Formulas for Quantitative
Emission Targets
Jeffrey Frankel
Harvard Kennedy School
For Architectures for Agreement:
Addressing Global Climate Change in the Post Kyoto World; and
Harvard Project on International Climate Agreements
Directed by Joe Aldy and Robert Stavins
Paper available at
http://ksghome.harvard.edu/~jfrankel/currentpubsspeeches.htm#On%20Climate%20Change
A constructive approach
• “You’re Getting Warmer: The Most Feasible Path for
Addressing Global Climate Change Does Run
Through Kyoto.”
• Features of Kyoto worth building on
– Politics:
Quantitative limits maximize national sovereignty
– Economics: Market mechanisms
• What successor to the 2008-2012 regime?
– Build on what is good about Kyoto & fix what is lacking.
J. Frankel, Harvard
2
Desiderata for the next stage,
requirements for the next multilateral treaty
• More comprehensive participation
– specifically getting US, China, et al, to join
•
•
•
•
Efficiency
Dynamic consistency (credible century path)
Equity re poor countries
Compliance – no country will stay in if it means
huge economic sacrifice in any given period
• Robustness under uncertainty
J. Frankel, Harvard
3
Proposed Architecture for
Quantitative Emissions Targets
• Unlike Kyoto, my proposal seeks to bring all
countries in & to look far into the future.
• But we can’t pretend to see with a fine degree of
resolution at a century-long horizon.
• How to set a century of quantitative targets?
– a decade at a time, in a sequence of negotiations.
• <= Fixing targets a century ahead is impractical.
– But within an overall flexible framework,
– building confidence as it goes along.
J. Frankel, Harvard
4
“An Elaborated Proposal For Global Climate Policy
Architecture: Specific Formulas and Emission
Targets for All Countries in All Decades,” Oct. 2008
• A framework of formulas that produce precise
numerical targets for the emissions of carbon
dioxide in all regions in all decades.
• The formulas are designed pragmatically, based
on what is possible politically.
• Why the political approach? Many of the usual
science- and economics-based paths are not
dynamically consistent; that is, it is not credible
that successor governments will be able to abide
by the commitments that today’s leaders make.
J. Frankel, Harvard
5
The formulas are driven by 5 axioms:
1. The US will not commit to quantitative targets if China
and & major developing countries do not commit to
quantitative targets at the same time, due to concerns
about economic “competitiveness” and carbon leakage.
2. China & other developing countries will not make
sacrifices different in character from those made by
richer countries who have gone before them.
3. In the longer run, no country can be rewarded for having
“ramped up” its emissions high above the levels of 1990.
4. No country will abide by targets that cost it more than,
say 5% of GDP in any on period.
5. If one major country drops out, others will become
discouraged and the system may unravel.
J. Frankel, Harvard
6
The 11 regions:
• EUROPE =
– Old Europe
– New Europe
+
• US = The United States
• KOSAU = Korea + S. Africa
+ Australia (3 coal-users)
• CAJAZ = Canada, Japan &
New Zealand
• TE = Russia & other
Transition Economies
• MENA = Middle East +
North Africa
• SSA = Sub-Saharan Africa
• SASIA= India & the rest of
South Asia
• CHINA = PRC
• EASIA = Smaller countries
of East Asia
• LACA = Latin America &
the Caribbean
J. Frankel, Harvard
7
Building on existing commitments
• Between now and 2050, the EU follows the path
laid out in the January 2008 EC Directive,
• the US follows the path in the Lieberman bills,
• and Japan, Australia & Korea follow statements that
their own leaders have recently made.
• China, India & others agree immediately to
quantitative targets which at first merely copy their
BAU paths, thereby precluding leakage.
– They are not expected to cut emissions below their BAU
until they cross certain thresholds.
J. Frankel, Harvard
8
When the time comes for developing countries cuts,
• their emission targets are determined by a
formula that incorporates 3 elements,
designed so they are only asked to take actions
analogous to those already taken by others:
– a Progressive Cut Factor:
• For each 1% difference in income/cap => target is 0.14%
greater emissions abatement from BAU, as agreed at Kyoto.
– a Latecomer Catch-up Factor,
• gradually closing the gap between the starting point of the
latecomer & 1990 emission levels, at the same rate as US
(Goal: avoid rewarding latecomers for ramping up emissions).
And
– a Gradual Equalization Factor:
• in the long run, rich & poor countries’ emissions/cap targets
converge. (Goal: equity)
J. Frankel, Harvard
9
The targeted reductions from BAU agreed to at
Kyoto were progressive with respect to income.
J. Frankel, Harvard
10
The resultant paths for emissions targets,
permit trading, the price of carbon, GDP
costs, & environmental effects
• Estimated by means of the WITCH model of
FEEM, Milan, applied by Valentina Bossetti
• Overall economic costs, discounted:
0.24% of GDP.
• No country in any one period suffers a loss
as large as 5% of GDP by participating.
• Concentrations level off at 500 ppm in the
latter part of the century.
J. Frankel, Harvard
11
Targets for emission per capita, by region
7
USA
6
OLDEURO
NEWEURO
KOSAU
5
CAJAZ
TE
4
MENA
SSA
3
SASIA
CHINA
EASIA
2
LACA
World
1
0
2005 2010
2015 2020 2025 2030
2035 2040 2045 2050
2055 2060 2065 2070 2075
J. Frankel, Harvard
2080 2085 2090 2095
2100 2105
12
Fig. 3: Emissions path for industrialized
countries in the aggregate
(Predicted actual emissions exceed caps, by permit purchases)
OECD Emissions
7
6
5
4
Simulated Emissions
3
CAP
2
1
0
20
10
20
20
20
30
20
40
20
50
20
60
20
70
20
80
20
90
21
00
GtC
BAU
J. Frankel, Harvard
13
Fig. 4: Emissions path for poor countries
in the aggregate
(Predicted actual emissions fall below caps, by permit sales)
NON OECD Emissions
20
BAU
13
GtC
Simulated Emissions
CAP
7
21
00
20
85
20
70
20
55
20
40
20
25
20
10
0
J. Frankel, Harvard
14
Fig. 5: Emissions path for the world,
in the aggregate
World Industrial Carbon Emissions
25
bau
15
10
Simulated
Emissions
5
20
95
20
80
20
65
20
50
20
35
20
20
0
20
05
GtC
20
J. Frankel, Harvard
15
Fig. 6: Price of Carbon Dioxide Rises
Slowly Over 50 Years, then Rapidly
800
700
600
500
400
300
200
100
0
FRANKEL
Architecture
2005 2020 2035 2050 2065 2080 2095
Zoom on Price of Carbon Permits
140
120
$/tCO2e
$/tCO2e
Price of Carbon Permits
100
80
FRANKEL
Architecture
60
40
20
0
2005
J. Frankel, Harvard
2015
2025
2035
2045
16
Fig. 8: Concentrations come very close
to the 500ppm goal
Carbon Concentrations (CO2 only)
800
750
bau
700
600
550
FRANK
EL
Archite
cture
500
450
400
350
300
20
05
20
15
20
25
20
35
20
45
20
55
20
65
20
75
20
85
20
95
21
05
ppmv
650
J. Frankel, Harvard
17
Figure 9
Temperature increase (above pre-industrial)
4
3.5
3
bau
°C
2.5
2
FRANKEL
Architecture
1.5
1
0.5
20
05
20
15
20
25
20
35
20
45
20
55
20
65
20
75
20
85
20
95
21
05
0
J. Frankel, Harvard
18