Facilitating Linkage of Heterogeneous Regional, National, and Sub-National Climate Policies Through a Future International Agreement

Links to full text of the discussion paper and its executive summary are at the bottom of this page.

The Harvard Project on Climate Agreements has been collaborating with the International Emissions Trading Association (IETA) to explore the role of linkage in the new international climate-change agreement to be completed in Paris in December 2015, under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC). IETA is a corporate membership organization whose mission is to advance market-based mechanisms for reducing greenhouse-gas emissions.

As a major part of this initiative, Robert Stavins, Director of the Harvard Project, has co-authored a discussion paper on linkage—not only among cap-and-trade systems, but among cap-and-trade, carbon tax, and non-market regulatory systems—and the role of linkage in the Paris agreement. Co-authors are Daniel Bodansky (Arizona State University), Seth Hoedl, (Harvard Law School), and Gilbert Metcalf (Tufts University).

The Harvard-Project team and IETA colleagues will host panels, based in part on this paper and also addressing related topics involving market mechanisms for reducing carbon emissions, at the Twentieth Conference of the Parties (COP-20) of the UNFCCC in Lima, Peru in December 2014. Times and locations of these events follow; for more information see here:

• Tuesday, December 9, 4:45 – 5:45 pm, IETA Pavilion, "Linkage and the 2015 Paris Agreement"
• Thursday, December 11, 11:30 am – 1:00 pm, Room: Caral,  "What role will market mechanisms play in the 2015 Agreement"

The Executive Summary of the discussion paper was released at an event co-sponsored by IETA and the Harvard Project in New York on September 22, 2014, on the sidelines of U.N. Secretary-General Ban Ki-moon's Climate Summit. See more on this event here—and see the links at the bottom of this page for the full text of the Executive Summary and the full discussion paper.

There were a number of press reports on the symposium—or elaborating on its content:

• The Harvard Gazette published an interview with Robert Stavins (from New York) here.
• Robert Stavins' and the Harvard-Project team's work was referenced in a column on the Huffington Post on September 23, 2014 by Harvard University President Drew Faust and Stanford University President John Hennessy, titled "What Universities Can Do About Climate Change"—also keyed to the Secretary-General's Climate Summit.
• Bloomberg posted a report on the symposium here, titled "Rise of Carbon Markets Drives Interest in Linking Them, Speakers on Climate Say."
• Robert Stavins published an op-ed in the New York Times the day before the event, here.

Stavins notes that "As negotiators from countries around the world meet in Lima as part of the process of negotiating an agreement to be finalized in Paris one year later, a major question is how can the new hybrid policy architecture encourage greater ambition, while remaining true to the principle of 'common but differentiated responsibilities.' A key answer to that question is to allow for the linkage of heterogeneous national policy instruments. This paper examines what needs to be in the 2015 agreement to make that possible."

The discussion paper concludes that there are a number of design elements the 2015 agreement should avoid, because they would inhibit linkage. These include "supplementarity requirements" that require parties to accomplish all or most of their emissions-reduction commitments within their national borders. The 2015 agreement also should avoid including detailed linkage rules in the core agreement; an agreement with more flexibility would allow rules to evolve on the basis of experience.

The Harvard Project's research suggests that, to advance linkage, the 2015 agreement should:

• Define key terms, in particular the units that are used for compliance purposes;
• Establish registries and tracking mechanisms;
• Include default or model rules, from which nations are free to deviate at their discretion.

The authors conclude that the most valuable outcome of the Paris Agreement regarding linkage may simply be including an explicit statement that parties may transfer portions of their emissions-reduction contributions to other parties—and that these transferred units may be used by the transferees to implement their own commitments.

IETA and six of its member companies provided financial support for the Harvard Project's research on linkage. These companies are: Chevron, GDF-Suez, Global CCS Institute, Rio Tinto, Shell, and TransCanada.