Is There a Future for Intensity Targets in the Durban Platform Climate Negotiations?

Summary

The international community has agreed that the average increase of global temperature should be limited to 2 degrees Celsius with respect to preindustrial levels in order to avoid massive damage due to climate change. To attain the atmospheric carbon concentration required for that goal, greenhouse-gas (GHG) emissions from all countries need to be reduced substantially. There is still no new commitment on which emission-reduction targets will be allocated to (and accepted by) various countries, but progress has been made.

In the international climate-change policy arena, Kyoto targets were designed as absolute caps with baselines in the past, as was the objective of the United Nations Framework Convention on Climate Change (UNFCCC). Copenhagen-Accord pledges are of four types: fixed reductions with respect to the past; absolute reductions with respect to the (future) business as usual (BAU) emissions; carbon neutrality objectives; and intensity caps with baselines in the past. Intensity caps, contrary to fixed caps, do not set a country's allowable emissions level, but determine that level as a linear function of gross domestic product (GDP). Two countries submitted linearly indexed pledges to the Copenhagen Accord: China, to reduce its CO2 emissions by 40–45 percent per unit of GDP by 2020, compared with 2005; and India, to reduce CO2 emissions by 20–25 percent between 2005 and 2020.

The discussion of dynamic targets is not new. It began at the end of the 1990s as a means to foster developing countries' participation in emissions reduction (Argentina designed a GDP-adjusted target in 1999). Intensity targets allegedly have the virtue, by indexing emissions with respect to GDP, of favoring green growth and avoiding "hot air" (allowances for emissions above expected levels) in uncertain contexts, such as those of many developing economies. General audiences tend to believe that intensity targets yield a sort of "double dividend": allowing growth and, at the same time, reducing emissions. What is certain is that these approaches deserve more attention.

This paper conducts a comparative analysis of fixed and intensity carbon targets and discusses their implications in simpler terms than has usually been the case. It focuses on four differences among those targets: how allowed emissions vary with GDP; how abatement levels depend on GDP; under which circumstances "hot air" can arise; and what are the critical factors that affect uncertainty about the level of emissions abatement. It then discusses intensity as an indicator of climate performance and deals with the need for homogeneity and reliability of GDP statistics in the design of intensity targets. In addition, several alternatives to pure intensity targets that attempt to overcome the difficulties associated with fixed caps and standard intensity targets are reviewed: growth-indexed emission limits; generalized intensity caps; dual targets; and "safety-valve" mechanisms.

Intensity targets add complexity, always involve lesser burdens than fixed targets at high GDP levels, and have the potential (in some cases) to lower abatement variability and decrease the likelihood of "hot air." There are countries and reduction levels for which intensity targets do not work. For those, alternative mechanisms should be given a chance. All alternatives have the potential to reduce the twin uncertainties of fixed targets (i.e., economic and environmental risk), so their adoption could be justified even if it implies increased effort. As stated by Goulder and Parry (2008, p.1), "selecting the 'best' instrument involves art as well as science." Uncertainty can alter the stringency of emissions targets so that the resulting abatement is potentially different than what had been forecasted. But, it should be kept in mind that the ultimate objective of the new rounds of climate negotiations—intended to produce a new international agreement, under the Durban-/Platform process, by late 2015—is to engage all countries in actions that can alleviate climate change, through one type of target or another. Errors are possible, but the biggest error can be taking no action.

Mariana Conte Grand, Universidad del CEMA, Buenos Aires, Argentina