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Climate policy iwd 1. October 2015

Progress requires group action

At the UN Climate Change Conference in Paris, participants will once again attempt to reach an agreement on a reduction of greenhouse gas emissions. The Cologne Institute for Economic Research has already submitted a proposal involving the largest emissions-producing countries. Current proposals from the key industrialised and newly industrialised countries, in contrast, do not all measure up.

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The issue boils down to two numbers: 2 and 195. To prevent the long-term deterioration of living conditions on earth, global warming should be limited to 2 degrees Celsius at most. And 195 countries should ensure that this limit is kept.

Starting on 30 November, these signatories of the UN Framework Convention on Climate Change will spend two weeks at the UN Climate Change Conference in Paris once again grappling over a joint solution for climate protection.

Even if the climate does not recognise national boundaries, there are certain countries that play a critical role in the breakthrough for climate policy – namely, those whose emissions are highest.

In the year 2013, China alone produced ten billion tonnes of carbon dioxide – which was nearly 30 per cent of the global emissions.

The USA – with a good five billion tonnes of CO2, or 15 per cent – was the second-largest producer of emissions that year. The EU countries produced just under four billion tonnes combined, or 11 per cent.

The success of the Climate Change Conference will not depend on the typical industrialised countries alone, but also on major emerging economies such as China and India. But because their economies have so much catching-up to do, these countries are opposed to having the same CO2 limits applied to them as to the Europeans or Americans.

These factors demand a pragmatic solution. The IW institute recently developed a proposal on the premise that 15 countries and regions, including the EU, are responsible for more than 80 per cent of global CO2 emissions (see iwd 23/2015).

One of the central points of the proposal involves having the individual countries’ emissions targets tied to their gross domestic product; this way, more affluent countries would have to make a greater contribution to reducing global greenhouse gas emissions than countries with weaker economies. Furthermore, emerging economies would not be disadvantaged by the fact that their CO2 emissions have greatly increased during their catching-up process; for them, 2013 alone would serve as the base year. The targets for the countries to be included are correspondingly different (see chart).

While the IW proposal would require South Korea to reduce its 2013 emissions levels by 70 per cent by the year 2030, China could increase its emissions by a further 7 per cent.

A fair deal is possible, in principle – but much will depend on the goodwill shown by the conference participants in Paris. A number of countries have already submitted their own proposals; when viewed against the IW proposal, some of the plans seem promising, while others are disappointing.

The EU environment ministers just recently agreed on the member states reducing their 1990 emissions levels by 40 per cent by the year 2030. IW institute used this threshold as a guide for its proposal, deriving targets for the other countries.

The USA and Russia have each developed proposals that roughly correspond to the targets proposed by IW. However, the United States is limiting its commitment to the period up to 2025; and it is unclear whether the country will remain on the reduction path after that. Russia is apparently factoring into its emissions calculation the ability of its domestic forests to reabsorb carbon dioxide – which makes a comparison of the proposal difficult.

Plans from Asia also are not entirely convincing:

With its pledge to reduce its 2013 emissions levels by 26 per cent by the year 2030, Japan lags considerably behind the reduction of 57 per cent proposed by the IW institute.

And China refers only to a reduction of carbon intensity – that is, CO2 emissions levels relative to the gross domestic product. While the relationship between emissions and economic output is also a component of the IW proposal, the Chinese proposal places no limits on its overall greenhouse gas emissions – meaning future increases in China’s CO2 levels could cancel out reductions achieved in other countries.

The model presented by the EU stands out in comparison to these various plans – especially considering that many of the countries that will be represented in Paris have not yet put forward a pledge of their own.

The EU can also serve as an example for having already implemented the emissions trading instrument endorsed by IW. Emissions trading essentially helps to avoid emissions in those places where it is most cost-effective to do so. Since climate protection constitutes a global problem, however, emissions trading also should be established beyond Europe’s borders – ideally worldwide. Initial attempts have been made; China, for instance, is already experimenting with this instrument.

Independent efforts of individual countries are not very beneficial, however – and are, in fact, inefficient in the context of the emissions trading system. This also applies to the efforts of the federal government to rush forward in its plan to reduce its emissions levels from 1990 by 55 per cent by the year 2030. Such efforts would not reduce the EU’s overall greenhouse gas emissions any more than what the EU has already planned. Rather, they would create additional costs for companies in Germany while shifting the emissions to other countries.

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