the future of the climate regime in the aftermath of the bonn agreement

Hermann E. Ott Hermann E. Ott

Open Meeting, Open Meeting,

Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

The Future of the Climate Regime in the Aftermath of the

Bonn Agreement

The Future of the Climate Regime in the Aftermath of the

Bonn Agreement

Presentation at the Open Meeting

of the Global Environmental Change Community

Rio de Janeiro, 6 - 8 October 2001

by

Dr. Hermann E. OttDirector, Climate Policy Division

Wuppertal Institute for Climate, Environment and Energy

Presentation at the Open Meeting

of the Global Environmental Change Community

Rio de Janeiro, 6 - 8 October 2001

by

Dr. Hermann E. OttDirector, Climate Policy Division

Wuppertal Institute for Climate, Environment and Energy



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Before talking about the future we have to ask:

Before talking about the future we have to ask:

What is the climate regime and is it working?

Sorry, but

this is not an academic question!

What is the climate regime and is it working?

Sorry, but

this is not an academic question!



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

What have we got?What have we got?



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Institutionally?Institutionally?• step-by-step approach

• umbrella convention – UNFCCC (United Nations Framework Convention on

Climate Change)

• protocol with quantified targets – Kyoto Protocol to the UNFCCC

• universal regime:• FCCC: 186 ratifications

• Kyoto Protocol: 39 ratifications, 84 signatures

• step-by-step approach• umbrella convention

– UNFCCC (United Nations Framework Convention on Climate Change)

• protocol with quantified targets – Kyoto Protocol to the UNFCCC

• universal regime:• FCCC: 186 ratifications

• Kyoto Protocol: 39 ratifications, 84 signatures



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

...more on institutions:...more on institutions:

• differentiated obligations for industrialised countries (5.17 % globally)

• modified by Bonn Agreement:– reduced to 2.49 % by additional LULUCF

activities (Article 3.4)

• negotiations on further commitment periods scheduled to start in 2005

• differentiated obligations for industrialised countries (5.17 % globally)

• modified by Bonn Agreement:– reduced to 2.49 % by additional LULUCF

activities (Article 3.4)

• negotiations on further commitment periods scheduled to start in 2005



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

...and even more on institutions:...and even more on institutions:

• a functioning system for inventories• = reporting and monitoring

• basis for compliance regime in KP, elaborated in Bonn Agreement

• “Kyoto Mechanisms”• Emissions Trading, Joint Implementation, Clean

Development Mechanism

• a functioning system for inventories• = reporting and monitoring

• basis for compliance regime in KP, elaborated in Bonn Agreement

• “Kyoto Mechanisms”• Emissions Trading, Joint Implementation, Clean

Development Mechanism



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Impacts?Behavioural Change?

Impacts?Behavioural Change?

• not really quantifiable or discernible

• considerable reductions in UK and Germany in anticipation of entry into force

• industry has caught on but is not yet won

• “impacts” so far largely psychological

• not really quantifiable or discernible

• considerable reductions in UK and Germany in anticipation of entry into force

• industry has caught on but is not yet won

• “impacts” so far largely psychological



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Conclusion:Conclusion:

All we’ve got is institutions!All we’ve got is institutions!



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

This is no small progress, but difficulties in the process (like after The Hague) immediately threaten the regime as such!

This is no small progress, but difficulties in the process (like after The Hague) immediately threaten the regime as such!

...and of course: in troubled waters,

proposals for alternative routes abound!

...and of course: in troubled waters,

proposals for alternative routes abound!



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Proposals include:Proposals include:• abandon Kyoto process altogether!

– 10 years of effort wasted...no alternatives put forward really

• strictly voluntary measures – unfortunately did not work

• global CO2 tax– mostly from US scientists - whose Govt fiercely opposes idea

• policies and measures – great idea, but maybe not solely

• intensity targets– petrify emission profiles, maybe good for developing countries

• price caps – interesting, but environmentally flawed

• abandon Kyoto process altogether!– 10 years of effort wasted...no alternatives put forward really

• strictly voluntary measures – unfortunately did not work

• global CO2 tax– mostly from US scientists - whose Govt fiercely opposes idea

• policies and measures – great idea, but maybe not solely

• intensity targets– petrify emission profiles, maybe good for developing countries

• price caps – interesting, but environmentally flawed



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Something to Remember:The Challenges of Climate Change

Something to Remember:The Challenges of Climate Change

• a most complex problem - diffuse, multi-layered, dispersed in time and space etc. etc....

• fundamental change in production & consumption– from the fossil/atomic age to solar age– from waste/abundance to efficiency/sufficiency

• redistribution of wealth (nations/individuals)• new systemic body of international law• ...in a nutshell:

– climate change is at heart of the sustainability agenda...

• a most complex problem - diffuse, multi-layered, dispersed in time and space etc. etc....

• fundamental change in production & consumption– from the fossil/atomic age to solar age– from waste/abundance to efficiency/sufficiency

• redistribution of wealth (nations/individuals)• new systemic body of international law• ...in a nutshell:

– climate change is at heart of the sustainability agenda...



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

To remember as well: marvellous institutional novelties!

To remember as well: marvellous institutional novelties!

• establishment of three complex international market mechanisms

• strongest non-compliance procedure in international environmental law

• first levy on international market transactions• first acknowledgement of principle of

contraction and convergence

• establishment of three complex international market mechanisms

• strongest non-compliance procedure in international environmental law

• first levy on international market transactions• first acknowledgement of principle of

contraction and convergence



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

So what might be done???So what might be done???



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

• Kyoto should remain main show in town– indispensable as global framework– catalyst of political and industrial action– forum for creation of new international norms

• let a thousand flowers blossom!– why not more regional approaches?– “IRENA”, “EREA” etc. for pushing renewables– liability: is there a case against oil companies?– international aviation fuel tax should be on

agenda, inside or outside climate regime

• Kyoto should remain main show in town– indispensable as global framework– catalyst of political and industrial action– forum for creation of new international norms

• let a thousand flowers blossom!– why not more regional approaches?– “IRENA”, “EREA” etc. for pushing renewables– liability: is there a case against oil companies?– international aviation fuel tax should be on

agenda, inside or outside climate regime



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

...inside the climate regime:...inside the climate regime:

• short term issues:– COP 7 is not yet done...– first priority: ratification asap– European leadership will have to remain strong

(even after September 11)

• short term issues:– COP 7 is not yet done...– first priority: ratification asap– European leadership will have to remain strong

(even after September 11)



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Longer Term IssuesLonger Term Issues

• improve the regime structure!

• co-ordinate PAMs!

• address equity!

• co-operate with OPEC!

• improve the regime structure!

• co-ordinate PAMs!

• address equity!

• co-operate with OPEC!



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Improve regime structure:Improve regime structure:

• reduction of issues– regime has become overloaded, KISS principle

• reduction of complexity– majority voting urgently required– allow for different speeds (Arts 43/44 TEU)

• improve institutional structure– continuous process of communication required

• reduction of issues– regime has become overloaded, KISS principle

• reduction of complexity– majority voting urgently required– allow for different speeds (Arts 43/44 TEU)

• improve institutional structure– continuous process of communication required



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Co-ordination of PAMsCo-ordination of PAMs• domestic implementation of policies and

measures has been slow in most countries

• fear of comparative disadvantages requires a co-ordinated approach

• some prime candidates:– fiscal policy: co-ordinate carbon/energy taxes– dismantle climate adverse subsidies– harmonise efficiency standards– foster climate friendly public procurement

• domestic implementation of policies and measures has been slow in most countries

• fear of comparative disadvantages requires a co-ordinated approach

• some prime candidates:– fiscal policy: co-ordinate carbon/energy taxes– dismantle climate adverse subsidies– harmonise efficiency standards– foster climate friendly public procurement



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Equity: the keyEquity: the key

• the challenge: fair and equitable allocation

• simple “grandfathering” will not do

• process as well as substance are important– substance: a formula for allocation, based on

transparent and sensible criteria– process: must be non-confrontational, without

undue demands for “meaningful participation”

• the challenge: fair and equitable allocation

• simple “grandfathering” will not do

• process as well as substance are important– substance: a formula for allocation, based on

transparent and sensible criteria– process: must be non-confrontational, without

undue demands for “meaningful participation”



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Co-operation with OPECCo-operation with OPEC• oil price fluctuations between $20 and $40 per

barrel severely obstruct rational climate policy– prices too low: no incentive to save energy

– prices too high: deligitimize energy taxes etc.

• revenues under CO2/energy taxes go exclusively to Northern governments

• many forms of co-operation possible – from simple price control to

– producer - consumer cartels

– options should be explored

• oil price fluctuations between $20 and $40 per barrel severely obstruct rational climate policy– prices too low: no incentive to save energy

– prices too high: deligitimize energy taxes etc.

• revenues under CO2/energy taxes go exclusively to Northern governments

• many forms of co-operation possible – from simple price control to

– producer - consumer cartels

– options should be explored



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

The Sky Trust Idea(from Peter Barnes: Who Owns the Sky?)

The Sky Trust Idea(from Peter Barnes: Who Owns the Sky?)

• carbon emissions cap for country/region

• upstream emissions trading (energy comp.)

• revenues from permit sales go into trust

• trust pays equal annual dividends to all citizens

• problem: rather nation-based idea, difficult to implement at global level

• carbon emissions cap for country/region

• upstream emissions trading (energy comp.)

• revenues from permit sales go into trust

• trust pays equal annual dividends to all citizens

• problem: rather nation-based idea, difficult to implement at global level



Rio, Oct. 6 - 8, 2001Rio, Oct. 6 - 8, 2001

Thank you / Obrigado!Thank you / Obrigado!

For more information go to

http://www.wupperinst.org

or mail to

[email protected]

For more information go to

http://www.wupperinst.org

or mail to

[email protected]

the future of the climate regime in the aftermath of the bonn agreement

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