International

Climate change is a global challenge and requires a global solution. Through analysis and dialogue, the Center for Climate and Energy Solutions is working with governments and stakeholders to identify practical and effective options for the post-2012 international climate framework. Read more

 

Press Release: Elliot Diringer to Direct International Strategies for Pew Center on Global Climate Change

For Immediate Release:
January 16, 2001

Contact: Katie Mandes
1-703-516-4146

Elliot Diringer to Direct International Strategies for Pew Center on Global Climate Change

The Pew Center on Global Climate Change announced today that Elliot Diringer, a Deputy White House Press Secretary and veteran environmental journalist, will join its staff next month as Director of International Strategies.

Mr. Diringer, 42, will oversee the Center's analysis of the international challenges posed by climate change and strategies for meeting them. With Senior International Fellows Sophie Chou and Christie Jorge Santelises, he also will direct the Center's outreach to key governments and actors involved in international climate change negotiations.

"We are delighted to have Elliot join the Pew Center," said Eileen Claussen, the center's president. "Elliot brings a critical set of skills that will help strengthen our efforts to bring about fair and effective international strategies to combat climate change."

From 1983 to 1997, Mr. Diringer was a reporter and editor at the San Francisco Chronicle, where he covered the 1992 Earth Summit in Rio de Janeiro and authored several award-winning environmental series. In 1995-96, he was a Nieman Fellow at Harvard University, where he studied international environmental law and policy.

Mr. Diringer, joined the Council on Environmental Quality in the Executive Office of the President in 1997 as Director of Communications, and later was named Senior Policy Advisor. While at CEQ, he helped develop major policy initiatives, led White House press and communications strategy on the environment, and was a member of U.S. delegations to climate change negotiations. Last year, he was named Deputy Assistant to the President and Deputy Press Secretary.

About the Pew Center: The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, leads the Pew Center.

The Pew Center includes the Business Environmental Leadership Council, a group of large, mostly Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center; it is solely supported by contributions from charitable foundations.

An important area of the Pew Center's work is to commission studies on the scientific, economic and policy issues surrounding climate change. Some of those recent studies have explored such issues as the Kyoto Mechanisms, compliance, carbon sequestration, environmental impacts of climate change, and ways to improve the economic analysis of climate policies. A complete list of these reports and downloadable copies of them can be found at www.c2es.org.

Statement: Wrap-Up of COP6 Global Climate Change Negotiations

For Immediate Release:
November 27, 2000

Contact: Katie Mandes (+1-703-516-4146)
Dale Curtis (+1-202-777-3530)

Wrap-Up of "COP6" Global Climate Change Negotiations

Statement by Eileen Claussen
President, Pew Center on Global Climate Change

I am disappointed that the "COP6" global climate change negotiations in The Hague were suspended on Saturday, November 25, without resolution, but I am hopeful that the Parties will move forward at their next meeting. As we continue to work internationally, I think the time has also come to put more emphasis on domestic action to address climate change. This would put us in a better position to assert our views internationally and work with others to complete a global regime.

These talks were supposed to have been about building a workable, global climate system for the long term. However, they appear to have stalemated over a relatively small number of tons of carbon to be absorbed by sinks in the first commitment period. This dispute strikes me as extremely short-sighted. It overshadows the progress that was made in narrowing differences on other issues.

In the long-term fight against global warming, we need every tool at our disposal. If we take carbon sequestration and market mechanisms out of the equation, or bog them down with such overly restrictive rules that nobody uses them, then we are limiting our ability to meet our environmental objectives. We are also undermining the political and business support that are needed - especially in the United States - to ratify the Protocol.

If appropriate guidelines and oversight can be put in place to ensure environmental integrity, then carbon sequestration and market mechanisms can play a valuable role in stabilizing the climate and providing other environmental, economic and social benefits. Developing those guidelines should remain one of our top priorities.

Finally, let's not overlook one of the genuine breakthroughs of this conference: A growing number of companies are joining the effort to develop a treaty that's workable and effective. IBM joined the Pew Center's Business Environmental Leadership Council, joining 27 other pro-action companies including DuPont, ABB, BP, Shell, Intel, Toyota and United Technologies.

Saturday's developments represent a setback but not a permanent breakdown in the process. I hope that in the weeks and months ahead, all sides will lower their voices, solicit advice from the experts, and resume discussions toward an agreement that can stand the test of time.

About the Pew Center: The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, leads the Pew Center.

The Pew Center includes the Business Environmental Leadership Council, a group of large, mostly Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center; it is solely supported by contributions from charitable foundations.

An important area of the Pew Center's work is to commission studies on the scientific, economic and policy issues surrounding climate change. Some of those recent studies have explored such issues as the Kyoto Mechanisms, compliance, carbon sequestration, environmental impacts of climate change, and ways to improve the economic analysis of climate policies. A complete list of these reports and downloadable copies of them can be found at www.c2es.org.

Statement: COP6: A Realistic Definition of "Success"

For Immediate Release:
November 24, 2000

Contact: Katie Mandes (+44-77-300-52194)
Dale Curtis (+44-77-300-52206)
Juan Cortinas (+1-703-587-5909)

A Realistic Definition of "Success"

Statement by Eileen Claussen
President, Pew Center on Global Climate Change
Netherlands Conference Center, The Hague

As the "COP6" global climate change negotiations entered the critical final hours last night, Chairman Pronk offered a text designed to spur governments toward a successful compromise. As everyone looks to the conference's end tomorrow, we should take a realistic view of what can be accomplished and what would constitute "success."

There is a perception among many observers that COP6 was supposed to resolve all of the outstanding political and technical issues stemming from the Kyoto Protocol and pave the way to its ratification. But this has never been a realistic expectation, particularly with respect to the United States.

The political and technical issues under discussion at COP6 are extremely complex. In fact, it is fair to say that these negotiations are more complex than those that spawned today's international trade rules, and that process took more than 10 years. The congressional deliberations that produced the US Clean Air Act took nearly a decade.

So it should come as no surprise if the approximately 180 governments attending COP6 do not agree on every issue in this round. A more realistic definition of success would envision:

  • Resolving some of the political questions surrounding the Kyoto Mechanisms (e.g. supplementarity, fungibility, whether to extend the levy on the CDM to the other mechanisms, etc.);
  • Creating a process for resolving some of the technical issues (e.g. what rules will be used for approving projects under the Clean Development Mechanism);
  • Defining a specific mandate for the next round of negotiations, carrying the process forward on the issues that are too contentious to be resolved at this meeting (e.g. what system should be agreed for sinks under Article 3.4).

In light of the scale and complexity of these issues, even small decisions here represent important progress. The text proposed last night by Conference President Jan Pronk, while imperfect, is a necessary element of the negotiating process and is an encouraging sign that real progress can be achieved here.

Our top priority must remain resolving the political and technical issues in ways that work in the long run, because ultimately this treaty must stand the test of time.

About the Pew Center: The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, leads the Pew Center.

The Pew Center includes the Business Environmental Leadership Council, a group of large, mostly Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center; it is solely supported by contributions from charitable foundations.

An important area of the Pew Center's work is to commission studies on the scientific, economic and policy issues surrounding climate change. Some of those recent studies have explored such issues as the Kyoto Mechanisms, compliance, carbon sequestration, environmental impacts of climate change, and ways to improve the economic analysis of climate policies. A complete list of these reports and downloadable copies of them can be found at www.c2es.org.

Press Release: COP6 Occurs Amid Progress; Goal Is A Workable System For Short and Long-Term Action

For Immediate Release:
November 20, 2000

Contact: Katie Mandes, +44-77-300-52194
             Dale Curtis, +44-77-300-52206
             Juan Cortinas, +1-202-777-3530

COP6 Occurs Amid Progress; Goal Is A Workable System For Short and Long-Term Action

Statement by Eileen Claussen
President, Pew Center on Global Climate Change
Netherlands Conference Center, The Hague

As we enter the second and final week of the Sixth Conference of Parties to the UN Framework Convention on Climate Change (COP6), everyone involved should keep two points in mind:

First, A great deal of progress has occurred since Kyoto and continues to occur. What do I mean by "progress"?

· While the talks are at a critical juncture, this is a predictable phase of the international negotiating process, and areas of disagreement are narrowing. Even if we get an incomplete result from COP6, some things are almost certain to be decided, and further talks are more likely than a breakdown. Nobody can afford to walk away from this process; too much time and effort has already been spent.

· Second, outright opposition to action in the United States is shrinking as a growing number of businesses join efforts like the Pew Center's Business Environmental Leadership Council. DuPont, ABB, BP, Shell, Intel, Toyota and United Technologies are just a few of the companies working to be a part of the solution. We're also seeing movement in the US Congress, where a growing number of members view climate change as an issue that deserves a constructive response.

· And third, the scientific case for action just keeps getting stronger, as evidenced by the latest information from the Intergovernmental Panel on Climate Change.

Second -- and this is critically important - we need to complete the Kyoto Protocol framework and get it right for the short and long term.

· The Kyoto Protocol and the UN Framework Convention on Climate Change are about much more than the first round of negotiated targets and timetables for emissions reductions. They will have to be the framework for international action to address the long-term issue of global climate change, a framework that will be needed over decades, not months or years.

· "Getting it right" means resolving the remaining political and technical questions in a way that makes future emissions reductions and political support more likely. Many of the proposals on the table in The Hague would make the treaty more cumbersome and controversial.

· The key areas requiring sensible, workable rules are the Kyoto Mechanisms and carbon storage in forests and soils. The Pew Center has issued research reports that explore each of these issues.

· Finally, all of the issues need to be worked out in a way that moves everyone toward the goal of stabilizing the concentration of greenhouse gasses in the atmosphere while at the same time maintaining the economic integrity of all nations.

Decision-makers in The Hague should remember that the Kyoto Protocol was designed to be both a first step toward stabilizing the earth's climate system, and a framework for long-term, cost-effective action. If the overall system is to work, it must be environmentally effective, economically efficient, transparent, fair, and as simple as possible. Decisions should be made with these goals in mind.

About the Pew Center: The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, leads the Pew Center.

The Pew Center includes the Business Environmental Leadership Council, a group of large, mostly Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center; it is solely supported by contributions from charitable foundations.

An important area of the Pew Center's work is to commission studies on the scientific, economic and policy issues surrounding climate change. Some of those recent studies have explored such issues as the Kyoto Mechanisms, compliance, carbon sequestration, environmental impacts of climate change, and ways to improve the economic analysis of climate policies. A complete list of these reports and downloadable copies of them can be found at www.c2es.org.

Op-Ed: Getting It Right: Climate Change Problem Demands Thoughtful Solutions

OPINION EDITORIAL
"Getting It Right: Climate Change Problem Demands Thoughtful Solutions"

By Eileen Claussen, Executive Director for the Pew Center on Global Climate Change

Appeared in the Washington Post

November 14, 2000

Many of the government officials gathering this month for the climate change negotiations in The Hague are hoping to put the finishing touches on rules to implement the Kyoto Protocol. But getting those rules right is more important than getting them all completed.

Still unresolved on the eve of the meeting are a range of very complicated political and technical issues that will play a decisive role in determining whether we achieve our goal of stabilizing the earth's climate system. It is not a stretch to say that how we decide these issues will determine how we are judged by future generations.

Decision-makers in The Hague should remember that the Kyoto Protocol was designed as both a first step in reducing atmospheric concentrations of greenhouse gases and as a framework for long-term, cost-effective action. In other words, this is a treaty that will have to stand the test of time. Short-term political considerations-including the desire to resolve all remaining issues this year-should therefore take a backseat to the goal of creating a global system that is transparent, fair, environmentally effective, economically efficient, and as simple as possible.

The Remaining Issues

Four key sets of issues remain in play as the negotiators come together:

  1. The Kyoto Mechanisms. The Kyoto mechanisms were designed to allow countries to pursue the most cost-effective means of reducing their emissions-for example, by engaging in international emissions trading. But there are provisions being negotiated that would make the Kyoto mechanisms totally inoperable, and others that would seriously limit their use. If the negotiators are careless in defining the rules, or determined to constrain when and how the mechanisms can be used, this will simply increase the costs of complying with the Protocol. And the result might be a higher level of noncompliance, an outcome that no one should want.
  2. Carbon Sequestration. The question here is whether and how countries should receive credit toward their emissions reduction targets for using agricultural lands and forests to store carbon. A related question is whether credit should be given for investments in sequestration projects in developing countries. The important role of soil and forest sequestration in stabilizing the global climate system cannot be denied. However, we have not yet defined what types of sequestration activities ought to count-or even how to count them.
  3. Compliance. Yet another unanswered question is whether the Kyoto Protocol will include binding consequences for noncompliance. In other words, how will we penalize those countries that miss their targets? This is a crucial issue to the Protocol's success. Only by establishing and enforcing significant noncompliance penalties can we create a fair and efficient global system, and one that yields results.
  4. Assistance to Developing Countries. Developing countries properly argue that the industrialized world is not doing enough to implement provisions of the United Nations Framework Convention on Climate Change. In that precursor agreement to the Kyoto Protocol, the United States and other nations pledged to support developing countries in their efforts to reduce emissions through capacity building, technology transfer, and funding for "adaptation" initiatives. Decision makers in The Hague will have to respond seriously to these concerns at the same time as they are working on the more fractious issues of the Kyoto framework.

Looking Ahead

As if resolving these immediate questions were not enough of a challenge, everyone concerned with this issue must also give serious thought to the future. After all, the 2008-2012 deadline for achieving the first round of emissions reductions under the Kyoto Protocol is fast approaching. And, even if these initial targets are met (an unlikely prospect), they represent only a first step toward the sustained and significant reductions in emissions that will be necessary to reduce the threat of climate change throughout the 21st century.

A crucial issue for the future, then, is to think about what kind of targets we will have to establish in the years after 2012. At the same time, we need to think about how to involve developing countries in these future global efforts in a more active way. Developing countries are struggling to lift their people to a higher standard of living, and doing so will mean absolute increases in energy use and emissions.

We will accomplish very little, if anything, by requiring developing countries to achieve short-term emissions reductions. The better approach is to craft an equitable and effective framework for future targets for all countries, bearing in mind that we face a common challenge: maximizing the environmental benefits we are able to achieve while minimizing the costs of reducing and limiting our emissions.

Meeting the challenge of global climate change calls for no less than a second industrial revolution. We need to promote new technologies and new investments that will put the entire world on a path to clean economic development. And, in creating the global legal framework to make this happen, we need to make absolutely certain that we get it right.

Appeared in the Washington Post, Tuesday, November 14, 2000— by Eileen Claussen

Promoting Meaningful Compliance with Climate Change Commitments

Download Full Report

Promoting Meaningful Compliance with Climate Change Commitments

Prepared for the Pew Center on Global Climate Change
November 2000

By:
Eric Dannenmaier, North-South Center, Environmental Law Program
Isaac Cohen, INVERWAY, LLC

Press Release

Download Entire Report (pdf)

Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

The ultimate success and credibility of the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or any future climate agreement, will depend on whether most, if not all, Parties meet their greenhouse gas emission reduction commitments. A critical factor in achieving this goal is having a system that is able to identify, sanction, and also deter non-compliance. Traditionally, international agreements have had weak or ineffective compliance systems because of sovereignty concerns. There are, however, means outside the compliance regime of the Protocol to work toward similar outcomes.

The Pew Center has commissioned this report to provide insights on several factors that are often overlooked in the debate on compliance: the role of national compliance systems; national and international monitoring and verification; and the willingness of Parties to participate in the climate change regime. These three factors can significantly contribute to achieving a meaningful and effective compliance system. The report concludes that:

  • National compliance systems should be promoted as a means to ensure compliance with the Kyoto Protocol or any future climate change agreement and should seek to balance market-based instruments with strong enforcement;
  • National compliance with international climate change agreements must be verifiable to ensure credibility, and monitoring and verifying compliance with the Kyoto Protocol can benefit significantly from integrating existing national compliance systems into the international system; and
  • Broad participation in any climate change regime is as important as meeting the commitments of the agreements themselves; the Kyoto Mechanisms can play an important role in boosting both participation and compliance.
     

The importance of Parties actually complying with their targets cannot be overstated. While this report outlines benefits from having flexibility and balance in compliance regimes, the damage from non-compliance — even if later remedied — can be a loss of the trust and good faith that underpins international agreements. We prefer the approach to compliance described in this report rather than ensuring compliance by making the rules weaker.

The Pew Center and the authors appreciate the valuable input and thoughtful comments of Robert Nordhaus, Kyle Danish, Glenn Wiser, Alistair Lucas, and Thomas Husted. The authors would also like to thank Gabriela Donini, Adriana Faria, Maria Junco, and Tricia Choe for their research assistance.

Executive Summary

As Parties to the UN Framework Convention on Climate Change hammer out the details of Kyoto Protocol implementation, a central issue has been how to guarantee compliance with the commitments being made to reduce greenhouse gas (GHG) emissions. Clearly, the promises of the Framework Convention and the Protocol cannot produce desired results unless the pledges are met.

Yet meeting those pledges is a complex task because the economic and social behaviors that drive anthropogenic GHG emissions occur across a broad array of sectors and reach almost every facet of modern life. The ability to assure compliance with GHG emission reduction commitments is constrained by the inherent nature of the commitments — focused on environmental results rather than observable behaviors — and by the nature of multilateral environmental accords, where compliance is more often a matter of will than compulsion.

Despite these constraints, progress under multilateral climate change regimes requires that emission reduction commitments be fully met, at a domestic level, by the broadest number of Parties. In short, the success and credibility of the Kyoto Protocol, or any future climate accord, will depend upon meaningful compliance. This report explores the importance of meaningful compliance in the context of climate change and examines some of the principles and strategies that can help reach that goal.

Recognizing that the compliance regime under the Kyoto Protocol is still the subject of debate and that rules and institutions are still being designed internationally and domestically, the report does not speak expressly to this debate, nor offer guidance on underlying policies and measures to implement the Protocol. It focuses instead on three compliance concerns that the authors believe are fundamental to any meaningful regime and may have special priority for climate change. The report explores how meaningful compliance can be advanced where:

  • National compliance systems are promoted, consistent with domestic priorities and legal tradition, as a core strategy to meet international commitments;
     
  • Monitoring and verification are made routine and credible through cooperative effort and integration with national systems; and
     
  • Participation in the Kyoto Protocol, and in efforts to meet broader climate change policy goals, is encouraged among the broadest possible range of states.
     

T hese factors may not be sufficient to guarantee the ultimate success of an international compliance climate change framework but, the authors suggest, they are necessary to make any real progress.

Examining the first of these concerns, the report looks to compliance regimes that begin at home — on the domestic policy front — albeit with cooperation and multilateral support where needed. The authors reason that the role of states as regulators — translating their international climate change commitments to domestic action — is critical. States are more capable than multilateral institutions of adapting policy choices to their national needs and priorities, and better able to claim jurisdiction over relevant entities where necessary to compel attention to those choices. Concerns about sovereignty that complicate international compliance and limit international institutions can be minimized when compliance efforts are undertaken in a national context under the rules of the prevailing legal system.

Examining relevant national models, the authors find that legal frameworks that balance supportive and adaptive tools with corrective measures can promote compliance domestically. The report highlights successful frameworks that have achieved this balance while establishing a regulatory baseline of minimum standards and giving compliance institutions the flexibility to obtain environmentally sound results. The report also examines how the choice of consequences other than penalties can be used to promote compliance, and how the allocation of penalties, when collected, can be shaped to serve the objectives of GHG emissions reductions more directly.

The authors review the role of voluntary compliance programs and conclude that they may be important supplements to, but not substitutes for, enforceable targets and government oversight. They also conclude that self-assessment and reporting can significantly increase cost-efficiency, and that incentives, including steps to minimize liability for self-reported problems, might be useful in promoting a greater use of self-auditing programs.

The authors also review the fundamental role that civil society can play in promoting effective compliance at a national level, and explore how expanding this role through access to information, policy formulation, and compliance proceedings can help achieve GHG emissions reduction goals.

Taking their analysis of national strategies back into the context of the Framework Convention and the Kyoto Protocol, the authors argue that monitoring and verifying compliance with climate change commitments are critical to assuring the integration of climate commitments into national systems. Yet they note that such oversight will be uniquely challenging because emissions will be estimated, not directly measured, and because implementation strategies will vary greatly.

In light of these challenges, the report outlines principles and strategies for effective monitoring and verification and discusses their relevance in the climate change context. The report examines how direct inspections and monitoring, transparency and openness, independent study and verification, redundancy, and false-reporting deterrence can serve as oversight tools, adding certainty and credibility to compliance assurance.

The authors also highlight reliance on international and regional cooperation — already at the heart of the Framework Convention and the Kyoto Protocol — as a basis for collecting and verifying credible data. Research, information exchange, data gathering, and scientific exchanges envisioned by the Parties to promote the general goals of the accords can also be used to support performance monitoring and verification by building trust and allowing access to compliance data and performance issues on a real-time basis. This cooperative approach may also help uncover concerns before they lead to systemic failures, and thus promote corrective action even as performance is monitored.

The report explores the importance of using national compliance systems as data sources for multilateral monitoring, and integrating the work of national agencies with international compliance and verification institutions. The authors suggest that the international emissions reporting process will gain credibility where estimations are drawn as directly as possible from domestic systems rather than a separate process designed solely for the purposes of the Kyoto Protocol. Efficiencies and accuracy can also be realized where domestic compliance institutions play a direct role as national focal points for GHG emissions reporting and verification.

Finally, the authors examine an issue not always tied to the compliance debate — the question of how to promote participation of Parties in the climate change regime. If meaningful compliance is to achieve real environmental results, some attention must be paid to the number of countries actually willing to pursue those results. This is particularly true of the Kyoto Protocol Annex B commitments, where success is defined as an aggregate average of emissions reductions. The Protocol, almost by definition, cannot be effective if only a handful of states accept and observe its conditions. In essence, a regime that promotes national participation as well as national performance can help assure the Protocol's long-term success.

Thus, the authors examine how a climate change compliance regime might be designed to be compelling to participants even as it compels performance. They suggest that nationally distinct compliance systems, tied to an integrated and cooperative international monitoring effort, can promote greater participation of Parties in the climate change regime — through the Framework Convention, the Kyoto Protocol and beyond.

In sum, the authors' analysis of these three separate but related themes of national compliance systems, monitoring and verification, and participation lead to the following principal findings:
 

  1. Meaningful compliance with climate change commitments can best be achieved where promises made internationally are embraced domestically (promoting behavioral change within communities whose actions are most likely to achieve results), and where participation is maximized across the broadest possible range of states.
     
  2. National compliance systems should be promoted as a core strategy for assuring compliance with the international climate change regime because states are more capable of making policy choices suited to their national needs and priorities, and better able to claim jurisdiction over relevant entities where necessary to compel attention to those choices.
     
  3. Effective national compliance systems tend to balance and combine market-based mechanisms and incentives with regulatory models suited to domestic priorities — emphasizing supportive and adaptive measures, but leading to corrective and punitive responses where necessary.
     
  4. Monitoring and verifying compliance will be substantially aided by using the cooperative mechanisms of the Framework Convention and the Kyoto Protocol in part to oversee and complement national data gathering and emissions estimation, and by integrating existing national compliance mechanisms and institutions into the international system.
     
  5. Broad state participation in climate change regimes may be as important as national performance, and any meaningful compliance system should seek to encourage participation even as it discourages non-compliance.
Eric Dannenmaier
Isaac Cohen
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Getting Kyoto Right

Getting Kyoto Right

Speech by Eileen Claussen, President
Pew Center on Global Climate Change

Earth Technologies Forum
Washington, D.C.

October 30, 2000

Thank you very much. It is a pleasure to be here. And I want to pay tribute to all of you for your commitment to developing the technologies and the policies that are pointing the way to progress in protecting the global environment.

I am here, of course, to talk about the issue of global climate change. But before I go any further, I want to make sure there are no English teachers in the audience today. If there are, I want to apologize in advance for some of the phraseology that I will be using during my remarks. The global warming discussion, as you all know, has succeeded in massacring the English language, and I am sure other languages as well, by promoting the use of such abominable words as additionality (which, of course, is the opposite of subtractionality), supplementarity (which is merely another word for additionality, as if we needed one), and fungibility (which always conjures up images of mushroom soup).

A month or so ago, U.S. Republican presidential candidate George W. Bush received a drubbing in the press for mispronouncing the word "subliminal." Imagine the delight of political reporters if the candidate were forced into a detailed discussion of global climate issues. I can see the headlines now: "Bush Says No to Making Overseas Emissions Cuts Supplementariable." Of course, I mean no offense to Governor Bush. After all, Vice President Gore probably invented the term "fungibility."

Like many of you, I'm sure, I have been more than a little disappointed that we have not seen more discussion of the climate change issue in this election. But when you really think about it, it is an issue that in its sheer complexity only highlights the weaknesses of each of the candidates. I can only imagine the horror on the faces of his advisors if Vice President Gore were to use the debates to present the American public with a tutorial on such topics as the Clean Development Mechanism and carbon sinks.

On the other hand, I can picture it coming to Governor Bush's turn and him thinking that carbon sinks are some sort of high-end kitchen appliance. "Of course I'm for carbon sinks," he'd say. To which the Vice President would surely reply, "But your plan only makes them available to the wealthiest one percent of Americans."

Seriously, in their complexity and their sheer awkwardness, the words and the concepts we are using to address this subject are an accurate reflection of the difficulty of many of the issues involved. No one ever said that structuring an effective, global regime for mitigating climate change would be simple. Setting politically acceptable, environmentally friendly, and economically sound targets has been an enormous challenge, and we still have not mastered it.

Adding to that challenge is the fact that we have not firmly established the rules that will govern how countries can achieve their targets.

These rules, of course, will play a decisive role in determining whether we can achieve our goals, and whether future generations will look back and say we got it right. But making the Kyoto mechanisms work, deciding how to address sequestration, and dealing with compliance in an effective way will not be easy things to do or decide.

Difficult or not, however, the bottom line is that we need clear and effective rules in all of these areas. Because without a viable framework, the targets and timetables we set will mean little, and countries will be free to follow the example of the writer who, when asked what he loved about deadlines, replied, "I love the whooshing sound they make as they go by."

The International Negotiations: Reflections on Where Things Stand

I will talk more about some of the specific issues that still need to be decided later in my remarks. But first I want to reflect on the international negotiations themselves, which will come to a head in November in The Hague.

As all of you know, negotiators met in mid-September in Lyon, France, in an effort to achieve progress on some of these issues. And, while there were no real breakthroughs, we saw clear evidence that many of the participants were beginning to understand the perspectives of their counterparts from other nations, and what the negotiators across the table might need to achieve in order to make the agreement more acceptable in their countries.

Over the years, I have been involved in a variety of global environmental negotiations, and I have noticed a clear pattern in how these negotiations proceed. It starts with what I call the rhetorical phase, but I suppose you also could call it grandstanding. This is when people lay out their initial and seemingly inviolable positions-boldly declaring that this is where they stand and they would no sooner compromise their principles than subject themselves to a public flogging, or something like that.

The rhetorical phase is followed by a period of stalemate while everyone argues about the big issues involved. This, then, is followed by a phase I call "traction" when the negotiators begin to understand each others' positions and we start to see the outlines of a compromise approach.

Traction, in turn, is followed by a phase-let's call it "clearing"-where the difficult technical issues are decided. And, last but not least, we move onto the final phase, decision-making, where the big issues are decided once and for all, the once-considerable political obstacles to a deal fall by the wayside, and everybody gets a little something to take home with them to show they did their part for justice and a better world.

Right now, in my opinion, we are in the traction phase of this process. Although it might feel from time to time that we are actually "in traction"-in other words, unable to move forward at all-I do think that the Lyon meeting saw the negotiators exhibiting a new understanding of what it will take for the world to reach a deal. We have moved, in other words, from grandstanding and rhetoric and the subsequent stalemate phase to a phase in which we begin to see the outlines, however sketchy, of what will need to happen in order to resolve both the technical and the political issues that still stand in the way of a solution.

Of course, I am not saying that the resolution of these issues is preordained or that resolving them will be easy. These are all very difficult questions. Indeed, my belief is that some of them are difficult enough that they may not be amenable to resolution at the Conference of the Parties in The Hague.

The Issues: Deciding What Is Most Important

In my view, the key to resolving the remaining technical issues and moving forward from the traction to the clearing phase of the current negotiation-and then onto decision-making-is to answer a simple question: What is truly important? The sheer number of issues that still must be resolved make it clear that getting thoughtful decisions on all of them will probably remain elusive. What counts, I believe, is to get enough decisions made well so we can move forward to implementation.

In other words, it is better to do less and get it right than to do too much and get it wrong. As I say this, I hope you don't consider me an advocate of doing nothing or of going slow for the sake of going slow. I strongly believe that we can and must make real and substantial progress on many of these issues, and that the meeting in The Hague provides an historic opportunity to do so.

In particular, I believe that the key to the success of the negotiations in The Hague will be continued progress in defining and clarifying the Kyoto mechanisms. These, of course, include the Clean Development Mechanism (CDM), Joint Implementation (JI) and international emissions trading. As the negotiators prepare for the November meeting, I feel it is important for them to remember that these mechanisms were included in the Kyoto Protocol so that countries could achieve their emission limits at a reduced cost.

In fact, a recent report prepared for the Pew Center found that hundreds of analyses using a wide array of economic models agree that the costs of reducing emissions will be significantly lower under an emissions-trading scenario.

Despite this, there is still language that is being negotiated that would make the Kyoto mechanisms totally inoperable or, at the very least, seriously limit their use. In my view, this is a very serious problem. Why? Because if we define the mechanisms in ways that do not allow them to be used, or that allow them to be used in only limited circumstances, we are likely to increase the costs of complying with the treaty and make noncompliance the norm rather than the exception.

A closer look at the CDM illustrates the potential costs of placing onerous limits on how countries can use the mechanisms. At the Pew Center, we are very supportive of some tough requirements for monitoring and verification and for making sure that projects in developing countries result in clear environmental benefits. These requirements, if structured properly, will allow for some degree of international oversight to ensure consistency in project selection and accurate determination of credits, and they will allow for public participation to ensure transparency.

But we are not convinced of the need for a slew of so-called "additionality tests," beyond environmental additionality. Nor do we believe there should be a prescribed geographic distribution of projects, or that every project should have to meet the test of "non perpetuity of inequity." (I am not sure exactly what this means, but it sure sounds like a test that I would not want to take.)

Again, I will get to the bottom line: if the hurdles for using the CDM are sufficiently bureaucratic and cumbersome, they simply will not be used. And we will squander a wonderful opportunity to make known the very real environmental benefits that can come with the creation of the CDM-both to the firms that will make the investments, and to the developing countries that want to attract clean investment.

In a report issued by the Pew Center last month, we took a look at the Kyoto mechanisms in terms of equity, environmental integrity, and economic efficiency. Drawing on this report, we have reached a number of conclusions that I believe are worth repeating:

1. First, the Kyoto mechanisms will work best if substitution among the different mechanisms is permitted.
2. Second, the rules for international emissions trading should allow quote-unquote "legal entities," including emitters and emissions brokers, to participate.
3. Third, the lack of harmonization among the three mechanisms may inadvertently restrict their use. Achieving harmonization, wherever possible and consistent with the language of the Protocol, should therefore be an important objective.
4. Fourth, significant penalties for noncompliance, together with effective enforcement of those penalties, are crucial to the environmental integrity of an emissions trading system.
5. Fifth, binding supplementarity rules could increase costs, thereby increasing the risks of noncompliance with no environmental benefit.
6. And sixth, the mechanisms are most amenable to use by those countries that adopt domestic cap and trade systems.

We believe that the mechanisms must work effectively and efficiently in order for the Protocol to achieve the goal of the United Nations Framework Convention on Climate Change-that is, to stabilize atmospheric greenhouse gas concentrations. And, for this to happen, the final text that is agreed to in The Hague should reflect the conclusions in the Pew Center report.

Sequestration: Toward an Effective, Balanced Approach

One issue that I feel we may not be able to resolve this year-or, at least, not satisfactorily-is the issue of carbon sequestration. The question is this: if a tree falls in the forest and no one is there, does it count against your Kyoto target? Seriously, allowing countries to receive credit under the Kyoto Protocol for using lands and forests to store carbon is the most complex and potentially controversial issue that the negotiators face.

As all of you know, the Protocol sets forth a partial system for crediting land-use changes and forestry practices, but the negotiators still face the difficult task of defining exactly how this will happen. In doing so, the negotiators will have to answer such vexing questions as how to deal with the group of technically complex issues known as permanence, leakage and saturation. And not only that, but the issues are politically complex as well-involving such topics as sovereignty concerns. The resolution of these and other issues can have a substantial impact on whether a country will be able to meet its negotiated target, and that has caused some countries to urge that the quantity of credits available from carbon sequestration be capped. In this way, the debate over sinks resembles the debate over supplementarity or "hot air."

Now I am a strong believer in the notion that forests and the way we manage them can provide significant opportunities to assist in stabilizing the climate. But the Kyoto language, because it deals with some sequestration activities and not others, could result in perverse effects. In its current form, the Protocol is inconsistent in how it awards credits for increasing carbon stored through forest and land management-sometimes it does, and sometimes it does not. Decreases in carbon stocks because of deforestation and other activities are treated in much the same way. Sometimes they are charged against national commitments, and sometimes they are not. It is enough to remind me of the quote attributed to the U.S. composer and actor Oscar Levant. "Once I make up my mind," he said, "I am full of indecision."

The bottom line, in my mind, is that because of the complexity of this topic and because of where the negotiations stand right now, it will be extremely difficult to make comprehensive decisions on what to include and how to do it. Of course, this does not mean that the negotiators in The Hague should completely set this issue aside. On the contrary, there are decisions that can be made and that should be made. One of these issues is the scope of activities that can count toward a country's target, where we believe that a broad scope, consistent with the state of the science and with the concepts of permanence and saturation, should be accepted. Another is the inclusion of legitimate and well-thought-out carbon sequestration projects under the Clean Development Mechanism consistent with efforts to deal with the important issue of leakage. These would be good and important decisions to make in the Hague, although if we cannot make good decisions we would be better off not making any decisions at all.

Additional Issues

Allow me to touch very briefly on two additional issues that remain in play as the negotiators prepare for their meeting in The Hague. Those issues are compliance and assistance to developing countries. On the compliance issue, the question is whether the Kyoto Protocol will include binding consequences for noncompliance. In other words, how will we penalize those countries that miss their targets? This is a crucial issue to the Protocol's success. Only by establishing and enforcing significant noncompliance penalties can we create a fair and efficient global system, and one that yields results.

On the second issue I mentioned, developing countries very properly argue that the industrialized world is not doing enough to implement provisions of the United Nations Framework Convention on Climate Change. In that precursor agreement to the Kyoto Protocol, the United States and other nations pledged to support developing countries in their efforts to reduce emissions through capacity building, technology transfer, and funding for "adaptation" initiatives. Decision makers in The Hague will have to respond seriously to these concerns at the same time that they are working on the more fractious issues of the Kyoto framework.

Looking to Industry for Answers

At the same time that the negotiators are addressing all of the issues that I have mentioned, I believe it is extremely important that the United States and other countries not put off those actions that we can and should be taking now to meet the challenge of climate change, outside of the context of the international negotiations. One place we can look for inspiration in terms of how to take the initiative on this issue is industry.

Over the past several years, we have witnessed a remarkable shift in business activity and thinking on this issue. Many businesses in the United States and throughout the world no longer view environmental concerns such as climate change as a threat to their very existence. Rather, they accept that something must be done to address these concerns, even when doing so will be difficult and expensive. Progressive business leaders also understand that the smartest approach for industry is to help shape solutions instead of having solutions imposed by others.

An additional incentive for many of the businesses that are dealing proactively with the issue of climate change is that doing so can promote new thinking, new efficiencies and new growth. Not only are companies pursuing opportunities in the development of renewable energy, new technologies and other strategies to assist in reducing emissions, but they are making new commitments to conservation and energy efficiency-commitments that could pay off for years to come.

Dupont, ABB, BP, Shell, Baxter, Toyota and United Technologies are just a few of the companies that already have set serious emissions reduction targets, and have developed programs to assure that these targets will be met.

Of course, these and other existing efforts will not be nearly enough to achieve the emissions reductions needed to stabilize greenhouse gas concentrations in the atmosphere. However, committed industry leaders in the United States and throughout the world are providing a window on what needs to happen-and how the necessary reductions can be achieved.

If I may, I'd like to pause here a moment to consider the difference between involvement and commitment. Many industries and individual companies are involved in climate change activities. But only a few are truly committed, and they include many of the companies represented here at this meeting. It is a bit like a ham and egg breakfast. The chicken was clearly involved, but the pig was truly committed. And I believe the challenge for the future is for more companies to follow the pig's example.

The Role of Government: Leadership Needed

In the end, however, it is governments and not the private sector that will create the frameworks that will allow us to achieve significant and wide-ranging progress in meeting the challenge of climate change. And it is my belief that the United States can and must play an important role in moving this issue forward-if only because we are responsible for one-quarter of global emissions of greenhouse gases.

I am pleased to report that we have seen some action on this issue in the U.S. Congress in recent months. A number of bills have been introduced, and last summer's hearings in the Senate Commerce Committee, under the leadership of Senator John McCain, provide some reason for optimism.

But for the Kyoto Protocol to be taken seriously in the United States, four things have to happen.

First, we need a good result at The Hague. If we can get a series of rational and thoughtful decisions on the Kyoto mechanisms and compliance (or even on sinks if that is possible), we will be moving the ball forward toward the end zone. But if the Conference of the Parties yields a set of decisions that render the mechanisms useless, then I believe we will have made positive political action next to impossible.

Second, we need to respond seriously to those who argue that the costs of complying with the Protocol will ruin the U.S. economy. Major changes, of course, never come free. But most of the cost studies conducted to date have been based on flawed or incomplete assumptions in the economic models that are used. Partisan analysts, I will remind you, rely on data the same way a drunkard uses a lamppost: for support rather than illumination. What we need to do is conduct more thoughtful economic analysis that delivers reliable results-and that takes into account such considerations as the remarkable ability of our economy to adapt to change, the very real costs of not acting to address this issue, the policies that can be used to assist in implementation, and a realistic set of baseline emissions that reflect our best estimate of reality over the next decades.

I have no doubt that there will be costs involved and that important segments of our economy will be adversely affected. But the dire predictions we have seen to date appear to be removed from reality. They do not contribute anything to the debate, and they do not provide us with ideas about how we can help people and industries adapt.

The third thing we have to do is to deal seriously with the issue of developing country participation. To those in the U.S. Congress and elsewhere who continue to insist that China and other developing nations should have to live by the same requirements as the industrialized world, I say that fairness demands we think differently. I believe that the United Nations Framework Convention on Climate Change-which was ratified by the U.S. Congress-took the right approach in asserting that industrialized countries should take the lead in reducing emissions. The Convention went on to state that developing countries have a right to development, even though their development will surely increase these countries' greenhouse gas emissions.

Does this mean we should expect nothing of the developing world as we work to reduce emissions in the years ahead? Of course not. Without changes in the trajectories of these countries' greenhouse gas emissions, we will be no closer to successfully addressing the challenge of climate change than we are today. But rather than attempting to pressure developing countries into accepting binding emissions reduction targets in this decade, we should be working to influence the character of the investments made in these countries and to insure that these investments are climate-friendly. And, as I noted above, we should be dealing with the Convention's requirements for technology transfer, capacity building and funding for adaptation.

To sum up, there is no doubt in my mind that we can achieve a positive result in The Hague, and that we can make decisions on the Kyoto framework that will make it viable over the long term. But it will take hard work, concentration, and a willingness to make tough decisions.

As if resolving these immediate questions were not enough of a challenge, everyone concerned with this issue must also give serious thought to the future. After all, the 2008-2012 deadline for achieving the first round of emissions reductions under the Kyoto Protocol is fast approaching. And, even if these initial targets are met, which is an unlikely prospect, they represent only a first step toward the sustained and significant reductions in emissions that will be necessary to reduce the threat of climate change throughout the 21st century.

In closing, let me say that meeting the challenge of global climate change calls for no less than a second industrial revolution. We need to promote new technologies and new investments that will put the entire world on a path to clean economic development. And, in creating the global legal framework to make this happen, we need to make absolutely certain that we get it right.

Thank you very much.

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The Kyoto Mechanisms and Global Climate Change

The Kyoto Mechanisms and Global Climate Change: Coordination Issues and Domestic Policies

Prepared for the Pew Center on Global Climate Change
September 2000

By:
Erik Haites, Margaree Consultants Inc.
Malik Amin Aslam, ENVORK Research And Development Organisation

Press Release

Download Entire Report (pdf)

Executive Summary

The Kyoto Protocol sets greenhouse gas emissions limits for 2008-2012 for 38 developed coun-tries. Developing countries have no emissions limits. The Protocol also creates three "mechanisms" that enable countries to reduce the cost of meeting their emissions limits. The nations of the world are now negotiating the detailed rules for implementing the Protocol, including the three Kyoto Mechanisms.

A number of countries have made specific proposals to restrict the use of the Mechanisms to achieve environmental or equity objectives. Other countries are arguing for an unrestrictive approach to improve economic efficiency. In addition, the lack of integration among the three Mechanisms may inadvertently restrict or bias their use. Finally, the extent to which countries may avail themselves of the Mechanisms depends both on the rules for the Mechanisms and on the domestic policies adopted by the developed countries to meet their commitments.

This report evaluates proposed rules for implementing the Kyoto Mechanisms in terms of their implications for equity, environmental integrity, and economic efficiency, and discusses coordination of domestic policies with the Kyoto Mechanisms. The authors conclude that:

The Kyoto Mechanisms have the potential to dramatically reduce the costs of meeting the Kyoto commitments. The Kyoto Protocol allows nations to fulfill part of their emissions reduction obligations by purchasing emissions reductions from other nations. Because greenhouse gases (GHG) lead to global effects, it does not matter, from an environmental perspective, where GHG reductions occur. However, because countries and businesses face widely differing control costs, it matters greatly from an economic perspective where GHG reductions occur. Hundreds of analyses using a wide array of economic models agree that the costs of controlling GHG emissions are significantly lower if emissions trading is permitted than if each nation has to meet its emission reduction responsibilities domestically. The broader the trade possibilities, the lower the costs of control.

The rules should allow substitution among the different Mechanisms. Some countries have proposed limiting substitution (fungibility) among the three Mechanisms. Others argue that the Protocol does not allow full fungibility. To limit such substitution, the rules governing use of the Mechanisms would have to be very restrictive. Even then countries could develop means to circumvent the restrictions. It would be better to simply allow substitution among the Mechanisms.

The rules for International Emissions Trading should allow "legal entities" (emitters, emissions brokers, etc.) to participate. Legal entities should be allowed to participate in emissions trading, just as they are allowed to participate in Joint Implementation, the Clean Development Mechanism, and international trading of other goods and services. If governments rather than legal entities trade, the potential efficiency gains of trading cannot be realized because governments do not know the compliance costs faced by the emitters. If the international rules don't allow legal entities to participate, individual governments could circumvent those rules, if they wish, by establishing internationally tradable "obligations to transfer." Rather than encourage the development of complex legal devices, countries should simply agree to allow legal entities to participate in emissions trading.

Lack of harmonization among the three Mechanisms may inadvertently restrict their use. There will be differences in design among the Mechanisms because their purposes vary. For example, only one of the three Mechanisms is designed to promote sustainable development in developing countries. However, an important objective of each of the Mechanisms is to allow legal entities and nations to use the most cost-effective means available to comply with their domestic and international obligations. Differences in rules among Mechanisms that are unrelated to differences in their purposes reduce economic efficiency and should be minimized to the extent possible.

Significant penalties for non-compliance and effective enforcement of those penalties are crucial to the environmental integrity of emissions trading. If the penalties for non-compliance with national emissions limitation commitments are relatively weak, emissions trading enables a country to benefit financially through non-compliance. Such behavior reduces the value of the allowances held by governments and legal entities. Liability proposals seek to limit the extent of such non-compliance by limiting sales to allowances expected to be surplus to the seller's compliance needs. Liability proposals differ in their environmental effectiveness, their economic efficiency, and their impact on the timing of transactions. Negotiators should adopt rules that are maximally effective in encouraging compliance with minimal increase in cost or environmental risk.

The Mechanisms are most amenable to use by countries that adopt domestic cap and trade systems. Countries will need to implement domestic policies to control emissions by different sources if they are to meet their emissions limitation obligations. The cost of compliance with domestic policies can be minimized by giving sources access to the Kyoto Mechanisms to the extent allowed by the international rules. Use of the Mechanisms is easiest to structure for participants in a domestic cap and trade system. However, the Mechanisms could be used, albeit with some difficulty, by countries that adopt emissions taxes or that specify the means of compliance through some types of regulations or negotiated agreements.

Erik Haites
Malik Amin Aslam
0

Press Release: Design of Kyoto Mechanisms Is Critical To Overall Success - Pew Insight, Recommendations

For Immediate Release:
September 11, 2000

Contact: Katie Mandes, 703-516-0606
             Dale Curtis, 202-777-3530
             In Lyon: Lisa McNeilly, +44 773 005 2254

Design of Kyoto Mechanisms Is Critical To Overall Success: Pew Center Report Provides Insights, Recommendations

Lyon, France — As international negotiators develop rules to implement the Kyoto Protocol, they can lower the costs of meeting their commitments by making sure that certain provisions strike the right balance between economic efficiency, environmental integrity and global equity. Likewise, domestic climate change policies will need to mesh well with the international rules.

Those are the views of the Pew Center on Global Climate Change, which today released a report with recommendations on the Kyoto Mechanisms: International Emissions Trading, Joint Implementation and the Clean Development Mechanism (CDM). The report, entitled Kyoto Mechanisms and Global Climate Change: Coordination Issues and Domestic Policies, examines the institutional and regulatory implications of the Mechanisms and ways to unlock their full potential.

The report was authored by two leading experts on the Kyoto Mechanisms: Erik Haites of Margaree Consultants Inc. in Toronto, and Malik Amin Aslam of ENVORK: Research & Development Organization in Pakistan.

"The Kyoto Mechanisms were designed to lower the costs of achieving emissions reductions," said Eileen Claussen, President of the Pew Center. "However, there are numerous proposals on the table that could severely limit the use of the Mechanisms or even encourage non-compliance with the Kyoto commitments. The report we are releasing today is intended to help the negotiators strike the right balance between environmental integrity, global equity, and economic efficiency."

Making the Mechanisms Work

The Kyoto Protocol sets greenhouse gas emissions limits for 38 developed countries, to be achieved by the 2008-2012 time period. Negotiators meeting in Lyon, France, this week are working on detailed rules for implementing the Protocol, including the three Mechanisms. Governments hope to reach agreement at the Sixth Conference of Parties (COP6) in The Hague in November.

A number of countries have proposed limiting the use of the Mechanisms to achieve environmental or equity objectives, such as those preventing the participation of private companies in emissions trading or those restricting substitution among allowances. In addition, the lack of integration among the Mechanisms may inadvertently restrict or bias their use. The extent to which countries avail themselves of the Mechanisms also depends in part on the domestic policies developed countries adopt to meet their commitments.

To avoid the economic efficiency losses that will result if the Mechanisms are restricted in these ways, the report says decision-makers can, without losing environmental benefits:

  • Craft rules that allow substitution among the allowances created by each Mechanism to improve economic efficiency by equating prices across the three Mechanisms;
  • Develop rules for International Emissions Trading that allow legal entities — like private companies, or emissions brokers -- to participate subject to the approval of their national governments;
  • Heed the caution that binding supplementarity rules could increase costs, thereby increasing the risks of noncompliance; and
  • Allow private entities easy access to the Kyoto Mechanisms through domestic cap-and-trade systems, since other domestic mitigation options will diminish the potential economic benefits.

Further, significant penalties for non-compliance and effective enforcement of those penalties are crucial to the environmental integrity of emissions trading. If these penalties are relatively weak, negotiators should adopt a liability rule that is maximally effective in encouraging compliance with a minimal increase in costs or environmental risk.

This report complements two others previously released by the Pew Center: International Emissions Trading & Global Climate Change (1999) and Market Mechanisms & Global Climate Change (1998). A complete copy of this report, and information on all previous Pew reports, is available on the Pew Center's web site, www.c2es.org.

The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is a nonprofit, non-partisan and independent organization dedicated to providing credible information, straight answers and innovative solutions in the effort to address global climate change. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs. The Pew Center includes the Business Environmental Leadership Council, which is composed largely of Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center -- it is solely supported by contributions from charitable foundations.

Press Release: Report Reviews National Climate Change Programs of Five EU Countries and their Kyoto Targets

For Immediate Release :
June 21, 2000

Contact: Juan Cortinas, 202-777-3519
             Katie Mandes, 703-516-4146
             Leonie Edwards, +44 02-07-457-2345 (London)

Report Reviews National Climate Change Programs of Five EU Countries and their Kyoto Targets:   Germany, United Kingdom, The Netherlands, Austria, and Spain Examined

London, UK — Of five European Union countries reviewed in a newly-released report, only the United Kingdom is currently on track to achieve its Kyoto Protocol emissions reduction target. Germany will not achieve its target based on current measures alone but strong political commitment and further measures, including recent proposals put forth by the government, could put the country within reach of its goal. The Netherlands, Austria, and Spain are not expected to meet their Kyoto targets based on their current programs.

The Pew Center on Global Climate Change report, "The European Union and Global Climate Change: A Review of Five National Programmes," is co-authored by John Gummer, MP, former UK Environment Minister and Chairman of Sancroft International Ltd., and Robert Moreland, also of Sancroft, an environmental consulting firm. The report examines the climate change programs of Germany, United Kingdom, The Netherlands, Austria, and Spain, presents the national emissions reduction targets to which the countries committed under the Kyoto Protocol, and draws conclusions on the likelihood of success taking into consideration the political will and obstacles in each country.

"As we approach the third anniversary of the Kyoto Protocol and continue working to address the questions raised but not answered in the agreement, it is worth examining whether these countries are on track to deliver their promised reductions," said Eileen Claussen, President of the Pew Center on Global Climate Change. "This is especially true given the current discussions advocating ratification by 2002."

Following are some country-by-country findings:

Germany
The largest GHG emitter in the EU, Germany's reduction target is 21 percent below its 1990 levels. Emissions are currently 17 percent below, largely due to dramatic reductions in the former East Germany. The main elements of the current program include eco-taxes, voluntary agreements with industry, policies to reduce coal production and use, and to promote co-generation, district heating, natural gas, and renewable energy. Despite likely additional programs and strong political commitment, reductions are unlikely to continue at the same pace, and it will be difficult for Germany to reach its Kyoto target.

United Kingdom
The United Kingdom has committed to reducing its emissions by 12.5 percent below 1990 levels. Emissions are currently down 14.6 percent, due primarily to fuel switching from coal to natural gas, but further switching will have diminishing returns. To stay on track, the UK program encourages renewable energy, co-generation, and district heating; employs eco-taxes to support fuel-efficient vehicles and to reduce domestic fuel use and energy use by businesses (through a revenue-neutral levy); and is working with industry to find ways to introduce an emissions trading system. Deputy Prime Minister John Prescott now has direct responsibility for the issue and his strong personal commitment will help the UK maintain political support for climate change action.

The Netherlands
The Netherlands Kyoto target is to reduce overall emissions 6 percent below 1990 levels. Current CO2 emissions have increased by 17 percent, calling into question the country's ability to meet its target despite its strong political commitment and intention to purchase half its reductions through emissions trading. The government has introduced a wide range of measures but they have not reversed the trend of growing emissions, a result of the high-energy use of its economic base and the country's strong economy.

Austria
Austria's Kyoto Protocol commitment is to reduce greenhouse gas emissions by 13 percent from 1990 levels. Per capita emissions are already low, due to heavy use of hydropower and biomass energy and strong support for public transportation. CO2 emissions have increased by around 8 percent and the government has devised a policy package to reverse this increase. The difficulty lies in the potential for diminishing returns from furthering its renewables, energy savings, and transportation policies; also, public opinion is that Austria has no great problem from most emission sources and consequently could react against tougher measures.

Spain
Because of its need for economic growth and its relatively low level of per capita emissions, Spain's target is to limit its emissions increase to 15 percent above 1990 levels. With current emissions already 11 to 13 percent over, the country is unlikely to meet its target without additional action. Environmental concern in Spain is generally lower than elsewhere in the EU. As the largest net recipient from the EU budget, pressure from net contributor states (particularly Germany, The Netherlands, and the UK) is a lever that may help ensure further action on climate change by the Spanish government.

A complete copy of this report is available on the Pew Center's web site, www.c2es.org.

The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the nation's largest philanthropies and an influential voice in efforts to improve the quality of America's environment. The Pew Center supports businesses in developing marketplace solutions to reduce greenhouse gases, produces analytical reports on the science, economics, and policies related to climate change, launches public education efforts, and promotes better understanding of market mechanisms globally. Eileen Claussen, former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs, is the President of the Pew Center. The Pew Center includes the Business Environmental Leadership Council, which is composed of 21 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center — it is solely supported by contributions from charitable foundations.

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