Climate Change Scientific evidence, regulatory options, & global governance

US Global Change Research Program 11 January 2013 Draft Climate Assessment Report: Climate change is no longer a future threat. It is happening now. National Climate Assessment Development Advisory Committee 13 US government departments and agencies Executive Office of POTUS oversees

Science of climate change It is global in it’s origin and effects The effect is NOT marginal – potential impacts are extremely large and lethal The risk and uncertainty associated are extremely large – the variance of the effect dominates the average effect The impact is to be felt over the long run (hundreds if not thousands of years)

Historic CO2 Concentrations Antarctic ice cores going back 800,000 years – 180 ppm (during the colder ice ages) to – 280 ppm (during the warmer interglacial periods) Last 10,000 years: 280 ppm Lndustrial revolution about 1750: began rising Mauna Loa 1958: 315 ppm Mauna Loa 2013: 400 ppm IPCC formula: 600 (800) ppm = average change of 3.3 C (4.5 C) & likely range 1.1 C (3 C ) to 5 C (6.8)

Relationship between CO2 and temperature is not linear

Slow moving disaster ms ms

There is uncertainty (follow CO2 lines from right to gauge temp. probability)

Global Population: Mind the gap

Who will be in the developed country category? In the past 100 years, only a small number of countries have moved from developing to developed categories. This will change by Two billion people countries will join the club: China and India And another group with 100+ million will be there too: Mexico and Brazil

Temperature and human impact

Policy issues Simplistic division of countries into developed & developing. – Categorize according to mitigation & adaptation capacity & vulnerability. Analyze IPRs by technology type – Plant varieties – Clean energy technology Don’t subsidize fossil fuel – Do subsidize clean energy – Ensure WTO rules allow

Policy responses to climate change Mitigation: reduce GHG emissions to limit the degree of climate change that will occur. Adaptation: to respond to the effects of climate change that has occurred or will occur. Both require technology diffusion. Key issue: legal implications of unilateral responses to multilateral negotiation failure.

Multilateral negotiation failure Causes – Consensus-based decision-making (WTO, UNFCC) – ‘Nothing is agreed until everything is agreed’ (WTO) – Rise of major emerging economies – Financial crisis in developed countries – North-South, North-North and South-South divides – (Disguised) protectionism, regulatory capture

Multilateral negotiation failure Consequences WTO consequences – Unilateral, bilateral or plurilateral responses – Regional Trade Agreements UNFCCC/Kyoto consequences – Unilateral, bilateral or plurilateral responses – Bilateral and Regional Agreements Catalysts for action – weather events (hurricanes, fires, droughts, floods) – unilateral measures

Jurisdictional categories of policy responses Scope of measures – subnational (NYC zoning; California cap-and-trade) – national (Australia carbon tax) – international (Kyoto) Method of enacting measures – unilateral (no international agreement) – bilateral (EU-Australia) – Regional (EU emissions trading; aviation directive) – Multilateral (UNFCCC; WTO)

Mitigation & Adaptation Address different, interrelated risks. Mitigation increases chances of successful adaptation. Mitigation: local costs, global (long-term) benefits. Adaptation: local costs and (short and medium-term) benefits. Adaptation capacity & vulnerability differ, so costs & benefits do too. Asymmetrical incentives to take mitigation and adaptation measures. But can’t ignore global nature of the problem.

Global governance Means risk management via international processes, institutions and legal regimes. Scientists identify and assess risks. Leaders find ways to mitigate and adapt. Mitigation and adaptation have financial and economic implications. And require coordination of legal regulation, including international environmental law and international economic law. Legal regulation implies international negotiation, avoiding regulatory capture and coordination between global institutions.

Technology Transfer for Mitigation and Adaptation IPR issues vary with technology – Some cite debate over patents and medicine Mitigation: clean energy technology – IPRs less likely to reduce access by increasing cost – Competing firms & technologies reduce costs – US CVDs on solar panels = IPRs not sufficient entry barrier Adaptation: biotechnology barriers to access – GM plants have few substitutes – 6 MNCs patented 77% of “climate ready crop genes” – Developing countries more vulnerable to impacts of climate change on agriculture and subsistence farmers – Terminator genes prevent replanting saved seed

IPRs, tech transfer & North-South divide In climate change negotiations: – developing countries seek $ for technology or relaxation of IPRs to lower tech cost – developed countries defend IPRs Why? – concentration of technologies and IPRs in developed countries – prediction of disproportionate impacts of climate change on developing countries BUT role of IPRs in tech transfer will be different in richer, scientifically-advanced developing nations than in poorer, less scientifically-advanced nations. – China: solar power – Brazil: biodiesels

Real clean energy issues are… Redirect fossil fuel subsidies to clean energy. – Reform WTO law to allow enviro subsidies. Disseminate clean energy tech by removing barriers to: – trade in clean energy technologies (CVDs, ADDs & TRIMS) – foreign investment (BITs, GATS) – trade in services (GATS) Use cap-and-trade to create tech demand. – SO2 example (below)

Is cap-and-trade just hype or hope? Design based on US SO2 market model. US set up emission rules for the US Acid Rain Program in Title IV of the 1990 Clean Air Act. Energy producers then had incentive to adopt cleaner technology. Led to dramatic reduction of acid rain in certain region of the United States. How dramatic?

Current, future carbon markets

China 2013 (#1 GHG emitter) Had pledged to cut emissions intensity (Co2 emissions per economic unit) 45 % by National Development and Reform Commission (NDRC) proposed absolute caps to separate emissions growth from economic growth. Planned peak in overall emissions in First pilot carbon-trading program Shenzhen: 638 companies (38% of city's total emissions). Shenzhen is one of seven pilot carbon-trading programs set for 2013.

International economic law & climate change regime No inherent inconsistency BUT analysis is complex. Right to regulate is constrained by international legal obligations: UNFCCC, WTO (GATT, TBT, TRIMS, SCM, AoA), RTAs, BITs, IPRs (TRIPS, UPOV). Scope of right to regulate requires interpretation of international treaties. Must interpret international treaties in light of each other’s content, to avoid conflicting interpretations. Complexity of this legal analysis is additional obstacle to effective climate change regulation. Relevant international economic law treaties not drafted with climate change in mind.