G20 Are Trying to Hit Ambitious Greenhouse Gas Goals While Obeying Political Constraints

Sep.23.09 | About: SPDR S&P (SPY)

National leaders are meeting at the United Nations in New York to discuss climate change negotiations. Talks will continue at the G-20 meeting in Pittsburgh later in the week. But hopes look very bleak for progress sufficient to produce at Copenhagen in December a successor treaty to the Kyoto Protocol. The biggest roadblock is the familiar game of “After you, Alphonse.” The United States will not accept quantitative emission targets unless China, India and other developing countries do the same, at the same time. But the developing countries will not cut their emissions below the Business as Usual path (BAU) unless the rich countries go first.

In the past I have developed my own proposal for how to break the deadlock, a politically realistic plan to assign emission targets in ways that leaves no country feeling it is being asked to incur an economic cost that is unfair or too large. The targets are derived from a family of formulas The specific detailed example of the plan that I have given in the past attained an environmental target by the year 2100 of CO2 concentrations equal to 500 ppm. It did so without violating the political constraints, which included that no country is asked to accept an ex ante target that costs it more than 1% of income in present value, or more than 5% of income in any single budget period.

The G-7 leaders, meeting in Italy in June 2009, set a more aggressive collective goal, corresponding approximately to concentrations of 380 PPM. I have been trying to hit that goal, working with Valentina Bosetti, within the same political constraints and framework of formulas. To achieve the more aggressive environmental goal, we advance the dates at which some countries are asked to begin cutting below BAU. We also tinker with the values for the parameters in the formulas (parameters that govern the extent of progressivity and equity, and the speed with which latecomers must eventually catch up). The resulting target paths for emissions are run through the WITCH model to find their economic and environmental effects. We found that it is not possible to attain the 380 ppm goal, subject strictly to our political constraints. We were however, able to attain a concentration goal of 460 ppm with somewhat looser political constraints than 500.

Some may conclude from these results that the more aggressive environmental goals are not attainable in practice, and that our earlier proposal for how to attain 500ppm is the better plan. We take no position on which environmental goal is best overall. Rather, we submit that, whatever the goal, our approach will give targets that are more practical economically and politically than approaches that have been proposed by others.