Why the US and China Inspire Hope for International Climate Change Action

Protesters assemble outside the 19th Conference of Parties of the United Nations Framework Convention on Climate Change in Warsaw, Poland, late last month. What the conference achieved — and avoided — and an emerging convergence between the world’s two biggest carbon emitters has left Harvard environmental economist Robert Stavins hopeful. Photo courtesy of Flickr user Adopt a Negotiator.

Editor’s Note: The parties to the United Nations Framework Convention on Climate Change met for their 19th conference late last month in Warsaw, Poland. Here to update us on their progress is chair of Harvard’s environmental economics program Robert Stavins. His blog, “One Economist’s Perspective on Environmental and Natural Resource Policy,” is required reading for anyone interested in environmental economics. As is his earlier post on the Business Desk examining the prospects for climate change action within the American political system. Along with Harvard economist Marty Weitzman, who’s defended on this page the economic incentives of preparing for climate change’s potentially drastic outcomes, Stavins is someone to watch if you follow climate change or economics, and especially both. Today, he takes an international prospective in sharing some glimmers of optimism that the interests of the two biggest carbon emitters — the United States and China — are beginning to align.

Rob Stavins: The 19th Conference of the Parties (COP-19) of the United Nations Framework Convention on Climate Change (UNFCCC) came to a close in Warsaw, Poland, on Nov. 23, after several all-night sessions spent haggling over subtle changes to the text on which countries were willing to agree.

The key task was to pave the way for negotiations next year, at COP-20 in Lima, Peru, as a lead-up to reaching a new international climate agreement at the 2015 negotiations in Paris. A new agreement would be implemented in 2020, at the end of the second commitment period of the Kyoto Protocol, which set internationally binding emission reduction targets.

If paving the way for a new agreement was the major objective, the Warsaw meetings were at least a modest success. The baton was not dropped; rather, it was passed successfully in this long relay race of negotiations.

The Lead Up to the Warsaw Negotiations

The UNFCCC, adopted at the U.N. Conference on Environment and Development in Rio de Janeiro in 1992, contains a crucial passage for understanding the relative success of current negotiations.

The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof. [emphasis added]

The countries considered to be “developed country Parties” were listed in an appendix to the 1992 Convention — Annex I — including, of course, the United States. As a developing country, the People’s Republic of China was not part of Annex I.

The phrase “common but differentiated responsibilities” took on a specific interpretation in 1995 as part of the Berlin Mandate, formulated at the first Conference of Parties of the UNFCCC. The mandate launched a process to commit (by 1997) the Annex I countries to quantified greenhouse gas emissions reductions within specified time periods. At the same time, it stated unambiguously that the process should “not introduce any new commitments for Parties not included in Annex I.”

Thus, the Mandate drew a dichotomous distinction between the requirements for Annex I (developed) and non-Annex I (developing) countries. The non-Annex I countries, had none of the emission-reduction responsibilities of their developed counterparts.

But the distinction didn’t achieve all that much balance between what were understood to be the richer Annex I countries and the poorer countries not held to the same standards. Within a few years, as many as 50 non-Annex I countries came to have greater per capita income than the poorest of the Annex I countries. In short, the distinction was quickly out of whack.

The distinction in the Berlin Mandate was impractical for several other reasons, too. Under the divided standards, half of global emissions would be from nations without constraints, and that meant that the country fast becoming the world’s largest emitter — China — would be unconstrained.

Second, not requiring developing countries to curb their emissions drove up aggregate compliance costs to four times their cost-effective level because opportunities for low-cost emissions abatement in emerging economies were taken off the table.

Third, setting up this developed-developing divide perpetuated an institutional structure resistant to change since it was in the interest of all non-Annex I countries to maintain the status quo. They wanted to freeze the 1995 list of which countries should take action.

Two years after the Berlin conference, the Kyoto Protocol codified the Berlin Mandate with numerical targets and timetables for Annex I countries and no commitments for other nations. Prospects for meaningful action seemed bleak.

Change Afoot

Fast forward to 2011, however, and things began looking up. At the meeting of the 17th Conference of the Parties in Durban, South Africa, delegates adopted a platform that – according to some interpretations — eliminated the Annex I/non-Annex I (or industrialized/developing country) distinction. In the Durban Platform, the delegates decided to reach an agreement by 2015 that will be applicable to all countries in 2020.

National delegations from around the world faced a challenge to identify a new international climate policy architecture that is consistent with the process, pathway, and principles laid out in this Durban Platform. They sought a way to include all (key) countries (such as the 20 largest national and regional economies that together account for upwards of 80 percent of global carbon dioxide emissions) in a structure that brings about meaningful emissions reductions within an appropriate timetable at acceptable cost, while remaining within the overall framework provided by the UNFCCC, including the celebrated principle of common but differentiated responsibilities.

Making Progress Toward a Post-Kyoto Agreement

Two weeks ago in Warsaw, the negotiators succeeded in developing a work plan under the Durban Platform and a related calendar that will set the stage for developing a new agreement that can be discussed at COP-20 in Lima one year from now and then be subject to final consideration and adoption a year after that at COP-21 in Paris. In the process, they identified six components for the new architecture: mitigation, adaptation, finance, technology development and transfer capacity-building, and transparency of action and support. Some of these are more necessary than others, but this was the package on which they agreed in Warsaw.

It now looks likely that the 2015 agreement will take the form of a hybrid architecture, combining: (1) a bottom-up system of national contributions that arise from — or are at least consistent with — national policies and goals; plus (2) top-down, centralized management of oversight, guidance and coordination, with an eye to increasing ambition over time.
At the Harvard Project on Climate Agreements, we outlined such a hybrid international climate policy architecture four years ago, and we explored it further just last month in a new report.

Avoiding a Long and Perilous Road

The talks in Warsaw last month were a success for one other reason. Delegates avoided getting mired in one of the touchiest subjects that could have blown up the talks: the issue of “loss and damage,” or the effects of climate change on developing countries that are particularly vulnerable to its adverse effects. International policy discussions on the topic frequently raise arguments about who should pay for such loss and damages. So the delegates were taking a risk — with potential pay offs, certainly — by agreeing to put “loss and damage” on the agenda.
So who should foot the bill for this damage? Since climate change is a function not of current emissions, but of concentrations, responsibility for damages is presumably correlated with cumulative emissions. Hence the industrialized countries, in particular, the United States, worry that negotiations on “loss and damage” would soon raise the specter of unlimited legal liability.

The link between cumulative emissions and responsibility for damage is less direct than one might think, however. First, climate change is a global commons problem; it cannot be linked to emissions from a specific country. And second, links between climate change and changes in weather patterns are highly stochastic; no specific weather incident — whether Superstorm Sandy in New York, Hurricane Katrina in New Orleans, or Typhoon Haiyan in the Philippines — can be deterministically linked with global climate change. These two scientific realities mean that moving from “loss and damage” to legal liability would take countries down a long and perilous road.

But this is a very important issue in the climate negotiations for many developing countries, in particular, for the small island states that are most at risk from loss and damage. Therefore, it’s no surprise that this area of discussion — in some ways only a sideshow of the primary talks on reducing emissions and the risk of climate change — almost caused the talks to collapse.

In the end, however, the delegates agreed to finesse the topic by creating the Warsaw International Mechanism for Loss and Damage, which does not mention liability or promise compensation, but rather states that this is a topic to be discussed further at future meetings, and under the general subject of adaptation to climate change.

Little Progress on Finance

On the third major issue in Warsaw, finance, there was — not surprisingly — little or no progress. Specifically, the delegates needed to address when and how the industrialized countries will meet their 2009 commitment to begin delivering $100 billion per year of financial assistance to developing countries in 2020 to help with mitigation and adaptation.

Any Reason for Optimism?

Given this description of what happened (and did not happen) in Warsaw, is there any cause for optimism regarding the path ahead? There is cause at least for cautious optimism, because of a singular reality — the growing convergence of interests between the two most important countries in the world when it comes to climate change and international policy to address it, namely, China and the United States.

First of all, the annual carbon dioxide (CO2) and greenhouse gas (GHG) emissions of these two countries have already converged. Whereas U.S. CO2 emissions in 1990 were almost five times greater than Chinese emissions, by 2006 China had overtaken the United States. We are the world’s two largest emitters.

Second, looking at cumulative emissions is also important because they are what cause climate change. Any discussion of distributional equity in the climate realm inevitably turns to considerations of historic responsibility. Looking at the period 1850-2010, the United States led the pack, accounting for nearly 19 percent of cumulative global emissions of GHGs, with the European Union in second place with 17 percent, and China third, accounting for about 12 percent of global cumulative emissions. But that is changing rapidly: emissions are flat to declining throughout the industrialized world, while they are increasing rapidly in the large emerging economies, in particular, China. Depending upon the relative rates of economic growth of China and the United States, as well as many other factors, China may top all countries in cumulative emissions within 10 to 20 years.

Third, the United States’ and China’s historically high reliance on coal for generating electricity has diminished, in the case of the United States, and will inevitably at some point in China, as well. U.S. dependence on coal is decreasing because of increased supplies of unconventional natural gas and hence lower gas prices. China continues to rely on coal, but is very concerned about this, partly because of localized health impacts of particulates and other pollutants. Importantly, both countries have very large shale gas reserves. U.S. output (and use for electricity generation) has been increasing rapidly, bringing down CO2 emissions, whereas Chinese exploitation and output have been constrained by available infrastructure (i.e., lack of pipelines), but that will change.

A fourth way convergence between the two countries can inspire some optimism is that in both countries, sub-national climate policies — cap-and-trade systems — are moving forward. In the case of China, seven pilot CO2 cap-and-trade regimes at the local level are under development, while in the United States, California’s ambitious AB-32 cap-and-trade system continues to make progress.

Fifth and finally, there is the reality of global geopolitics. If the 20th century was the American Century, then many observers, including leaders in China, anticipate (or hope) that the 21st century will be the Chinese Century. And, as David Jolly quoted me recently in the New York Times, “If it’s your century, you don’t obstruct, you lead.”

The Path Ahead

There was no fundamental setback in Warsaw to the stream of work that needs to be accomplished in Lima, Peru, one year from now. The key objective for COP-20 in Lima will be to develop the text of an agreement that can be reached in Paris in 2015, as mandated by the Durban Platform for Enhanced Action. So, without a setback in Warsaw, the baton has been passed. This modest success, combined with the increasing convergence of Chinese and U.S. perspectives and interests, leaves me cautiously optimistic — or perhaps, just hopeful — about the path ahead.