Transitions in Policy Architecture

1
Transitions in Policy Architecture
Henry D. Jacoby Joint Program on the Science and
Policy of Global Change Massachusetts Institute
of Technology

• IPIECA Workshop
• Beijing
• 26 October 2005

2
Opening Thoughts on Regime Building

• What do we mean by an architecture?
• A unifying structure that restricts potential
  agreements in ways that simplify negotiations and
  point them toward common goals.
• Analogies
• Schools of building design
• Income vs. expenditure as the basis for taxation
  (e.g., Europe vs. US federal system)

3
The Lure of a Comprehensive Climate Architecture

• A global commons problem
• So include all nations from the start
• Both rich and poor nations are important
• So agree to base regime on common but
  differentiated responsibilities
• Many substances contribute to forcing
• So include all gases in a common system
• Country cost differences will be inefficient
• So introduce flexibility mechanisms

4
More Thoughts on Regimes

• A common view of international process
• (1) Agree on the structure for negotiations
• (2) Negotiate commitment levels measures
• (3) Nations implement control measures
• For an issue like climate change the process
  begins the other way around
• Nations only agree to a potentially costly
  commitment if confident they can meet it
• Binding agreements follow (not lead) domestic
  commitment
• So . . . expected transition in architecture
• Favella ?? edifice

5
Shortcomings of Kyoto

• Local politics drove Protocol text beyond the
  level of commitment of key nations
• Climate change treated like a traditional
  environmental issue whereas it is more about
  economic policy
• Insufficient attention to differences in
  governmental structure social priorities
• US (Congress) vs. parliamentary systems
• Brazil, China, India, Indonesia, Mexico

6
Must Not Disparage the Effort

• A meaningful long-term response will require a
  comprehensive architecture
• It is faint criticism to say they (we) reached
  for too much, to soon
• Montreal provided an attractive model
• But lessons drawn were not appropriate for a
  problem of different scope scale
• The search for coherence must continue
• Stalemate is not a surprise
• Structure will emerge only from early actions
  (including Kyoto) taken by key large nations

7
For Now, Fragmentation
2005
2008
2012
1st
2nd
Into force 2005
Kyoto (Annex B)
(Non-Annex B)
8
Background for Post-2010 VisionA Scenario of
FCCC Kyoto

• FCCC and the COP
• Continued support from all parties
• But focus shifts to other venues (G8, L20)
• Kyoto Protocol
• Survives post-2012 as a softer commitment
• National measures (e.g., ETS) are permanent
• CDM
• Transactions costs keep CER quantities small
  attempts to loosen threaten credibility
• Post-2012 uncertainty weakens projects
• Maintained by demand from ETS national systems
  and World Bank caretaking

9
No Shortage of Proposals, e.g.

• Targets Timetables (extend Kyoto), e.g.,
• Wealth trigger for accession
• Hybrid trading with international safety valve
• Harmonized carbon taxes
• International fund to buy reductions
• By direct aid (perhaps development related)
• Through an emissions trading regime
• Portfolio of policies and measures
• Implementation by pledge and review
• Targets and timetables as only a loose guide
• Protocol on RD and demonstration

10
As Would-Be Architects Work Uncoordinated
Building Proceeds

• Proliferation of CDM-like deal-making, with
  inconsistent definitions
• Sub-group pledge review, by sector
• Design standards
• Ad-hoc linking of trading systems
• Among Kyoto parties with nations outside
• Sub-nation but across borders (New England, SW
  USA and NW Mexico)
• Non-CO2 gases as a separate target
• Diverse individual national programs

11
Diverse National Programs

• Voluntary schemes MOUs
• Regulations and standards
• Subsidies to low-CO2 technologies
• Carbon prices
• CO2 fuel taxes . . . subsidy removal
• Cap-and-trade systems
• RDD and commercial demonstration
• Financial and technology transfers

12
Transition to an Architecture

• For some years a climate favela
• Kyoto Protocol and other arrangements
• Many meetings but little progress
• Serious discussions only after two nations start
  independent, domestic action
• The US
• Beyond RD, subsidies and voluntary measures
• Processes under way . . . And the timing?
• China
• Some action and contingent commitments
• Processes under way? . . . And the timing?

13
Scenario or Exhortation?

• The intent here description not prescription
• Not argue that parallel movement is equitable
• Only present a view of needed steps even given
  actions by the EU and other parties
• No clear view of the ultimate structure
• Is a global architecture possible?
• Coordination after messy start should be easy
  compared to the difficulty of first commitments
• Action by these two big nations is a necessary
  condition for serious negotiation of a
  substantial common global effort

14
While Waiting, Seek Low-Cost Gains

• The timing is bad for achievement of frequently
  discussed Article 2 goals
• A favela regime may be all we get for many
  years, but will lower climate risk

15
Thank You