The Politics of Global Climate Change Urs Luterbacher Graduate Institute of International Studies

Climate Change can be defined as a Global Common Problem: A Rival Non-Exclusive Collective Good The Atmosphere is a global common Greenhouse gas accumulation demonstrates the overuse of this global common

Problems due to Greenhouse gas accumulation Rise in temperatures (not uniform) Rise in precipitations Sea level rise Enhancement of the water cycle: more extreme events

Theory of Collective Goods and Theory of the Commons

Possible Solution to Tragedy Privatize the resource to make owner responsible for costs

Problems with private ownership Need institutional structure (usually legal system) to protect and enforce individual rights Costly Some resources difficult to allocate to individuals or even to groups The Atmosphere is such a Resource Problem of “Anticommons”

How to overcome tragedy? Define a common pool resource but apply strict regulation membership criteria rules of use define new property rights

The UNFCCC and the Kyoto Protocol The United Nations Framework Convention on Climate Change signed in Rio in 1992 establishes broad guidelines for climate change policies but no legal obligations, the only obligation is an obligation to report emissions by country The Kyoto protocol establishes mandatory emission reduction targets below 1990 levels but only for industrialized (Annex I) countries

The Kyoto Targets: 5.2 % reduction of emission levels below 1990 levels by for all industrialized countries specific targets for various countries: US -7%, EU -8%, Japan -6%, Switzerland -8% but Australia + 8%, Norway +1%, Iceland +10%! 6 greenhouse gases are considered: CO 2, CH 4, N 2 O, HFC(hexafluorocarbon), PFC(perfluocarbon), SF 6 (sulphur hexaflouride)

Which Instruments to use to achieve reductions? At first, a generalized carbon tax was envisaged. Such a tax raises many problems: Who will collect it? How can one avoid distortions between countries? How can one make sure that goals are achieved: When property rights are not well defined tax mechanisms might make things worse Such taxes are regressive between and within countries

The Kyoto Flexible Mechanisms: an alternative instrument Emission reductions can be achieved in a variety of ways, country specific or through the use of the so-called Kyoto flexible mechanisms which are: Emissions trading between industrialized countries Joint implementation between industrialized countries The clean development mechanism between industrialized and developing countries

Several Issues About the Mechanisms Remain Unresolved Will a country be able to achieve all reductions through the mechanisms? How will the mechanisms be implemented? Which compliance rules shall be used? How will emission rights be allocated? How will one account for carbon sinks?

The Kyoto decisions reflect the interests of major players Major rapidly developing countries such as India, China, and Brazil are not subject to any obligations These countries might benefit from the mechanisms without having to reduce emissions via the CDM Emissions trading and joint implementation are there to keep the US involved The targets reflect a compromise between the US and the EU

Can Formal Analysis help us to understand the climate change negotiation process? Yes, common good analysis tells us that often players don not have dominant strategies: there is thus a competition for first move (players do not want to cooperate and compete with each other not to be the first) This is why the Kyoto ratification process is so difficult

A simple illustration of first move competition and the absence of equilibrium

How can one catch the dynamic evolution of a country’s interests? The Nordhaus method: Describe the global economic evolution of several countries involved in transactions with each other via an integrated model that considers both economic evolution and climate change Define a “Utility” (Interest function) for each country (for instance in terms of maximizing consumption) Calculate optimal strategies to achieve this Do the calculations show whether a country has an interest or not to collaborate with others on climate change ?

Calculation of Optimal Strategies

Calculation of Optimal Strategies:

The Role of Non State Actors Non State Actors influence negotiations mostly through their influence on public opinion within countries NGO’s might help to coordinate information

The Kyoto Protocol Mechanisms Also Raise Equity Questions What is the appropriate distribution of emission rights? What are the criteria? What are the equity considerations within countries?

The Kyoto Protocol is largely compatible with other global environmental agreements except for minor details It is largely compatible with the Biodiversity convention, with the possible problem of carbon sinks. Refrigerant gases are recommended by the Montreal Protocol on the protection of the ozone layer and listed as greenhouse gases by the Kyoto Protocol.

Trade issues could pose problems The WTO order is built on the principle of non-discrimination for like products In principle the WTO does not distinguish between different PPM’s Some dispositions of the Kyoto protocol could be in contradiction with these WTO principles Problem of leakage and gray energy

For small countries it makes sense to promote international cooperation Make use of the articles of the protocol and do not attempt to use idiosyncratic methods Try to reduce as many emissions abroad as possible Encourage the construction of international networks On these points, Switzerland does not compare favorably with Norway for instance