A high ambition coalition of the willing on climate change

As the Center for Global Development’s Owen Barder and Alice Lepissier noted in their post from the COP19 climate summit in Warsaw last month, there was “lots of cloud and not much silver lining” in evidence there, what with Japan’s announcement of reduced emissions targets and the further diluting of the already dubious ‘pledge and review’ approach.

For me, though, the most depressing thing of all was the deafening silence among governments attending the COP about the issue of global carbon budgets. It’s a deep irony that, just as the IPCC publishes by far its most unequivocal analysis to date about the need to define (and then stay within) a safe global carbon budget, governments are less willing than ever to talk about the issue.

Part of the problem is that governments and other UNFCCC process hacks assume that a carbon budget is just too difficult to talk about. Not just because countries would have to agree on a way to share it out, but also, even more fundamentally, because of a sense that agreeing a carbon budget would depend on a ‘big bang’ moment at which all countries agreed on an allocation mechanism – and good luck with that.

This set Owen, Alice, and I thinking about whether there’s a way for some countries to go ahead with a carbon budget-based approach, but without all governments having to be on board at the outset: a high ambition coalition of the willing, in other words.

Would it be possible, we wondered, to set up a voluntary framework that would involve both developed and developing countries in binding emission targets – a framework that would (a) be based on a safe global carbon budget, (b) use an equitable way of sharing that budget out, and (c) leave the door open for other governments to join at a later date as they too became convinced of the seriousness of the issue?

From the outset, all of us felt that the ‘contraction and convergence’ approach first developed by the Global Commons Institute (which I’ve written about here lots of times before) was the most realistic allocation mechanism.

As Owen observed in an early conversation, the problem with a ‘burden sharing’ framing on climate change is that it doesn’t point towards any obvious approach to the massive equity issues raised. But if you frame the challenge in terms of entitlements, on the other hand – property rights – then the opposite is the case. How else are we going to share out such an asset if not on the basis that each of the earth’s citizens should (by the end of a managed process of convergence) have the same entitlement to what’s after all the quintessential example of a shared global commons?

The big question, though, was how a coalition of the willing could go ahead with contraction and convergence on an initially sub-global basis.

A year into working on it, we’ve developed a detailed quantitative model that allows users to select which countries would be part of the coalition, what the carbon budget would be, when entitlements converge to equal per capita, and hence what share of the overall global carbon budget would be allocated both to the coalition as a whole, and to its individual members.

But it also does something else: tell users what the projected financial flows would be, including both decarbonisation costs at home and revenue flows from international emissions trading. Right now we’re checking and rechecking the calculations, prior to launching it early in the new year – but we’re excited by what we’re seeing in the tests.

For one thing, as development practitioners, we’re very interested to see how much money least developed countries could make from the system. For example, Ethiopia, where I live, could by 2020 be earning several times more from emissions trading than it currently receives from official development assistance – which kind of challenges the argument that a binding emissions cap is something to be avoided at all costs.

Many middle income countries, too, could make significant sums of money (depending, of course, on the convergence date) – allowing the international community to (gasp!) actually keep its promises on climate finance, but through a market mechanism rather than discretionary finance.

And developed countries? Yes, they face some significant costs. But one of the other big stories to emerge from the model findings is just how much more cheaply they can meet their commitments if they’re able to use international emissions trading to make emissions reductions.

Of course, the more developing countries join the coalition, the cheaper it gets for developed countries to meet their targets – because the emissions trading market gets more and more liquid and efficient. But at the same time, the fact that all emissions trading would be happening within a finite carbon budget means that it wouldn’t come at the cost of undermining the system’s environmental integrity (unlike the Kyoto Protocol and its awful Clean Development Mechanism, with its deeply questionable carbon arithmetic about ‘what would have happened in the absence of this project’).

Overall, we think that the coalition of the willing approach that we’re testing looks like a serious option for how high-ambition countries could work together to raise the bar on climate ahead of COP21 in Paris in 2015.

For one thing, it would be a big stepping stone towards a global deal on climate that actually solved the problem – which we think only a carbon budget can do.

Second, it would start engaging developing countries in binding targets (without which, again, we can’t solve climate change) – but in a way that’s fair, that respects their right to develop, and that they’d want to join because they’d make a stack of money out of it.

Third: yes, it would involve costs for developed countries, but that’s unavoidable in any scenario in which we actually sort out climate change. And emissions trading that’s as global and liquid as possible is by far the cheapest, most flexible way to do it

And fourth, it would create a really significant new source of finance for development, but as trade, not aid. That’s no small consideration as the post-2015 development agenda searches around for ways of finding additional financing (especially for least developed countries) at a point when rich governments look less likely than ever to meet their promises on allocating 0.7% of their gross national income to aid.

We’ll be publishing the model, together with a full accompanying paper, early in the new year. Watch this space…