Graduation and deepening: moving climate policy forward

September 14, 2011

By Axel Michaelowa

Climate policy is a titanic clash of interests. Emitters of greenhouse gases (GHG), both rich and poor, do not want to bear costs of reducing emissions. Consequently, implementation of climate policy measures on a national scale has often been stalled. Rich and poor alike want to protect themselves against the impact of climate change – but the latter do not have the means to do so. Thus international climate negotiations will become the world trade negotiations of the future. And like those, they will fail from time to time. But they will never be derailed completely because the alternative is a "fortress world" of the rich. Fortresses have never managed to hold out indefinitely…

Currently, a bleak mood prevails. The US does not want to participate in the global effort to reduce emissions. Russia holds the Kyoto Protocol hostage to extort as many concessions as possible. Developing countries go berserk whenever someone utters the word "targets". But we will not stay in this abyss forever as several trends emerge that will strengthen climate policy in the medium term.

First and foremost, natural science about climate change tends to become more alarmist. The sensitivity of the climate systems to GHG forcing seems to be larger than thought so far. The threshold to avoid dangerous climate change seems to be more around 1.5°C change from pre-industrial values rather than the hitherto suggested 2°C. We have already reached 0.8°C and since 1990 the threshold of 0.2°C decadal change has been exceeded, leading to increased meteorological extremes such as floods and heat waves. Events like this year’s summer in Europe that exceeded the previous instrumental record by up to 3°C and led to over 10,000 heat-related deaths generate an increasing awareness in the public that impacts of climate change can be disruptive. Policy pressure for stronger mitigation efforts has already materialised in some countries, e.g. Germany and the UK. Both countries have announced strong long-term mitigation targets. Moreover, a tendency emerges to make companies liable for climate change impacts due to their emissions. Several NGOs are campaigning in this direction and the small island state of Tuvalu has announced the first legal action. In the 21st century, climate change litigation may become what asbestos and tobacco litigation were in the last years of the 20th century.

The challenge is to bend the current emissions growth trend downwards quickly without stifling the growing energy needs of developing countries. Recent promising cost reductions of some forms of renewable energy increase the hope that eventually the gap between fossil fuels and renewables will be closed. The Kyoto Protocol structure is efficient due to its international market mechanisms and adaptable due to the concept of subsequent commitment periods with adjustment of rules. It contains innovative verification and compliance provisions. Beyond 2012, one needs to elaborate the Kyoto framework in a way that eliminates its deficits. The most important issue in this regard is to widen its geographical scope whilst increasing target stringency in an adequate way. Developing countries can only be asked to adopt emission targets ("Graduation") when reduction commitments of industrialised countries are considerably strengthened ("Deepening"). We have developed a "Graduation and deepening" scenario for 2013-2017. Its key elements are:

  •  an average current Annex B (industrialised countries) target of –23 per cent compared to 1990, .i.e. –17 per cent from 2012. "Hot air" elimination prevents that each group of graduating countries has to receive hot air to entice them into the system. All types of sinks, terrestrial and marine would be available to reduce costs and to get reluctant industrialised as well as current hot air countries into the regime. Countries would be liable for a reversal of sinks;

  • concentric rings of graduation of current Non-Annex-B countries defined by thresholds of a "graduation index", calculated on the basis of per capita emissions and income. The thresholds would be:

  • the average of the current Annex B,

  • the lowest level of Annex II (i.e. countries financing the Global Environment Facility or GEF), and

  • the lowest level of Annex B.

  • targets of the graduating countries that are the less stringent the lower the threshold. The base year is 2012 meaning that reductions start relatively slowly. Any country that does not accept graduation would lose the rights to host CDM projects and to receive any funding (GEF, adaptation fund) under the Kyoto Protocol and the Convention;

The large emitters such as China, India and Indonesia do not graduate under this scheme and can use a CDM extended to include policies and sectoral approaches.

Axel Michaelowa is with the Hamburg Institute of International Economics, Neuer Jungfernstieg 21, 20347 Hamburg,