The Paris Agreement- an analysis

 

Summary

  • A “historic” agreement, sending a strong signal that the world is serious to tackle climate change, galvanizing the surge in non-state actor efforts and providing clear signals to business and investors.
  • Confirmation and tightening of the ultimate objective: was 2oC, now “well below 2, with efforts to stay below 1.5”.
  • Operationalises the temperature objective with a goal to reach net zero GHG emissions after 2050, albeit using a slightly more complicated language for that.
  • Agreement is legally binding, but not the national emission reduction plans and targets, nor the level of providing financial support to developing countries.
  • The mitigation commitments stretch from intensified consideration of potential additional actions before 2020 (including connecting to non-state actor efforts), a global stocktake in 2018, strengthening national plans every 5 years, starting in 2020 and producing low-emissions development strategies. The strengthening of national plans is essential as the current ones will lead at best to a temperature increase of 3-3.5o
  • Use of market mechanisms between countries is allowed, but rules still need to be developed. There are no provisions for carbon pricing; there is just an acknowledgement that it can be useful.
  • An adaptation goal is established that unfortunately only looks at a 1.5-2oC temperature increase, while there is a risk of higher temperatures.
  • Addressing Loss and Damage, the remaining climate impacts that are not adapted to, is covered, but only in a risk evaluation and risk management and insurance sense. Liability of and compensation by industrialised countries is explicitly excluded.
  • Finance obligations of developed countries are included, taking the $100 billion/yr from the Copenhagen Accord as a floor for the period after 2020, to be further discussed in the period before 2025. More adaptation finance has to happen.
  • Technology development and diffusion provisions are mostly administrative. Impact will be limited. Outside initiatives launched in Paris and the increasing investment in clean technology can have a significant effect.
  • Provisions for reporting and review to be strengthened, but detailed arrangements to be decided later.

Significance

The significance of this agreement is predominantly lying in the strong signal it gives that the whole world is serious about tackling climate change, almost 20 years after the last global agreement in Kyoto. As was visible in the run up to and during the Paris conference, there is an unprecedented surge in awareness of climate change and its impacts and of action on transforming our economy, energy system and land-use practices in many corners of society, NGO’s, businesses, cities, states, regions, etc. The agreement between more than 190 nations now galvanizes this and provides a strong signal for further action. It also makes clear that GHG emissions will have to get to (net) zero and implicitly therefore calls for end of the fossil fuel era.

It became clear during (the rushed gaveling by president Fabius) and after adoption of the agreement that some Parties are not fully agreeing with the outcome. The African Group of countries objects to the fact that Africa was not explicitly included in the list of vulnerable countries. Nicaragua made clear that they disagree with for instance the decision that article 8 of the agreement on Loss & Damage of the agreement cannot be a basis for liability or compensation. So consensus yes (the Arab countries did not object), unanimity no.

Objective

The objective of the agreement (and in fact the objective of the Climate Convention’s article 2) has been tightened somewhat. The agreement reached in Cancun in 2010 specified it as “2 degrees and considering if this should be lowered to 1.5”. The Paris Agreement says “well below 2oC above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5oC above pre-industrial”. During the negotiations a lot of time and effort was devoted by many delegations to a push for a strict 1.5oC limit, driven by vulnerable developing countries that argued the impacts of the 2oC increase would be devastating to them. Scientifically this is true, but the realities are that with current INDCs we are on track to an increase of 3.5oC, as shown by the UNEP Emission Gap Report[2] and that closing the 2030 emissions gap for a 2oC trajectory is a major challenge, let alone the further emission reductions and large negative emissions later, required by a 1.5oC trajectory. Countries like India and China and other emerging economies obviously saw the implications of a 1.5oC limit for the starkly reduced remaining carbon budget that would be left for them and objected.

Legally binding?

The Paris Agreement is a legally binding instrument under the UNFCCC. It requires Parties to produce National Determined Contributions (NDCs) to the required global emission reduction, but the individual NDCs and the specific reduction targets and measures in them, are not internationally legally binding. The same holds for specific commitment to provide financial support to developing countries.

In practice this will not make much difference, as can be seen from the experience with the Kyoto Protocol. There countries did commit to legally binding reduction targets, but when Canada decided not to implement these, nothing happened and Canada even formally withdrew from the Kyoto Protocol.

Crucial for making countries deliver on their NDCs is a good system of reporting, review and strengthening. For this see the sections on Ambition and Transparency.

Long-term goal

The formulation of the long-term goals in article 4.1 has shifted in the various earlier drafts. The idea was to say something about the implications of the objective (“well below 2oC and pursue efforts to keep it below 1.5oC”) for global emission levels, as this is more operational than the temperature limits. IPCC AR5 gives the answer: “net zero GHG emissions by the end of the century for the 2oC scenarios”. After a long discussion this was reformulated as “aim to reach global peaking of greenhouse gas emissions as soon as possible …. and undertake rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century..”.

For all practical purposes this is equivalent to the “net zero” language and is thus in line with the science. The wording “in the second half of the century” are needed, since the objective now extends to below 2oC, requiring reaching “net zero” earlier. Nevertheless the African Group stated after the adoption of the agreement that the wording is unclear and needs a better definition, to be taken up in consultations by the President of the COP.

What unfortunately is missing is expressing this in terms of CO2 only. As the UNEP Emissions Gap Report 2015 clearly states, the implication of available scenarios is that net zero CO2 emissions need to be reached by 2060-2075 for a 2oC limit and around 2050 for a 1.5oC limit. That would have made the message about the end of the fossil fuel era much clearer.

Mitigation

Mitigation is a cornerstone of the agreement, but as indicated above, the heart of the efforts are in the NDCs from the 186 countries’ NDCs that will be put in a registry. This will allow much more flexibility to modify and strengthen them over time, as no new agreement (with its own ratification process) will be needed when NDCs are changed. In the Kyoto Protocol the targets were inscribed in the Protocol itself and thus new ratifications were needed when a second commitment period from 2012-2020 was agreed. Another reason for the registry model is that the US will only be able to join the Agreement if accession can be done via a Presidential Decision. Ratification in the US Senate would be impossible in the current political situation.

As laid out in the UNEP Emissions Gap Report, the collective impact of submitted INDCs is an estimated emission level of 54-56 GT CO2e by 2030, well above the level of 42 GtCO2e required to be on track to 2oC. The Decision text (II.17) accompanying the agreement notes that for the agreed objective and long-term goal emission global emission levels of not more than 40 GtCO2e by 2030 will be required.

Pre-2020 mitigation, which formally is not part of the agreement as this only enters into force in 2020, is addressed in the Decision text (106-133). During the negotiations over the last 4 years the issue has been discussed in a separate track. The outcome is a strengthened process of “technical examination by experts” of possible additional policies and measures, based on sharing experiences in implementation and considering studies of what can be done additionally. To give this process more political weight a provision is included to appoint “high level champions” to connect the technical process to political decision making in countries with the help of the UNFCCC producing Policy Makers Summaries of the more technical reports on the process.

A connection is also made to the so-called “non-state actors (NSA’s)”, covering the (voluntary) initiatives of citizens, businesses, cities, regions, provinces and (federal) states and collaborative initiatives of those players (sometimes with national states) that have emerged. The UNFCCC raised the profile of these NSA’s over the past 2 years by creating a registry (Non-State Actor Zone of Action, NAZCA) and high-level sessions during the regular UNFCCC meetings. By now more than 10000 entries have been made in the NAZCA registry and in Paris there was a surge in new announcements, including on doubling energy related R&D, investment in solar power, building 300 GW of renewable electricity capacity in Africa, pledging 100% renewable energy use by many companies, large scale restoration of degraded lands, and on many other topics.

A missed opportunity is that mitigation in international shipping and aviation sector has been left out of the agreement. This now has to be dealt with in IMO and ICAO, where progress has been extremely slow over the years.

Ambition mechanism

The text has improved provisions for raising ambition in the period after Paris. It starts with a “facilitative dialogue” (Decision II.20) before the entry into force of the Paris Agreement in 2018 to “take stock of collective efforts” in relation to the long-term goal, with the purpose of informing the preparation of future NDCs.

This builds upon a whole range of provisions in Decisions IV.106-133 that strengthen the actions in the pre-2020 period, including a commitment to ensure the highest possible mitigation efforts in the pre-2020 period” and a strengthened “technical examination process” of additional policies and measures that countries could take.

The big question is by when the current NDC should be revised. Article 4.9 says “every 5 years”, but as the Agreement will only enter into force in 2020 and the first global stocktake will happen in 2023, that means not before 2025.

However, Decisions III.23 and III.24 add a provision that “urges” or “requests” parties to already submit a new NDC by 2020. It is curious that a distinction is made in these terms. The “urges” is for Parties whose NDCs have a horizon of 2025 (such as the US), the “request” is for Parties whose INDCs have a 2030 horizon. So these provisions could bring the revision (and strengthening) forward to 2020, which is essential to have a chance of closing the 2030 emissions gap.

There is another element in the decision that pushes revision (and early strengthening), namely Decision II.17 mentioned above that says that 2030 global emission levels should not be higher than 40 GtCO2e. As we are heading for 55 Gt with current INDCs this provides a strong signal for strengthening.

Provisions for strengthening successive NDCs (each new NDC will be more ambitious than the previous one, strengthening can be done at any time) are included in articles 4.3 and 4.11.

An important element of a procedure for review and strengthening of NDCs is reporting on implementation and review. For accounting and reporting see the section on Transparency.

Finally a provision is included in article 4.19 saying that Parties “should strive to formulate …. long term low-emissions development strategies”. This would help countries to think about the necessary transitions in the energy, transport, buildings, agriculture, forestry and infrastructure sectors in the context of their economic and development priorities and would facilitate the strengthening of their short and medium term mitigation and adaptation efforts. Unfortunately no further guidance or support for these efforts is included. At the same time it is a remarkable achievement for this notion of a low emissions development trajectory to have been accepted so broadly in a matter of a few years.

Carbon Pricing and Market Mechanisms

The important role of carbon pricing as an incentive for emission reduction is only mentioned in the decision text (137) once. This does not mean that it is considered unimportant, but it reflects the philosophy of the agreement to leave the choice of instruments to individual countries, which have very different views on the use of carbon pricing. Movement in this area will have to come from cooperative initiatives such as the Carbon Pricing Leadership Coalition[3], led by the World Bank, helping like minded countries and other actors to promote and implement carbon pricing domestically. For the same reason domestic market mechanisms, like cap and trade, are not even mentioned in the agreement or the decision text. This is purely a choice of countries.

International market mechanisms, like the Clean Development Mechanism and International Emissions Trading that exist under the Kyoto Protocol, are covered in the agreement in article 6, albeit in a somewhat concealed way. The possibility for arrangements to transfer emission reductions is created, a “mechanism” is established that needs further elaboration later and “robust accounting to provide, inter alia, double counting” is mandated.

Adaptation and Loss & Damage

A global goal is established (article 7.1) of “enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change”, which is a rather general statement. It puts this goal “in the context of the temperature goal referred to in article 2” (the “well below 2oC, striving for 1.5oC”). This is far too weak, as there is a fair chance global temperatures will not be contained to those levels, but will increase with 3oC or more. A more solid approach to adaptation would have been to “prepare for the worst”, but that would probably have generated calls for more financial assistance from developed countries, who feel already too much under pressure.

“Loss and damage”, the remaining climate impacts that are adapted to, has its own article (8). It accepts the issue and absorbs an already ongoing programme of activities (the Warsaw Mechanism), aimed at better understanding of the risks, knowledge about risk management and insurance. Decision 52 states that this article cannot provide a basis for liability of or compensation by industrialised countries, the ones responsible for most of the historic emissions. This has been a red line for these countries in the negotiations and the disclaimer has angered vulnerable developing countries and the climate justice civil society movement.

Finance

Finance, in particular the support to developing countries for preparing their NDCs, implementing adaptation and mitigation measures, reporting on implementation and to cover loss& damage as a result of not adapting or being able to adapt, has been one of the most hotly debates issues in Paris. The current situation, emerging from the Copenhagen Accord, is that developed countries have promised to “mobilise $100 billon/yr from public and private sources” to flow to developing countries by 2020.

OECD[4] reported recently on the actual commitments of funds according to this promise and concluded that for 2013-2014 the average flow was $57 billion/yr. In Paris this was immediately contested by India and other emerging economies, arguing the numbers were inflated and actual delivery of funding was far behind and in passing also stating the formulation of Copenhagen with private investments was unacceptable and that only funds through the Green Climate Fund should be counted. Developing countries, in particular the most vulnerable, insisted also that much more finance for adaptation is required, as they are already facing the impacts of climate change (the OECD report identified a flow of about $10 billion/yr for adaptation purposes, mostly from public sources, while estimates of what is needed may be 10-fold or more by 2030).

At the same time developed countries were unwilling to commit to increased funding and insisted that private investments are needed to make the transition of the energy system happen. Against this background it is no surprise the discussions on finance were tense.

The result is that the agreement in article 9 has provisions stipulating developed country obligations to support developing countries financially. OECD countries have argued that the world has changed and that many countries outside OECD are now richer than several OECD members and thus should also contribute. This was rejected and only voluntary contributions from non-OECD countries are encouraged. More finance for adaptation is called for. And developed countries committed to provide more clarity and predictability of finance. But no numbers in the agreement text. Decision 54 states that developed countries before 2025 will come up with a new target for climate finance above the $100 billion promised in Copenhagen. Decision 58 specifies that accounting methods will be developed, so that controversy over the amounts delivered can be avoided in the future.

Technology

For promotion of the transfer of technology to developing countries a range of institutional provisions had been created since Copenhagen under the UNFCCC (Technology Mechanism, Technology Executive Committee, Climate Technology Centre and Network). The Paris Agreement adds a Technology Framework (art 10.3), but it is the question what this adds to the necessary development and diffusion of clean technologies. Even saying that cooperation in this area needs to be strengthened will not make much difference. The special emphasis on innovation (art 10.5) is positive, but is is unclear how this will be promoted in practice. However, initiatives outside the UNFCCC, such as the Doubling R&D initiative of 20 countries and some major foundations[5], the Solar Alliance of 120 countries initiated by India[6] and the strong surge in clean energy and climate friendly investments will probably have more impact.

Capacity Building

On the issue of capacity building in developing countries the approach in the agreement has been mostly administrative as well: creating a new Capacity Building Committee , a work programme, annual reporting on progress, planned evaluations of effectiveness of capacity building activities and a special capacity building initiative for transparency.

Transparency

The provisions on accounting and reporting on mitigation actions in article 4.13 are fairly general, such as “promoting environmental integrity, transparency, etc” and “avoid double counting” (in case use is made of market mechanisms). Further guidance by the Conference of Parties (to be prepared by the Ad Hoc Working Group on the Paris Agreement as stipulated in decision III.28) is foreseen.

A more comprehensive system of reporting and review is established in article 13, the details of which are still to be developed and agreed when the agreement enters into force in 2020. It is clear that much of the current arrangements for reporting and review, including national communications, biennial reports and biennial update reports, international assessment and review (for developed countries) and international consultation and analysis (for developing countries), will be drawn upon. Strengthening of the reporting and review requirements can be expected, but developing countries are insisting that these requirements for them should be lighter and less frequent.

Equity and climate justice

Venezuela made a big point of acknowledging in its remarks after adoption of the agreement the reflection in the pre-amble of the agreement of human rights, the right of indigenous people, climate justice, gender equality, intergenerational equity and other important principles. In the NGO Climate Justice community reactions were quite negative, as they pointed out that the operational parts of the agreement do not sufficiently address the issues and the decision text has a disclaimer on liability and compensation for loss & damage[7].

For the agreement itself equity was translated into differentiation between developed and developing countries in the various obligations. This led to a big fight, as the agreed negotiation remit agreed in Durban in 2011 had done away with the hard division between Annex I and non-Annex I countries and the mitigation efforts had been structured along the lines of self-differentiation of INDCs. Even in the mitigation section (article 4.4), a certain degree of explicit differentiation was brought back in the sense that for developed countries economy-wide emission reduction targets are mandatory, and for developing countries not.

Entry into force

There is a rather light hurdle for entry into force: at least 55 countries and coverage of at least 55% of global GHG emissions. With the very broad support of the agreement in Paris, entry into force may take some time, but should not be a problem.

 

[1] Paris Agreement, http://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf

[2] UNEP Emission Gap Report 2015, http://uneplive.org/media/docs/theme/13/EGR%202015_Technical%20Report.pdf

[3] Carbon Pricing Leadership Coalition, http://www.carbonpricingleadership.org

[4] OECD and CPI, Climate Finance in 2013-14 and the USD 100 billion goal, http://www.oecd.org/env/cc/oecd-cpi-climate-finance-report.htm

[5] http://www.sciencebusiness.net/news/77339/Governments-pledge-$20B-for-clean-energy-R-and-D-at-Paris-climate-talks

[6] http://www.theguardian.com/environment/2015/nov/30/india-set-to-unveil-global-solar-alliance-of-120-countries-at-paris-climate-summit

[7] http://oneworld.org/2015/12/12/too-weak-too-late-says-climate-justice-campaigners/?utm_source=twitterfeed&utm_medium=twitter

Text on Long-term Goal and Ambition Mechanism improved, but revised NDCs not mandated before 2025

The new text (10 December @ 21.00) has improved language on long-term-goal and ambition mechanism, but early revision of NDCs is not ensured.

Long-term goal 

The new text now states in article 3.1:

  • “Parties aim to reach the peaking of greenhouse house gas emissions as soon as possible, …”,
  • to undertake rapid reductions thereafter towards reaching greenhouse gas emissions neutrality in the second half of the century

This is a good compromise, as the term greenhouse gas emissions neutrality is much clearer than “climate neutrality” that was in the previous draft. The peaking language is a nice, although not very specific, addition.

Ambition mechanism

The new text has improved provisions for raising ambition in the period after Paris. It starts with a “facilitative dialogue” before the entry into force of the Paris Agreement in 2019 to “take stock of collective efforts” in relation to the long-term goal, with the purpose of informing the preparation of future NDCs.

  • Decision II.20: Decides to convene a facilitative dialogue among Parties to take stock of the collective efforts of Parties in 2019 in relation to progress towards the long-term goal referred to in Article 3, paragraph 1, of the Agreement and to inform the preparation of ### pursuant to Article 3, paragraph 8, of the Agreement

This builds upon a whole range of provisions in Decisions IV.114-140 that strengthen the actions in the pre-2020 period, including a commitment to ensure the highest possible mitigation efforts in the pre-2020 period”.

  • Decision IV.114 Resolves to ensure the highest possible mitigation efforts in the pre-2020 period, including by:

The big question is by when the current NDC should be revised. Article 3.8 says “every 5 years”, but as the Agreement will only enter into force in 2020 and the first global stocktake will happen in 2024, that means not before 2025.

  • Article 3.8: Parties shall communicate an ### every five years in accordance with decision X/CP.21 and any decisions of the Conference of the Parties serving as the meeting of the Parties to the Agreement being informed by the outcomes of the global stock take referred to in Article 10.

However, Decisions III.23 and III.24 add a provision that “invites” parties to already submit a new NDC by 2020. So this could bring the revision (and strengthening) forward, were it not that it is only an “invitation”, not a requirement.

  • Decision III.23 Also invites those Parties whose intended nationally determined contribution pursuant to decision 1/CP.20 contains a timeframe up to 2025 to communicate by 2020 a new ### and to do so every five years thereafter pursuant to Article 3, paragraph 8, of the Agreement;
  • Decision III.24 Further invites those Parties whose intended nationally determined contribution pursuant to decision 1/CP.20 contains a timeframe up to 2030 to confirm or update by 2020 their ### and to do so every five years thereafter pursuant to Article 3, paragraph 8, of the Agreement;

There is another element in the decision that seems to push revision (and strengthening) into the longer term, namely Decision II.17 that says that greater emission reduction efforts will be required AFTER 2025 or 2030, which is a sure way of missing the 2oC limit.

  • Decision II.17: Notes with concern that the estimated aggregate greenhouse gas emission levels resulting from the intended nationally determined contributions in 2025 and 2030 do not fall within least-cost 2 ˚C scenarios, and that much greater emission reduction efforts than those associated with the intended nationally determined contributions will be required in the period after 2025 and 2030 in order to hold the temperature rise to below 2 ˚C or 1.5 ˚C above pre-industrial levels;

Provisions for strengthening successive NDCs look ok.

  • 3.6 Each Party’s successive ### should represent a progression beyond the Party’s previous efforts and reflect its highest possible ambition.
  • 3.8 A Party may at any time adjust its existing ### with a view to enhancing its level of ambition.

An important element of a procedure for review and strengthening of NDCs is the reporting on implementation. The provisions on this are fairly general, such as “promoting environmental integrity, transparency, etc” and “avoid double counting” (in case use is made of market mechanisms). Further guidance by the Conference of Parties (to be prepared by the Ad Hoc Working Group on the Paris Agreement as stipulated in decision III.28) is foreseen.

  • 3.12 Parties shall account for their ###. In accounting for their ###, Parties shall promote environmental integrity, transparency, accuracy, completeness, comparability and consistency, and ensure the avoidance of double counting, in accordance with guidance adopted by the Conference of the Parties serving as the meeting of the Parties to the Agreement.
  • Decision III.28 Requests the Ad Hoc Working Group on the Paris Agreement to develop further guidance for the information to be provided by Parties in order to facilitate clarity, transparency and understanding of ### for consideration and adoption by the Conference of the Parties serving as the meeting of the Parties to the Agreement at its first session;

Finally a provision is included in article 3.22 that says that Parties “should strive to formulate …. long term low-emissions development strategies”. This would help countries to think about the necessary transitions in the energy, transport, buildings, agriculture, forestry and infrastructure sectors and would facilitate identify the strengthening of their short and medium term mitigation and adaptation efforts. Unfortunately no further guidance or support for these efforts is included.

  • 3.22 All Parties should strive to formulate and communicate long-term low-greenhouse gas emission development strategies mindful of Article 2 of this Agreement taking into account Parties different national circumstance and development stages.

Long-term goal and ambition mechanism: problems in the COP21 negotiation text

Some problems in the COP21 negotiating text of Wednesday December 9

Long-term goal

There are two options in the text to formulate the long-term goal that operationalizes the 2/1.5oC temperature limit:

Option 1: Parties collectively aim to reach the global temperature goal referred to in Article 2 through [a peaking of global greenhouse gas emissions as soon as possible, recognizing that peaking requires deeper cuts of emissions of developed countries and will be longer for developing countries; rapid reductions thereafter to [40–70 per cent][70–95 per cent] below 2010 levels by 2050; toward achieving net zero greenhouse gas emissions [by the end][after the middle] of the century] informed by best available science, on the basis of equity and in the context of sustainable development and poverty eradication.

Option 2: Parties collectively aim to reach the global temperature goal referred to in Article 2 through a long-term global low emissions [transformation toward [climate neutrality][decarbonization]] over the course of this century informed by best available science, on the basis of equity and in the context of sustainable development and poverty eradication.

The advantage of the first option is that it specifically mentions the net zero GHG emissions target that needs to be met for a 2oC limit by the end of the century, according to IPCC AR5 and repeated in the UNEP Emissions Gap report 2015[1]. This is much clearer than the formulation in option 2 that talks about “climate neutrality”. That climate neutrality wording also leaves open the possibility of meeting this target by large-scale insertion of aerosols in the upper atmosphere (geo-engineering). The “decarbonisation” wording in option 2 is in fact incompatible with a 2oC limit: for all GHGs to be net zero by the end of the century, CO2 emissions should already be net zero much earlier: between 2060 and 2075 (see UNEP Emissions Gap Report 2015). And for a 1.5oC limit that many countries favour, the net zero CO2 emissions should already be reached by 2050. The decarbonisation language is therefore wrong.

 

Ambition mechanism

The so-called ambition mechanism is necessary, since the collective effect of the submitted INDCs is at best limiting the long-term temperature increase to 3-3.5oC (UNEP Emissions Gap report 2015). The Emissions Gap in 2030 is estimated to be 12-14 GtCO2e. Waiting to 2025 or 2030 with strengthening the mitigation efforts is a sure way to miss the 2oC limit.

The text of the agreement addresses this in 3.6 by emphasizing progression in subsequent INDCs. In 3.8 a 5 year cycle is mandated, but only after the first so-called stocktake that article 10 sets for 2023 or 2024. And 2bis.4 adds another barrier, i.e. it says that successive INDCs will be communicated before the expiry of the previous INDCs. In other words, for INDCs that only have a target for 2030, like the EU, a new INDC would only be required after 2030.

3.6 Each Party’s successive ### [shall][should][will] represent a progression beyond the Party’s previous efforts and reflect its highest possible ambition [based on common but differentiated responsibilities and respective capabilities, in light of different national circumstances].

3.8 Parties shall communicate an ### every five years in accordance with decisions of the CMA being informed by the outcomes of the global stock take referred to in Article 10.

2bis.4 Successive [intended] nationally determined contributions will be [informed by the result of the global stocktake as defined in Article 10 of the Convention] and communicated before the expiry of the previous [intended] nationally determined contribution by the Party concerned.]

Decision II.20 adds another requirement to have a first stocktake before the new agreement enters into force in 2020, namely a “facilitative dialogue” in 2018 or 2019, without any stipulation that such a stocktake should lead to strengthening the INDCs.

Decision II.20 [[Decides][Invites the President of the COP] to convene a facilitative dialogue among Parties to take stock of the collective efforts of Parties in [2018][2019] in relation to progress towards the long-term goal referred to in Article 3, paragraph 1, of the Agreement and to inform the preparation of INDCs pursuant to Article 3, paragraph 8, of the Agreement;]

And, surprisingly, decision II.17 states that “greater emission reduction efforts .. will be required in the period after 2025 and 2030…”. This is a sure way of missing the 2oC limit (let alone a 1.5oC limit), because it would then be impossible to close the very big 2030 emissions gap mentioned above. Strengthening efforts should happen much earlier, even before 2020 to have a chance of returning to a 2oC trajectory.

Decision II.17 Notes with concern that the estimated aggregate greenhouse gas emission levels resulting from the INDCs in 2025 and 2030 do not fall within least-cost 2 ˚C scenarios, and that much greater emission reduction efforts than those associated with the INDCs will be required in the period after 2025 and 2030 in order to hold the temperature rise to below 2 ˚C or 1.5 ˚C above pre-industrial levels;

Then there are two other elements that could have an impact on the strengthening of ambition. Article 2bis.3 is a disclaimer for developing country INDC implementation and strengthening by referring to ill-defined “implementation of developed country Parties of their provision of finance and technology”. Without having an agreed level of support for individual INDCs this is an open invitation to do less.

2bis.3 The extent to which developing country Parties will effectively implement this Agreement will depend on the effective implementation by developed country Parties of their commitments on the provision of finance, technology development and transfer and capacity-building.

The second element is an invitation to countries to develop and communicate long-term low-emissions development strategies. This would be helpful for countries to strengthen their INDCs, but by making it purely voluntary and not connecting it with financial and technical support this is currently a very weak provision.

3.21 All Parties should voluntarily formulate and communicate long-term low-emission development strategies.

All in all, the conclusion must be that the ambition mechanism in the current text is still very weak.

 

B.Metz

December 9, 2015

[1] UNEP Emissions Gap Report 2015, http://uneplive.org/media/docs/theme/13/EGR%202015_Technical%20Report.pdf

Is there a Reality Gap in the UNEP Emissions Gap Report?

The latest UNEP Emissions Gap Report (EGR)[1] has been criticized for (1) maintaining that we can still keep global mean temperature increase below 2 degrees, although actual emissions are still rising, and not peaking by 2020 as considered necessary by science earlier, (2) for making very challenging assumptions for possible future emission reductions, in particular through negative emissions and (3) for making politicians believe in something that is no longer realistic[2].

What are the arguments?

Moving the goal posts

The first point that is made is that earlier EGRs stated that global emission levels in 2020 could not be higher than 44 GtCO2e (range 38-47), if we would want to keep long-term temperature increase below 2oC, while projected emissions based on pledges and implementation thereof are clearly going to be higher. Nevertheless the 2014 and 2015 reports maintain that the 2oC limit can still be met if global emissions by 2020 are higher than that, provided that by 2030 they are below 42 GtCO2e.

What actually happened? In the 2010, 2011, 2012 and 2013 reports, the scenario set from the IPCC Fourth Assessment (AR4) Report was used that had no scenarios that attempted to keep temperature increase below 2oC with action not starting immediately (2000 or 2010 in this case). From these scenarios, the 44 GtCO2e in 2020 is derived. By 2014 new scenario sets from the IPCC Fifth Assessment (AR5) Report were available that assumed delayed action till 2020 (more or less consistent with the 2010 Cancun pledges that countries made), followed by stringent reductions thereafter. These scenarios were not longer following the “least cost” trajectory as of 2010 that all of the IPCC AR4 Report scenarios did. As a result there were now solutions available that postponed action, as long as emission levels by 2030 would be kept below 42 GtCO2e. So this is clearly a matter of new scientific insights.

 

Negative emissions

The second criticism is that these IPCC AR5 scenarios rely on substantial negative emissions in the second half of the century and that these negative emissions are supposed to be achieved predominantly by using biomass power plants with CO2 Capture and Storage (BECCS) at a very large scale. BECCS is a technology that has only been demonstrated at small scale, is currently quite expensive, requires large amounts of sustainable biomass that may not be available and would therefore never deliver the significant negative emissions that the scenarios assume.

What are the facts? The IPCC AR5’s 2-degree scenarios that are used as a reference in the 2014 and 2015 EGR all follow the Cancun pledges till 2020 and then a least cost reduction path thereafter. They all assume a >66% probability of meeting the 2oC limit. As already two thirds of the available carbon budget for a 2oC temperature increase has been used up and there are limits in how fast emissions can be reduced in the future, all scenarios assume negative emissions in the second half of the century from afforestation and particularly from BECCS.[3] The cumulative amount of CO2 storage in these scenarios ranges from about 400 to 800 GtCO2[4]. The amount of CO2 removal through BECCS is lower. The amount of biomass that is needed for the use of BECCS is in the order of several hundred Exajoules. The combination of biomass as fuel and CCS is not particularly challenging. So two issues need to be considered: the penetration of CCS at scale and the availability of sustainable biomass.

Could power plant CCS penetrate from the current scale (1 million t/yr in the Boundary Dam power plant in Canada) to reach the cumulative scale of at least 400 GtCO2 by the end of the century? A simple exponential growth curve with a growth rate of 15-20% per year can do this in a period of 85 years. Growth rates of solar and wind power have been higher than this over the last 10-15 years, also in a situation where these technologies were significantly more expensive than fossil fuel based energy supply. And China built 2 coal-fired 600 MW power plants per week between 2005 and 2011[5]. Integrated Assessment Models base their assumptions of penetration rates on historic data. The IMAGE model has an upper limit for BECCS of 10 GtCO2/yr by 2050 and 20 GtCO2/yr by 2100[6], which would allow having a cumulative amount of negative emissions over the century of about 900 GtCO2[7], much more than what would be needed.

Would sufficient amounts of sustainable biomass be available? The IPCC AR5 estimates the available biomass to be 10- 245 EJ/yr by 2050 and 105-325 EJ/yr by 2100[8]. The AR5 scenarios for staying below 2 degrees assume amounts of available biomass energy that are lower than these maximum values[9]. And biomass is not only used for BECCS, so the amount needed for BECCS will be even lower. Producing all the required biomass of this would require a substantial percentage of agricultural land; a recent assessment[10] indicated that for 100 EJ/yr 30% of cropland and 10% of crop and pasture land combined would be needed. However, waste streams can already deliver significant amounts of biomass (ref), biomass can be grown on marginal lands that not compete with food production (ref) and productivity of biomass production (amount/hectare) can be further increased. Conclusion: the amounts of sustainable biomass that would be needed for large-scale application of BECCS can most likely be delivered in a sustainable manner.

Last but not least, negative emissions can also be realised by enhanced afforestation and reforestation and revegetation of degraded lands. If those options are further developed they would reduce the amounts to be removed through BECCS.

Conclusion on BECCS assumptions in the IPCC AR5 scenarios: plausible, but challenging to realize[11].

 

Incentives for postponing action

The third criticism is that the EGR would make it seem easy to still meet the 2oC limit and thus provide an incentive for politicians to postpone action in the short time.

What are the facts? EGRs have consistently warned against delay, based on the risk of locking in carbon intensive infrastructure, higher costs, more serious climate impacts, missed co-benefits for health, energy security and employment and also very specifically the risk of relying on large amounts of negative emissions through technologies that have not yet been demonstrated at scale.  So they have certainly not encouraged politicians to delay action.

—————————————————————————————————-

[1] UNEP, Emissions Gap Report 2015, http://uneplive.org/theme/index/13#indcs

[2] See e.g. Revkin,A., The reality gap in the push to close the “Emissions Gap” in Paris, New York Times, November 6, 2015, http://dotearth.blogs.nytimes.com/2015/11/06/the-reality-gap-in-the-push-to-close-the-global-warming-emissions-gap-in-paris/ and Tollefson,J., Is the 2oC world a fantasy?, Nature, November 24, 2015, http://www.nature.com/news/is-the-2-c-world-a-fantasy-1.18868

[3] Importantly, no attempts were made to model scenarios that limit warming to below 2°C from Cancun pledge levels in 2020 in the absence of BECCS. The absence of such scenarios thus does not imply that they could not be generated.

[4] This is actually the cumulative amount of emissions avoided through application of CCS, corrected for the fact that only delayed action scenarios are considered; see e.g. Gough,C. and Vaughan,N.E., Synthesising existing knowledge on the feasibility of BECCS. Tyndall Centre Working Paper, February 2015, http://avoid-net-uk.cc.ic.ac.uk/wp-content/uploads/delightful-downloads/2015/07/Synthesising-existing-knowledge-on-the-feasibility-of-BECCS-AVOID-2_WPD1a_v1.pdf

[5] http://www.climatecentral.org/blogs/chinas-growing-coal-use-is-worlds-growing-problem-16999

[6] Van Vuuren et al, The role of negative CO2 emissions for reaching 2oC- insights from integrated assessment Modelling, Climatic Change 118 (2013) 15–27

[7] See 4

[8] Kemper,J., Biomass and carbon dioxide capture and storage: A review, International Journal of Greenhouse Gas Control 40 (2015) 401–430

[9] IPCC AR5 Scenario database. Available at: https://tntcat.iiasa.ac.at/AR5DB/

[10] Ibid 8

[11] See also Schaeffer,M., et al, Feasibility of limiting warming to 1.5 or 2 oC, http://climateanalytics.org/files/feasibility_1o5c_2c.pdf

REVISED The collective impact of INDCs: why are there such different estimates for long-term global mean temperature increase?

More than 160 countries have submitted Intended Nationally Determined Contributions (INDCs) to the UN Framework Convention on Climate Change ahead of the Paris Conference of Parties. Research groups have published what these INDCs collectively mean in terms of the 2025 and 2030 global emission levels and the corresponding implications for long-term global mean temperature. Two high-profile UN reports have summarized this research: the UNFCCC Synthesis Report[1] and the UNEP Emissions Gap Report[2].

The common message of these publications is that INDCs are bending the curve of global emissions, lead to a lower 2100 global temperature than with current policies and are not enough to be on track to keeping global mean temperature increase below 2oC. However, estimates of what 2100 global mean temperature increase is implied in the collective INDCs vary considerably. The most widely quoted numbers are as follows.

The Climate Action Tracker[3] estimated an increase of 2.7oC (range 2.2-3.4) by the end of the century. The Climate Interactive team[4] estimated 3.5oC, and IEA[5] came up with an estimate of 2.7oC as well, all for unconditional INDCs only. The UNEP Emissions Gap Report, which assesses all available research findings, estimated 3.5oC (range 3-4) if looking at only unconditional INDCs and 3oC if including conditional ones as well (no range is given for this number, but it can be assumed it is comparable to the range for the unconditional INDCs, i.e 2.5-3.5). A more comprehensive overview and analysis has been published by WRI [9]

Why are there such differences?

There are a couple of reasons:

  • Individual estimates of global emission levels from implementing INDCs differ. Many of the INDCs submitted by countries do not specify 2025 or 2030 emission levels as a result of the INDC, so these emission levels need to be calculated, requiring certain assumptions to be made. The UNEP Emissions Gap report shows that between research groups there can be a difference of more than10%, with the CAT estimates being on the low end of the range.
  • Some research groups include all INDCs, unconditional and conditional ones, but others only include unconditional ones. The difference, according to the UNEP Emissions Gap Report is about 2 GtCO2e.
  • The calculation of long-term temperatures for a given global emission level differs. The 2100 temperatures depends not only on the 2025 and 2030 emission levels, but more on what happens with emissions thereafter. Different methodologies are used[6],[7],[8]. The Climate Interactive assumptions for post 2030 action are much more conservative than what others have done.
  • The definition of the statistical chance of staying below a certain temperature level differs. Due to the uncertainties in translating an emission level into a global mean temperature increase, it makes a difference if the threshold is defined as a 50% chance of staying below a certain temperature or as 66% or 90% chance. The UNEP Emissions Gap Report uses a 66% chance as the definition of the threshold. Their finding that with 66% chance INDCs will keep temperatures below 3.5oC (for unconditional INDCs).  The IEA and CAT findings that there is a 50% chance that temperatures will be kept below 2.7oC is equivalent to a 66% chance below 3oC.

So, when looking at the factors discussed above, it can be concluded that there are three main reasons for the differences: (1) the definition of the statistical threshold:  (2) the difference in assumptions about  post-2030 action; and (3) the estimate of the emission levels in 2025/2030 implied in the INDCs. The approach followed by the UNEP Emissions Gap Report (66% probability, looking at selected scenarios from the IPCC database for the post-2030 assumptions, and averaging the emission levels found by different research groups) gives a good basis for assessing the long-term temperature implications of the INDCs: 3.5oC for only unconditional and 3oC for conditional and unconditional pledges.

——————-

[1] UNFCCC Synthesis Report on the aggregate effect of intended nationally determined contributions, http://unfccc.int/resource/docs/2015/cop21/eng/07.pdf   (does not include temperature estimates, but has its own calculations of the emissions gap; press release mentions 2.7oC, see http://newsroom.unfccc.int/unfccc-newsroom/indc-synthesis-report-press-release )

[2] UNEP Emissions Gap Report 2015, Executive Summary, http://www.unep.org/publications

[3] Climate Action Tracker, http://climateactiontracker.org/assets/publications/CAT_global_temperature_update_October_2015.pdf

[4] Climate Interactive, https://www.climateinteractive.org/tools/scoreboard

[5] IEA, World Energy Outlook 2015 presentation, http://www.iea.org/media/weowebsite/2015/151110_WEO2015_presentation.pdf

[6] See C-Roads Reference Guide, https://www.climateinteractive.org/wp-content/uploads/2014/01/C-ROADS_Reference_Guide_v68.pdf and methodology used for post 2030 emission scenarios, https://www.climateinteractive.org/tools/scoreboard/scoreboard-science-and-data

[7] http://climateactiontracker.org/methodology/18/Global-pathways.html

[8] UNEP Emissions Gap Report 2015, in press, http://www.unep.org/publications

[9] http://www.wri.org/blog/2015/11/insider-why-are-indc-studies-reaching-different-temperature-estimates

 

 

 

IPCC confirms that global temperature change can still be limited to less than 2°C, but current trends make it much more difficult

The Summary for Policy Makers (SPM) of the IPCC Working Group on Mitigation to the 5th Assessment Report ( see http://report.mitigation2014.org/spm/ipcc_wg3_ar5_summary-for-policymakers_approved.pdf ) was approved and the full report was accepted by the IPCC Plenary on April 12 (see http://mitigation2014.org/report/final-draft/ ). What are its main messages? Are these the messages that policy makers need to know? And what is not being said?

What are current trends?
Current trends in emissions, the underlying energy system and efforts to reduce emissions go in the wrong direction:

  • Greenhouse gases emissions are rising faster than ever before. Between 2000 and 2010 global GHG emissions rose with 2.2% on average, despite an increasing number of countries implementing emissions reduction policies. Between 1970 and 2000 the increase was 1.3% per year. Total GHG emissions are now 49 Gigaton CO2 equivalent.
  • The carbon content of energy has increased over the last decade, reversing a declining trend since 1970. This is caused by a sharp increase in the use of coal. It dwarfed the emission reductions from the significant increase in the use of renewable low-carbon energy sources that in 2012 represented more than 50% of the new power capacity added to the global grid.
  • Current trends are expected to lead to a 4-5°C increase of global temperatures by 2100, compared to pre-industrial levels, with further increases thereafter. Without further mitigation action beyond what is in place today atmospheric greenhouse concentrations are expected to rise till 750-1300 parts per million of CO2 equivalent by the end of the century, corresponding to 4-5°C higher temperatures than pre-industrial ones. Concentrations and temperatures will further increase after 2100.
  • Current emission reduction efforts fall short of a cost-effective path to keep temperature increase below 2°C, the limit unanimously agreed by countries in 2010 in order to avoid unmanageable risks of climate change.

Figure SPM.1. Total annual anthropogenic GHG emissions (GtCO2eq/yr) by groups of gases 1970-2010: CO2 from fossil fuel combustion and industrial processes; CO2 from Forestry and Other Land Use (FOLU); methane (CH4); nitrous oxide (N2O); fluorinated gases8 covered under the Kyoto Protocol (F-gases). At the right side of the figure GHG emissions in 2010 are shown again broken down into these components with the associated uncertainties (90% confidence interval) indicated by the error bars. Total anthropogenic GHG emissions uncertainties are derived from the individual gas estimates as described in Chapter 5 [5.2.3.6]. Global CO2 emissions from fossil fuel combustion are known within 8% uncertainty (90% confidence interval). CO2 emissions from FOLU have very large uncertainties attached in the order of ±50%. Uncertainty for global emissions of CH4, N2O and the Fgases has been estimated as 20%, 60% and 20%, respectively. 2010 was the most recent year for which emission statistics on all gases as well as assessment of uncertainties were essentially complete at the time of data cut off for this report. Emissions are converted into CO2-equivalents based on GWP100 from the IPCC Second Assessment Report. The emission data from FOLU represents land-based CO2 emissions from forest fires, peat fires and peat decay that approximate to net CO2 flux from the FOLU as described in chapter 11 of this report. Average annual growth rate over different periods is highlighted with the brackets. [Figure 1.3, Figure TS.1] [Subject to final quality check and copy edit.] [source IPCC AR5 WG 3 SPM]

Can temperature rise still be kept below 1.5 or 2°C?
All countries of the world agreed in 2010 that temperatures should not increase more than 2oC above pre-industrial, preferably even 1.5°C. With the current trend pointing to 4-5°C or more, will that still be possible?

  • Many scenario studies confirm that it is technically and economically feasible to keep temperature rise below 2°C, with 70% probability (”likely chance”). This would imply limiting atmospheric concentrations to 450 ppm CO2 equivalent by the end of the century. If a 50-50 chance of staying below 2°C would be acceptable, then the concentration limit is 500 ppm (provided the overshoot in the interim is not beyond 530 ppm).
  • Such scenarios for a 70% chance imply halving global emissions compared to 2010 by mid-century and zero or negative emissions by 2100. Depending on the degree of delay in reduction efforts the reduction is 40-70% below 2010 by 2050. For a 50-50 chance of staying below 2°C these numbers are going down only a little: 25-55% % emissions reduction. By the end of the century net emissions have to be zero or negative, implying large removals of CO2 from the atmosphere by bioenergy with CCS (BECCS) or afforestation.
  • Keeping global temperature increase below 1.5°C would require even lower atmospheric concentrations (<430 ppm) to have a little more than 50% chance. There are not many scenario studies available that can deliver such results, requiring even faster reductions in the medium term, indicating how difficult this is, given where we are now.
  • Scenarios that keep temperature increase to less than 2°C with a likely chance, show rapid increases of energy efficiency, a huge increase in low carbon electricity generation (to 60% share by mid-century) and extensive use of CO2 capture and storage – CCS). Large amounts of renewable energy, nuclear power, fossil fuel power plants with CCS and biomass fueled plants with CCS (BECCS), will be needed to realize the massive emission reductions (more than 90% by mid-century) in the energy supply sector, a huge transition operation.
  • Average global macro-economic costs of such reduction pathways that minimize costs over the century are modest compared to expected economic growth, and economic co-benefits and avoided climate change impacts more than compensate for these costs in most countries. Under a cost-effective approach, implying mitigation action in all countries starting immediately, a global carbon price and all key technologies applicable so that costs over the century are minimised, macro-economic costs of a 2°C scenario are limited: an average annual reduction of consumption of about 0.04-0.14 percentage points (from a baseline increase of consumption of 1.6-3% per year). Under practical conditions where ideal conditions do not apply, costs will be higher. There are many co-benefits of pursuing a 2°C scenario (in particular reduced health and ecosystem damages due to reduced air pollution and improved energy security, but also for instance biodiversity conservation, food security and employment ) that in many cases provide a net economic benefit, even accounting for potential negative side-effects. The report unfortunately does not quantify them. The economic costs of climate change impacts (not mentioned explicitly) was estimated in the IPCC Working Group II report (see http://ipcc-wg2.gov/AR5/images/uploads/IPCC_WG2AR5_SPM_Approved.pdf ) at least at 0.2-2% annually by mid-century.
  • The report underestimates the serious risks of the current lack of action. The report acknowledges that current pledges from countries of intended reductions are not consistent with a cost-effective approach to drastic emission reductions. As the UNEP Emissions Gap Report 2013 showed, global emission levels in 2020 are likely to be way above the levels necessary to do the transition in a cost-effective manner. Many of the models that generate so called delayed action scenarios are able to drive down emissions after 2020 aggressively by applying more stringent efficiency improvement, more rapid introduction of renewables, nuclear power, CCS and particularly CO2 removing technologies like BECCS or large scale afforestation. Given well known problems with expansion of nuclear power, the costs and public concern about CCS and the questions about the sustainability of large-scale biomass production for BECCS, the practical feasibility of such aggressive technological changes is questionable, i.e. this approach may very well fail to keep temperature increase below 2°C. The UNEP report mentioned above says these risks out in detail, but the IPCC report only mentions them in passing. Interestingly the IPCC does say “ Many models could not achieve atmospheric concentration levels of about 450 ppm CO2eq by 2100 if additional mitigation is considerably delayed or under limited availability of key technologies, such as bioenergy, CCS and their combination (BECCS)
  • Not only the risks but also the costs of delayed action are high. Delayed action till 2020 or 2030 (more or less what is currently happening) adds 15-80% to the costs in the medium term, because further lock-in into a high-carbon infrastructure will have happened. Such lock-in, says the SPM, “may be difficult or very costly to change, reinforcing the importance of early action for ambitious mitigation.” Chapter 6 adds an important point: “Studies suggest that important transitional economic metrics other than aggregate costs — for example, reduced growth rates in economic output and consumption, escalating energy prices, and increasing carbon rents — may be more affected by delayed mitigation than aggregate costs” (Chapter 6, section 6.3.6.4)

The report confirms that technologies and practices for all economic sectors are available to bring emissions down in line with cost-effective 2°C scenarios.

Figure SPM.2. Total anthropogenic GHG emissions (GtCO2eq/yr) by economic sectors. Inner circle shows direct GHG emission shares (in % of total anthropogenic GHG emissions) of five economic sectors in 2010. Pull-out shows how indirect CO2 emission shares (in % of total anthropogenic GHG emissions) from electricity and heat production are attributed to sectors of final energy use. “Other Energy” refers to all GHG emission sources in the energy sector as defined in Annex II other than electricity and heat production [A.II.9.1]. The emissions data from Agriculture, Forestry and Other Land Use (AFOLU) includes land-based CO2 emissions from forest fires, peat fires and peat decay that approximate to net CO2 flux from the Forestry and Other Land Use (FOLU) sub-sector as described in Chapter 11 of this report. Emissions are converted into CO2-equivalents based on GWP100 from the IPCC Second Assessment Report. Sector definitions are provided in Annex II.9.[Figure 1.3a, Figure TS.3 a/b] [Subject to final quality check and copy edit.] [Source IPCC AR5 WG3]

  • Energy efficiency improvements that lower energy demand are an essential element of mitigation strategies for keeping temperature increase below 2°C. The potential of end-use energy efficiency improvement in transport, buildings and industry is large: at least about 40-60, 30-60 and 30-50% respectively by 2050, compared to the baseline (see figure 6.37). Clear cost numbers are not available. The carbon intensity of energy carriers will of course determine the overall emission reduction.
  • Changes of human choices in transport modes, diet, energy use in households, and purchasing long-lasting products can also have a large contribution to emission reduction. The potential is very hard to quantify.
  • In the energy supply sector the significant cost reduction of renewables and the sharp increase in volume are a positive development, but increased coal use, a declining share of nuclear power and lack of progress with application of CCS is limiting progress towards decarbonisation of electricity supply. The potential for a 90%+ reduction of emissions by mid-century is there, with fossil fuel with CCS and bioenergy with CCS (BECCS) being critical technologies to keep costs down. Leaving nuclear power from the technology mix has a much smaller impact on cost increase.
  • What the report– unfortunately- does not say is that new coal fired power plants without CCS are incompatible with 2°C scenarios. It is a direct consequence of the fact that the cumulative CO2 emissions budget consistent with 2°C has been used up already too much to allow for new long living coal fired power plants. See http://www.europeanclimate.org/documents/nocoal2c.pdf. This is a very relevant point for policy makers dealing with energy supply, since new coal fired power plants are still being planned in large numbers. What the report does say is that natural gas without CCS can have role as a transition fuel in the medium term. It means in the longer term CCS will also be essential for natural gas fired power plants.
  • Available technologies and practices in the transport sector will allow an emission reduction of 15-40% below baseline by 2050, while transport demand growth would otherwise lead to doubling of emissions. Cost numbers are not available. Measures will be combination of technical improvements in vehicle design, low-carbon fuels, mode shifts for passenger and freight transport, as well as urban planning to reduce the need for transport and make it easy for people to walk or cycle.
  • In buildings there are big opportunities for emission reduction in new and renovated building at low or sometimes at negative costs, but they have not been quantified. Given the long life of buildings, delaying action will lead to lock-in of inefficient new buildings that will be very costly to renovate later. In developed countries changes in lifestyle and behavior could halve energy demand by mid-century compared to today.
  • Industry, the biggest emitting sector, has significant opportunities to improve energy efficiency, efficiency of material use, recycling and reuse in the short term, allowing emissions to get below a fast growing baseline. Many of these opportunities will be made attractive by regional collaboration between industries. For more significant reductions in the longer-term radical process and product innovations, low carbon electricity and application of CCS in cement and steel production will be needed.
  • Emissions from agriculture and forestry have stabilized and are now declining, mainly due to a reduction in deforestation rates and increased forest planting. Further reductions are possible. Reductions of about 75% of current emissions can be achieved by afforestation, sustainable forest management, reducing deforestation, cropland and grassland management and restoration of degraded soils.
  • Urban areas provide unique opportunities to deliver reductions from integrated transport, building and infrastructure measures and reap many other social and economic benefits. Urban areas cover 52% of global population now, increasing to about 65% by 2050. They are responsible for 70% of energy use and 75% of CO2 emissions, with a strong increase expected. As this requires a lot of new urban development, a low carbon infrastructure can be built.

What are effective policy instruments to realize the large reduction potential?

  • Different policy instruments are discussed in the report, but no attempt was made to show best practice approaches that have proven effectiveness. Policy makers would have benefitted from such best practice information, as there is always resistance from vested interests and questions about effectiveness of policy design.
  • Phasing out fossil fuel subsidies (estimated at about $ 470 bn/yr direct subsidies or $ 1850 bn/yr including indirect subsidies) will lead to global emission reduction and economic growth, but is politically difficult to implement in most countries. The use of lump-sum cash transfers to low income groups has proven to be a good way to avoid negative impacts on these low-income groups.
  • The report points –rather modestly- to multiple objective policy packages to provide proper incentives for action. Co-benefits are mentioned prominently in the report, reflecting a very climate centric perspective. Taking a broader perspective where policies aim at multiple benefits and may be driven even more by other non-climate concerns such as congestion, air quality or energy import dependence would be more realistic and more relevant for policy making. The multiple objectives approach may in fact be one of the most promising ways to overcome the barriers to introducing ambitious policies. They would exploit the important co-benefits (or better: other benefits) of policy instruments, thereby broadening the constituencies that would benefit and mobilizing forces for more ambitious action. Things that are not clearly conveyed by the report. In a blog Rachel Kyte, vice president for sustainable development of the Worldbank, refers to her recent discussions with a group of finance ministers: “Often, policies that bring emissions reduction benefits also bring other more tangible benefits. Framing policies their way may expand support. Take transportation: Improving vehicle standards and investing in and increasing the use of public transportation reduces outdoor air pollution that contributes to asthma, heart disease, lung cancer, and 3.7 million deaths a year – and it reduces greenhouse gas emissions.” (see http://blogs.worldbank.org/voices/ipcc-longer-world-waits-address-climate-change-higher-cost )
  • The report does not provide much help in figuring out how to make ambitious climate action happen in practice. The messages from the 5th assessment report are not very different from those coming out of the 4th report 7 years ago. So why has climate action been insufficient when all the possibilities were there and costs were low? Without better clues on how to make ambitious mitigation action happen in light of all the barriers in place, the risk is that the IPCC messages will again fall at deaf ears. The report does not provide the necessary insights on how to make it happen. The previous point about a multiple benefit approach goes in the right direction, but was not emphasized much in the SPM.

Investment

  • Current investments in climate change mitigation and adaptation are about $ 360 billion per year, most of which goes to mitigation. For comparison: the total annual investment in the energy sector is about $ 1200 billion. Private investment form 70-75% of it. Public funds flowing to developing countries are about $40 billion/yr and private inflow in developing countries also about $40 billion/yr.
  • For a 2°C scenario large shifts in investment will be needed between now and 2030: low carbon electricity generation +$ 150 bn/yr, end-use energy efficiency +$ 340 bn/yr, fossil fuel extraction and fossil fired power plants -$ 80 bn/yr.
  • As investments are mostly private, public policies and incentives should trigger this shift in investment. The report pus emphasis on credit insurance, concessional finance, power purchasing agreements and feed-in tariffs as prime examples of such policies and incentives and also points to the need for an appropriate investment climate.

Figure SPM.9. Change in annual investment flows from the average baseline level over the next two decades (2010 to 2029) for mitigation scenarios that stabilize concentrations within the range of approximately 430–530 ppm CO2eq by 2100. Investment changes are based on a limited number of model studies and model comparisons. Total electricity generation (leftmost column) is the sum of renewables, nuclear, power plants with CCS and fossil power plants without CCS. The vertical bars indicate the range between minimum and maximum estimate; the horizontal bar indicates the median.
Proximity to this median value does not imply higher likelihood because of the different degree of aggregation of model results, the low number of studies available and different assumptions in the different studies considered. The numbers in the bottom row show the total number of studies in the literature used for the assessment. This underscores that investment needs are still an evolving area of research that relatively few studies have examined. [Figure 16.3] [Subject to final quality check and copy edit] [source IPCC AR5 WG3 SPM]

International cooperation

The summary for policy makers of the report is extremely vague on the role and instruments of international cooperation. The full chapter on international cooperation does not provide a thorough analysis of how to make international agreements more effective, which would have been a much-needed contribution to more ambitious climate action.

Making a Pledge and Review system work: national green growth plans, policies and a different approach to equity

Workshop: Building the Hinge: Reinforcing National and Global Climate Governance Mechanisms

December 4-7, 2013, Neemrana India

Background
The topic of the workshop is building the connection between national and international climate governance. In the early days of the international climate change regime the dominant idea was to set a global goal and distribute the effort required to get there over individual countries, to be implemented nationally through the country’s own policy package. The Kyoto Protocol was shaped along those lines, although countries did come to the table with specific ideas on what their share should be. After seeing the problems with applying this model for further steps to address climate change amongst a larger group including emerging economies and other developing countries, there now is a convergence to a model where nationally determined actions are the basis for an international agreement, with a system of “pledge and review” as the main mechanism to generate adequate collective action. This gives a central role to nationally determined action plans and to an international system for reviewing the adequacy of the proposed actions, with the universally agreed 2°C limit to global mean temperature increase as the benchmark for the collective impact of the national plans. Several proposals are now emerging of how such a pledge and review system could work in practice1.

How would pledge and review work out under current circumstances?
The dominant view in most countries in formulating national climate change plans is that they risk undermining economic growth, development and poverty reduction. Particularly in economically difficult times this leads to plans with low climate ambition or even weakening of earlier plans2. In that light it is likely that national pledges for the period till 2020 will not be strengthened significantly, and that pledges for a new treaty after 2020 will be weak and together not adequate to get the world back on a trajectory to 2°C3.

Current pledges for the period till 2020 are also lacking specificity regarding the national policies that will be implemented to get to the desired outcomes. It is likely that pledges for after 2020 will be similar, so that it will remain unclear what part of the national potential to reduce GHG emissions will be tackled. As we need rapid global emission reductions after 2020 to get back on a 2°C trajectory, not having full insights in what the potential for reduction and the accompanying policy options are in all countries will be a major obstacle.

The third problem is the way the thinking on equity has shaped up. The dominant view amongst developing countries is to look for a set of principles, more recently referred to as an “equity reference framework”, with which countries can determine what a fair contribution to a global effort would be. Apart from the problem of getting universal agreement on such a framework, the implication of this approach is that countries will only look at that part of their mitigation potential they consider to be their fair share. This will prevent to show the full potential available in countries and will thus make it hard to investigate if the untapped potential in countries can be tapped through international support, while it is clear that the full potential is globally needed to get back on a 2°C trajectory4.

A new paradigm for the relation between growth, development and climate action
There is growing awareness that there is a way to reconcile growth and development ambitions and effectively dealing with climate change and other pressing global issues: it is called Inclusive Green Growth. It is growth that ensures natural resources are used in a sustainable manner and planetary boundaries are respected. The OECD, the Worldbank, Asian Development Bank, African Development Bank, UNDP, UNEP and other international institutions5 have convincingly demonstrated that an inclusive green growth strategy is a much better guarantee, also for developing countries, to secure the future wellbeing of people. Thinking this through at national level, transforming national development strategies and translating this into national green growth plans would show a wealth of opportunities to grow economically while maintaining or getting to a low emissions, climate resilient and resource efficient economy. Based on such national green growth plans6 countries will be able to come forward with more ambitious pledges on climate change action than what we can expect under current circumstances. It means approaching economic, development and climate change issues on an equal footing, looking at the multiple benefits that can be achieved. This would avoid a “climate only” or “development only” approach that could lead to insufficient attention to either development or climate issues. In addition, international cooperation will become a positive force in realising national green growth opportunities, which could positively influence the international negotiation dynamics.

Policies as the key to capture emissions reduction potential in key economic sectors
Identifying the potential to get to a low emissions economy or even identifying what outcomes are aimed at in the various economic sectors is a good step to a national plan. However, the proof of the pudding is to identify how this potential and these outcomes can be realised in practice. This requires specific policy instruments to be put in place that create the incentives and disincentives that would lead business and individuals to invest or change behaviour. Without effective policy instruments a national plan is toothless. It is therefore important for any national plan or pledge to include the policy instruments to achieve the goals. There is now a wealth of information on effective policy instruments and how they can be tuned to national circumstances that countries can draw upon7. Ideally countries would present a policy programme in conjunction with an economy-wide target, so that adjustment of the policies over time will be triggered if the need arises. However, having just an economy wide-target without an accompanying policy programme could easily lead to an unambitious target or an unrealistic ambitious target.

A different interpretation of Equitable Access to Sustainable Development
Equitable access to sustainable development, the way BASIC countries have formulated the issue of equity in the climate change context8, can be defined in a different way than what currently has been proposed: not as effort sharing, but as cost sharing. The current effort sharing interpretation has led African developing countries to propose an “Equity Reference Framework” as part of the negotiations towards a new post-2020 climate agreement9. It would roughly work as follows for mitigation contributions (see also note by Xolisa Ngwadla):

  • Define how much needs to be done on mitigation and adaptation and finance (starting from the 2 degree goal and calculations of finance needed for mitigation and adaptation support
  • Develop an agreed “bucket of indicators” for what is equitable and derives from that what is the relative contribution of countries to the effort, while retaining the Annex I, non-Annex I categorisation.
  • The “bucket of indicators” then leads to a range of percentages (as determined by the equity indicators put in by countries), that provide guidance to countries on what they could contribute
  • Country contributions are then compared with the guidance on fair shares and if the contributions do not add up to the global total required, discussions are held with countries to increase their contribution

The ERF would also include adaptation and finance contributions, to be brought under a common metric, in a manner to be determined.

The ERF approach appeals to those that want to see the equity principles embedded in the UNFCCC to be visibly applied and it could help raise countries’ ambition by “ambitious ” countries “pushing up” ambition of others. However, reaching agreement on the reference framework will be difficult to achieve within the UNFCCC; even moving the responsibility to expert bodies outside the UNFCCC would be very controversial. In addition, the retention of the Annex I/ non-Annex I framework that the UNFCCC Durban decisions on a future agreement did away with, will be very controversial. It is also an approach that disconnects the discussion from the development agenda, a “climate only“ approach.

As an alternative, a cost sharing interpretation of the “Equitable Access to Sustainable Development” would work as follows:

  • If all countries would assess their full mitigation potential (up to a cost level that would be consistent with being on a 2°C trajectory) and how they could capture that potential with policies and measures,
  • They could then identify what they consider a fair share of the “net” costs (including development co-benefits) that they could absorb themselves and for what part they would need international financial assistance. That division would then be the country’s interpretation of what is their equitable contribution.
  • If the sum of countries’ proposed contributions, plus the financial contributions available to capture an additional part of the potential, does not add up to what is needed under a 2°C trajectory, then discussions are held with developing countries on raising their own contribution and with donor countries and international financial institutions on raising the financial means.

The advantage of such an approach is that the debate of what is equitable could take place on the basis of specific policies and interventions in the country and not in the abstract when discussing equity principles. The other big advantage would be that the full potential for emissions reduction would be visible and bilateral and international financial resources to tap that potential could be more easily mobilised. The approach links the development with the climate agenda and has therefore a better chance that countries see the opportunities for low carbon, climate resilient green growth, allowing them to be more ambitious in their climate actions. The model is comparable to the South African analysis performed in their LTMS exercise10 (see figure).

Implications for a global regime
Giving the three elements discussed above a place in a new climate regime that is being negotiated will not happen automatically, as the contentious negotiations at COP19 in Warsaw have shown11.

The issue of national green growth plans as the basis for determining pledges has been covered to some extent in the Cancun decisions, although it was called “low carbon development plans” at the time12. For developed countries it was mandatory to produce such plans, for developing countries it was “encouraged”. This is too weak a link to the emerging pledge and review system, as current negotiations show. It would be important to have the national green growth/ low carbon development plan as the basis for determining pledges enshrined more firmly in the process to get to a 2015 agreement. Of course more time could be given to least developed countries and those with very low emissions.

The identification of the full mitigation potential and the policies that would make it possible to tap that potential could be made a requirement for the proposals that countries are to make in the run up to the 2015 COP, in the form of agreed guidance13. Differentiation of the time frame for producing such a full potential assessment would be needed, but G20 countries should be able to produce such an assessment well before the 2015 COP, and some other countries probably as well.

The element of identifying countries’ equitable share of paying for the “net” costs of implementing the respective policies would have to become part of the review process, in which other parties and independent analysts could comment on the proposed division “self-paid” contribution from a country in light of its development benefits and in which discussions on mobilising financial assistance to countries for the remaining part could be held. Unfortunately no agreement exists at the moment in the UNFCCC negotiations on whether to have a review process and if so, how such a review process should be structured14. Without a proper review process a new regime that is built on national offers would be seriously weakened.

  1. See for instance Haites et al, Possible elements of a 2015 legal agreement on climate change, IDDRI Working Paper #16, October 2013; Morgan et al, A pathway to a climate change agreement in 2015: options for setting and reviewing GHG emission reduction offers, World Resources Institute Working Paper, October 2013.
  2. Australia is repealing its national climate legislation and making the conditions for raising its target more stringent (http://climateactiontracker.org/assets/publications/briefing_papers/CAT_Policy_brief_Australia_2013-11.pdf ); Japan has changed its previous reduction pledge to a pledge that lets emissions grow compared to 1990 (http://climateactiontracker.org/assets/publications/briefing_papers/CAT_Policy_brief_Japan-Nov15-2011.pdf )
  3. The 2013 UNEP Emissions Gap Report (http://www.unep.org/pdf/UNEPEmissionsGapReport2013.pdf ) indicated that we currently are on a 3-5 oC pathway
  4. The 2013 UNEP Emissions Gap Report shows that very rapid reductions after 2020 are needed now that it is becoming likely that action before 2020 will be inadequate.
  5. See for instance Worldbank, Inclusive Green Growth (http://www.worldbank.org/en/news/feature/2012/05/09/inclusive-green-growth-policies-real-world-challenges ); OECD’s Green Growth work (http://www.oecd.org/greengrowth/keydocuments.htm ); UNEP’s Green Economy work (http://www.unep.org/GreenEconomy/ ); UNDP’s Climate Resilient Green Growth work (http://www.undp.org/content/ethiopia/en/home/operations/projects/environment_and_energy.html ); African Development Bank, African Development Report 2012: Towards Green Growth in Africa (http://www.insme.org/files/adfb-report-green-growth-in-africa ); UNESCAP’s Low Carbon Green Growth Roadmap for Asia and the Pacific (http://www.unescap.org/esd/publications/environment/lcgg-roadmap/Roadmap-FINAL-rev.pdf ); Asian Development Banks’s Green Growth, Resources and Resilience (http://www.adb.org/publications/green-growth-resources-and-resilience )
  6. Some countries that have developed National Green Growth plans are: Ethiopia, Mozambique, Sierra Leone, Kenya, South Korea, Cambodia, Indonesia.
  7. See for instance the UNEP Emissions Gap reports 2012 and 2013, ClimateWorks Foundation’s Policies that Work (http://www.climateworks.org/news/item/policies-that-work-overview-report ) and its Vehicles and Fuels report (http://www.climateworks.org/news/item/policies-that-work-vehicles-and-fuels ) and IEA’s Policies and measures databases (http://www.iea.org/policiesandmeasures/ ).
  8. Harald Winkler, T. Jayaraman, Jiahua Pan, Adriano Santhiago de Oliveira, Yongsheng Zhang, Girish Sant, Jose Domingos Gonzalez Miguez, Thapelo Letete, Andrew Marquard and Stefan Raubenheimer, Equitable access to sustainable development: Contribution to the body of scientific knowledge. A paper by experts from BASIC countries, 2011, http://www.rcsd.org.cn/FCKeditor/userimages/rcsd-20111221111920.pdf
  9. https://unfccc.int/files/documentation/submissions_from_parties/adp/application/pdf/adp_african_group_workstream_1_20131008.pdf
  10. Winkler, H (ed.) 2007, Long Term Mitigation Scenarios: Technical Report, Prepared by the Energy Research Centre for Department of Environment Affairs and Tourism, Pretoria, October 2007
  11. See the outcome of the ADP discussions at COP19 at http://unfccc.int/files/meetings/warsaw_nov_2013/decisions/application/pdf/cop19_adp.pdf .. postponing the determination of information that should be contained in country pledges.
  12. See UNFCCC document FCCC/CP/2010/7/Add.1
  13. COP19 decided that ADP should agree on such guidance by COP20 in Lima
  14. See ADP and COP decisions from COP19

The confusion about emission budgets for staying below 2°C

After the release of the IPCC Working Group I report in September there has been a lot of attention to the issue of the GHG emissions budget that corresponds to staying below the internationally agreed global mean temperature increase of not more than 2°C. Unfortunately, the numbers being discussed are a bit confusing, since they mix “carbon” ,”carbon dioxide” and “ CO2equivalent” (i.e. all greenhouse gas together) and do often not account for the errata that IPCC issued in November regarding its Summary for Policy Makers of the recent Working Group I report.

Some basics:

  • To go from C to CO2, numbers have to be multiplied by 3.67.
  • CO2equivalent is the weighted sum of all greenhouse gases, using their respective Global Warming Potential for a 100 year period (CO2=1, Methane= 34, Nitrous Oxide= 298, HFC 134a= 1550) (see IPCC AR5, WG I, chapter 8)
  • 1 Gigaton= 1 billion tons

The proper calculation goes as follows:

  • IPCC WG I says the total GHG budget (from around 1860 till the end of this century) for a 2°C temperature increase, according to the RCP 2.6 scenario set, is 1000 Gigaton C
  • Looking only at CO2 and omitting the other greenhouse gases this number is reduced to 800 Gigaton C
  • CO2 already emitted: 515 Gigaton C (corrected value as indicated in errata issued November 13, 2013)
  • Remaining budget for CO2 only: 285 Gigaton C, which is equivalent to 1050 GtCO2

Compare the budget of about 1000 GtCO2 with current annual CO2 emissions (about 34 GtCO2 from energy and industry and about 5 from deforestation and land use change): at current rates the budget will be finished in about 25 years.

Compare the budget with the currently known fossil fuel reserves: about 3/4 of those reserves will have to stay in the ground (see graph below from the Scientist Statement).

 

New unabated coal not compatible with keeping global warming below 2°C

I have recently been a part of an initiative to counter claims from the coal industry that more efficient coal plants are a climate solution. This has resulted in a factual statement of leading energy and climate scientists from across the world.

Read the press release, or click here for the full statement with supporting evidence.

The main points of the statement are:

  1. Unabated coal is not a “low carbon” technology
  2. Avoiding dangerous climate change requires that the majority of fossil fuel reserves need to stay underground
  3. Current trends in coal use are harbouring catastrophic climate change
  4. To keep global warming to less than 2°C above pre-industrial, use of unabated coal has to go down in absolute terms from now on
  5. Alternatives are available and affordable
  6. Public financing institutions and regulatory agencies are reining in unabated coal, but more is needed

Download the PDF statement

 

Does green growth make economic sense? Yes, but you have to do it right.

Last week in Mexico City the launching conference took place of the Green Growth Knowledge Platform, established by the Global Green Growth Institute, OECD, UNEP and the World Bank to try and improve the sharing of relevant knowledge on what green growth is, whether it makes economic sense and how to implement it. Green Growth is the newest incarnation of the Development First approach described in my book in chapter 4.

At the official signing ceremony a series of high-level speakers made strong statements about the need for and the potential of green growth. The Mexican Minister for Environment and Natural Resources, the Deputy Minister of Finance and the chief presidential advisor all made clear that Green Growth is the way to go for Mexico. This is very much inspired by president Calderon, who has made Green Growth one of his key priorities. Green Growth is seen as essential to improve Mexico’s competitiveness. It already drives investments in waste management and wind energy. A commitment is made to reduce greenhouse gas emissions to 30% below the business as usual levels by 2020. A new Centre for Sustainable Economy and Development has been established. A comprehensive Green Growth Strategy is being developed. When Mexico hosts the G20 meeting in June of this year the topic will be high on the agenda. In private a Mexican NGO representative pointed out however that the Mexican government is not making the necessary choices yet. In addition to green policies and initiatives the “old” policies such as building more roads and maintaining fossil fuel subsidies are maintained.   The OECD Secretary-General Angel Gurria, referring to the OECD Green Growth Strategy that was agreed upon last year said “Green and Growth can and must go hand-in-hand”. This is a major change in the OECD’s economic thinking. As a follow-up OECD recently published the Energy and Green Growth study and soon will issue the 2050 Environmental Outlook. The messages from that work are: quality of life will deteriorate if we continue on a business as usual path and economic growth will be lower than in a Green Growth scenario. OECD’s policy recommendations for a green growth strategy are: don’t delay action in climate, because it will be extremely costly; get the prices right; complement that with regulatory policies where price signals are ineffective; avoid investments that lock economies into a high carbon state (cities, infrastructure, electricity supply); invest heavily in R&D and a good innovation climate; and make the labour market as flexible as possible to accommodate the changes that need to happen.

The conference then moved to a discussion on the fundamental question if anything like Green Growth really exists. Geoffrey Heal from Columbia University presented an overview paper that tries to answer that question. The basic conclusion is: “Green policies can indeed lead to as much growth (i.e GDP increase) as traditional policies, but you have to do it right.” Economic theory supports this for three reasons: (1) all economies are in a sub-optimal state, so increasing efficiency through green policies is possible; (2) green policies can enhance the natural capital or the knowledge (green tech) that can lead to higher growth; (3) green policies can increase the optimal growth possible by creating a structurally higher rate of innovation. In addition to this it is obvious that welfare can benefit greatly, because environmental and climate damage can be avoided. Implementing green policies to maximise growth and avoid negative effects is not easy however and, if not done correctly, growth can suffer. The recipe for the right green policy package is similar to what OECD is now recommending (see above). In practice the political economy often leads governments not to follow the optimal policy approach, but to satisfy the vested interests at the same time as introducing green policies. Then growth can easily suffer.

The rest of the conference moved to a more specific discussion of the question how this green growth potential can be realised.   In a discussion on the transportation sector it was made clear that green transportation policies can have real economic benefits by reducing congestion and air pollution and increasing mobility. However, in practice rational transportation policy is rare, because governments  “manoeuvre” the political economy to get re-elected. A paper by Jose Gomez-Ibanez of Harvard University explains this very well on the basis of experiences in Ho Chi Minh City, Jakarta and Mumbai. There are additional barriers to green transportation solutions, such as the way infrastructure options are being compared economically, that disfavour green solutions.

The issue of international competitiveness and trade is often seen as a major obstacle to green growth. It is then assumed that green production in tradable goods is seriously limited by the risk of leakage and relocation of industries. A thorough evaluation of the literature however learns that this is not the case. A paper by Brian Copeland of the University of British Columbia showed that polices to get to clean production in the tradable sector in OECD countries have only a small negative effect on competitiveness and relocation of industries. There is no evidence that shielding the tradable sector helps overall economic growth. In the same vain the idea that “pollution havens” are a good way to stimulate growth has not been confirmed by studies. Weak environmental policy is not leading to a growth bonus. For cases of green policy to prevent natural capital depletion (such as deforestation) the findings are slightly different: in the short term green policies will lead to economic loss, but in the long term this is reversed. In case of global goods such as forest the way to overcome these short-term economic losses is to get compensation for maintaining the natural resource in the form of payment for environmental services.

Employment is a key issue in evaluating the benefits of green growth.  Green and renewable energy policies (wind and solar energy, energy efficiency) can create additional employment, because the activities are more labour intensive than adding large scale centralised fossil fuel power stations and to a large extent require local labour.  If this would lead to closing local labour intensive coalmines however, net employment may not change much. This was more or less the conclusion of the debate on green growth and employment: green growth can create new jobs, but it will not solve unemployment altogether. See also the paper of Alex Bowen of the London School of Economics. Another paper by Stefan Dercon of Oxford University warns that specific attention is needed to make sure green growth will not make the poor worse off, even if their living conditions may improve. Green policies generally lead to higher prices for energy and water (incorporating the externalities), which is good for a greener economy, but would require compensation for poor people. Green growth may also lead to loss of unskilled labour that poor people often rely on, so that additional efforts are required to train poor people.

Particularly interesting was a session on behavioural economics, i.e. on the question how people can accept the change necessary for the transition to a green economy. A nice overview was given by Elke Weber of Columbia University (see the paper by Weber and Johnson) of the lessons that can be drawn from psychological research into human decision making. The research clearly shows that humans seemingly do not follow rational economic arguments. “Green” decisions may be economically attractive, but that does not mean people will agree with them. But using the insights from research on human decision-making it can be explained why that is the case. People have for instance a limited attention span, they have difficulty comparing different options if these differ in many respects, they heavily discount things that happen in the future (such as long term benefits), they are sceptical about new technologies in general, they are influenced by emotions (certain words often have a negative connotation). So it should be no surprise that seemingly attractive choices for green policies are not embraced. Human beings however also have a natural desire to do “good”. Turning these insights around tells us that strategies to get general acceptance of “green” decisions or behaviour should simplify choices (by making the green alternative the default, presenting the choice as simple as possible), avoid negative connotations (by choosing the right wording), create trustworthy references (by using celebrities declaring their support), building in elements of doing good and competition (how low can I get my energy consumption compared to my neighbours?) and using rule-based approaches, such as building codes.

There is still a lot to learn on how to design and implement green policies without sacrificing growth, particularly in developing countries.  However, there is a solid basis to start making the transition to a green economy now.