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Effort Sharing

Contents

Introduction

Effort sharing (also burden sharing) refers to the question of how emission reductions should be shared between countries, in order to reach a desired level of overall emission reductions. This is stated already in the Article 3.1 of the United Nations Framework Convention on Climate Change (UNFCCC) as “common but differentiated responsibilities” between the parties to the Convention.

The right to emit greenhouse gases, or the obligation to reduce emissions, of a country can be justified in a number of ways, e.g. based on the country’s population, economy, reduction potentials or past emissions. Effort sharing attempts to assign emission limitations for countries in an equitable fashion, possibly taking a number of these criteria into account. As many developed countries have already given pledges on their emission targets, effort sharing analysis can also be used for assessing these pledges, instead of assigning the targets.

Effort sharing can be seen as a critical question in the ongoing negotiations, as the countries’ pledges for emission reductions for 2020 have been very divergent and do not sum up to an adequate overall reduction globally – if compared to what e.g. what the IPCC has suggested.

Principles for effort sharing

A number of principles have been used for defining equitable emission entitlements: [1] [2] [3]

• Grandfathering: each country reduces its emissions with the same relative amount, compared to a selected a base year

• Egalitarianism (equal emissions per capita): each country gets emission entitlements according to its population

• Historical responsibility: countries with high historical emissions receive less emission entitlements in the future, and vice versa

• Merit from past efforts: countries that have taken already measures to reduce their emissions, should be merited in the form of higher emission entitlements in the future

• Polluter pays: the countries should finance the mitigation measures relative to their own emissions

• Basic needs: each individual should be entitled to fill her basic needs; for excess emissions e.g. the polluter pays principle could be applied

• Ability to pay (capacity): countries should finance the mitigation effort relative to their ability to pay, e.g. their GDP (can be overcome through flexibility mechanisms, e.g. financing)

• Cost effectiveness: emissions should be reduced where it is in the most cost efficient (can be overcome through flexibility mechanisms, e.g. emission trading Cap and Trade)

• Equal economic burden: the economic burden, e.g. in terms of mitigation cost or welfare loss, from mitigation in efforts should be equal between countries

Each criterion provides by itself a reasonable justification for sharing the effort, and none can be selected as the only correct alternative. As a number of principles exist, effort sharing methods using multiple weighted criteria have also been proposed. [Vaillancourt et al. 2004; Ringius et al. 1998] The problem of weighting the criteria has to be however solved, and the views of different countries on the relevance of the criteria have been very divergent.

As the principles differ in their spirit, they do also in their complexity. Emissions allocations can be more easily defined with a simple grandfathering rule than with estimates on possible economic burden, the latter of which involves calculations with complex numerical models and forecasts on future economic development. Even if the equal economic burden would be seen as a more proper principle for effort sharing, it might prove hard to establish confidence among the countries to complex calculations. There is therefore a trade-off between detail and transparency in the effort sharing process.

Methods for sharing the effort

Although effort sharing, in the narrow sense, usually refers to the question of assigning emission targets for individual countries, there exists a number of ways for sharing the actual effort. These include:

• Emission targets (Quantitative Emission Limitations or Reduction Obligations or QELRO’s in the jargon)

• Technology transfer

• Financing

These constitute the issue of effort sharing in the broader sense, and are an actively discussed in the climate negotiations under the UNFCCC. The QUELRO’s provide targets for national and international cap-and-trade, emission taxation or other equivalent emission control schemes. Technology transfer deals with capacity building in order to facilitate emission reductions in the developing countries. Financing can be used to share the costs of the mitigation measures and provide funding for adaptation schemes in the countries most vulnerable to climate change.

Approaches used for effort sharing

The approaches for defining or assessing emission targets can be divided to methods using a single effort sharing principle, described above, or a more complex model drawing possibly on multiple effort sharing principles.

Prominent approaches based on a single criterion include:

• Equal emissions per capita

• Equal reductions from a base year (Grandfathering)

• Historical responsibility (the Brazilian proposal)

More sophisticated, and also more complex, models that have been proposed include:

• Weighted criteria: The emission targets as e.g. a weighted average from those defined by selected single criteria.

• Contract & Converge: Based on the equal emissions per capita. Instead of assigning targets immediately on the basis of population within countries, defines emission allowances on the basis of the convergence of per capita emission allowances under a contracting global emission profile. [4]

• Triptych: Emissions are divided into a few sectors (originally three, hence the name Triptych), and simplified reduction potentials with comparable costs are assumed for each sector in the future. Draws on the cost effectiveness and equal economic burden principles. The Triptych approach intends to balance the trade-off between detail and complexity. [5]

• Multistage: The level of commitments are divided into four or five stages, with least developing countries being on the first stage and having no commitments, and the most developed being on the highest stage and having a binding target using a simple criterion e.g. emissions per capita. The countries graduate to higher stages when they exceed certain thresholds of e.g. emissions per capita or GDP per capita. [6]

• Comparable costs: Mitigation costs (or welfare loss; usually as a share of country’s GDP) should be equal or comparable between the countries. Cost estimates often based on complex calculations with Integrated Assessment Models.

Relevant assumptions behind effort sharing

A number of assumptions have to be made for effort sharing, and the number, complexity and uncertainty of which depends on the approach used. The effect of varying assumptions on effort sharing depends on the approach used. However, as the effects of burden sharing in the future are analyzed, the assumptions on future emission and reduction potentials are very critical, regardless of the approach used for the actual burden sharing.

• Overall emission target: What will the global emission target be in the specified future years? Relevant for all effort sharing approaches.

• Participation: Will all countries participate in the effort, or only a set of countries.

• What emissions are included: E.g. will emissions and emission sinks from land use change and forestry be accounted. Might have a considerable impact for certain countries.

• Future projections for relevant variables: How will e.g. population, economic output, energy demand or emissions evolve in different countries? Often described in the form of a baseline scenario, absent of emission reductions. Important mainly for the more sophisticated effort sharing approaches.

• Mitigation potentials and assumptions for future technologies: What possibilities we have for reducing emissions from different sources, and at what costs. Important especially with the more sophisticated approaches that take costs into account.

• Flexibility mechanisms: Will the countries be able to use flexibility mechanisms, e.g. emission trading between each other? Has a large impact on the attainability of ambitious emission targets and costs for reaching the targets.
5 Past examples of effort sharing

Targets within the Kyoto protocol

The reduction targets in the Kyoto protocol, (including 8% reduction from 1990 levels by the European Union, 7% by the US, 6% by Japan, 0% by Russia and a 8% increase by Australia [UNFCCC press release December , http://unfccc.int/cop3/fccc/info/indust.htm]) were based on the negotiating process and bargaining between the parties and the chairman of the Committee of the Whole in the COP-3, rather than an analytically formulated effort sharing regime. [7]

Although the reduction percentages differ between the Annex I parties – instead of a flat rate of 5% for example – this wasn’t perhaps differentiation of commitments purely in the sense of the Article 3 to the UNFCCC. As an example, emissions in Eastern Europe and Russia had declined sharply after 1990 due to the fall of the Soviet block, changing the 0% reduction target from 1990 levels of Russia and Ukraine to, in fact, and increase of roughly 50% and 90%, respectively, from the levels of 1997. This excess is often referred to as ‘hot air’.

EU targets within the Kyoto protocol

As the EU acted as a single party in the Kyoto process, effort sharing was required to take place within the EU in order to form the reduction targets of individual member states. In addition, the reduction offers from individual member states did not add up to the overall EU target. The Netherlands, holding the EU presidency at the time, therefore commissioned research from Utrecht University in order to facilitate the burden sharing process, which resulted in the Triptych approach (also Triptique approach). [8]The Triptych approach provided a consistent metric for comparing the efforts in the member states and explicitly, though still in a simplified manner, pointed out differences in their emission reduction potentials. As a result, after further negotiations the emission targets for the vast majority of the member states were scaled down from their original offers toward that indicated by the Triptych approach. [9]

EU targets in the 'energy and climate change package'

As a part of the 20% reduction pledge in 2020 for the EU in the 'energy and climate change package', a differentiation of emission targets took place for the member states. [10] The differentiation was based on the ability to pay principle and from a premise that the reduction or increase in any member state should not exceed 20% in 2020 from its 2005 emission level. Therefore, the member state with the lowest GDP per capita (Bulgaria) received a target of 20% increase between 2005 and 2020. The remaining member states were then distributed to the range of emission change from -20% to +20% according to their GDP/capita levels, with Denmark, Ireland and Luxembourg having the 20% reduction target. As a result, the overall reduction of the EU member states equals a 20% reduction from 1990 levels.

Main outcomes of past research

An extensive amount of research exists on the implications of different effort sharing regimes, and below is a brief outline from some selected studies. As the studies differ with various assumptions with regard to the overall emission target, economic and population growth, technological progress, mitigation potentials etc., it is relatively hard to perform a comprehensive comparison between different studies. Studies can be generally divided to deal with either global effort sharing, or that for a set of countries, e.g. for Annex I or the EU member states. Those dealing with global effort sharing can be divided further based on their emission targets, often specified as e.g. 550 ppm CO2 equivalent or 450 ppm CO2 equivalent scenarios, although the relative effort between countries or regions doesn’t necessarily depend strongly on the overall target.

A paper by den Elzen et. al. [11] assessed Multistage, the Brazilian proposal and Contract & Converge regimes with a 550 ppm target; and a more recent paper [den Elzen et al 2008] Multistage and Contract & Converge regimes with 550 ppm and 450 ppm targets. In the latter paper, global mitigation costs amount to 0.1% and 0.3% of global GDP in 2020, respectively for the 550 ppm and 450 ppm targets. With both targets and effort sharing regimes most developed countries incurred costs and the least developed regions of Sub-Saharan Africa and South Asia in fact gained from the emission reduction regime. Of Annex I countries, the members of the former Soviet Union (FSU) were only to incur gains in 2020. Also, Middle East faces relatively large costs for a non-Annex I region in 2020. Of the two effort sharing regimes, Multistage provided more modest costs for the developed and more moderate gains for the developing countries.

The results are partly confirmed in a report by Ekholm et. al. [12], which analyzes Triptych and Multistage burden sharing with 550 and 485 ppm targets. The main differences are primarily the larger costs for Australia and FSU, and gains instead of costs for China in 2020. Also, for some countries or regions there was a stark difference between the Triptych and Multistage regimes, with Triptych having a more moderate balance between Annex I costs and non-Annex I gains. As an extreme case, India was able to profit annually roughly 0.4% of its GDP in 2020 and 7% in 2050 from the climate regime.

References

  1. ↑ Ringius, L. et al. "Can multi-criteria rules fairly distribute climate burdens? OECD results from three burden sharing rules," Energy Policy, Vol. 26, No. 10, pp. 777-793, 1998.
  2. ↑ Aldy, J. E. et al. 2003. "13 + 1: A Comparison of Global Climate Change Policy Architectures, Resources for the Future Discussion" Paper 03-26, Washington DC
  3. ↑ Vaillancourt, K. and Waaub, J.-P. Equity in international greenhouse gas abatement scenarios: A multicriteria approach, European Journal of Operational Research, Vol. 153, Iss. 2, pp. 489-505, 2004. http://dx.doi.org/10.1016/S0377-2217(03)00170-X
  4. ↑ Meyer, A. "Contraction & Convergence. The Global Solution to Climate Change," Schumacher Briefings, Vol. 5. Green Books, Bristol, UK, 2000
  5. ↑ Groenenberg H, Blok K, van der Sluijs JP "Global Triptych: a bottom-up approach for the differentiation of commitments under the Climate Convention," Climate Policy 4, pp. 153–175, 2000
  6. ↑ den Elzen, Michel G.J. et. al. "Multi-Stage: A Rule-Based Evolution of Future Commitments Under the Climate Change Convention," International Environmental Agreements 6, pp.1–28, 2006 http://dx.doi.org/10.1007/s10784-004-5645-3
  7. ↑ Earth Negotiations Bulletin Vol. 12 No. 76
  8. ↑ Ringius, Lasse 1997. Differentiation, Leaders and Fairness Negotiating Climate Commitments in the European Community, CICERO Report 1997:8, ISSN: http://www.cicero.uio.no/media/99.pdf.
  9. ↑ Phylipsen, G.J.M. et. al. "A Triptych sectoral approach to burden differentiation; GHG emissions in the European bubble," Energy policy vol. 26, no. 12, pp. 929-943, 1998. http://dx.doi.org/10.1016/S0301-4215(98)00036-6
  10. ↑ EC 2009, DECISION No 406/2009/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0136:0148:EN:PDF
  11. ↑ den Elzen, Michel et al. "Abatement costs of post-Kyoto climate regimes," Energy Policy 33, pp. 2138–2151, 2005 http://dx.doi.org/10.1016/j.enpol.2004.04.012
  12. ↑ Ekholm, Tommi et al. 2008. Assessing the effort sharing for greenhouse gas emission reductions in ambitious global climate scenarios, VTT Research Notes 2453, http://www.vtt.fi/inf/pdf/tiedotteet/2008/T2453.pdf, 2009
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