The São Paulo Proposal for an Improved International Climate Agreement

An effective international climate agreement poses formidable challenges. Existing agreements, naturally, have some good features. Further improvements are being discussed in the current negotiations. But the cost and uncertainty associated with regular renegotiation of commitments is not being addressed. The São Paulo Proposal suggests mechanisms that would avoid the need for regular renegotiation of commitments and suggests other ways to make international climate agreements more effective.

The United Nations Framework Convention on Climate Change (UNFCCC) enjoys almost universal participation. The Kyoto Protocol to the UNFCCC also enjoys almost universal participation, with the notable exception of the United States. Under the Protocol, thirty-eight developed countries take the lead in combating climate change by accepting national emissions-limitation commitments of greenhouse gases (GHG) for the period 2008–2012. The Protocol established three emissions-trading mechanisms to help developed countries meet their commitments: two mechanisms for trades between countries with commitments and the Clean Development Mechanism (CDM), which allows developed countries to purchase credits generated by emission-reduction projects in developing countries.

The Kyoto Protocol is not a long-term agreement and so does not provide the predictable framework needed for long-lived capital investments and for research on and development of lower-emission technologies. Rather it assumes successive commitment periods with revised national commitments reflecting the most recent scientific evidence. Changing the responsibilities of countries over time is implicitly assumed to be part of the periodic renegotiation of commitments.

It is widely recognized that a five-year commitment period does not establish a predictable framework for long-lived investments. But longer commitment periods require that countries agree to larger emission reductions and to an explicit process for changing country responsibilities. Due to the relationship between emissions and economic growth, countries are reluctant to agree to the larger reductions in national emissions commitments needed to stabilize atmospheric concentrations when the commitment periods are longer. Each country tends to be optimistic about its future economic growth and reluctant to agree to an emissions commitment that may be perceived as a constraint on its growth, even though the emissions-trading mechanisms loosen that constraint. National commitments that are politically acceptable for longer periods do not yield reductions on the scale needed to stabilize atmospheric concentrations.

The current negotiations are intended, among other things, to establish commitments for the period after 2012. Negotiations are proceeding simultaneously under the auspices of the UNFCCC and the Kyoto Protocol, where the United States and a few other non-signatory countries do not participate. The Copenhagen Accord may constitute a third track. Ideally, there would be a single agreement that covers all countries that is implemented through one or more legal instruments, such as an amendment to the Kyoto Protocol, a new protocol or, perhaps, a new treaty growing out of the Copenhagen Accord. Multiple legal instruments would, however, complicate ratification and future negotiations.

At present, the mechanism for changing the responsibilities of countries is the periodic renegotiation of commitments. Additional countries accept commitments—possibly different types of commitments—as part of the renegotiation. This approach is reasonable for a five-year commitment period. But for any longer period, an explicit process for changing country responsibilities during the course of the agreement is needed.

Regular renegotiation of commitments creates uncertainty. Renegotiation means that the future commitment of each country is unknown. The stringency of the future commitment is not known, the form of the commitment may change, additional countries may agree to a commitment of some form, and some countries may drop out of the agreement. As in any negotiating process, some participants resort to brinkmanship as a tactic, thus adding to the uncertainty. After a new agreement has been reached, cases in which countries that have not yet ratified their new commitments by the time their existing commitments expire are likely.

The São Paulo Proposal eliminates the cost and uncertainty associated with periodic renegotiation of commitments while retaining desirable features—including the principle of common but differentiated responsibilities, national emissions commitments, and emissions-trading mechanisms—of the Kyoto Protocol. It establishes a predictable long-term framework through small annual adjustments to national emissions commitments. And as any long-term agreement must, it includes a mechanism for changing country responsibilities....

Erik Haites, President, Margaree Consultants

Viewpoints present policy proposals, considered opinions, and commentary by distinguished policymakers, leaders from business and nongovernmental organizations, and scholars. The Harvard Project on International Climate Agreements does not advocate any specific climate change policy proposals. Statements and views expressed in Viewpoints are solely those of the authors and do not imply endorsement by Harvard University, the Harvard Kennedy School, or the Harvard Project on International Climate Agreements.