Thanks to Jörg Haas from the European Climate Foundation for putting a central thought behind the Wuppertal Institute’s new publication on the 2015 agreement much more clearly than we were able to, as contained in this post’s title. We argue that, as long as emissions are seen as inextricably linked to economic well-being, framing commitments in terms of emission reductions directly triggers the perspective of seeing climate protection as an economic loss. Moreover, adopting quantity commitments is risky for governments as key emission drivers such as economic and population growth are largely beyond their influence. Finally, the approach of turning emissions into a valuable commodity means that quantity commitments are equivalent to giving countries money. These factors directly give rise to the distributional controversy that has dominated the climate negotiations for more than 20 years. As Joseph Stiglitz notes, “If emissions were appropriately restricted, the value of emission rights would be a couple trillion dollars a year – no wonder that there is a squabble over who should get them.”
The history of the climate negotiations has amply borne out those who have been skeptical of the quantity-based approach, post-Copenhagen wasn’t the first time Stiglitz and others voiced their doubts. One doesn’t even need to look at certain Eastern European countries who torpedoed the latest round of climate negotiations in Bonn because a certain decision taken in Doha took away their punch bowl.
One only needs to look at the EU, the self-proclaimed climate frontrunner. The EU has almost achieved its target of reducing emissions by 20% below 1990 levels by 2020, eight years ahead of schedule, and through domestic emission reductions to boot. Sandbag calculated that taking into account offset credits surrendered in the EU ETS, the EU in 2012 even reduced emissions by the equivalent of 27% of its 1990 emissions. And still the EU is politically unable to increase its target. I don’t know how many surplus Kyoto units will be generated by the EU’s sticking to 20%, but it’s probably going to be a lot. Which the EU will of course want to import into the 2015 agreement.
And I don’t see why the cap-setting in the 2015 agreement should play out any differently, the emission allowances punch bowl will probably continue to be too tasty for too many. Which is why the Wuppertal paper recommends exploring different kinds of commitments, for which it discusses some candidates at some length, and to ideally combine different types of commitments.
Which isn’t to say that emission trading cannot be a useful tool for DOMESTIC climate policy. It can be, if done right. But I sincerely hope that quantity commitments will not continue to form the core of the international regime.