1. Sharing the burden: the multistage approach Support of Shaping the Post Kyoto Climate Regime REC Workshop Developed by Ecofys presented by Zsolt Lengyel, SenterNovem 5-6 March 2009, Szentendre, REC

2. 5 March 2009, Szentendre, The Regional Environmental Center2 Content 1.The background snapshot : climate stabilsation goals 2.The various post-Kyoto effort sharing approaches 3.The multistage approach 4.Stabilisation scenarios 5.Conclusions

3. 5 March 2009, Szentendre, The Regional Environmental Center3 1.a. Climate stabilisation Source: IPCC Synthesis Report, 2001

4. 5 March 2009, Szentendre, The Regional Environmental Center4 1.b. Risk of overshooting 2°C Source: IPCC AR4, Synthesis Report

5. 5 March 2009, Szentendre, The Regional Environmental Center5 1.c. Emission reduction efforts Source: IPCC AR4, Workong Group III, Chapter 13, Box 13.7

6. 5 March 2009, Szentendre, The Regional Environmental Center6 2. Approaches Based on one/two principles Sophisticated approaches Contraction and Convergence Common but diff. convergence Triptych Brazilian Proposal on hist. resp. South North dialogue Multistage Sectoral approaches Intensity targets

7. 5 March 2009, Szentendre, The Regional Environmental Center7 2.a. Contraction and Convergence Contraction: Agreement on a global emission pathway (e.g. towards 450ppmv) Convergence: Per capita emission converge until, e.g., 2050 Origin of the approach: Global Commons Institute www.gci.org.uk/briefings/ICE.pdf For 450 ppmv CO 2 : Convergence level 2-3 tCO 2 eq. (Global average today ~6)

8. 5 March 2009, Szentendre, The Regional Environmental Center8 2.b. Common but differentiated convergence (CDC) Three stages –No commitments –No-Lose targets –Convergence of per capita emission level to the same level in e.g. 40 years Participation threshold: –(time dependent) global average per capita emissions Höhne, den Elzen, Weiss: Common but differentiated convergence accepted at Climate Policy 2005 For 450 ppmv CO 2 : Convergence level ~2 tCO 2 eq. Participation at world average

9. 5 March 2009, Szentendre, The Regional Environmental Center9 2.c. Brazilian Proposal on historical responsibility Design Share reduction proportional to historical responsibility To allow growth targets: reductions below a reference scenario Critical issues Calculation of historical responsibility For growth targets reference scenario needed Decisions on who participates needed For 450 ppmv CO 2 : Fast participation of countries additional to Annex I, e.g. at Annex I average per capita emissions or GDP Ambitious reductions for reducing countries See www.match-info.net for calculations of contributions to temperature increase

10. 5 March 2009, Szentendre, The Regional Environmental Center10 2.d. Intensity targets Improvement of Emissions/GDP Decision on participation needed For 450 ppmv CO 2 : Annex I assumed to reduce 20% below 1990 in 2020 Intensity targets for Non-Annex I countries, if their per-capita emissions above 3 to 5 tCO 2 eq./cap in 2020 Emissions/GDP improvement 1 to 2 percentage points per year better than under reference scenario

11. 5 March 2009, Szentendre, The Regional Environmental Center11 2.e. Sectoral approaches Emission targets are defined for all individual sectors as function of their respective output (e.g. t of steel, kWh produced, etc.). Emission trading possible For 450 ppmv CO 2 : Annex I assumed to reduce 20% below 1990 in 2020 Major Non-Annex I countries –Electricity: reduction in CO 2 /kWh by 3% per year; energy efficiency improvements reduce growth in production by 0.5% per year –Iron & steel: convergence in tCO 2 /t steel by 2025 to 0.80 (year 2000 average = 1.53) –Cement: convergence in tCO 2 /t cement by 2020 to 0.60 (year 2000 average = 0.77)

12. 5 March 2009, Szentendre, The Regional Environmental Center12 2.f. Triptych For 450 ppmv CO 2 : Convergence to efficiency 50% better than BAT in industry in 2050 60% emission free electricity in 2050. Domestic: convergence to 0.7tCO 2 eq/cap

13. 5 March 2009, Szentendre, The Regional Environmental Center13 2.g. South North Dialogue Quantitative commitment Qualitative commitment Financial support 1. Least developed countries -SD PAMS optionalReceive payments 2. Other developing countries -SD PAMS obligatory, co- funded Receive payments 3. Rapidly industrializing developing countries Limitation if funding provided SD PAMS obligatory, co- funded Receive high payments 4. Newly industrialized countries LimitationSD PAMS obligatory Co-funding 5. Annex I but not Annex II Absolute reduction -Low/no payments 6. Annex IIStrict absolute reduction -Make high payments Thresholds: CO 2 /GDP, GHG/cap, emission growth, cumulative emissions, GDP/cap, HDI; show members of the groups Adaptation commitment http://www.wupperinst.org/Sites/Projects/rg2/1085.html

14. 5 March 2009, Szentendre, The Regional Environmental Center14 2.h. Multistage Countries graduate into the next steps (based on thresholds emissions/cap, GDP/cap, human development index) No reduction commitments (current non-Annex I) e.g. sustainable development policies and measures e.g. slowing of emission growth Absolute reductions (current Annex I)

15. 5 March 2009, Szentendre, The Regional Environmental Center15 Towards 450 ppmv CO 2 (550 ppmv CO 2 eq.) in 2020 No commitments e.g. sustainable development policies and measures e.g. slowing of emission growth Absolute reductions Above Non- Annex I average Above world average Very few 1.5-4 % p.a. 20 to 25% below BAU 10% below BAU Source: Höhne, Phylipsen, Ullrich, Blok, 2005: Options for the second commitment period of the Kyoto Protocol http://www.umweltdaten.de/publikationen/fpdf-l/2847.pdf 3. Multistage: A staged future system

16. 5 March 2009, Szentendre, The Regional Environmental Center16 3.a. Stages of the multistage system (1-2) Stage 1 – No commitments: Countries with a low level of development do not have climate commitments. At least all least developed countries (LDCs) would be in this stage. Stage 2 – Enhanced sustainable development: At the next stage, countries commit in a clear way to sustainable development. The environmental objectives are built into the development policies. Such a first soft stage would make it easier for new countries to join the regime. Requirements for such a sustainable pathway could be defined, e.g. inefficient equipment is phased out and requirements and certain standards are met for any new equipment or a clear deviation from the current policies depending on the countries.

17. 5 March 2009, Szentendre, The Regional Environmental Center17 3.b. Stages of the multistage system (3) Stage 3 – Moderate absolute target: In this stage, countries commit to a moderate target on absolute emissions. The emission level may be higher than the starting year, but it should be below a reference scenario. The target could also be positively binding, meaning that allowances can be sold, if the target is exceeded. No allowances have to be bought, if the target is not achieved. An incentive to accept such a target would be the possibility to participate in emissions trading.

18. 5 March 2009, Szentendre, The Regional Environmental Center18 3.c. Stages of the multistage system (4) Stage 4 – Absolute reduction target: Countries in stage 4 receive absolute emission reduction targets (like industrialised countries now in the Kyoto Protocol) and have to reduce their absolute emissions substantially until they reach a low per capita level (essentially a fifth stage). How much each individual country has to reduce its emissions can be defined in different ways, e.g. Comparison of International Climate Policy Approaches for Post 2012 converging per capita emissions, based on the Triptych approach or based purely on negotiations. As time progresses, more and more countries enter stage 4.

19. 5 March 2009, Szentendre, The Regional Environmental Center19 3.d. Multistage approach: Strength and weaknesses Strenghts: Gradual phase in of countries, in line with UNFCCC spirit, taking into account national circumstances General framework that can accommodate many ideas and satisfy many demands Allows for gradual decision making Trust-building as industrialised countries take the lead Compatible with Kyoto Protocol (reporting and mechanisms) Weaknesses: Can lead to a complex system, requires many decisions and allows for exceptions Risk that countries enter too late so that some long term stabilisation options are lost Incentives needed for countries to participate in a certain stage Source: Comparison of International Climate Policy Approaches for Post 2012, Niklas Höhne, Ecofys, KyotoPlus – Papers,, 2006 Berlin

20. 5 March 2009, Szentendre, The Regional Environmental Center20 3.e. Multistage for 450 ppmv CO2 No commitments e.g. sustainable development policies and measures e.g. slowing of emission growth Absolute reductions ~3tCO 2 eq/cap ~4 tCO 2 eq/cap ~5 tCO 2 eq/cap 2-5 % per year 20 to 35% below BAU 10 to 15% below BAU

21. 5 March 2009, Szentendre, The Regional Environmental Center21 3.f. Possible multi-stage agreement GroupCriterion (cut-offs are indicative) Ambition level of commitments Types of targets Differen- tiation of targets A> 9 tCO 2 -eq/cap 2/3 of Annex I average Annex I + 15 to 30% average reduction from 1990 Absolute emission ceilings Sectoral approach B5 - 9 t/cap between 1/3 and 2/3 of Annex I average Per capita stabilization Flexible emission targets (no lose or sectoral dynamic) Individual approach C< 5 t/cap < 4000 $/cap Emission limitation efforts None, but assistance to reduce N.A. Source: K. Blok, N. Höhne, A. Torvanger, R. Janzic, 2005: Towards a Post-2012 Climate Change Regime, http://europa.eu.int/comm/environment/climat/pdf/id_bps098.PDF

22. 5 March 2009, Szentendre, The Regional Environmental Center22 3.g. Paramaters: from the 550 to 400 ppmv case (1) 550 ppmv case: The parameters in this case could have a realistic chance of being acceptable to many countries: Participation in stage 4 (substantial reductions) would be at the current average of industrialised countries, developing countries participate, when they reach the development (emission levels) of industrialised (Annex I) countries. The second stage (pledge for sustainable development) would require 5% reduction below the reference scenario, the third stage (moderate reductions) would require emission to be 10% to 15% below reference. The final stage would still be ambitious with 1.5% to 4% reduction per year.

23. 5 March 2009, Szentendre, The Regional Environmental Center23 3.h. Paramaters: from the 550 to 400 ppmv case (2) 450 ppmv case: The parameters for this case are already much more stringent and likely to be less agreeable: Participation in stage 4 (substantial reductions) would be at current world average. The second stage (pledge for sustainable development) would already require emissions to be reduced by 10% to 15% below reference, the third stage (moderate reductions) would require reductions of 30% to 35% below reference. The final stage would be ambitious with a 4.5% to 5.2% reduction per year.

24. 5 March 2009, Szentendre, The Regional Environmental Center24 3.i. Paramaters: from the 550 to 400 ppmv case (3) 450 ppmv case: The parameters needed for this case stretch the Multistage approach to its limits: Participation in stages 2 and 3 has to occur almost immediately for most developing countries. Already in stages 2 and 3 reductions of 20% and 30% to 35%, respectively, have to occur and countries at stage 4 have to reduce emissions drastically with 7.5% to 9% per year.

25. 5 March 2009, Szentendre, The Regional Environmental Center25 3.j. Options in a multistage setting Annex I: Alternatives to absolute emission reduction targets –Dynamic targets and price caps –Sectoral targets / sectoral emission standards –Agreements on technology development Most of the alternatives are unlikely to be sufficient to reach the 2°C limit Non-Annex I: incentives for participation –Sectoral targets –No lose targets –Sector crediting mechanisms –Extended CDM –Sustainable development policies and measures See also: Höhne and Lahme 2005: Types of future commitments under the UNFCCC and the Kyoto Protocol post 2012, Briefing paper for WWF

26. 5 March 2009, Szentendre, The Regional Environmental Center26 4.a. Delay of emission reductions Delay of 5 to 10 years after 2010 has significant implications on subsequently necessary emission reductions to meet the same goal Source: K. Blok, N. Höhne, A. Torvanger, R. Janzic, 2005: Towards a Post-2012 Climate Change Regime, http://europa.eu.int/comm/environment/climat/pdf/id_bps098.PDF Reference: Based on SRES A1B scenario Delayed 2020: Kyoto countries extend their targets to 2020, no action by others Delayed 2015: Kyoto countries extend their targets to 2015, no action by others Multistage: All countries reach Kyoto until 2010, followed by ambitious agreement for 2020 for all countries

27. 5 March 2009, Szentendre, The Regional Environmental Center27 4.b. Different stabilization levels The choice of the stabilization level is important 2020

28. 5 March 2009, Szentendre, The Regional Environmental Center28 4.c. Different stabilization levels The choice of the stabilization level is important 2050

29. 5 March 2009, Szentendre, The Regional Environmental Center29 4.d. Change 1990 to 2020 towards 450 ppm CO 2 Annex I: -10% to –30% below 1990 No participation but also no hot air: South Asia and Africa Deviate from their reference: Latin America, Middle East, East Asia and Centrally planned Asia - Kyoto target Source: Höhne, Phylipsen, Ullrich, Blok, 2005: Options for the second commitment period of the Kyoto Protocol http://www.umweltdaten.de/publikationen/fpdf-l/2847.pdf

30. 5 March 2009, Szentendre, The Regional Environmental Center30 4.e. Change 1990 to 2050 towards 450 ppm CO 2 All approaches require drastic reductions Annex I: -70% to -90% below 1990 Substantial deviation from reference in all Non-Annex I regions

31. 5 March 2009, Szentendre, The Regional Environmental Center31 5.a. Conclusions (1) The parameters stretched to their limits for the low stabilization levels: 550 ppmv CO 2 : –participation of Non-Annex I countries at Annex I average per capita emissions –45% renewables and emission-free fossil fuels in the electricity sector by 2050 400 ppmv CO 2 : –almost immediate participation of many Non-Annex I countries –emission reductions of more than 5% per year in the last stage –85% renewables and emission-free fossil fuels in the electricity sector by 2050

32. 5 March 2009, Szentendre, The Regional Environmental Center32 5.b. Conclusions (2) Annex I: the difference in reductions between stabilization targets (400, 450 and 550 ppmv) is larger than the difference between the various approaches aiming at the same stabilization target. Only for developing countries that participate under some and do not participate under other approaches, the differences between approaches are large. For those countries the criteria for participation are an important determinant.

33. 5 March 2009, Szentendre, The Regional Environmental Center33 5.c. Conclusions (3) It seems likely that any future regime will be staged in some form. Countries are very diverse. Hence, several types of targets are likely to exist in parallel. A staged or parallel setting is the most likely outcome of the sequential decision-making that is currently applied. The critical element of the approach is that additional countries participate early enough so that stringent environmental goals can be reached. Incentives for such participation (not just thresholds) have to be included into the system.

34. 5 March 2009, Szentendre, The Regional Environmental Center34 Relevant contact details for Ecofys & SenterNovem Dr. Niklas HöhneZsolt Lengyel Manager Programme Advisor Energy and Climate Strategy Energy & Climate Global Cooperation Ecofys Germany GmbHSenterNovem Tel: +49 221 270 70 101Tel: +31 30 214 7829 n.hoehne@ecofys.com z.lengyel@senternovem.nl Alyssa Gilbert International Sector Manager: Governments Ecofys UK Ltd T: +44 7867 524 730 E: a.gilbert@ecofys.com