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International Climate Policy

International Climate Policy. Richard S.J. Tol Hamburg, Vrije & Carnegie Mellon Universities. Purposes of this Session. International climate policy is in a fit – the US does not play, developing countries have no targets, and all energy is wasted on short term issues

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International Climate Policy

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  1. International Climate Policy Richard S.J. Tol Hamburg, Vrije & Carnegie Mellon Universities

  2. Purposes of this Session • International climate policy is in a fit – the US does not play, developing countries have no targets, and all energy is wasted on short term issues • This is all very predictable with non-cooperative game theory • Worse, the Kyoto Protocol is about to enter into force – and it would be amazing if the EU in particular would not stumble to meet its targets by accident

  3. Purposes of this Session -2 • So, in 2010, we‘ll have an apparently successful but lousy treaty • How do we get out of this mess? • Will the Kyoto regime be amended to embrace the Americans and the Chinese? • Will the Kyoto regime be abandoned for an international version of Clear Skies? • Will regional regimes emerge, or will international climate policy collapse?

  4. Set-up of this Session • Tuesday afternoon: • Tol, Kuik, Rosenthal, Edenhofer • Wednesday morning: • Buchner, Hisschemoller, Metz, Grubb • Format • 20 + 10 min, followed by 1 hour discussion, break after speaker #2

  5. Game Theory • Emission reduction is a public good, and therefore it will be hard, if not impossible, to get countries to cooperate • This is basic non-cooperative game theory, but more advanced models predict the same (cartel theory, far-sighted behaviour) while side payments and issue linkage are unlikely to work • Global agreements thus fall apart or codify what countries plan to do anyway

  6. Source: FUND2.5

  7. Kyoto Protocol • The Kyoto Protocol gets things wrong • The backbone are negotiated targets in the short run, all energy goes into the details of policy instruments – while what is needed is monitoring, information and assurance on abatement plans (particularly between trading partners), broad agreement on instruments (the market will sort things out), conflict resolution, and technology • No wonder, Kyoto is a paper tiger

  8. Technology as the Answer? • The key to climate change is technology • Once we have an energy source that is safe, reliable, convenient, cheap and carbon-free, the problem goes away • Malaria and ozone may be the inspiration – that is, conditional but guaranteed government procurement or self-imposed industrial targets cum temporary monopoly • The Clear Skies programme is already formulated positively, in technology improvement

  9. Some Results • FUND2.6 is an integrated assessment model, 1950-2200, 16 regions, learning-by-doing on emission reduction • Scenario 1: Everyone meets Kyoto, emissions fall by 5% per decade afterwards; participate if income is above $5000; initial target is emissions of 20 years ago • Scenario 2: Everyone follows Clear Skies, emission intensity falls by 18% per decade; participate if income is above $5000

  10. Conclusion • These were just some thoughts to start up the session • I look forward to interesting presentations and vigorous discussions • We should not be distracted by what policy-makers would like to hear, nor by wishful thinking on our part

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