Bonn Climate Negotiations: From the Harvard Project on International Climate Agreements

The current negotiations in Bonn, Germany, mark a major step on the road to the next international climate agreement. The Harvard Project on International Climate Agreements leadership team is traveling to Bonn and plans to meet with members of nearly two dozen government delegations.

With the negotiating text now being discussed, the Harvard Project has a wide array of research papers and policy ideas, each condensed into a two-page summary which may be useful to those working on these issues. We have chosen to highlight below some of those most relevant to the Bonn negotiating agenda. Unless noted otherwise, the recommendations in each paper are those of the author(s) only.

Bonn negotiating text: Nationally appropriate mitigation commitments or actions by developed countries:

The Bonn negotiating text provides several options on targets for global greenhouse gas emissions. In the course of its research, the Harvard Project engaged several modeling teams to look at the economic and environmental impacts of various targets, including 450 parts per million (ppm), 500 ppm, and 550 ppm. Their work can be found here:

http://belfercenter.ksg.harvard.edu/publication/18679/

http://belfercenter.ksg.harvard.edu/publication/18613/

http://belfercenter.ksg.harvard.edu/publication/18581/

Criteria to calculate comparability of effort:

The negotiating text suggests using factors such as: historical responsibility, national and regional development priorities, natural and geographical characteristics, availability of low-carbon energy supply options and opportunities for fuel switching, emissions per capita, domestic mitigation potential and mitigation costs, sector-specific circumstances, degree of access to flexibility mechanisms; relative size of the economy, ability to pay, extent of transition to a market economy, and position on the human development index.

Several Harvard Project papers address comparability of effort. Jeffrey Frankel has developed an approach to setting emissions caps using formulas. Frankel, a professor at the Harvard Kennedy School, shapes his formulas to include three factors: (1) At first, richer countries make more severe cuts relative to their business-as-usual emissions, (2) States that did not agree to binding targets under Kyoto make gradual emissions cuts to account for their additional emissions since 1990, and (3) During each decade of the second half of the century, per capita emissions in each country move a small step in the direction of the global average of per capita emissions.

Read more here: http://belfercenter.ksg.harvard.edu/publication/18597/

Carolyn Fischer and Richard Morgenstern discuss, in a preliminary manner, metrics for evaluating and comparing policy commitments of varying types, with particular attention to the challenge of assessing the equity and integrity of these commitments.

Read more here: http://belfercenter.ksg.harvard.edu/publication/18662/

On the Bonn agenda: Should industrialized countries set an aggregate goal (e.g., reduce emissions X percent below 1990?)

International climate negotiations have produced a variety of emissions reduction goals. At the same time, there is a general sense that developed countries should take a disproportionate share of the reduction burden, with goals of 70 percent to 80 percent reductions by 2050 expressed by a number of developed countries, and there are calls for positive incentives for mitigation action by developing nations and for protection from the indirect (e.g., terms-of-trade) effects of mitigation elsewhere. Henry D. Jacoby and colleagues at MIT use the MIT Emissions Prediction and Policy Analysis (EPPA) model to explore the mitigation effort and financial transfers that would be necessary, using a cap-and-trade system as an example.

Among their findings:

• Simple emissions reduction rules are incapable of dealing with the highly varying circumstances of different countries. For example, a 30–70 proposal (in which developing and developed nations reduce their emissions by 30 percent and 70 percent, respectively, by 2050) initially appears to be a generous offer from the developed countries. However, it turns out that it could result in net purchases of allowances by some developing countries from the developed countries, in effect partially compensating the richer ones for their mitigation and counteracting the intent of the Bali Action Plan.
• Successful climate negotiations will need to be grounded in a full understanding of the substantial amounts at stake. If developing countries are fully compensated for the costs of mitigation in the period to 2050, then the average welfare cost to developed countries is around 2 percent of GDP in 2020 (relative to reference level), rising to 10 percent in 2050.

Read more here: http://belfercenter.ksg.harvard.edu/publication/18613/

Bonn negotiating text: Nationally appropriate mitigation actions by developing countries

The Harvard Project addresses developing country participation in a number of papers, including contributions from several authors in India and China. Some examples:

• Jing Cao of Tsinghua University in Beijing focuses on how to break the current political impasse between the developed and the developing countries. She proposes a multi-stage framework that gradually engages developing countries. Read more here: http://belfercenter.ksg.harvard.edu/publication/18685/
• Ramgopal Agarwala of Research and Information System for Developing Countries, India, proposes an approach in which targets for the developed countries are mandatory in so far as they can be achieved by national action. For developing countries, the targets are conditional on receipt of funding and technology from international sources. Read more here: http://belfercenter.ksg.harvard.edu/publication/18746/
• Larry Karp and Jinhua Zhao propose that the next international climate agreement impose mandatory emissions ceilings on rich countries and preserve existing mechanisms for promoting voluntary abatement efforts in developing countries, including the Clean Development Mechanism (CDM). Developing countries would not face mandatory abatement commitments for the relatively short (at most ten-year) period covered by what Karp and Zhao call "Kyoto II." But to avail themselves of the benefits of participation, they would need to accept the concept of future obligations in principle. Read more here: http://belfercenter.ksg.harvard.edu/publication/18522/
• David Victor of Stanford University proposes a new strategy for engaging developing countries, focusing on the concept of Climate Accession Deals (CADs). These deals would take advantage of there being many large potential policy shifts that are in these countries' interests and that also, fortuitously, reduce greenhouse gases. Each CAD would include a set of policies that are tailored to gain maximum leverage on a single developing country's emissions, while also aligning with its interests and capabilities, so that the initial investments are easily expanded with few incentives for developing countries to abandon the effort once underway. Industrialized countries would support each CAD by providing specific benefits such as financial resources, technology, administrative training, or security guarantees. See Victor's paper here: http://belfercenter.ksg.harvard.edu/publication/18735/

Bonn agenda: Should there be "no-lose target[s]" for developing countries?

From the Harvard Project:Akihiro Sawa of the University of Tokyo suggests that developing countries could be given "no-lose" targets that allow them to sell credits if they reduce their emissions intensity below a certain threshold. Alternatively, they could be given dual intensity targets that require them to meet a "compliance" target, but allow them to sell credits for emissions reductions above a higher "selling" target. Finally, industrialized countries should provide incentives for private firms to transfer technology to developing world projects. Read more here: http://belfercenter.ksg.harvard.edu/publication/18736/

Bonn negotiating text: Nationally Appropriate Mitigation Actions by Developing Countries should be "supported and enabled by technology, financing and capacity-building"

The scale of investment needed in non-OECD countries to achieve global greenhouse gas mitigation objectives necessitates a rethinking of the international financing mechanisms available for transferring resources from developed to developing countries.

• One team of Harvard Project authors — Michael A. Levi and colleagues — argue that post-Kyoto international climate negotiations are likely to focus on a "grand bargain," with developing countries offering some form of commitments in exchange for further emission reductions and increased financing from developed countries. Developing country commitments could take the form of domestic policy reforms, sectoral targets, or even economy-wide limits. Because no single approach offers a sure path to success, a variety of strategies — including policy reforms, financing approaches, and diplomatic venues — must be pursued simultaneously. See their paper here: http://belfercenter.ksg.harvard.edu/publication/18649/

Proposals for Reform of the Clean Development Mechanism

Serious concerns have emerged about the integrity of the existing CDM, most of them centered on whether the reductions being credited are indeed "additional, real, verifiable, and permanent." Given the importance of having an effective mechanism to help manage costs, promote technology transfer, and create inducements for developing-country participation, changes to the CDM should be included in any new agreement. Among other improvements, more dramatic reforms — such as moving away from a project-based approach to also recognize policy changes, sectoral approaches, and pursuing country specific "Climate Accession Deals" — merit consideration.

One option under discussion in Bonn: Set up a nationally appropriate mitigation action crediting mechanism under the Kyoto Protocol

From the Harvard Project: Andrew Keeler and Alexander Thompson, both of Ohio State University, propose a more expansive approach to offsets that would meet thedifferent objectives of industrialized and developing countries while providing substantial support for long-term investments and policy changes to reduce greenhouse gas emissions in the developing world. Their approach would involve less emphasis on strict ton-for-ton accounting and more emphasis on a range of activities that could produce significant long-term benefits. The criteria for offsets would be changed from "real, verifiable, and permanent reductions" to "actions that create real progress in developing countries toward mitigation and adaptation." Read more here: http://belfercenter.ksg.harvard.edu/publication/18564/

Under discussion in Bonn: Should there be access to the carbon market for emission reductions from deforestation and forest degradation?

From the Harvard Project: Andrew Plantinga of Oregon State University and Kenneth Richards of Indiana University discuss alternative approaches to preventing deforestation. They observe that a project-based credit system, such as the current CDM, is poorly suited to achieving this goal and propose instead a "national inventory" approach, in which states receive credits or debits for changes in forest carbon inventories relative to a measured baseline. Read more here: http://belfercenter.ksg.harvard.edu/publication/18634/

Bonn Negotiating Text: Enhanced action on technology

Several Harvard Project papers address technology transfer. Four examples:

• Fei Teng, Wenying Chen, and Jiankun He of Tsinghua University in Beijing propose a new idea that pertains to both CDM reform and technology development and transfer: "Technology CDM," which would take technology transfer as the emissions-reducing activity for which credits are awarded. A Technology CDM would have three features. First, the technology transfer goal must be clearly identified before any activities are implemented. The counterfactual baseline against which transfer goals would be evaluated would be defined by the assumption that new technologies would only be adopted in developing countries after a substantial delay. Second, only projects using the technology transferred under the program can receive credit for emissions reductions. Third, credits may be shared by the technology provider or the government of the host country if they provide enabling support for technology transfer and discounted or free licensing. Read more here: http://belfercenter.ksg.harvard.edu/publication/18677/
• Ramgopal Agarwala of Research and Information System for Developing Countries, India, argues that a new agreement should support development and dissemination of carbon-saving technologies. His specific suggestions include patent buy-outs, reduction of tariffs on sale of technologies, a global clean-energy venture capital fund, transfer of technologies to public domain, licensing schemes with reduced duration of intellectual property rights, and flexible technology transfer mechanisms. Read more here: http://belfercenter.ksg.harvard.edu/publication/18746/
• Richard Newell considers opportunities for improved and expanded international development and transfer of climate technologies. He characterizes the economic scale of the climate technology challenge and reviews the pattern of public and private R&D and the rationale for R&D policies within the global innovation system. Newell clarifies the importance of options for inducing technology market demand through domestic GHG pricing, international trade, and international development assistance. He then turns to upstream innovation strategies, including international coordination and funding of climate technology R&D, and knowledge transfer through intellectual property. He concludes that a successful international effort to accelerate and then sustain the rate of development and transfer of GHG mitigation technologies must harness a diverse set of markets and institutions beyond those explicitly related to climate, to include those for energy, trade, development, and intellectual property. Read more here: http://belfercenter.ksg.harvard.edu/publication/18641/
• Harvard Project Director Robert Stavins and former Co-Director Joseph Aldy prepared a background paper on "The Role of Technology Policies in an International Climate Agreement," for a roundtable dialogue hosted by the former Danish Prime Minister, in his role as incoming President of COP 15, in September 2008. The authors note note that the critical role of developing and deploying climate-friendly technologies has drawn more attention to the impact of three categories of policies addressed in the three main sections of this paper: (1) international carbon markets; (2) technology transfer to developing countries; and (3) coordinated innovation and commercialization programs. Read more here: http://belfercenter.ksg.harvard.edu/publication/18516/

All of the Harvard Project's discussion papers may be accessed here: http://belfercenter.ksg.harvard.edu/project/56/harvard_project_on_international_climate_agreements.html?page_id=211