Jonathan Pershing

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Framing the Post-Kyoto Debate: Options for Climate Policy After 2012 STEP Seminar Series Princeton University Princeton, NJ April, 2006 Jonathan Pershing Climate, Energy and Pollution Program World Resources Institute http://www.wri.org

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Framing the Post-Kyoto Debate: Options for Climate Policy After 2012 STEP Seminar Series Princeton University Princeton, NJ April, 2006. Jonathan Pershing Climate, Energy and Pollution Program World Resources Institute http://www.wri.org. Overview. An update on the science - PowerPoint PPT Presentation

Transcript of Jonathan Pershing

Page 1: Jonathan Pershing

Framing the Post-Kyoto Debate: Options for Climate Policy After

2012

STEP Seminar SeriesPrinceton University

Princeton, NJ

April, 2006

Jonathan PershingClimate, Energy and Pollution ProgramWorld Resources Institute http://www.wri.org

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• An update on the science• Greenhouse gases and related indicators• Policy options• The international process: reviewing the state

of play• Framing the debate on next steps• Conclusions

Overview

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An update on the science

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2005 Temperature Records(Deviation from 1951- 1980 mean)

Source: NASA Goddard Institute for Space Studies Surface Temperature Analysis at  data.giss.nasa.gov/gistemp/

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Changes in Ocean Circulation

• Transect at 23º N latitude– Measurements

taken in 1957, 1981, 1992, 1998, 2004

• Indicates a 30% reduction in ocean circulation volume since 1957

Source: Ocean current figure: www.NASA.govTransect information: Bryden, Harry L. et al. "Slowing of the Atlantic meridional overturning circulation at 25° N." Nature 438: 655-657. 1 December 2005

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Source: ACIA, Impacts of a Warming Arctic, Climate Impact Assessment Report, Cambridge University Press, 2004

Observed sea ice September 1979

These two images, constructed from satellite data, compare arctic sea ice concentrations in September of 1979 and 2003. September is the month in which sea ice is at its yearly minimum and 1979 marks the first year that data of this kind became available in meaningful form.

Observed sea ice September 2003

DEPLETION OF SUMMER SEA ICE

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Hurricane Trends

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Impacts follow temperature trends

Source: WashingtonPost.com, September 16, 2005, after Science Magazine 9

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Scenario of damages in 2050

Source: The Guardian, based on Pentagon report, February 2004

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Greenhouse Gases and Related Indicators

Near- and Longer-Term Trends

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World GHG Emissions (2000)

Source: WRI, CAIT: http://cait.wri.org

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National GHG Emissions, 2000

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Per Capita Emissions, 2000

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Largest Emitters: Developed & Developing

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Projected Future GHG Emissions Growth

% Percent change from 2000

Source: Baumert et al, 2005

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World Primary Energy Demand

Source: IEA WEO 2004

Oil

Natural gas

Coal

Nuclear power

Hydro power

Other renewables

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

1970 1980 1990 2000 2010 2020 2030

Mto

e

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

1970 1980 1990 2000 2010 2020 2030

Mto

e

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Electricity generation: fuel mix

% S

hare

of

Fue

l Mix

Source: IEA Statistics, 2002 data20

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GLOBAL CO2 EMISSIONS FOR IPCC/SRES SCENARIO GROUPS

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Policy options

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What will it take to stabilize the atmosphere?

Need to reduce greenhouse gases globally by

60-80 percent over the century

Population is likely to increase from 6 billion today to 10-12 billion

Economic growth is likely to expand, perhaps

by a factor of 10

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Dealing with Climate Change

• Policies cover all gases and all sectors -- but emissions are not evenly divided among these– Energy and CO2 are key

• Policy Choices:– Emit less (be more efficient)– Emit differently (switch fuels or processes)– Sequester– Do without (change behavior)– Adapt (learn to live with it)

• Policy actions include:– Market approaches (taxes, subsidies, cap-and-trade)– Regulations– R&D– Processes/outreach– Foreign Assistance

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Policies by Instrument (1999-2004)

Source: IEA (http://www.iea.org/dbtw-wpd/textbase/envissu/pamsdb/index.html)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Fiscal Tradable Permits Regulatory Instruments Voluntary Agreements RD&D Process/Outreach

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GHG Flow Diagram: Global Greenhouse Gas Emissions

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Policies by Sector (1999-2004)

Source: IEA (http://www.iea.org/dbtw-wpd/textbase/envissu/pamsdb/index.html)

0%

20%

40%

60%

80%

100%

Buildings Energy Production Industry Transport

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Reviewing the state of play

The International Process

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International Agreements: The UN Convention and Kyoto Protocol

• Targets: national caps on greenhouse gas emissions; collective reduction of 5.2% below 1990 levels by the 2008-2012 timetable…for 38 industrialized countries and economies in transition (i.e. “Annex I”)

• Market-based mechanisms: designed to achieve global emission reductions at the least possible cost (involves private entities, not just governments.)

• Compliance mechanisms: Emissions measurement standards; reporting requirements; review provisions; mandatory consequences for countries that do not comply.

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UNFCCC – State of Play• 1992: UNFCC• 1997: Kyoto Protocol• 1998 – 2001: Following Kyoto, negotiators spend several years

developing rules to implement Kyoto agreement (i.e., Marrakech Accords)

• 2004: Ratification and entry into force (with attendant agreement from Russia on gas and WTO)

• Beginning of post-Kyoto discussions– 2003: New Delhi (Cop 9): focus on adaptation– 2004: Buenos Aires (Cop 10): consideration of post Kyoto commitments– 2005: SB 22: Seminar of Government Experts (SOGE)

• Nov/Dec 2005: Montreal: COP/MOP 1

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Montreal Outcomes• Annex I parties continue discussions on post Kyoto

regime – based on emissions markets– US and Australia largely oppose talks– However, at the state/local level, both US and Australia

experimenting with emissions trading regimes• Non-Annex I parties reject any discussion of accepting

binding emissions caps (language allowing discussion of next steps explicitly states it will “not open any negotiations leading to new commitments.”

• Marrakech Accords adopted (with ET, JI, and CDM as well as rules governing forest activities). – News rules opening CDM to “programmatic” as well as

“project” activities

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International Politics: the EU

• “Climate Change is a major threat”• “While the Kyoto Protocol takes us in the right

direction, it is not enough. We need to cut GHG emissions radically, but Kyoto doesn’t even stabilize them. It won’t work as intended unless the US is part of it.”

• There are huge opportunities in environmental technology, and huge possibilities in sustainable development.”

-- Prime Minister Tony Blair, 2005

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International Politics: Developing Countries

• “Climate change has, and for the foreseeable future will continue to have a profound impact on the development prospects of our societies.”

• “The UNFCCC and the Kyoto protocol establishes a regime that adequately addresses the economic, social and environmental impacts of sustainable development.”

• “The regime rests on differentiation of obligations among Parties…developed countries should therefore take the lead in international action to combat climate change.”

• “The convention establishes economic and social development and poverty eradication as the first and overriding priorities of developing countries.”

-- Joint Declaration, Gleneagles, 2005 Brazil, China, India, Mexico, S. Africa

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International Politics: The US

• “Climate change, with its potential to impact every corner of the world is an issue that must be addressed by the world.”

• “The Kyoto Protocol was fatally flawed in fundamental ways.”

• “We’re creating a National Climate Technology Initiative…”

-- President Bush, 2001

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Framing the debate on next steps

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Form and Stringency Are NOT the Same

Form

Fiscal Measures(taxes, fees…)

Market and regulatory(cap-and-trade, standards...)

Industry agreements

Stringency

What level of effort is required?

Size of tax or subsidy

Level of cap

Stringency of technical standard…

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Stringency is about how much…

 

Meinshausen, Malte. "On the Risk of Overshooting 2°C." Proceedings from International Symposium on Stabilisation of Greenhouse Gas Concentrations -- Avoiding Dangerous Climate Change, Exeter, 1-3 February 2005 at www.stabilisation2005.com/programme.html.

Risk of increased temperature

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…which presumes a cost for action as well as a risk from inaction…

Source: IPCC TAR

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Implications of delayed action

Source: Meinshausen, 2005

…and when.

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Policies & MeasuresGreenhouse gas markets

Sector approaches

Action targetssupply & demand

No-regrets targets demand

Project mechanismsdemand

Adaptation

Technology agreements

Emissions Trading (binding targets) supply & demand

Institutions

Form is everything else

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EU and US emission market trendsECX/ICE FUTURES Price and Volume

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

22 A

pr

16 M

ay

07 J

un

28 J

un

19 J

ul

09 A

ug

31 A

ug

21 S

ep

12 O

ct

02 N

ov

23 N

ov

14 D

ec

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Total Volume

Settlement

Source:http://www.chicagoclimatex.com/mktdata_ccfe/sfi/historical/Historical_Prices.xls

EU ECX Price

US CCX Price

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.505/

16/2

005

5/23

/200

5

5/30

/200

5

6/6/

2005

6/13

/200

5

6/20

/200

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6/27

/200

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7/4/

2005

7/11

/200

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7/18

/200

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7/25

/200

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8/1/

2005

8/8/

2005

8/15

/200

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8/22

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8/29

/200

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9/5/

2005

9/12

/200

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9/19

/200

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9/26

/200

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10/3

/200

5

10/1

0/20

05

10/1

7/20

05

10/2

4/20

05

10/3

1/20

05

11/7

/200

5

11/1

4/20

05

11/2

1/20

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11/2

8/20

05

12/5

/200

5

12/1

2/20

05

12/1

9/20

05

12/2

6/20

05

1/2/

2006

1/9/

2006

1/16

/200

6

1/23

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6

1/30

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2/6/

2006

2/13

/200

6

2/20

/200

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2/27

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6

Vin 2003

Vin 2004

Vin 2005

Vin 2006

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CDM growing

• Data based on 919 projects (compare with 716 in December 2005)

• Strong growth started in last Q05 and continues

• 1.3 billion credits expected pre-2012

Source: Scharf & Ellis (OECD), 2006

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Country

CO2 Change1990–2002

MtCO2

GDP percapita

(GDP/Pop)Population

(Pop)

EnergyIntensity (E/GDP)

Fuel Mix (CO2/E)

China 1247 122 15 -96 8

United States 863 23 16 -20 -1

France 2 17 5 -6 -15

United Kingdom -36 24 3 -20 -13

Russian Federation -453 -5 -3 -12 -3

% Contributions to CO2 Changes

But setting new post-2012 targets is difficult…

Source: Baumert et al, 2005

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…even for a single country

China

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2002 2025Year

MtC

O2

(fro

m e

ner

gy)

Low

Medium

High

USA

Difference of 1,990 MtCO2 or approx 25%

2002 Emissions

2025 Emissions

(EIA Projections Reference Case)

Kyoto style target 2012

China

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2002 2025Year

MtC

O2

(fro

m e

ner

gy)

Low

Medium

High

USA

Difference of 1,990 MtCO2 or approx 25%

2002 Emissions

2025 Emissions

(EIA Projections Reference Case)

Kyoto style target 2012

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Expectations for the Market Post-2012

• Some Annex I Parties continue with market development (likely to include US, but to exclude Russia) – Key is institutional capacity to manage market compliance,

including adequate assurance of integrity of emissions reductions

– Politics will dictate level of effort; US engagement critical• Some developing countries adopt market approaches and

participate in global emissions trading market (e.g., Korea, Mexico)– China, depending on rate of institutional development, may

engage over medium term (e.g., by 2020)• Other countries continue to participate in CDM/project

offset systems, including with “programmatic” CDM

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The alternative to markets: A policy approach

Source: David Victor, Presentation at RFF, February 2006

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Policies may not focus on climate…

Source: IEA WEO, 2002

Global Energy Poverty

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Other development challenges exist…

Motor vehicles per 1000 people, selected countries

Source: Bradley and Baumert, 2005, “Growing in the Greenhouse”

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Motor Vehicle Shares of Criteria Pollutants in Chinese Cities

Source: Schipper and Ng, 2005

 City

CO (%) HC (%) NOx (%)

Beijing (2000)

77 78 40

Shanghai (1996)

86 96 56

Guangzhou (2000)

84 50 45

…and are multifaceted…

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…including energy security as well as environmental issues

-150

-100

-50

0

50

100

150

200

250

300

1974

1979

1984

1989

1994

1999

2004

Consumption

Production

Exports

Mil

lions

of

tons

of

oil e

quiv

.

Figure 2. Oil Production, Consumption, and Exports in China

Source & Notes: IEA, 2004b, with estimates for 2003 and 2004 based on BP, 2004 and 2005. Negative values indicate imports.Source: Schipper and Ng, 2005

Oil Production, Consumption and Imports for China

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0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2003

: Roa

d

2005

2010

2015

2020

Oil Sav

ed20

0520

1020

1520

20

Inte

grat

ed T

rans

port

2005

2010

2015

2020

Car

bo

n E

mis

sio

ns

(Mt)

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.1

Car

bo

n(k

g)/

km

Electric Cars

CNG

Oil

Carbon/km

Three scenarios for China: Carbon from Motor Vehicles

Source: Schipper and Ng, 2005

2003 Road Oil Saved Integrated Transport

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Considering a Sectoral Agreement

Source: Baumert et al, 2005

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Sectoral “Fit” for Agreement

• ICAO has failed to reach conclusions on emissions reduction plan

• EU proposals being considered include:– Fuel tax– Ticket tax– Slot auctioning– Emissions charge– Modal transfer incentives

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Sectoral “Fit” for Agreement

• Voluntary agreement through International Aluminum Institute (26 members with 80% of global production)

• Key climate change targets include an 80% reduction in PFC emissions and a 10% reduction in smelting energy per ton of aluminum produced; to be reached by 2010 (using a 1990 base year).

• To date have already achieved PFC reduction of 73%

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The technology chain

Government

Research Consumers

Policy I nterventions

Business and Investors

I nvestmentsInvestments

DiffusionCommercial

-isationDemon-stration

Applied R&D

Basic R&D

Product/ Technology Push

Market Pull

Grubb, M. and R. Stewart, 2003. “Promoting Climate-Friendly Technologies: International Perspectives and Issues.” Introductory paper for the INTACT High-Level Transatlantic Dialogue on Climate Change

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Technology Penetration

Source: http://www.aimpowergen.com/wind_power.html

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Thoughts on the PAMs approach• Moving to scale is possible, but policies likely to differ from

country to country.• Policies that incorporate development priorities can garner

near-term engagement by developing countries, particularly large emitters such as India and China

• Comparing level of effort will be difficult; no single metric is likely to provide robust method for evaluation.– Political agreements, involving complex negotiations, may address

this concern– Public awareness to support national policies will likely require

significant reporting on policies adopted– which, in turn will require international assistance.

• Once sufficient capacity is built, countries may move to adopt GHG market systems

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A brief comment on adaptation

Global Impacts of Natural Disasters, 1980 - 2004

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Adaptation in a future regime• Money, money, money

– Expected damages amount to several percent of global GDP, with preponderance of damages in developing nations

• New international agreement(s) may provide “steer” for development assistance, but seems, at present, unlikely to establish significant new institutional arrangements to pay for impacts or their amelioration

• Policies are mostly unlikely to be climate specific; key will be links to development– Water resources– Health care– Coastal zone management– Infrastructure development

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Conclusions

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The post-Kyoto architecture (1)

• New scientific information compels more aggressive action

• The Kyoto structure WILL continue– Emissions trading with new more stringent

targets and some additional countries– Markets will provide stimulus to new technology

research, development and diffusion– Current systems for financial transfer to

developing countries will remain – albeit unlikely to grow significantly

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• Kyoto is not likely to be the sole mechanism for future efforts• In parallel to the Kyoto market-based regime, countries

(developed and developing) will adopt policies (including for sectoral and technology based approaches) driven by other concerns:– Energy security (leading to aggressive focus on energy efficiency,

focus on indigenous supply and development of alternative fuel options such as biomass, nuclear, RE)

– Local air quality (technologies such as IGCC, replacement of gasoline vehicles with hybrids and EVs or H2)

– Key is how “climate friendly” these policies will be• Independent of international agreement, we are likely to see

increasing energy investment – including some financial transfers to developing countries– Some new investment in climate friendly technology such as CCS

The post-Kyoto architecture (2)

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The post-Kyoto architecture (3)

• We are not on a path to avoid significant climate change

• The question is how hot things will get…

• Adaptation will become a more central policy imperative over time

?