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"Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord"

"Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord"

Discussion Paper 10-35, Harvard Project on International Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School

June 2010

Authors: Warwick McKibbin, Adele Morris, Peter Wilcoxen

The Harvard Project on Climate Agreements Discussion Paper Series

Belfer Center Programs or Projects: Harvard Project on Climate Agreements

 

OVERVIEW

The authors compare the targets and actions to which countries have committed under the Copenhagen Accord. The Accord allows participating countries to express their commitments to reduce greenhouse-gas (GHG) emissions in a variety of ways—most broadly, through economy-wide quantified emissions targets for developed countries and mitigation "actions" by developing countries. These are difficult to assess. Even mitigation commitments that look similar can require very different levels of effort in different countries, and commitments that produce similar economic outcomes can look inequitable. These variations in effort and equity depend on historical patterns of energy use, marginal costs of greenhouse-gas abatement, choice of base year, methods for determining "business as usual" projections, and other factors.

A Note about Methodology:

The authors use an intertemporal computable general equilibrium model of the world economy—the "G-Cubed model." Baseline (business as uaual) emissions-growth projections are built on specifications of economic growth described in Appendix II of the paper. The authors also make a number of assumptions intended to simplify the Copenhagen Accord:

  • The Copenhagen Accord policy scenario begins in 2012, at which time countries with economy-wide targets under the Accord place a price on all carbon dioxide emitted from fossil fuels.
  • All countries achieve their targets domestically, with no offsets or emissions trading. (Since the Accord is silent on emissions trading, there is no clear way to anticipate the quantity or price of imported reductions that a country might use. Additionally, since the policy scenario includes economy-wide targets for two of the largest potential sources of offsets, China and India, it is unclear how these targets would be compatible with offset sales).
  • When countries offered a range of potential targets or actions that depend on what other countries do, the authors assumed that they achieved the least stringent target they offered.

Please see the authors' more detailed explanation of their methodology in the text of the paper.

Key Findings:

  • After comparing Copenhagen Accord commitments in common terms, it is determined that overall, the Accord would achieve a decline in world emissions by 17.5 percent in 2020, relative to business as usual projections.
  • By various measures, Japan is pursuing the most ambitious emissions reductions among all countries that have submitted targets or actions under the Accord. Japan would reduce emissions 25 percent below 1990, or 48 percent below business as usual by 2020. This is all the more striking, given Japan's already-relatively-low emissions intensity (emissions per unit of GDP) and high marginal cost of abatement.
  • Viewed as emissions reductions against a 1990 baseline, Western Europe would reduce emissions by 20 percent, the United States by 1 percent, and Australia would actually increase emissions by 30 percent. However, viewed as a reduction from business as usual, Western Europe, Australia, and the United States committed to similar reductions, with projected declines from business as usual by 2020 of 36, 35, and 33 percent respectively.
  • Of all of the regions with Accord commitments, India and Eastern Europe/former Soviet Union are the least ambitious across all measures. The United States is within a few percentage points of Western Europe and Australia, followed by the rest of the OECD (Canada and New Zealand) and China.
  • India's lower-bound commitment to reduce emissions by 20 percent per unit of GDP, relative to 2005 emissions, implies about a 350 percent increase in emissions from 1990. Under this scenario, India's 2020 emissions are about the same as business as usual.
  • Eastern Europe and the former Soviet Union's emissions reduction of 15 percent relative to 1990 represents about a 1 percent decline relative to business as usual.
  • Although the model suggests that China's emissions goal under the Accord implies a nearly fivefold increase in emissions relatively to 1990 levels, the target still represents a 22 percent reduction from Chinese baseline emissions in 2020.
  • The economic consequences of the Accord vary significantly among countries. Countries' commitments under the Accord would result in 2012 carbon prices above 50 U.S. dollars per ton in both Western Europe and Japan, measured in 2006 U.S. dollars. The United States would have a 2012 carbon dioxide price of 28 U.S. dollars, while Australia, China, and Canada/New Zealand would have prices below 20 U.S. dollars per ton. India and Eastern Europe/former Soviet Union would have a carbon dioxide price of around 1 U.S. dollars per ton.
  • The effect on real GDP growth from 2012 to 2020 also varies considerably. The largest impact is in Australia, Canada/New Zealand, and the Organization of Petroleum Exporting Countries (OPEC) states, with declines of roughly 6 percentage points relative to business as usual. (Those economies would still grow, but slower than under a baseline scenario). Japan's and Western Europe's GDP growth would be about 5 percentage points lower than business as usual, while China's GDP would be about 4 percentage points lower, the United States about 3, and Eastern Europe/Former Soviet Union about 3. The declines are all relative to the baseline case — i.e., in 2020, U.S. GDP would be 22 percent larger than in 2012, rather than the baseline projection of 25 percent higher.
  • For many countries, the domestic price on carbon is a poor predictor of the welfare implications of the overall agreement. The United States has the third-largest carbon price but nearly no loss of consumption. On the other hand, OPEC has no carbon price but experiences profound consumption losses because other countries are taxing OPEC exports and reducing global demands for these goods.

 

 

Warwick J. McKibbin, Centre for Applied Macroeconomic Analysis, Australian National University; Adele Morris, The Brookings Institution; and Peter J. Wilcoxen, Center for Environmental Policy and Administration, Maxwell School, Syracuse University.

 

For more information about this publication please contact the Harvard Project on Climate Agreements Coordinator at 617-496-8054.

For Academic Citation:

McKibbin, Warwick J., Adele Morris, and Peter J. Wilcoxen. "Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord." Discussion Paper 10-35, Harvard Project on International Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School, June 2010.

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