Options for differentiation of future commitments in climate policy: how to realise timely participation to meet stringent climate goals?

Options for differentiation of future commitments in climate policy: how to realise timely participation to meet stringent climate goals?

Climate Policy 1 (2001) 465–480 Options for differentiation of future commitments in climate policy: how to realise timely participation to meet stri...

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Climate Policy 1 (2001) 465–480

Options for differentiation of future commitments in climate policy: how to realise timely participation to meet stringent climate goals? Marcel M. Berk, Michel G.J. den Elzen∗ Netherlands National Institute for Public Health and the Environment (RIVM), P.O. Box 1, 3720 BA Bilthoven, The Netherlands Received 6 April 2001; received in revised form 19 July 2001; accepted 3 September 2001

Abstract This paper aims at exploring options for differentiation of future commitments in global greenhouse gas emissions control, linked to climate targets. This is done on the basis of the EU target of a maximum global temperature increase of 2◦ C compared to pre-industrial levels. The Framework to Assess International Regimes for the differentiation of commitments (FAIR) is used to explore the implications of two possible climate regimes: (1) increasing participation (i.e. a gradual increase in the number of parties involved and their level of commitment according to participation and differentiation rules) and (2) ‘contraction and convergence’ (C&C) with universal participation and a convergence of per capita emission permits. It is found that in a regime of increasing participation, stabilising the CO2 concentration at 450 ppmv by 2100 requires participation of major developing countries before 2050 in global emission control, irrespective of the participation and differentiation rules chosen. In the case of stringent climate targets, a convergence regime seems to provide more incentives for a timely participation of developing countries, and opportunities for an effective and efficient regime for controlling global emissions than increasing participation. © 2001 Elsevier Science B.V. All rights reserved. Keywords: Climate policy; Climate regimes; EU climate target; Differentiation of future commitments; Burden sharing

1. Introduction In the past, the issue of international burden sharing in global climate policy has received much attention, especially during the negotiations on the United Nations Framework Convention on Climate Change (UNFCCC) in Rio de Janeiro in 1992 (see, for example, Grubb, 1989; Agarwal and Narain, 1991; Grubb et al., 1992; den Elzen et al., 1992; Grübler and Nakicenovic, 1994; Rose, 1992). After the adoption of the Berlin Mandate (UNFCCC, 1995), during the first conference of parties (COP-1) in 1995, the focus of analysis shifted to burden sharing within the group of Annex I (e.g. Torvanger et al., 1996; ∗

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Kawashima, 1996; Reiner and Jacoby, 1997; Blok et al., 1997). With the adoption of the Kyoto Protocol (KP) (UNFCCC, 1998), a renewed interest in global burden sharing can be expected. 1 Although burden sharing is a common concept in the literature, this debate is usually framed in terms of ‘differentiation of future commitments’ given the language in the UNFCCC. Therefore, we prefer to use this term instead of burden sharing. 2 One of the key policy issues in the future evolution of the UNFCCC is the involvement of non-Annex I parties. While presently their emissions of global greenhouse gases (GHGs) are smaller than the emissions of industrialised countries (Annex I), it is expected that within a few decades their emissions will outgrow those of Annex I. However, already during the negotiations on the UNFCCC, developing countries stressed that given their historical emissions, the industrialised countries bear the primary responsibility for the climate problem and should be the first to act. This was formally recognised in the UNFCCC, which states that developed and developing countries have “common but differentiated responsibilities” (Article 3.1). It was re-acknowledged in the so-called Berlin Mandate (UNFCCC, 1995), in which additional commitments were limited to developed countries only. During COP-3 in 1997, the industrialised countries in Kyoto (Japan) agreed to reduce their GHG emissions in the 2008-2012 period by an average of 5.2% compared to 1990 levels (UNFCCC, 1998). Consistent with the Berlin Mandate, the KP does not include new commitments for developing country parties for the first commitment period, but it will be a major issue in discussions regarding subsequent commitment periods. With the need for a broadening of the participation of developing country parties in future emission control, the development of the international climate regime could take different directions: 1. incremental regime evolution, i.e. a gradual expansion of the Annex I group of countries adopting binding quantified emission limitation or reduction objectives under the UNFCCC; 2. structural regime change, i.e. defining the evolution of emission allowances for all parties over a longer period. The first approach would mean a gradual extension of the present KP approach to differentiate the obligations of various parties under the convention (sometimes referred to as ‘graduation’). It could be based on ad-hoc criteria, or on pre-defined rules for both participation and differentiation of commitments. This type of regime we call ‘increasing participation’. In an increasing participation regime, the number of parties involved and their level of commitment gradually increase according to participation and differentiation rules like per capita income or per capita emissions. This regime can be developed into a so-called multi-stage approach by extending the number of stages or levels of participation for groups of countries. The second approach would be a shift away from the present approach towards defining commitments for all parties and their evolution over the long term. A clear case of the latter is the so-called ‘contraction and convergence (C&C)’ approach (Meyer, 2000), which defines emission permits on the basis of a convergence of per capita emissions under a contracting global emission profile. In such a convergence

1 At the time of going to press the prospects for the ratification of the KP looked good, but were still uncertain. However, without ratification the discussion on differentiation of future commitments revive even sooner. 2 It can also be argued that the burden should be defined in economic terms only. Moreover, in some regime approaches, like contraction and convergence, it is not the reduction of emissions but the use of the atmosphere as a global common that is being shared (resource sharing instead of burden sharing).

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regime all parties participate in the climate regime with emission allowances converging to equal per capita levels over time. Of course, other types of structurally different climate regimes can be thought of as well, like a regime based on technology standards, common policies and measures or the so-called Triptych approach (Phylipsen et al., 1998). The latter approach was used within the EU to help define its internal differentiation of targets for the KP. Such approaches would be more bottom-up in character, although they could be combined with specific emission targets (as illustrated in the case of the EU). Such approaches are not discussed in this paper. In this paper, we combine the two types of regimes — increasing participation and C&C, with a long-term global emission profile, which meets the long-term EU climate target of limiting the maximum global temperature increase to 2◦ C above the pre-industrial levels. For this analysis, we use the decision-support model, Framework to Assess International Regimes for differentiation of future commitments (FAIR). This tool is especially developed to explore options for differentiation of commitments under the UNFCCC (post-Kyoto) in the context of stabilising GHG concentrations (den Elzen et al., 2001). However, we will first start with a brief overview on various equity principles of differentiation of future commitments that are relevant for understanding the evaluated approaches (Section 2). Next, a brief overview of the FAIR model is given. Section 3 describes the background of the global emissions profile for stabilising CO2 concentration at 450 ppmv, which is used in the model analysis of climate regimes in Section 4. The last two sections discuss and conclude our evaluation.

2. Differentiation of future commitments A key issue in this debate on ‘differentiation of future commitments’ will be equity or fairness. Equity usually relates to principles. Here, we will first give a short overview of various equity principles in the literature on international differentiation of future commitments in climate change policy making. 2.1. Principles of equity There is no common accepted definition of equity. Equity principles refer to more general notions or concepts of distributive justice or fairness (Rose, 1992). Rose et al. (1998) distinguish three types of alternative equity criteria for global warming regimes: 1. allocation based criteria, defining equitable differentiation of commitments in terms of principles for the distribution of emission allowances or the allocation of emission burdens; 2. outcome based criteria, defining equitable differentiation of commitments in terms of outcome, in particular the distribution of economic effects; 3. process based criteria, defining equitable differentiation of commitments in terms of the process for arriving at a distribution of emission burdens. This distinction is important for understanding the approaches explored here, as these include only allocation-based criteria for the differentiation of future commitments. Outcome based criteria usually refer to the distribution of costs (and benefits) (in terms of either investment costs or welfare effects) resulting from any distribution of commitments. A general problem with such an approach is the dependence on complex economic models, the outcomes of which are usually hardly transparent to policy-makers.

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Nevertheless, costs and economic impacts of options for differentiation of future commitments will be important for evaluating policy options. Ringius et al. (1998) use another typology based on the type of equity principles relevant in the context of climate change, i.e. 1. 2. 3. 4. 5.

egalitarian: people have equal rights to use the atmosphere; sovereignty: current emissions constitute a status quo right now; horizontal: actors under similar (economic) conditions have similar emission reduction commitments; vertical: the greater the capacity to act/ability to pay the greater the (economic) burden; polluter pays: the greater the contribution to the problem the greater the burden.

They note that in practice proposals for differentiation of commitments often use formulas that relate to different equity principles and multiple criteria relating to both economic and environmental dimensions of climate change regimes (e.g. Kawashima, 1996; Metz, 2000). In their view, the principle of horizontal equity was dominant during the negotiations on the KP. In both the UNFCCC and the KP, the relations between the developed and developing countries are much more described in terms that refer to vertical equity and the polluter-pays principle. In more recent studies, focusing on the most relevant elements for a widely accepted approach to burden differentiation in future international climate negotiations, Ringius et al. (1999) simplify their typology of “principles for distributive fairness” down to three key principles (see also Torvanger and Ringius, 2001): 1. guilt: costs should be distributed in proportion to a party’s share of responsibility for causing the problem; 2. capacity: costs should be distributed in proportion to ability to pay; 3. need: all individuals have equal rights to pollution permits, with a minimum to ensure basic human rights, including a decent standard of living. We will follow the typology of Ringius et al. (1999), but use the term responsibility instead of guilt like in the UNFCCC terminology. 3 In our approach, we focus on differentiating commitments on the basis of criteria for the allocation of emission permits (allocation-based instead of outcome- or process-based). With the acceptance of the Kyoto Mechanisms (KMs), i.e. Emission Trading (ET), Joint Implementation (JI) and the Clean Development Mechanism (CDM), differentiation of future commitments based on the allocation of allowances has become more viable because actual emission levels no longer need to be the same as permitted emission levels. The (economic) impacts of such allocations can only be assessed after accounting for the use of the KMs. Our present analysis does not include an economic evaluation. 2.2. Methodology: the FAIR model The FAIR model was designed to quantitatively explore a range of alternative climate policy options for international differentiation of future commitments and link these to targets for global climate protection 3

See Article 3.1 (UNFCCC), which states: “The parties should protect the climate system for the benefit of present and future generations, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities, . . . ”.

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Fig. 1. Equity principles and different approaches to the differentiation of future commitments.

(den Elzen et al., 2001). 4 The FAIR model is a simulation tool with a graphical interface allowing for chancing and viewing model input and output in an interactive way. The model consists of a simple integrated climate model combined with an accounting framework for calculating regional emission allowances or permits resulting from various allocation rules. In order to construct and evaluate global emission profiles, the model includes a scenario construction mode, in which the impacts in terms of the main climate indicators of a constructed or well-defined global emissions profile can be evaluated. The FAIR model calculates regional emission allowances or permits on the basis of three different commitment regime approaches. 1. Increasing participation: in this mode the number of parties involved and their level of commitment gradually increase according to participation and differentiation rules, such as per capita income, per capita emissions, or contribution to global warming (den Elzen et al., 1999). 2. Convergence: in this mode all parties participate in the regime, with emission allowances converging to equal per capita levels over time. The model includes three types of convergence methodologies: (i) non-linear C&C; (ii) linear C&C (both according to the C&C approach of Global Commons Institute (Meyer, 2000)); (iii) the CSE convergence approach in which convergence is combined with the distribution of basic sustainable emission rights (CSE, 1998; Agarwal, 1999). 3. Triptych: here different rules for differentiation of future commitments are applied to different sectors (e.g. convergence of per capita emissions in the domestic sector, efficiency and de-carbonisation targets for the industrial and the power generation sector) (Blok et al., 1997; Phylipsen et al., 1998). The modes in FAIR combine different principles of equity discussed above. This is illustrated in Fig. 1. The increasing participation approach is based on the polluter pays principle but is adjusted for considerations on need (for development) and capacity to act. The convergence approach is based on 4

The 13 world regions considered are: Canada, USA, Latin America, Africa, Western-Europe (WEUR), Eastern Europe, CIS, Middle East, India and South Asia, China and centrally planned Asia, West Asia, Oceania and Japan, as well as their aggregated region-variants: Annex I and non-Annex I; and the four regions: OECD Annex I, non-OECD Annex I, Asia and other developing regions.

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the egalitarian equity principle, leaving aside differences in historical contributions to the problem. It somewhat accounts for considerations of capabilities by allowing for a transition period in which the distribution of per capita permits change from status quo levels to equal per capita levels. The Triptych approach is mainly based on capability to act, but also encompasses elements of the egalitarian equity principle.

3. Scenario for stabilisation of the CO2 concentration In 1996, the European Council (1996) decided that global average surface temperature increase should be limited to 2◦ C above pre-industrial levels, and that CO2 concentration should therefore be stabilised below 550 ppmv. Whether the two conditions are consistent depends on (1) the assumptions for the contribution from other GHGs (and other substances affecting the radiative balance, such as sulphur dioxide (SO2 ), and (2) the so-called climate sensitivity (the long-term equilibrium annual global-mean surface-air temperature increase resulting from a doubling of the CO2 concentration). According to IPCC (2001), the climate sensitivity is in the 1.5–4.5◦ C range with a best estimate of 2.5◦ C. The CO2 concentration of 550 ppmv constitutes almost a doubling of the pre-industrial CO2 concentration of 280 ppmv. This implies that with a climate sensitivity of 2.5◦ C, a stabilisation of CO2 concentration at 550 ppmv will eventually result in a temperature increase well above 2◦ C due to CO2 only, even in the absence of other GHGs. Therefore, with a medium value for the climate sensitivity, the EU temperature limit would imply that CO2 equivalent concentration have to be stabilised well below 550 ppmv. Using the FAIR model, we constructed a global emissions scenario which aims at meeting the EU temperature target as well as two additional climate targets adopted by the Dutch government: • global-mean surface temperature increases less than 2.0◦ C relative to 1900 in the long term; • rate of global temperature increases less than 0.1◦ C per decade; • global-mean sea level rises less than 50 cm in the long term. For the period 1990–2013, we assume that Annex I anthropogenic CO2 emissions follow the KP emissions reduction targets, 5 while non-Annex I CO2 emissions follow the assumed baseline emissions scenario, namely: the IMAGE 2.1 A1 emissions scenario (de Vries et al., 2001). 6 After 2010, global CO2 emissions increase to somewhat above 8 GtC per year around 2015–2020 before gradually reducing to about 2.5 GtC per year by 2100. For defining allowable fossil CO2 emissions, we assume that land use related CO2 emissions decrease to zero due to a halt in the deforestation by 2050. For other major GHGs, the following assumptions are made: the energy-related methane (CH4 ) emissions are sharply reduced due to a 70% abatement of the CH4 leakages from coal mining and oil production. For the anthropogenic land use related emissions of CH4 and N2 O, a slight increase is assumed until 2030, followed by a decreasing trend to the present 1990 levels by 2100. The emissions of halocarbons follow the IPCC SRES A1 scenario (Nakicenovic et al., 2000). 5

Regional fossil CO2 emissions follow the 1997 KP reduction targets, including the USA. This is the IMAGE 2.1 implementation of the IPCC SRES A1 emission scenario (Nakicenovic et al., 2000). This scenario is characterised by a globalisation of markets and a materialistic value orientation, assuming to result in relatively high levels of economic growth and technological development in developing countries and a decreasing world population in the second half of this century. 6

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Fig. 2. The atmospheric CO2 and CO2 equivalent concentration (left), as well as the global-mean temperature increase and the rate of global temperature increase (right) for the S450 Kyoto scenario.

The resulting emission scenario will hereafter be referred to as S450 Kyoto scenario (den Elzen et al., 2001). The emission assumptions lead to a stabilisation of the CO2 concentration at about 450 ppmv, and the CO2 equivalent concentration below 550 ppmv (see Fig. 2). The climate targets formulated in terms of global temperature and sea level rise are achieved, but the rate of temperature change exceeds 0.1◦ C per decade until 2030 (Fig. 2). This is caused by the decrease in the anthropogenic SO2 emissions after 1995, which directly leads to an increase in the rate of global temperature increase, since the cooling effect of the present levels of sulphate aerosols in the atmosphere diminishes. The scenario assumes a moderate sulphur abatement policy. Analyses with FAIR show that the future SO2 emissions largely determine the rate of global temperature increase, so it will be difficult to achieve the 0.1◦ C per decade target before the year 2030.

Fig. 3. The emission reduction burden (grey area): the difference between the IMAGE 2.1 A1 baseline scenario and the S450 Kyoto scenario.

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The total emission reduction burden between 1990 and 2100 for stabilising CO2 concentration at 450 ppmv by 2100 is defined by the difference between the emission profile for the S450 Kyoto scenario and the IMAGE 2.1 A1 emissions scenario (Fig. 3). It should be noted that the allowable global CO2 emissions for meeting the EU 2◦ C target are highly dependent on the assumed climate sensitivity. The default climate sensitivity of the FAIR model is 2.4, as derived from the IMAGE 2.1 model. If this value is changed to 1.5 (and the limits for the rate of change and sea level rise are ignored), one finds that global CO2 emissions follow the A1 baseline up to 2050 before emissions would have to decline faster than in the baseline. However, if the climate sensitivity would be 4.5, it would be practically impossible to limit temperature increase to less than 2◦ C.

4. Analysis of options for differentiation of future commitments 4.1. The increasing participation approach: the Brazilian approach case The principle of responsibility is related to the ‘polluter-pays principle’, the greater one’s contribution to the problem the greater one’s share of the burden. During the negotiations on the KP, Brazil made a proposal to link the relative contribution of Annex I (industrialised) parties to emission reductions to their relative contribution to the global mean temperature increase realised (UNFCCC, 1997). In the Brazilian proposal, the approach was suggested for burden sharing among Annex I countries only, but here we extend the approach to the global level (den Elzen et al., 1999). The results are given in Fig. 4 for some selected regions/countries. It shows that this approach would imply that after 2012 all regions/countries would start contributing to global emission reductions regardless of their level of economic development. This would leave developing countries no room for increasing their (per capita) emissions after 2012. It should be noted that this problem is not typical for the Brazilian approach but for every burden sharing approach that immediately involves all parties in sharing the emission reduction effort on the basis of their relative contribution to the problem. This would contradict the principles of capability and need.

Fig. 4. Regional CO2 emission permits for USA, Western Europe (WEUR), Japan (JAP), India (IND) and China (CHI), and with global burden sharing is based on contribution to temperature increase, all regions participate for the S450 Kyoto scenario.

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This points to the desirability of introducing a threshold for developing country participation in global emission control. Another option to make the Brazilian approach more acceptable for developing countries (DCs) would be to follow a per capita approach for calculating countries’ relative contribution to climate change. 4.2. Accounting for the need for development: thresholds for participation The main idea behind a participation threshold in a global emission control regime is the need for and right to development: the GHG emissions are to some extent an inevitable product of economic development, and measures limiting these emissions should not hamper economic development (Article 2 of the UNFCCC). The UNFCCC also stipulates that the developed countries take the lead in controlling global GHG emissions (Article 4). The KP, therefore, does not contain emission targets for the developing countries. The key question is at what level of development it would be fair to demand developing countries to commit themselves to quantified emission control efforts? And what type of quantified commitment should this be? In recent discussions, it has been suggested that middle-income developing countries, like Argentina, Mexico or South Korea, could first commit themselves to de-carbonisation targets. These would reduce the carbon intensity of their economies below the baseline levels, without limiting economic growth. Later on, they could become full members of Annex B. 7 We explored the implications of such an approach with FAIR. As a threshold for de-carbonisation targets of 4% per year we used a per capita income value of 50% of the 1990 Annex I per capita income (about US$ 7200 at Market Exchange Rates). 8 This level corresponds with the present level of per capita income in Argentina. Upon reaching 75% of 1990 Annex I per capita income (ca. US$ 10.800 per capita), it is assumed that they join the Annex B group. Within this group, the emission reduction burden — the emission reduction needed to remain below the global emission ceiling — is shared proportional to their per capita contribution to (CO2 -induced) temperature increase (Brazilian proposal). Non-participating developing countries follow their baseline emissions. Fig. 5 shows that the global ceiling for reaching 450 ppmv is violated after 2020 because developing countries emissions are not sufficiently limited in time to stay below the global emission ceiling for stabilising CO2 concentration below 450 ppmv by 2100. Major developing countries like China and India would only start participating after the middle of this century resulting in too high global CO2 emissions even if Annex B emissions would be zero. In the case of a 550 ppmv emission ceiling, the emission space left for the Annex B would be extremely limited. In conclusion, if the group of countries adopting quantified commitments after the first commitment period is limited to middle-income developing countries, and this would set a precedent for future extensions of the group of participating countries, stabilisation levels of 550 ppmv or lower may be out of reach. For stabilising CO2 concentration at levels around 450 ppmv, which may be needed to meet the 2◦ C target, major developing countries like China and India will have to participate within a number of decades at much lower levels of per capita income than for the average 1990 Annex B country.

7

Annex I countries are almost identical to the Annex B countries, excluding Belarus, Croatia and Turkey. The de-carbonisation target of 4% per year is a high rate, but related to the already high level of de-carbonisation in the IMAGE 2.1 A1 baseline scenario. 8

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Fig. 5. Global and regional CO2 emissions permits for an increasing participation regime aimed at stabilising CO2 concentration at 450 ppmv with a participation threshold of 75% of 1990 Annex I per capita income, where burden sharing is based on per capita CO2 emissions. After 2020 baseline emissions of non-participating countries exceed the global emission constraints.

4.3. Increasing participation: how could it work for more stringent stabilisation goals? In the case of stringent climate goals, developing countries have to participate early. To stimulate early participation, while leaving room for an increase in emissions for economic development, the following multi-stage approach case was evaluated: • up to 2013, Annex B countries fulfil their targets under the KP, while non-Annex B countries follow their baseline emissions (IMAGE 2.1 A1 emissions scenario); • after 2012, all non-Annex B countries adopt de-carbonisation targets (4% per year); • non-Annex B countries join the Annex B countries when their per capita CO2 emissions reach the average world level; • the Annex B countries share the efforts of limiting global emissions below the ceiling of the emission profile for stabilising CO2 concentration at 450 ppmv on the basis of per capita emission levels. The use of a participation threshold based on world average per capita emissions rewards both emission reductions by the industrialised regions as well as efforts by developing countries to control the growth in their emissions (e.g. by improving their energy efficiencies). As a rule for the differentiation of emission reduction efforts, we selected per capita (CO2 ) emissions in stead of per capita (CO2 -induced) temperature increase. In the latter case developed regions’ per capita permits would be reduced to well below the world average due to their historical emissions. The FAIR results indicate that Latin America would participate in the emission reduction regime from the second commitment period onwards, while China, India and Africa would first be allowed to increase their emissions until 2025, 2030 and 2040, respectively. At the same time, the emission space for Western Europe, Japan, and in particular, the USA would diminish sharply (Fig. 6.). In reality, emissions in the developed countries are likely to be reduced more gradually due to emission trading with developing countries with de-carbonisation targets and the use of the CDM. At the same time, the emission profile and

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Fig. 6. Regional absolute and per capita emission space under an increasing participation (multi-stage) regime for the S450 Kyoto scenario with a participation threshold of world average per capita CO2 emissions, where burden sharing is based on per capita CO2 emissions.

resulting allocation of emission space will not only demand substantial efforts from developed countries but also from developing countries, when compared to their baseline developments. 4.4. An alternative approach: contraction and convergence In the previous cases, global GHG emission control was presented as a pollution control problem. By contrast, the C&C approach redefines the problem as a resource-sharing problem. Instead of focusing on emission reductions this approach considers the atmosphere to be a global common to which each human being, in principle, is equally entitled. Differentiation of future commitments thus concerns the equitable allocation of emission rights or permits. By way of ‘compromise’ between ideal and reality, the approach allows for a transition period during which per capita emission allowances converge from status quo to equal per capita levels. Key policy choices relate to the duration of the transition period and accounting for population growth. A long transition period (late date of convergence) is to the disadvantage of developing countries since it results in less (cumulative) emission permits over a defined period of time. This is particularly true when global emissions contract, making the ‘compromise’ less fair. 9 Assuming international emission trading, it can be argued that the transition period could be rather short because real emissions can be adjusted over a longer period. However, a short period will result in the need for extensive emission trading and large capital flows and may thus not be politically acceptable. Accounting for the population growth could discourage population control. For this reason, the approach can be combined with the option of applying a cutoff year after which population growth is no longer accounted for (Meyer, 2000). In our analyses with the FAIR model, we have nevertheless applied it with a running population using the (relatively low) population projections of the baseline scenario. We have chosen 9

See for an discussion of the convergence date, i.e. Benito Müller (2000). Another argument in favor of a short transition period is that during the transition period the global emission ceiling may be adjusted downwards on the basis of new scientific insights or observed climate change impacts. In that case, the loss of cumulative emissions during the transition period by developing countries would larger than that of the developed countries.

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Fig. 7. Regional absolute and per capita emission space with a linear convergence of CO2 emissions between 2012 and 2030 (a) and 2012 and 2050 (b) for the S450 Kyoto scenario.

two convergence years, 2030 and 2050. Regional distributions of emission allowances resulting from a linear convergence of per capita CO2 between 2012 and 2030, or 2050, with a CO2 emission profile for stabilising CO2 concentration at 450 ppmv are depicted in Fig. 7. Convergence in per capita emission allowances in 2030 will imply a strong reduction in allowable emissions after 2012 for Annex B regions, in particular for North America, Oceania and Western Europe (75, 75 and 60% reduction by 2030, respectively compared to 1990 levels). If the convergence year is shifted to 2050, these reductions are significantly smaller (ca. 55, 55 and 40% by 2030, respectively). At the same time, for stabilising at 450 ppmv there is only limited space for non-Annex B regions to increase their per capita emissions. In the convergence year, these would be well below current world average levels. In fact, per capita emission space of some non-Annex B regions, like Latin America, already decreases. In the case of convergence by 2030, in some developing regions, like India and Africa, emission allowances may exceed baseline emission levels. However, this is dependent on baseline assumptions and normally only occurs for a limited period. Over the longer term, after full convergence in per capita emission allowances, the gap between baseline emissions and emission allowances is likely to be larger for developing than developed regions due to higher economic growth rates.

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5. Discussion The results presented in this paper indicate that the climate target adopted by the EU implies that a further extension of the group of countries with quantified emission limitation or reduction obligations in the coming decades will be needed. This finding is dependent on the allowed global emissions for meeting this target, which, as indicated, is still highly uncertain due to the uncertainties in the climate sensitivity. However, also in the case of a substantially higher global emission profile for stabilisation of 550 ppmv, the reduction of emission space for developed regions may become very limited if developing countries would only start contributing to global emission control when reaching per capita income levels of middle-income countries. This raises the important question how to reach an early involvement of the developing countries in controlling global GHG control in an acceptable way. Although this is ultimately a question that can only be answered by policy makers, some general observations can be made about it. First, there are many opportunities for limiting the growth of developing country GHG emissions for non-climate reasons. In fact, as indicated by the IPCC SRES scenarios (Nakicenovic et al., 2000), the baseline emissions of developing countries may be much lower in a world that has a more sustainable development orientation, such as the B1 world. Here, CO2 emissions of the developing countries may grow less fast due to the measures to control other environmental or health problems or per capita income developments may enable earlier adoption of new commitments. So, helping the developing countries to follow sustainable development pathways can make an enormous contribution to global emission control, apart from any formal commitment under the UNFCCC. Moreover, it will also make the emission reduction burden for developing countries smaller in case stringent climate goals would be pursued (Fig. 8). Second, in designing more comprehensive climate regimes it will be important to create incentives for developing countries to control their GHG emissions. The KMs could provide one possible incentive. If we now look at the two approaches for broadening participation in the climate regime, evaluated in this paper, we can make a number of observations. Compared to a regime of increasing

Fig. 8. CO2 emissions for non-Annex I for a linear convergence of CO2 emissions between 2012 and 2030 compared to the IMAGE 2.1 A1 and B1 baseline emissions.

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participation/multi-stage approach, the C&C approach offers some advantages. First, the convergence regime offers the best opportunities for exploring cost-reduction options of the KMs as all parties can fully participate in global emission trading. There may be excess emission allowances (hot air), but this will not affect the effectiveness nor the efficiency of the regime, only the distribution of costs. Second, there will be no so-called carbon leakage (an increase in developing countries’ emissions due to a shift of production from the developed countries with emission targets). A problem with a convergence approach may be that countries that benefit from emission trading under the KP, like Russia, may lose their markets once the developing countries join the global emission trading regime. The most difficult problem will be the political acceptance of the per capita emission allowance concept. In particular, by countries with high per capita emissions like the USA, Canada and Australia. However, economic analysis seems to indicate that even for these regions the welfare losses involved (in terms of lifetime consumption) may be limited to a few percent (Böhringer and Welsch, 2000). This is substantial, but moderate, compared to the overall welfare increase projected in the baseline. A multi-stage regime would offer more flexibility in accounting for national circumstances than the C&C approach, while clear participation thresholds could secure a transparent and gradual broadening and deepening of the developing country participation. Once adopting quantified commitments, the developing countries could also participate in ET (and JI) which would allow them to make money from selling emission reductions in excess of their commitment levels. For countries without any quantitative targets there remains the option of CDM projects. Participation thresholds based on per capita emission levels could provide an incentive for developing countries to limit the growth of their emissions. On the other hand, due to the use of the KMs, differentiation of targets for subsequent commitment periods will become more and more complex as real emission values will deviate from formally assigned amounts. Moreover, real emissions could influence target setting: developing countries able to sell much surplus emissions might face tougher targets for the subsequent commitment periods. In order to avoid this clear burden sharing criteria would be needed. An important difference between the C&C approach and the multi-stage approach is the position of the least developed countries. In the first approach these countries may be given more emission allowances than their actual emissions, allowing them to pursue sustainable development and adapt to climate change. So from their perspective, the C&C approach is more attractive than a multi-stage approach. 10

6. Conclusions In this paper, we explored the implications of some possible international regimes for the differentiation of future commitments to control global climate change, using the FAIR model. On the basis of the EU climate target of a maximum temperature increase of 2◦ C above the pre-industrial levels, we selected a global emission profile for stabilising CO2 concentration at 450 ppmv by 2100. We used this profile as a global emission constraint for exploring the implications of two different climate regimes: increasing participation and contraction and convergence. First, we evaluated the implications of applying a region’s responsibility for the climate change as a principle for differentiation of future commitments, focusing on a region’s relative contribution to the 10

It will also be more attractive then their present non-Annex B status. They will hardly profit from the CDM because they have limited reduction options to offer.

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realised global temperature increase. Global application of such an approach would imply an immediate involvement of all parties regardless of their level of economic development in the global emission control. Introducing a threshold for participation could account for the need for and right to economic development for the developing countries. In the case of stringent climate goals, a per capita income threshold for participating in global emission reduction efforts may result in too long a delay in the participation of non-Annex I regions to meet these goals. In all cases, on the basis of per capita approach, stabilisation of CO2 concentration at 450 ppmv by 2100 will result in strong reductions in emission allowances for the Annex I. World average (per capita) emissions seems a particularly interesting criterion for participation because it rewards both emission reductions by the developed regions and efforts by developing countries to control the growth in their emissions. Secondly, we explored the ‘contraction and convergence’ approach, in which all parties participate in the regime with emission allowances converging to equal per capita levels over time. Under a global emissions profile for stabilising CO2 at 450 ppmv, convergence in per capita emissions allowances implies a strong reduction in allowable emissions for Annex B regions after the Kyoto period. However, developed regions’ compliance costs can be much reduced by the global emission trading. At the same time, there is only limited scope for non-Annex B regions to increase their per capita emissions, and on the long-term the gap between baseline emissions projections and emissions allowances is likely to be larger for developing than developed countries due to higher economic growth rates. Finally, we discussed the two different climate regime options against the requirement of early participation of developing countries in global greenhouse emission control to meet stringent climate targets. Where climate change limits are stringent, a C&C regime seems to provide more incentives for a timely participation of developing countries, and better opportunities for an effective and efficient regime for controlling global GHG emission control than increasing participation. Acknowledgements The authors thank the participants of the COOL (Climate Options for the Long-term) project and the members of the Dutch Inter-ministerial Task Force on the KP (TKP) for critical and useful comments on the FAIR model and the issue of differentiation of commitments. We also thank Bert Metz for his comments on this article, and other colleagues at the RIVM, Jelle van Minnen, Andre de Moor, Michiel Schaeffer, Bert de Vries and Detlef van Vuuren, for their contributions to our work. References Agarwal, A., Narain, S., 1991. Global Warming in an Unequal World: A Case of Environmental Colonialism. Centre for Science and Environment, Delhi. Agarwal, A., 1999. Personal communication. RIVM. Blok, K., Phylipsen, G.J.M., Bode, J.W., 1997. The Triptique Approach: Burden Differentiation of CO2 Emission Reduction Among European Union Member States. Department of Science, Utrecht University, Utrecht. Böhringer, C., Welsch, H., 2000. C&C Contraction and Convergence: The Economic Implications of Permit Trading. ZEW Discussion Paper No. 99-13, Mannheim (http://www.zew.de/en/publikationen/). Centre for Science and Environment (CSE), 1998. Definitions of Equal Entitlements. CSE -dossier, Fact sheet 5, CSE, Delhi. de Vries, H.J.M., de Bollen, J., Bouwman, L., den Elzen, M.G.J., Janssen, M.A., Kreileman, G.J., Leemans, R., 2001. Greenhouse-gas emissions in equity, environment- and service-oriented world: an IMAGE-based scenario for the next century. Technol. Forecasting Social Change 63, 137–174.

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