The Politics of Global Climate Change

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The Politics of Global Climate Change

• Urs Luterbacher
• Graduate Institute of International Studies

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Climate Change can be defined as a Global Common
Problem A Rival Non-Exclusive Collective Good

• The Atmosphere is a global common
• Greenhouse gas accumulation demonstrates the
  overuse of this global common

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Problems due to Greenhouse gas accumulation

• Rise in temperatures (not uniform)
• Rise in precipitations
• Sea level rise
• Enhancement of the water cycle more extreme
  events

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Theory of Collective Goods and Theory of the
Commons
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Possible Solution to Tragedy

• Privatize the resource to make owner responsible
  for costs

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Problems with private ownership

• Need institutional structure (usually legal
  system) to protect and enforce individual rights
• Costly
• Some resources difficult to allocate to
  individuals or even to groups
• The Atmosphere is such a Resource
• Problem of Anticommons

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How to overcome tragedy?

• Define a common pool resource but apply strict
  regulation
• membership criteria
• rules of use
• define new property rights

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The UNFCCC and the Kyoto Protocol

• The United Nations Framework Convention on
  Climate Change signed in Rio in 1992 establishes
  broad guidelines for climate change policies but
  no legal obligations, the only obligation is an
  obligation to report emissions by country
• The Kyoto protocol establishes mandatory emission
  reduction targets below 1990 levels but only for
  industrialized (Annex I) countries

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The Kyoto Targets

• 5.2 reduction of emission levels below 1990
  levels by 2008-2012 for all industrialized
  countries
• specific targets for various countries US
  -7, EU -8, Japan -6, Switzerland -8 but
  Australia 8, Norway 1, Iceland 10!
• 6 greenhouse gases are considered CO2, CH4, N2
  O, HFC(hexafluorocarbon), PFC(perfluocarbon),
  SF6(sulphur hexaflouride)

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Which Instruments to use to achieve reductions?

• At first, a generalized carbon tax was envisaged.
  
• Such a tax raises many problems
• Who will collect it?
• How can one avoid distortions between countries?
• How can one make sure that goals are achieved
  When property rights are not well defined tax
  mechanisms might make things worse
• Such taxes are regressive between and within
  countries

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The Kyoto Flexible Mechanisms an alternative
instrument

• Emission reductions can be achieved in a variety
  of ways, country specific or through the use of
  the so-called Kyoto flexible mechanisms which
  are
• Emissions trading between industrialized
  countries
• Joint implementation between industrialized
  countries
• The clean development mechanism between
  industrialized and developing countries

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Several Issues About the Mechanisms Remain
Unresolved

• Will a country be able to achieve all reductions
  through the mechanisms?
• How will the mechanisms be implemented?
• Which compliance rules shall be used?
• How will emission rights be allocated?
• How will one account for carbon sinks?

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The Kyoto decisions reflect the interests of
major players

• Major rapidly developing countries such as India,
  China, and Brazil are not subject to any
  obligations
• These countries might benefit from the mechanisms
  without having to reduce emissions via the CDM
• Emissions trading and joint implementation are
  there to keep the US involved
• The targets reflect a compromise between the US
  and the EU

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Can Formal Analysis help us to understand the
climate change negotiation process?

• Yes, common good analysis tells us that often
  players don not have dominant strategies there
  is thus a competition for first move (players do
  not want to cooperate and compete with each other
  not to be the first)
• This is why the Kyoto ratification process is so
  difficult

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A simple illustration of first move competition
and the absence of equilibrium
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How can one catch the dynamic evolution of a
countrys interests?

• The Nordhaus method
• Describe the global economic evolution of several
  countries involved in transactions with each
  other via an integrated model that considers both
  economic evolution and climate change
• Define a Utility (Interest function) for each
  country (for instance in terms of maximizing
  consumption)
• Calculate optimal strategies to achieve this
• Do the calculations show whether a country has an
  interest or not to collaborate with others on
  climate change ?

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Calculation of Optimal Strategies
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Calculation of Optimal Strategies
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The Role of Non State Actors

• Non State Actors influence negotiations mostly
  through their influence on public opinion within
  countries
• NGOs might help to coordinate information

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The Kyoto Protocol Mechanisms Also Raise Equity
Questions

• What is the appropriate distribution of emission
  rights?
• What are the criteria?
• What are the equity considerations within
  countries?

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The Kyoto Protocol is largely compatible with
other global environmental agreements except for
minor details

• It is largely compatible with the Biodiversity
  convention, with the possible problem of carbon
  sinks.
• Refrigerant gases are recommended by the Montreal
  Protocol on the protection of the ozone layer and
  listed as greenhouse gases by the Kyoto Protocol.

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Trade issues could pose problems

• The WTO order is built on the principle of
  non-discrimination for like products
• In principle the WTO does not distinguish between
  different PPMs
• Some dispositions of the Kyoto protocol could be
  in contradiction with these WTO principles
• Problem of leakage and gray energy

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For small countries it makes sense to promote
international cooperation

• Make use of the articles of the protocol and do
  not attempt to use idiosyncratic methods
• Try to reduce as many emissions abroad as
  possible
• Encourage the construction of international
  networks
• On these points, Switzerland does not compare
  favorably with Norway for instance