Reports & Papers

This essay examines Russia’s growing role in Asia’s energy markets, assesses the implications for the U.S., and examines the claim that closer Sino-Russian energy ties are adding new incentives for a broader strategic alignment.

Economics are an essential part of understanding climate change and for developing solutions to it. Robert Stavins and Rohini Pande focused on that idea at a Harvard Kennedy School "IDEASpHERE" event titled "Harnessing Market Forces to Protect the Climate."

The outcome of the December 2011 United Nations climate negotiations in Durban, South Africa, provides an important new opportunity to move toward an international climate policy architecture that is capable of delivering broad international participation and significant global CO2 emissions reductions at reasonable cost. This paper addresses an important component of potential climate policy architecture for the post-Durban era: links among independent tradable permit systems for greenhouse gases.

In pursuit of a workable successor to the Kyoto Protocol, this study offers a framework of formulas that produces precise numerical targets for emissions of carbon dioxide (CO2) and other greenhouse gases, in all regions of the world in all decades of this century....Firms, consumers, and researchers base their current decisions to invest in plant and equipment, consumer durables, or new technological possibilities on the expected future price of carbon: If government commitments are not credible from the start, then they will not raise the expected future carbon price.

"...[I]t is not clear that emissions trade between developed and developing countries is either feasible or desirable at this juncture. Technological change that lowers the prices of competitors to fossil fuels is the only way out. This can be promoted by regulation, tax, and tradeable permits in developed countries that provide inducements for R&D, and no less importantly, by the direct subsidization of R&D. The bulk of the finance for this will have to come from the developed countries. An international agreement involving developing countries should, at least in the coming round of negotiations, confine itself to promoting technical cooperation between regulators and other entities from all countries. It should include financial support from the developed countries for spreading energy conservation technologies and practices. Tropical agriculture will need a major thrust to develop new varieties that will withstand climate change. The necessary research and development cooperation should be part of the new agreement and needs major funding from developed countries. Research can also include emissions cuts from agricultural sources as long as this is financially well supported so that it does not reduce the funds available for promoting research into agricultural productivity."

This paper offers a detailed plan to set quantitative national limits on emissions of greenhouse gases, building on the foundation of the Kyoto Protocol. It attempts to fill in the most serious gaps: the absence of targets extending as far as 2100, the absence of participation by the United States and developing countries, and the absence of reason to think that countries will abide by commitments. The plan elaborates on the idea of a framework of formulas that can assign quantitative limits across countries, one budget period at a time. Unlike other proposals for century-long paths of emission targets that are based purely on science (concentration goals) or economics (cost-benefit optimization), this plan is based partly on politics.