December 17, 2015

From Rio to Paris

One way to evaluate what was accomplished at the recently concluded COP-21 talks in Paris is to look at John Kerry’s response to Jim Hansen’s description of the Paris agreement as “bullshit”:

I understand the criticisms of the agreement because it doesn’t have a mandatory scheme and it doesn’t have a compliance enforcement mechanism. That’s true. But we have 196 countries, for the first time in history, all submitting independent plans that they have laid down, which are real, for reducing emissions.

They’re both right. Negotiating any international agreement in the equivalent of Madison Square Garden (given the number of governments, observers, media and interested parties) is no small feat in itself. Every country on the planet got together and agreed that they would each do something, but without any requirement as to what they—individually or collectively—will actually do.  In other words, it is a remarkable achievement that doesn’t achieve nearly enough.

Compare Paris to where we were in the 1992 Rio Treaty, which started this whole process. In 1992, the goal was “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system . . . within a time frame sufficient to allow ecosystems to adapt naturally to climate change, [and] to ensure that food production is not threatened.” We would achieve that goal by each country “limiting” its emissions.

In Paris, we agreed to limit “the increase in the global average temperature to well below 2 °C above pre-industrial levels” by “aim[ing] to reach global peaking of greenhouse gas emissions as soon as possible.”

So, after 23 years we’ve put a number – 2 0C – on the goal, and gone from trying to reduce emissions before bad things happen to trying just to get emissions to peak as soon as possible.  Both represent progress.

First (and putting aside the incredibly arbitrary and probably unattainable nature of the 2 0C target), atmospheric dynamics on the one hand (the problem) and technology and economics on the other (the solutions) are all numbers-driven, and we need a number to plug into one side of the equation.  Second, Paris improves on Rio by explicitly recognizing that replacing fossil fuels—the foundation of the world economy—is an almost unimaginably gargantuan task. The agreement thus embraces the more achievable and necessary first step: slowing the growth in fossil fuel use until it peaks.

The developed world has already achieved precisely that. For example, U.S. emissions peaked in 2007, and in 2013 our net emissions were less than 5% greater than in 1992. This despite the fact that over the same period, population grew by 27% and the economy almost doubled in size.

But, like the Paris agreement itself, that is a remarkable achievement that achieves far too little. Emission reductions in the developed world are—and will continue to be—dwarfed by increased emissions over the rest of the planet. Emissions are still increasing – and rapidly — in Africa and Asia, home to 77% of the world’s population.

So, that said let’s look at the details, which comprise the usual mixture of the good, the bad, and the ugly.

The Good

The agreement is wise to focus on making the voluntary national commitments more consistently reported over time, to allow for peer pressure improvement, and for trying to promote adaptation as a parallel effort with mitigation. We also like the focus on transparency (albeit thoroughly qualified, as we will see) and recognizing the need for capacity building so that developing countries do the right things with any financial assistance they get.

And it’s final. Although theoretically, the U.S. can simply abandon it, we don’t think things will ever get that far. Despite likely promises to the contrary from the bench of Republican presidential candidates, any incoming Republican administration will have too many immediate international problems on its plate to take the international heat of withdrawing.

The Bad

The agreement is beset by bureaucracy and frequent do-overs. We get biennial reviews, updated INDCs, “stocktakes” every five years, etc., and all after numerous expert committees, reviews and consultations.

There is clearly a need for some of these, but the danger is that the sideshow fights about who is or isn’t playing fair in this process guarantees substitutes for action. Sadly, the Madison Square Garden-as-policy-forum circus will also continue its annual visit to town.

The Ugly

The fundamental weakness of the agreement is the two most prominent numbers: 2 0C and $100 billion a year – that are somewhat interdependent and both probably unachievable. No one disputes that it would take far, far more than this agreement provides—and implausibly quickly—to avoid a 2-degree rise in temperature. As noted above, developed countries can’t make that much of an impact alone, and developing countries understandably don’t want to jeopardize economic growth.

As for money, the agreement repeatedly imposes obligations on developed countries and calls for voluntary action by developing ones – to be funded by the developed countries. That funding will be the hottest of political hot potatoes in the United States, where the idea that the government and private sector will send around $30 billion a year indefinitely to countries that are more likely than not to waste it is a recipe for political disaster. It is also doubtful in an era of budget crises that Congress will ever be persuaded to fund its share. Without serious anticorruption efforts and economic reform in receiving countries, the money—and not just the U.S. share—will dry up quickly.

The agreement’s approach to enforcement is embodied in this comment on how to implement transparency: “… in a facilitative, non-intrusive, non-punitive manner, respectful of national sovereignty, and avoid placing undue burden on Parties.” That approach is consistent throughout the document. For example, the compliance mechanism is to be “facilitative in nature and function in a manner that is transparent, non-adversarial and non-punitive” and will “pay particular attention to the respective national capabilities and circumstances of Parties.”

Reasons to be Cheerful

We think the combination of unrealistic objectives and (over) regular reviews will soon lead to the realization that new national measures are needed. To be charitable, that may actually be the one justification for those endless meetings. We may thus see a wider adoption of carbon pricing through taxation.

The agreement’s relative silence on cap-and-trade and its encouragement of dismantling (“voluntary cancellation”) the Kyoto Joint Mechanisms suggest that, at least as an international mechanism, cap-and-trade has had its day.

The finance issue has a similar upside. The fragile commitment to higher funding will sooner or later break without institutional reform in the developing countries. This may be the driver for real change in how those countries do (and allow their inhabitants to do) business.

In terms of better defining the problem and the path toward solving it—and in getting everyone to agree that they will sooner or later do something about it—Paris was a success.  But we are little closer to the means of solving the problem or figuring out the optimal way for those 196 countries to go about implementing the solutions.