Two good news from Copenhagen?

Carlo Carraro, Emanuele Massetti

15 January 2010

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As many analysts predicted, the Copenhagen summit held in December 2009 did not achieve the lofty goals that were set for it years ago. It failed to produce a legally binding agreement to replace the Kyoto Protocol after 2012 (Stravins 2009, Doniger 2009). But it did make progress.

Indeed, a realistic assessment must admit that the outcome of the summit could have not been different. Hopes for a more ambitious result were not based on the reality on the ground. There are three insurmountable obstacles:

  • First, the US could not sign a binding agreement, as the Senate had not passed the Boxer-Kerry Bill. That bill, coupled with the already approved American Clean Energy and Security Act (Waxman-Markey Bill), would have given President Obama the credibility to propose more ambitious steps.
  • Second, the lack of commitment from fast-growing developing countries to reduce emissions – not necessarily immediately, more realistically after a “grace” period – meant that any attempts from developed countries to contain temperature increases to safe levels would have been in vain.
  • Third, fast-growing developing countries are reluctant to take on any legally binding commitment, citing that their primary objective is to reduce poverty and to spread economic well-being to their poorest citizens. They also point out that responsibility for the high concentrations of greenhouse gases in the atmosphere today is only marginally attributable to their emissions. Hence, their refusal to sign any legally binding agreement when the major world economies are not ready to do so is largely understandable.

These are the basic ingredients of the so-called “climate deadlock” that prevented the signing of a real substitute to the Kyoto Protocol and pushed the climate summit in Copenhagen to “take note” of a more modest Copenhagen Accord on the morning of Saturday, 19 December.

Effectiveness and consistency of the Copenhagen Accord

Nevertheless, our research analyses two important outcomes from Copenhagen.

  • First, an informal, but politically relevant, declaration of national emissions reduction targets for 2020.
  • Secondly, the definition of the resources that will be transferred to developing countries for mitigation and adaptation actions.

Considering the first outcome: Are the domestic abatement plans announced in Copenhagen sufficient to significantly reduce global GHG emissions and to keep the temperature increase below the proposed 2°C target?

Answering this question requires both information on the targets agreed in Copenhagen and on the set of reference pathways of greenhouse gas emissions necessary to limit global warming. By comparing these two, we can test the effectiveness of the Copenhagen commitments on controlling climate change.

It is actually quite straight-forward to assess short-term trajectories of emissions compatible with temperature targets around 2°C. As we discussed in a previous Vox column, the stock of greenhouse gases in the atmosphere – which ultimately governs global mean temperature – is already very close to a threshold beyond which it will be extremely difficult to contain global warming below 2°C (Carraro and Massetti 2009). What is required is that emissions peak in the next decade and then decline steadily to become zero, or even negative thanks to enhanced absorption capacity, as shown by the scenarios developed by the International Panel on Climate Change.

What is the effect of the announced Copenhagen targets on global greenhouse gas emissions in 2020?

Table 1 summarises our information on the emissions targets that major countries have announced in Copenhagen. The lack of consensus among the parties is clear from the absence of abatement targets for each country. Despite this, leaders of major world economies did announce their emissions targets in a purposely informal, but public, session on 18 December 2009. While still informal, the commitments announced at Copenhagen are very informative on future climate policies.

We have gathered the national targets from records of the 18 December session of the United Nations Framework Convention on Climate Change and from a variety of other sources. We have homogenised them to reflect changes of emissions with respect to 1990.

Instead of announcing emissions targets with respect to a specific base year, some countries have taken a more flexible approach by proposing to reduce emissions below the level that they are expected to achieve if climate policy would not be implemented. Such a scenario without any policy to curb emissions is often called the “business-as-usual” scenario.

Business-as-usual emissions scenarios produced by economy-energy-climate integrated assessment models (IAM) – a workhorse for all economists that study optimal mitigation policies – are a good indicator of plausible short-term emissions trajectories. Here, we use the business-as-usual scenario of the Hybrid IAM WITCH developed at Fondazione Eni Enrico Mattei to derive emissions levels for these countries (see www.witchmodel.org for a description).

China and India, meanwhile, announced intensity targets. They have pledged to reduce the carbon intensity – the ratio between carbon emissions and GDP – of their economies by 45% and 20%–25%, respectively. But both these targets appear to be non-binding because both China and India are expected to achieve them as the consequence of autonomous efficiency improvements triggered by long-term price and technology dynamics more than by any specific policy. For example, the WITCH model, without any specific target on carbon intensity of output, already shows autonomous carbon intensity reductions of 53% for China and 42% for India with respect to 2005 (see Carraro and Tavoni 2010). This finding is supported by the World Energy Outlook 2009.

The results are clear:

  • As a group, the Copenhagen commitments for the biggest emitters, if confirmed, would imply a 28% increase of emissions above the 1990 level.
  • Compared with the business-as-usual scenario for those countries, emissions would be reduced by 21%.
  • Assuming that the rest of the world continues on a business-as-usual path, global emissions would increase to about 48 gigatons of carbon dioxide equivalent (GT CO2-eq) by 2020. This represents a 29% increase with respect to 1990, a 5% increase with respect to 2005 and a 16% reduction with respect to business-as-usual.

Table 1. The Copenhagen emissions reductions commitment

Are the promised emissions reductions sufficient to control global warming?

The scientific consensus states that severe climate change cannot be avoided unless we limit the earth’s average temperature rise to something like 2.0-2.4 °C. Specifically, the goal is to keep average temperature to no more than 2.0-2.4 °C above the pre-industrial level by 2100.

The stabilisation scenarios presented in the Fourth Assessment Report of the International Panel on Climate Change show that this will require emissions of CO2 to:

a) peak before 2015

b) decrease by roughly 5-10% starting from 2020

c) then decline steadily.

If instead emissions peak right before 2020, the temperature rise will be of 2.4-2.8 °C (IPCC 2007)

The Copenhagen declarations are clearly insufficient to control global warming below 2°C – even if they are substantial when compared with the business-as-usual scenario. What at first glanced seemed like good news – the emission-reduction declarations – turns out to be bad news. The declarations are inconsistent with the 2°C temperature target, even though the target is reiterated in the Copenhagen Accord itself (see Carraro and Massetti 2009).

Financial adequacy of the Copenhagen Accord

What about the second piece of seemingly good news – the funding for developing nations as well as the improved access to technologies that should enable and support action on mitigation and adaptation?

The commitment contained in the Copenhagen Accord is to set up a fast track fund that will consist of $10 billion per year from 2010 to 2012 (totalling $30 billion). If there is sufficient and transparent action towards mitigation, developed countries have committed to mobilise, jointly, $100 billion dollars a year by 2020. A significant portion of such funding will flow through a newly established Copenhagen Green Climate Fund.

Recent research with an enhanced version of the WITCH model – designed to quantify the optimal time profile of investments in adaptation and in mitigation – clearly shows that it is optimal to invest immediately in mitigation actions, while delaying most investments in adaptation to the future (Bosello, Carroro and Cian 2009). The reason is that it is imperative to control greenhouse gas emissions as soon as possible to attain low-temperature targets, meanwhile the short-term climate change impacts are still moderate and adaptation measures can be put in place relatively fast in the future.

We therefore model that the financial resources mobilised in Copenhagen will be used to mitigate greenhouse gas emissions, at least from 2011 until 2020. We also assume that these emissions reductions will be additional to those already announced, including the Clean Development Mechanisms.

Are these resources sufficient to fund the investments which are necessary to close the gap between the announced emissions reductions and the optimal trajectories towards a safe greenhouse gas concentrations stabilisation pathway?

Estimated impact

Our estimates show that, by directing about 60% of the Copenhagen Green Climate Fund to financing low-cost abatement actions in developing countries, global emissions could peak in 2020, as shown in Table 2.

Increasing the allocation of the Green Climate Fund will continue to reduce emissions far below a business-as-usual level. The transformation of the CGCF into a full mitigation fund would allow to reduce emissions by 3% with respect to 2005. It would limit to 18% the increase with respect to 1990 and it would reduce emissions by 22% with respect to business-as-usual (see Figure 1).

With smooth rapid mitigation action, it is therefore possible to have the peak of emissions around 2015, but in order to achieve the required emissions reductions in 2020 (10% below 2005), additional funding would be needed.

Table 2. The mitigation potential of the Copenhagen Green Climate Fund

Figure 1. Historical and business as usual (BaU) scenario greenhouse gas emissions (GHG), Copenhagen Commitment and the role of the Copenhagen Green Climate Fund (CGCF) for mitigation.

Conclusion

The mitigation targets coming out of Copenhagen are expected to have a substantial impact on global emissions . But they are insufficient to curb emissions below 2005 levels by 2020 – a necessary condition for containing global warming within safe levels.

It us thus necessary to invest in the development of low carbon technologies (and their diffusion) and energy efficiency, in avoiding deforestation, and in carbon capture and storage technology, etc. If all the Copenhagen Green Climate Fund is used to finance cheap, additional mitigation actions in developing countries, this would cause emissions to peak before 2020. With steady emission cuts in the following decades, it would be possible to limit temperature increase to about 2.5°C, above the 2°C threshold but well below the temperature level that would be achieved without strong mitigation action.

This seems to be the only good news from Copenhagen. Future negotiations rounds should devote great attention on how to shape the Copenhagen Green Climate Fund.

References

Bosello, Francesco, Carlo Carraro and Enrica De Cian (2009), “An Analysis of Adaptation as a Response to Climate Change”, University of Venice, Working Papers of the Department of Economics, No. 2 6 /WP/2009, September.

Carraro, Carlo and Emanuele Massetti (2009), “The improbable 2°C target”, VoxEU.org, 3 September.

Carraro, Carlo and Massimo Tavoni (2010), “Looking ahead from Copenhagen: How Challenging is the Chinese carbon intensity target?” VoxEU.org, 5 January.

Doniger, David (2009), “The Copenhagen Accord: A Big Step Forward”, NRDC Climate Center, 21 December.

IPCC, Chapter 3 Table 3.10 (2007) “Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change” Bert Metz, Ogunlade Davidson, Peter Bosch, Rutu Dave, Leo Meyer, Cambridge University Press.

Stavins, Robert (2009), “What Hath Copenhagen Wrought? A Preliminary Assessment of the Copenhagen Accord”, Harvard Belfer Center for Science and International Affairs, 20 December.

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Topics:  Environment

Tags:  Copenhagen, Global climate cooperation

Professor of Environmental Economics and Econometrics, University of Venice and CEPR Research Fellow

Emanuele Massetti

Assistant Professor of Economics at the School of Public Policy, Georgia Institute of Technology

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