<<

. 11
( 16)



>>

a challenge and opportunity to the world™s industry to develop important new
technologies “ more of that in Chapter 11. And in all these matters, developed
countries in taking the ¬rst actions (as demanded by the FCCC) need to show the
way to developing countries as they develop their economies.


The Precautionary Principle
Some of these arguments for action are applications of what is often called the
Precautionary Principle, one of the basic principles that was included in the Rio
Declaration at the Earth Summit in June 1992 (see box below). A similar state-
ment is contained in Article 3 of the Framework Convention on Climate Change
(see box on pages 291“2 in Chapter 10).
We often apply the Precautionary Principle in our day-to-day living. We take
out insurance policies to cover the possibility of accidents or losses; we carry out
precautionary maintenance on housing or on vehicles; and we readily accept
that in medicine prevention is better than cure. In all these actions we weigh
up the cost of insurance or other precautions against the possible damage and
conclude that the investment is worthwhile. The arguments are similar as the
Precautionary Principle is applied to the problem of global warming.
In taking out an insurance policy we often have in mind the possibility of
the unexpected. In fact, when selling their policies, insurance companies often
trade on our fear of the unlikely or the unknown, especially of the more devas-
tating possibilities. Although covering ourselves for the most unlikely happen-
ings is not our main reason for taking out the insurance, our peace of mind is
considerably increased if the policy includes these improbable events. In a simi-
lar way, in arguing for action concerning global warming, some have strongly
emphasised the need to guard against the possibility of surprises (see examples
in Table 7.4). They point out that, because of positive feedbacks that are not yet
275
T H E P R E C AU T I O N A RY P R I N C I P L E




well understood (see Chapter 3), the increase of some greenhouse gases could
be much larger than is currently predicted. They also point to the evidence that
rapid changes of climate have occurred in the past (Figures 4.5 and 4.6) pos-
sibly because of dramatic changes in ocean circulation; they could presumably
occur again.
The risk posed by such possibilities is impossible to assess. It is, however, salu-
tary to call attention to the discovery of the ozone ˜hole™ over Antarctica in 1985.
Scienti¬c experts in the chemistry of the ozone layer were completely taken by
surprise by that discovery. In the years since its discovery, the ˜hole™ has substan-
tially increased in depth. Resulting from this knowledge, international action
to ban ozone-depleting chemicals has progressed much more rapidly. Ozone lev-
els are beginning to recover “ full recovery will take about a century. The lesson
for us here is that the climate system may be more vulnerable to disturbance
than we have often thought it to be. When it comes to future climate change, it
would not be prudent to ignore the possibility of surprises.
However, in weighing the action that needs to be taken with regard to future
climate change, although the possibility of surprises should be kept in mind,
that possibility must not be allowed to feature as the main argument for action.
Much stronger in the argument for precautionary action is the realisation that
signi¬cant anthropogenic climate change is not an unlikely possibility but a
near certainty; it is no change of climate that is unlikely. The uncertainties that
mainly have to be weighed lie in the magnitude of the change and the details
of its regional distribution.
An argument that is sometimes advanced for doing nothing now is that by
the time action is really necessary, more technical options will be available.
By acting now, we might foreclose their use. Any action taken now must, of
course, take into account the possibility of helpful technical developments. But
the argument also works the other way. The thinking and the activity gener-
ated by considering appropriate actions now and by planning for more action
later will itself be likely to stimulate the sort of technical innovation that will
be required.
While speaking of technical options, I should brie¬‚y mention possible options
to counteract global warming by the arti¬cial modi¬cation of the environment
(sometimes referred to as geoengineering).11 The suggestion of iron fertilisation
of the oceans was mentioned in Chapter 3. Other proposals have concentrated
on techniques that might reduce the amount of sunlight absorbed by the Earth,
for instance, the installation of mirrors in space to cool the Earth by re¬‚ecting
sunlight away from it; the addition of dust to the upper atmosphere to provide
a similar cooling effect and the alteration of cloud amount and type by adding
cloud condensation nuclei to the atmosphere.12 None of these however has been
276 W E I G H I N G T H E U N C E R TA I N T Y




demonstrated to be either feasible or effective, nor would any of them make
any difference to the problem of increasing acidity of the oceans due to increas-
ing carbon dioxide. Further, they suffer from the serious problem that none of
them would exactly counterbalance the effect of increasing greenhouse gases.
As has been shown, the climate system is far from simple. The results of any
attempt at large-scale climate modi¬cation could not be perfectly predicted
and might not be what is desired. With the present state of knowledge, extreme
caution must be exercised when considering implementation of proposals for
the introduction of arti¬cial climate modi¬cation.
The conclusion from this section “ and the last one “ is that to ˜wait and see™
would be an inadequate and irresponsible response to what we know. That was
recognised over 15 years ago by the FCCC signed in Rio (see box on pages 291“2 in
Chapter 10) in 1992 and has often been reiterated since. Just what the required
action should be is the subject of the next chapter.



Principles for international action
From the three previous sections and from the discussion in Chapter 8, four
distinct principles can be identi¬ed to form the basis of international action.
They are all contained in the Rio Declaration on Environment and Development
(see box below) agreed by over 160 countries at the United Nations Conference
on Environment and Development (the Earth Summit) held in Rio de Janeiro in
1992. They can also be identi¬ed in one form or another in the FCCC (see box on
pages 291“2 in Chapter 10). The Principles (with references to the Principles of
the Rio Declaration and the Articles of the FCCC) are:

• The Precautionary Principle (Principle 15)
• The Principle of Sustainable Development (Principles 1 and 7)
• The Polluter-Pays Principle (Principle 16)
• The Principle of Equity “ International and Intergenerational (Principles 3
and 5).

In the next chapter we shall consider how these principles can be applied.



Some global economics
So far our attempt to balance uncertainty against the need for action has been
considered in terms of issues. Is it possible to carry out the weighing in terms
of cost? In a world that tends to be dominated by economic arguments, quan-
ti¬cation of the costs of action against the likely costs of the consequences of
277
S OM E G LO BA L E CO N OM I C S




inaction must at least be attempted. It is also helpful to put these costs in con-
text by comparing them with other items of global expenditure.
The costs of anthropogenic climate change fall into three parts. Firstly, there
is the cost of the damage due to that change; for instance, the cost of ¬‚ooding
due to sea level rise or the cost of the increase in the number or intensity of
disasters such as ¬‚oods, droughts or windstorms, and so on. Secondly, there
is the cost of adaptation that reduces the damage or the impact of the climate
change. Thirdly, there is the cost of mitigating action to reduce the amount
of climate change. The roles of adaptation and mitigation are illustrated in
Figure 1.5. Because there is already a commitment to a signi¬cant degree of
climate change, a need for signi¬cant adaptation is apparent. That need will
continue to increase through the twenty-¬rst century, an increase that will
eventually be molli¬ed as the effects of mitigation begin to bite. Mitigation is
beginning now but the degree of mitigation that is eventually undertaken will
depend on an assessment of the effectiveness and cost of adaptation. The costs,
disadvantages and bene¬ts of both adaptation and mitigation need therefore to
be assessed and weighed against each other.
The models providing estimates of cost need to include all aspects of the cli-
mate change issue, for instance, interactions between the factors driving cli-
mate change and its impacts both on humans and ecosystems, human activities
that are in¬‚uencing those factors and the response to climate change both of
humans and ecosystems “ in fact all the elements illustrated in Figure 1.5. This
process is often called Integrated Assessment (see box below) and is supported
by Integrated Assessment Models (IAMs) that address all the relevant elements
in as complete a manner as possible.
At the end of Chapter 7, estimates of the cost of damage from global warming
were presented. Many of these estimates also included some of the costs of adap-
tation; in general adaptation costs have not been separately identi¬ed. Many
of these cost estimates assumed a situation for which, resulting from human
activities, the increase in greenhouse gases in the atmosphere was equivalent
to a doubling of the carbon dioxide concentration “ under business-as-usual
this is likely to occur around the middle of the twenty-¬rst century. The esti-
mates were typically in the range 1% to 4% of GDP for developed countries. In
developing countries, because of their greater vulnerability to climate change
and because a greater proportion of their expenditure is dependent on activi-
ties such as agriculture and water, estimates of the cost of damage are greater,
typically in the range 5% to 10% of GDP or more. It was also pointed out in
Chapter 7 that the cost estimates only included those items that could be costed
in money terms. Those items of damage or disturbance for which money is not
an appropriate measure (e.g. the generation of large numbers of environmental
278 W E I G H I N G T H E U N C E R TA I N T Y




The Rio Declaration 1992
The Rio Declaration on Environment and Development was agreed by over 160 countries at the United
Nations Conference on Environment and Development (the Earth Summit) held in Rio de Janeiro in 1992.
Some examples of the 27 principles enumerated in the Declaration are as follows.

Principle 1 Human beings are at the centre of concerns for sustainable development. They are entitled to
a healthy and productive life in harmony with nature.

Principle 3 The right to development must be ful¬lled so as to equitably meet developmental and environ-
mental needs of present and future generations.

Principle 5 All States and all people shall cooperate in the essential task of eradicating poverty as an indis-
pensable requirement for sustainable development, in order to decrease the disparities in standards of
living and better meet the needs of the majority of the people of the world.

Principle 7 States shall cooperate in a spirit of global partnership to conserve, protect and restore the
health and integrity of the Earth™s ecosystem. In view of the different contributions to global environmen-
tal degradation, States have common but differentiated responsibilities. The developed countries acknowl-
edge the responsibility they bear in the international pursuit of sustainable development in view of the
pressures their societies place on the global environment and of the technologies and ¬nancial resources
they command.

Principle 15 In order to protect the environment, the precautionary approach shall be widely applied by
States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full
scienti¬c certainty shall not be used as a reason for postponing cost-effective measures to prevent envi-
ronmental degradation.

Principle 16 National authorities should endeavour to promote the internalisation of environmental costs
and the use of economic instruments, taking into account the approach that the polluter should, in princi-
ple, bear the cost of pollution, with due regard to the public interest and without distorting international
trade and investment.




refugees) also need to be exposed and taken into account in any overall
appraisal.
The longer-term damage, should greenhouse gases more than double in
concentration, is likely to rise somewhat more steeply in relation to the con-
centration of carbon dioxide. For quadrupled equivalent carbon dioxide con-
centration, for instance, estimates of damage cost of the order of two to four
times that for doubled carbon dioxide have been made “ suggesting that the
damage might follow something like a quadratic law relative to the expected
279
S OM E G LO BA L E CO N OM I C S




temperature rise.15 In addition the much larger degree of climate change
would considerably enhance the possibilities of singular events (see Table 7.4),
irreversible change and of possible surprises. The Stern Review (see box in
Chapter 7 on page 227) estimates the cost of continuing with business-as-usual
beyond 2100 as equivalent to a reduction of 5“20% in current per capita con-
sumption now and for ever with a strong likelihood that it will be in the upper
part of that range and with disproportionate losses tending to fall on poorer
countries.
Since the main contribution to global warming arises from carbon dioxide
emissions, attempts have also been made to express these costs in terms of
the cost per tonne of carbon as carbon dioxide emitted from human activities.
This is known as the social cost of carbon. A simple but crude calculation can be
carried out as follows. Consider the situation when carbon dioxide concentra-
tion in the atmosphere has doubled from its pre-industrial value, i.e. when
an additional amount of about 5500 Gt of CO2 (1500 GtC) from anthropogenic
sources has been emitted into the atmosphere (see Figure 3.1 and recall that
about half the carbon dioxide emitted accumulates in the atmosphere). This
carbon dioxide will remain in the atmosphere on average for about 100 years.
Assuming a ¬gure of 3% of global world product (GWP) “ or 2000 billion per
year “ as the cost of the damage due to global warming in that situation, and
assuming also that the damage remains over the 100 years of the lifetime of
carbon dioxide in the atmosphere, the cost per tonne of CO2 turns out to be
about $US36.
Calculations of the cost per tonne of carbon can be made with much more
sophistication by considering that it is the incremental damage cost (that is, the
cost of the damage due to one extra tonne of carbon emitted now) that is really
required and also by allowing through a discount rate for the fact that it is dam-
age some time in the future that is being costed now. Estimates made by differ-
ent economists produced for the IPCC 1995 Report ranged from about $US1.5 to
$US35 per tonne of CO2 ($US5“125 per tonne C).16 For the 2007 Report, the range
of estimates is even greater, the very large range being due to the different
assumptions that have been made.17
The estimates are particularly sensitive to the discount rate that is assumed;
values at the top end of the range have assumed a discount rate of less than 2%;
those at the bottom end have assumed a discount rate of 5% or more.18 The domi-
nant effect of the discount rate will be clear when it is realised that over 50 years
a 2% discount rate devalues costs by a factor of about 3 while a 5% rate discounts
by a factor of 13. Over 100 years the difference is even larger “ a factor of 7 for
a 2% and a factor of 170 for a 5% rate. Amongst economists there has been much
debate but no agreement about how to apply discount accounting to long-term
280 W E I G H I N G T H E U N C E R TA I N T Y




Integrated Assessment and Evaluation13
In the assessment and evaluation of the impacts of different aspects of global climate change with its large
complexity, it is essential that all components are properly addressed. The major components are illustrated
in Figure 1.5. They involve a very wide range of disciplines from natural sciences, technology, economics
and the social sciences (including ethics). Take the example of sea level rise “ probably the easiest impact
to envisage and to quantify. From the natural sciences, estimates can be made of the amount and rate
of rise and its characteristics. From various technologies, options for adaptation can be proposed. From
economics and the social sciences, risks can be assessed and evaluated. The economic costs of sea level
rise might be expressed, for instance, most simply as the capital cost of protection (where protection is
possible) plus the economic value of the land or structures that may be lost plus the cost of rehabilitating
those persons that would be displaced. But in practice the situation is more complex. For a costing to be
at all realistic, especially when it is to apply to periods of decades into the future, it must account not only
for direct damage and the cost of protection but also for a range of options and possibilities for adapta-
tion other than direct protection. The likelihood of increased storm surges with the consequent damages
and the possibility of substantial loss of life need also to be addressed. Further, there are other indirect
consequences; for instance, the loss of fresh water because of salination, the loss of wetlands and associ-
ated ecosystems, wildlife or ¬sheries and the lives and jobs of people that would be affected in a variety of
ways. In developed country situations rough estimates of the costs of some of these components can be
made in money terms. For developing countries, however, the possible options can less easily be identi¬ed
or weighed and even rough estimates of costs cannot be provided.
Integrated Assessment Models or IAMs are important tools for Integrated Assessment and Evaluation.
They represent within one integrated numerical model the physical, chemical and biological processes that
control the concentration of greenhouse gases in the atmosphere, the physical processes that determine
the effect of changing greenhouse gas concentrations on climate and sea level, the biology and ecology
of ecosystems (natural and managed), the physical and human impacts of climate change and the socio-
economics of adaptation to and mitigation of climate change. Such models are highly sophisticated and
complex although their components are bound to be very simpli¬ed. They provide an important means for
studying the connections and interactions between the various elements of the climate change problem.
Because of their complexity and because of the non-linear nature of many of the interactions, a great deal
of care and skill is needed in interpreting the results from such models.
A number of the components of impact, even for the relatively simple situation of sea level rise, cannot be
readily costed in money terms. For instance, the loss of ecosystems or wildlife as it impacts tourism can be
expressed in money terms, but there is no agreed way of setting a money measure for the longer-term loss or
the intrinsic value of unique systems. Or a further example is that, although the cost of rehabilitation for dis-
placed people can be estimated, other social, security or political consequences of displacement (e.g. in extreme
cases the loss of whole islands or even whole states) cannot be costed in terms of money. Any appraisal there-
fore of impacts of anthropogenic climate change will have to draw together components that are expressed in
different ways or use different measures. Policy-and decision-makers need to ¬nd ways of considering alongside
each other all the components that need to be aggregated in order to make appropriate judgements.14
281
S OM E G LO BA L E CO N OM I C S




problems of this sort or about what rate is most appropriate. However, as Partha
Dasgupta points out, ˜the disagreement is not about economics nor about social
cost“bene¬t analysis nor even about the numeracy of fellow scientists™,19 but is in
fact more fundamental. He explains that the effects of carbon emissions could
bring such large negative perturbations to future economies that the basis is
threatened on which discount rates for future investment are set. Further, there
are the likely damages that cannot easily be valued in money terms such as the
large-scale loss of land “ or even of whole countries “ due to sea level rise or the
large-scale loss of habitats or species. For these, even if valuation is attempted,
discounting seems inappropriate. The Stern Review also believes discounting to
be inappropriate and argues that the welfare of future generations should be
considered on the same basis as the welfare of the current generation.20 This is
an example of an ethical question raised by the discounting process. Professor
John Broome of Oxford points out that discounting is not only concerned with
economics but also brings into play ethical questions that cannot be avoided
“ although they are frequently ignored.21 If discount rates are to be applied at
all to cost estimating for climate change, there seem cogent arguments that
a smaller discount rate rather than a larger one should be employed. And in
any case, for any cost estimate that is made the discount rate used should be
adequately exposed.
After a thorough discussion of the factors in¬‚uencing the social cost of
carbon, the Stern Review, working with the PAGE 2002 IAM and a business-
as-usual (BAU) scenario, estimates its value as around $US85 per tonne of
CO2.22 The Review also points out that the social cost of carbon will rise with
time (as damage increases with time) and at any one time is dependent on
the future emissions trajectory (Figure 9.3); for a stabilisation scenario (see
Chapter 10, page 311), for instance at 550 ppm CO2e it would be considerably
less at around $US30 per tonne of CO2e and at 450 ppm CO2e about $US25 per
tonne CO2e. For our broad economic arguments in later chapters we shall use
estimates of the social cost of carbon in the range $US25 to $US50 per tonne
CO2e.
To slow the onset of climate change and to limit the longer-term damage, mit-
igating action can be taken by reducing greenhouse gas emissions, in particular
the emissions of carbon dioxide. The cost of mitigation depends on the amount
of reduction required in greenhouse gas emissions; large reductions will cost
proportionately more than small ones. It will also depend on the timescale of
reduction. To reduce emissions drastically in the very near term would inevi-
tably mean large reductions in energy availability with signi¬cant disruption
to industry and large cost. However, less drastic reductions can be made with
relatively small cost through actions of two kinds. Firstly, substantial ef¬ciency
282 W E I G H I N G T H E U N C E R TA I N T Y



Social cost of Marginal abatement
carbon costs Technical progress
in abatement
lowers the
marginal cost
curve




Time Emissions
reductions

Figure 9.3 The social cost of carbon, marginal abatement costs and emissions reductions. Up to the
long-term stabilisation goal, the social cost of carbon will rise over time because marginal costs do so.
This is because damage costs tend to rise more rapidly than global average temperature. Abatement costs
are illustrated schematically in the right-hand part of the ¬gure. Over time, technical progress will reduce
the total cost of any particular level of abatement, so that at any given price there will be more emis-
sion reductions. The dashed lines illustrate how the path for the social cost of carbon drives the extent of
abatement.




gains in the use of energy can easily be achieved, many of which would lead
to cost savings; these can be put into train now. Secondly, in the generation
of energy, again proven technology exists for substantial ef¬ciency improve-
ments and also for bringing into use sources of energy generation that are not
dependent on fossil fuels. These can be planned for now and changes made as
energy infrastructure is replaced or new infrastructure constructed. The next
two chapters will present more detail about these possible actions and how they
might be achieved.
What about the cost of mitigation? Much of it will arise in the energy or trans-
port sectors as cheap fossil fuels are replaced by other energy sources that, at
least in the short term, are likely to be more expensive. Some detail is provided
in the next chapter of the pro¬le of emissions reductions required to stabilise
concentrations of greenhouse gases in the atmosphere at different levels espe-
cially at 550 or 450 ppm CO2e (for de¬nition of equivalent carbon dioxide, i.e.
CO2e, see Chapter 6, page 147). To stabilise at 550 ppm CO2, a reduction by 2050
of global carbon dioxide emissions back to about 1990 levels would be required
(Figure 10.3). The Stern Review estimates the annual cost to the developed world
economies of such reductions will be around 1% of GDP.23 As quoted by Stern
and by the IPCC, estimates from all sources of this annual cost span a range
from minus 1% to around 4% with a mean of about 1%. This large range signi¬es
283
S OM E G LO BA L E CO N OM I C S




the large uncertainties in the assumptions that have to be made. As might be
expected, the cost is substantially dependent on the target level of carbon diox-
ide concentration stabilisation. For a 450 ppm stabilisation level the mitigation
costs will be higher and a reduction by 2050 of global carbon dioxide emissions
by about 60% from 1990 levels will be required. For levels in the range 445 to
535 ppm CO2e the IPCC AR4 report24 cites estimates of less than 5.5% of GDP for
mitigation costs by 2050. With typical levels of economic growth being between
2% and 4% per year, the cost of achieving reductions to meet any stabilisation
levels mentioned, even as low as 445 ppm CO2e, is less than the equivalent of
about two years™ economic growth over 50 years.
Although the economic studies on which these estimates are based have taken
into account many of the relevant factors, they are bound to be surrounded by
substantial uncertainty “ as is illustrated by the large range in the estimates
quoted. Some of the more dif¬cult factors to take into account are some that
contribute to lower costs25 such as the economic effects of introducing new
low-emission technologies, new revenue-raising instruments, adequate inter-re-
gional ¬nancial and technology transfers and likely future innovation. For the
last of these, it is not easy to peer into the crystal ball of technical development;
almost any attempt to do so is likely to underestimate its potential. For these
reasons the estimates of mitigation cost are almost certainly on the high side.
How do these mitigation (or abatement) costs compare with the damage costs
we listed earlier? Compared with the damage costs assuming a BAU trajectory
with no signi¬cant action being taken this century, they are much less. They
are more comparable with the likely damage cost for lower scenarios. However,
recalling the warnings, for instance in the Stern Review, that monetary esti-
mates only represent part of the story of the damage costs, mitigation costs
appear modest compared with the likely overall damage if little or no mitigat-
ing action is taken. The right-hand part of Figure 9.3 is a schematic showing
curves of marginal abatement cost (the cost of reducing by one unit of emissions
at the margin). These curves rise with emissions reductions as the reductions
that are cheaper to achieve will be carried out ¬rst. The ¬gure illustrates how
abatement cost might be related to the social cost of carbon. However, in prac-
tice because of the large uncertainties in future estimates both of damages and
abatement costs, factors in addition to money cost estimates will tend to deter-
mine the extent of mitigation that is planned or achieved.
However, it should be noted that, even if the carbon dioxide concentration is
stabilised at 450 ppm CO2e, the world will have been committed to a very signif-
icant degree of climate change, bringing with it substantial costs and demands
for adaptation. What is being mitigated is further and even more damaging
climate change.
284 W E I G H I N G T H E U N C E R TA I N T Y




Nature™s view of the key meeting to ¬nalise the second IPCC report. Scienti¬c integrity and political and
environmental agendas met to thrash out and ¬nally agree on the report, the results of which fed into the
Kyoto Protocol. Left to right: Professor Bolin (¬rst Chair of IPCC), myself, and Dr Gylvan Meira of Brazil,
(Co-Chair of the science working group in 1995) are taking the temperature of a sick Earth with a clinical
thermometer!



In considering the costs of the impacts of both global warming and adaptation
or mitigation, ¬gures of a small percentage of GDP have been mentioned. It is
interesting to compare this with other items of expenditure in national or per-
sonal budgets. In a typical developed country, for example the United Kingdom,
about 5% of national income is spent on the supply of primary energy (basic
fuel such as coal, oil and gas, fuel for electricity supply and fuel for transport),
about 9% on health and 3“4% on defence. It is, of course, clear that global warm-
ing is strongly linked to energy production “ it is because of the way energy
is provided that the problem exists “ and this subject will be expanded in the
next two chapters. But the impacts of global warming also have implications for
health “ such as the possible spread of disease “ and for national security “ for
example, the possibility of wars fought over water, or the impact of large num-
bers of environmental refugees. Any thorough consideration of the economics
of global warming needs therefore to assess the strength of these implications
and to take them into account in the overall economic balance.
285
S UM M A RY




So far, on the global warming balance sheet we have estimates of costs and of
bene¬ts or drawbacks. What we do not have as yet is a capital account. Valuing
human-made capital is commonplace, but in the overall accounting we are
attempting, ˜natural™ capital must clearly be valued too. By ˜natural™ capital is
meant, for instance, natural resources that may be renewable (such as a forest)
or non-renewable (such as coal, oil or minerals).26 Their value is clearly more
than the cost of exploitation or extraction.
Other items, some of which were mentioned at the end of Chapter 7, such as
natural amenity and the value of species, can also be considered as ˜natural™ cap-
ital. I have argued (Chapter 8) that there is intrinsic value in the natural world “
indeed, the value and importance of such ˜natural™ capital is increasingly rec-
ognised. The dif¬culty is that it is neither possible nor appropriate to express
much of this value in money. Despite this dif¬culty, it is now widely recognised
that national and global indicators of sustainable development should be pre-
pared that include items of ˜natural™ capital and ways of including such items in
national balance sheets are being actively pursued.




SUMM ARY

This chapter has been considering how uncertainty concerning future cli-
mate change is weighed against the costs of the likely damage due to climate
change, of adaptation and of mitigation action. Its conclusions can be sum-
marised as follows:
• The four comprehensive IPCC assessments since 1990 have provided
increasingly accurate and detailed information about the climate change
occurring now and likely future change “ although substantial uncertainties
still remain.
• Four principles for international action have been identi¬ed: the Precautionary
Principle, the Principle of Sustainable Development, the Polluter-Pays
Principle and the Principle of Equity.
• In assessing costs the following items in the climate change balance sheet
have been identi¬ed as follows:
(1) Due to damage from the impacts of climate change by 2050, loss in GDP
in developed countries has been estimated as typically in the range 1% to
4% of GDP and of 5% to 10% or more in many developing countries.
(2) Climate change impacts that cannot be valued in money terms; for
instance, those with social consequences or that affect human amenity
286 W E I G H I N G T H E U N C E R TA I N T Y




or ˜natural™ capital or those with implications for national security. For
instance, it is estimated that there could be over 150 million environ-
mental refugees by 2050.
(3) The cost of adaptation to anthropogenic climate change. As climate
change is beginning to be realised, planning for adaptation is urgently
required that in some areas and sectors will lead to substantial cost.
(4) The costs of mitigation of anthropogenic climate change. Providing
mitigation action is pursued urgently and properly planned, for reduc-
tions in emissions leading to stabilisation of atmospheric carbon dioxide
concentration mitigation costs are typically less than one or two year™s
economic growth by 2050 “ considerably less than estimates of climate
change damage in (1) above.
(5) Re¬nements of all the above estimates and the assumptions on which
they are based in the above list are urgently required.

The next chapter will consider some of the actions in more detail in the light
of the principles we have enunciated in this chapter and in the context of the
international FCCC.



QU
Q U E S TI O N S
1 It is sometimes argued that, in scienti¬c enquiry, ˜consensus™ can never be
achieved, because debate and controversy are fundamental to the search
for scienti¬c truth. Discuss what is meant by ˜consensus™ and whether you
agree with this argument. Do you think the IPCC Reports have achieved
˜consensus™?
2 How much do you think the value of IPCC Reports depends on (1) the peer
review process to which they have been subjected, and (2) the involvement
of governments in the presentation of scienti¬c results?
3 Look out as many de¬nitions of ˜sustainable development™ as you can ¬nd.
Discuss which you think is the best.
4 Make a list of appropriate indicators that might be used to assess the degree
to which a country is achieving sustainable development. Which do you
think might be the most valuable?
5 Work out the value of a ˜cost™ today if it is 20, 50 or 100 years into the
future and the assumed discount rate is 1%, 2% or 5%. Look up and sum-
marise the arguments for discounting future costs as presented for instance
in the Stern Review and various chapters of the IPCC Reports. What do you
think is the most appropriate discount rate to use?
287
FURTHER READING AND REFERENCE




6 Construct, as far as you are able, a set of environmental accounts for your
country including items of ˜natural™ capital. Your accounts will not necessar-
ily be all in terms of money.
7 List, with as much detail as you can, the mitigation action that is being
undertaken by your country. What are the factors that determine the
extent of this mitigation action. Is enough being done by your country? If
you think not, how could it be increased?
8 Because of continuing economic growth, there is an expectation that the
world will be very much richer by the middle of the twenty-¬rst century
and therefore, it is sometimes argued, in a better position than now to
tackle the impacts or the mitigation of climate change. Do you agree with
this argument?
9 Gross National Product (GNP) is commonly employed to measure the
health of a national economy. But it is commonly accepted that, in provid-
ing a relatively crude measure of economic growth, it fails to take account
of many important factors such as human welfare, quality of life, use of
irreplaceable resources etc. Investigate other measures that have been
proposed to assess and compare national economies. Would you judge any
of them to be more valuable than GNP for policymakers to use as a general
measure of economic health and performance?
10 Look up information on proposals for possible geoengineering options to
mitigate climate change “ for instance in the volume cited in Note 12. Make
an appraisal of these options particularly considering their likely effective-
ness and the possibilities of unwanted or negative effects on climate or
society that might also result from their introduction.




FURTHER READING AND REFERENCE
IPCC AR4 Climate Change 2007 Synthesis Report
Metz, B., Davidson, O., Bosch, P., Dave, R., Meyer, L. (eds.) 2007. Climate Change 2007:
Mitigation of Climate Change. Contribution of Working Group III to the Fourth
Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge:
Cambridge University Press.
Technical Summary
Chapter 2 Framing issues (e.g. links to sustainable development, integrated
assessment)
Chapter 3 Issues relating to mitigation in the long-term context
Chapter 12 Sustainable development and mitigation
288 W E I G H I N G T H E U N C E R TA I N T Y




Stern, N. 2006. The Economics of Climate Change. Cambridge: Cambridge University
Press. The Stern Review: especially Chapters 3 to 6 in Part II on the cost of climate-
change impacts.
Framework Convention on Climate Change (FCCC): www.unfccc.int.
Pew Centre on Global Climate Change: www.pewclimate.org.
The Climate Group: www.climategroup.org.




N OTE S F O R C HA P TE R 9
Bruce, J., Hoesung Lee, Haites, E. (eds.) 1996. Climate
1 Houghton, J. T., Jenkins, G. J., Ephraums, J. J. (eds.)
Change 1995: Economic and Social Dimensions of Climate
1990. Climate Change: The IPCC Scienti¬c Assessments.
Change. Cambridge: Cambridge University Press.
Cambridge: Cambridge University Press, p. 365;
Houghton, J. T., Ding, Y., Griggs, D. J., Noguer,
Executive Summary, p. xii. Similar but more
M., van der Linden, P. J., Dai, X., Maskell, K.,
elaborate statements are in the 1995, 2001 and 2007
Johnson, C. A. (eds.) 2001. Climate Change 2001: The
IPCC Reports.
Scienti¬c Basis. Contribution of Working Group I to
2 For a detailed description of how the output from
the Third Assessment Report of the Intergovernmental
climate models can be combined with other
Panel on Climate Change. Cambridge: Cambridge
information in climate studies see Mearns, L. O.,
University Press.
Hulme, M. et al. 2001. Climate scenario development.
McCarthy, J. J., Canziani, O., Leary, N. A.,
In Houghton, J. T., Ding, Y., Griggs, D. J., Noguer, M.,
Dokken, D. J., White, K. S. (eds.) 2001. Climate
van der Linden, P. J., Dai, X., Maskell, K., Johnson, C. A.
Change 2001: Impacts, Adaptation and Vulnerability.
(eds.) 2001. Climate Change 2001: The Scienti¬c Basis.
Contribution of Working Group II to the Third
Contribution of Working Group I to the Third Assessment
Assessment Report of the Intergovernmental Panel on
Report of the Intergovernmental Panel on Climate Change.
Climate Change. Cambridge: Cambridge University
Cambridge: Cambridge University Press, Chapter 13.
Press.
3 For an overview of the history of the IPCC see Bolin, B.
Metz, B., Davidson, O., Swart, R., Pan, J.
2007. A History of the Science and Politics of Climate Change.
(eds.) 2001. Climate Change 2001: Mitigation.
Cambridge: Cambridge University Press.
Contribution of Working Group III to the Third
4 Houghton et al. (eds.) Climate Change: The IPCC
Assessment Report of the Intergovernmental Panel
Scienti¬c Assessment; Tegart, W. J. McG., Sheldon, G. W.,
on Climate Change. Cambridge: Cambridge
Grif¬ths, D. C. (eds.) 1990. Climate Change: The IPCC
University Press.
Impacts Assessment. Canberra: Australian Government
Solomon, S., Qin, D., Manning, M., Marquis, M., Averyt,
Publishing Service.
K., Tignor, M. M. B., Miller, H. L. Jr, Chen, Z. (eds.),
Houghton, J. T., Meira Filho, L. G., Callander, B. A.,
2007. Climate Change 2007: The Physical Science Basis.
Harris, N., Kattenberg, A., Maskell, K. (eds.) 1996.
Contribution of Working Group I to the Fourth Assessment
Climate Change 1995: The Science of Climate Change.
Report of the Intergovernmental Panel on Climate Change.
Cambridge: Cambridge University Press.
Cambridge: Cambridge University Press.
Watson, R. T., Zinyowera, M. C., Moss, R. H. (eds.)
Parry, M., Canziani, O., Palutikof, J., van der Linden, P.,
1996. Climate Change 1995: Impacts, Adaptations
Hanson, C. (eds.) 2007. Climate Change 2007:
and Mitigation of Climate Change: Scienti¬c“Technical
Impacts, Adaptation and Vulnerability. Contribution of
Analyses. Contribution of Working Group II to the Second
Working Group II to the Fourth Assessment Report of the
Assessment Report of the Intergovernmental Panel on
Intergovernmental Panel on Climate Change. Cambridge:
Climate Change. Cambridge: Cambridge University
Cambridge University Press.
Press.
289
N OT E S F O R C H A P T E R 9



Metz, B., Davidson, O., Bosch, D., Dave, R., Meyer, L. 16 Summary for policymakers, in Bruce et al. (eds.),
(eds.) 2007. Climate Change 2007: Mitigation of Climate Climate Change 1995: Economic and Social Dimensions.
Change, Contribution of Working Group III to the Fourth 17 Chapter 3, page 232, in Metz et al. (eds.) Climate
Assessment Report of the Intergovernmental Panel on Climate Change 2007: Mitigation.
Change. Cambridge: Cambridge University Press. 18 Cline argues for a low rate (Cline, W. R. 1992. The
5 See also Houghton, J. T. 2002. An overview of the IPCC Economics of Global Warming. Washington, DC:
and its process of science assessment. In Hester, R. E., Institute for International Economics, Chapter 6), as
Harrison, R. M. (eds.) Global Environmental Change, does S. Fankhauser (Valuing Climate Change, London:
Issues in Environmental Science and Technology, Earthscan, 1995). Nordhaus (Nordhaus, W. R. 1994.
No. 17. Cambridge: Royal Society of Chemistry. Managing the Global Commons: The Economics of Climate
6 For an account of the ˜denial industry™ see Monbiot, Change. Cambridge, Mass.: MIT Press) has used rates
G. 2007. Heat: How to Stop the Planet Burning. London: in the range of 5% to 10%; see also Tol, R. S. J. 1999.
Allen Lane, Chapter 2. The marginal costs of greenhouse gas emissions.
7 See Climate Change Controversies: A Simple Guide The Energy Journal, 20, 61“8.
published by the Royal Society, http://royalsociety. 19 Dasgupta, P. 2001. Human Well-Being and the Natural
org/document.asp?id=6229 Environment. Oxford: Oxford University Press,
8 The Academies of Science 2005 statement can p. 184; see also pp. 183“91; see also Markhndya, A.,
be found on http://royalsociety.org/document. Halsnaes, K. et al. Costing methodologies. Chapter 7,
asp?id=3222. in Metz et al. (eds.), Climate Change 2001: Mitigation.
9 De¬ned on page 143 in Chapter 6. 20 Stern, N. 2007. The Economics of Climate Change.
10 Address to the Energy and Environment Ministerial Cambridge: Cambridge University Press, pp. 35“7.
Round Table, 15 March 2005. 21 Broome, J. 2008. The ethics of climate change.
11 See Section 11.2.2, in Metz et al. (eds.) Climate Change Scienti¬c American, 298, 69“73.
2007: Mitigation. 22 Stern, Economics of Climate Change, p. 344.
12 For more information, see Lauder, B., Thompson, 23 Ibid., p. 239.
M. (eds.) 2008. Geoscale Engineering to Avert Dangerous 24 Table SPM 7 and Figure 3.25, in Metz et al. (eds.)
Climate Change. London: Royal Society (an issue of Climate Change 2007: Mitigation.
Philosophical Transactions of the Royal Society). 25 Further detail in Hourcade, J.-C., Shukla, P. et al .
13 Weyant, J. et al. Integrated assessment of climate 2001. Global regional and national costs and
change. In Bruce et al. (eds.), Climate Change 1995: ancillary bene¬ts of mitigation. Chapter 8; in
Economic and Social Dimensions, Chapter 10; also, Metz et al . (eds.), Climate Change 2001: Mitigation;
Chapters 2 and 3, in Parry et al. (eds.) Climate Change see also Metz et al . (eds.) Climate Change 2007:
2007; Impacts. Mitigation .
14 A full discussion of such integrated appraisal can 26 For a discussion of this issue see Daly, H. E. 1993.
be found in 21st Report of the UK Royal Commission From empty-world economics to full-world
on Environmental Pollution. London: Her Majesty™s economics: a historical turning point in economic
Stationery Of¬ce, 1998. development. In Ramakrishna, K., Woodwell, G. M.
15 Pearce, D. W. et al., Chapter 6, in Bruce et al. (eds.), (eds.) World Forests for the Future. New Haven, Conn.:
Climate Change 1995: Economic and Social Dimensions. Yale University Press, pp. 79“91.
A strategy for action to slow
10 and stabilise climate change




Amazon rainforest canopy.



F OLLOWING THE awareness of the problems of climate change aroused by the IPCC scienti¬c
assessments, the necessity of international action has been recognised. In particular, an Objective
has been agreed to stabilise the concentrations of greenhouse gases in the atmosphere so as to
eventually stabilise the climate. Nations or groups of nations are already pledging to substantial
emissions reductions between now and 2050. What has yet to be agreed is the target level of
stabilisation. In this chapter I discuss what target levels should be the aim and the actions that will be
necessary to achieve them.
291
TH E C L I M AT E CO N V E N T I O N




The Climate Convention
The United Nations Framework Convention on Climate Change (FCCC) signed
by over 160 countries at the United Nations Conference on Environment and
Development held in Rio de Janeiro in June 1992 came into force on 21 March
1994. It has set the agenda for action to slow and stabilise climate change. The
signatories to the Convention (some of the detailed wording is presented in the
box below) recognised the reality of global warming, recognised also the uncer-
tainties associated with current predictions of climate change, agreed that
action to mitigate the effects of climate change needs to be taken and pointed
out that developed countries should take the lead in this action.
The Convention mentions one particular aim concerned with the relatively
short-term and one far-reaching objective. The particular aim is that devel-
oped countries (Annex I countries in Climate Convention parlance) should
take action to return greenhouse gas emissions, in particular those of carbon
dioxide, to their 1990 levels by the year 2000. The long-term objective of the



Some extracts from the United Nations Framework Convention
on Climate Change, signed by over 160 countries in
Rio de Janeiro in June 1992
Firstly, some of the paragraphs in its preamble, where the parties to the Convention:
CONCERNED that human activities have been substantially increasing the atmospheric concentration of
greenhouse gases, that these increases enhance the natural greenhouse effect, and that this will result on
average in an additional warming of the Earth™s surface and atmosphere and may adversely affect natural
ecosystems and humankind.
NOTING that the largest share of historical and current global emissions of greenhouse gases has origi-
nated in developed countries, that per capita emissions in developing countries are still relatively low and
that the share of global emissions originating in developing countries will grow to meet their social and
development needs.
RECOGNISING that various actions to address climate change can be justi¬ed economically in their own
right and can also help in solving other environmental problems.
RECOGNISING that low-lying and other small island countries, countries with low-lying coastal, arid
and semi-arid areas or areas liable to ¬‚oods, drought and deserti¬cation, and developing countries with
fragile mountainous ecosystems are particularly vulnerable to the adverse effects of climate change.
AFFIRMING that responses to climate change should be coordinated with social and economic devel-
opment in an integrated manner with a view to avoiding adverse impacts on the latter, taking into full
account the legitimate priority needs of developing countries for the achievement of sustained economic
growth and the eradication of poverty.
292 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




Continued

DETERMINED to protect the climate system for present and future generations, have AGREED as
follows:
The Objective of the Convention is contained in Article 2 and reads as follows:

The ultimate objective of this Convention and any related legal instruments that the Conference of
the Parties may adopt is to achieve, in accordance with the relevant provisions of the Convention,
stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent
dangerous anthropogenic interference with the climate system. Such a level should be achieved
within a time-frame suf¬cient to allow ecosystems to adapt naturally to climate change, to ensure
that food production is not threatened and to enable economic development to proceed in a
sustainable manner.

Article 3 deals with principles and includes agreement that the Parties:

take precautionary measures to anticipate, prevent or minimize the causes of climate change and
mitigate its adverse effects. Where there are threats of serious or irreversible damage, lack of
full scienti¬c certainty should not be used as a reason for postponing such measures, taking into
account that policies and measures to deal with climate change should be cost-effective so as to
ensure global bene¬ts at the lowest possible cost.

Article 4 is concerned with Commitments. In this article, each of the signatories to the Convention agreed:

to adopt national policies and take corresponding measures on the mitigation of climate change,
by limiting its anthropogenic emissions of greenhouse gases and protecting and enhancing its
greenhouse sinks and reservoirs. These policies and measures will demonstrate that developed
countries are taking the lead in modifying longer-term trends in anthropogenic emissions consist-
ent with the objective of the Convention, recognising that the return by the end of the present
decade to earlier levels of anthropogenic emissions of carbon dioxide and other greenhouse gases
not controlled by the Montreal Protocol would contribute to such modi¬cation¦

Each signatory also agreed:

in order to promote progress to this end ¦ to communicate ¦ detailed information on its policies
and measures referred to above, as well as on its resulting projected anthropogenic emissions by
sources and removals by sinks of greenhouse gases not covered by the Montreal Protocol ¦ with
the aim of returning individually or jointly to their 1990 levels these ¦ emissions ¦


Convention, expressed in Article 2, is that the concentrations of greenhouse
gases in the atmosphere should be stabilised ˜at a level which would prevent
dangerous anthropogenic interference with the climate system™, the stabilisa-
tion to be achieved within a time-frame suf¬cient to allow ecosystems to adapt
293
S TA B I L I S AT I O N O F E M I S S I O N S




naturally to climate change, to ensure that food production is not threatened
and to enable economic development to proceed in a sustainable manner. In set-
ting this objective, the Convention has recognised that it is only by stabilising
the concentration of greenhouse gases (especially carbon dioxide) in the atmos-
phere that the rapid climate change which is expected to occur with global
warming can be halted.
Up to the end of 2008, 14 sessions of the Conference of the Parties to the
Climate Convention have taken place. Those since November 1997 have largely
been concerned with the Kyoto Protocol, the ¬rst formal binding legislation
promulgated under the Convention. The following paragraphs will ¬rst outline
the actions taken so far, then describe the Kyoto Protocol and address the further
actions necessary to satisfy the Convention™s objective to stabilise greenhouse
gas concentrations. Options for the energy and transport sectors to achieve the
reductions in emissions required will be described in Chapter 11.


Stabilisation of emissions
The target for short-term action proposed for developed countries by the
Climate Convention was that, by the year 2000, greenhouse gas emissions
should be brought back to no more than their 1990 levels. In the run-up to the
Rio conference, before the Climate Convention was formulated, many devel-
oped countries had already announced their intention to meet such a target
at least for carbon dioxide. They would do this mainly through energy-saving
measures, through switching to fuels such as natural gas, which for the same
energy production generates 40% less carbon dioxide than coal and 25% less
than oil. In addition those countries with traditional heavy industries (e.g. the
iron and steel industry) were experiencing large changes which signi¬cantly
reduce fossil fuel use. More detail of these energy-saving measures are given in
the next chapter, which is devoted to a discussion of future energy needs and
production.
Despite the Climate Convention target, by the year 2000, compared with 1990,
global emissions from fossil fuel burning had risen by about 11%. There was
great variation between the emissions from different countries. In the USA they
rose by 17%, in the rest of the OECD (Organization for Economic Cooperation
and Development) they rose on average by 5%. Emissions in countries in the
former Soviet Union (FSU “ also often called Economies in Transition) fell by
around 40% because of the collapse of their economies, while the total of emis-
sions from developing countries increased by nearly 40%. Since 2000, global
emissions from fossil fuel burning have continued to rise at an average of about
3% per year.
294 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




As we shall learn later in the chapter, stabilisation of carbon dioxide emis-
sions would not lead in the foreseeable future to stabilisation of atmospheric
concentrations. Stabilisation of emissions could only be a short-term aim. In the
longer term much more substantial reductions of emissions are necessary.


The Montreal Protocol
The chloro¬‚uorocarbons (CFCs) are greenhouse gases whose emissions into
the atmosphere are already controlled under the Montreal Protocol on ozone-
depleting substances. This control has not arisen because of their potential as
greenhouse gases, but because they deplete atmospheric ozone (see Chapter 3).
Emissions of CFCs have fallen sharply during the last few years and the growth
in their concentrations has slowed; for some CFCs a slight decline in their con-
centration is now apparent. The phase-out of their manufacture in industrial-
ised countries by 1996 and in developing countries by 2006 as required by the
1992 amendments to the Montreal Protocol will ensure that the pro¬le of their
atmospheric concentration will continue to decline. However, because of their
long life in the atmosphere this decline will be slow; it will be a century or more
before their contribution to global warming is reduced to a negligible amount.
The replacements for CFCs “ the hydrochloro¬‚uorocarbons (HCFCs), which
are also greenhouse gases though less potent than the CFCs “ are required to
be phased out by 2030. It will probably be close to that date before their atmos-
pheric concentration stops rising and begins to decline.
Because of the international agreements that now exist for control of the
production of the CFCs and many of the related species that contribute to the
greenhouse effect, for these gases the stabilisation of atmospheric concentra-
tion required by the Climate Convention will in due course be achieved.
Other replacements for CFCs are the hydro¬‚uorocarbons (HFCs), which are
greenhouse gases but not ozone-depleting. The controls of the Montreal Protocol
do not therefore apply and, as was mentioned in Chapter 3, any substantial
growth in HFCs needs to be evaluated along with the other greenhouse gases.
As we shall see in the next section, they are included in the ˜basket™ of green-
house gases addressed by the Kyoto Protocol.


The Kyoto Protocol
At the ¬ rst meeting after its entry into force held in Berlin in 1995, the
Parties to the Climate Convention (i.e. all the countries that had rati¬ed it)
decided that they needed to negotiate a more speci¬c and quanti¬ed agree-
ment than the Convention on its own provided. Because of the principle in
295
T H E K YOTO P R OTO C O L




the Convention that industrialised countries should take the lead, a Protocol
was formulated that required commitments from these countries (known as
Annex I countries) for speci¬c quantitative reductions in emissions (listed in
Table 10.1) from their level in 1990 to their average from 2008“12, called the
¬ rst commitment period. The Protocol also required that a second commit-
ment period be de¬ ned. Negotiations began at the Montreal meeting in late
2005 with the aim of completing arrangements in time for a smooth transi-
tion between the ¬ rst and second periods. The Protocol carries inbuilt mecha-
nisms that could lead to stronger action and be expanded over time to include
developing countries.
The basic structure of the Protocol and the commitments required by differ-
ent countries were agreed at a meeting of the Conference of the Parties in Kyoto
in November 1997. But the Protocol is a highly complex agreement and over the
next three years intense negotiations followed regarding the details “ the range
of gases covered, the basis for comparing them and the rules for monitoring,
reporting and compliance. Further the Protocol incorporates a range of mech-
anisms (see box below) of a kind that are unprecedented in an international
treaty and that enable countries to offset their domestic emission obligations
against the absorption of emissions by ˜sinks™ (e.g. through forestation “ see next
section) or by investment in or trading with other countries where it might be
cheaper to limit emissions.
The emissions controlled by the Protocol are from six greenhouse gases
(Table 10.2 and Figure 10.1) that can be converted into an amount of carbon
dioxide equivalent through the use of their global warming potentials (GWPs)
which were introduced in Chapter 3, page 63.
The details of the Protocol were ¬nally agreed at a meeting of the Conference
of the Parties in Marrakesh in October“November 2001. Much of the detailed
discussion related to the inclusion of carbon sinks, especially from forests and
from land-use change. Because of the large uncertainties regarding the magni-
tude of such sinks, considerable doubts were expressed regarding their inclu-
sion in the Protocol arrangements. However, it was agreed that they should be
included in a limited way and detailed regulations were agreed concerning the
inclusion of afforestation, reforestation and deforestation activities and certain
kinds of land-use change. Capping arrangements were also set up that limit the
extent to which removals of carbon dioxide from these activities are allowed to
offset emissions elsewhere.1
`Before the Marrakesh meeting in 2001 the United States had announced
its withdrawal from the Protocol. Despite this by the end of 2003, 120 coun-
tries had rati¬ed the Protocol and the Annex I countries that had rati¬ed
represented 44% of Annex I country emissions. For the Protocol to come
296 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




Table 10.1 Emissions targets (1990a “2008/2012) for greenhouse gases
under the Kyoto Protocol

Country Target (%)

EU-15b, Bulgaria, Czech Republic, Estonia, Latvia, ’8
Lithuania, Romania, Slovakia, Slovenia, Switzerland
USA c ’7
Canada, Hungary, Japan, Poland ’6
Croatia ’5
New Zealand, Russian Federation, Ukraine 0
Norway +1
Australia c +8
Iceland +10
a
Some economies in transition (EIT) countries have a baseline other than 1990.
b
The 15 countries of the European Union have agreed an average reduction; changes for
individual countries vary from ’28% for Luxembourg, ’21% for Denmark and Germany to
+25% for Greece and +27% for Portugal.
c
The USA has not rati¬ed the Protocol. Australia did not ratify until March 2008.




Table 10.2 Greenhouse gases covered by the Kyoto Protocol and their
global warming potentials (GWPs) on a mass basis relative to carbon
dioxide and for a time horizon of 100 years

Greenhouse gas Global warming potential (GWP)

Carbon dioxide (CO2) 1
Methane (CH4) 25
Nitrous oxide (N2O) 298
from 12 to 12 000 a
Hydro¬‚uorocarbons (HFCs)
from 5000 to 12 000 a
Per¬‚uorocarbons (PFCs)
Sulphur hexa¬‚uoride (SF6) 22 200
a
Range of values for different HFCs: for more information about HFCs see Moomaw, W. R.,
Moreira, J. R. et al., in Metz et al. (eds.) Climate Change 2001: Mitigation, Chapter 3 and its
appendix.
297
T H E K YOTO P R OTO C O L




N2O F-gases
7.9% 1.1%
(b)
(a)
60

CH4
14.3%
49.0
50
44.7
CO2 fossil
CO2
39.4 fuel use
40 56.6%
(deforestation,
Gt CO2 “eq yr “1




35.6
decay of
biomass, etc.)
17.3%
28.7
30
CO2 (other)
2.8%
20 Waste and wastewater
(c)
2.8%
Forestry Energy supply
17.4%
10 25.9%


0
Agriculture
1970 1980 1990 2000 2004
13.5%
Transport
N2O from agriculture and others
CO2 from fossil fuel use and other sources 13.1%
F-gases
CO2 from deforestation, decay and peat Industry Residential and
19.4% commercial buildings
CH4 from agriculture, waste and energy 7.9%

Figure 10.1 (a) Global annual emissions of anthropogenic greenhouse gases from 1970 to 2004, in terms of
Gt CO2e per year (includes CO2, CH4, N20, HFCs, PFCs and SF6 weighted by their 100-year horizon global
warming potentials “ see Chapter 3, page 63). (b) Share of different anthropogenic greenhouse gases in total
emissions in 2004 in terms of CO2e. (c) Share of different sectors in total anthropogenic emissions in 2004
in terms of CO2e (forestry includes deforestation). Buildings and Industry sectors do not include electricity use
which is aggregated under Energy supply. (Figure 11.2 provides proportional information under end use).


into force 55 countries had to ratify together with suf¬cient Annex I coun-
tries to represent 55% of Annex I country emissions. With the rati¬cation
by Russia towards the end of 2004, the Protocol ¬ nally came into force on
16 February 2005.
Concern has often been expressed about the likely cost of implementation of
the Kyoto Protocol. Cost studies have been carried out using a number of inter-
national energy-economic models. For nine such studies, the range of values
in impacts on the gross domestic product (GDP) of participating countries is
as follows.2 In the absence of emissions trading (see box), estimated reductions
in projected GDP in the year 2010 are between 0.2% and 2% compared with
a base case with no implementation of the Protocol. With emissions trading
between Annex I countries, the estimated reductions in GDP are between 0.1%
and 1.1%. If emissions trading with all countries is assumed through ideal CDM
(see box) implementation, the estimated reductions in GDP are substantially
less “ between 0.01% and 0.7%. Although there are differences between coun-
tries, most of the large range in the results is due to differences in the models
298 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




The Kyoto mechanisms
The Kyoto Protocol includes three special mechanisms to assist in emissions reductions.
Joint implementation (JI) allows industrialised countries to implement projects that reduce emissions
or increase removals by sinks in the territories of other industrialised countries. Emissions reduction units
generated by such projects can then be used by investing Annex I countries to help meet their emissions
targets. Examples of JI projects could be the replacement of a coal-¬red power plant with a more ef¬cient
combined heat and power plant or the reforestation of an area of land. Joint implementation projects are
expected to be mainly in EIT (economies in transition) countries where there is more scope for cutting
emissions at low cost.
The Clean Development Mechanism (CDM) allows industrialised countries to implement projects that
reduce emissions in developing countries. The certi¬ed emission reductions generated can be used by
industrialised countries to help meet their emissions targets, while the projects also help developing coun-
tries to achieve sustainable development and contribute to the objective of the Convention. Examples of
CDM projects could be a rural electri¬cation project using solar panels or the reforestation of degraded
land.
Emissions trading allows industrialised countries to purchase ˜assigned amount units™ of emissions from
other industrialised countries that ¬nd it easier, relatively speaking, to meet their emissions targets. This
enables countries to utilise lower cost opportunities to curb emissions or increase removals, irrespective of
where those opportunities exist, in order to reduce the overall cost of mitigating climate change. (See the
box on carbon trading on page 299 for more detail.)
The detailed regulations concerning the implementation of these mechanisms state that projects will
only be approved if they lead to real, measurable and long-term bene¬ts related to the mitigation of cli-
mate change and that they are additional to any that would have occurred without the project.




and can be considered as an expression of the large uncertainties inherent in
such studies at the present stage of development.
Given that failure of any Annex I Parties to meet their emission reduction
targets could undermine the efforts of the others, it is important that any Party
lagging in their commitments is identi¬ed early. The Protocol has therefore
established a rigorous system of reporting and veri¬cation whereby states™
annual emission estimation reports are scrutinised by independent experts.
A Compliance Committee encourages compliance through a combination of
˜carrot™ and ˜stick™ measures. Through its Facilitative Branch it offers Parties
¬nancial and technical assistance towards meeting their commitments whilst
its Enforcement Branch is responsible for declaring cases of non-compliance
and has power to penalise Parties by preventing them from making use of the
¬‚exible mechanisms. For any Party exceeding their emissions allowance at the
299
T H E K YOTO P R OTO C O L




Carbon trading
Carbon trading is an innovative market-based solution to the problem of reducing greenhouse gas emis-
sions3. Its main rationale is that, by attaching a price to carbon dioxide emissions, trading schemes will
generate powerful economic incentives to cut emissions and channel investment ef¬ciently.
Emissions trading works by setting limits on total allowable emissions that are then converted into
tradable permits to be distributed amongst participants. For example, a company with commitments to
reduce its emissions by 20% during a set ˜commitment period™ will be allocated permits equal to 80% of
what it would have emitted given an agreed baseline emissions level. Participants have the option of trad-
ing a certain proportion of their allocation but must ensure that they hold enough permits to cover their
emissions reduction target when the commitment period comes to an end. Those that ¬nd they can make
reductions relatively cheaply have an incentive to reduce their emissions below their allocated level know-
ing that they can sell any excess permits to participants for whom direct reductions are too expensive. By
these means, all participants will end up spending less than they would have done without the trading
mechanism, helping to reduce emissions more quickly than would otherwise have been possible.
The United States successfully argued for including carbon trading as a central component of the Kyoto
Protocol in 1997, citing the effectiveness of its own domestic sulphur dioxide trading scheme. International
discussions subsequently provided the impetus for the European Union to develop the ¬rst international
scheme. The European Trading Scheme commenced operation in 2005, covering some 11 500 industrial
plants accounting for 45% of total EU carbon dioxide emissions. Since then a number of governments
have announced plans for their own variants of carbon trading schemes including Australia, New Zealand,
Canada and several states within the USA. Rules and procedures agreed under the Kyoto Protocol provide
a framework through which future trading schemes might be linked.
Two factors are key to the success of any emissions trading scheme. First is the provision of accurate
and veri¬able information regarding actual emissions by different sectors and countries. Secondly, the
method of allocation of permits must be transparent and fair to all participants; in practice this presents
a large challenge. At the start of the European Trading Scheme, substantial over-allocations of permits
occurred which led in 2006, to a collapse of the price of carbon. For the 2008“12 period, procedures have
been tightened. One method of allocation, known as grandfathering, allocates permits in proportion to
participant™s current emission levels. This tends to favour the largest current emitters. Another, potentially
fairer, method is to auction the permits using the auction proceeds, for instance, to assist reductions
schemes that are of general value to the participants. Lessons learnt from the European Trading Scheme
so far point strongly to future arrangements in which most of the permits are allocated by auction.
As an instrument of policy the market-based approach underlying emissions trading has been criticised
for favouring emission reduction projects that promise low initial costs and rapid paybacks in the short
term over more radical, systematic programmes that offer greater and cheaper reductions over a longer
period of time.4 It has also been criticised for its inadequate recognition of human rights especially in
developing countries. Emissions trading therefore, although an important instrument for the control of
emissions, must be supported by other measures mentioned later in this chapter or in Chapter 11.
300 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




end of the ¬rst commitment period, 130% of the excess is deducted from their
allowance in the second period.
The Kyoto Protocol is an important start to the mitigation of climate change
through reductions in greenhouse gas emissions. With its complexity and its
diversity of mechanisms for implementation, it also represents a considerable
achievement in international negotiation and agreement. It will stem contin-
uing growth of emissions from many industrialised countries and achieve a
reduction overall compared with 1990 from those Annex I countries that par-
ticipate. A Kyoto Protocol with successful achievements will be essential for
movement to be made towards a truly global system (i.e. involving both devel-
oped and developing countries) with binding targets after 2012. The much more
substantial longer-term reductions that are necessary for the decades following
2012 will be discussed later in the chapter.




Forests
We now turn to the situation of the world™s forests and the contribution that
they can make to the mitigation of global warming. Action here can easily be
taken now and is commendable for many other reasons.
Over the past few centuries many countries, especially those at mid lati-
tudes, have removed much of their forest cover to make room for agricul-
ture. Many of the largest and most critical remaining forested areas are in
the tropics. However, during the last few decades, the additional needs of the
increasing populations of developing countries for agricultural land and for
fuelwood, together with the rise in demand for tropical hardwoods by devel-
oped countries, has led to a worrying rate of loss of forest in tropical regions
(see box below). In many tropical countries the development of forest areas
has been the only hope of subsistence for many people. Unfortunately, because
the soils and other conditions were often inappropriate, some of this forest
clearance has not led to sustainable agriculture but to serious land and soil
degradation.5
Measurements on the ground and observations from orbiting satellites have
been combined to provide estimates of the area of tropical forest lost. Over the
decades of the 1980s and 1990s the average loss was about 1% per year (see box
below) although in some areas it was considerably higher. Such rates of loss can-
not be sustained if much forest is to be left in 50 or a 100 years™ time. The loss of
forests is damaging, not only because of the ensuing land degradation but also
301
FORESTS




The world™s forests and deforestation
The total area covered by forest is almost one-third of the world™s land area, of which 95% is natural forest
and 5% planted forest.9 About 47% of forests worldwide are tropical, 9% sub-tropical, 11% temperate
and 33% boreal.
At the global level, the net loss in forest area during the 1990s was an estimated 940 000 km2 (2.4% of
total forest area). This was the combined effect of a deforestation rate of about 150 000 km2 per year and
a rate of forest increase of about 50 000 km2 per year. Deforestation of tropical forests averaged about 1%
per year. The rate of loss since 2000 has slightly slowed but not by enough to reduce concern.
The area under forest plantations grew by an average of about 3000 km2 per year during the 1990s.
Half of this increase was the result of afforestation on land previously under non-forest land use, whereas
the other half resulted from conversion of natural forest.
In the 1990s, almost 70% of deforested areas changed to agricultural land, predominantly under per-
manent rather than shifting systems.



because of the contribution that loss makes to carbon emissions and therefore
to global warming. There is also the dramatic loss in biodiversity (it is estimated
that over half the world™s species live in tropical forests) and the potential dam-
age to regional climates (loss of forests can lead to a signi¬cant regional reduc-
tion in rainfall “ see box on page 208).
For every square kilometre of a typical tropical forest there are about 25 000
tonnes of biomass (total living material) above ground, containing about 12 000
tonnes of carbon.6 It is estimated that burning or other destruction from deforest-
ation turns about two-thirds of this carbon into carbon dioxide. Approximately
the same amount of carbon is also stored below the surface in the soil. On this
basis, from the destruction of about 150 000 km2 per year over the decades of
the 1980s and 1990s (see box) about 1.2 Gt of carbon would enter the atmosphere
as carbon dioxide. Although there are substantial uncertainties in the num-
bers, they approximately tally with the IPCC estimate, quoted in Chapter 3 (see
Table 3.1), of the carbon as carbon dioxide entering the atmosphere each year
from land-use change (mostly deforestation) of 1.6 ± 1.1 Gt per year “ a larger
fraction of the total anthropogenic emissions of carbon dioxide than results
from the whole of the world™s transportation sector. If all tropical forest were
to be removed by 2100, between 100 and 150 ppm would be added to the CO2
concentration at that date.7
Reducing tropical deforestation can therefore make a large contribution to
slowing the increase of greenhouse gases in the atmosphere, as well as the
302 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




Landsat images of Bolivia taken in 1984 and 2000 show the dramatic deforestation of the Bolivian rainforest. In
1984 the rainforest had been thinned out in places, and by 2000 the rainforest had receded dramatically.




provision of other vital bene¬ts such as guarding biodiversity, protecting water
supplies, avoiding soil degradation and preserving the livelihoods of forest peo-
ples. The Stern Review has estimated the cost of emissions savings from avoided
deforestation as less than $US5 per tonne CO2.9
Strong emphasis is being given internationally to reduction of deforestation
as an essential contribution to mitigation of climate change. Towards the end
of 2007, at the Bali conference of the UN FCCC it was agreed to work towards an
agreement on deforestation in developing countries to be included as part of a
post-Kyoto international Climate Change agreement.10
In the above discussion of deforestation, I have not mentioned the increasing
interest in growing biomass for production of energy either directly or through
biofuels. Land that is under forest may increasingly be taken over for such crops.
This will be addressed, along with other energy issues, in the next chapter.
303
FORESTS




What about the possibilities for afforestation. For every square kilometre, a
growing forest ¬ xes between about 100 and 600 tonnes of carbon per year for
a tropical forest and between about 100 and 250 tonnes for a boreal forest.11 To
illustrate the effect of afforestation on atmospheric carbon dioxide, suppose
that an area of 100 000 km2, a little more than the area of the island of Ireland,
were planted each year for 40 years “ starting now. By the year 2050, 4 000 000
km2 would have been planted; that is roughly half the area of Australia. During
that 40 years, the forests would continue to grow and uptake carbon for 20 to
50 years or more after planting (the actual period depending on the type of for-
est and site conditions) “ and, assuming a mixture of tropical, temperate and
boreal forest, between about 10 and 40 Gt of carbon from the atmosphere would
have been sequestered or 4 GtCO2 per year. This accumulation of carbon in the
forests is equivalent to between about 5% and 10% of the likely emissions due to
fossil fuel burning up to 2050. Add to this the emissions reductions that could
arise with a near elimination of tropical deforestation and approximately 20% of
304 A S T R AT E G Y F O R AC T I O N TO S LO W A N D S TA B I L I S E C L I M AT E C H A N G E




anthropogenic CO2 emissions over the
period to 2050 would be accounted for.
But is such a tree-planting pro-
gramme feasible and is land on the scale
required available? The answer is almost
certainly, yes. For instance, China
is currently adding forests covering
approximately 10 000 km 2 per year
or one-tenth of the area we have men-
tioned above.12 Studies have been car-
ried out that have identi¬ed land which
is not presently being used for croplands
or settlements, much of which has sup-
ported forests in the past, totalling about
the area just quoted.13 Estimates of the
cost of afforestation range from $US5 to
$US15 per tonne CO2 (the lower values in
developing countries) not including the
value of assocatiated local bene¬ts (for
instance, watershed protection, mainte-
nance of biodiversity, education, tourism
and recreation).14 Compare these ¬gures
with the estimate given in Chapter 9 of
between $US25 and $US50 for the cost
per tonne CO2 of the likely damage due
Aforestation in Burkina Faso.
to global warming. Such a programme
therefore appears potentially attractive for alleviating the rate of change of cli-
mate due to increasing greenhouse gases in the relatively short term.
Let me insert here a note of caution. As with many environmental projects
the situation, however, may not be as simple as it seems at ¬rst. One compli-
cating factor is that introducing forest can change the albedo15 of the Earth™s
surface. Dark green forests absorb more of the incoming solar radiation than
arable cropland or grassland and so tend to warm the surface. This is particu-
larly noticeable in winter months when unforested areas may possess highly
re¬‚ecting snow cover. Calculations show that, particularly at high latitudes, the
warming due to this ˜albedo effect™ can offset a signi¬cant fraction of the cool-
ing that arises from the additional carbon sink provided by the forest.16
A possible afforestation programme has been presented in order to illustrate
the potential for carbon sequestration. Once the trees are fully grown, of course,
the sequestration ceases. What happens then depends on the use that may be
305
R E D UC T I O N I N S O U RC E S O F G R E E N H O U S E G A S E S




made of them. They may be ˜protection™ forests,17 for instance for the control
of erosion or for the maintenance of biodiversity; or they may be production
forests, used for biofuels or for industrial timber. If they are used as fuel for
energy generation (see Chapter 11), they add to the atmospheric carbon dioxide
but, unlike fossil fuels, they are a renewable resource. As with the rest of the
biosphere where natural recycling takes place on a wide variety of timescales,
carbon from wood fuel can be continuously recycled through the biosphere and
the atmosphere.

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