Equity, climate change and the right to development

Paul BaerAssistant ProfessorGeorgia Tech School of Public PolicyGuest Lecture, EAS 2803February 28, 2012

What is PPP?

Point-to-point protocol Public Policy Polling Precision Plumbing Products Public Private Partnership Purchasing Power Parity

Purchasing Power Parity

A technique used to compare the actual purchasing power of a unit of different countries’ currency

As opposed to “Market Exchange Rates”

The currency of a developing (poor) country is typically worth substantially more on a PPP basis than an MER basis

In general, the poorer the country, the greater the difference

Why do we care about PPP? The conflict about how to solve the climate

problem – in particular “Who should pay?” – is largely about the longstanding conflict between rich and poor countries

How wealthy a country is compared to (say) the US depends substantially on whether you use PPP or MER measures

I’m going to use these figures a lot, so I wanted to be clear at the beginning about the definitions and their implications

Comparing PPP and MER

Comparing PPP and MER

Comparing PPP and MER

Per Capita CO2 emissions

Total CO2 Emissions (Billions of tons CO2) and Population (%)

A brief autobiographical interlude

Future engineer? Born in Berkeley,

CA 1962 Grew up in

Houston 1972-1980 listening to Rolling Stones, Led Zeppelin, Aerosmith

Had actual “records”

Future Scholar? Attended Stanford

University, 1980-1984 Started studying

physics, ended up with a degree in economics

Worked in the Internet industry 1988-1997

MS in environmental planning from LSU, 1999

PhD from UC Berkeley in 2005, “Energy and Resources”

Other stuff about me

Co-founded EcoEquity in 2000 Co-authored a book, Dead Heat:

Global Justice and Global Warming in 2002

Co-authored “Greenhouse Development Rights” framework for fair global climate policy

Started at Georgia Tech in 2009

What am I?

An interdisciplinary environmental scholar, policy analyst and advocate

An ecological economist A philosopher of sorts (specializing in

“climate ethics”) An expert in global climate policy Kind of an expert in the management of

scientific uncertainty Teach statistics, ecological economics,

political economy, environmental policy, climate policy

Comparing PPP and MER

Per Capita CO2 emissions

Total CO2 Emissions (Billions of tons CO2) and Population (%)

Starting in the middle: Greenhouse Development Rights

A global climate policy framework for “burden sharing”

Assigns obligations to countries based on aggregating the wealth and GHG emissions of their citizens “Capacity” (ability to pay) and “responsibility” (contribution to the problem)

Excludes from consideration the wealth and emissions of poor individuals, below a “development threshold”

Rich individuals are treated equally (have obligations) wherever they live

In principle, an individually-based “right to development”

Things you might want to know (or I might want you to know)

Why do I think this might be helpful? How would it work in theory? How “realistic” is it in practice? What are important alternative

approaches? How do you justify it ethically?

Some important premises… The climate problem is VERY serious To reduce risks to a tolerably low level,

we need to reduce emissions immediately and rapidly

While this is not prohibitively expensive in a conventional economic sense, it is not free, and it is potentially very redistributive

Global cooperation requires a solution that is “fair enough”

Some additional premises…

Ideas matter The influence that ideas have

depends on both the ideas and the ways they are promoted

The norms that are embodied in the UNFCCC are important but not unproblematic “Common but differentiated

responsibilities and respective capabilities”

So: back to the beginning By the time the climate problem was clearly

identified in the late 1980s, global emissions already exceeded any “sustainable” level

Yet there was a vast disparity of current emissions – measured on a per capita basis – between the developed and developing countries (“North and South”)

This already implied that the South could not safely develop the way the North has, based on fossil fuels (and, recall, vast deforestation)

Yet there was no option for inexpensive alternative energy sources that allowed unrestricted economic development without increasing emissions

Detour: the conflict over development and globalization

The end of the colonial era in the 1950s and 1960s, and the rise of the “Third World” (e.g., the Non-Aligned Movement) had given rise to a consistent pattern of North/South conflict The South blames the North for its economic

problems and demands additional development assistance

The North blames the South for its own economic problems and demands economic liberalization

This conflict repeats itself in every domain of international negotiations, and climate is no exception

Enter the climate problem… The climate problem demands we reduce total global

emissions (and thus average per capita emissions) when they are currently vastly unequal

This can be usefully thought of as dividing a finite and shrinking pool of emissions rights, that have a significant economic value

Given the level of inequality, it was implausible for the North to demand (say) a global freeze on emissions, or equal percentage reductions worldwide That would have transparently meant that the limits to the

development of the South were directly linked to the much higher levels of consumption/emissions in the North

In fact…

The South demanded that the North “go first”, and this was recognized in both the UNFCCC (1992) and the Kyoto Protocol (1997) Much ado was made in the language of the UNFCCC

about the right to development The North was not in a position to coerce the

South into reducing economic growth by reducing emissions

So, rather than actually negotiate the sharing of a shrinking budget, the North chose to let global emissions continue to rise

Thus the North did not have to redistribute any significant resources

From the UNFCCC, Article III, Principles

The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof.

From the preamble to the UNFCCC:Historical responsibility and expected emissions growth

Noting that the largest share of historical and current global emissions of greenhouse gases has originated in developed countries, that per capita emissions in developing countries are still relatively low and that the share of global emissions originating in developing countries will grow to meet their social and development needs,

From the preamble to the UNFCCC:Priority of development over environment

Recognizing that States should enact effective environmental legislation, that environmental standards, management objectives and priorities should reflect the environmental and developmental context to which they apply, and that standards applied by some countries may be inappropriate and of unwarranted economic and social cost to other countries, in particular developing countries,

From the preamble to the UNFCCC:Prioritizing development and poverty alleviation

Affirming that responses to climate change should be coordinated with social and economic development in an integrated manner with a view to avoiding adverse impacts on the latter, taking into full account the legitimate priority needs of developing countries for the achievement of sustained economic growth and the eradication of poverty,

From the preamble to the UNFCCC:Prioritizing development with subsidized technologies

Recognizing that all countries, especially developing countries, need access to resources required to achieve sustainable social and economic development and that, in order for developing countries to progress towards that goal, their energy consumption will need to grow taking into account the possibilities for achieving greater energy efficiency and for controlling greenhouse gas emissions in general, including through the application of new technologies on terms which make such an application economically and socially beneficial

However…

While there is still a strong correlation between income and emissions, the simple division between developed and developing countries, already blurred by 1992, has become untenable

Many non-Annex I countries have per capita incomes higher than many Annex I countries

There is now a G20, and the so-called “BASIC” countries (Brazil, South Africa, India, China) are recognized global powers

The large “emerging economies” have substantial elite and consumer classes, and compete for export markets

However…

The Annex I/non-Annex I division means wealthy individuals in poor countries have no obligations, while poor people in wealthy countries do

This is ethically very hard to justify unless this exemption can be seen to directly benefit the poor in developing countries

Thus it was not implausible to argue that the Kyoto Protocol was “unfair to the US”

However (continued)

The real problem was not the richest of the “developing” countries, it was the largest and most economically competitive

That is, China and India Given their low per capita incomes and

remaining widespread poverty, and their low per capita emissions, they could legitimately use a “right to development” argument to justify complete exemption (or subsidized reductions)

The US parties focused on China actually wanted no deal, not a fair deal

So, “burden sharing” is a prominent issue

Scholars of all sorts have been proposing policies with different methods for dividing the “bill”

There is general agreement on the need for “flexibility” – separating where reductions get made, from who pays for them

Equal per capita rights (to emit) has been a popular equity “focal point”

But, there’s not enough left for “equal” to be “fair”

Plus, there are still substantial variations in the correlation of emissions and wealth

The Right to Development in a Climate Constrained World The Greenhouse Development Rights Framework

AuthorsTom Athansiou (EcoEquity)Sivan Kartha (Stockholm Environment Institute)Paul Baer (EcoEquity)Eric Kemp-Benedict (SEI)

Key CollaboratorsJörg Haas (European Climate Foundation)

Lili Fuhr (Heinrich Boll Foundation)Nelson Muffuh (Christian Aid)

Andrew Pendleton (IPPR)Antonio Hill (Oxfam)

SupportersChristian Aid (UK)Oxfam (International)European Aprodev Network The Heinrich Böll Foundation (Germany) MISTRA Foundation CLIPORE Programme (Sweden)Stockholm Environment Institute (Int’l)Rockefeller Brothers Fund (US)Town Creek Foundation (US)

Five key elements of GDRs An indicator of capacity that excludes

income below a threshold An indicator of responsibility that similarly

excludes “subsistence emissions” A combination of responsibility and

capacity into a single index National obligations calculated by

aggregating individual obligations to give a national percentage share

All countries treated the same!

Details of GDRs – “subject to change without notice”

What is the measure of capacity? Where is the “development

threshold” set? Is there increasing progressivity over

the development threshold (e.g., a “luxury threshold”)?

What is the time period of responsibility accounting?

What gases and what sources are included?

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A “Greenhouse Development Rights”approach to burden-sharing

Define National Obligation (national share of global mitigation and adaptation costs) based on:

Capacity: resources to pay w/o sacrificing necessities We use income, excluding income below a “development threshold” of $20/day ($7,500/year, PPP)

Responsibility: contribution to climate change We use cumulative CO2 emissions, excluding “subsistence” emissions (i.e., emissions corresponding to consumption below the development threshold)

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Income and Capacity income distributions (relative to a “development threshold”)

Emissions and Responsibility fossil CO2 (since 1990) (showing portion defined as “responsibility”)

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 Population

%

Income ($/capita)

Capacity

%

Responsibility%

RCI (obligations)

%

EU 27 7.3 30,472 28.8             22.6 25.7

- EU 15 5.8 33,754 26.1             19.8 22.9

- EU +12 1.5 17,708 2.7             2.8 2.7

Norway 0.07 52,406 0.54           0.26 0.40

United States 4.5 45,640 29.7             36.4 33.1

China 19.7 5,899 5.8             5.2 5.5

India 17.2 2,818 0.66           0.30 0.48

South Africa 0.7 10,117 0.6             1.3 1.0

LDCs 11.7 1,274 0.11           0.04 0.07

Annex I 18.7 30,924 75.8             78.0 76.9

Non-Annex I 81.3 5,096 24.2             22.0 23.1

High Income 15.5 36,488 76.9             77.9 77.4

Middle Income 63.3 6,226 22.9             21.9 22.4

Low Income 21.2 1,599 0.2             0.2 0.2

World 100% 9,929 100 %         100 % 100 %

National obligations based on national “capacity” and “responsibility”

Allocating global mitigation obligationsamong countries according to their “RCI”

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Allocating global mitigation obligationsamong countries according to responsibility & capacity

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Implications for United States

US mitigation obligation amounts to a reduction target exceeding 100% after ~2025 (“negative emission allocation”). 44

Implications for United States

Here, physical domestic reductions (~25% below 1990 by 2020) are only part of the total US obligation. The rest would be met internationally. 45

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Implications for China中国的测算结果

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A fraction of China's reduction, (and most of the reductions in the South) are driven by industrialized country reduction commitments.

Implications for China中国的测算结果

How does this fit in the real world?

GDRs is actually quite well known within the small world of climate policy wonks

The idea of a transition from Kyoto to a globally binding treaty is, um, in trouble

The Copenhagen Accord can be considered “pledge and review”

It becomes up to domestic constituencies to demand their countries do their “fair share”

Otherwise we’re in a “race to the bottom”