Supplement to Class for presentation on Environmental regulation

1. (Continued)

2. Kyoto Protocol
 Binding Targets for Developed Country
Parties: 5% Below 1990 Levels by 2012
 No Binding Targets for Developing Country
Parties
 ‘Clean Development Mechanism’: Get Credit
for Emissions Reductions by Paying for
Emission Savings in Other Countries
 Seen as First Step: Little Net Emissions
Reduction because Increased Emissions in
Developing Countries Compensate for
Decreased Emissions in Developed Countries

3. Underlying Ethical Issue: Who
Should Pay the Costs of
Precautionary Measures?
 Developing Countries Argue for More
Time: the Advanced Countries Put the
CO2 into the Atmosphere
– LDC Annual Contribution has only just
Caught Up with OECD Countries’
– LDC Aggregate Contribution Catches up in
~2100
 OK, But We’re All on the Same Planet –
and China is Now the #1 Emitter

4. US Senate (1998) Refuses (95-0) to Ratify Kyoto
Protocol Unless LDCs Agree to
Conservation Targets.
Newly Installed Bush Administration Abandons
Kyoto Protocol on the Grounds of
Damage to Economy
‘Inadequate Science.’
Little Net Reduction in Emissions
Refusal to Try to Improve Kyoto Furiously
Resented by Europeans

5. Present Situation
 Kyoto Entered into Force,
 EU Has Instituted a Mandatory Trading Regime,
and EU Members have Instituted Domestic
Measures so as to Reach 2012 Targets
– UK and Germany have an Advantage Because of
Special Circumstances: UK Shrank Inefficient Coal
Industry, Switched to Natural Gas. East Germany
Closed Massively Inefficient Industry.
 Targets, However Modest, are Now Out of Reach
for Nearly All Other Countries, Given 1990s
Economic Boom.
– US Target Would Require 30% Cut in Energy Use.

6. Policies for Reducing
Emissions
 Regulated Emissions Reduction
 Market-Based Policy Instruments
– Carbon Tax (i.e., a Tax on CO2 Emissions)
 Economically Logical but Politically Difficult
– Emissions Trading (not formally a tax)
 A Cap-and-Trade Bill (Waxman-Markey) has
Passed the House, is Pending in the Senate
– Passage Not Assured: Impact is Especially
Heavy on States Dependent on Coal for Power

7. Post-Kyoto Regime Now Being
Negotiated

8. Cap-and-Trade Issues
 How is the Cap to be Set?
– By Science? by Politics? or Both?
 How are Allowances to be Allocated?
– By Auction? By Past CO2 Emissions?
 Are there to be Escape Clauses (‘Off-Ramps’) if
Carbon Credits Become Too Expensive?
 Are International Transactions Allowed?
– ‘Joint Implementation’? ‘Clean Development
Mechanism’?
 How Will Free Riders be Dealt with?
– Impose a ‘Border Adjustment’ on Imports from Non-
Participating Countries? (It’s in the House Bill.)
– This may or may not pass muster with WTO, and Would
Threaten a Major Trade War

9. Existing Emissions Markets
 Public Systems
– European Union, 2005
 Teething Troubles: Price Collapse in 2006 from
Over-Allocation
 Private Sector
– Internal Corporate Programs (BP)
– Voluntary Multi-Corporation Programs
 Chicago Voluntary Exchange
 Voluntary Offsets

10. Technical Post-Kyoto Issues
 Collaboration on Technology Development
 Carbon Sequestration is Particularly Important, Since China and
India Have Huge Coal Reserves
 Forests as Carbon Sinks
– Credit for Planting Forests
– Credit for ‘Avoided Deforestation’?
 How to Verify?
 Who Gets the Money?
– Government?
– Concessionaires?
– Forest People?
 ‘Geoengineering’: Fertilizing the Ocean to Increase Carbon
Capture by Plankton
– This May be within the Resources of Wealthy Individuals
– An International Legal Limbo

11. Post-Kyoto Non-Technical
Issues
 Targets? – Binding or Not?
 ‘Measurable, Verifiable, Reportable’
(MRP) Actions
 Money

12. Bali Action Plan (2008): Basis for
Post-Kyoto Regime
 Small Adjustment Fund to Help LDCs Adjust to
Global Warming
 Reduction of Emissions from Deforestation
(REDD)
 Non-Binding National Action Plans for
Developing countries
 Parallel Negotiating Tracks (Complicated!)
– Technical Cooperation (Under UNFCC)
– Working Group on Extending Kyoto

13. An International Conference in
Copenhagen in December Begins
to Negotiate Post-Kyoto Regime
 US Failure to Pass Waxman-Markey Hangs over
Conference
 Developing Countries Refuse Binding Targets but
Acknowledge Importance
 Progress on REDD, Less on Other Issues, No Formal
Agreement
 Obama Negotiates Last-Minute ‘Accord’
– Legal Status Unclear – But If Nations Comply, Who Cares?
 Major Economies Forum Will Continue Discussions
and Technical Cooperation
– Numerous Bilateral Agreements Exist, at Least on Paper

14. Take-Home Lessons (STIA)
 Science Puts Issue on the Agenda,
 Governments Recognize the Value of
Regular Scientific Advice, and Integrate it
into the Diplomatic Process
 However, Even the Strongest Scientific
Consensus is not Proof against a
Determined Counter-Attack by Powerful
Vested Interests
 Multilateral For a are Tough Places to
Negotiate Complex Technical Issues
 Sovereign Nations Decide the Political
Response – but Nature Has the Last Word

15. Take-Home Lessons
(International Relations)
 A Change in Our Notion of Security?
– If the Ocean Rises and Floods the Coast, What Good
was the Navy?
 A Blurring of the Distinction Between Public
and Private Issues
– Exxon’s and BP’s Policies are as Important as
Australia’s
 A Blurring of The Distinction Between
Domestic and International Issues
– If CO2 Originating in the US Affects the European
Climate and the Flow of Major Asian Rivers, US
Energy Policy Isn’t a Purely Domestic Issue Any
More. It’s ‘Intermestic’!
– The Same is True of China and India

16. We Will Return to these Issues
When We Discuss Energy.