Can we afford to reduce GHG emissions?

For today's post I will simply highlight some of the messages of a major reference in terms of the Economics of Climate Change: the Stern Review, an independent review commissioned by the UK's government.

1 - The scientific evidence points to increasing risks of serious, irreversible impacts from climate change associated with business-as-usual paths for emissions of greenhouse gases (GHG)

The annual emissions of GHG are increasing as the demand for energy increases around the world. A concentration of 550ppm CO2e in the atmosphere could be reached as early as 2035. At this level there is a 77% to 99% chance of a global average temperature rise exceeding 2°C. Under a business-as-usual scenario, the GHG in the atmosphere by the end of the century could give a 50% risk of exceeding a 5°C global average temperature change. Such changes would transform the physical and human geography of the world.

2 – Mitigation is a highly productive investment

A strong mitigation policy to reduce GHG emissions can be achieved at a far lower cost than those calculated for the impacts of climate change. Mitigation must be viewed as an investment, a cost incurred now and in the coming few decades to avoid the risks of very severe consequences in the future.

So, to answer the title question... we'd better!

Sources:  

"STERN REVIEW: The Economics of Climate Change" available at http://webarchive.nationalarchives.gov.uk/+/http:/www.hm-treasury.gov.uk/sternreview_index.htm

 

Who benefits with limited global action against climate change and just how far does the Kyoto Protocol go?

During the UNFCCC conference of parties in Durban, South Africa, nations came together to try to salvage the Kyoto Protocol beyond its first commitment period. Let us step back for a moment and question just how far the Kyoto Protocol goes, and see if saving it would be enough.

According to the IEA World Energy Outlook 2010 projections, the future fossil fuel prices will be significantly higher in a scenario of limited global action against climate change. So the answer to the first part of the title question is obvious: oil producing countries and corporations. Does the Kyoto Protocol reflect this reality? Clearly. 

Among the thirty largest oil producers (considering crude oil extraction and refinery products production), there are only six developed countries listed as Annex I parties to the Kyoto Protocol (Russia, USA, Canada, Norway, the United Kingdom, and Australia). Of those, the Kyoto Protocol only established GHG reduction targets beyond the 1990 emissions level to three: USA, Canada, and UK.

Now let us examine the energy consumption side. The top ten energy consumers are China, USA, India, Russia, Japan, Germany, Brazil, France, Canada, and South Korea (Global Energy Stastistical Yearbook 2011, Enerdata). Developing countries are not subject to the legally binding restrictions under the Kyoto Protocol (China, India, Brazil, and South Korea). Russia, undergoing the transition process to a market economy, does not have to reduce emissions beyond 1990 levels, sufficing to maintain them. Of these large energy consumers, and hence large GHG emiters, the Kyoto Protocol only established reduction targets beyond the 1990 emissions level to five: USA, Japan, Germany, France, and Canada. As is common knowledge, the USA never ratifyed the protocol, and Canada officially “droped out” in Durban. 

So to summarize, currently only three (Japan, Germany, and France) of the ten largest energy consumers, and only one (UK) of the thirty largest oil producers are legally bound to reduce their GHG emissions beyong 1990 levels under the Kyoto Protocol... We do need to go beyond the Kyoto Protocol. 

Nevertheless, this post ends with a positive keynote. During the UNFCCC conference of parties in Durban, South Africa, large emerging economic powers such as China, India and Brazil agreeded, for the first time in history, to set legally binding constraints to their greenhouse gases emissions (GHG). This is perhaps the recognition that the old development model reliant on cheap fuel consumption is no longer viable, for both economic, social and environmental reasons. Developing countries already share the vision of a low-carbon future, built on renewable energies and energy efficiency.

Sources:

- IEA World Energy Outlook 2010;

- A Roadmap for moving to a competitive low carbon economy in 2050, European Commission, 2011;

- Global Energy Stastistical Yearbook 2011, Enerdata;

- Kyoto Protocol (available at UNFCCC's website); 
- Financial Times, December 15, 2011;
- http://en.wikipedia.org/ (oil producing countries' data).