• International Climate Change Programs and Proposals
  • July 26, 2008 | Authors: William J. Walsh; Mark A. Erman
  • Law Firms: Pepper Hamilton LLP - Washington Office ; Pepper Hamilton LLP - Detroit Office
  • Because climate change is a global environmental problem caused by the combined impact of worldwide greenhouse gas (GHG) emissions, mitigating climate change requires a global solution. Although the Kyoto Protocol was a landmark diplomatic accomplishment, it did not apply to developing nations and required only slight reductions from 1990 emission levels for developed nations.

    Mitigating climate change will require a global solution much more expansive than the Kyoto Protocol. For example, as of 2005, the total GHG emissions from the developing world exceeded the combined GHG emissions of the members of the Organization for Economic Cooperation and Development, which is comprised of Western Europe, Japan, the U.S., Canada, Australia, the Czech Republic, and Mexico.1 China and other major developing countries could offset the most stringent reduction efforts of developed countries if developing countries fail to participate in global GHG reduction efforts. These negative offsets will result in increasing climate changes.

    Three critical time frames impact the effects of GHGs – 2005 to 2012 (the Global Warming Convention, commonly known as the Kyoto Protocol),2 2012 to 2030 (the period in which countries seek to stop increases in emissions), and 2030 to 2050 (the period in which significant reductions from the 1990 GHG levels will be required).

    Kyoto Protocol – The Past

    The Kyoto Protocol divided signatory nations into developed countries (Annex I) and developing countries (Non-Annex I). The Kyoto Protocol imposed a total worldwide cap on GHG emissions at 5 percent below the total 1990 GHG emission levels of Annex I countries by 2012.3 Additionally, the protocol assigned national caps to each Annex I country; for example, the U.S.,4 the EU, Canada, Japan, and the Russian Federation are not allowed to emit GHGs at levels greater than 7 percent, 8 percent, 6 percent, 6 percent, and 0 percent of their respective 1990 GHG emission levels. Similarly, Norway and Australia cannot emit more than 1 percent and 8 percent above their 1990 GHGs levels, respectively. Each nation has full discretion in implementing measures domestically to comply with its GHG limit.

    Two of the more innovative provisions of the Kyoto Protocol are Joint Implementation (Article 6) and the Clean Development Mechanism (Article 12). Joint Implementation (JI) establishes a unique form of emissions trading among Annex I countries.5 In a JI transaction, the purchasing country receives Emission Reduction Units (ERUs) by funding a GHG emission-reduction project in the host country, presumably because the mitigation costs are lower. A purchasing country can use the resulting ERUs to comply with its national GHG limit.

    Similar to Joint Implementation, the Clean Development Mechanism (CDM) also provides for project-based emissions trading, but unlike JI, CDM projects are between Annex I and non-Annex I countries.6 In other words, industrialized, Annex I countries can pay for projects that cut emissions in developing, non-Annex I nations, which generate Certified Emission Reductions (CERs) that are transferred to the purchasing country’s national GHG account, but only after a Designated Operational Entity (DOE) verifies that actual emissions reductions have occurred “additional to any that would occur in the absence of the certified project activity.”7

    The CDM allows a host developing country to benefit from advanced technology funded by an Annex I country, which allows their factories and electrical generating plants to operate more efficiently at lower costs and higher profits. This allows Non-Annex I countries to continue developing as usual, but with lower future GHG emissions.

    Negotiating a New Treaty Post-2012 – The Present and Future

    At the 2007 U.N. climate change meeting in Bali, 180 nations from around the world agreed upon a “road map” for future climate change negotiations.8 The agreed-upon deadline for drafting a new climate change strategy is 2009, but the strategy will not become effective until after 2012. The attending nations did not produce an agreement on specific emissions reduction targets to guide negotiators over the next two years.

    The message issued after the Bali meeting recommended the next agreement include quantifiable emissions caps for developed countries, while developing nations work to slow the rate of their emissions growth, which is consistent with the Kyoto protocol. While these are good first steps, the exact nature of the international scheme remains unknown.

    The EU has stated that “developed countries should continue to take the lead by committing to collectively reducing their emissions of GHGs in the order of 30 percent by 2020 compared to 1990” and “60 percent to 80 percent by 2050 compared to 1990.” However, the EU’s only “firm independent commitment” is “to achieve at least a 20 percent reduction of GHG emissions by 2020 compared to 1990,”9 although absent a treaty, even this commitment is essentially not “enforceable.” The EU emphasizes that controlling climate change worldwide “will require global greenhouse gas emissions to peak within the next 10 to 15 years, followed by substantial global emission reductions to at least 50 percent below 1990 levels by 2050.”10

    Additionally, the EU has set “a binding target of a 20 percent share of renewable energies in overall EU energy consumption by 2020” and “a 10 percent binding minimum target to be achieved by all member states for the share of biofuels in overall EU transport petrol and diesel consumption by 2020, to be introduced in a cost-efficient way.” Given the significance of the EU’s GHG reduction efforts, it is likely that many elements of the EU scheme will be included in a final international treaty designed to continue the progress of Kyoto.

    Another key issue confronting international negotiators is the enforceability of GHG reduction goals under international law and what, if any, GHG emission goals apply to developing nations. The EU nations would prefer developed nations to accept stringent GHG emissions reductions compared to developing nations, including China and India. The EU also stresses the importance of providing financial assistance to developing nations through international funds.

    Climate Change Regulation in Other Countries

    Any international GHG emission-reduction treaty will still leave the details of domestic implementation of each signatory nation’s GHG targets to its national government. Each country should have discretion in choosing how to allocate its reductions. These options include energy conservation, fuel switching, incentives to provide for more efficient industrial process designs, carbon sequestration, and other techniques. The following examples provide a glimpse of the different approaches.

    The U.K. has enacted mandatory requirements to cut emissions by 60 percent from 1990 levels by 2050 to stabilize global atmospheric carbon dioxide levels at around 550 ppm.11 According to scientists, this reduction in emissions should result in global warming being limited to 2º C (3.6º F) above pre-industrial temperatures12 (assuming that other countries make similar reductions). As with most aspects of climate change, some people advocate more stringent GHG emission reductions as a precautionary measure, and others warn that the proposed GHG reductions are not cost-effective. Some believe the eventual cost of adverse climate change is smaller than the cost of the GHG emission reductions.

    Finland, the Netherlands, Sweden, Denmark and Norway have enacted carbon taxes,13 which may be a more economically efficient method of mitigating climate change than the cap-and-trade approach.14 However, no country is relying solely upon taxes to reduce GHG emissions in 2050 to 60 percent of 1990 emission levels.15 The Norwegian Commission on Low Emissions concluded that it is necessary, feasible and not prohibitively expensive to reduce by two-thirds Norway’s greenhouse gas emissions by 2050. Norway is considering many of the same alternatives as the U.S.

    China’s GHG emissions (6.2 billion tons CO2) surpassed the U.S. (5.8 billion tons CO2) in 2006, and recent research indicates that China’s projected growth from now until 2020 could single-handedly negate GHG reductions by the rest of the globe. However, China’s per capita GHG emissions are only one-fifth of U.S. per capita emissions, and from a fairness perspective, the West has already enjoyed unfettered economic development since the Industrial Revolution.16 China and other developing countries that have begun to grow economically are manufacturing goods that, until recently, developed nations manufactured. Now, developed nations import these products from developing nations.17 This system means developed nations are outsourcing both their GHG emissions and their jobs. Developing nations argue that developed nations should share in the cost of reducing GHG emissions since the developed nations benefit from outsourced manufacturing and the associated local GHG emissions reductions.

    Even China has developed a relatively comprehensive climate change plan. China has set its target at a 20 percent reduction in energy consumption per unit GDP by 2010 through energy conservation and efficiency. China has called for a 10 percent increase in the proportion of renewable energy, including large-scale hydropower, by 2010. China also set a goal of increasing the forest coverage rate to 20 percent by 2010, which would increase its carbon sink by 50 million tons more than the 2005 level. China has made significant progress in converting its bus fleet to cleaner-burning compressed natural gas, and the State Council recently implemented an energy efficiency policy that public buildings cannot set their thermostats below 79°F in the summer and above 68°F in the winter.

    China’s GHG emission reduction efforts are similar to those pursued in the U.S. and other developed nations. Notably absent, though, are expensive end-of-pipe measures such as carbon sequestration. China’s Climate Change Plan explicitly “appeals to the developed countries to sincerely fulfill their commitments under the Convention to provide financial assistance and transfer technology to developing countries so as to enhance their capacity to address climate change.”18

    International climate change developments have created an overarching framework that many countries are following, particularly in the developed world. Despite some recent U.S. efforts, these international developments are largely proceeding without U.S. leadership.

    Endnotes

    1 J. Rubin and B. Tal, The Carbon Tariff, CBIC World Markets Inc., StrategEcon at 4 (March 27, 2008), available at http://research.cibcwm.com/economic_public/download/feature1.pdf.

    2 The United National Framework Convention on Climate Change (also called the Kyoto Protocol) was signed on December 11, 1997 and entered into effect on February 15, 2005. Ratification Status, available at http://unfccc.int/kyoto_protocol/background/status_of_ratification/items/2613.php.

    3 See United National Framework Convention on Climate Change, Countries included in Annex B to the Kyoto Protocol and their emission targets, available at http://unfccc.int/kyoto_protocol/background/items/3145.php.

    4 The United States has not ratified the Kyoto Protocol.

    5 Joint Implementation is described at http://unfccc.int/kyoto_protocol/background/items/2882.php.

    6 The Clean Development Fund is described at http://unfccc.int/kyoto_protocol/background/items/2881.php.

    7 Protocol Article 12.5(c). Joint Implementation projects have a similar “additionality” requirement.

    8 “Bali Delegates Agree on Road Map, But Complex Negotiations Lie Ahead.” BNA Daily Environmental Reporter, No. 242. Page A-1. Tuesday, December 18, 2007. ISSN 1521-9402. News Climate Change.

    9 Council Of The European Union Presidency Conclusions – Brussels , 8/9 March 2007, 7224/1/07, REV 1 at p. 12, ¶30-32 (2 May 2007) (available at http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/93135.pdf) and EU Position Paper on Climate Change and Related Events (September 20, 2007), available http://www.eu2007.pt/UE/vEN/Noticias_Documentos/20070920EUPosition.htm. These positions were restated on October 30, 2007. EU Environmental Ministers Lay Out Details of Negotiating Position for Bali Meeting, BNA Daily Environmental Reporter. No. 211. Page A-3, Thursday, November 1, 2007. ISSN 1521-9402.

    10 Council of Europe, Council Conclusions on climate change at 2, 2826th ENVIRONMENT Council meeting Luxembourg, (October 30, 2007), available at http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/envir/96899.pdf.

    11 Colin Challen, Editorial, “Playing Climate Change Poker,” Vol. 317. Science 205 (Jul¿29, 2007); and Stern Review Conclusion at vii.

    12 Challen Editorial at 205; see also IPCC, 2007: Summary for Policymakers. In: Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, at 16, fig.SPM.2, available at http://www.ipcc-wg2.org/index.html.

    13 Congressional Research Service, Climate Change: Design Approaches for a Greenhouse Gas Reduction Program at 3 (January 16, 2007), available at http://fpc.state.gov/documents/organization/79271.pdf.

    14 William Nordhaus, Professor of Economics, Yale University, The Challenge of Global Warming: Economic Models and Environmental Policy at 10 (September 11, 2007), available at http://nordhaus.econ.yale.edu/dice_mss_091107_public.pdf. The group of Canadian economists from the National Round Table on the Environment and Economy recently stated that a carbon tax appears to be the preferred method of reducing Canadian GHG emissions. See Getting to 2050: Canada’s Transition to a Low-Emission Future – Advice for Long-Term Reductions of Greenhouse Gases and other Air Pollutants, available at http://www.nrtee-trnee.ca/eng/publications/getting-to-2050/Getting-to-2050-eng.pdf.

    15 Norway currently uses a CO2 tax, which applies to about 64 percent of all CO2 emissions and about 47 percent of all greenhouse gas emissions (State of the Environment in Norway: Measures and Instruments, available at http://www.environment.no/templates/PageWithRightListing____2328.aspx).

    16 Margret J. Kim and Robert E. Jones, “China: Climate Change Superpower and the Clean Technology Revolution,” 22 Natural Resources & Environment 9 (Winter 2008).

    17 The Carbon Tariff, supra note 1, at 7.

    18 China’s National Climate Change Programme, available at http://en.ndrc.gov.cn/newsrelease/P020070604561191006823.pdf.