency opportunities (as shown in the McKinsey (2007) marginal abatement cost curve); enhanced ecosystem services contribute more to monetary output than alternative investment of the policy costs; disruption to ecosystem services that would have resulted in greater monetary costs than the policy implementation cost is prevented; currently higher-­cost technologies to protect ecosystems become cheaper than the currently cheaper technologies that damage them; international demand develops for technologies stimulated by environmental policy, stimulating the growth of export markets. If the world as a whole moves toward “sustainable” growth, then the relatively high-­growth countries in this world will be those that have developed, and can export, resource-­efficient technologies and industries; or environmental policy stimulates innovation in the economy that would produce greater monetary output than would have been produced in its absence.

Green growth could produce higher employment than brown growth if: •

with unemployment, environmental policy gives skills and training to people who would otherwise have remained unproductive;

88   P. Ekins • •

with unemployment, environmental policy such as ETR makes labor cheaper; and the new environmental industries stimulated by environmental policy are more labor-­intensive than the industries they replace.

ETR emerges from the analysis undertaken as a key policy for fostering sustainable growth. There is certainly no evidence at all that ETR or other policies for environmental sustainability would choke off economic growth altogether. Complementary policies to ETR should focus on influencing the direction of innovation (eco-­innovation) and increasing its rate. Such policies could be any or all of publicly funded research and development, regulation (standards), information, public procurement (e.g., Japan’s Top Runner program), and voluntary agreements. Relatively high-­growth countries in a sustainable future will be those that have developed, and can export, resource-­efficient technologies and industries. It also seems most unlikely, given the environmental pressures and damage for which there is very clear scientific evidence, that “unsustain­ able” growth will last beyond this century, and it could lead to environmental collapse well before 2100. Depending on the learning curves of new technologies and the economic impacts of climate change and other manifestations of environmental unsustainability, green growth may start to exceed brown growth as early as 2020. The Durban Summit may come to be regarded as the starting gun for a new “green race.” The choice facing economic and other policy makers is therefore clear, and from a cost–benefit angle environmental sustainability seems the correct social choice at any but the highest discount rates.

The politics of moving toward environmental sustainability A final question then arises as to why, if the economic costs of moving toward environmental sustainability are relatively low, governments everywhere are finding carbon reduction and other systemic measures of environmental improvement (for example, relating to the conservation of biodiversity) so difficult. The answer to this question has more to do with politics than economics. It may be true that the technologies for large-­scale climate change mitigation are, or soon will be, available at affordable cost, but, to realize their potential in the near term, government funding of RD&D will need to increase dramatically, and governments will also need to put in place clear incentives for the private sector, because deployment and diffusion of these technologies can only be driven at scale by markets. Such deployment will require huge investments in low-­carbon technologies right along the innovation chain (research, development, demonstration, diffusion). Financing this investment will require a substantial shift from today’s consumption-­oriented economy of Western countries to an investment

Post-Durban prospects   89 economy that builds up low-­carbon infrastructure and industries. This shift need not impact negatively on GDP (incomes) and employment but will require higher savings and lower consumption rates. This may not be politically popular in a consumer society. A second reason for the political difficulty of reducing carbon emissions is that stimulating the required investment will require high (now) and rising carbon prices over the next half century, to choke off investment in high-­carbon technologies and incentivize low-­carbon investments. These high carbon prices will also have the effect of greatly changing lifestyles and consumption patterns. This too may not be politically popular, because many forms of high-­carbon consumption (for example, related to travel) are deeply embedded in society. The conclusions from this analysis can therefore be summarized thus. The adequate mitigation of climate change will require a fundamental shift in the direction of innovation. This innovation will generate “green growth” which in the medium term will exceed rates of brown growth. The agreements at COP 17 at Durban may begin to focus countries’ attention on green growth in earnest. It is not technology or cost that are the main constraining factors to policies for green growth, but politics—people’s attachment to consumption rather than savings/investment, and to high-­carbon lifestyles. This political situation will need to be changed for green growth to become a reality. Conversely, it is only the possibility of and prospects for green growth that will persuade policy makers and the public to go for environmental sustainability at all and, in particular, for the adequate mitigation of climate change, which will alone avoid the potentially enormous, but still very uncertain, costs of adapting to climate events and conditions outside all known human experience.

Notes 1 See DECC 2011 for a comprehensive statement of this. 2 See www2.dmu.dk/cometr; for a full exposition of the results see Andersen and Ekins 2009. 3 Its final report is at www.petre.org.uk (Ekins 2009a), with the results reported in more detail in Ekins and Speck 2011. 4 For its final report see Ekins 2009b.

References Andersen, M. S. and Ekins, P. (eds.) 2009 Carbon Taxation: Lessons from Europe, Oxford University Press, Oxford/New York. Barker, T., Junankar, S., Pollitt, H., and Summerton, P. 2007 The Effects of Environmental Tax Reform on Competitiveness in the European Union, Final Report of the COMETR project, Cambridge Econometrics, Cambridge, pp. 43–75, www2.dmu.dk/cometr/COMETR_Final_Report.pdf.

90   P. Ekins Barker, T., Qureshi, M., and Köhler, J. 2006 “The costs of greenhouse gas mitigation with induced technological change: A meta-­analysis of estimates in the literature,” mimeo, Cambridge Centre for Climate Change Mitigation Research (4CMR), University of Cambridge, Cambridge. Daly, H.  E. 1991 “Elements of environmental macroeconomic,” in R. Costanza (ed.) Ecological Economics: The Science and Management of Sustainability, Columbia University Press, New York. DECC (Department of Energy and Climate Change) 2010 Electricity Market Reform: Consultation Document, Cm 7983, December, DECC, London, online, available at: www.decc.gov.uk/assets/decc/consultations/emr/1041-electricity-­ market-reform-­condoc.pdf. DECC (Department of Energy and Climate Change) 2011 The Carbon Plan: Delivering Our Low Carbon Future, December, DECC, London, online, available at: www.decc.gov.uk/en/content/cms/tackling/carbon_plan/carbon_plan.aspx. Ekins, P. 2000 Economic Growth and Environmental Sustainability: The Prospects for Green Growth, Routledge, London/New York. Ekins, P. 2009a Resource Productivity, Environmental Tax Reform and Sustainable Growth in Europe, Final Report, Anglo–German Foundation, London, October. Ekins, P. 2009b The Case for Green Fiscal Reform, Final Report of the Green Fiscal Commission, October, Green Fiscal Commission, London, online, available at: www.greenfiscalcommission.org.uk/index.php/site/about/final_report/. Ekins, P. and Speck, S. (eds.) 2011 Environmental Tax Reform: A Policy for Green Growth, Oxford University Press, Oxford. Everett T., Ishwaran, M., Ansaloni, G.  P., and Rubin, A. Economic Growth and the Environment, Defra Evidence and Analysis Series, Paper 2, DEFRA, London, online, available at: www.defra.gov.uk/publications/files/pb13390-economic-­ growth-100305.pdf. Goodland, R. 1992 “The case that the world has reached limits,” in T. Goodland, H.  E. Daly, and S. El Serafy (eds.) Population, Technology and Lifestyle: The Transition to Sustainability, Island Press, Washington, DC, pp. 3–22. HMT (HM Treasury) 2010 Carbon Price Floor: Support and Certainty for Low-­ Carbon Investment, December, HM Treasury, London, online, available at: www.hm-­treasury.gov.uk/d/consult_carbon_price_support_condoc.pdf. HMT (HM Treasury) 2011 Budget 2011, HC 836, March, HM Treasury, London, online, available at: http://cdn.hm-­treasury.gov.uk/2011budget_complete.pdf. IPCC (Intergovernmental Panel on Climate Change) 2007 Climate Change 2007: The Physical Science Basis, Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge. Jackson, T. 2009 Prosperity without Growth: Economics for a Finite Planet, Earthscan, London. McKinsey 2007 “A cost curve for greenhouse gas reductions,” The McKinsey Quarterly, February, McKinsey, London. MEA (Millennium Ecosystem Assessment) 2005 Ecosystems and Human Well-­ being: Synthesis, Island Press, Washington, DC. Meinshausen, M. 2006 “What does a 2°C target mean for greenhouse gas concentrations? A brief analysis based on multi-­gas emission pathways and several climate sensitivity uncertainty estimates,” in H.-J. Schellnhuber, W. Cramer, N.

Post-Durban prospects   91 Nakicenovic, T. M. L. Wigley, and G. Yohe (eds.) Avoiding Dangerous Climate Change, Cambridge University Press, Cambridge/New York, pp. 265–279. Meinshausen, M. 2007, Potsdam Institute for Climate Impact Research, Potsdam, personal communication. Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin III, F. S., Lambin, E. F., Lenton, T.  M., Scheffer, M., Folke, C., Schellnhuber, H.  J., Nykvist, B., de Wit, C. A., Hughes, S., van der Leeuw, S., Rodhe, H., Sörlin, S., Snyder, P. K., Costanza, R., Svedin, U., Falkenmark, M., Karlberg, L., Corell, R. W., Fabry, V. J., Hansen, J., Walker, B., Liverman, D., Richardson, K., Crutzen, P., and Foley, J. A. 2009 “A safe operating space for humanity,” Nature Vol. 461 (24 September), pp. 472–475. Socolow, R. 2005 “Stabilisation wedges,” Met Office Symposium, February 3, Met Office, Exeter, online, available at: http://cmi.princeton.edu/wedges/slides.php. Stern, N. 2007 The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge. Strachan, N. and Kannan, R. 2008 “Hybrid modelling of long-­term carbon reduction scenarios for the UK,” Energy Economics, Vol. 30 No. 6, pp. 2947–2963. UNEP (United Nations Environment Programme) 2011 Green Economy Report, UNEP, Nairobi, online, available at: www.unep.org/greeneconomy/ GreenEconomyReport/tabid/29846/Default.aspx. WBGU (German Advisory Council on Global Change) 2007 Climate Change as a Security Risk, Flagship Report, Earthscan, London, online, available at: www. wbgu.de/en/flagship-­reports/fr-­2007-security.

5 Climate negotiations How to break the impasse and deliver Juan Zak and Myung Kyoon Lee

An enormous gap Greenhouse gas emissions are still out of control, despite the Climate Convention that entered into force in March 1994. The very essence of the Convention and its Kyoto Protocol is reducing emissions to safer levels. However, how to share the burden among countries (or rather, among signatory governments) has been a permanent impasse for achieving any significant progress in emissions reductions. So far binding commitments are hardly more than symbolic and apply to developed countries only. Stabilizing atmospheric CO2 concentrations today would require reducing anthropogenic carbon emissions from the current ten billion tons per year (Global Carbon Project, 2008) to less than six billion, assuming that the rest is absorbed by natural sinks with no further environmental consequences. A perfect compliance of the Kyoto Protocol would reduce annual carbon emissions by 165 million tons at most (own estimate based on UNFCCC Secretariat, 2007). Clearly, the gap between what Kyoto could achieve in practice and real reduction needs is enormous. Performance of any post-­Kyoto climate regime must improve dramatically if greenhouse concentrations are to be timely stabilized.

Renewable energy and technology not enough Curbing emissions is becoming crucial as more evidence emerges on the serious limitations of renewable energy and new technologies in supporting current consumption patterns while reducing emissions to the required levels. One of the best case studies concludes that decarbonizing the British economy in a sustainable way seems almost impracticable (MacKay, 2008). The average per capita energy consumption of the United Kingdom (195 kWh/p/d1) could in principle be almost matched with about 180 kWh/p/d of renewable energy supply as follows, social and economic constrains aside:

Breaking the impasse in climate negotiations   93 Onshore wind energy: covering the windiest 10 percent of the country’s land with windmills would generate 20 kWh/p/d (11 percent of the demand). Solar thermal energy: covering all south-­facing roofs in the country with solar panels to produce hot water would deliver 13 kWh/p/d (7 percent of demand). Solar photovoltaic panels: assuming that all the above south-­facing roofs could accommodate photovoltaic panels at the same time, these would produce 5 kWh/p/d (3 percent of the demand). Solar photovoltaic farm: covering 5 percent of the country’s land with photovoltaic panels would generate 50 kWh/p/d (28 percent of demand). Solar biomass energy: growing biomass on 75 percent of the land would produce 24 kWh/p/d (14 percent of demand). Hydropower: assuming an exploitation of rainfall with 20 percent efficiency, the British hydropower production would be boosted from the present 0.2 kWh/p/d to 1.5 kWh/p/d (1 percent of demand). Shallow offshore wind energy: covering 33 percent of British shallow waters (13,000 km2) with windmills would generate 16 kWh/p/d (9 percent of demand). Deep offshore wind energy: covering 33 percent of British deep waters (26,000 km2) with windmills would generate 32 kWh/p/d (18 percent of demand). Wave power: packing wave-­machines along 500 km of the British Atlantic-­facing coastline would generate 4 kWh/p/d (2 percent of demand). Tidal power: the estimated output of preliminary proposals for tidal barrage, lagoon, and stream farms is 11 kWh/p/d (6 percent of demand). Geothermal energy: although most of the dry-­rock resource in the UK is considered technically unfeasible, its contribution was estimated at 1.1 kWh/p/d (1 percent of demand). In summary, the above initial approach would take 10 percent of the UK’s land for wind farms, 5 percent for photovoltaic panels, 75 percent for biomass plantations, and all south-­facing roofs for solar panels. Another 39,000 km2 of sea are required for offshore wind farms, and 500 km of coastline for wave power. Huge areas are also needed for tidal power (above 10,000 km2) and for geothermal energy facilities. This enormous demand for space is inherent to renewable energies and originates in their

94   J. Zak and M.K. Lee very low “areal” density (e.g., watts per square meter); in other words, although the technology of extracting energy may eventually improve, the very low energy density will ultimately demand huge areas anyway. MacKay describes six plans to make the above approach technically realistic by 2050, each trying to satisfy a different sector of the British society. All the plans include technological improvements on the consumption side. Individual and public transport is largely electrified, and liquid biofuels are used for vehicles that cannot operate on electricity. Heating demand is reduced by improving insulation in houses and buildings, and by using heat pumps, solar heating, and biomass. Efficiency improvements in lighting and domestic appliances are considered, but offset by consumption of new consumer devices. The latter assumption is in line with the finding that new electronic devices have wiped out gains in energy efficiency achieved in residential appliances and lighting (International Energy Agency, 2009b). Areas and rough costs of energy facilities were estimated only for Plan M (“middle”) as follows: Onshore wind Offshore wind Pumped storage Photovoltaic Solar water heaters Waste incinerators Heat pumps Wave Barrage Tidal lagoons Tidal stream Nuclear fission power Clean coal2 Solar power Power line Biofuel plantations Wood plantations Total cost

5,200 km2, £27 billion 2,900 km2, £36 billion 15 facilities, £15 billion 1,000 km2, £190 billion 60 km2, £72 billion 100 units, £8.5 billion £60 billion 130 km, £6 billion 550 km2, £15 billion 800 km2, £2.6 2,000 km2, £21 billion 40 stations, £60 billion £16 billion 2,700 km2 North Africa, £340 billion 3,200 km (for solar power), £2 billion 30,000 km2, – 31,000 km2, – £871 billion

The size of renewable energy facilities remains enormous, even when combined with controversial “clean” technologies like nuclear fission and clean coal, and despite technological improvements in the consumption side. The cost of Plan M is as enormous as the facilities to be constructed. While a complete replacement of fossil fuels by nuclear fission power is in principle practicable (MacKay, 2008), the safety and security implications of such a switch are very controversial. In any case, the fact remains that any episode, either accidental or intentional, leading to radioactive release has severe long-­term impacts on the population and the environment.

Breaking the impasse in climate negotiations   95 Evidently, the only environmentally sound option left to fill in the gap is a change to less energy-­intensive lifestyles, especially by richer consumers; but the gap is so significant that direct limitation of emissions seems the only practicable way to achieving the required emissions reductions.

Curbing emissions at the root The ultimate cause of greenhouse gas (GHG) emissions is the consumption of goods and services by individuals. Emissions by individuals are released directly at final consumption (mostly of fuels), and indirectly along the whole production/supply chain. In this context, emissions released by producers and suppliers are in fact indirect emissions from the individuals consuming the goods produced and the services supplied. In theory, the most effective way of reducing global emissions to safer levels is limiting emissions at the root—the individuals. This would require translating a global emissions reduction target to an individual reduction target, to be met by every person on the planet. More importantly, limiting emissions at an individual level implies setting per-­capita emissions allowances, and therefore per-­capita emissions rights. Essential sense of equity indicates (see for example Centre of Science and Environment, 1998; Meyer, 2000) that per-­capita emissions rights should be the same for every person on Earth. A complementary line of argument, held by the authors, is that the benefits of emitting GHG must be shared equitably among the world population just because the consequences of emitting GHG will inevitably strike the entire population. In other words, since emissions ultimately have global effects and thus reach the entire global population, it would be unfair not sharing the benefits equitably among the same population. This principle necessarily leads to assigning the same emissions rights to every person on Earth. Unfortunately, as further discussed in this chapter, the current climate regime and its eventual successor are inherently inequitable in terms of per­capita emissions rights. A first global emissions reduction target was already agreed in the Kyoto Protocol, in the form of reduction commitments for developed (Annex 1) parties to the Climate Convention. These commitments amount to 5.2 percent of the total emissions of developed parties in 1990, and should be achieved in the period 2008–2012. However, the global reduction target set in the Kyoto Protocol is not convertible to an individual reduction target. The most evident reason is that reduction commitments under the Kyoto Protocol apply to developed parties only; developing (non-­Annex 1) parties have no reduction commitments. The fundamental reason that makes the global target of the Kyoto Protocol not convertible is more subtle, though: the reduction commitments under the Kyoto Protocol are based on absolute emissions levels, which de

96   J. Zak and M.K. Lee facto grant inequitable per-­capita emissions rights among developed parties. A further analysis, later in this chapter, shows that these emissions rights are also inequitable to developing parties, despite having no reduction commitments as such. The above discussion indicates that limiting emissions at individual level requires first of all a climate regime that sets global emissions targets agreed by the parties and equitably allocates emissions rights to each party, such that every individual is granted the same emissions right, regardless of nationality. Limiting emissions by individuals also requires flexibility schemes that permit transfer of unused emissions among countries, and among individuals in the countries. These mechanisms should guarantee that the agreed global amount of emissions is not exceeded, while allowing transfer of unused emissions rights from parties spending less emissions than the equitable level to parties demanding more emissions. Similarly, these schemes should guarantee that the allocated national amount of emissions rights is not exceeded, while permitting transfer of unused rights from individuals spending less emissions than the equitable emissions right to those demanding more. The above flexibility schemes have by definition no connection with the intricate flexibility mechanisms and related trading schemes operating under the Kyoto Protocol. The former are much simpler and transparent than the latter. Initial schemes for the proposed mechanisms are discussed later in this chapter.

An unjustified impasse There are no strong indications at present climate negotiations that the burden-­sharing impasse will be overcome for the post-­Kyoto regime. Developed countries are not willing to accept the required major reduction commitments unless developing countries take some initial binding commitments. But developing countries are reluctant given their hitherto minor contribution to global warming and the lack of progress by developed countries. Regrettably, the rationale behind the impasse is not well sustained by reality on the ground. It is richer individuals from both developed and developing countries, and not developed countries per se, who have major historical responsibility and contribute most to global warming. From this perspective, the direct burden of significantly reducing emissions should be on the individuals causing the emissions and not on the Convention’s signatory governments. The role of governments should be to implement and regulate systems to directly limit emissions by individuals. Governments, and climate negotiators in particular, should realize that there is no point in blaming other countries for emitting more or doing less, and that efforts should focus on reducing emissions of individual consumers, irrespective of nationality.

Breaking the impasse in climate negotiations   97

Kyoto Protocol and the post-­2012 treaty: implications on emissions rights The Kyoto Protocol sets reduction commitments for developed (Annex 1) parties relative to their emissions in 1990. The reduction commitment varies from party to party in the range3 of −10 percent to 8 percent4 (Table 5.1), and should be achieved in the period 2008–2012. Developing (non-­ Annex 1) parties have no reduction commitments under the Kyoto Protocol. It is important to realize that commitments set in the Kyoto Protocol imply de facto emissions rights for developed parties, ranging from 92 percent to 110 percent of their 1990 emissions. By setting reductions on absolute emissions, the Protocol is implicitly granting inequitable per-­ capita emission rights, not only among developed parties but especially to most developing parties. By granting inequitable emissions rights, the Kyoto Protocol contradicts the Universal Declaration of Human Rights (United Nations, 1948). Article 1 of the Declaration proclaims that all human beings are equal in rights. Article 2 goes further by saying that no distinction shall be made on the basis of the status of the country to which a person belongs. Article 7 states that all are equal before the law and are entitled without any discrimination to equal protection of the law. The Kyoto Protocol also contradicts the Climate Convention. Article 3.1 of the Convention states that “. . . Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities . . .” It should be noted that the word “equity” does not appear in the text of the Kyoto Protocol. Inequity of the Kyoto Protocol would persist if its architecture is adopted for the post-­2012 treaty. This would be the case if the Copenhagen Accord is taken as starting point for the post-­2012 treaty, despite the promise of equity stated in the text of the Accord. Article 1 of the Accord states: “To achieve the ultimate objective of the Convention . . . on the basis of equity . . . we shall . . . enhance our long-­term cooperative action . . .” Article 2 of the Accord goes further to state: “We agree that deep cuts in global emissions are required . . . and take action to meet this objective consistent with science and on the basis of equity.” Inequity of the Kyoto Protocol and a post-­2012 treaty based on its architecture, as well as its consequences, are better illustrated through figures, as discussed below. These figures correspond to CO2 emissions from the following sectors: for developed countries, all sectors excluding land use, land-­use change, and forestry;5 for developing countries, combustion of fossil fuels. For the period 2008–2012, annual emission rights of developed parties are 9.7 tonnes per capita. By comparison, annual emissions of the United

7.8 – 13.9 9.8 12.6 5.0 7.2 8.5 5.2 2.9 5.9 7.2 17.8 5.4 – 15.8 9.7 [22.6] – 4.8

7.2 7.8 12.1 9.4 11.0 4.7 6.2 8.0 4.6 2.7 5.2 6.4 16.9 4.9 0.8 15.1 9.0 15.8 10.7 4.7

92.0 – 108.0 92.0 94.0 95.0 110.0 94.0 92.0 92.0 100.0 101.0 100.0 92.0 [92.0] 100.0 – – – –

20 20 6 20 18 17 4 18 20 20 13 12 13 20 13 13 17 20 – –

Post-2012 treaty (2020)

Emissions reduction pledge (%)

Source: Own estimate based on International Energy Agency, 2008, 2009a; International Monetary Fund, 2009; UNFCCC ,2009; and United States Congress, 2009.

European Union 15 European Union 25 Australia Belarus Canada Croatia Iceland Japan Liechtenstein Monaco New Zealand Norway Russian Federation Switzerland Turkey Ukraine All above United States Annex 1 total Equitable emission rights

Kyoto Protocol (2008–2012)

Kyoto Protocol (2008–2012)

Post-2012 treaty (2013–2020)

Emission limitation (%)

Annual emission rights (tonnes CO2 per capita)

Table 5.1 Emission rights and commitments 2008–2020, Annex 1 parties

Breaking the impasse in climate negotiations   99 States (not a Kyoto Party) are 22.6 tonnes per capita, and equitable emission rights (i.e., total emissions of all parties divided by total population of all parties) are only 4.8 tonnes (Table 5.1). Annual emissions of the 95 developing parties included in the estimation are 2.8 tonnes per capita (Table 5.26). A new climate treaty for the period 2013–2020 based on the Kyoto Protocol’s architecture, be it the Copenhagen Accord or an extension of the Kyoto Protocol, would grant Annex 1 parties (United States included) annual emission rights of 10.7 tonnes per capita, while equitable emission rights are only 4.7 tonnes (Table 5.1). Annual emissions of the 95 developing parties included in the estimation are 3.3 tonnes per capita (Table 5.2). As a result of this inequitable allocation of emission rights, in the period 2013–2020 developing parties would lose 61 billion tonnes in CO2 trading. In summary, the Kyoto Protocol is inherently inequitable in terms of per-­capita emissions. Any new climate treaty which overlooks per-­capita emission will become inequitable as well.

Table 5.2 Per-capita emissions 2008–2020, non-Annex 1 parties Per-capita emissions1

Algeria Argentina Brazil China PR Egypt India Indonesia Iran Iraq Kazakhstan Korea RO Malaysia Mexico Pakistan Saudi Arabia South Africa Thailand United Arab Emirates Uzbekistan Venezuela All analyzed parties

2008–2012

2013–2020

2.8 4.5 2.0 5.2 2.2 1.3 1.8 6.6 3.8 13.9 10.3 6.7 4.1 0.8 14.8 8.9 3.5 29.6 5.3 5.7 2.8

2.9 5.0 2.4 6.6 2.4 1.5 2.1 7.4 4.4 15.7 12.2 7.3 4.4 0.8 16.4 9.7 4.0 32.5 6.0 6.2 3.3

Source: Own estimate based on International Energy Agency, 2008, 2009a; International Monetary Fund, 2009; UNFCCC ,2009; and United States Congress, 2009. Note 1 In tonnes CO2 per capita per year.

100   J. Zak and M.K. Lee While the Kyoto Protocol formally grants inequitable emission rights to developed parties, inequity in per-­capita emissions has persisted for many years. For the sake of illustration, emission debts and credits between the parties were estimated for CO2 emissions from combustion of fossil fuels since the entry into force of the Climate Convention (~1995) until 2007, just before the start of the Kyoto Protocol’s commitment period (own estimates based on International Energy Agency, 2008). The net debt of developed parties for the period 1995–2007 reaches 116 billion tonnes which is, in turn, the net credits to which developing parties are entitled. Developed parties will also bear an emission debt originated from the inequitable emission rights granted by the Kyoto Protocol. The debt acquired by the United States (not a Kyoto party) originates from its emissions over the equitable right. The resulting net debt of developed parties for the period 2008–2012 is estimated at 52.8 billion tonnes while net credits developing parties are entitled to amount to 52.6 billion tonnes.

An equitable and effective climate regime Besides causing an impasse on how to share the burden, the architecture of a Kyoto-­based climate regime has other unwanted side effects, inter alia: • • • •

implicit allocation of emission rights on an inequitable basis (as discussed above); unfair emissions-­reduction burden on poorer people in developed countries, and conversely carte blanche to richer individuals in developing countries; unfair emissions-­reduction burden on producers of exported goods, and carte blanche to consumers in countries importing such goods; and ineffectiveness in reducing emissions on the ground: governments are left on their own to achieving the committed reductions.

The above problems could be overcome by transitioning to a climate regime based on per-­capita emissions allowances. For the sake of equity henceforth, every human being should be granted the right to generate the same amount of (direct plus indirect) emissions, irrespective of the country in which the person lives. An equitable climate regime requires two components: an international climate treaty where the emissions allowance of each Party is an internationally agreed global per-­capita emissions allowance multiplied by the population of the Party; and national systems where emissions allowances are allocated to individuals and their emissions are tracked to comply with the said global per-­capita allowance.

Breaking the impasse in climate negotiations   101 While an equal emissions allowance may not be immediately practicable across developing and developed Parties, this should be the equitable goal in the near future. Any initially agreed global per-­capita emissions allowance could be gradually reduced over time as required by the stabilization trajectory of greenhouse gas concentrations which science suggests. For the sake of equity and transparency, allocation of emissions allowances should by definition be fixed and equal for all individuals in any country. Since richer individuals will need more allowances and poorer individuals less allowances than the equitable allowance, national schemes should be in place to facilitate trading of unused allowances among individuals. Similarly, allowance trading between countries should provide flexible distribution of the allocated allowances. It is expected that developed countries will need more allowances and developing countries less allowances than those allocated on a per-­capita basis. The total amount of allowances globally should of course remain constant, despite trading among countries, and trading among individuals within the countries. Since most emissions are caused by richer individuals, allocating emissions allowances only to them would deliver most of the reductions. The downside, however, is inequity against poorer individuals, and short supply of unused allowances for trading. Widening the allocation to poorer individuals would secure sufficient supply of unused allowances, and even provide a source of additional income or finance better life conditions for the poor. Allowance trading among individuals can serve for income redistribution as well. It is important to note that national systems for allocating allowances to—and tracking emissions by—individuals do require an equitable climate treaty to be in place, and equitable allowance trading among parties to be operational. Otherwise, developed parties would not be able to purchase enough unused allowances as the majority of the population has emissions well above the equitable level; conversely, developing parties would not be in position to sell all the allowances that most of their population is not able to use.

Implementing per-­capita emissions allowances The authors propose the implementation of national systems of per-­capita emissions allowances. These systems would allocate emissions allowances to individuals while tracking that the allowances are not exceeded. It could be argued that implementing a system for tracking emissions from every individual in a country is hardly practicable. There are two main aspects to consider: the scale of the system (millions of individuals) and the complexity of tracked variables (a myriad of goods and services with different emission factors).

102   J. Zak and M.K. Lee Systems for tracking consumption of goods and services by the population are not new. Major examples are the systems for metering and billing the consumption of electricity, natural gas, and water. From a technical standpoint, knowledge and experience gained from existing systems seem sufficient to implement national systems for tracking individual emissions. Operation of the entire allowance system (i.e., allocating allowances and tracking emissions) could be further facilitated by taking advantage of synergies with existing systems. For example, if emissions allowances are monetized, crediting and debiting allowances could be easily achieved through money accounts, in the same way as money is credited to and debited from normal personal accounts. Power-­law statistical distributions occur in many natural and anthropogenic phenomena: the occurrence of a particular value is inversely proportional to a power of that value (Newman, 2006). A special case of this relationship is better known as the Pareto principle: 80 percent of the effects come from 20 percent of the causes, which also implies other relationships (for example 64 percent of effects come from 4 percent of causes). Considerable literature exists about the application of the Pareto principle to energy efficiency and carbon footprint analysis in facilities, buildings, and similar premises (see for example Franchetti and Apul, 2012). Thus, there is high probability that energy consumption and emissions at facility level do follow a power-­law distribution. A quick analysis of national carbon emissions by the authors (based on International Energy Agency, 2008) seems to confirm that GHG emissions follow a power-­law distribution quite well. Therefore, the complexity of tracked variables in a national system for following individual emissions could be streamlined by targeting the minority of goods and services that accounts for most of the emissions. Which particular goods and services should be prioritized for tracking will depend on the peculiarities of GHG emissions in each particular country, the possibilities of the national body responsible for implementing the allowance system, and the level of support anticipated from the government, political parties, and the public in general. Early difficulties to be expected in the development and implementation of national emissions allowance systems could be overcome more easily through technical cooperation among signatories of the Climate Convention. Besides making best use of available expertise in different countries, international cooperation would also contribute to harmonizing the design of national systems such that interoperability is assured. Interoperability is important at the moment of tracking GHG embedded in goods traded between countries. International cooperation would also contribute to making the implementation of emissions allowance systems practicable and affordable for less developed countries.

Breaking the impasse in climate negotiations   103 The implementation and running costs of national allowance systems, including designated national authorities, could be paid from the trading of allowances, for example through a fee on each transaction. The designated national authority for the national allowance system should be appointed by the government of the country. This role could be taken by existing agencies or authorities already dealing with operational matters of the Climate Convention in the country. In developing countries hosting projects within the Clean Development Mechanism (CDM), already existing Designated National Authorities (DNA) for the CDM could operate the national systems. Since new CDM projects would become redundant under the proposed allowance system, this would enable the DNA to keep its role while using its existing expertise. In order to avoid unwanted political effects, the introduction of the emissions allowance system in a country should be preceded by a public information campaign explaining the reasons for and the operation of the system. Just as important is raising awareness and conducting debates among politicians, public opinion leaders, and representatives of main sectors of the society so as to gain early acceptance for the system. The implementation difficulties of national emissions allowance systems should be assessed in comparison to the difficulties in implementing a post-­ 2012 climate regime built on the Kyoto Protocol’s architecture. In the opinion of the authors, successfully implementing the extended Kyoto flexibility mechanisms or their successors is seemingly more difficult than implementing the more straightforward and transparent per-­capita emissions allowance system once streamlined as suggested above. The following is an early outline of how the emissions allowance system would work in a developed country:   1 A total emissions allowance is allocated to the country at the beginning of each commitment period by a competent international authority, such as the Secretariat of the United Nations Framework Convention on Climate Change (UNFCCC), according to the global emissions reduction target and the global per-­capita allowance agreed by the parties for the commitment period. The total allowance for the country is simply the global per-­capita allowance multiplied by the population of the country.   2 The international price of emissions allowances is agreed annually by the parties, as to provide sufficient incentive to countries to reduce emissions without placing an excessive burden on the world economy. Similarly, the national price of emissions allowances is set by the designated national authority, so as to provide sufficient incentive for consumers to switch to less emitting goods and services; for producers and suppliers to lower embedded greenhouse gases (GHG) in goods and services; and for technology developers to come up with new low-­emissions solutions; while avoiding excessive burden on the national economy.

104   J. Zak and M.K. Lee It could be argued that prices of emissions should be set by the market in order to avoid trade distortions. The authors are of the opinion that free markets are not the best way to address emergencies. Since the trading of emissions allowances is just a mechanism to share equitably the significant burden of avoiding an imminent environmental emergency, emissions allowances are not ordinary goods traded in free markets. Trading of emissions allowances must be closely regulated to avoid the abuses free markets are prone to. An important advantage of setting the price by the regulatory authority is that it can reduce the market uncertainly by a fixed price for a certain period of time. On the other hand, setting the price through international negotiation may require a lot of time and effort. Theoretically, the price set by regulation with perfect information is the same as that determined by a perfectly competitive free market.   3 Every individual has an emissions allowance account, akin to a bank money account. A sum of money, representing the total price of the allocated emissions allowance for a given allowance period—in principle one year or one quarter—is credited by the state at the beginning of each allowance period.   4 No emissions allowances are allocated to producers and suppliers because emissions released along the production/supply chain are accounted as indirect emissions by the individuals consuming goods and services. Producers and suppliers nevertheless have allowance accounts where inflows and outflows of allowances are settled as discussed in points 5 and 10 of this outline. Economic signals for reducing embedded GHG come from final consumers as explained in points 11 and 12 below.   5 Prices of goods and services include an emissions surcharge that represents the embedded GHG at the current price of emissions allowances. Embedded GHG include the emissions already incurred during production and/or supply, and any direct emissions released from consumption by individuals. Embedded GHG of any good or service are added up along the production/supply chain as producers/suppliers pass along the embedded GHG of the resources they use for producing/supplying the goods or services. Those goods that generate direct emissions during use/consumption by the final user (mostly fuels) must have their embedded GHG added at the first point of entry in the production/supply chain, in which case the designated national authority determines the corresponding specific values. Most of these values can be directly taken from standard values provided by guidelines of the Intergovernmental Panel on Climate Change (IPCC), already used by countries to prepare inventories of greenhouse gases for their National Communications to the UNFCCC Secretariat.

Breaking the impasse in climate negotiations   105   6 Embedded GHG and the resulting price surcharge apply regardless of the place (in-­country or abroad) where emissions were incurred. Embedded GHG of imported fuels, goods, and services are taken from the allowance system of the country of origin. In case the country of origin has no allowance system in place, values of imported embedded GHG are determined by the designated national authority. Emissions of international transport are charged to the carriers when buying local fuel, goods, and services. These emissions are eventually passed along as indirect emissions to passengers or goods transported, in the latter case as indicated in the next section of this outline.   7 Embedded GHG of exported fuels, goods, and services are provided to the allowance system of the country of destination.   8 The emissions surcharge of any fuel, good, or service bought by an individual is withdrawn from his/her allowance account, and repaid to the State.   9 Emptying the individual’s allowance account before the end of the allowance period has the same economic consequences as running out of money. The individual can no longer buy fuels, goods, or services with embedded GHG until the allowance account is replenished by buying unused allowances from the allowance trading system. 10 Producers and suppliers also pay emissions surcharges for the goods and services they buy from others; these surcharges are initially debited from the allowance account until they are passed along to customers via the corresponding emissions surcharges; any emissions surcharges not passed to customers show as an overdraft in the allowance account and must be balanced by buying unused emissions allowances; persistent negative balance in the allowance account has the same economic consequences as temporary insolvency, which prevents the producer/ supplier from buying further goods or services with embedded GHG. 11 The limited amount of allowances induces individuals to use fuels, goods, and services with lower embedded GHG, thus giving the corresponding producers and suppliers advantage over more emissions-­ intensive competitors. 12 Competition on offering fuels, goods, and services with lower embedded GHG creates demand for improved or new technologies from developers. 13 The price of allowances sends signals to individuals on the cost of overspending the allocated allowances. The limited amount of allowances available either globally or nationally, and the consequent scarcity of unused allowances should prevent rich individuals from emitting liberally regardless of the cost. Very rich individuals may be tempted to buy as many allowances as they need despite the cost. While monopolization of allowances would not impede meeting the overall emissions target, it would bring unwanted side effects on the economy, and should be prevented by close regulation.

106   J. Zak and M.K. Lee The implementation of the above outlined system in developing countries would need modification, as discussed below. Emissions from richer individuals are mostly manageable as described above for developed countries, and would very probably deliver most of the emissions reduction. Decreasing the number of tracked variables could become necessary though, if the burden of the emissions allowance system proves excessive for the capability of the supporting systems in the country, especially for the designated national authority and the banking system. Including poorer individuals in the allowance system is however important, both for equity considerations and for a fully performing allowance trading. Since the informal economy is rather extensive in developing countries, providing all poor individuals with emissions allowance accounts does not seem practicable. The same constraint applies to informal producers and suppliers: predictably not all of them are in position to have emissions allowance accounts. Alternative approaches should be devised for enabling poor individuals outside the banking system to receive emissions allowances, reimburse incurred emissions, and sell any surplus to the allowance trading system. Simple cash payments for the total price of the emissions allowance could deliver equivalent results if emissions incurred by the individual are lower than the emissions allowance. This can certainly be the case for most individuals outside the banking system. Similarly, new approaches should be developed for enabling informal producers/suppliers outside the banking system to participate in the emissions allowance system. The lack of allowance accounts would not impede these producers/suppliers to buy goods/services from others or sell their own products; the emissions surcharges however would be passed to customers via the normal price instead of deducted from the customers’ allowance accounts. While this shift in the accounting of emissions surcharges is detectable upstream in the allowance system, it would introduce uncertainties in the actual allowances used by poor individuals outside of the banking system. In other words, the sale of goods/services by informal producers/suppliers to final consumers would create uncertainty in the corresponding allowance used by the latter when both the producer/supplier and the final consumer do not have allowances accounts. A simple but not always accurate enough approach to solve the above uncertainty is estimating the unused allowances from poor individuals outside the banking system. On one hand, cash payments to these individuals—as discussed above—would cover both the emissions surcharges and the price of actual unused allowances; on the other hand, the unused emissions allowances cashed by those individuals are accounted in the allowance system by estimation rather than tracking. As mentioned in previous sections, allowance trading could provide the poor with a source of additional income or even finance better life conditions (e.g., access to energy, sanitation, and potable water). Smart ways

Breaking the impasse in climate negotiations   107 for allocating allowances, estimating (rather than tracking) emissions, and facilitating trading of unused allowances for the poor need to be developed. Methods used by mobile phone providers for example may bring initial inspiration. An early outline of the emissions allowance system for a developing country is discussed below. Elements and features similar to those already presented for developed countries are discussed in lesser detail.   1 As in the case of developed countries, total emissions allowances for developing countries are allocated at the beginning of each commitment period, on the basis of the global emissions reduction target and per-­capita allowance agreed by the parties. The total allowance for a country is the global per-­capita allowance multiplied by the population of the country.   2 The international price of emissions allowances is agreed annually by the parties, while the national price is set by the designated national authority.   3 Individuals with access to bank services have emissions allowance accounts. A sum of money, equivalent to the total price of the allocated emissions allowance, is credited by the state at the beginning of each allowance period. Poor individuals outside the banking system receive from the state a cash payment for the total price of the emissions allowance at the beginning of one or more allowance periods. Emissions of these individuals are presumed lower than the emissions allowance.   4 Producers and suppliers with access to bank services have emissions allowance accounts but do not receive emissions allowances. Informal producers and suppliers outside the banking system do not receive emissions allowances either.   5 Prices of goods and services include an emissions surcharge for their embedded GHG. These include emissions already incurred during production and/or supply, and any direct emissions released from consumption by individuals. Embedded GHG are added up along the production/supply chain as producers/suppliers pass along the embedded GHG. Goods generating direct emissions by the final user have their embedded GHG added at the first point of entry in the production/supply chain; the designated national authority determines the corresponding specific values.   6 Embedded GHG and the resulting price surcharge apply regardless of the country where emissions were incurred. Embedded GHG of imported fuels, goods and services are taken from the allowance system of the country of origin; otherwise, values of imported embedded GHG are determined by the designated national authority. Emissions of international transport are charged to the carriers when buying local fuels, goods, and services.

108   J. Zak and M.K. Lee   7 Embedded GHG of exported fuels, goods, and services are provided to the allowance system of the country of destination.   8 The emissions surcharge of any fuel, good, or service bought by an individual is withdrawn from his/her allowance account, and repaid to the state. Poor individuals with no allowance account pay the emissions surcharge via normal prices; the corresponding amount is reimbursed in advance by the cash payment received from the state for the emissions allowance; the unused allowances of these individuals are accounted in the allowance system by estimation instead of tracking.   9 Emptying the allowance account before the end of the allowance period impedes the individual to buy fuels, goods, or services with embedded GHG, until the allowance account is replenished by buying unused allowances from the allowance trading system. 10 Producers and suppliers with allowance accounts pay emissions surcharges for goods/services bought from others; these surcharges are debited from the allowance account until they are passed along to customers; emissions surcharges not passed to customers must be balanced by buying unused emissions allowances; persistent negative balance in the allowance impedes the producer/supplier buying further goods or services with embedded GHG. Informal producers and suppliers outside the banking system also pay emissions surcharges for good/services bought from others; these surcharges are paid via normal prices and then passed to customers, in the latter case via the normal price of their products. The use of normal prices to pass emissions surcharges is necessary as there are no allowance accounts to deduct from. 11 The limited amount of allowances induces individuals to prefer goods/ services with lower embedded GHG. Resulting competition drives producers/suppliers to adopt improved and new technologies. 12 Eventual scarcity of unused allowances should prevent rich individuals from emitting liberally regardless of the cost. Close regulation should prevent attempts to monopolize allowances because of unwanted side effects on the economy. Monopolization per se would not impede meeting the overall emissions targets. More research is needed on the detailed design and implementation issues of an equitable climate regime based on per-­capita emissions allowances. Besides the system proposed in this chapter, there is valuable previous research on the topic (see for example Centre of Science and Environment, 1998; Meyer, 2000). The ever-­increasing concentration of GHG in the atmosphere is just one of the many manifestations of over-­consumption of natural resources by richer individuals worldwide. These resources include inter alia water, minerals, forests, land, seas and atmosphere.

Breaking the impasse in climate negotiations   109 The system of per-­capita GHG emissions allowances proposed in this chapter could be eventually extended to other natural resources which are over-­consumed at the expense of the environment and future generations. The ultimate goal should be to regulate the consumption of these resources within sustainable levels, while guaranteeing their equitable sharing among the global population.

Conclusions The current climate regime has proven largely insufficient to stabilize the global climate system. The root of the shortfall is in the system adopted to reduce emissions: meager binding targets for developed countries based on absolute 1990 levels. The issue of how to adopt more realistic and equitable allocation of emissions reduction targets has been a permanent impasse in the international climate negotiations. There are two essential considerations to break the impasse and deliver an effective and equitable post-­Kyoto climate regime: 1 The emissions rights implicit in the Kyoto Protocol are ultimately inequitable. If per-­capita global emissions must be halved on an equitable basis to stabilize climate, then most developing countries have always been under this sustainable target. 2 It is richer individuals globally, and not developed countries per se, who have contributed most to global warming. Equity should transcend national borders: the poor in developed countries have the same rights to emit as anybody else; conversely, richer individuals in developing countries have the same obligation to reduce emissions as their counterparts in developed countries. To be equitable, any new climate regime should be based on per-­capita emissions. To be effective, the new regime should limit emissions directly at the root—the consumers—as new evidence emerges that renewables, nuclear fission and technologies per se in the near future cannot support current consumption patterns in a sustainable way. While every individual in a country should receive the same equitable emissions allowance, flexibility in fitting different needs should be provided by national trading of unused allowances. Every signatory country should receive an equitable share of allowances proportional to its population. While trading between countries should provide flexible distribution of allocated allowances, the total amount of allowances globally should remain constant as per the agreed global reduction target. At first glance, a system of per-­capita emissions allowances could look unfeasible. Monetizing emissions allowances and prioritizing tracked variables should make the system practicable. A concerted international

110   J. Zak and M.K. Lee effort could also contribute to making the system operational by less developed countries. The implementation difficulties of a per-­capita allowance system should be assessed in comparison to the difficulties in implementing a post-­2012 climate regime built on the Kyoto architecture. Successfully implementing the extended Kyoto flexibility mechanisms or their successors is seemingly more difficult than implementing the more straightforward and transparent per-­capita allowance system. This chapter provides an early outline of how a system of per-­capita emissions allowances would work. More research is needed on the detailed design and implementation issues of a new climate regime based on this system. The system of per-­capita GHG emissions allowances here proposed could be eventually extended to other natural resources subject to unsustainable consumption, at the expense of the environment and future generations.

Notes 1 Kilowatt-­hours per person per day. Note that this measure not only includes electricity but also all forms of energy. 2 Clean coal in this context means coal power stations with carbon capture and storage. 3 In this chapter, a negative reduction commitment is considered an increase in emissions. 4 According to the EU Burden Sharing Agreement, the reduction commitment ranges from −27 percent (Portugal) to 28 percent (Luxembourg). 5 These emissions essentially come from fuel combustion and cement production. 6 Table 5.2 only lists the top 20 developing parties ranked by their absolute CO2 emissions in 2012. The complete table, presenting all the 95 developing parties included in the estimation, is available upon request to the authors.

References Centre for Science and Environment, 1998, Definitions of Equal Entitlements. CSE-­dossier, factsheet 5, Delhi. Global Carbon Project, 2008, Carbon Budget and Trends 2007, www.globalcarbonproject.org. International Energy Agency, 2008, World Energy Outlook 2008, IEA, Paris. International Energy Agency, 2009a, CO2 Emissions from Fuel Combustion, Highlights 2009, IEA, Paris. International Energy Agency, 2009b, Gadgets and Gigawatts, IEA, Paris. International Monetary Fund, 2009, World Economic Outlook Database (October 2009), IMF, Washington, DC. MacKay, D., 2008, Sustainable Energy—Without the Hot Air, UIT Cambridge, Cambridge. Franchetti, J. and Apul, D., 2012, Carbon Footprint Analysis: Concepts, Methods, Implementation, and Case Studies, CRC Press, Boca Raton.

Breaking the impasse in climate negotiations   111 Meyer, A., 2000, Contraction and Convergence: The Global Solution to Climate Change, Schumacher Briefings 5, Green Books, Bristol. Newman, M. E. J., 2006, Power Laws, Pareto Distributions and Zipf ’s Law, University of Michigan, Ann Arbor. UNFCCC, 2007, National greenhouse gas inventory data for the period 1990–2005, Advance version, UNFCCC Secretariat, Bonn. UNFCCC, 2009, National Greenhouse Gas Inventory Data for the Period 1990–2007. Advance version, UNFCCC Secretariat, Bonn. United Nations, 1948, Universal Declaration of Human Rights, UN, New York, www.un.org/en/documents/udhr/index.shtml. United States Congress, 2009, A Bill to Create Clean Energy Jobs, Achieve Energy Independence, Reduce Global Warming Pollution and Transition to a Clean Energy Economy (as passed by the House of Representatives on June 26, 2009), Washington, DC.

6 China’s transition toward a low-­carbon economy A review of the 11th Five Year Plan Ye Qi and Hui-­min Li

Introduction China’s economic reform dates back to 1978 when the central government decided to turn the focus of the nation from political campaigns to economic development. From 1978 to 2000, China’s gross domestic product (GDP) was quadrupled, and the energy consumption was doubled. Thus the energy intensity was cut by half. As the nation entered the new century, the accelerated industrialization posed new challenges in energy use, the share of energy-­intensive heavy industry increased quickly (Figure 6.1), and the overall energy intensity reversed from a decreasing trend to a sharp increase. The energy intensity (measured by energy consumption per unit GDP) increased by 4.8 percent in 2003 and by 5.5 percent in 2004. In 2005 the energy intensity was back to the 1999 level. The two consecutive years of increase canceled out the achievement in energy intensity reduction from 1999 to 2005. GDP in 2005 increased by 70 percent compared to that of 1999. Should such a high growth rate continue into the future, energy consumption and carbon emissions would increase dramatically without an effective control, posing a severe challenge to energy supply, environmental quality, and greenhouse gas emissions for China as well as for the world. The 11th Five Year Plan (FYP) for the period from 2006–2010 set an explicit target of reducing the energy intensity by 20 percent. In addition, a few major industrial sectors were identified as priority areas under the energy saving policy. The 11th FYP defined the target as “mandatory” and required that all government departments and local governments ensure the delivery of the target with the maximum effort and the maximum resources they could allocate. According to data from the National Development and Reform Commission (NDRC and NBS, 2011), by the end of 2010, the energy intensity of China had decreased by 19.1 percent compared to the 2005 level, virtually achieving the target set by the 11th Five Year Plan. On a year-­to-year basis, the reduction was 2.72 percent in 2006, 5.01 percent in 2007, 5.23 percent in 2008, 3.62 percent in 2009, and 4.10 percent in 2010. By 2008, energy intensity had dropped to the 2002 level (see Figure 6.2). The rapidly

China’s transition to a low-carbon economy   113 25

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increasing trend of the energy intensity during the 10th FYP period (2000–2005) was replaced with a sharp decrease of an annual rate of 4.3 percent. As a comparison, the energy intensity in the United States decreased by 1.2 percent annually on average (BEA, 2011; EIA, 2010). In 2011, the first year of the 12th FYP, the energy intensity of the Chinese economy was further cut by 2.01 percent toward an overall five-­year target of 16 percent. The key to low-­carbon development is to decarbonize the production and consumption of the economy. Decarbonization is achieved by the decrease in fossil fuel consumption per unit of production and consumption. During the 11th FYP, China successfully curbed its increasing energy intensity, and achieved its transition toward a low-­carbon development path. This helped alleviate the pressure of energy supply shortage and greenhouse gas emissions in China as well as in the world.

Decarbonization in the major sectors China’s transition toward a low-­carbon economy was seen in major sectors of the economy. Among the key industries, electric power generation and manufacturing industries achieved significant progress. Buildings and transportation sectors showed a series of encouraging achievements and trends. The fossil fuel consumption in agriculture was stabilized, and the forest carbon sequestration increased. Moreover, the development of low-­carbon energies became a new hotspot for economic growth and attracted both domestic and international investment.

114   Y. Qi and H.-M. Li

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Power generation The efficiency of both electricity generation and transmission witnessed significant improvement, and the carbon intensity of the whole sector experienced a steady decrease. China heavily relies on fossil fuel for power generation: approximately 80 percent of the generation is from coal. As a result, the priority for decarbonization of the electricity sector is to increase generation efficiency in fossil fuel-­fired power plants and the share of non-­ fossil energy in the generation mix. China achieved success in both aspects during the 11th FYP. Coal consumption per kilowatt hour (kWh) generated and per kWh supplied decreased by 31 grams and 37 grams, respectively, in the 11th FYP, as opposed to 20 grams and 22 grams in the 10th FYP. In terms of the coal consumption of power plant, China was quickly catching up the advanced countries. For example, the net coal consumption of power plants of capacity higher than 6,000 kW in China was 392 gce/kWh in 2000, and the average net coal consumption of the top nine electricity companies in Japan was 316 gce/kWh. The gap between China and Japan was 76 gce/kWh in 2000, 56.3 gce/kWh in 2005 and 23 gce/kWh in 2010. The improvement of coal generation efficiency led to a decrease in carbon emissions intensity. Carbon emissions intensity decreased by 7.48 percent from 936.4 gCO2/kWh in 2005 to 866.3 gCO2/kWh in 2009 (see Figure 6.3). Power generation from non-­fossil energy sources experienced rapid development during the 11th FYP (Figure 6.4). In 2010, total electricity generation from non-­fossil energy sources reached 813.2 billion kWh

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(CEC, 2011), 80 percent higher than in 2005. The growth rate of power generation from non-­fossil energy sources is 67 percent higher than that from fossil energy sources. The share of non-­fossil electricity generation in total electricity generation was 19.2 percent (CEC, 2011), as compared to 18.1 percent in 2005. Among all non-­fossil energy sources, hydropower generation capacity expansion was the most significant in absolute terms. With additional capacity of 20 GW per year, hydropower generation capacity increased 2.5 times as fast as it did during previous FYP. The total installed capacity of hydropower reached 210  GW (CEC, 2011) in 2010. Meanwhile, wind power generation capacity experienced the most rapid increase. With an annual increase of 105 percent for five consecutive years, the total installed wind capacity reached 44.73 GW in 2010 (Li et al. 2011), accounting for 22.4 percent of the world’s total installed capacity (BP, 2011). The growth of photovoltaic (PV) power generation was exponential. The installed PV capacity reached 860,000 kW in 2010, 12.29 times of that of 2005. The development of nuclear power also drew extensive attention. By the end of 2010, a total of 13 nuclear plants were commercial use, 28 nuclear plants were under construction (Han, 2011). The efficiency improvement of coal-­fired power generation and the expanding share of non-­fossil fuels in the generation mix resulted in a rapid decrease in the power sector’s carbon emission intensity from 766.7 gCO2/

116   Y. Qi and H.-M. Li kWh in 2005 to 695.6 gCO2/kWh in 2009, a decrease of 9.27 percent. Emissions from fossil energy were avoided due to the increase of non-­fossil power. The emission reduction of the sector reached 146 million tons of CO2. Manufacturing industry In 2010, energy consumption by the manufacturing industry was about 1.37 Gtce, accounting for 66.5 percent of end-­use energy consumption or 100

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China’s transition to a low-carbon economy   117 42.1 percent of total national energy consumption; CO2 emissions were 4.30 Gt, accounting for 62 percent of national total energy-­related emissions. During the 11th FYP, total energy consumption and CO2 emissions increased in the manufacturing industry, but the energy intensity and carbon emissions intensity experienced a rapid decrease. Energy efficiency in the manufacturing industry can be measured by two indicators—the energy consumption per unit of value added which reflects the overall energy intensity in one industry, and energy consumption per unit of an industrial product. From 2005 to 2010, energy consumption per unit of value added in the manufacturing industry decreased by 23.2 percent, an annual decrease of 5.14 percent on average, 20 percent faster than the national average of 4.15 percent. This translated into total energy savings of 329 Mtce, accounting for 52.5 percent of national total. CO2 emissions per 10,000 yuan value added decreased from 4.37 t in 2005 to 3.28 t in 2010, a decrease of 25.1 percent or an annual decrease of 5.6 percent on average (Figure 6.5). Cumulative CO2 emission reductions were 1.16 Gt, accounting for 74.8 percent of national total reductions. Energy consumption per unit of product decreased for all 16 major products in six energy-­intensive industries. The manufacturing industry achieved total energy savings of 311 Mtce through unit product energy efficiency improvement, accounting for 94.6 percent of the total savings achieved by the manufacturing industry or 49.6 percent of total national energy savings. Such a success was largely due to technology improvement and structural optimization. Technology improvement included technology innovation,

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Figure 6.5 Energy intensity and CO2 emission intensity of the manufacturing industry sector (2005–2010).

118   Y. Qi and H.-M. Li phasing out inefficient technologies and scaling-­up the deployment of advanced technologies, adopting energy efficient equipment, and expanding R&D investment. From 2006–2010, the “Top 1,000 Enterprises Energy-­ Saving Program”1 yielded energy savings of 150 Mtce (NDRC, 2011a), the “Ten Key Energy-­Saving Projects”2 340 Mtce (NDRC, 2011b), and the “Phasing-­out Obsolete Capacity Program” over 110 Mtce. These three programs successfully met and even surpassed energy savings targets. With the deployment of more efficient technologies, overall energy consumption per ton of steel dropped by 12.1 percent in 2006–2010 (NBS, 2011c). At the same time, the deployment rates of all major new technologies went up. The medium and large steel companies achieved better performance than their Japanese peers who were considered world leaders in terms of many indicators. Comprehensive energy consumption intensity in cement industry achieved a decrease of 28.6 percent through large scale deployment of new dry process and residue heat to electricity technologies, and through increasing bulk cement rate (NBS, 2011c). Success in energy efficiency was also witnessed by the non-­ferrous metal industry in China. With the scale-­up of the pre-­baked cell production, the AC electricity consumption in aluminum ingot production has dropped by 12 percent (NBS, 2011c). The overall electricity consumption intensity in copper smelting dropped by 35.9 percent (NBS, 2011c), the largest decrease achieved among all industries during 2006–2010. In terms of structural changes, the heavy-­industry-oriented industrialization trend in the first three years during 2006–2010 continued but slowed down. Meanwhile, the structure of the manufacturing industry started to transition to a more energy-­efficient mode with a decreasing share of high energy-­intensive industries and an increasing share of less energy-­intensive products. Efficiency improvement in buildings Energy consumption and CO2 emissions in the building sector continuously increased in the 11th FYP, but the annual growth rate decreased notably compared to that in the 10th FYP. From 2005 to 2010, energy consumption per unit area increased by 19.7 percent, or an annual rate of 3.7 percent on average. At the same time, CO2 emissions per unit area increased by 17.9 percent overall or 3.3 percent annually on average. At present, China’s CO2 emissions per unit of building area are far lower than that in the developed countries and less than a third of the US level. Four categories can be identified in building energy consumption. Centralized district heating systems in northern cities achieved the greatest progress in energy efficiency. Energy consumption per unit area in central heating systems in northern cities continuously dropped from 17.78 kgce/ m2 in 2005 to 16.28 kgce/m2 in 2010, a decrease of 8.41 percent. At the same time, the associated CO2 emissions per unit area also decreased from 47.48 kgCO2/m2 in 2005 to 43.87 kg CO2/m2 in 2010, a decrease of 7.6

China’s transition to a low-carbon economy   119 percent. As a result, the growth rate of total energy consumption and CO2 emissions related to northern cities’ central heating systems was slowed down, which accounted for about 25 percent of total building energy consumption in the whole country in 2010. Through the transformation of the envelope structure of buildings, the institutional reform of centralized district heating systems, and the scale-­up of energy-­saving lighting and energy standards of home appliances, the building sector achieved an energy-­saving capability of 67.50 Mtce, equivalent to an accumulative emissions reduction capability of 185 MtCO2 from 2006 to 2010. Transportation China’s transportation sector has experienced rapid growth in roads, vehicles, and traffic, all leading to growth in energy consumption. Energy consumption in the transportation sector amounted to 230 Mtce in 2005 and 3,000 Mtce in 2009, an increase of more than 30 percent over four years, higher than the average growth rate in other sectors, although it was lower than that in the previous FYP. Energy efficiency improved significantly in the sector. Energy consumption per ton-­kilometer in railway transportation decreased from 6.48 tce/Mton/km equivalent in 2005 to 4.94 tce/ Mton/km equivalent in 2010, a decrease of 23.8 percent (MOR, 2011). Fuel oil consumption per unit of ton-­kilometer in aviation transportation decreased from 0.336 kg/ton/km in 2005 to 0.298 kg/ton/km in 2010, a decrease of 11.3 percent (CAA, 2011). The Chinese government encouraged the development of mass transportation. There was a continued increase in the share of public transportation in residential trips. Taking Beijing as an example, the share of public transportation reached 39.3 percent in the first half of 2010 (Beijing Daily, 2010), an increase of nearly 7 percent compared to the 2005 level. In response to the booming of private vehicles, the government increased fuel economy standards to encourage the production of more efficient cars and imposed a gas tax in 2008 with a progressive tax schedule on cars with higher fuel consumption and to incentivize the purchase of more efficient cars. In 2005, small-­displacement cars of 1.6 liters or less accounted for two-­thirds of the total ordinary passenger cars in China (CATRC, 2009). The ratio increased to 68.77 percent in 2010 (CAMA, 2011). In 2009, the Ministry of Finance and the Ministry of Science and Technologies jointly launched a pilot program of 1,000 new energy cars in ten cities to promote the mass production of new energy cars and to reduce cost for the consumers (MOF and MOST, 2009). In railway transportation, the government developed an overall plan and implemented an express railway network with priorities. It is expected that the express railway network will provide alternatives for carbon-­intensive rides in airplanes and cars in the long run.

120   Y. Qi and H.-M. Li Agriculture and forestry A key sector of the economy, agriculture is of strategic importance in the nation’s low-­carbon development. Thirty-­seven Mtce fossil fuel, accounting for about 1.14 percent of the total end-­use energy consumption was consumed in agriculture and forestry in 2010, while contributing 9.4 percent of the national GDP. Among all industries, agriculture was the only one that has stabilized its energy consumption in the 11th FYP, at about 35–37 Mtc per year. Energy intensity showed a sharp decrease of 17.4 percent from 2005 to 2010. It is notable that the embedded carbon emissions associated with agricultural production increased. In 2009 the embedded carbon emissions in agriculture production materials were 325 MtCO2-eq, or 2.6 times as much as the direct emissions in agriculture. Fertilizer was a major source of embedded carbon emissions, accounting for about 86 percent of all sources. Need-­based fertilization was an effective measure to reduce the total fertilizer use and thus to reduce the embedded carbon emissions in agriculture. China’s agriculture shows strong low-­carbon features compared to many other countries. Compared to the agricultural energy consumption in some OECD countries in 2006 by the purchase power parity (PPP) method (IEA, 2009), China’s agricultural energy consumption was as low as 0.31 tce/10,000 international dollars, only 19 percent of the average level of the OECD countries. It was 24.4 percent of that in Australia, 22.1 percent of that in the US, and 36.5 percent of that in Japan. The large scale of reforestation in China contributed to forest carbon sequestration. In 2009 forest coverage rate reached 20.4 percent, achieving the 11th FYP target for forest coverage. A nationwide general survey of forest stock from 2004 to 2009 showed that China’s forestry carbon sink amounted to 22,290 MtCO2, a total increase of 10.4 percent compared to the previous survey period (1998–2003), an annual increase of 420 MtCO2 on average. Ifo Institute–Center for Economic Studies, a think tank of the German government, reported that China developed 73 percent of total new forest in the world (Xinhua News Agency, 2010), and despite that forested areas globally reduce by 20,000 hectares per day on average, China’s continuous effort in reforestation ensured a steady increase in forestland, which greatly contributed to China’s low-­carbon development and global CO2 emission reductions.

Factors contributing to low-­carbon development A key factor for the progress of low-­carbon development in China during the 11th FYP was the making and effective implementation of a number of important policies. These policies have helped to lay an institutional foundation for low-­carbon development in the long run.

China’s transition to a low-carbon economy   121 Technical and infrastructure foundation During 2006–2010, driven by mandatory energy conservation targets, policy incentives, market competition, and desire for profit, many companies, especially medium and large companies in energy-­intensive industries, have upgraded their technologies and devoted efforts to developing and adopting energy efficiency and renewable energy technologies, laying a critical technical foundation for their low-­carbon development in the future. They phased out backward technologies and equipment, adopted new technologies and facilities, and expanded production capacity and R&D capacity in energy efficiency and new energy equipment and technologies. In terms of adoption and dissemination of low-­carbon technologies, many sectors including building, transportation, and other consumption sectors have achieved significant success. A study conducted by McKinsey showed that four quarters of technological innovation and adoption had negative costs, meaning that a financial gain can be achieved through energy-­saving and carbon abatement measures (McKinsey & Company, 2009). However, it must be noted that the concept of “cost” here only refers to the direct cost of deployment of the related technology. Removing barriers to applying the related technology could be quite costly, as McKinsey pointed out. Technology innovation is usually achieved through a combination of several factors—technology transfer from other countries, scaling up the adoption of energy efficient technologies through investment, and enhanced R&D. During the 11th FYP, technology innovation was achieved in many sectors in China, including the iron and steel, non-­ferrous, chemical, cement, textile, and pulp and paper industries. Technology innovation showed several features. First, it was driven by explicit goals to adopt the best available technologies to achieve energy conservation and to develop new energies. Second, it was an overall upgrade covering large enterprises and involving large projects. For example, technology innovation was the focus of the “Ten Key Energy-­Saving Projects.” Third, innovation of technologies covered not only production but also consumption sectors such as the building and the transportation sectors. Infrastructure was an important carrier for technologies and its construction required technology inputs. Urban planning was treated as a tool for low-­carbon development, and urban planners started to integrated the low-­carbon concept into their planning and development of urban infrastructure, especially transportation routes and facilities. The Transport Oriented Design (TOD) and public transport became popular concepts among the planners and policy makers in many cities, especially those in medium and large cities. In terms of building facilities, the new building efficiency standards put forward new norms for building energy conservation, including raising the standard for the insulation coefficient for external walls. By the end of 2009, 99 percent of building design and

122   Y. Qi and H.-M. Li engineering and 90 percent of constructions in new urban building followed mandatory energy efficiency standards in China. Nationwide, the area of energy-­saving buildings reached 4.08 billion m2, accounting for 21.7 percent of total urban building area (NDRC, 2010). The development of communication infrastructure and facilities also contributed to energy conservation and low carbon development. Policy innovation During the 11th FYP, China developed a series of laws, regulations, norms, and policies which constitute a legal and policy framework for its low-­ carbon development. The Renewable Energy Law that came into effect in 2006 and the Energy Conservation Law amended in 2007 together provided a legal framework for low-­carbon development. With the implementation of the Renewable Energy Law, wind and solar power generation experienced dramatic growth. In December 2009, the standing committee of the National People’s Commission amended the Renewable Energy Law to increase national support for grid connection for wind and solar power plants. The new Energy Conservation Law defined energy conservation as a foundational national strategy. Low-­carbon development became a consensus among the top leaders in the central government and a commitment for the future. President Hu declared that China would actively develop toward a low-­carbon economy in the APEC summit in 2007 and in the United Nations Conference on Climate Change in 2009. Premier Wen also expressed China’s commitment to develop its low-­carbon economy in the Copenhagen meeting in 2009. Such strong political commitment was reflected at different levels of policy, from the 11th FYP to a series of specific sectoral policies aiming at promoting energy conservation and efficiency. There were “command and control” policies such as phasing out backward technologies and capacity, replacing them with more energy-­efficient ones, and regulating market access for enterprises in energy-­intensive industries, as well as incentives such as tax breaks, financial support, and economic instruments such as tiered pricing for electricity. The central government also helped build capacity in local governments and to support the development of the energy-­efficiency market by providing incentives and assistance to energy service companies. Institutional development China established in 2007 the Leading Group on Climate Change and the Leading Group on Energy Conservation and Pollution Reduction; both are led by Premier Wen Jiabao. In addition, the National Energy Expert Council and the National Climate Change Expert Council were established. Local governments at provincial and municipal levels also established

China’s transition to a low-carbon economy   123 similar institutions. These institutions have proved to be critical in strengthening the leadership on low-­carbon development in the country. Policy implementation was greatly improved due to the establishment of the energy-­saving target responsibility system (TRS) which disaggregates the energy-­saving target among all levels of local government and major energy users. The energy-­saving performance of local governments and major enterprises were closely monitored and assessed. Leaders of the local governments were held accountable for implementing energy-­conservation policies and achieving the targets. Three schemes for data collection, supervision, and evaluation were developed accordingly to support the TRS. This system put the emphasis on local governments, which was distinctly different from the previous system under central planning before 1998. The old system relied on various ministries for implementing the energy-­ saving policies. An energy-­conservation market was newly established with the support of the government’s legal and policy framework, covering the full purchase of renewable energy generation by law, and the electricity wholesale rate-­ setting process. Enterprises were motivated to participate in Clean Development Mechanism projects, investing in renewable energy projects and implementing energy efficiency upgrades via public tender. Industrial associations, NGOs and other related organizations started to play a more active role in low-­carbon development. Both international and domestic NGOs are quite active in the field, reshaping the landscape of governance. Healthy interaction among the government, the enterprises, the market, and the society is gradually evolving. International cooperation Energy conservation, clean energy, and climate change were the focal areas for international cooperation. China and the US set forth to collaborate on climate change and clean energy, which was the centerpiece of the bilateral cooperation and played an important role in their strategic and economic dialogue. Such cooperation included expanding R&D for building efficiency, clean coal, and electric vehicles. It is notable that besides cooperation with developed countries, China also conducts extensive cooperation with developing countries on low-­carbon technologies, which constitutes an important part of south–south cooperation.

Characteristics of China’s low carbon development Total emissions increased rapidly while emission intensity was decreasing China’s CO2 emissions intensity dramatically decreased; however, total CO2 emissions still rapidly increased during the 11th FYP. The X-­shaped

124   Y. Qi and H.-M. Li curve with decreasing intensity and increasing total emissions was the primary feature of China’s low-­carbon development in this period. China’s total energy consumption increased by 178 Mtce annually on average, which translated into a total increase from 2,360 Mtce in 2005 to 3,250 Mtce in 2010, an increase of 37.7 percent in five years. China’s energy-­related CO2 emissions increased from 5.147 Gt in 2005 to 6.93 Gt in 2010, an increase of 34.64 percent in total or by about 7 percent annually on average, a rate 3.38 times as high as the world average (BP, 2011). The energy and manufacturing industries accounted for over 70 percent of China’s total CO2 emissions. As a result, these two were also the priority of China’s implementation of energy-­saving policies. These two industries witnessed both significantly decreasing energy and carbon intensity and notably increasing total energy consumption and emission, which exemplifies China’s story of energy and carbon as a whole (see Figure 6.6). As industrialization, urbanization, and export-­oriented GDP growth continue, the “X-­shaped” curve with decreasing intensity and increasing total emissions will be the primary feature of China’s low-­ carbon development in long time. Large scale and high effectiveness China was able to avoid a total of CO2 emission of 1.55 billion tons, about five times of the EU greenhouse gas emission reduction target under Kyoto Protocol. Such a large scale and a sharp transition are unprecedented in the world. The successful transition manifested the high effectiveness of central government’s policies. These policies have two prominent characteristics. First, administrative power was fully deployed, including performance evaluation of the local governments and state-­owned enterprises by the higher-­level government, and administrative approval. Second, the government invested a tremendous amount including financial transfer and subsidy, incentives, interest discount, and favorable loans. The administrative power motivated local governments and state-­owned enterprises to expand their inputs, improve their management practices, optimize their structures, and develop new policy measures, while the economic incentives enabled enterprises to better implement the energy conservation policies. These two policy instruments have proved highly effective over a short period of time, even though they require a large amount of input in terms of funding and administrative resources. High cost In terms of direct investment, the central government arranged an 89.4 billion yuan budget, and 133.8 billion yuan in special funds for energy saving and emission reduction, adding a 22.32 billion yuan investment to energy saving and environmental protection projects (Xinhua News

China’s transition to a low-carbon economy   125 Agency, 2011). Such an amount only accounts for 10–15 percent of the total national investment (State Council Information Office, 2010). Hence the estimated total investment for energy conservation, environmental protection, and low-­carbon development nationwide would be 2–3 trillion yuan. According to McKinsey, China committed about US$100 billion during the first three years and at least the same amount during the last two years of the 11th FYP period to energy conservation and carbon-­ emission reductions, resulting in a total of at least US$200 billion during 8,000

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Figure 6.6 CO2 emission and CO2 emission intensity in the energy industry sector, the manufacturing industry sector, and the nation (2005–2010).

126   Y. Qi and H.-M. Li 2006–2010. China became the largest investor in renewable energy during the 11th FYP. To achieve the energy conservation goal of a 20 percent reduction, besides direct investment, China also phased out much backward capacity, including 76.83 GW of small coal-­fired power plants (NDRC et al., 2011), 110 million tons of iron production plants (NBS, 2011c), 66.83 million tons of steel production plants, 330 million tons of cement production plants (NBS, 2011c), and 110 million tons of coke production plants (NBS, 2011c). It is worth mentioning that the small coal-­fired power generation capacity that China phased out during 2006–2010 exceeded the total installed capacity in the UK. Phasing out such a large amount of backward capacity served the purpose of energy conservation and carbon-­emission reductions. However, such a phase-­out of obsolete power capacity came at the tremendous economic and social cost of many enterprises, though the government provided some subsidies to compensate their losses. Third, there was alternative cost involved. As China’s market is yet to be fully developed, administrative measures were the major instrument to implement energy-­conservation and carbon-­emission reduction policies. However, in many cases the market displays higher efficiency than the government. For example, the EU adopted carbon trade to achieve its carbon-­ emission reduction goals. China, on the contrary, largely allocated the targets evenly among different provinces. Among the 30 provinces that participated in this program, 20 of them were assigned a target of 20 percent reduction in energy consumption. In reality these provinces vary greatly by their energy consumption and economic development, and their energy conservation potential and cost were also different. In theory, if some provinces want to purchase emission reduction certificates from others, it can be mutually beneficial, thus achieving the so-­called efficiency improvement. High energy-­consuming enterprises were also assigned a target of 20 percent reduction. Such a clear-­cut policy led to losses in efficiency as it cost some enterprises more to achieve emission reductions than others. The trading mechanism would be a market mechanism that helps to improve efficiency. Finally, energy conservation and emissions reduction involves opportunity cost. If we look into other services the government could provide, the opportunity cost for energy conservation was rather high. A large amount of funding and other resources from the government, enterprises, and society were deployed to energy conservation and carbon-­emissions reduction, while this could possibly lead to less resources for other fields, hence an overall loss in social welfare.

Achievements and challenges China made tremendous progress in energy saving and emissions reduction. For such an enormous economy to shift to a low-­carbon economy

China’s transition to a low-carbon economy   127 from high energy consumption and carbon emissions was like changing the tracks for large high-­speed train. In addition to internal challenges of balancing economic growth and changing economic growth path, the global financial crisis that occurred in 2008 challenged all efforts on energy saving and carbon reduction. The first challenge came from the effort to maintain a high rate of economic growth. The central government put forward four trillion yuan investment and ten trillion loans and local governments launched 18 trillion programs. This stimulus package implied that a huge amount of energy was to be consumed and carbon emitted. As a result, a further decrease in energy intensity in 2009 became very difficult. The impact continued in the first half of 2010 and energy intensity of the economy went up (WWF and DRC 2011). The second challenge had to do with balancing energy saving with poverty alleviation. As a relatively underdeveloped economy, China’s per capita GDP was about 3,700 dollars in 2009, less than one-­twelfth of America’s. China now has a population of 150 million under the poverty line defined by the World Bank. Thus, further economic development and increased energy consumption were inevitable. Energy savings and carbon reductions required additional investment and the costs of economic development affected national welfare in the near future. The dilemma still remains as a big challenge for China’s development. Third, transitioning to a low-­carbon economy in the middle of the industrialization and urbanization processes is particularly challenging. Industrialization of most developed countries was supported by rapid increase in fossil-­fuel consumption and energy intensity. The link between industrial development and energy consumption was embedded in the growth model of the economy. Therefore, the reverse of energy intensity during the 11th FYP was an unusual success for China considering the current stage of the economy. Low-­carbon development in the long run requires change in the economic development model. China’s economic development has been driven largely by the growth in export and urbanization in recent decades. Although exports have been impacted by the global financial crisis, they have remain at a high level as a major driver of the economy. China’s urban population grew by 45 million, reaching 50 percent of the overall population during the period. Since an urban resident consumes three times more energy than a rural resident, and also because the construction of urban infrastructure consumes much energy, rapid and large-­scale urbanization has been and continues to be a main driver of energy consumption and carbon emission in China’s economy. The 12th Five-­Year-Plan period (2011–2015) is a critical period for achieving the 40–45 percent decrease in carbon emission intensity until 2020. China set the target of a “16% decrease in energy intensity and 17% decrease in carbon emission intensity.” With many of the low-­hanging

128   Y. Qi and H.-M. Li fruits picked, further energy saving and emission reduction will involve even greater costs, posing a serious challenge for a developing nation. China’s efforts on low-­carbon transition during 11th FYP provided valuable experiences and lessons for the current period. It has been shown that the vision and resolve of the central government on the issue was critically important. Leadership matters. Despite the great difficulties and challenges encountered in the transition process, the goal was virtually completed in the end. Second, policy making and implementation were the basis for the achievement. In particular, the establishment and implementation of energy conservation target responsibility system was the key to the low-­carbon transition. Third, adequate funding ensured the implementation of the policies. Implementation of the energy-­saving policy was effective, but highly costly due to the undiversified policy measures employed, which remain a key issue in formulating and implementing low-­carbon development policies. China has started piloting a market instrument in energy saving and carbon-­emission reduction in the 12th FYP and the effect of that will soon be seen.

Acknowledgment This paper was adapted partly based on Chapter 1 of Annual Review of Low-­Carbon Development in China: 2010 (Qi 2011), and the calculation results come from the team of Climate Policy Initiative at Tsinghua. Part of the research funding comes from Climate Policy Initiative funded by the Soros Foundation. We are deeply indebted for their support.

Notes 1 Approximately 1,000 of the largest energy consuming enterprises were selected as the primary focus of the industrial energy saving program. This program was called the “Top 1,000 Enterprises Energy-­Saving Program,” a key program in the 11th FYP. This program has been scaled up in the 12th FYP to a “Top 10,000 Program,” to cover a much wider range of enterprises. 2 The “Ten Key Energy-­Saving Projects” identified ten major areas of industry for national support for energy saving.

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7 Moving forward in the climate change policies and practices Wan Portia Hamzah

Introduction Shaping the climate change regime has been fraught with challenges. While the science of climate change1 has shown considerable progress, the politics surrounding the multilateral process of negotiations have faltered. The United Nations Framework Convention on Climate Change (UNFCCC),2 the international regime for global action to address climate change, emerged some twenty years ago in 1992 during the United Nations Conference on Environment and Development or Rio Earth Summit. Central to the long-­standing impasse in the climate change negotiations is the principle of “common but differentiated responsibilities and respective capabilities (CBDR).”3 The principle was derived from some early discussions on the concept of responsibility and subsequently the United Nations General Assembly Resolution 44/228 attributed historical responsibility for certain global environmental problems to developed countries. But it was the Earth Summit that clearly stated the CBDR principle, a key element in the UNFCCC as well as in many other multilateral environmental agreements. In recognizing the common responsibility of States to protect the environment, or parts of it, at the national, regional and global level as well as the need to take into account the different circumstances, particularly each State’s contribution to the problem and its ability to prevent, reduce and control the threat4 the multilateral process has tried to be fair. Furthermore, to strengthen global response to climate change, the Kyoto Protocol (KP),5 which stipulates differences in commitments between and among developed and developing countries, was adopted in accordance with CBDR. Fairness to all Parties in the UNFCCC and KP, both legally binding agreements, is addressed via the concept of historical responsibility. The Protocol, which is of great significance to developing countries endorsing differential

132   W.P. Hamzah treatment in their favor, has become contentious. Over recent years, it has been observed that a changing or evolving approach is taking place within the climate change regime.6 To recall, a number of the COP meetings have special significance because of the agenda or expected outcomes. Briefly, of the last five COP meetings, COP13 in Bali (2007), just after the release of the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report7 and culminating with the “Bali Road Map,” was considered a success. The Road Map was designed to launch a two-­year negotiation process for the second commitment period—“Kyoto Phase 2”—or a post-­2012 agreement. COP14, the following year, in Poznan, was then focused on building a foundation for the “Kyoto Phase 2.” Calls for a post-­2012 legally binding commitments to reflect the CBDR principle were heard. At the same time, statements that patterns of emissions and even capabilities have changed since the adoption of the Protocol in 1997 were also declared. But the high expectations for a post-­2012 agreement at COP15 in Copenhagen (2009) did not materialize and that the multilateral process had been hijacked to come out with the Copenhagen Accord was severely criticized.8 Interestingly, COP 16 in Cancun (2010), shifted in approach and instead of arriving at an agreement on a legally binding emissions target, it ended with a set of agreed initiatives called the Cancun Agreement. The agreement acknowledges that “adaptation must be addressed with the same priority as mitigation” and reflects greater support for developing countries in terms of adapting to the impacts of climate change and pursuing a low-­carbon pathway. The initiatives are of significance for the ASEAN region and will be explored later in the paper. The COP17 in Durban (2011), after extending negotiations beyond the scheduled deadline, concluded a set of agreements including the “Durban Platform for Enhanced Action.” The preamble to the Durban Platform notes with “grave concern” the gap between aspirational national emissions targets—declared in Copenhagen and Cancun—and the necessity for emissions to peak no later than 2020 to keep warming within the agreed target of “1.5°C to 2.0°C above pre-­industrial levels.” The 2°C level is that which is generally accepted to sustain life without irreversible damage. The Durban Platform is committed to launch a “process to develop a protocol, another legal instrument or an agreed outcome with legal force under the United Nations Framework Convention on Climate Change applicable to all parties” to come into effect from 2020. There was no reference to “equity” or to the “common but differentiated responsibilities.” The second commitment to the Kyoto Protocol, while questions remained, was extended. The beautifully crafted Durban outcomes presented challenges in the Bonn meeting in May 2012 when Parties began debating the agenda and addressing the issues. What is clear is that Parties have different perspectives on moving forward.9 The different perspectives could also be

Moving forward in policies and practices   133 observed within groupings of Parties such as within the G77 and China to which developing countries like Malaysia belong. What is also clear is that the multilateral process is so participatory and that the negotiations tend to take a longer time cannot be denied. But the issues are complex and the multilateral process, which not only follows the United Nations’ principles of transparency, inclusiveness, and equality but also decides on consensus, has often been challenged and the debates have been well documented.10 In view of the changing approach taking place within the climate change regime, this paper will explore implications for Malaysia in going forward to address climate change. It will also examine the existing regional mechanism, within the framework of ASEAN, in facing the challenges. Exercising goodwill and fostering trust will be needed in climate negotiations. For policy makers, climate change presents a “wicked problem”11 that has much wider social, economic, and cultural impacts and is so complex that attempted solutions seem to have created more challenges. Closer to the region, the impacts of climate variabilities are already being felt and managing extreme climate-­related events requires cooperation at all levels. Adaptation, which has been treated as a peripheral issue, must also be given priority because of the region’s vulnerability to and low level of preparedness for climate change events.

Facing the challenges of climate change Malaysia has experienced a remarkable economic performance with the economy projected to grow at an average annual growth rate of 4.2 percent annually between 2005 and 2030, with real Gross Domestic Product (GDP) increasing from US$300 billion in 2005 to US$843 billion in 2030.12 The rise in per capita income of its population has shown higher standards of living accompanied by rapid urbanization demanding greater energy services. The increasing population from 26 million in 2005 to 35 million in 2030—of which population growth rate is expected to be 1.3 percent per annum during the same period13—accompanied by increasing energy demand, will lead to challenges in terms of energy security and environmental sustainability. Malaysia’s final energy demand is projected to grow at 3.4 percent per annum, from 39.9 million tons of oil equivalent (Mtoe) in 2005 to reach 92.9 Mtoe in 2030.14 This is driven largely by the demand for coal and gas in the electricity generation sector and for oil products in the transportation sector. Malaysia’s attempt toward energy sustainability does not fare well in terms of indicators such as per capita energy consumption, energy intensity, carbon dioxide emissions per capita, or even the use of renewable energy. Domestic oil and gas supply has played a crucial role in the growth of the Malaysian economy. The combined oil, gas, and energy sectors represented approximately 35.91 billion USD or 19 percent of GDP

134   W.P. Hamzah in 2009.15 But after decades of production, Malaysia will need to take significant efforts to also tap from potentials in mature, smaller, and technically more complex fields for future growth. In terms of total primary energy supply for the country, the projection indicates an increase of 2.8 percent per annum from 65.9 Mtoe in 2005 to 130.5 Mtoe in 2030 with fossil fuel constituting more than 90 percent of supply.16 In parallel with Malaysia’s economic growth, electricity generation17 is expected to grow at an average annual rate of 4.7 percent, from 84.8 TWh in 2005 to 265.3 TWh in 2030. That the country’s economic growth is closely linked to increasing usage of electricity which is predominantly based on natural gas, will have serious implications. First, the domestic energy landscape has changed over the years. Not only are local gas reserves depleting but a heavily subsidized gas pricing has caused a strain on the gas supply infrastructure.18 However, the power sector will see a change with the government’s subsidy rationalization plans. Prices of gas will determine the future generation energy mix for the country and Malaysia is projected to show an increasing dependency on coal in electricity generation. Second, coal use—which is expected to grow from 27 percent in 2005 to 37 percent in 2030—will be largely imported and subjected to the vagaries of market price. Malaysia’s heavy reliance on fossil fuels must be managed judiciously in order to build a sustainable energy platform for growth and to address the challenge of greenhouse gas (GHG) mitigation. Malaysia, as a signatory to the climate change convention, submitted the Initial National Communication (INC) to the UNFCCC in 2000 and the Second National Communication (NC2) in 2011. For Malaysia, the total GHG emissions increased by 55 percent, from 144.3 MtCO2 in 1994 to 223 MtCO2 in 2000. Between 1994 and 2000, GHG emissions increased by 13 percent per GDP and 32 percent per capita. Also noted in the INC inventory for 1994, the energy sector contributed about 68 percent of the total GHG emissions. Within this sector, the power generation sector was reported to record the highest CO2 emissions at 47 percent followed by the transport sector at 28 percent.19 The NC2 similarly indicates that the highest emissions were again from the energy sector accounting for 66 percent of total emissions in 2000. (In terms of ranking by countries for CO2 emissions in 2008, Malaysia ranks twenty-­seventh—out of 216 countries—accounting for 0.69 percent of global total whereas in terms of CO2 emissions per capita, Malaysia ranks fifty-­first accounting 7.7 metric tonnes of CO2 per capita in 2008.20) Of concern are the implications of future GHG emissions. Although a higher contribution of the services sector to real GDP is expected to reduce GHG emissions in the future, Malaysia’s CO2 emissions from fuel combustion in the energy sector will still be high and projected to increase by 83 percent from 151 MtCO2 in 2005 to register at 339 MtCO2 in 2030.21 The electricity sector alone is reported to be the biggest contributor to the

Moving forward in policies and practices   135 growth in CO2 emissions, contributing about 42 percent of the total 2030 emissions.22 In this case, implications of aggressive energy-­efficiency programs or expansion of renewable technology will have to be further explored. But the transition itself will involve huge investments, technology, research and design, infrastructure, and institutional reforms not to mention suitable responses from various actors. Of equal concern for Malaysia is the transportation sector which is central to many economic activities. It is one of the most energy intensive sectors in the country, relying heavily on petroleum products—largely petroleum (54 percent in 2008) followed by diesel (32 percent in 2008).23 The sector covers a wide range from roads, railroads, and civil aviation to shipping, but road transport—consisting largely of automobiles, vans and two-­ wheelers—accounted for 36.5 percent of total energy use in 2008. This is reportedly high compared to the world average of about 20 percent.24 Moreover, the slow acceptance of hybrid vehicles and long-­standing consumer behavior could further increase emissions from passenger travels. Meantime, the Malaysian government has introduced measures to address price and subsidy adjustments of petroleum products including diesel, but the assessments on the ramifications of subsidy removal including those on the energy efficiency of the transport systems or energy consumption and carbon emission by vehicle-­type have been handicapped by available statistics.25 The total number of vehicles in the country has increased from about 5 million in 1991 to 19 million in 2009, registering an average annual growth rate of about 8 percent during this period.26 Within this same period, automobiles have shown the highest growth rate—an average annual growth rate of about 9 percent. This is followed by two-­wheelers at 7 percent and public transport modes (buses, taxis, and hire and drive cars) registering a much slower growth at about 5 percent. The increasing share of private modes is not surprising partly because of the promotion of the domestic automotive industry by the government as well as the subsidies that are still available for transport fuels. Greater motorization, increase in vehicle ownership as well as increase in vehicle-­kilometers travelled, do not augur well for energy and environmental sustainability. Furthermore, vehicle source pollutants—where emissions tend to be released and concentrated in areas with highest population density—will be harmful to human health.

Facing low-­carbon pathway Energy security is crucial in supporting Malaysia’s rapid growth trajectory. At the same time, there is also a growing recognition of environmental change posing risks to the economic growth of the country, to the health and welfare of people, and to the communities in general. Interventions across economic, social, and environmental spheres are not new to the

136   W.P. Hamzah country. But that the economy is very much linked to the global environment with the multidimensional challenges, Malaysia’s economy must undergo significant changes. Malaysia’s transformation into a high income, inclusive, and sustainable economy saw the release of the New Economic Model, the Tenth Malaysia Plan (10MP) a rolling plan covering the period 2011–2015, as well as the projects under the National Key Economic Areas (NKEAs). The approach, which will be carried out through the Economic Transformation Program (ETP), will give priority to the most vulnerable. Policies to provide social safety nets and other protective measures will cushion the most vulnerable from the impact of the changes—such as to ensure their accessibility to affordable cleaner energy. With policy measures of “sustainability,” “green growth,” and “energy efficiency” being incorporated in the broad range of initiatives articulated under the 10MP and in the ongoing ETP, issues of greater energy resource use and how Malaysia can decarbonize the economy are being analyzed. Some early assessments are already available on how Malaysia can execute a low carbon growth plan.27 Working toward a voluntary reduction target28 of up to 40 percent in terms of carbon emissions intensity of GDP by 2020 compared to 2005 levels, has witnessed Malaysia forging ahead with strategies to accelerate the transition into a low-­carbon and resource-­ efficient development pathway.29 The National Green Technology Policy to push for a low-­carbon economy, for example, was launched in July 2009. For the Green Technology Development, fiscal and financial mechanisms to support growth of green industries, enhancement programs, human capital development, research, and innovation, as well as awareness programs, are being provided. As a developing country, Malaysia will continue to adopt voluntary measures but Malaysia is not alone. Other developing countries including ASEAN member countries are taking similar moves especially after witnessing South Korea’s positive role in promoting a much broader concept of green growth as a national strategy.30 Furthermore, the economic crisis in 2008, saw many countries investing through their stimulus packages in green new deals for a low-­carbon future. Toward a greener Malaysia saw the restructuring of the energy sector through policy, technological, and economic innovations. One of Malaysia’s early policy initiatives to supplement conventional sources of energy, was to adopt low-­carbon technologies and hence the inclusion of renewable energy (RE) as the fifth fuel—the priority then was to address energy security and high oil prices. Specific RE targets to contribute to the energy mix during the Eighth Malaysia Plan (8MP) from 2001 to 2005 and the Ninth Malaysia Plan (9MP) from 2006 to 2010 did not materialize. But with greater awareness on carbon mitigation measures to combat GHG emissions as well as increasing concerns for energy security, concerted efforts to overcome obstacles—from financial, technical,

Moving forward in policies and practices   137 regulatory/institutional, to informational—hindering the growth of RE were identified and appropriate mechanisms have been proposed. The Feed-­in Tariff (FIT), a policy mechanism adopted by Malaysia and an equally “popular” policy tool adopted by some other ASEAN countries,31 needs to be briefly highlighted. FIT, whereby a fixed price is set (according to RE sources) for utility purchases of renewable energy, is reported to be the best single policy tool to improve efficiency on the supply side. But for FIT to be more effective, it must be combined with complementary policies such as the removal of subsidies for conventional energy sources, more accurate electricity pricing, and the provision of energy efficiency programs. Malaysia has the potential to improve energy efficiency on the demand side in the industrial, building, and transport sectors. Embracing the energy efficiency policy tools saw the Malaysian government taking the decision to introduce a regulatory approach to supplement the voluntary approach. In the past, Malaysia has been using persuasive approaches to promote energy efficiency improvement to bring in a voluntary behavioral shift among energy users. But there are emerging challenges not within Malaysia’s control, for example, the ongoing debate over border carbon adjustments designed to address competitiveness concerns and carbon leakage. Countries like Malaysia have been vocal against such moves, but at the same time must find ways to encourage local industry players to plan strategies early to avoid being caught unprepared. Accordingly, different strategies and actions have been identified. However, what must be recognized is that the actions must be approached across the board involving all stakeholders. To get a better understanding, a brief look at the energy institutional structure in Malaysia indicating fragmentation deserves some discussions (and see Table 7.1). The Ministry of Energy, Green Technology and Water (MEGTW) is in charge of policies related to electricity and gas supplies at reticulation ends. Promoting efficient use of energy, but limited to the electricity and gas supplies, is therefore the responsibility of MEGTW. To coordinate the issues of green technology and climate change between and across ministries, agencies, the private sector, and other stakeholders saw the establishment of the National Green Technology and Climate Change Council chaired by the Hon. Prime Minister. But one of the major attempts by the MEGTW is through the National Energy Efficiency Master Plan (NEEMP). The plan, carefully developed to stabilize energy consumption against economic growth as well as to address the issue of climate change, had been reviewed by the Peer Review Team from the Asia Pacific Economic Cooperation (APEC) and several of the recommendations were noted for consideration. That NEEMP should have a comprehensive coverage by including the transport sector as one of the recommendations by the Team is not surprising in view of the high energy usage. While clear targets and strategies—in terms of public transport improvement, green-­technology vehicles, and

Petroleum (oil and gas) • Privatization of the electricity supply industry i.e. Independent Power Producers (IPPs) • Nuclear energy • Electricity supply industry • Energy efficiency • Renewable energy Rural electricity supply

Prime Minister’s Department

Ministry of Energy, Green Technology and Water

Ministry of Rural and Regional Development

• Electricity in all states except in the state of Sarawak (technical including safety and economic issues) • Safety in gas sector (at reticulation stage). Safety in oil sector (up-stream and down-stream) • Natural gas prices • Price of petroleum products • Exploitation of coal resources • Licensing on petroleum processing activities • Atomic energy licencing

Energy Commission

Departmental of Occupational Health and Safety

Prime Minister’s Department (Economic Planning Unit)

Ministry of Domestic Trade, Co-operatives and Consumerism

State Governments

Ministry of International Trade and Industry

Ministry of Science, Technology and Innovation

Source: adapted from the Ministry of Energy, Green Technology and Water at: www.kettha.gov.my/en/content/government.

Areas of jurisdiction

Institutions

The economic and technical regulatory functions reside with the following institutions:

Areas of jurisdiction

Institutions

Policy making for the energy sector resides with the following institutions:

Table 7.1 Energy policy and regulatory responsibilities

Moving forward in policies and practices   139 Green Transport Plan—are already in place, the Peer Review reiterated the need for energy efficiency improvement needed for emission reduction in the transport sector as highlighted in the other two studies.32 The discussion on decarbonizing the transport sector will not be complete if biofuels are not mentioned. For the transport sector, any significant transition to biofuels that rely on a dedicated biofuel crop has raised questionable benefits relating to GHG emissions reduction.33 This is related to Malaysia’s other initiatives such as the issue of land-­use, land-­use change and forestry (LULUCF ), one of the strategies to reduce GHG emissions. LULUCF has already been assessed in the NC2 where findings indicated potentials for emission reduction through initiatives, including reducing the rate of forest conversion, reforestation or afforestation, improving the forestry sector, and agroforestry. Malaysia currently retains 55 percent of its natural forest and earlier adopted the sustainable forest management and for countries such as Malaysia, Indonesia, and even Brazil that have programs on biofuel production, there exists the potential for sharing of best practices. The challenges faced by Malaysia are immense. Pursuing a low-­carbon pathway can bring multiple benefits—aside from energy savings and the associated benefits of energy security, there are others such as improved health, increase in asset values, and opportunities for job creation. However, the transition to a low-­carbon growth, as highlighted earlier, is complex, requiring numerous changes affecting various sectors of the society. Moreover, the policy for investment, innovation, infrastructure to marketing, and promotion of technologies is largely anticipative in approach, implying taking the future into consideration. For developing countries like Malaysia, the transition requires cooperation at all levels with local and regional, as well as other international, partners. Currently in Malaysia, there are in-­depth studies to assess the costs and benefits of mitigation and adaptation options for climate change as well as to prescribe measures in line with national priority. In the case of adaptation, it is no longer an option but a necessity.

Facing adaptation and disaster risk reduction challenges The occurrence of extreme weather events resulting in damage due to severe flooding or prolonged drought in Malaysia has increased. Over recent years flash floods, strong winds, and waterspouts as well as prolonged dry periods have become more frequent. But Malaysia, situated just outside the “Ring of Fire,” is relatively more fortunate compared to some other ASEAN member countries that are exposed to hazards such as earthquake, volcanic eruption, and typhoon. Southeast Asia is reported to be one of the world’s most vulnerable regions to climate change because of its long coastlines, concentration of people and economic activities near coastal areas, and heavy reliance on climate-­sensitive sectors such as

140   W.P. Hamzah agriculture, fisheries, forestry, tourism, and natural resources.34 Natural disasters such as the Boxing Day Tsunami of 2004, Cyclone Nargis in 2008, Typhoon Ketsana of 2009, the 2010 “Triple Disaster” in Indonesia, and the more recent destructive 2011 floods in Thailand, resulting in loss of life and property, have only illustrated the vulnerability of the people to changing climate and changing environment. However, it is important to note that while climate change can exacerbate disasters in this region, disasters are the result of interaction of the hazard phenomena and vulnerability of people and property when exposed to the hazard. The manner in which climate change can impact and undermine the security of the people and the communities varies: multi-­impact—from health to economic productivity to political instability; multi-­subject— individuals and communities; multi-­scale—local to global; and multi-­ temporal—present and future generations.35 On the other hand, the ability to adapt to climate change is a function of a number of factors—the degree of support communities receive from the state, the effectiveness of the decision-­making process, the communities’ access to economic opportunities, and the extent of social cohesion within and surrounding vulnerable communities.36 States can and do play a critical role, creating conditions and providing people with the means to act so that the things they value are not adversely affected. Drawing from a review of climate change literature, the Asian Development Bank (ADB)37 2009 study indicates temperature increase projection of 2.1°C to 3.4°C by 2100 for Indonesia; 1.2°C to 3.9°C by 2080 for Philippines; for Singapore within a range of 1.7°C to 4.4°C; and for both Thailand and Vietnam about 2.0°C to 4.0°C by 2100. The ADB model projects temperature increase by as much as 4°C by 2100 under the worst case scenario of high emissions and sea level rise by 18 to 59 cm across the various scenarios of low to high emissions. The ADB study also indicates that water resources in Indonesia, Thailand, and Vietnam would be vulnerable to climate change and that millions in Indonesia, Thailand, and Vietnam would experience worsening water stress by 2050. In the case of agriculture, under worst case scenarios, where no measures are taken to control climate change, rice production could fall by 50 percent—by 2100 relative to 1990 level on average—in Indonesia, Thailand, Vietnam, and the Philippines. In the case of Malaysia, from the NC2, the regional climate dynamic modeling undertaken to evaluate the extent to which the climate will be influenced by climate change is one of the significant achievements— although uncertainties in model projections will need to be reduced. By downscaling global climate models,38 differences in terms of temperature and rainfall within Malaysia have been determined by institutions such as the National Hydraulic Research Institute of Malaysia (NAHRIM). (NAHRIM conducted its own climate change projections by downscaling global historical and climate change atmospheric databases developed by

Moving forward in policies and practices   141 the Canadian Global Climate Model First Generation at the scale of 9 km fine spatial resolution). Findings indicate projected temperature increase of 1.9°C in 2050 for Sabah (East Malaysia, situated in the island of Borneo), 1.6°C for Sarawak (also in East Malaysia) and 1.5°C degrees for Peninsular Malaysia.39 The other model, Providing Regional Climates for Impact Studies (PRECIS), which was developed by the United Kingdom Meteorological Office, has been downscaled at 50 km spatial resolution by the Malaysian Meteorological Department (MMD) to provide regional climates for impact studies40—here Malaysia collaborates with other ASEAN member countries to understand climate change impact and adaptation needs. Drawing from the NC2 using the climate modeling, the report indicates varying impacts of climate change. Oil palm yields could decrease by 30 percent should temperatures increase by 2°C above optimum levels (optimum annual temperature is 22°C–32°C). In the case of rice, an increase in daily temperature above 34°C will reduce potential yields. Although agriculture yields are influenced by other factors such as the type of cultivar, agricultural practices, and soil conditions; higher temperatures often trigger increased storm activity as well as rainfall intensity, resulting in flooding which is not at all conducive for agricultural production. While efficient drainage measures as well as studies examining newer breeds to withstand drought tolerance are being undertaken, the more important focus is to assess the suitability of adaptation options under the various simulation scenarios. The projections41 for Malaysia also indicate fluctuations in average annual rainfall pattern, from −5 percent to +50 percent for Peninsular Malaysia with the west coast of the Peninsula, which is more developed, getting a lesser percentage. For Sabah and Sarawak, a smaller fluctuation of −6 percent to +5 percent in terms of average annual rainfall pattern is projected. These fluctuations will impact on the water resources, and given that Malaysia’s water supply is largely from surface water, resources with ground water contributing around only 3 percent, more attention has been given to this sector. Also within this sector, the other impacts of climate change include on drainage systems and catchment management, as well as the safety of dams and reservoirs. Thus, climate change adaptation activity and emphasis has largely focused on the water sector, addressed through integrated approaches for water management. However, increased rainfall accompanied by increased flooding and landslides, which are more frequent in and around the Greater Kuala Lumpur area, are more often dealt with through infrastructure builds such as the “smart tunnel” to overcome urban flooding. That fluctuation in rainfall will affect public safety and well-­being in terms of diseases has certainly caught the attention of medical practitioners as well as various other planners and policy makers at the local and national levels. Several diseases including vector-­borne and food-­andwater-­borne diarrheal diseases are still endemic in the rural areas of

142   W.P. Hamzah Malaysia.42 While outbreaks are sporadic and are often associated with poor sanitation, increased flooding or prolonged dry periods, resulting in deterioration of water quality will only trigger more undesirable outbreaks. Of concern is the re-­emergence of malaria. While vector-­capacity modeling has been undertaken43—where a number of malaria cases are projected to increase by about 15–20 percent with an increase of 1.5°C to 2°C—there is a need to conduct more risk assessments on the possible impacts of climate change on health. Another area of public safety is equated with disaster risk reduction (DRR) actions. DRR measures closely overlap with climate change adaptation (CCA) initiatives, in that they have a common objective of reducing factors that contribute to climate-­related risks.44 Second, both approaches use similar tools—pro-­active anticipatory actions—to monitor, analyze, and address adverse impacts. Malaysia has demonstrated its commitment to reduce the risks of climate change and disaster through initiatives taken at both regional and international levels. Malaysia is an active partner in the regional effort through the ASEAN Agreement on Disaster Management and Emergency Responses (AADMER) and in the international effort through the Hyogo Framework for Action. While the strategic thinking regarding DRR has been initiated and institutional arrangements have been implemented, there is still a lack of synergy of efforts within the country. There is, in the first place, a need to integrate DRR and CCA in all national planning processes. But limited understanding of the concepts or desired outcomes such as dealing with uncertainty or defining acceptable levels of risks have proven to be barriers. Worth highlighting is the huge scope and opportunities for sharing and cross learning of experiences across the region. Concerns for the coastal areas and the well-­being of affected communities saw other achievements in the form of Coastal Vulnerability Index, Integrated Shoreline Management Plans, Enhanced Marine Park Management, and Inclusive Sustainable Island Development designed to assess vulnerability of populations, coastal developments, and related ecosystems.45 However, gaps identified such as knowledge transfer, integrated modeling information, or policy effectiveness studies will need specific initiatives to address the concerns. On the regional scale with the other ASEAN member countries, Malaysia is also involved in other activities including the Coral Triangle Initiative because of the importance of the ecosystem in providing livelihoods to the communities as well as in capturing and storing carbon. For Malaysia, it is also useful to look at ecosystem functions and the state of biodiversity to get another perspective of climate change impacts. A scoping study indicates Malaysia’s ability to absorb climate change impacts as a result of its strong environmental management program.46 However, climate variation is likely to exceed environmental thresholds where the ecosystems and habitats will not be able recover to existing

Moving forward in policies and practices   143 equilibrium and stable conditions. Biodiversity loss, for example, is extremely likely on examining the expected percentages of fauna that are vulnerable to ecosystem changes triggered by climate change—13.5 percent of amphibians, 5.8 percent of birds, and 5.4 percent of mammals are considered vulnerable.47 With forests as terrestrial storehouses of carbon, they play an important role in controlling the climate. Covering more than 50 percent of the country, the forestry sector also saw some achievements where protected forest areas and forest state parks have been expanded with the aim of enhancing natural adaptation processes of the forests. In addition, forestry management efforts undertaken will help in sustainable forest use as well as improving livelihood and food security of the people in time of climate variability.48 Although Malaysia introduced the National Policy on Climate Change49 and adopted a “precautionary principle” and “no regrets option” in addressing climate change, observations indicate that initial actions toward adaptation have been reactive. This is not surprising because the design and implementation of adaptation policies are site-­specific, complex, and require more local adjustments, not to mention the economic implications. Efforts in mainstreaming adaptation strategies into national development plans have not been easy. However, it is important so as to enable economic development to proceed in a sustainable manner and also to ensure the security of the people. The benefits will make certain that future projects are consciously aimed at reducing vulnerability as well as to ensure long-­term sustainability of investments.

Cooperation within ASEAN to address climate change Tackling the challenges of climate change will reinforce Malaysia’s international position. In the negotiation process, with the CBDR principle being “diluted,” there is now a strong pressure for the Non-­Annex I (developing) countries to initiate mitigation strategies in view of their increasing GHG emissions although per capita emissions are still low. Malaysia will need to search for new forms of collaboration within (and beyond) ASEAN especially if ASEAN member countries are to be drawn as a group to be more active in the climate change regime. However, to be able to do this it must be recognized that the ASEAN member countries are at different levels of development with different resource endowments, knowledge, skills, and governance structure. There are also differences in capacity and needs in addressing the impacts of and vulnerability to climate variability. While it is important for ASEAN member countries to craft their own initiatives to support their development aspirations, threats of climate change which have transboundary effects, as well as the sharing of common physical characteristics and systems within the region, merit the calls for regional cooperation.50 Furthermore, the declaration that ASEAN

144   W.P. Hamzah constituted “one ecosystem”51 recognizing that in principle environmental problems including climate change could not be adequately addressed solely within the domestic context further strengthened the need for a regional approach Within ASEAN, cooperative efforts on the environment started in the mid-­1970s when “environment” was integrated into the complex system of regional consultations following the Stockholm Conference on the Human Environment in 1972. Environmental issues slowly gained prominence aligning environmental concerns at the international level. Cooperation began with the First ASEAN Sub-­regional Environmental Program (ASEP-­1) in 1977 and subsequently other environmental programs52 followed. It is important to note that ASEAN’s approach to environmental management,53 stresses three norms: (1) non-­interference or non-­ intervention in other member states’ domestic affairs; (2) consensus building and cooperative programs preferred over legally binding treaties; and (3) preference for national implementation rather than reliance on a strong region-­wide bureaucracy. It must be reiterated that the approach follows the traditional “ASEAN way” of non-­interference. In addition, since ASEAN embraces the CBDR principle, it must ensure that member countries would carry out common and agreed measures or activities at the national level based on different levels of development and capacities of each member state. This is of course understandable in view of how the ASEAN institutional structure has evolved reflecting modest undertakings and according the highest priority to the preservation of national sovereignty. Regional efforts on formulating climate-­related policies could be traced back to ASEAN’s initiatives in 2003, when the heads of state/government of ASEAN member states declared that an ASEAN Community shall be established comprising three pillars namely political and security cooperation, economic cooperation, and socio-­cultural cooperation that are closely intertwined and mutually reinforcing for the purpose of ensuring durable peace, stability and shared prosperity in the region.54 A strong commitment to accelerate the establishment of an ASEAN Community by 2015 was made during the twelfth ASEAN Summit in 2007 through the Cebu Declaration on the Acceleration of an ASEAN Community. The vision of ASEAN Community that is “politically cohesive and peaceful, economically integrated and vibrant and socially responsible and caring”55 is an important one especially in terms of addressing climate change. The ASEAN Economic Community Blueprint (AEC)56 makes reference to climate change and emphasizes the importance of ensuring sustainable development while striving toward the establishment of the ASEAN

Moving forward in policies and practices   145 Community by 2015. Pursuing a sustainable economic growth as the way forward, the AEC notes the importance of securing energy supplies and curbing the energy sector’s contribution to climate change. But the more significant pillar for the advancement of climate change is the pillar based on the Socio-­Cultural Community. The ASEAN Socio-­Cultural Blueprint (ASCC), as part of the roadmap for an ASEAN Community, presents a plan for building a regional identity that provides priority actions in responding to climate change. The Blueprint focuses on enhancing cooperation at regional and international levels to address the impact of climate change on the socio-­economic development, health, and the environment based on the principles of equity, flexibility, respective capabilities, and common but differentiated responsibilities. While the Blueprints are well crafted, questions remain on how measures taken could be commensurate to what ASEAN has declared. That said, the intentions declared in the Blueprints are being addressed by the ASEAN member countries, in stages, but a more positive outcome is only possible if the establishment of the ASEAN Community is on the right track. Some early initiatives in the form of non-­legally binding declarations and statements were made as early as 2007. For example, the ASEAN heads of states recognized the climate-­change threat through the ASEAN Declaration on Environmental Sustainability at the thirteenth ASEAN Summit in Singapore. The concern was also reiterated through another declaration, the Singapore Declaration on Energy, Climate Change and Environment together with the East Asian Summit counterparts in November of 2007. It must be noted that the declarations made were immediately prior to Indonesia’s hosting of the COP13 to the UNFCCC. But from 2007, ASEAN saw other declarations made supporting climate change57 initiatives. Of significance is the ASEAN Leaders’ Statement on Joint Response to Climate Change to the seventeenth Session of the Conference of the Parties to the UNFCCC in 2011 where more detailed attention was given in terms of the needs of ASEAN in addressing climate change responses. It is also interesting to note that climate change has slowly crept into the energy policy within ASEAN. The new ASEAN Plan of Action for Energy Cooperation 2010–2015 containing three key initiatives—namely energy efficiency and conservation goals, renewable energy goals, and coal and clean coal technology—is clearly and voluntarily committed in ensuring that environmental issues and climate change are being looked into. To address the declarations made in the Blueprints saw other policy initiatives including the Multi-­sectoral Framework on Climate Change and Food Security (AFCC-­FS) formulated. The AFCC-­FS is designed to have a cross-­ sectoral approach to ensure food security by taking into account environmental sustainability, energy efficiency, and effective coordination of all parties involved. One of the major components is to include impact studies and risk assessments of climate change on agriculture, forestry, and fisheries.

146   W.P. Hamzah To facilitate regional response and cooperation, then saw the creation of the ASEAN Climate Change Initiative (ACCI). The ACCI was envisaged to be a consultative platform to further strengthen regional coordination and cooperation in addressing climate change and to undertake concrete actions to respond to its adverse impacts.58 Within the regional framework, the ACCI is supported by the ASEAN Working Group on Climate Change (AWGCC) and the scope of the ACCI will include policy and strategy formulation, information sharing, and capacity building, as well as technology transfer. That the ACCI is legally grounded in the ASEAN Charter,59 a legally binding agreement, is supposed to give it a clout—to enhance consultations and speak for its common interest. However, questions on the impact of ACCI on national climate change policies as well as its potential role in the climate change regime have been raised. A stronger ACCI backed by resources and greater support from ASEAN member countries has yet to materialize. For now, what can be observed is that the “ASEAN way” of non-­interference or non-­intervention may still act as impediments to the noble objectives of ACCI. Thus, while a regional consensus on the need to address climate change exists, the more advanced of the ASEAN member countries have taken the lead to move ahead cognizant of the climate change politics and debates going on at the international level. Moreover, many took note of the ADB’s estimate for the economy-­wide cost of climate change—where the results indicate that cost due to global warming to be significantly lower with GHG stabilization at 450–550 ppm, suggesting that the cost of no action and therefore the benefits of action could be significant for the four countries (Indonesia, Philippines, Thailand, and Vietnam) studied.60 Many could also see the opportunities arising from climate change and hence are taking the initiative to move to a low-­carbon economy. ASEAN member countries have considerable potential to undertake mitigation measures in various sectors including the energy supply and demand sectors. ASEAN has for some time acknowledged the need to mobilize investment in relatively cleaner generation fuels and in more efficient generation technologies. But this was not easy initially because of the subsidies and electricity pricing arrangements which were not supportive of new generation or transition investment. However, significant efforts have been made in Indonesia as well as in Malaysia in gradually reducing the subsidies and targeting the programs for the poor and the vulnerable. Energy efficiency improvement measures can be achieved at a relatively low cost or even a net negative cost through appropriate policies, identifying constraints such as policy, regulatory, and behavioral barriers or price distortions or information and knowledge/technology gaps.61 The important step is to assess the constraints and eliminate them accordingly. While mitigation options for the demand side, ranging from the transport industry to the residential and commercial building sectors62 are available for ASEAN, constraints such as technology and finance will have

Moving forward in policies and practices   147 to be addressed. Therefore, businesses must be on board with wider consultations to include industry, social entrepreneurs, and the banking sector. This involvement is crucial because innovations very often reside with the industry sector, while the financing options are with the banking sector and social entrepreneurs are the “change-­makers” that can help societies face the new challenges. This paper will not be complete if the following are not included. First, carbon dioxide capture and storage (CCS), which has its challenges, is a technology option for countries interested in continuing the use of fossil fuels. Also, for member countries using coal-­fired units, raising thermal efficiency to address the carbon emissions must be explored. While further improvements are also possible through the introduction of transitional technologies, there must be greater sharing of experiences and transfer of best practices within and from outside ASEAN. Second, the debates for nuclear power generation as part of the solution to meet rising demand deserve attention. Briefly, for nuclear power generation, the ASEAN region will need to address the legitimate concerns related to safety and reliability of nuclear energy as well as practices. But technological innovations—for example the thorium fueled, heavy water reactor whose fuel cycle is proliferation-­resistant as designed by India—present another option without the problem of safety and security prescriptions.63 Third, there are also concerns in maximizing the region’s hydroelectric potential. For ASEAN, which possesses quite extensive resources, greater attention and cooperation in hydroelectric power—considered clean and renewable—will be required particularly in addressing the environmental and social externalities. Fourth, for the trans-­ASEAN gas pipeline and the trans-­ASEAN power grid—projects proposed to ensure security of energy supply for the region—the political, legal, and institutional framework, as well as the technical standards must be looked into to allow a trading system to take place For ASEAN, the forestry sector has a lot to offer in terms of mitigation and adaptation to climate change. To a large extent the approach taken is greatly influenced by national policies and programs to prevent further degradation of forests and loss of biodiversity, and enhancing carbon storage. The various approaches, including reforestation and afforestation, early warning systems of dry spells to prevent forest fires, as well as reducing emissions from deforestation and forest degradation (REDD) initiative, have been well documented in the ADB study.64 The study indicates significant progress made in Indonesia, Vietnam, and Thailand but such measures do require huge investments An area that has received little attention but also highlighted in the ADB study is the technical potential to sequester carbon in agriculture. Southeast Asia has vast areas of croplands and through proper cropland management could offer the means to sequester carbon in soils. The agriculture sector could also contribute to a reduction of emissions such as from land use change or a reduction of methane emissions from rice paddies.65

148   W.P. Hamzah Mitigation is given considerable attention, especially in the early ASEAN climate change initiatives, but many have questioned the focus on mitigation having observed a number of ASEAN member countries that are already vulnerable due to their low level of preparedness. The ADB66 not only considers the region to be one of the world’s most vulnerable regions to the impact of climate change but also projects that the worst is yet to come. Decrease in rice yield and a rise in the price of agricultural products as a result of water scarcity has already been observed. Increased floods and storm surges are more frequent and competition from other land uses is already happening. As a developing region, a large number of the regional populace living along the coasts depend on natural resources for sustenance and livelihoods. For many, the main economic activities include tourism and fisheries but the security and well-­being of the community have been affected by the sharp rise in the frequency of extreme weather events. The UN 2007–2008 Human Development Report67 states that climate change is a massive threat to human development and in some places it is already undermining the international community’s efforts to reduce poverty. Adaptation has therefore gained attention within the region particularly in terms of reducing vulnerability and increasing the resilience of ecosystems, economies, communities, and individuals. Briefly, adaptation68 measures imply some adjustments which often depend not only on the physical or geographical location, but also on the level of social and economic development, existing level of capabilities, institutional support, and social organization of the society.69 To be able to respond appropriately, systematic assessment of possible risks in terms of time frame, scale, and frequency of impact as well as the degree of vulnerabilities must be carried out. For the ASEAN region, a “Climate Change Vulnerability Mapping for Southeast Asia”70 was conducted with the support of international organizations. Vulnerable areas identified include all regions of the Philippines; the Mekong Delta region of Vietnam and the Bangkok region due to exposure to sea level rise; almost all of Cambodia; North and East Lao PDR; west and south Sumatra; western and eastern Java. Discussions among some experts within ASEAN have also revealed other areas such as the central part of Vietnam, which is relatively less developed, The important issue here is the ability to adapt and it is the adaptive capacity that plays an important role in changing the spatial pattern of vulnerability. One interesting example of subregional cooperation within ASEAN that deals with climate change, through the conservation of protected areas and promoting of sustainable management of productive forests and sustainable land-­uses, is the Heart of Borneo (HoB) initiative, which started in 2007. The HoB initiative stretching along the borders of Indonesia, Malaysia, and Brunei has some of the most biologically diverse habitats on earth. Home to more than 16 million people, HoB is where those millions depend for agricultural products and forest produce. The HoB initiative is considered an achievement; giving initial option to governments and

Moving forward in policies and practices   149 communities in the three countries to develop the forest and terrestrial ecosystems in a sustainable manner. Programs and plans of action involving the three countries with the support of ADB have resulted in protecting, conserving, and sustainably managing the remaining forests and the adjacent areas.71 The HoB initiative was successful in halting the development of oil palm on the border of Kalimantan and Malaysia. However, to overcome the constant pressure and demand for oil palm and timber, more effort will be required to provide some form of incentive. At that time, REDD, a form of offset payments to preserve the forests and contribute to the reduction or capture of carbon emissions, was proposed. REDD is not without its problems, such as sustainability, but at that point in time, the idea for REDD to succeed and support the HoB initiative, some initial investment was put up for consideration—for example capacity building, and policies and measures to reduce and monitor deforestation. To complete the discussion on the HoB initiative, a climate simulation conducted within the HoB, suggests that occurrences of drought and forest fires may have an adverse impact on local livelihoods as well as the animal population, particularly the remaining orangutan population. Droughts associated with El Niño events/Southern Oscillation (ENSO)72 have become more frequent and have created conducive conditions for fires— initially started for land clearing—to spread, causing transboundary haze pollution. Inter-­state tensions are not uncommon whenever the smoke and haze affect neighboring countries. The ASEAN Agreement on Transboundary Haze Pollution (2002) was well crafted to address the issue and was considered an achievement but it has not been effective.73 Fraught with many shortcomings including the lack of mechanisms for sanctions and dispute settlement, the absence of an ASEAN judiciary to enforce regional laws, and the lack of any monitoring mechanisms, the Agreement has not been able to deal with the problem of forest fires and transboundary haze. Generally, sector-­specific adaptation measures have been undertaken within ASEAN especially where climate change impact is seen damaging, for example, water resources, agriculture, health, forestry, and coastal and marine resources. But the measures taken are reactive in approach and more often the implementation is autonomous and not well planned. The region needs a more proactive, systematic, and integrated approach to adaptation in the key climate-­sensitive sectors that will offer a more cost-­ effective and long-­term solutions. But how can ASEAN move forward in terms of creating resilience to climate change? A country’s resilience to climate change depends largely on its adaptive capacity74 and ASEAN should improve its adaptive capacity through appropriate policy intervention. As such, ASEAN will then need to look at the outcomes of the last two COP meetings, in particular COP16 where the adaptation section of the Cancun Agreement makes a priority of protecting the most vulnerable to the worst effects of climate change. The

150   W.P. Hamzah Cancun Adaptation Framework calls for countries to “enhance actions on adaptation” through “planning, prioritizing and implementing adaptation options” on a country-­driven approach. This is important for ASEAN member countries seeking to conduct research on vulnerability, adaptation, needs assessment, and sustainable development in their respective countries. Furthermore, ASEAN must take this opportunity to tap into the technical resources available within the Adaptation Committee as well as into the Green Climate Fund (GCF )—for both mitigation and adaptation measures—to help those who are most in need of assistance. This is where the ACCI can play a more pro-­active role. For example, the forestry sector is one of the largest contributors to GHG emissions in the region but it also supports the livelihood of some of the more vulnerable and marginalized groups. The ACCI—through the sharing of information and exchanging of best practices—can help member countries to take advantage of the initiatives offered by REDD Plus (REDD+, the extension of REDD which includes the role of conservation, the sustainable management of forests, and the enhancement of forest carbon stocks) initiatives which are important avenues for mitigating GHG emissions due to deforestation but equally important do not put the vulnerable or marginalized groups further at risk. Safeguarding the rights of the vulnerable and marginalized groups is observed, for example, in the UN-­REDD program in Indonesia. There was pressure on the Indonesian government to ensure that the implementation of REDD+ would not impede the local forest communities with loss of livelihood or displacement. The problems of corruption, poor law enforcement, and vested interests as well as close ties between logging companies and officials were reported to hinder the success of REDD+ implementation.75 To overcome such problems in forest governance, the application of monitoring, reporting, and verifying (MRV) initiatives reached in Cancun could prove useful. This is another area that ACCI can come in to support member countries in the MRV process. ACCI can therefore help to strengthen the region’s technical and institutional capacities to undertake carbon inventories as well as support to stepping up efforts in sustainable forest management. At the same time, ensuring that member countries effectively use the fund to implement projects—at the local, national, or regional levels—that appropriately address the physical and social vulnerabilities faced as a result of climate change will be a positive contribution from ACCI. There are, however, issues such as the modalities for the Adaptation Committee and Green Climate Fund to be resolved. Because of the level of development as well as the capacity, not all ASEAN member countries would be eligible to receive GCF support. Moreover, the assessment of a country’s vulnerability for the purposes of GCF funding can be a challenge in itself. But the region is highly vulnerable and ASEAN, through ACCI, may need to help member countries to look for other cooperative means.

Moving forward in policies and practices   151 Another important element is technology. Technology can also play an important role in adapting to climate change. Technology involving early warning systems, seasonal forecasting, flood defense mechanisms, and others in terms of improving infrastructure, are already available. There are yet others such as vector-­capacity modeling for the health sector or climate-­resistant crop varieties and genetically modified seeds that are drought-­proof for the agriculture sector. One major concern here is the issue of technology transfer. Developing countries have very limited access to many of these technologies. The Technology Mechanism established in Cancun may be able to give the international support for technology and in so doing be able to encourage further inter-­ASEAN cooperation and collaboration with the private sector in the development and transfer of technology. While ASEAN can provide the basis for regional collaboration and coordination, ultimately it is the national governments that must initiate appropriate measures and provide the necessary support for better adaptation. The national governments within ASEAN are aware of the adaptation needs but are also mindful of the limited availability of financial resources, experts, accurate information on the climate change scenario, technological options, and many others. Adaptation initiatives are therefore constrained and efforts taken so far have been largely through collaboration with international organizations. In general at the ASEAN level, there are still a number of actions that ASEAN can take to foster effective climate change responses. ASEAN may need to take a different approach, such as properly targeting the most vulnerable sectors of the society or safeguarding the rights and welfare of the vulnerable and marginalized, that will help to achieve a more integrated approach. In addition, such an approach will be more consistent with ASEAN’s people-­centered approach in ensuring social welfare and protection as well as justice.

Moving forward in the international climate change negotiations ASEAN member countries recognize the evolving change in the climate negotiations and although they have been involved in a number of mitigation and adaptation initiatives, they are not clear about what outcomes can be expected under the future regime. As seen from the discussions above, ASEAN as a region is addressing climate change, not through a policy mechanism, but through the framework of ASEAN community building. But the question is often asked—is ASEAN capable of having one strong voice in the international climate negotiations? ASEAN leaders have expressed their concerns and their commitment to address the challenges posed by climate change in the various declarations. But ASEAN’s traditional decision-­making process based on consensus and non-­interference

152   W.P. Hamzah has made it a divided group where consensus was not reached. ASEAN member countries belong to the Group of 77 and China (G77+China) which is the main coalition for developing countries. The general position of G77+China is to respect the CBDR principle and to insist on developed countries cutting their own emissions before requiring developing countries to do the same. But there are moves for a redefinition of developed and developing countries and there are also signs that ASEAN will have a stronger voice as a southern bloc within the G77+China. A stronger ASEAN voice will strengthen the position of the G77 grouping. The emergence of the BASIC countries, consisting of Brazil, South Africa, India, and China in 2009, saw a strong alliance within the grouping where these countries defined a common position on emission reductions and climate aid money. While arguing that “equitable access to carbon space must be considered in the context of sustainable development,”76 the BASIC countries have announced voluntary commitments as well as discussed the possibility of providing financial and technical aid to the poorer nations of the G77 grouping. It will indeed be a challenge for ASEAN to come out with a common position but for the sake of the 600 million habitants of ASEAN and with the recent developments such as greater openness for political decision-­making and multi-­stakeholder networking, ASEAN can have a stronger voice. Discussions within ASEAN do have potential, by providing inputs, to stimulate progress for developing countries in the climate negotiations. ASEAN needs to be pro-­active since the UNFCCC is the only multilateral process in which developing countries can be heard. Moving to the next step, some ASEAN member countries have in fact taken positions in the negotiating process. Singapore, the more wealthy and advanced among the developing countries, is in favor of voluntary commitments to reduce GHG emissions through “nationally appropriate mitigation actions” (or NAMAs) but such measures are to be made conditional on developed countries’ technology and financial support. Indonesia’s continued economic growth and resilience has enhanced its international reputation. But as one of the major GHG emitters amongst the developing countries, Indonesia has its eyes on the forest agreements and is also in favor of voluntary action. Malaysia and Thailand have articulated the argument for developed countries to take the lead in combating climate change and the associated adverse impacts as well as to provide developing countries with financial and technical support and, where appropriate, technology transfer. However, Malaysia, like its neighbor Indonesia, having made a voluntary commitment to the UNFCCC during COP 15, was reported to have placed national interest beyond that of ASEAN. How should the climate change regime evolve? There are many factors to be considered. The Kyoto Protocol is a highly centralized, top-­down agreement on climate change which has proven to be very rigid in its approach to reducing GHG emissions.77 Is there a likelihood for bottom-­up

Moving forward in policies and practices   153 diplomacy to emerge? Should a flexible system beyond the traditional top-­ down approach be an efficient way to move multilaterally in climate change? In other words, should bottom-­up approaches which envision the international regime as an aggregation of nationally and regionally defined programs put forward by countries on voluntary basis, rather than top-­ down approaches, in which governments negotiate more or less binding international commitments, be considered?78 There are also proposals of top-­down burden-­sharing architecture which still preserves the CBDR principle but eliminates the distinction between the so-­called Annex I and non-­ Annex I countries. There are benefits to both the top-­down and bottom-­up approaches and perhaps a combination may be a possible step forward. What is important is to be able to slow down the GHG emissions globally and to try meeting the 2°C target. Some early discussions have raised concerns that decisions made outside the UNFCCC process may have negative consequences on the legitimacy or credibility of the regime. However, it must be recognized that negotiations in smaller groups could lead to a more positive outcome which can then complement the multilateral process. Smaller group discussions can help in raising mutual awareness for specific regional problems, disseminating best practices and strengthening networking. Equally important, it can help to keep climate change concerns and cooperative frameworks on the agenda. Available for some time is the plentiful academic literature on possible ways to move forward to build the climate change regime. While several institutions such as the World Resources Institute79 have attempted to survey and capture the diverse interests and views, there have been limited attempts for a similar review within institutions of the ASEAN member countries. As such, there is a lack of discussion on bottom-­up approaches or alternatives such as the “Contraction and Convergence” principle supposedly to provide a more realistic way to improve the UNFCCC approach.80 What can be observed is that some advanced ASEAN member countries have conducted assessments, but of national interest, and subsequently made voluntary pledges—independently of ASEAN. Moving forward, there has yet to be an assessment on what an individual member country does within ASEAN and what ASEAN as a regional organization is hoping to achieve. The pledges are serious national political commitments indicating a significant shift from the business-­as-usual approach. The second observation is that while the bottom-­up approach (pledge and review) is commendable in that it stimulates national action, an initial concern among ASEAN member countries raised was the review component—the proposal that NAMA targets be legally binding and subjected to international consultation and analysis (ICA) as well as funding conditionalities. But moving forward means greater transparency required as indicated in the outcomes of the last two COP meetings. Moreover, increased transparency will help to encourage increased funding.

154   W.P. Hamzah The third observation is that governments of developing countries, including ASEAN, have started to incentivize the private sector to move forward to a green economy. Accessing funding and technology innovation will be critical and a robust low-­carbon growth plan must therefore be developed to secure international funding. At this juncture, it is still too early to assess whether the initiatives taken by some ASEAN member countries have resulted in more job creation or GDP growth. The fourth observation in facing the challenges is the issue of carbon footprint and carbon markets. The need to examine the carbon footprint of products, services, and events in any industry according to life-­cycle analysis and eco-­labeling approaches is not new. Such measures will send a signal to industry players that governments are looking for innovative ways to address climate change. For Malaysia, the oil palm industry is actively exploring global approaches in computing carbon balance.81 What is important is that the industry must ensure that the carbon credit offered in the market is real in achieving GHG reduction. The demand for measuring carbon footprints saw ISO standards bringing together a common set of rules to avoid inconsistencies. Moving forward, the ISO standards and guidance for the quantification of carbon footprint claims will be useful for industries within ASEAN to ensure sustainability. Destruction of rainforest and the much wider-­reaching consequences for the global climate and for biodiversity, saw another positive move. The REDD+ mechanism whereby international players in developed countries help to facilitate forest preservation in developing countries as part of the climate change mitigation strategies is being actively pursued. The expanded mechanism, which includes protecting local rights to forest resources, offers considerable potential but REDD+ costs and benefits must be explored carefully. The wider social and economic benefits including land-­use challenges for oil palm and food production will require careful analyses and to move forward wider consultation and cooperation with various stakeholders as seen in the Indonesian case will be an interesting case to follow.82 Developing country cooperation is equally important in moving forward. Cooperation, for example, in the development of more substantial climate data and analysis capabilities to project climate variability is essential. While data collection and analysis can be carried out at the national level, regional or international assistance will be useful in providing more detailed scientific data and climate information. Cooperation will also be useful in terms of advancing research and development, benchmarking or sharing of best practices as well as better understanding of the interlinkages between water, energy, and food sectors from the nexus-­ oriented approach as part of the solutions for a green economy. One final observation is the changing dynamics in the negotiating process. Countries tend to forge new alliances and one of the most recent

Moving forward in policies and practices   155 is the Like Minded Group (LMG) which has identified itself as a formal negotiating bloc under the UNFCCC. It consists of the Arab group, China, India, emerging Asian economies such as Malaysia and the Philippines. and some South American nations including Venezuela, Bolivia, and Cuba. Many are from the G77+China, and are still associated with the grouping, but such positioning is interesting to see. Groups negotiate what they perceive are their own group interests. Moving to the next COP18, the common goal should be in achieving environmental effectiveness. While symmetry is to be achieved through “applicable to all,” “legal force” has not got the same connotation as “legally binding.” The issue of CBDR is taken care of “under the UNFCCC” but CBDR and equity may be redefined to reflect the changing dynamics.

Concluding remarks The main challenge of the climate regime is how to accommodate the diverse interests of the countries concerned as well as to instill trust and understanding. The UNFCCC has been successful in serving as the main vehicle for engaging developing countries on climate change. While developing countries do recognize the challenge of tackling climate change, and have been willing to do more, national priority has be given accordance. The approach to climate change thus far for developing countries has depended and will continue to depend very much on the political commitment, economic progress, and other domestic realities. For these countries, the opportunity to develop is a fundamental right, anything that diminishes these opportunities will only perpetuate poverty and cause further disadvantages. As such, countries will react to the negotiations primarily from a national standpoint. For ASEAN member countries, in recognizing the need to address climate change mitigation and adaptation, they have accepted the challenges. The policy making is complicated by a number of factors such as huge investments in terms of research and development, infrastructure, human capital development, and knowledge building. Most importantly, the efforts taken by ASEAN should be supported at all levels—private, non-­governmental, and governmental. ASEAN provides a platform for cooperation. Enhancing regional support through dialogues, flow of information, exchange of expertise, or sharing of best practices can contribute to a better understanding and help to strengthen the ASEAN community. In view of the vulnerabilities, ASEAN cannot afford to wait for others to act. ASEAN must strike a smart partnership and exercise goodwill to turn around some of the intractable issues and come out with constructive solutions. It is important that ASEAN member countries understand the impact that climate change may have on their economies, the well-­being of people and the ecological systems. It only through this understanding that

156   W.P. Hamzah successful strategies on climate change responses can be crafted and implemented effectively. Furthermore, such understanding will enable ASEAN to tap and contribute to the pool of knowledge as well as make its voice heard at the international level.

Notes   1 Scientific, technical, and socio-­economic advice is largely channeled through the Intergovernmental Panel on Climate Change (IPCC). The IPCC has produced four multi-­volume Assessment Reports, the first in 1990, the second in 1995, the third in 2001 and the fourth in 2007. The fifth is to be completed in 2014.   2 The United Nations Framework Convention on Climate Change (UNFCCC)’s supreme body is the Conference of the Parties (COP), in which all states that have ratified the treaty are represented. COP met for the first time in March 1995 and on a yearly basis thereafter. The purpose of the UNFCCC is to provide a framework of governance for climate change.   3 Please refer to L. Rajamani “The changing fortunes of differential treatment in the evolution of international environmental law,” International Affairs 88: 3, 2012, 605–623; L. Rajamani “The principle of common but differentiated responsibility and the balance of commitments under the climate change regime,” Review of European Community and International Environmental Law, 9: 2, 2000,120–131 and The Centre for International Sustainable Development Law (CISDL)—A CISDL Legal Brief “The Principle of Common But Differentiated Responsibilities: Origins and Scope” for the World Summit on Sustainable Development 2002, Johannesburg, August 26.   4 This is considered as one of the fundamental elements of the principle of common but differentiated responsibility. Please refer to the Centre for International Sustainable Development Law (CISDL)—A CSIDL Legal Brief.   5 In 1997, the Third Meeting of the Conference of Parties (COP3) adopted the Kyoto Protocol (KP) which entered into force only in 2005 after a complex ratification process. The Protocol commits developed countries (or Annex 1 countries) to an aggregated emission reduction target of 5 per cent below their 1990 levels by 2008–2012 or the “first commitment period.” Developing countries (or Non-­Annex 1 countries) have no binding commitments under the Protocol and have stood firm for non-­binding targets for the second commitment period or post-­2012. Please refer to http://unfccc.int/essential_background/ items/6031. php.   6 Please refer to discussions by D. Bodansky “W[h]ither the Kyoto Protocol? Durban and beyond” Viewpoint, Harvard Project on Climate Agreements, online, August 2011, discussions by Rajamani, “The changing fortunes,” as well as discussions by R. Leal-­Arcas “Top-­down versus bottom-­up approaches for climate change negotiations: An analysis,” The IUP Journal of Governance and Public Policy, 6: 4, 2011, 7–52.   7 The IPCC Fourth Assessment Report (AR4) clearly shows stronger links between human-­induced emissions and increased global temperature and climate change. The IPCC has also estimated that global emissions reductions of 25–40 percent of 2000 levels are needed if global temperature fluctuations are to be maintained within the range of 2°C.   8 L. Elliot “COP15: A step forward or a step backward?” S. Rajaratnam School of International Studies RSIS Commentaries, December 24, 2009 and M. Khor, “The real tragedy of Copenhagen,” Economic and Political Weekly, 45, 1, 2010.

Moving forward in policies and practices   157   9 Please refer to P. Gass et al. Peering over the Ledge and Stepping Back (Again): The Bonn Climate Change Conference May 2012, International Institute for Sustainable Development IISD Briefing Note, June 2012. 10 Debates are captured by various authors including J. Jackson Ewing “From Kyoto to Durban: The fits and starts of global climate negotiations,” NTS Insight, February, Singapore: RSIS Centre for Non-­Traditional Security (NTS) Studies, 2012, and M. Khor, “Strange outcome of Cancun conference,” 2010, Third World Network, online. 11 “Wicked Problem” was coined by Horst Rittel and Melvin Webber in their article for Policy Sciences “Dilemmas in a General Theory of Planning” in 1973. Essentially, a “wicked problem” is a set of complex, interacting issues evolving in a dynamic social context—environmental degradation, terrorism, and poverty are some examples of “wicked problems.” Also please refer to discussions by Richard J. Lazarus “Super wicked problems and climate change,” Environmental Law and Policy Annual Review, 94, 2010, online. 12 Please refer to Asia Pacific Energy Research Centre (APERC) APEC Energy Demand and Supply Outlook, 4th edition, 2009 (please note PPP is at 2005 constant price). 13 APERC, 2009. 14 Op. cit. 15 Performance Management and Delivery Unit (PEMANDU), Prime Minister’s Department, Government of Malaysia Economic Transformation Program: A Roadmap for Malaysia, 2010 (Malaysia’s gross national income per capita in 2009 was US$6,700 or RM23,700). 16 APERC, 2009. 17 PEMANDU, 2010. In terms of electricity/power generation, by fuel type, natural gas is the major fuel used, and together with coal accounted for 92 percent of power production in 2009. Hydropower accounted for only 6.5 percent with others accounting for the remaining percentage for that year. Malaysia has three discrete power grid systems—West/Peninsular Malaysia supplied by Tenaga Nasional Berhad, Sarawak in East Malaysia by the Sarawak Electricity Supply Corp. (SESCo) and Sabah also in East Malaysia by the Sabah Electricity Sdn Bhd. 18 Malaysia’s natural gas, discovered thirty years ago, benefitted the power-­hungry industries of Japan, Korea, and Taiwan which drew up long-­term supply contracts. Malaysia’s main utility company, Tenaga Nasional Berhad (TNB) has been depending on natural gas for power/electricity generation. The future of the power sector, however, will see a change with the government’s commitment to subsidy rationalization plan which was initiated in 2010. 19 Y.  P. Leong et al. “Climate change challenges on CO2 emission reduction for developing countries: A case for Malaysia’s agenda for action,” The International Journal of Climate Change: Impacts and Responses 2: 4, 2011, 9–26. 20 Data collected by US Department of Energy’s Carbon Dioxide Information Analysis Center (CDIAC) for the United Nations. The data consider only CO2 emissions from the burning of fossil fuels and cement manufacture but not emissions from land use, land-­use change and forestry (LULUCF ). 21 Leong et al. “Climate change challenges.” 22 Op. cit. 23 Siti Indati Mustapa et al. “Energy efficient pathways for the transportation sector in Malaysia” 2011, online. The paper indicated that for the transport sector, usage of natural gas was minimal at 1.18 percent and of electricity at 0.09 percent. 24 Asia-­Pacific Energy Cooperation APEC Peer Review on Energy Efficiency in Malaysia, final report for the APEC Energy Working Group, 2011, online.

158   W.P. Hamzah 25 C. H. Leong, and S. Kennedy “Energy efficiency in the transport sector for the next 20 to 25 years” 2008 paper submitted to ISIS Malaysia for discussion and also please refer to Sustainable Development Initiatives (SUDI) “Lowering the heat: Low carbon sustainable development options for Malaysia,” CETDEM, 2012. 26 Please refer to Siti Indati Mustapa et al. “Energy efficient pathways.” The authors noted that the growth in the number of vehicles in the country has been much faster than the growth in population (average annual growth rate of 2.5 percent from 1991 to 2009). 27 Khazanah Nasional Berhad “Opportunities and risks arising from climate change for Malaysia” online, 2010. The analysis however does not give the methodology used. SUDI’s study “Lowering the heat” was constrained by cost and data availability. Also please refer to Endang Jati Mat Sahid et al. “Transition to sustainability: Energy demand and supply in Malaysia,” in Hezri and Hofmeister (eds.), Towards a Green Economy: In Search of Sustainable Energy Policies for the Future, ISIS, 2012. 28 The 40 percent conditional voluntary target announcement was made by the Hon. Prime Minister of Malaysia during COP15. 29 Various initiatives such as Low Carbon City Framework and Low Carbon Society are already in place. Other initiatives such as eco-­labeling and green procurement are being looked into. 30 The phrase “green growth” was first floated by the UN Economic and Social Commission for Asia and the Pacific much earlier but South Korea offers a broader concept to include sustainable development, poverty reduction and human development, green job creation, green technology dissemination, and energy security. The world saw South Korea, Asia’s fourth largest economy, pouring 80 percent of its $38billion stimulus program into green growth. Later, it committed 2 percent of its annual GDP over five years to the same national cause. 31 B. K. Sovacool “A comparative analysis of renewable electricity support mechanisms for Southeast Asia,” Energy, 35: 4, 2010, 1779–1793. A survey on policy tools for energy efficiency was carried out and the author concluded that for southeast Asian countries, while policy makers have numerous options for energy efficiency, the data collected indicates FIT as the best option. 32 Leong and Kennedy “Energy efficiency in the transport sector,” and the publication by Sustainable Development Initiatives (SUDI) “Lowering the heat” highlighted the need for energy data in the transport sector. 33 The majority of existing oil palm cultivation in Malaysia was converted from a previous crop such as rubber but further expansion of oil palm plantation will raise the question of new land clearing and removal of the carbon sink. 34 Please refer to IPCC Fourth Assessment Report (AR4) and Asian Development Bank (ADB) The Economics of Climate Change: A Regional Review, 2009, as well as the National Intelligence Council Conference Report, Southeast Asia and Pacific Islands: The Impact of Climate Change to 2030: Geopolitical Implications, a commissioned research report, 2009, Washington, DC, National Intelligence Council. 35 S. Khagram et al. “From the environment and human security to sustainable security and development,” Journal of Human Development, 4: 2, 2003, 289–313. 36 J. Barnett and W. N. Adger “Climate change, human security and violent conflict,” Political Geography, 26: 6, 2007, 639–655. 37 Asian Development Bank, The Economics of Climate Change. 38 General Circulation Models (GCMs) are the main tools used by scientists to project future climate change. These models simulate atmospheric and oceanic

Moving forward in policies and practices   159 circulations, as well as processes that occur on land. As a result, GCMs are very complex models, and they tend to have rather low spatial resolutions, on the order of 400 to 125 km. To obtain model information on the local and regional scales, such as for Southeast Asia, at higher resolutions than native GCM grid sizes, “downscaling” is used. Please refer to the National Intelligence Council Special Report 2009. 39 Government of Malaysia “Second National Communication to UNFCCC,” 2011. 40 Op. cit. 41 Please refer to Ahmad Jamallludin Shaaban “Malaysian climate change projections and potential impacts on water resources,” paper presented at the National Conference on the Impacts of Climate Change on Water Resources and their Consequence to Major Economic Sector, July 2011, Putrajaya, Malaysia as well as to Lee Jin and Lavanyer Rama Ayer “Position Paper on Malaysian Climate Change and Water Resources” paper delivered to the Academy of Sciences Malaysia for discussion, 2011. 42 Adaptation Knowledge Platform, Scoping Assessment on Climate Change in Adaptation in Malaysia, AIT-­UNEP RRC.A, October 2011. 43 Lee Jin and Lavanyer Rama Ayer “Position paper.” 44 J. Velasquez and Phong Tran “Climate Change Adaptation and Disaster Risk Reduction Institutional and Policy Landscape in Asia and Pacific” 2010. 45 Government of Malaysia “Second National Communication.” 46 Adaptation Knowledge Platform Scoping Assessment. 47 Government of Malaysia “Second National Communication.” 48 Please refer to the Government of Malaysia “Second National Communication” and Adaptation Knowledge Platform Scoping Assessment. 49 The National Policy on Climate Change was approved by the Cabinet in 2009. The policy provides the framework to mobilize and guide government agencies, industry, and consumers as well as other stakeholders and major groups in addressing the challenges of climate change in an effective and holistic manner. 50 K.  L. Koh and L. Bhullar “Adaptation to climate change in the ASEAN Region,” 2010, online. 51 The declaration that “The Ministers agreed to enhance cooperation to manage natural resources and to control transboundary pollution within ASEAN region as ‘one-­ecosystem’ ” was made at the First Informal ASEAN Ministerial Meeting on the Environment in 1994. 52 The Second ASEAN Subregional Environmental Program (ASEP-­II) for 1982–1987 and ASEP-­III for 1988–1992, adopted by the ASEAN environment ministers, articulated the regional policies on the environment but kept to the ASEAN procedures and norms—soft law declarations, resolutions, and primacy of national laws. The ASEAN Strategic Plan on the Environment (ASPE), in 1994, influenced partly by UNCED, particularly the Agenda 21, called for institutional strengthening, harmonization of goals and policy measures, and the importance of operational and technical cooperation including joint action. The Hanoi Plan of Action (1999–2004) to achieve the goals of ASEAN Vision 2020, was also designed to protect the environment and promote sustainable development. 53 K. L. Koh and N. A. Robinson “Regional environmental governance examining the Association of Southeast Asian Nations (ASEAN) Model” in Esty and Ivanova (eds.) Global Environmental Governance: Options and Opportunities, Yale School of Forestry and Environmental Studies, Falls Village, CT, 2002, 101–120. 54 Declaration of ASEAN Concord II (Bali Concord II), October 7, 2003.

160   W.P. Hamzah 55 ASEAN Secretariat ASEAN Socio-­Cultural Community Blueprint, 2009, online. 56 ASEAN Secretariat ASEAN Economic Community Factbook, 2011, online. The three Blueprints, the ASEAN Political-­Security Community Blueprint, the ASEAN Economic Community Blueprint and the ASEAN Socio-­Cultural Community Blueprint, were launched in 2009. 57 Declarations include: • ASEAN Declaration on COP13 to the UNFCCC and CMP3 to the Kyoto Protocol (2007). • ASEAN Joint Statement on Climate Change to COP15 to the UNFCCC and CMP5 to the Kyoto Protocol (2009). • Singapore Resolution on Environmental Sustainability and Climate Change (2009). • ASEAN Leaders’ Statement on Joint Response to Climate Change (2010). • other declarations also include the Joint Ministerial Statements of the East Asia Summit (EAS) Energy Ministers Meeting (The Joint Ministerial Statement of EAS Energy Ministers Meeting started in 2007 and the most recent, the Sixth, was in September 2012). 58 R. Letchumanan Climate Change: Is Southeast Asia up to the Challenge?: Is there an ASEAN policy on climate change? IDEAS reports, special reports, Kitchen (ed.) SR004, LSE IDEAS, London School of Economics and Political Science, London, 2010, online. 59 In 2007, the ASEAN Charter was adopted—one of the notes under the Preamble states “RESOLVED to ensure sustainable development for the benefit of present and future generations and to place the well-­being, livelihood and welfare of the peoples at the centre of the ASEAN community building process.” The Charter sets out, among others, principles and procedures for decision making, implementation, and dispute settlement. 60 The 2009 ADB study estimates the economy-­wide cost of climate change for the four countries—the results indicate that while the economy-­wide cost of climate change without global mitigation efforts is relatively low in the medium term, it rises significantly beyond that; by 2100, the economy-­wide cost each year on average could reach 2.2 percent of GDP if non-­market impacts related to health and ecosystems are included, and 6.7 percent of GDP if catastrophic risks are taken into account. This is more than double similar estimates for global average. 61 Zhuang, Juzhong et al. The Economics of Climate Change in Southeast Asia, Asia Security Initiative Policy Series Working Paper No 9, RSIS Centre for Non­Traditional Security (NTS) Studies, Singapore 2010. 62 For the industry sector, one of the ways to reduce CO2 emissions is through improvements in efficiency i.e., recycling of waste materials and changing product design, improved management practices such as energy audit and benchmarking, heat and power recovery, and fuel switching. For the building and residential sector, a variety of technologies are already available in terms of heating systems, lighting, appliances, and consumer products, as well as behavioral change. ASEAN member countries have stepped up their efforts to mitigate their emissions and this was well documented in the 2009 ADB study. 63 Please refer to discussions by U. Aswathanarayana et al. Green Energy Technology, Economics and Policy, Abingdon: Routledge/CRC Press, 2010. 64 Asian Development Bank The Economics of Climate Change. 65 Op. cit.

Moving forward in policies and practices   161 66 Op. cit. 67 United Nations Development Program Human Development Report 2007–2008—Fighting Climate Change: Human Solidarity in a Divided World, New York, UNDP, 2007. 68 According to IPCC “adaptation” means “adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderates harm or exploit beneficial opportunities.” Adaptation can be “autonomous,” taken autonomously by private actors in reaction to actual or expected climate change or “planned” when taken as a result of policy intervention. Adaptation can also be “reactive” in response to climate change impact or “anticipatory” in response to anticipated climate change. 69 Barnett and Adger “Climate change, human security and violent conflict.” 70 Arief Anshory Yusuf and H. Franscisco, Climate Change Vulnerability Mapping for Southeast Asia, Economy and Environment Program for Southeast Asia (EEPSEA), Singapore, 2009. 71 Asian Development Bank “Heart of Borneo initiative,” online, 2010. 72 ENSO consists of El Niño, a dry phase and La Niña, a wet phase. The complex atmospheric circulation exerts an influence over southeast Asia, suppressing precipitation during an El Niño event. Anomalous wind during this period “transports” smoke-­haze from Indonesia across the region northward to neighboring countries. The precipitation pattern and anomalous atmospheric circulation provides useful meteorological information. As El Niño itself is a predictable event, the information is relevant in mitigating the risk of forest fires and recurrence of haze pollution. However, there could also be other phenomena that could influence the haze episodes. 73 Please refer to A. K.-J. Tan, “The ASEAN Agreement on Transboundary Haze Pollution: Prospects for Compliance and Effectiveness in Post Suharto Indonesia,” New York University Environmental Law Journal, 13: 3, 2005, 647–722. 74 According to the 2009 ADB study, at a more fundamental level, a country’s adaptive capacity depends on the economic, social, and human development which are closely related to income, inequality, poverty, literacy, and regional disparity; capacity and governance of public institutions and public finance; availability of public services such as social protection and social safety nets; and capacity for economic diversification, especially at the local levels. There are wide variations across ASEAN and significant gaps between the region and the developed world which will have to be addressed by ASEAN. 75 J. Jackson Ewing, Forests, Food and Fuel: REDD+ and Indonesia’s Land-­Use Conundrum, Asia Security Initiative Policy Series No 19, Singapore: RSIS Centre for Non-­Traditional Security (NTS) Studies, 2011. 76 BASIC Joint Statement issued at the conclusion of the Fourth Meeting of BASIC Ministers, July 26, Rio de Janeiro, online, 2010. 77 C. Carraro et al. “Bottom-­up approaches towards a global climate agreement: an overview,” online, 2012. 78 Leal-­Arcas “Top-­down versus bottom-­up approaches.” 79 World Resources Institute Building the Climate Change Regime: Survey and Analysis of Approaches: Summary for Stakeholder Comment, online, 2011. 80 Takashi Sagara, “Are there realistic ways to improve the UNFCCC? An interview with Aubrey Meyer,” Climatico Special Features, online, November 2009. 81 K.  W. Chan, “Carbon footprint of Malaysian palm oil and future areas of research,” online, n.d. 82 Ewing Forests, Food and Fuel.

162   W.P. Hamzah

References Adaptation Knowledge, Platform Scoping Assessment on Climate Change in Adaptation in Malaysia, AIT-­UNEP RRC.A, Bangkok, October 2011. Ahmad Jamallludin Shaaban “Malaysian climate change projections and potential impacts on water resources,” paper presented at the National Conference on the Impacts of Climate Change on Water Resources and their Consequence to Major Economic Sector, Putrajaya, Malaysia, July 2011. ASEAN Secretariat, “The ASEAN Charter,” online, available at: www.asean.org/ asean/asean-­charter/asean-­charter, 2007. ASEAN Secretariat “ASEAN Socio-­Cultural Community Blueprint,” online, available at: www.asean.org/communities/asean-­socio-cultural-­community, 2009. ASEAN Secretariat “ASEAN Economic Community Blueprint,” online, available at: www.asean.org/archive/5187-10.pdf, 2009. ASEAN Secretariat “ASEAN Economic Community Factbook,” online, available at: www.asean.org/resources/item/asean-­economic-community-­factbook-2, 2011. Asian Development Bank, The Economics of Climate Change: A Regional Review, ADB, Manila, 2009. Asian Development Bank, “Heart of Borneo initiative,” formerly online at: www. adb.org/Environmental/adb-­hob.asp, 2010 Asia-­Pacific Energy Cooperation, APEC Peer Review on Energy Efficiency in Malaysia, final report for the APEC Energy Working Group, online, available at: www.apec.org/Groups/SOM-­Steering-Committee-­on-Economic-­and-Technical-­ Cooperation/Working-­Groups/~/media/Files/Groups/EWG/PREE_Guidelines. ashx, May 2011. Asia Pacific Energy Research Centre (APERC), APEC Energy Demand and Supply Outlook, 4th edition, online, available at: http://aperc.ieej.or.jp/ publications/ reports/outlook.php, 2009. Aswathanarayana, U., Harikrishnan, T., and Thayyib Sahini, K. M., Green Energy Technology, Economics and Policy, Abingdon: Routledge/CRC Press, 2010. Barnett, J. and Adger, W.  N., “Climate change, human security and violent conflict,” Political Geography, 26: 6, 639–655, 2007. BASIC (2010) Joint statement issued at the conclusion of the fourth meeting of BASIC ministers, July 26, Rio de Janeiro, online, available at: www.brasil.gov. br/para/press/press-­releases/july/joint-­statement-issued-­at-the-­conclusion-of-­thefourth-­meeting-of-­ministers-of-­the-basic-­group/br_model1?set_language=en. Bodansky, D., “W[h]ither the Kyoto Protocol? Durban and beyond,” Viewpoint, Harvard Project on Climate Agreements, online, available at: www.c2es.org/ docUploads/whither-­kyoto-protocol-­durban-and-­beyond.pdf, August 2011. Carraro, C., Egenhofer, C., and Fujiwara, N., “Bottom-­up approaches towards a global climate agreement: an overview,” online, available at: www.iit.upcomillas.es/gcs2012/download/contributed/Carraro_01.pdf, 2012. Centre for International Sustainable Development Law (CISDL)—A CISDL Legal Brief, “the principle of common but differentiated responsibilities: origins and scope” for the World Summit on Sustainable Development 2002, Johannesburg, 26 August. Chan, K. W., “Carbon footprint of Malaysian palm oil and future areas of research,” online, available at: www.palmoilworld.org/PDFs/Sustainable_Production/ Carbon­Footprint-of-­Malaysian-Palm-­Oil-and-­Future-Areas-­of-Research.pdf, n.d.

Moving forward in policies and practices   163 Declaration of ASEAN Concord II (Bali Concord II), October 7, 2003, online, available at: www.asean.org/asean/asean-­summit/item/declaration-­of-asean-­concord-ii-­ bali-concord-­ii. Elliot, L., “COP15: A step forward or a step backward?” S. Rajaratnam School of International Studies RSIS Commentaries, December 24, 2009. Endang Jati Mat Sahid, Adnan Hezri, Shahnaz Sharifuddin, and Leong, Y.  P., “Transition to sustainability: Energy demand and supply in Malaysia,” in A. A. Hezri and W. Hofmeister (eds.) Towards a Green Economy: In Search of Sustainable Energy Policies for the Future, Institute of Strategic and International Studies, Kuala Lumpur, 2012. Ewing, J. Jackson, Forests, Food and Fuel: REDD+ and Indonesia’s Land-­Use Conundrum, Asia Security Initiative Policy Series No 19, RSIS Centre for Non-­ Traditional Security Studies, Singapore, August 2011. Ewing, J. Jackson, “From Kyoto to Durban: The fits and starts of global climate negotiations,” NTS Insight, February, RSIS Centre for Non-­Traditional Security Studies, Singapore, online, available at: www.rsis.edu.sg/nts/HTML-­Newsletter/ Insight/NTS-­Insight-Feb-­1201.html, February, 2012. First Informal ASEAN Ministerial Meeting on the Environment in 1994: Joint Press Statement. Gass, P., Boyle, J., and Murphy, D., Peering over the Ledge and Stepping Back (Again): The Bonn Climate Change Conference May 2012, International Institute for Sustainable Development (IISD) Briefing Note, online, available at: www.iisd.org/pdf/2012/peering_over_the_ledge.pdf, June 2012. Government of Malaysia “Second National Communication to UNFCCC” 2011. Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4), online, available at: www.ipcc.ch/publications_and_data/ publications_ and_data_reports.shtml#1, 2007. Khagram, S., Clark, W. C., and Raad, D. F., “From the environment and human security to sustainable security and development,” Journal of Human Development, 4: 2, 2003, 289–313. Khazanah Nasional Berhad “Opportunities and risks arising from climate change for Malaysia,” online, available at: www.khazanah.com.my/docs/ KNB%20 CR%20Report%202010.pdf, 2010. Khor, M., “The real tragedy of Copenhagen,” Economic and Political Weekly, 45: 1, online, available at: www.epw.in/commentary/real-­tragedy-copenhagen.html, 2010. Khor, M., “Strange outcome of Cancun conference,” Third World Network, online, available at: http://twnside.org.sg/title2/gtrends/gtrends324.htm, 2010. Koh, K. L. and Bhullar, L., “Adaptation to climate change in the ASEAN Region,” online, available at: www.ucl.ac.uk/laws/environment/docs/hong-­kong/ Adaptation%20to%20CC%20ASEAN%20%28KL%20Koh%20AND%20 Lovleen%20Bhullar%29.pdf, 2010. Koh, K. L. and Robinson N. A., “Regional Environmental Governance Examining the Association of Southeast Asian Nations (ASEAN) Mode,” in Daniel C. Esty and Maria H. Ivanova (eds.) Global Environmental Governance: Options and Opportunities, Yale School of Forestry and Environmental Studies, Falls Village, CT, 2002, 101–120. Lazarus, Richard J., “Super wicked problems and climate change,” Environmental Law and Policy Annual Review, 94, 2010, 1153–1234, online, available at: www.lawschool.cornell.edu/research/cornell-­law-review/upload/Lazarus.pdf.

164   W.P. Hamzah Leal-­Arcas R., “Top-­down versus bottom-­up approaches for climate change negotiations: An analysis,” The IUP Journal of Governance and Public Policy, 6: 4, 2011, 7–52. Lee Jin and Lavanyer Rama Ayer, “Position paper on Malaysian climate change and water resources,” ASM Study Consultants, paper presented at the National Conference on The Impact of Climate Change on Water Resources and Their Consequences to Major Economic Sectors, Putrajaya, Malaysia, July 25, 2011, online, available at: www.nahrim.gov.my?index.php/en/news-­a-events/42pengumuman/383-muat-­turun-kertas-­perbentangan-qnational-­conference-on-­ the-impact-­of-climate-­change-on-­water-resources-­and-their-­consequences-to-­ major-economic-­sectors-putrajaya-­july-25-2011. Leong, C.  H. and Kennedy, S., “Energy efficiency in the transport sector for the next 20 to 25 years,” 2008, paper prepared for ISIS Malaysia for discussion. Leong, Y.  P., Siti Indati Mustapa, and Amir Hisham Hashim, “climate change challenges on CO2 emission reduction for developing countries: A case for Malaysia’s agenda for action,” The International Journal of Climate Change: Impacts and Responses 2: 4, 2011, 9–26. Letchumanan, R., Climate Change: Is Southeast Asia up to the Challenge?: Is there an ASEAN policy on climate change? IDEAS reports, special reports, N. Kitchen (ed.) SR004, LSE IDEAS, London School of Economics and Political Science, London, online, available at: http://eprints.lse.ac.uk/43572/, 2010. National Intelligence Council Conference Report “Southeast Asia and Pacific Islands: The Impact on Climate Change to 2030: Geopolitical Implications,” January 2010, Washington, DC, National Intelligence Council. Performance Management and Delivery Unit (PEMANDU), Prime Minister’s Department, Government of Malaysia “Economic Transformation Programme: A Roadmap for Malaysia,” online, available at: www.scribd.com/doc/ 40120654/The-­E conomic-Transformation-­P rogramme-A-­R oadmap-for-­ Malaysia-Executive-­Summary-Roadmap, 2010. Rajamani, L., “The changing fortunes of differential treatment in the evolution of international environmental law,” International Affairs, 88: 3, 2012, 605–623. Rajamani, L., “The principle of common but differentiated responsibility and the balance of commitments under the climate change regime,” Review of European Community and International Environmental Law, 9: 2, 2000, 120–131. Sagara, Takashi, “Are there realistic ways to improve the UNFCCC? An interview with Aubrey Meyer,” Climatico Special Features, online, available at: www.climaticoanalysis.org/wp-­c ontent/uploads/2009/12/tsagara_interview. pdf, November 2009. Siti Indati Mustapa, Tan C. S., and Leong, Y. P., “Energy efficient pathways for the transportation sector in Malaysia,” 2011, online, available at: www. uniten.edu.my/newhome/uploaded/admin/research/centres/iepre/2012/papers/ Energy%20Efficient%20Pathways%20for%20the%20Transportation%20 Sector%20in%20Malaysia.pdf. Sovacool, B.  K., “A comparative analysis of renewable electricity support mechanisms for Southeast Asia,” Energy, 35: 4, 2010, 1779–1793. Sustainable Development Initiatives (SUDI), “Lowering the heat: Low carbon sustainable development options for Malaysia,” CETDEM, Petaling Jaya, 2012.

Moving forward in policies and practices   165 Tan, A.  K.-J., “The ASEAN Agreement on Transboundary Haze Pollution: Prospects for compliance and effectiveness in post-­Suharto Indonesia,” New York University Environmental Law Journal, 13: 3, 2005, 647–722. United Nations Development Programme, Human Development Report 2007/2008, Fighting Climate Change: Human Solidarity in a Divided World, UNDP, New York, 2007. Velasquez, J. and Phong Tran, Climate Change Adaptation and Disaster Risk Reduction: Institutional and Policy Landscape in Asia and Pacific, SELA, Panama, 2010. World Resources Institute, Building the Climate Change Regime: Survey and Analysis of Approaches: Summary for Stakeholder Comment, online, available at: http://pdf.wri.org/moving_forward_summary_for_stakeholder_comment.pdf, 2011. Yusuf, A. A. and Franscisco, H., Climate Change Vulnerability Mapping for Southeast Asia, Economy and Environment Program for Southeast Asia (EEPSEA), Singapore, 2009. Zhuang, Juzhong, Supachol Suphachalasai, and Jindra Nuella Samson, The Economics of Climate Change in Southeast Asia, Asia Security Initiative Policy Series Working Paper No. 9, RSIS Centre for Non-­Traditional Security Studies, Singapore, 2010.

Conclusion Suh-­Yong Chung

Designing an effective climate change regime for the post-­2020 period warrants a sober assessment of the current regime to flesh out the important issues that need to be addressed. As the chapters in this volume demonstrate, the existing climate change regime has fallen short on several fronts. First, the way countries are grouped into Annex I and non-­Annex I countries has engendered a sense of injustice over how the emissions burden is shared. Many Annex I Parties contend that the current system has failed to take into account the recent changes in the economic landscape. They argue that since some developing countries, notably China and India, emit more than some of their developed counterparts—if not based on legally binding obligations akin to the ones accorded to Annex I Parties—they should take on more responsibilities to reduce greenhouse gases (GHGs). This could be particularly so as developed countries argue the principle of common but differentiated responsibility is a dynamic one, not a static one. However, advanced developing countries argue that such a proposal stands in stark contrast to the common but differentiated responsibility principle which has been the guiding principle of the UNFCCC. The ongoing impasse over how to share the burden has crippled the existing regime’s capacity to produce deeper cuts in emissions. Second, the current regime’s apparent centralized approach to reducing emissions does not encourage greater participation, particularly from the advanced developing countries. For instance, economy-­wide caps, of the type envisioned in the Kyoto Protocol, are seen by many developing countries as measures that would potentially constrain economic development. This widely held notion, alongside the limitations of the flexibility measures of the Protocol, underpins the need for the emerging treaty to incorporate more flexible approaches. This limitation has also been accentuated by the outcome of the recent UNFCCC meeting in regard to the second commitment period of the Kyoto Protocol which is supposed to deal with the economy-­wide caps of developed countries. Compared with the framework for the first commitment period under the Kyoto Protocol, the agreed scheme on the second

Conclusion   167 commitment period has been significantly weakened. In addition to the US, which did not participate in the first commitment period as an Annex I country, other important countries including Japan, Canada, New Zealand, and Russia have declared their unwillingness to participate in the second commitment period. This will result in a situation where the current top-­down approach can cover only approximately 16 percent of the total GHG emissions. Furthermore, the second commitment period has become longer. Because of internal reasons of some countries such as in the EU, the length of the second commitment period has become eight years, covering the years from 2013 to 2020. Third, in order to address climate change, efforts to curb GHG emissions should produce tangible results. Past efforts have primarily focused on agreeing on universal standards which then need to be implemented by the countries. Moreover, considering the fragmented nature of the international community, which lacks any centralized governing architecture, the implementation by international institutions will be different from domestic communities. Ignoring this unique characteristic of the international community has often resulted in problems of bringing about substantial results at the national level. Although China has become the largest GHG emitter now, it has worked on reducing GHG emissions in recent years. Its per capita GDP still remains lower compared with that of many of the advanced industrialized countries. It is expected that the Chinese economy will grow more and essentially require much more energy consumption. However, this does not necessary mean that China is not serious about addressing climate change problems. As demonstrated in Chapter 6 of this volume, China has made already significant progress in accommodating its environmental concerns during the process of its economic growth. From an institution-­building point of view, what we need is to develop an international institution that can encourage countries such as China to make their utmost efforts to address climate change at a level which they can accept domestically. Simply imposing burdens without having a strong enforcement mechanism would not work with many sovereign states.

Overcoming the constraints of the existing regime Central to the process of forging a new climate change regime is “effectiveness.” Mounting scientific evidence reveals that there is a gap between the current national and international efforts and the level of emissions reduction required by science. Bridging this emissions gap requires the emerging international architecture to improve its effectiveness. Considering obstacles that prevent global efforts to address climate change from bringing effective outcomes, more practical approaches may need to be considered.

168   S.-Y. Chung Bottom-­up approach as a means to overcome the limitations of the UN-­led climate regime Internationally specified and binding national targets and timetables have been unpopular in climate talks. This centralized, top-­down approach to addressing climate change has been criticized for underestimating Parties’ embedded political interests and for ignoring their different capabilities. More often than not, the prevailing top-­down approach produces international agreements that are divorced from political and economic realities. As illustrated in this volume, the concept of a low-­carbon development strategy (LCDS) could offer the emerging regime insights on how to address flexibility issues and engage reluctant Parties. By allowing countries to incorporate their mitigation efforts into their low-­carbon development plans, LCDS provides Parties with the ability to define not only their willingness to take actions but also how they implement them. Considering the difficulties in depending on the top-­down approach in order to effectively address climate change as demonstrated in the history of implementation of the Kyoto Protocol, a country-­driven bottom-­up approach will be in a better position to enhance the level of efforts of all the countries to reduce GHG emissions. There are several ways of incorporating this approach into the UNFCCC climate change regime formation process. One of the advantages of developing international institutions is to be able to have better coordination. Without an adequate coordination mechanism to ensure effectiveness, this approach would lead only to more fragmented and ineffective results. In this sense, common accounting rules on measuring, verifying, and reporting will become very critical. In order to ensure individual countries make their efforts according to their respective capabilities and national circumstances, sophisticated common accounting rules need to be developed, agreed on, and implemented by all the countries; a measuring methodology also needs to be developed and implemented by the countries. Equally important is to develop a way to recognize the efforts of individual countries; hence, a registry or other appropriate mechanism will also be crucial in order to recognize and incentivize individual countries in their respective efforts toward a low-­ carbon future. Finally, it will be important for the new climate change regime to be able to verify policies and other measures of individual countries during the process of implementing a low-­carbon development strategy. Legal formality Since the time when countries started to engage in the negations on establishing the UNFCCC, countries tended to devote a lot of their efforts and resources to agreeing on legal issues. However, many legal issues are not actually related to the issues of how to implement the agreed outcomes, but rather on what type of legal form they need to rely on.

Conclusion   169 In other words, no matter whether it will be legally binding or not, an agreed outcome can be incorporated into a kind of form of institutions. As demonstrated by one of the authors, there are certainly merits for countries to agree on a legally binding instrument, usually as a form of treaty. Having a legally binding instrument will increase transparency and predictability of the agreed outcome of the countries. This will provide better guidance on what they have to do to related actors including not only the governments but also private sectors. This will, of course, have a better chance to increase effective implementation of the agreements. In practice, there often seems to be confusion between the issues of legal formality and approaches. In the context of designing the post-­2020 climate change regime, there are different ways of addressing climate change problems, including relying on imposing binding obligations to reduce GHG emissions and promoting country-­driven voluntary efforts to address climate change issues nationally through different means such as the evolution of low-­carbon development or low-­carbon green growth policies. Although a top-­down approach tends to go together with considering a legally binding form such as a treaty, measures based on the bottom-­up approach can be incorporated not only into a legally binding form of instrument but also into a form of non-­legally binding instrument. In other words, it may not be the ultimate goal to design a post-­2020 climate change regime which will have a legally binding formality but not be effective. The future regime must be designed to incorporate approach(es) which will ensure effective results, considering some benefits of having a legally binding form.

Agendas for future research Role of international law in climate change regime building Looking at the history of the development of international law, it has focused on state-­centric and legally binding norm-­based issues. Naturally, discussions on how to address global issues such as climate change have been made in line with how to utilize the Westphalian system-­based norms which have legally binding effects. Based on the identified degree of responsibility, some of the countries have to take more legal obligation in terms of reducing GHG emissions. This approach assumes the availability of monitoring and enforcement mechanisms so that adequate compliance can be ensured. However, consensus-­based rules of the UNFCCC tend not to be stringent. More importantly, the UNFCCC regime seems to be reluctant to enforce its rules on those countries which are not willing to implement those rules. It is also questionable for the UNFCCC regime to have effective enforcement mechanisms in its hand. Other factors have also raised issues regarding the effective role of international law. Non-­state actors are becoming more important in terms of

170   S.-Y. Chung implementing the rules as well as securing required resources for addressing climate change. The Kyoto mechanism has tried to develop an innovative scheme to ensure adequate implementation of the mechanism by developing more room for the private sector to participate in the process of implementation of the mechanism. However, it is still not enough for the UNFCCC regime to get relevant non-­state actors involved in its process. Indeed, a series of intensive and innovative efforts need to be made to address these challenges. One of the immediately available options is to encourage the utilization of soft law instruments. Since the Stockholm Conference in 1972, international law has slowly increased its consideration on the issues related to soft law. Declarations, Memoranda of Understanding to enhance cooperation between states on addressing environmental challenges, COP decisions, and other non-­legally binding instruments have often been used to accommodate the participation of various considerations and to avoid unnecessary confrontations which could occur during the processes of treaty negotiations at the international level and treaty ratifications at the domestic level. It is important to note that this phenomenon was not developed to replace the process of treaty making but to avoid situations where no agreement could be reached. In addition, it is often thought that this process could enhance the overall effectiveness of a regime if adequate agreements on substantive and procedural issues could be contained, based on the appropriate level of political will of the stakeholders including non-­state actors. Ultimately, all this endeavor will lead to a point on how to reconstruct the Westphalian international law order which can reflect the changing nature of the global community. To veer away from the Westphalian state-­centric conceptualization of the international law order is to present an opportunity to accommodate bottom-­up approaches to climate change that largely emphasize the crucial role that non-­state entities play in mitigating climate change and its adverse effects. Building an effective climate change governance Traditionally, global efforts to address climate change have primarily revolved around the UNFCCC regime, but the cross-­cutting nature of the climate challenge and the diversity of national interests have created an environment that makes it difficult to forge a comprehensive climate regime. This difficulty is evident in the existing climate change regime which is neither integrated nor comprehensive. Rather, it is characterized by the diversity of actors and of institutional arrangements.1 Beyond the UNFCCC process, smaller forums such as the Major Economies Forum and the European Union have become increasingly vital in complementing

Conclusion   171 the UN track by providing an avenue for like-­minded states to agree on strategies to address climate change. In the realm of climate finance, the G20 and the Green Climate Fund have been vital in mobilizing financial resources to support projects or programs particularly in developing countries to reduce emissions. The conglomeration of rules, mechanisms, and institutions renders climate change governance highly complex. The utility of this fragmented arrangement lies in its capacity to reduce costs and in the degree of flexibility that the non-­hierarchical governance framework provides to not only states but also to crucial non-­state entities. Since the UN-­led negotiations is riddled with issues concerning opposing beliefs on the responsibility for damage and the perceived limitations of the UNFCCC to address all the aspects of the climate challenge, the climate change regime complex is seen to persist. In the absence of an overarching political authority, the overriding challenge for the international community is how to facilitate all these efforts to produce substantial results in responding to climate change. Issue of sovereignty In addressing transboundary problems, the tendency of states to utilize national sovereignty as an excuse to justify their non-­compliance to international norms or institutional arrangements has been a common narrative in the discourse of global governance. In the course of crafting an international agreement on climate change, infringement upon national sovereignty has been a thorny issue. In particular, the centralized, top-­down approach that has been the primary one taken by the UNFCCC regime has often run into opposition from Parties. Countries, particularly developing countries, have relentlessly expressed their disagreement over imposing internally defined targets and timetables as they perceive them as a violation of their prized national sovereignty. Not only does a treaty-­based economy-­wide cap require countries to commit to internationally agreed emission goals, but it also entails that countries relinquish some of their national sovereignty. At the crux of this issue is the difficult task of striking a balance between upholding national sovereignty, and efficiency. This issue has broader implications for the study of global governance and sovereignty. It is vital to note that global problems such as climate change go beyond the capacity of states and warrants the involvement of non-­state actors. A monolithic, indivisible conceptualization of national sovereignty necessarily reinforces a state-­centric international system as states would interpret relegating some of their sovereignty to non-­state actors as something that necessarily renders them less of a state. This zero-­sum view on the relationship between national sovereignty and global governance inevitably hinders any form of cooperation at the international level.

172   S.-Y. Chung Thus, innovative ways to understanding the concept of national sovereignty might offer more insights on how to overcome the constraints of sovereignty in order to build a more effective global governance structure. A prime example is Stephen Krasner’s (1999)2 disaggregation of the concept of sovereignty. He argued that the practice of sovereignty is one characterized by organized hypocrisy which refers inconsistent, often contradictory behavior exhibited by states in the practice of national sovereignty. However, the question of how to reconfigure the concept of national sovereignty in a way that permits the blossoming of a more holistic and inclusive international system remains unanswered. Such an endeavor will have profound implications for the international effort to address common global problems such as climate change.

Notes 1 For scholars such as Keohane and Victor (2010), climate change is governed by a regime complex with the most visible efforts centered around the UNFCCC. It involves various institutional elements and initiatives without an overarching architecture that structures the whole set. 2 He argued that in practice sovereignty has four different meanings: domestic sovereignty (refers to the exercise of internal control), interdependence sovereignty (refers to the ability of states to regulate transborder flow), international legal sovereignty (refers to the international recognition accorded by other states), and Westphalian sovereignty (refers to the right of non-­interference by external actors).

References Keohane, Robert O. and David G. Victor, “The Regime Complex for Climate Change,” Belfer Center for Science and International Affairs, Harvard University, Discussion Paper 10-33, online available at: http://belfercenter.ksg.harvard. edu/ publication/19880/regime_complex_for_climate_change.html?breadcrumb= %2Fpublication%2Fby_type%2Fdiscussion_paper%3Fgroupby%3D0%26filter %3D2010%26page%3D3, 2010. Krasner, Stephen, Sovereignty: Organized Hypocrisy, Princeton, NJ, Princeton University Press, 1999.

Index

Page numbers in italics denote tables, those in bold denote figures. Ad Hoc Working Group on Further Commitments for Annex-I Parties 52 Ad Hoc Working Group on Long-Term Cooperative Action (AWG-LCA) 52 Ad Hoc Working Group on the Durban Platform (ADP) 2, 4, 56, 59 adaptation 23–5, 132; ASEAN countries 148; Malaysia 139–43 Adaptation Committee 150 adaptation-friendly contexts 24–5 adaptation projects 24 adaptive capacity 149–50 advanced developing countries: context and overview 48–9; greenhouse gas (GHG) emissions 3; legal framework 55; low-carbon development strategy (LCDS) 59–60; post-2012 climate change regime building 49–56; summary and conclusions 65; see also China Africa, water stress 37 agriculture: ASEAN countries 147; China 120 aid, unmet commitments 39–40 allowance trading 101, 106–7 ASEAN Agreement on Disaster Management and Emergency Responses (AADMER) 142 ASEAN Agreement on Transboundary Haze Pollution (2002) 149 ASEAN Climate Change Initiative (ACCI) 146, 150 ASEAN countries: adaptation 148; Adaptation Committee 150; adaptive capacity 149–50; agriculture 147; climate change negotiations 151–5; cooperation 143–51, 154; diversity

8–9; electricity 147; energy policies 145–6; environmental management 144; environmental programmes 144; forestry 147; gas 147; hydroelectric power 147; mitigation actions 146–7; non-legally binding declarations 145; nuclear power 147; subregional cooperation 148–9; summary and conclusions 155–6; technology 151; vulnerability 148; see also Malaysia ASEAN Economic Community Blueprint (AEC) 144–5 ASEAN Socio-Cultural Blueprint (ASCC) 145 Asian Development Bank (ADB) model 140, 146 assessment, low-carbon development strategy (LCDS) 63 Bali Action Plan 59 Bali Road Map 1, 4, 52, 132 BASIC countries 152 behavior change 75, 78 biodiversity, Malaysia 142–3 black boxes, governments as 14 Bonn MOP 132 book, structure 6–9 bottom-up approaches 57, 153, 168 Brazil, National Plan on Climate Change 60 brown growth, vs. green growth 87–8 building design, China 121–2 buildings, efficiency improvement 118–19 burden-sharing impasse 96 Cancun Accord 42, 59, 132

174   Index Cancun Adaptation Framework 150 Cancun COP 43, 45, 69–70, 132 capabilities, and international cooperation 17–18 capacity payments 76 carbon dioxide capture and storage (CCS) 147 carbon dioxide (CO2), and global warming 10–12 carbon footprint 154 carbon markets 154 carbon price support 76–7, 78 carbon prices, political acceptability 89 carbon pricing 75 carbon sequestration 147–8 Cebu Declaration 144 centralized approach 166 change 23–6 China 8; 11th Five Year Plan 112, 121; 12th Five-Year-Plan 127–8; achievements 126–7; administration 126; agriculture 120; backward capacity 126; building design 121–2; challenges 127–8; coal consumption 114, 115; context and overview 112; costs of energy saving and emissions reduction 124–5; decarbonization 113–20; economic growth 127, 167; economic reform 112; efficiency improvement in buildings 118–19; emissions vs. emissions intensity 123–4, 125; energy consumption 124; energy intensity 112–13, 114; energy intensity and CO2 emission intensity of the manufacturing industry sector 117; factors contributing to low-carbon development 120–3; forestry 120; fossil fuels 114; greenhouse gas (GHG) emissions 52–3, 115–16, 167; growth rate of light industry 113; industrialization 127; infrastructure 121–2; institutional development 122–3; international cooperation 123; low-carbon development, characteristics 123–6; manufacturing industry 116–18; non-fossil energy generating capacity 116; non-fossil energy sources 114–16; opportunity cost 126; policy innovation 122; poverty alleviation 127; power generation 114–16; renewable energy 126; scale and effectiveness 124; technical and infrastructure

foundation 121; transportation 119, 121; urban planning 121–2 China National Climate Change Plan 59 civil society, and international treaty 36–7 Clean Development Mechanism (CDM) 19, 36 climate change: probable extent 23; responses to 69–71; threat from 40; unpredictability 25 climate change adaptation (CCA) 23–5; ASEAN countries 148; Malaysia 139–43 climate change negotiations: ASEAN countries 151–5; dynamics of 154–5; smaller group discussions 153 climate change regime: bottom-up approaches 153, 168; burden sharing 49–51; challenges 131–3; complexity 48; country grouping 53–4; enhancing effectiveness 2–3; equitable and effective 100–1; flexibility 3–4; legal framework 54–5; overcoming constraints 167–9; post2012 regime building 49–56; potential evolution 152–3; two-track approach 52–3 climate change regime building, failure of 49 “Climate Change Vulnerability Mapping for Southeast Asia” 148 climate modeling 140–1 climate negotiations: achievements 42–3; conduct of 41–2; difficulties 38–42 climate policy, framework 69 climate regime, current 2 clubs approach 27–8 coal consumption: China 114; China vs. Japan 115; Japan 114 coal-fired power generation, China 115–16 collaboration, technology policy 20–3 COMETR project 82 common but differentiated responsibility 48, 49, 54–5, 131–2, 143, 144, 153, 155 Conferences of the Parties (COPs): achievements 42–4; composition of 36; legal instruments 4; see also Cancun COP; Copenhagen COP; Doha COP; Durban COP; Poznan COP

Index   175 consumption, tracking 102 Contract-for-Difference 76, 77 cooperation 27; ASEAN countries 143–51, 154 Copenhagen Accord 2, 15, 24, 42–3, 69–70, 132 Copenhagen COP 42–3, 59, 132 Copenhagen Principles 42 country grouping 53–4, 166 credibility 153 cross learning 142 Daly, H. 72 decarbonization: China 113–20; United Kingdom 92–5 decoupling 72 deep offshore wind energy 93 deforestation 70 deforestation and forest degradation (REDD) 147, 149 deforestation and forest degradation (REDD+) 70, 150, 154 developing countries: mitigation actions 1; unmet obligations and commitments to 39–40 development aid 6 diplomacy: central task of 29; failure of 10; gap between policy and implementation 14–15; mythology of 13 diplomatic strategy, redesign 26–9 diplomatic toolbox 6, 26 disaster risk reduction (DRR), Malaysia 142 disease risks, Malaysia 141–2 Doha COP 43 droughts 149 Durban COP 40, 42, 43, 45, 68, 70, 132 Durban Package 42 Durban platform 56–7, 70–1, 132 economic change 39 economic growth: China 127, 167; and emission reduction 7; green growth and environmental sustainability 71–2; Malaysia 133–4 economic instruments 75 Economic Transformation Program (ETP) (Malaysia) 136 economy as a subsystem of the biosphere 73 ecosystem functions, Malaysia 142–3 education and information instruments 76

effectiveness 2–3, 167–8 efficiency improvement, in buildings 118–19 electricity market reform (UK) 76–7 emergency plans 25–6 emission control policies, bottom-up emergence 13 emission debt 100 emission reduction, and economic growth 7 emission regulation 14–20 emission targets 69 Emission Trading Scheme 18 emissions allowance system, per-capita emissions allowances 107–8 Emissions Performance Standard 76 emissions rights: Kyoto Protocol 97–100; post-2012 treaty 97 emissions rights and commitments 98 emissions tracking 101–9 emissions trading 36 energy, and information technology (IT) 22–3 energy consumption: China 124; Malaysia 133–4; reduction 95 energy diversification 40–1 energy efficiency 13, 78; ASEAN countries 146; Malaysia 137 energy infrastructure 11–12 energy intensity 112–13; China 114 energy intensity targets 69 energy policies: clarity 35; inconsistency 35; predictability and stability 33–5 energy policy and regulatory responsibilities Malaysia 138 Energy Technology Systems Analysis Program (ETSAP) 80 “engineer’s myth” 13–14 enhancing effectiveness 2–3 enthusiastic countries 17–18 environment-degrading growth, vs. sustainable growth 87–8 environment management 25 environmental/ecological tax reform (ETR), 81, 81–7; effects on GHG emissions 82, 83, 85; GDP and GHG emissions 85; as key policy 88; results in PETRE project 84 environmental sustainability: costs of 77–88; economic growth and green growth 71–2; and politics 75–7; politics of 88–9 equity, per-capita emissions allowances 106

176   Index EU Emissions Trading System (ETS) 77 European Union: emission reduction commitment 33; Emission Trading Scheme 18 extinction 25 extreme weather events 139–40 fallacies, technology policy 22 Fast Start Fund 62 feed-in tariffs (FIT) 76, 77, 137 financing, of low-carbon strategies 6 flexibility: climate change negotiations 153; climate change regime 3–4; international agreement 6; international treaty 35–6 forest degradation 70 forestry 154; ASEAN countries 147; China 120; Malaysia 143 fossil fuels: Africa 39; China 113, 114; costs of 41; greenhouse gas (GHG) emissions 100; Malaysia 134; prices 85; use of 11 Framework Convention on Climate Change 45 funding: low-carbon development strategy (LCDS) 62–3; research development and deployment (RD&D) 88–9 future research 169–72 G77+China 152 GDP and domestically produced emissions indices 74 GDP percentage changes – UK MARKAL MACRO 81 geo-engineering 25–6 geopolitics 11 geothermal energy 93 global agreements 13 global economy, and country grouping 53–4 global emissions reduction target, Kyoto Protocol 95–6 Global Green Growth Institute (GGGI) 64–5 governance 170–1 governments: benefits of international treaty 37; as black boxes 14 Green Climate Fund (GCF) 43, 63, 150 Green Fiscal Commission (UK) 84 green growth: economic growth and environmental sustainability 71–2; and national interests 44; vs. brown growth 87–8

green jobs 22–3 Green Transport Plan (Malaysia) 139 greenhouse gas (GHG) emissions: advanced developing countries 3; China 115–16, 167; common but differentiated responsibility 49–51; effects of environmental tax reform (ETR) 82, 83, 85; environmental/ ecological tax reform (ETR), 82–7; legally binding obligations 52–3; Malaysia 134–5; reduction 95–6 gridlock, causes 26 health risks, Malaysia 141–2 Heart of Borneo (HoB) initiative 148–9 historic responsibility 38–9, 48 human adaptation 23–5 human economy, and natural world 72 human–nature relation 71 human rights 97 hybrid outcomes 18 hydroelectric power, ASEAN countries 147 hydropower 93; China 115 Hyogo Framework for Action 142 impasse 131; burden-sharing 96; limitations of renewable energy and technologies 92–5; overview 92; see also per-capita emissions allowances implementation, international treaty 45 incentives 5–6, 154 India, greenhouse gas (GHG) emissions 53 India National Action Plan on Climate Change 60 individual emissions reduction 95–6 Indonesia 131–3, 152; UN-REDD program 150 industrialization, China 127 inequity: emissions allowances 101; Kyoto Protocol 97–100 information and education instruments 76 information sharing 142 information technology (IT), and energy 22–3 infrastructure, China 121–2 injustice, sense of 39 innovation, investment in 20–3 institutional development, China 122–3 interest groups 22 Intergovernmental Negotiating

Index   177 Committee for Framework Convention on Climate Change 49 Intergovernmental Panel on Climate Change (IPCC) 71; emission reduction strategies 36; reporting guidelines 35 international agreement: flexibility 6; value of 6–7 international assistance, and climate change mitigation 44–5 international cooperation: enthusiastic and reluctant countries 17; per-capita emissions allowances 102; prospects for 15–18 international coordination 14 International Energy Agency (IEA) 80 international institutions, roles of 44–5 international law 169–70 international negotiations 20 international strategy 26–9 international treaty: benefits 32–8; and civil society 36–7; consistency and clarity 35; context and overview 32; difficulties of negotiation 38–42; flexibility 35–6; government benefits 37; implementation 45; level playing field 34; pooling knowledge and resources 37; predictability 33–5, 45; reaching agreement 42–6; reporting requirements 35; stability 33–5, 45 investment, in innovation 20–3 Jackson, T. 74 Japan, coal consumption 114, 115 knowledge, pooling 37 Korea, low carbon green growth policy 60, 136 Kyoto Phase 2 132 Kyoto Protocol 1, 3, 152–3; adaptation 37; Clean Development Mechanism (CDM) 19–20, 36; commitment periods 166–7; common but differentiated responsibility 49–51, 131–2 (see also common but differentiated responsibility); emissions rights 97–100; global emissions reduction target 95–6; impasse 92; rigidity 152; side effects 100; weakening 166–7 land-use change and forestry (LULUCF) (Malaysia) 139 legal formality 4–5, 168–9

legal framework, climate change regime 54–5 legitimacy 153 lessons learned 2–4 level playing field 34 Like Minded Group (LMG) 155 low-carbon development 113; China 123–6; contributory factors 120–3; Malaysia 136 low-carbon development strategy (LCDS) 5–6, 7, 48–9, 168; advanced developing countries 59–60; assessment 63; bottom-up approach 57; consultation 64–5; Durban platform 56–7; features of 57–8; financing 62–3; international institutional framework 60–1; legal basis 57; post-2020 climate change regime building 56–65; registry 62; reporting requirements 63–4; summary and conclusions 65 low-carbon green growth 7 low-carbon technologies: cost models 80–6; costs of 79–80; model cost projections 86; potential of 79 low-emission development strategy (LEDS) see low-carbon development strategy (LCDS) MacKay, D. 92–3, 94 Malaysia 8–9; adaptation and risk reduction 139–43; biodiversity 142–3; challenges of climate change 133–5; climate change negotiations 152; climate modeling 140–1; cooperation within ASEAN 143–51; demand-side efficiency 137; disaster risk reduction (DRR) 142; economic and social policy and planning 135–9; economic growth 133–4; ecosystem functions 142–3; electricity generation 134–4; energy demand 133–4; energy policy and regulatory responsibilities 138; energy sector restructuring 136; forestry 143; fossil fuels 134; greenhouse gas (GHG) emissions 134–5; health risks 141–2; Initial National Communication (INC) 134; institutional structure 137; land use 139; low-carbon development 136; renewable energy 136–7; Second National Communication (NC2) 134; transportation 135, 137, 139; see also ASEAN countries

178   Index Manhattan project 21 manufacturing industry, China 116–18 marginalized groups, safeguarding 150 MARKAL model 80–1; GDP percentage changes – UK MARKAL MACRO 81 McKinsey & Company 121 McKinsey marginal abatement cost curve 78–9 measurable, reportable and verifiable manner (MRV) 54 Millennium Ecosystem Assessment (MEA) 71 Ministry of Energy, Green Technology and Water (MEGTW) (Malaysia) 137 mitigation: economic costs 78; global challenge 72–4 mitigation actions: ASEAN countries 146–7; developing countries 1; international assistance 44–5; and national interests 40–1 monitoring, reporting, and verifying (MRV) 150 Multi-sectoral Framework on Climate Change and Food Security (AFCCFS) 145–6 multilateral process, challenges of 131–3 National Energy Efficiency Master Plan (NEEMP) (Malaysia) 137 National Green Technology Policy (Malaysia) 136 National Hydraulic Research Institute of Malaysia (NAHRIM) 140–1 national interests: and climate change mitigation 40–1; and green growth 44 national interests and emissions 16, 16–17 National Key Economic Areas (NKEAs) (Malaysia) 136 National Plan on Climate Change (Brazil) 60 National Policy on Climate Change (Malaysia) 143 national policy, viability 15 nationally appropriate mitigation actions (NAMAs) 54, 60–1, 152 natural selection 25 natural world, and human economy 72 nature, adaptation 25 negotiations, lessons learned 2–4

New Economic Model (Malaysia) 136 non-fossil energy generating capacity, China 116 non-fossil energy sources, China 114–16 non-governmental organizations (NGOs), management roles 25 nuclear power 94; ASEAN countries 147; China 115 oil palm industry 154 onshore wind energy 93 opportunity cost 126 Pareto principle 102 per-capita emissions allowances 8, 95–6, 100–1; emissions allowance system 107–8; equity 106; implementation 101–9; inclusion mechanisms 106; international cooperation 102; meeting costs 103; national authority 103; national systems 101–3; outline 103–6; political effects 103; summary and conclusions 107–8 per-capita emissions non-Annex 1 parties 99 PETRE project 82–4; results from environmental tax reform (ETR) 84 photovoltaic (PV) power generation, China 115 Plan M 94 Pledge and Review 27 policy debates, mythology of 12–14 policy innovation, China 122 policy instruments 75–6 political orphans 22 politics, of environmental sustainability 88–9 pooling, knowledge and resources 37 post-2012 treaty, emissions rights 97 post-2020 regime: approaches to 5–6; design issues 4–5; key issues 7; legal formality 4–5; per-capita emissions allowances 8 Potemkin markets 18, 22 poverty alleviation, China 127 power, and international cooperation 15–17 power generation, China 114–16 power-law statistical distributions 102 Poznan COP 132 Project Catalyst 62 Providing Regional Climates for Impact Studies (PRECIS) 141

rainforest destruction 154 recognition, of low-carbon strategies 5–6, 62 registry, of low-carbon strategies 5–6, 62 regulation, options for 18 regulatory instruments 76 reluctant countries 17–19 renewable energy 92–5; Malaysia 136–7 reporting requirements 35; low-carbon development strategy (LCDS) 63–4 research development and deployment (RD&D), investment in 88–9 research program, need for 26 resilience 149–50 resources, pooling 37 responsibilities: common but differentiated responsibility 48, 49; historic 38–9, 48; richer countries 24–5 richer countries, responsibilities 24–5 risk reduction, Malaysia 139–43 Rockström, J. 71, 74 safeguarding, vulnerable and marginalized groups 150 science of global warming, importance of 10–12 “scientist’s myth” 12–13 shallow offshore wind energy 93 Singapore 152 single protocol 55 small group approach 27–8 Socolow Wedges 79 solar biomass energy 93 solar thermal energy 93 solar voltaic farm 93 solar voltaic panels 93 Southeast Asia, vulnerability 139–40 sovereignty 171–2 spending, technology innovation 21–2 Stern, N. 72, 73 Stern Review 75, 80 stock pollutants 11–12 sustainable growth, vs. environmentdegrading growth 87–8 technology 13–14; ASEAN countries 151; limitations 92–5; policy collaboration 20–3

technology innovation: China 121; funding 22; spending 21–2 technology policy 22, 75 technology transfer 151 temperature increase projections 140 temporal relationship between emissions and atmospheric concentrations of greenhouse gases 70 Tenth Malaysia Plan (10MP) 136 Thailand 152 thermal efficiency 147 tidal power 93 timescales 23 transparency 5–6, 153 transportation: China 119, 121; Malaysia 135, 137, 139 triage 25 UN Human Development Report 2007–2008 148 UN-REDD program 150 United Kingdom: decarbonizing 92–5; Green Fiscal Commission 84; policy innovation 75–6 United Nations, role and purpose 45 United Nations Framework Convention on Climate Change (UNFCCC) 1, 6–7, 45, 69, 156; see also climate change regime United Nations General Assembly Resolution 44/228 131 United States, energy intensity 113 Universal Declaration of Human Rights 97 urban planning, China 121–2 vector-capacity modeling, of health risks 142 volcanoes 25–6 voluntary agreements 76 vulnerability, ASEAN countries 148 vulnerable groups, safeguarding 150 water stress, Africa 37 wave power 93 “win–win” opportunities 19–20 wind power, China 115 World Bank study 19