Jonathan Pershing

1. Framing the Post-Kyoto Debate: Options for Climate Policy After 2012STEP Seminar SeriesPrinceton UniversityPrinceton, NJApril, 2006 Jonathan Pershing Climate, Energy and Pollution ProgramWorld Resources Institute http://www.wri.org

2. Overview • An update on the science • Greenhouse gases and related indicators • Policy options • The international process: reviewing the state of play • Framing the debate on next steps • Conclusions

3. An update on the science

4. 2005 Temperature Records(Deviation from 1951- 1980 mean) Source: NASA Goddard Institute for Space Studies Surface Temperature Analysis at  data.giss.nasa.gov/gistemp/

5. Changes in Ocean Circulation • Transect at 23º N latitude • Measurements taken in 1957, 1981, 1992, 1998, 2004 • Indicates a 30% reduction in ocean circulation volume since 1957 Source: Ocean current figure: www.NASA.gov Transect information: Bryden, Harry L. et al. "Slowing of the Atlantic meridional overturning circulation at 25° N." Nature 438: 655-657. 1 December 2005

6. DEPLETION OF SUMMER SEA ICE Observed sea ice September 2003 Observed sea ice September 1979 These two images, constructed from satellite data, compare arctic sea ice concentrations in September of 1979 and 2003. September is the month in which sea ice is at its yearly minimum and 1979 marks the first year that data of this kind became available in meaningful form. Source: ACIA, Impacts of a Warming Arctic, Climate Impact Assessment Report, Cambridge University Press, 2004

7. Hurricane Trends

8. Impacts follow temperature trends Source: WashingtonPost.com, September 16, 2005, after Science Magazine 9

9. Scenario of damages in 2050 Source: The Guardian, based on Pentagon report, February 2004

10. Greenhouse Gases and Related IndicatorsNear- and Longer-Term Trends 11

11. World GHG Emissions (2000) Source: WRI, CAIT: http://cait.wri.org

12. National GHG Emissions, 2000

13. Per Capita Emissions, 2000

14. Largest Emitters: Developed & Developing

15. Projected Future GHG Emissions Growth % Percent change from 2000 Source: Baumert et al, 2005

16. 7 000 7 000 6 000 6 000 5 000 5 000 4 000 4 000 Mtoe Mtoe 3 000 3 000 2 000 2 000 1 000 1 000 0 0 1970 1970 1980 1980 1990 1990 2000 2000 2010 2010 2020 2020 2030 2030 World Primary Energy Demand Oil Natural gas Coal Other renewables Nuclear power Hydro power Source: IEA WEO 2004

17. Electricity generation: fuel mix % Share of Fuel Mix Source: IEA Statistics, 2002 data 20

18. GLOBAL CO2 EMISSIONS FOR IPCC/SRES SCENARIO GROUPS

19. Policy options

20. Population is likely to increase from 6 billion today to 10-12 billion Economic growth is likely to expand, perhaps by a factor of 10 What will it take to stabilize the atmosphere? Need to reduce greenhouse gases globally by 60-80 percent over the century

21. Dealing with Climate Change • Policies cover all gases and all sectors -- but emissions are not evenly divided among these • Energy and CO2 are key • Policy Choices: • Emit less (be more efficient) • Emit differently (switch fuels or processes) • Sequester • Do without (change behavior) • Adapt (learn to live with it) • Policy actions include: • Market approaches (taxes, subsidies, cap-and-trade) • Regulations • R&D • Processes/outreach • Foreign Assistance

22. Policies by Instrument (1999-2004) Source: IEA (http://www.iea.org/dbtw-wpd/textbase/envissu/pamsdb/index.html)

23. GHG Flow Diagram: Global Greenhouse Gas Emissions

24. Policies by Sector (1999-2004) Source: IEA (http://www.iea.org/dbtw-wpd/textbase/envissu/pamsdb/index.html)

25. Reviewing the state of play The International Process

26. International Agreements: The UN Convention and Kyoto Protocol • Targets: national caps on greenhouse gas emissions; collective reduction of 5.2% below 1990 levels by the 2008-2012 timetable…for 38 industrialized countries and economies in transition (i.e. “Annex I”) • Market-based mechanisms: designed to achieve global emission reductions at the least possible cost (involves private entities, not just governments.) • Compliance mechanisms: Emissions measurement standards; reporting requirements; review provisions; mandatory consequences for countries that do not comply.

27. UNFCCC – State of Play • 1992: UNFCC • 1997: Kyoto Protocol • 1998 – 2001: Following Kyoto, negotiators spend several years developing rules to implement Kyoto agreement (i.e., Marrakech Accords) • 2004: Ratification and entry into force (with attendant agreement from Russia on gas and WTO) • Beginning of post-Kyoto discussions • 2003: New Delhi (Cop 9): focus on adaptation • 2004: Buenos Aires (Cop 10): consideration of post Kyoto commitments • 2005: SB 22: Seminar of Government Experts (SOGE) • Nov/Dec 2005: Montreal: COP/MOP 1

28. Montreal Outcomes • Annex I parties continue discussions on post Kyoto regime – based on emissions markets • US and Australia largely oppose talks • However, at the state/local level, both US and Australia experimenting with emissions trading regimes • Non-Annex I parties reject any discussion of accepting binding emissions caps (language allowing discussion of next steps explicitly states it will “not open any negotiations leading to new commitments.” • Marrakech Accords adopted (with ET, JI, and CDM as well as rules governing forest activities). • News rules opening CDM to “programmatic” as well as “project” activities

29. International Politics: the EU • “Climate Change is a major threat” • “While the Kyoto Protocol takes us in the right direction, it is not enough. We need to cut GHG emissions radically, but Kyoto doesn’t even stabilize them. It won’t work as intended unless the US is part of it.” • There are huge opportunities in environmental technology, and huge possibilities in sustainable development.” -- Prime Minister Tony Blair, 2005

30. International Politics: Developing Countries • “Climate change has, and for the foreseeable future will continue to have a profound impact on the development prospects of our societies.” • “The UNFCCC and the Kyoto protocol establishes a regime that adequately addresses the economic, social and environmental impacts of sustainable development.” • “The regime rests on differentiation of obligations among Parties…developed countries should therefore take the lead in international action to combat climate change.” • “The convention establishes economic and social development and poverty eradication as the first and overriding priorities of developing countries.” -- Joint Declaration, Gleneagles, 2005 Brazil, China, India, Mexico, S. Africa

31. International Politics: The US • “Climate change, with its potential to impact every corner of the world is an issue that must be addressed by the world.” • “The Kyoto Protocol was fatally flawed in fundamental ways.” • “We’re creating a National Climate Technology Initiative…” -- President Bush, 2001

32. Framing the debate on next steps

33. Form and Stringency Are NOT the Same

34. Stringency is about how much… Risk of increased temperature Meinshausen, Malte. "On the Risk of Overshooting 2°C." Proceedings from International Symposium on Stabilisation of Greenhouse Gas Concentrations -- Avoiding Dangerous Climate Change, Exeter, 1-3 February 2005 at www.stabilisation2005.com/programme.html.

35. …which presumes a cost for action as well as a risk from inaction… Source: IPCC TAR

36. …and when. Implications of delayed action Source: Meinshausen, 2005

37. Form is everything else

38. EU and US emission market trends EU ECX Price US CCX Price Source:http://www.chicagoclimatex.com/mktdata_ccfe/sfi/historical/Historical_Prices.xls

39. CDM growing • Data based on 919 projects (compare with 716 in December 2005) • Strong growth started in last Q05 and continues • 1.3 billion credits expected pre-2012 Source: Scharf & Ellis (OECD), 2006

40. But setting new post-2012 targets is difficult… % Contributions to CO2 Changes Source: Baumert et al, 2005

41. …even for a single country

42. Expectations for the Market Post-2012 • Some Annex I Parties continue with market development (likely to include US, but to exclude Russia) • Key is institutional capacity to manage market compliance, including adequate assurance of integrity of emissions reductions • Politics will dictate level of effort; US engagement critical • Some developing countries adopt market approaches and participate in global emissions trading market (e.g., Korea, Mexico) • China, depending on rate of institutional development, may engage over medium term (e.g., by 2020) • Other countries continue to participate in CDM/project offset systems, including with “programmatic” CDM

43. The alternative to markets: A policy approach Source: David Victor, Presentation at RFF, February 2006

44. Policies may not focus on climate… Global Energy Poverty Source: IEA WEO, 2002

45. Other development challenges exist… Motor vehicles per 1000 people, selected countries Source: Bradley and Baumert, 2005, “Growing in the Greenhouse”

46. Motor Vehicle Shares of Criteria Pollutants in Chinese Cities …and are multifaceted… Source: Schipper and Ng, 2005

47. …including energy security as well as environmental issues Oil Production, Consumption and Imports for China Source: Schipper and Ng, 2005

48. Three scenarios for China: Carbon from Motor Vehicles 2003 Road Oil Saved Integrated Transport Source: Schipper and Ng, 2005

49. Considering a Sectoral Agreement Source: Baumert et al, 2005

50. Sectoral “Fit” for Agreement • ICAO has failed to reach conclusions on emissions reduction plan • EU proposals being considered include: • Fuel tax • Ticket tax • Slot auctioning • Emissions charge • Modal transfer incentives