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Proposal for a Global Climate Proposal for a Global Climate Agreement Agreement Jeffrey Frankel Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December 2009 Copenhagen, December 2009

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Page 1: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

Proposal for a Global Climate AgreementProposal for a Global Climate Agreement

Jeffrey FrankelJeffrey Frankel Harpel Professor, Harvard Kennedy SchoolHarpel Professor, Harvard Kennedy School

Copenhagen, December 2009Copenhagen, December 2009

Page 2: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

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• unlike other approaches based purely on:

– Science (concentration goals),

– Ethics (equal emission rights per capita),

– or Economics (cost-benefit optimization).

• Why the political approach? – Countries will not accept burdens that they view as unfair.– Above certain thresholds for economic costs, they will drop out.

The target formulas are designed pragmatically,based on what emissions paths are possible politically:

Page 3: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

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• Stage 2:Stage 2: When the time comes for developing country cuts, When the time comes for developing country cuts, targets are determined by a formula incorporating targets are determined by a formula incorporating 3 elements, designed so each is asked only to take 3 elements, designed so each is asked only to take actions analogous to those already taken by others:actions analogous to those already taken by others:

– a Progressive Reduction Factor,– a Latecomer Catch-up Factor, and

– a Gradual Equalization Factor.

• Stage 1: • Annex I countries commit to the post-2012 targets that their leaders have already announced.• Others commit immediately not to exceed BAU.

Proposal

Page 4: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

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World Industrial Carbon Emissions

0

5

10

15

20

25

GtC

bau

SimulatedEmissions

◙ ◙ Constraints are satisfied:Constraints are satisfied: -- No country in any one period suffers -- No country in any one period suffers a loss as large as 5% of GDP by participating.a loss as large as 5% of GDP by participating. -- Present Discounted Value of loss < 1% GDP. -- Present Discounted Value of loss < 1% GDP.

◙ ◙ In one version, concentrations level off at 500 ppm In one version, concentrations level off at 500 ppm

in the latter part of the century.in the latter part of the century.

Co-author: V.Bosetti

Global peak date ≈ 2035,Global peak date ≈ 2035, 2020 in aggressive version2020 in aggressive version..

Page 5: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

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What form should border measures take?What form should border measures take?

1. Best choice: multilateral sanctions under a new Copenhagen Protocol

2. Next-best choice: national import penalties adopted under multilateral guidelines

1. Measures can only be applied by participants in good standing

2. Judgments to be made by technical experts, not politicians

3. Interventions in only a ½ dozen of the most relevant sectors.

3. Third-best choice: no border measures.

4. Each country chooses trade barriers as it sees fit.

5. Worst choice: national measures are subsidies (bribes) to adversely affected firms.

Page 6: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

Paper:Paper: http://ksghome.harvard.edu/~jfrankel/SpecificTargetsHPICA2009.dochttp://ksghome.harvard.edu/~jfrankel/SpecificTargetsHPICA2009.docAvailable at: http://ksghome.harvard.edu/~jfrankel/currentpubsspeeches.htm#On%20Climate%20ChangeAvailable at: http://ksghome.harvard.edu/~jfrankel/currentpubsspeeches.htm#On%20Climate%20Change

HPICA HPICA directed bydirected by Rob Rob Stavins.Stavins.

Page 7: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

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Appendices:Appendices:

The targeted reductions from BAU agreed to at Kyoto The targeted reductions from BAU agreed to at Kyoto

in 1997 were progressive with respect to income.in 1997 were progressive with respect to income.

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

2.699 3.699 4.699

Per

cen

t re

du

ctio

n f

rom

2010 b

usi

nes

s-as-

usu

al

.

500 1,000 2,000 5,000 10,000 20,000 50,000

1996 GDP per capita (1987 US dollars, ratio scale)

Cuts ↑

Incomes →

Page 8: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

88

OECD Emissions

0

1

2

3

4

5

6

7

GtC

BAU

Simulated Emissions

CAP

Emissions path for rich countriesEmissions path for rich countries Fig. 2bFig. 2b

Predicted actual Predicted actual emissions exceed emissions exceed caps, by permit caps, by permit purchases.purchases.

Page 9: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

99

NON OECD Emissions

0

7

13

20

GtC

BAU

Simulated Emissions

CAP

Emissions path for poor countriesEmissions path for poor countriesFig. 4bFig. 4b

Predicted actual Predicted actual emissions fall emissions fall below caps, by below caps, by permit sales.permit sales.

Page 10: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

1010

Price of Carbon Dioxide Price of Carbon Dioxide

Fig. 6bFig. 6b Price of Carbon Permits

0

200

400

600

800

1000

2005 2020 2035 2050 2065 2080 2095

$/tC

O2

e

FRANKELArchitecture

Zoom on Price of Carbon Permits

020406080

100120140160180

2005 2015 2025 2035 2045

$/tC

O2e

FRANKELArchitecture

rises slowly over 50 rises slowly over 50 years, then rapidly.years, then rapidly.

Page 11: Proposal for a Global Climate Agreement Jeffrey Frankel Harpel Professor, Harvard Kennedy School Harpel Professor, Harvard Kennedy School Copenhagen, December

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Concentrations stay below 500 ppm goalConcentrations stay below 500 ppm goalFig. 7bFig. 7b

Carbon Concentrations (CO2 only)

300

350

400

450

500

550

600

650

700

750

800

pp

mv

bau

FRANKELArchitecture