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1 Climate Change Policies: Roles of Developing Countries Anil Markandya Bath University December 10, 2006 Slide 2 2 Variations of the Earths Surface Temperature: 1000 to 2100 Slide 3 3 Global Carbon Cycle For every 1 t of carbon emitted from fossil fuels 10 t are taken up and emitted by terrestrial ecosystems 7 t are taken up and emitted and by ocean ecosystems t is emitted from land clearing Slide 4 4 The Balance each year... 6.3 Gt from fossil emissions ca. 1.6 Gt emitted from land-clearing 1.7 Gt net uptake into ocean systems and c. 3.0 Gt into terrestrial systems Leaving a net 3.2 Gt in the atmosphere We cannot ignore sinks in UNFCCC Slide 5 Emissions and uptakes since 1800 (Gt C) Slide 6 6 Carbon budget 1980s1990s Atmospheric increase+3.3 0.1+3.2 0.1 Fossil emissions+5.4 0.3+6.3 0.4 Ocean - Atmosphere flux -1.9 0.6 -1.7 0.5 Land Atmosphere flux -0.2 0.7 -1.4 0.7 Land-use Change 1.7 ? ?1.6 0.8 ? Residual terrestrial sink -1.9 ? ?-3.0 ?? The terrestrial carbon sink appears to be increasing Slide 7 7 Background Consensus on Climate Change Suggests An increase in global mean temperatures of 1- 4.5 0 C by 2100 A global mean rise in sea level of 14 to 94 cm These are wide ranges. Even wider ranges apply at the regional level Changes in rainfall and extreme events is predicted to increase Slide 8 8 Background Information Consensus on Impacts Suggests A modest impact on agricultural production but with very wide variations (Positive to highly negative). Changes in fisheries with possible benefits in some areas, losses in others. Loss of land in low-lying areas. With some action a 1 meter rise would cause loss of 6% of Netherlands, 17.5% of Bangladesh. Slide 9 9 Background Information Consensus on Impacts Further Suggests Health impacts are significant: increase in malaria and infectious waterborne diseases. Increase in magnitude and frequency of natural disasters. Impacts on tourism, negative in winter sports, positive in some sea resorts. Possible conflicts as different groups attempt to claim land and water resources Slide 10 10 Global Climate Change Impacts Climate Change Temperature Precipitation Sea level rise Species and Natural Areas Loss of habitat and species Forests and coral reefs vulnerable Impacts on Coastal Areas Erosion, inundation of coastal areas, cost of protection low-lying delta areas and small island states threatened by sea level rise Water Resource Impacts Quantity, quality of supply; Competition over resources Arid and semi-arid areas in Africa, Middle East will become more water scarce Forest Impacts composition, geographic range, health and productivity Agricultural inputs Crop yields Irrigation demands agricultural productivity declines in Africa, Latin America Health Impacts Mortality, infectious disease, respiratory disease Increase in vector-borne diseases in the tropics Slide 11 11 Valuation of Impacts in Money Terms Can we value the damages in money terms? Question is highly controversial. Yet some attempts have been made. Main effects are health, sea-level rise and agriculture. Problem of time period is critical. Most damages over next 100 years will occur from 2030-2100. Hence discount rate is very important. Degree of uncertainty is very high. Slide 12 12 Valuation of Impacts: Fund Model Slide 13 13 Impact Valuation : Open Framework Model: $ Billion Slide 14 14 Valuation of Impacts Very sensitive to the discount rate. Going from 1- 5% reduces damages by factor of 20 Major impacts are in Asia, Africa, followed by Latin America. Europe and N. America have very small impacts. At country level impacts vary by even more. Type of damages: agriculture and water, followed by health are man direct effects. Disasters are main indirect effects. Valuation remains controversial Slide 15 15 Valuation of Impacts Models presented are not too dissimilar but there are some who argue that damages could be much greater. At 3% discount rate damages range from $43 to $74 trillion over 100 years. Annual world GNP was about $30 trillion in 1998. So annual damages are about 1-2% of world GNP, which is significant but should not be insurmountable. Damages amount to $20-60tC at 3% discount rate. This would amount to 1.7 to 5.1cents/kWh or 1.4-4.2 cents/litre of diesel. Slide 16 16 Some Recent Meta-analyses Joel Smith and Sam Hitz: Estimating the Global Impacts from Climate Change, OECD Background Paper ENV/EPOC/GSP(2002)12/FINAL, Paris (2003) Joel Smith, A Synthesis of Potential Climate Change Impacts on the US, Pew Center, Washington, DC (2004) Richard Tol, The Marginal Damage Costs of Carbon Dioxide Emissions: An Assessment of the Uncertainties, Energy Policy, 33:2064-74 (2005) Richard Tol, Estimates of the Damage Costs of Climate Change, Environmental and Resource Economics, 21:47-73 (2002). Slide 17 17 Tol: Meta-analysis of Marginal Damage Cost per tonne of C Source: Tol (2005) Slide 18 18 Issues in Valuation Discount rate Valuation of loss of life Why estimates have been declining? Certain values have been ignored. Slide 19 19 Stabilisation Scenario: Scope of Benefits Slide 20 20 Policy Implications Major impacts are in relatively poor countries Major actions for mitigation are needed in industrialized countries. Effects are over a long period Uncertainties are critical. Impacts are not independent of measures taken All these factors make action difficult to agree upon. Slide 21 21 Adaptation Action to adapt is necessary whatever measures for reducing greenhouse gases are agreed on. Uncertainty and risk aversion play a critical role in determining adaptation strategy. Measures have been classified w.r.t. purpose (whether planned or autonomous) and with respect to timing (reactive or anticipatory). Autonomous, reactive adaptation does not need government intervention. Planned anticipatory intervention does Slide 22 22 Adaptation Options Measures include infrastructure investments (e.g. sea defences) incentives to discourage land use in vulnerable areas Investment in R&D for malaria control and other diseases Development of better early warning mechanisms to reduce damages caused by extreme weather conditions. Investment in development of crops suited to new climate Slide 23 23 Adaptation Policy The need for adaptation is greatest in countries least able to afford it. At Rio it was accepted that some assistance should be provided to them. Idea that penalties for non-compliance would go to an adaptation fund was proposed. This has been taken up partly in the flexibility mechanisms (Clean Development Mechanism) Whatever policies are put in place, we have to ensure that the incentives for cost effective action remain in place (e.g. sea walls may be less cost effective than relocation but external assistance will only pay for former. Slide 24 24 Mitigation Mitigation measures reduce GHGs. Current emissions are about 1 tC/capita/year. South average is 0.5 TC. North average is 3tC. 2100 target is 0.25-0.3 tC/capita/year. By end of next century this implies around half of current levels. This will need a renewables transition (but we have time!) South catches up with North in 2016 w.r.t. to emissions, 2056 w.r.t. to concentrations and 2118 w.r.t. to radiative forcing. Slide 25 25 Aside How Much are We Doing in Renewables? UK! Slide 26 26 Mitigation Measures to reduce emissions fall into: Energy efficiency Clean energy production Carbon sequestration. It is expected that energy efficiency will make the major contribution in the next decade, whereas physical carbon sequestration will be the last category to come on line. Slide 27 27 Mitigation In Kyoto Time Frame Under the Kyoto Agreement industrialised countries agreed to reduce emissions by 5.2% w.r.t. 1990 levels by 2008-2012. Or about 150 mn. tons carbon/year (39 Annex I countries) No reduction commitment by non Annex I countries. Agreement on the importance of flexibility mechanisms Emissions trading between Annex I countries Permission to transfer/acquire emissions from projects between Annex I countries (JI) (Art 6) Permission for Annex I countries to acquire emissions from non Annex I (CDM) (Art 17). Slide 28 28 Kyoto Protocol- Recent Developments Ratification by Russia brought KP into effect USA has not ratified and so is not party to the Protocol but is looking at alternative ways to reduce GHGs Voluntary Programs (PCA) About 25 states are pursuing some kind of GHG reduction policy. Proposals range from carbon sequestration to stationary source emissions reductions. Wyoming: Carbon sequestration California: GHG registry, mobile source limits. MA., NH: Four pollutant legislation Nox, SO 2, CO 2, Mercury. Limits on all four. Slide 29