Climate change

Scope of the Challenge

Climate change is one of the most significant threats facing the world today. According to the American Meteorological Society, there is a 90 percent probability that global temperatures will rise by 3.5 to 7.4degrees Celsius (6.3 to 13.3 degrees Fahrenheit) in less than one hundred years, with even greater increases over land and the poles. These seemingly minor shifts in temperature could trigger widespread disasters in the form of rising sea levels, violent and volatile weather patterns, desertification, famine, water shortages, and other secondary effects including conflict. In November 2011, the International Energy Agency warned that the world may be fast approaching a tipping point concerning climate change, and suggested that the next five years will be crucial for greenhouse gas reduction efforts.

Avoiding the worst consequences of climate change will require large cuts in global greenhouse gas emissions. Humans produce greenhouse gases by burning coal, oil, and natural gas to generate energy for power, heat, industry, and transportation. Deforestation and agricultural activity also yield climate-changing emissions.

One way to reduce emissions would be to switch from fossil-fuel-based power to alternative sources of energy, such as nuclear, solar, and wind. A second, parallel option would be to achieve greater energy efficiency by developing new technologies and modifying daily behavior so each person produces a smaller carbon footprint. Additionally, retrofitting buildings and developing energy-efficient technology greatly help curb greenhouse gas emissions. All such measures, however, engender significant costs, and the onset of the global financial crisis has placed serious new constraints on national budgets both in the developed and developing worlds. Some climate change experts have expressed concern that the ongoing global financial crisis could defer action on climate change indefinitely.

Even if such reforms were implemented, substantial efforts will still be required to adapt to unavoidable change. Recent climate-related events, such as the flooding in Pakistan and Thailand, have caused focus to fall on adaptation financing for developing countries, which could support infrastructure projects to protect vulnerable areas. Other efforts might include drought-tolerant farming.

Distribution of global emissions reinforces the need for broad multilateral cooperation in mitigating climate change. Fifteen to twenty countries are responsible for roughly 75 percent of global emissions, but no one country accounts for more than about 26 percent. Efforts to cut emissions—mitigation—must therefore be global. Without international cooperation and coordination, some states may free ride on others’ efforts, or even exploit uneven emissions controls to gain competitive advantage. And because the impacts of climate change will be felt around the world, efforts to adapt to climate change—adaptation—will need to be global too.

At the launch of the United Nations Framework Convention on Climate Change seventeenth Conference of Parties (COP-17) in Durban, South Africa, many climate change experts were concerned that the Kyoto Protocol could expire in 2012 with no secondary legally binding accord on limiting global emissions in place. This fear, however, was somewhat assuaged as the nearly two hundred countries present at the COP-17 approved an extension of the protocol through 2017 and potentially 2020. A decision was also reached at the meeting to draft a successor accord to the Kyoto Protocol by 2015, which would ultimately come into force in 2020. Delegates also envisioned that the new accord would include greenhouse gas emissions targets for all countries, regardless of their level of economic development. This framework notably contrasts with that of the Kyoto Protocol, which primarily focuses on reducing emissions emanating from developed countries.

Despite these and other marked successes during the COP-17, the perceived lack of leadership by central players in the climate change debate-—especially the United States-—has elicited increasing concern about the long term prospects of the global climate change regime. Additionally, Canada’s December 2011 decision to withdraw from the Kyoto Protocol—based on domestic economic concerns as well as its view that the world’s top greenhouse gas emitters have refused to ratify the accord—has generated concerns that the Kyoto Protocol itself may be in danger of collapse. Both of these concerns and many other issues will likely be a part of the agenda for the COP-18, scheduled for November 2012 in Qatar.

Strengths & Weaknesses

OVERALL ASSESSMENT

Overall assessment: An underdeveloped and inadequate system

The current centerpieces for multilateral action against climate change are the United Nations Framework Convention on Climate Change (UNFCCC), its associated Kyoto Protocol, the Copenhagen Accord, and the COP-17 Durban Platform for Enhanced Action ("Durban Platform"). The Kyoto Protocol includes firm commitments to curb emissions only from developed countries, but does not include the United States, and has no meaningful consequences for noncompliance; it has also come under unprecedented strain as Canada officially withdrew from the accord in December 2011. Specifically, Canada’s environment minister suggestedCanada could only be a part of an accord which includes all major emitters as parties. As Japan and Russia could soon follow Canada’s example, the hopes for a legally binding climate accord—even if desirable—may be fading. Additionally, the regime, which allows for numerous exemptions regarding greenhouse gas emissions, fails to provide emerging big emitters like China and India with meaningful targets and incentives to curb their emissions. The architecture for global climate governance looks particularly shaky after the fifteenth Conference of Parties (COP-15), in Copenhagen, failed to overcome entrenched differences among the major parties and deliver targeted emissions cuts. Following Copenhagen, COP-16, in Cancun, made some strides toward effective multilateral action, but the regime still falls well short of promoting needed action to effect positive change, including committing to a post–Kyoto framework.

Similarly, little progress was made during the COP-17 meeting in Durban. While parties agreed to extend the Kyoto Protocol until at least 2017 as well as solidified an operating structure for the Green Climate Fund, little was clarified concerning the form of a successor accord to the Kyoto Protocol. Delegates to the COP-17 did agree, however, that the new accord would include reduction targets for all nations, rather than exclusively those considered to be developed.

Although delegations at Durban, Cancun, and Copenhagen developed reporting mechanisms, funding pledges, and unilaterally declared country-specific emissions reduction goals, the ongoing lack of an international enforcement body has left these promises largely empty.

The limitations of the Durban Platform, as well as the increasingly tenuous status of the Kyoto Protocol, have created a fresh imperative for global action on climate change. The tension between developing and developed countries is fueled by ongoing disagreements over how to interpret a fundamental underpinning of the UNFCCC and Kyoto framework—namely, the principle of "common but differentiated responsibilities" [PDF] among industrialized (Annex I) and developing (non-Annex I) countries, particularly when it comes to establishing and achieving meaningful mitigation targets. The 2010 UN climate change summit in Cancun did not achieve a comprehensive international framework, nor did it expect to. The agenda was pushed to the 2011 meetings in Durban, South Africa, where the Kyoto Protocol was extended for another five years at least. Concerns, however, arose over the refusals of India, China, and the United States to unequivocally accept legally binding admissions targets at the meeting, placing doubt on the extent that other significant greenhouse gas emitters will participate in the new commitment window.

At the most basic level, countries disagree over climate monitoring and financing stipulations in the Kyoto Protocol and other legally binding accords. Climate frameworks struggle to effectively monitor greenhouse gas outputs, especially in developing countries. Many countries lack the domestic capacity to audit their total emissions; even if they are able to monitor national levels, some fear that reporting such numbers would encourage international pressure to cap their emissions. Others, like China, argue that an international monitoring system represents an infringement on national sovereignty and that developing states should be afforded some leniency in emissions as they are currently in critical stages of economic development.

Additionally, the climate regime does not adequately address the sources of financing needed to help developing countries cope with climate change. While the meeting in Copenhagen witnessed political progress, including pledges by industrialized countries to provide $100 billion by 2020 to developed countries and the Green Climate Fund was put into place at Cancun, concrete funding streams have yet to materialize. While the COP-17 attempted to clarify how the Green Climate Fund would operate and disperse funds, little firm monetary support was allocated to the mechanism. To date, the total disbursed funds for climate change initiatives, both within and outside of the UNFCCC, add up to only $2.1 billion.

Seeking a more flexible and effective approach, the United States and other emitters have begun to turn to "à la carte multilateralism," focusing on smaller, less formal frameworks, such as the Major Econonomies Forum(MEF) and the Group of Twenty (G20). The MEF was launched in March 2009 as a successor to the Bush administration’s Major Economies Meeting (MEM). The seventeen-member MEF, which includes countries responsible for approximately 80 percent of global emissions, has provided an arena for major emitting countries to confront tricky issues and hammer out viable strategies without entering the labyrinth of UN diplomacy. In February 2012, a six-state coalition was also established to tackle climate and public and health risks posed by short-lived pollutants including methane, hydrofluorocarbons, and black carbon (soot). Even these niche fora, however, are not immune to political rancor over legally binding emissions cuts.

Despite concern that alternative efforts to the UNFCCC process might undermine the credibility and success of that universal forum, the MEF and the parallel G20 have the potential to complement the UN track by enabling meaningful dialogue among the countries whose financial commitments and solutions on mitigation and technology truly matter. The MEF and G20 offer leaders a setting for candid dialogue where parties can meet to negotiate new bilateral and "minilateral" arrangements, align parallel domestic initiatives and regulatory approaches, and monitor each other’s progress as part of an informal, “pledge and review” process. Accomplishments of the MEF and G20 include, respectively, launching a Global Partnership on Clean Energy Technologies and reaching an agreement to phase out inefficient fossil fuel subsidies. In September 2011 the MEF reportedly held a "frank discussion" regarding the COP-17 meeting in Durban and the future of the Kyoto Protocol among other issues.

Beyond the UNFCCC process and minilateral forums like the MEF and G20, climate change is increasingly addressed by a host of other international actors whose primary mandate may not explicitly include climate change. Within the UN system alone, some twenty agencies work on climate change, often through their own specific lens. The implementation of projects, for example, is spread across institutions like the United Nations Environment Program (UNEP), the Global Environment Facility (GEF), the United Nations Development Program (UNDP), and the World Bank, which work alongside bilateral agencies on mitigation and adaptation projects in developing countries. Although a proliferation of actors focused on this agenda is not necessarily negative, the lack of coordinated policies and programs can be a problem when it leads to redundancy. In part, this fragmentation reflects the inherent complexity of climate change, which has substantive connections to many issue areas, including development, finance, public health, energy, and security.

UNDERSTANDING CLIMATE CHANGE THREATS

Understanding climate change threats: Strong but could be improved

The international climate regime is at its strongest when it comes to understanding the threats posed by climate change. Such efforts, which are centered on the Intergovernmental Panel on Climate Change (IPCC), predate any other dedicated element of the regime. Yet, the infiltration of politics into the climate change debate has hampered the legitimacy and pervasiveness of new findings.

The IPCC was created in 1988 to review, assess, and synthesize the world’s scientific information related to climate change. It periodically releases assessment reports, which synthesize global data on climate change. The IPCC reports [PDF] are central in policy discussions of climate change, and their estimates play an outsized role in setting benchmarks for international action. The IPCC also produces occasional reports on urgent subjects such as carbon capture and technology transfer.

The IPCC is not without its critics, however, and a series of scandals concerning the methods of its reporting has somewhat weakened its legitimacy. Some have accused its reports of being politically driven—their summaries must be signed off on by all member governments—and overplaying the state of agreement on man-made climate change. Reacting to the findings of an independent review, the IPCC introduced institutional reforms in May 2011 to address some of these concerns. That said, the findings of the panel generally concur with those of major scientific associations [PDF], such as the U.S. National Academy of Sciences. Within the community of experts on climate science, few believe that IPCC reports overestimate the state of the problem.

The IPCC has also been criticized, from the other side, for underplaying the risks of extreme climate change, again because of the need for political consensus. Similarly, it has been criticized as lagging behind the current state of science because of its long and bureaucratic approval process. At a time when many studies are raising the possibility of extreme climate change, this may tend to bias the IPCC conservatively.

International cooperation on scientific observation and analysis has also benefited from several other forums for sharing global climate data. These include the Group on Earth Observations (GEO), a group of eighty governments committed to creating a Global Earth Observation System of Systems (GEOSS) as a common source for detailed data on everything related to climate change.

Despite these gains in researching, analyzing, and understanding climate change, a great deal of basic scientific work remains in clarifying the state of scientific opinion on the anthropogenic causes of climate change and ways to mitigate their effects. In addition, the international community needs to expand cooperation efforts in collecting data on the effects of climate change to facilitate adaptation and early warning systems.

CURBING EMISSIONS

Curbing emissions: Some progress, but too few commitments

Many countries with mandatory targets under the Kyoto Protocol are on track to cut their greenhouse gas emissions, and large emitters such as China, India, and Brazil suggest that they will take voluntary steps to control levels of anthropogenic pollution. But despite these successes, the existing climate regime remains grossly inadequate when it comes to stabilizing greenhouse gas levels; moreover, regulations that have already passed or which are about to go into effect, like the EU airplane tax, continue to stir significant political controversy. Additionally, the December 2011 Durban Platform committed UNFCCC parties to establish a more universal post–Kyoto accord with "legal force," and in December 2012 at the UNFCCC COP-18, parties agreed to extend the Kyoto commitment period to 2020 and to enter into negotiations for a treaty to replace the Kyoto Protocol in 2015. However, not all parties agreed to this second round of commitments and major emitters like Canada and Japan opted out.

The variance between commitment and action remains an obstacle to the development of a comprehensive solution. The non-binding Copenhagen Accord did little to force country-by-country accountability and action. The 2010 Cancun Agreement brought greenhouse gas reduction pledges under the auspices of the UN Framework Convention on Climate Change, but it remains to be seen if Cancun’s call for international assessment of implementation of these mitigation efforts will lead to substantive gains beyond the status quo. A shift in focus from diplomatic discussion over pledges to implementation is one positive outcome of the Cancun Conference.

The IPCC has called for a reduction in emissions to limit the increase in global temperatures by 2 degrees Celsius (3.6 degrees Fahrenheit). Although leaders at Copenhagen and Cancun used the same number to determine their mitigation pledges, the current growth in emissions, absent significant action on climate change, will cause an average global temperatures of 5 degrees Celsius (9 degrees Fahrenheit), according to the most recent analysis produced by the Climate Interactive Scoreboard.

The core policy and regulatory instruments to curb greenhouse gas emissions exist at the national level, and performance therefore varies from country to country. At the international level, the Kyoto Protocol provides three mechanisms that can help countries control their emissions through flexible arrangements. The Clean Development Mechanism (CDM) allows industrialized countries to invest in climate-friendly projects in poor countries and earn carbon credits in exchange. The Joint Implementation (JI) mechanism enables industrialized countries to invest in climate-friendly projects in other industrialized countries and earn carbon credits in exchange. Lastly, emissions trading creates a market for trading carbon credits with countries that are over their target.

From the beginning, the most promising of the three was the CDM, which provides twin benefits of curbing emissions and facilitating economic development for non-Annex I countries. However, experts have pointed to inadequacies regarding its operations and its inability to deliver lower emissions at acceptable costs. In particular, the CDM is burdened with extensive bureaucratic entanglements that have delayed the actual registry of many preapproved projects. More seriously, critics blame the CDM for earning some companies heaps of carbon credits for low-cost changes, noting that national regulation or other means of financing emissions reductions might have been better alternatives. Additionally, some experts complain about China capturing a significant number of the carbon credits, known as Certified Emission Reductions (CERs), at the expense of other developing countries. However, China’s extensive participation may also help jump-start its renewable sector, which could have ancillary long-term benefits. Although the COP-17 did not resolve all of these concerns, it did extend the CDM to include carbon capture storage projects—a move that enjoys significant private sector support.

Emissions trading, most developed within the EU framework, has also faced a barrage of criticism. Carbon markets are still in their infancy and fraught with challenges related to price discovery, price volatility, andexposure to political risk. At this stage, some businesses argue that the price of carbon is too low to support profitable opportunities. Similarly, environmental activists [PDF] argue that capital markets are too unregulated and unstable to serve as a foundation for global efforts against climate change. Despite the value of Europe’s carbon market approaching an estimated $120 billion in 2010, concerns remain about the future of the global carbon market absent a legally binding emissions accord.

The G20 has stressed the importance of market mechanisms to fight global warming, and some have argued that carbon markets can be seen as a cheap and simple way to ensure emissions reductions. When reinforced by regulation, such as the mandatory cap-and-trade system in Europe, emissions trading can be a beneficial mechanism [PDF] that contributes to overall emissions reductions. The EU carbon market, for example, has anestimated value of $120 billion. Similar to the EU model, nine states in the mid-Atlantic and northeast United States have created market-driven mandatory framework, called the Regional Greenhouse Gas Initiative (RGGI), to reduce emissions. To date, this is one of the most promising initiatives for emissions reduction in the United States.

Outside the Kyoto regime, international efforts to reduce carbon dioxide emissions have led to a UN program onReducing Emissions from Deforestation and Degradation (UN-REDD). The program provides financial incentives for poor countries to protect their national forests and thereby assigns them with some responsibility for global emissions reduction. By some estimates, tropical deforestation accounts for 15 percent [PDF] of annual global carbon dioxide emissions. The Kyoto Protocol, however, did not have any mechanism for conservation or prevention of deforestation as a means for mitigating climate change. Under the protocol, countries could seek credits and financial support after forests were cut down but no support was available to prevent them from cutting forests down in the first place. Fortunately, activism on the issue has generated enough interest for industrialized countries to commit $3.5 billion to provide funding for deforestation activities. Similarly, the COP-17 established a technical framework for facilitating deforestation products. Furthermore, in February 2012, the United States, along with Canada, Mexico, Sweden, Ghana, and Bangladesh, launched a joint effort to mitigate short-lived climate pollutants—such pollutants stay in the atmosphere only briefly, but they account for approximately of 30 percent of global warming—such as black carbon, hydrofluorocarbons, and methane. A limited fund of $15 million fund was set up to support the group’s efforts, but heavy emitters likeChina and India did not sign up.

MONITORING AND ENFORCING EMISSIONS CURBS

Monitoring and enforcing emissions curbs: Monitoring patchy but improving, enforcement nonexistent

Transparency in emissions cuts has become a relatively new focus of the climate change regime. The Bali Action Plan adopted new monitoring parameters that required both developed and developing countries to commit to mitigation actions that could be measured, reported, and verified (MRV). Strengthened somewhat at Copenhagen, this agenda was furthered in Cancun, where the final document called for "international assessment of emissions and removals related to quantified economy-wide emission reductions targets" for developed countries in a transparent manner. However, this language on enforcement has yet to be matched by a plan of implementation, likely making it a contentious issue for future international climate agreements. The 2011Durban Platform may have created additional confusion regarding the enforcement of climate accords. Particularly ambiguous was its call for a new agreement with "legal force" to replace the Kyoto Protocol rather than one that is expressly "legally binding."

Under the current UNFCCC framework, developed countries report their emissions annually and developing countries are supposed to report theirs every six years. Emissions inventories in developed countries are generallyagreed to be strong, and are accepted as the basis for international emissions trading (in which errors in emissions accounting would result in large financial transfers). Reporting from developing countries is widely considered to be much weaker, and the six-year reporting requirement is often violated. The exceptions are CDM projects, which are carefully monitored to determine whether promised emissions reductions are actually being achieved; here, monitoring is widely agreed to be strong. In an effort to improve monitoring, in 2009 the UNFCCC produced a new pledge and review process. This process tasks countries to publish emissions reductions goals in line with their national capabilities and then submit to international monitoring under the Copenhagen Accord.

The barriers to improving emissions monitoring in developing countries are threefold. First, many such countries lack the domestic capacity to monitor their own emissions, which makes international monitoring even more difficult. Existing emissions estimates are generally extrapolations based on energy use, and even large developing countries such as China and India, for example, do not know their total emissions output. This uncertainty isexacerbated in countries with significant emissions from deforestation because the technical means to precisely measure such emissions do not yet exist. Second, even if developing countries are able to monitor their emissions, many are wary that reporting emissions would open them to pressure to cap those emissions—something they have strongly resisted. Third, countries such as China publically state that concessions for an internationally verifiable monitoring system are a direct infringement on their national sovereignty. Despite these barriers, an agreement that focuses on emissions monitoring might be easier to implement than an arrangement based on binding emissions reductions.

Enforcement, meanwhile, is essentially nonexistent. Countries that fail to meet their Kyoto targets are legally required to subtract that shortfall (plus a 30 percent penalty) from their total allowed emissions in the next phase of the protocol. In practice, though, this is meaningless, given that future allowed emissions have not yet been negotiated. If the Kyoto Protocol penalty rules are observed—something still in question—countries could simply negotiate new caps that are inflated by an amount that offsets the penalty or just formally withdraw from the accord as Canada did in 2011.

FINANCING EMISSIONS CUTS

Financing emissions cuts: Needs concrete options

Channeling funds to curb emissions and adapt to global warming is one of the thorniest challenges in the fight against climate change. The Green Climate Fund, set forth in Cancun to be a centralized hub for climate financing, only recently agreed in October 2011 on a draft plan for dispersing funds. While the COP-17 made progress in clarifying the governance structure of the Green Climate Fund, only $50 million was promised as seed funding. And, despite Annex I countries having shown significant leadership COP-16 to the UN climate convention by committing to facilitate private funding and provide $100 billion annually in multilateral assistance by 2020 and reconfirmed their commitment to do so at COP-18. Despite this recommitment, however, no framework was agreed upon for financing in the final outcome document. Furthermore, some critics argue that the $100 billion assistance funding should be a base figure, as it falls short of what developing countries require, which is projected to increase [PDF] to $300 billion per year by 2020.

Total commitments for reaching the $30 billion in short-term funds pledged for 2012 have nearly reached the target amount, but reports indicate that little of this represents money outside of previously existing aid packages[PDF]. In February 2010, UN Secretary-General Ban Ki-moon established the High-Level Advisory Group on Climate Change Financing to explore means of accomplishing Copenhagen funding pledges. The group’s final report was released in November 2010 and calls for taxes on emissions, trading, and international travel. While tangible policy responses concerning the report have been mostly lackluster in the United States, the EU has instituted a controversial emissions tax on airlines flying in and out of its EU territory, which entered into force in January 2012.

Recently, the International Energy Agency (IEA) reported that achieving climate goals by 2020 would require an investment of roughly $5 trillion. The situation becomes particularly vexing when the transfer of money from industrialized countries to developing countries comes into play. At the September 2009 G20 meeting in Pittsburgh, leaders proposed significant increases in funding to poor countries, but differences in how to achieve this goal led to a weak statement [PDF] that merely recognized the need for climate change financing (for which there was no follow-through at the Toronto G20 summit in June 2010). More recent pledges made at the UN climate conference in Cancun are short of the aspirations of some world leaders and lack details regarding their source and disbursement.

Currently, some [PDF] climate change financing comes by way of official development assistance (ODA). Several multilateral funds have been established under the UNFCCC, the World Bank, and the GEF to provide grants and loans targeting specific aspects of climate change, ranging from adaptation to development of clean technology. However, by and large these funds are voluntary and have limited differences.

Many experts have pointed to private investments as a way forward. Private investment has been critical in industrialized countries but much harder to come by in developing countries. The clean development mechanism (CDM), initially set up by the Kyoto Protocol, has been applauded for injecting private-sector funding for clean energy projects into developing countries and helping industrialized countries meet their emissions-cutting targets. However, the CDM has brought little benefit to areas most in need of clean energy, notably sub-Saharan Africa.

Some economists and policymakers have proposed innovative solutions to the financing deficit such as a Tobin tax on financial transactions or a carbon tax on air transportation (the EU instituted the latter in 2012). The Organization for Economic Cooperation and Development (OECD) has reported [PDF] that if all industrialized countries used carbon taxes or auctioned emissions-trading permits to reduce their emissions by 20 percent in 2020 relative to 1990 levels, fiscal revenues could reach 2.5 percent of GDP by 2020.

UTILIZING CARBON SINKS

Utilizing carbon sinks: Achievements in deforestation

Approximately one-fifth of global emissions come from land use, including deforestation. Mitigating the effects of climate change will require looking at a broad set of alternatives, including leveraging tools inherent to our natural ecosystem. Forests provide natural carbon sinks that help mitigate the effects of carbon dioxide emissions. There are currently few initiatives that compensate countries that promote this natural process. Through the CDM, the UNFCCC regime provides carbon credits for afforestation and reforestation projects. Although this is a positive step, critically missing are incentives for forest conservation activities that would help reduce emissions from existing carbon stocks.

In an effort to bridge this gap, numerous [PDF] bilateral and multilateral arrangements outside the UNFCCC framework have been created to provide assistance to developing countries in harnessing their carbon sinks. Negotiations at the fifteenth meeting of states party to the UN climate convention, for instance, secured a pledge for $3.5 billion to combat deforestation in developing countries, which complements an existing UN-REDDprogram funded by Norway, Denmark, and Spain. Additionally, the World Bank Forest Carbon Partnership Facility provides better forestry management and conservation. At the national level, some governments have established funds, such as Brazil’s Amazon Fund, and Burkina Faso’s cash bonus tree-planting program, which leverage private donations and government resources to provide incentives for the preservation of forests.

Additionally, there has been some attention on promoting oceans as a natural carbon sink. However, scientific skepticism on the ocean’s ability to absorb carbon dioxide emissions remains.

PROMOTING LOW-CARBON DEVELOPMENT

Promoting low-carbon development: Needs coherence, financial support, and developing-country buy-in

Low-carbon development must be at the heart of any successful climate change mitigation effort. Yet it faces two distinct challenges. The world is not particularly good at development assistance beyond climate change, and it has no large-scale experience with low-carbon development.

The Kyoto Protocol focused on promoting low-carbon development through the Clean Development Mechanism (CDM). Although the CDM has undoubtedly resulted in some low-carbon investment that would not have otherwise occurred, it has not prompted fundamental shifts in development patterns. Alongside it, traditional development organizations have begun to invest in low-carbon development. The World Bank, for example, has ramped up climate-related spending, and the UNEP has set climate change as a priority in its capacity-building efforts. These efforts are constrained, however, by funding that is not commensurate with the scale of the challenge, as well as by deeper challenges in the development aid model. These international institutions are also not well coordinated, with occasionally weak mechanisms that can fail to complement each other.

Another important path to low-carbon development is new technology, such as carbon capture and storage(CCS), which focuses on securing and storing carbon dioxide emissions before they are released into the atmosphere. Although this technology is still in its early stages, successful pilot projects offer hope of developing and implementing it for large-scale projects. Some countries are committed to implementing variations of it, and both bilateral and multilateral cooperation is under way. This cooperation is particularly important because implementing CCS on a large scale can be expensive and offers few obvious economic benefits. One of the major multilateral efforts in this area is the Carbon Sequestration Leadership Forum (CSLF), which supports joint efforts to develop cost-effective carbon sequestration technology. At the bilateral level, the EU-China Partnership on Climate Change helps to develop Near-Zero Emissions Coal (NZEC) plants in China using CCS technology. The United States and China have also recently agreed to develop joint projects using CCS technology. Additionally, an international initiative, Futuregen, led by the U.S. Department of Energy, harnesses public and private-sector funds and expertise to help build near-zero emissions plants around the world.

Renewable and nuclear energy will be critical in diminishing reliance on fossil fuels and developing low-carbon communities. Expectations for nuclear power as an alternative source of energy are especially high among big emitters such as India, China, and the United States, as well as in a number of developing countries that lack the necessary infrastructure to meet their growing energy needs. Since the nuclear incident in the wake of Japan’s March 2011 earthquake and tsunami, some of the support for nuclear power has declined. Currently, theInternational Atomic Energy Agency (IAEA) assists countries in determining whether nuclear energy is a feasible option. When nuclear energy is optimal, the agency assists with energy planning and developing relevant infrastructure, such as drafting nuclear legislation and establishing independent and effective safety regulators. However, given its limited resources, the IAEA will find it increasingly difficult to meet the growing demands for its services as more developing countries seek help in establishing nuclear facilities.

There has also been significant international action on renewable energy. The International Renewable Energy Agency (IRENA), founded in January 2009, is the first international forum for specifically promoting the use of renewable energy. The UNEP has launched several initiatives, including the Global Bioenergy Partnership(GBEP), to support the deployment of biomass and biofuels, and the Solar and Wind Energy Resource Assessment (SWERA), which seeks to make renewable energy data widely available. Despite these promising international efforts, only about 25 percent [PDF] of the world’s energy is produced through renewable and alternative sources (including hydroelectric, biomass, and nuclear). However, investment in these areas continues to increase [PDF] (rising seventeen percent to a total of $257 billion in 2011) and more and more countries are setting policy targets for using renewable energy.

Another dimension of the solution is often ignored but is likely, in the long term, to be the most prominent:domestic policy reform in developing countries that encourages low-carbon investment. This might include steps like energy market reform or reduction of tariff barriers to low-carbon technology transfer. International institutions have begun to promote domestic policy shifts through measures like technical assistance provided by organizations like the UNEP and UNDP, discussions [PDF] on tariff reductions for environmentally friendly technologies through the WTO, and processes aimed at phasing out fossil fuel subsidies spurred through the G20. Some existing institutions, though, may incidentally work against positive developments in this area. The Kyoto Protocol’s CDM, for example, may discourage countries from making climate-friendly policy changes by rewarding countries only for activities that go beyond existing national policy. Complicating matters, efforts to promote policy shifts and efforts aimed at providing assistance with clean development are rarely coordinated with each other.

ADAPTING TO CLIMATE CHANGE

Adapting to climate change: Addressed weakly and incidentally

Adapting to climate change is currently being addressed incidentally through traditional development aid. Organizations like the World Bank and USAID are working to “climate-proof” their investments. Moreover, most traditional development aid (often aimed at areas like health and agriculture) will help countries become more resilient in a changing climate. Yet the perennial shortfalls in development assistance—both financially and in having the desired policy impact—mean that adaptation assistance invariably falls short as well.

There have been targeted efforts to address adaptation in particular. The Kyoto Protocol’s Adaptation Fund, supported by a small tax on CDM credit sales, currently yields funds that are supposed to be spent on adaptation. The fund, however, is severely underfinanced and hobbled by its own bureaucratic governance. The GEF also administers several funds that target adaptation efforts. The Least Developed Countries Climate Fund (LDCF) and the Special Climate Change Fund (SCCF) aim to address long-term efforts for the most vulnerable developing countries. Additionally, the World Bank Pilot Program for Climate Resilience (PPCR) works to integrate adaptation measures into development aid. National Adaptation Programs of Action under PPCR are underway in eighteen countries in the Caribbean, the Pacific, Africa, the Middle East, and Asia. While the World Bank facilitates this and other Climate Investment Funds, it has also provided loans for coal power plants and other projects not friendly to the climate change agenda. Most of these efforts are not distinguishable from other development support, however, making it difficult for a separate adaptation fund to make a big difference in any case.

The sixteenth Conference of Parties in Cancun developed a Cancun Adapation Framework (CAF) to raise the prominence of adaptation measures in the UNFCCC’s efforts. The CAF also represented the first formal agreement to establish guidelines concerning capacity building in communities vulnerable to the effects of cliamte change. Adaptation financing, even after the COP-17 in Durban remains an ad hoc enterprise.

Adaptation efforts are also hurt by the failure of the international community to generate precise predictions on the effects of climate change. The IPCC focuses on long-term projections and on regional or global analyses. Organizations like the UNDP help countries use broader projections in national adaptation planning, and national governments sometimes assist others in such efforts. Whether having governments and international institutions handle these projections offers any benefits is, however, still unclear.

U.S. and International Climate Change Policy Issues

INTRODUCTION

The United States and the international community face a host of challenges on the domestic and international fronts in the attempt to build a more robust international climate regime. At home, progress has come to a virtual standstill after the failure of national cap-and-trade legislation. Abroad, the ultimate fate of the Kyoto Protocol looms large. The United States will need to decide whether to rely on state-by-state targets, participate in minilateral forums, or engage in multilateral negotiations for reducing emissions, among other questions. It must also decide whether it intends to pursue a legally binding climate agreement. Other policy issues straddle the domestic-international divide.

FUTURE OF KYOTO PROTOCOL

Should the international community pursue a legally binding treaty to replace the Kyoto Protocol?

Yes: Proponents of legally binding commitments, like the Kyoto Protocol, argue that they are the only way to guarantee that countries will cut their emissions. Proponents also argue that by ensuring that others meet their obligations, legally binding commitments help promote stronger action by all parties. Moreover, they note that in some cases, legal commitments are needed to serve as the basis for schemes involving large financial flows, such as carbon trading. They also point to the heritage of the Kyoto Protocol, which included legally binding commitments for developed countries, and argue that it would be a step backward to take a different route in the future.

Moreover, withdrawing from efforts toward a binding accord would likely signal a retreat from the Durban Platform agreed to by 194 state parties in December 2011. Specifically, the COP-17 outcome document calls on states to develop a successor to the Kyoto Protocol with "legal force" by 2020.

No: On the other hand, detractors of the Kyoto Protocol claim the emissions reduction model inherent to the accord is not tenable, and the outcome of the COP-17 meeting in Durban may prove the international community is trying to move away from using legally binding emissions targets. Objections to including legally binding commitments at the center of an international climate deal take at least four forms. Some argue that enforcing climate commitments is extremely difficult and that, as a result, the legal nature of commitments may not be meaningful.Thus, they counsel against investing the extra effort normally required to devise a legally binding arrangement. Others argue that because climate commitments may turn out to be difficult or impossible, they should not be made legally binding, thus avoiding the risk of noncompliance. A frequent counterpart to this argument is the claim that because countries are concerned about noncompliance, they will tend to focus on making weak commitments in the first place; freeing them from concerns about being legally bound might also free them to do more.

While some accept the prospect of legally binding commitments for Annex-I countries like the United States in principle, they argue that all major economies or all countries should make similar commitments. If those same analysts also believe that major developing countries will not make legally binding commitments—a widely shared view—then they conclude that major greenhouse gas emitters like the United States should not make such commitments either. Canada’s December 2011 decision to withdraw from the Kyoto Protocol reflects this line of thinking.

MINILATERAL FORUMS

Should the United States focus its resources on minilateral forums rather than the UN climate framework?

Yes: Some say that progress on global climate change requires a joint strategy among the small number of actorsresponsible for the lion’s share of the world’s carbon dioxide emissions, including China (25.3 percent), the United States (17.8 percent), the European Union (14.2 percent), and a handful of other developed and emerging economies. The United States and other major economies have already begun to turn to smaller, less formal frameworks, including the Group of Twenty (G20), the Major Economies Forum (MEF), and the Climate Change Forum—which some analysts point to as alternatives to the United Nations.

These arenas allow large emitters to confront tricky issues and hammer out viable strategies without having to engage all 193 members of the United Nations. If the United States focuses its attention on minilateral forums with important players, it may achieve meaningful emissions control targets, as well as financial commitments for mitigation and technological development. Moreover, the United States can use the MEF and similar minilateral forums to complement the UNFCC process by negotiating realistic multilateral agreements that can subsequently be legitimated at the UN level.

No: Others argue that the breadth of its membership and depth of its history makes the UN climate framework the bedrock of the international climate regime. Climate change is a global threat that requires input from the world’s most vulnerable nations—not just the world’s largest emitters. Experience suggests that major emitting nations may use minilateral forums not to drive concrete action but to avoid binding emissions reductions and other sacrifices to address climate change. By focusing on minilateral forums, the United States diverts its limited resources from the UN climate negotiations, which are the most legitimate basis for global action. Any climate negotiations that exclude the majority of the world’s countries would be difficult to implement and inherently flawed. Still, others note that focusing on the minilateral versus broader UN forums may obscure focus on adequate levels of political will to address climate change.

DOMESTIC POLICY

Should the United States focus on state-by-state targets for reducing greenhouse gas emissions?

Yes: Proponents of this idea note that climate change action at the federal level is no longer a politically feasible goal within the United States. Efforts to enact cap-and-trade systems in the United States, such as the McCain-Lieberman and Lieberman-Warner legislation, have failed. The House ultimately passed the Waxman-Markey bill in June 2009, which would have capped greenhouse emissions at 17 percent of 2005 levels and provided increased investment for clean energy technology, but the U.S. Senate failed to agree on a matching cap-and-trade bill. Furthermore, even relatively minor climate change mitigation regulations have faced bipartisan resistance, with issues like cap-and-trade and a carbon tax basically disappearing from political debate. In October 2011, the House passed a measure through a bipartisan voice vote, which would order U.S. airliners to not pay fees associated with a new EU emissions tax on air travel scheduled to take effect in January 2012.

The nine-state Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI) also provide evidence that the fifty states are capable of crafting their own climate change plans moulded to the particularities of their geography, resources, and region. The WCI, launched in 2007 by six U.S. states and four Canadian provinces along the western rim of North America, illustrates an effort to tackle climate change at the regional level. According to its design, the WCI forms working committees, which recommend policies aimed at collectively reducing greenhouse gas emissions among member states and provinces. Relying on a cap-and-trade system, WCI members aim to reduce regional greenhouse gas emissions by 15 percent from 2005 levels by 2020.

No: Opponents argue that the rest of the world is looking to the United States to act on climate change, and that pursuing national level reform—even if during the global financial crisis—could give the United States credibility and leverage in this area. Since the failure of cap-and-trade, no significant climate change legislation has passed the House or Senate, calling U.S. global leadership in this area into question. Many climate change analysts also point to criticism regarding the inaction of the United States during the COP-17 as evidence that the climate change issue may be negatively affecting perceptions of U.S. global leadership. Furthermore, some would also suggest that the December 2011 decision by Canada to withdraw from the Kyoto Protocol has placed the entire global climate change regime in jeopardy.

Opponents of a state-by-state strategy also point to New Jersey’s decision in 2011 to unilaterally pull out of the RGGI and Arizona’s move in 2010 to leave the Western Climate Initiative as evidence that a state-by-state approach to reducing emissions in the United States is too risky of a strategy to rely on. In short, a top-down approach, rather than bottom-up alternatives, is likely to be more effective, and more enforceable .

Finally, those calling for a national level reprioritization of the issue of climate change in the United States point to the recent passage of carbon tax legislation in another Annex 1 country, Australia, as evidence to support their position.

INTERNATIONAL CARBON TRADING

Should international carbon trading be a central part of U.S. climate change strategy?

Yes: Proponents of using international carbon trading argue that it lowers [PDF] compliance costs for U.S. companies by allowing them to buy cheap emissions-reduction credits from abroad in lieu of cutting their own emissions. In addition, trading based on either project-based offsets or broader schemes with relatively high baselines could also channel large amounts of money to developing countries. Many believe that such transfers are the only way to induce deep cuts in developing countries’ emissions. Some also make a political argument for trading: integrating countries’ emissions-cutting programs into a global market would make it more difficult for any country to back away from its obligations.

Supporters of international carbon trading differ on the forms of trading they support. Some support all options—project-based offsets, program-based offsets, sectoral trading, and economy-wide trading. Others support only certain variations, most commonly ones with wider scope such as sectoral or economy-wide options.

No: Opponents of international carbon trading make a variety of arguments. Some object to any efforts to transfer significant sums of money to developing countries, and hence oppose carbon trading. Others support such efforts but argue that they could often be done more effectively through large public funds rather than through carbon markets.

Some support carbon trading in principle, but object on the basis that many such systems are unworkable in practice. They point to the experience of the CDM, a part of the Kyoto Protocol that allows developed countries to pay for emissions-cutting projects in developing countries in lieu of reducing their emissions. The CDM has been widely criticized as inefficient and as including many projects that would have occurred anyhow. Some who criticize it believe that its problems can be fixed by moving to other schemes for carbon trading; others disagree.

A final group opposes international carbon trading on ethical grounds, arguing that developed countries have a moral obligation to reduce their emissions and that avoiding that obligation by paying others is wrong.

COUNTRY-BY-COUNTRY EMISSIONS TARGETS

Should the world agree to country-by-country targets for cutting greenhouse gas emissions?

Yes: Agreeing on country-by-country targets has become the primary goal of recent climate change negotiations. Proponents of assigning greenhouse gas emissions targets to all countries maintain that they are needed to ensure that aggregate global emissions do not exceed dangerous thresholds. They take their cue from the Kyoto Protocol and its recent extension until 2017 or 2020, which focuses on a “targets and timetables” approach for developed countries. Some experts argue that it would be helpful to develop emissions-reduction goals for major emitters by setting short-term timetables and by targeting specific sectors. Limiting emissions intensity based on the production process instead of setting absolute targets could also prove beneficial. Beyond these points, many note that country-by-country targets are essential to enabling full-blown global carbon trading schemes (which could reduce the cost of cutting global emissions) and argue that it is only fair for all countries to adopt targets if some do so.

No: Following the failure of the Copenhagen Accord, as well as a lack of agreement on a new legally binding emisssions treaty at the COP-17, some argue that it may be impossible to garner international consensus on country-specific emissions cuts. Capacity and verification also remain issues in developing countries, making it difficult to implement policies that control ultimate emissions (such as cap-and-trade systems). Others support global emissions cuts—often strongly—but argue that adopting targets is not necessary to achieving that end. They contend that international discussions should be focused on suites of emissions-cutting policies and measures (policy inputs) rather than on emissions (policy outcomes).

TRADE SANCTIONS

Should trade sanctions be used to enforce climate change rules?

Yes: Climate change agreements are notoriously weak on enforcement. The Kyoto Protocol technically included penalties for noncompliance; in practice, though, those penalties have not been enforced. Some have turned to trade sanctions as an enforcement tool, arguing that border adjustment tariffs are the appropriate sanction for noncompliance. These would, ostensibly, impose costs on imports from countries with weak climate regulation equal to the costs those countries avoid through lax regulation.

Some also argue that implementing a cap-and-trade system in the United States would politically require border adjustment provisions to compensate for productivity losses stemming from rising energy costs. Domestic legislation taking this factor into account passed in the House, but failed to get through the Senate. It is yet to be seen, however, how to implement these provisions without violating rules of the World Trade Organization (WTO). Others argue such a system would be too weak to prompt appropriate behavior, and push for more punitive sanctions.

Proponents of using sanctions for enforcement are also split over whether such sanctions must be part of an international agreement or might be imposed unilaterally. Those in the first school argue that internationally approved sanctions are more credible as a threat and less likely to disrupt the broader global trading system. They also contend that unilateral sanctions would be too weak. Those in the latter camp doubt that appropriate sanctions could be built into an international agreement and think that sanctions are worth pursuing unilaterally.

No: Opponents of using sanctions argue that they are ineffective and that they could create problems for broader trade and climate efforts. They assert that border adjustment tariffs would target only a limited part of a country’s economy (energy-intensive exports) and would impose a penalty smaller than the value of noncompliance.

Regardless of their efficacy, many object to unilateral sanctions on legal grounds. They argue that punitive sanctions would violate global trade rules. More controversially, some also argue that border adjustment tariffs, done unilaterally, would violate WTO rules. Either of these options, they contend, would not only cause harm to global trade, but also poison the political environment for international climate negotiations and cooperation. Most agree, though, that multilateral sanctions, if made part of an international climate agreement, could be designed to withstand WTO scrutiny.

Recent Developments

GCF OPENS IN KOREA

December 2013

In December 2013, the Green Climate Fund (GCF) opened its headquarters in Songdo, South Korea. The GCF was originally established as a result of the C0P-16 negotiations in Cancun, Mexico. It is designed to manage annual commitments that will escalate to a combined $100 billion by 2020 for adaptation. Developed countries have pledged to provide this assistance to developing countries to help them adapt to the impacts of climate change and achieve their own emissions reduction targets. Though the opening of a physical headquarters was a welcome first step, it remained difficult to determine whether contributions to date by developed countries were genuinely “additional” allocations to this effort, or simply reapportionment of previously allocated financial resources. 

COP-19 IN WARSAW

November 2013

In November 2013, the nineteenth session of the Conference of the Parties to the UN Framework Convention on Climate Change convened in Warsaw, Poland. Longstanding disagreements between industrialized and developing countries continued to obstruct efforts to reach consensus on international emissions reduction targets. Still, the establishment of the Warsaw Mechanism for Loss and Damage was a sign of progress. This mechanism may mobilize support for overcoming these disagreements between industrialized and developing countries by providing a substantive means for the former to render assistance to the latter for adaptation to the impacts of climate change. This momentum could prove critical to realizing the full potential of the 2014 COP in Lima, Peru and ultimately the 2015 COP in Paris, France.

IPCCC PUBLISHES CARBON BUDGET

September 2013

In September 2013, the Intergovernmental Panel on Climate Change (IPCC) released a draft of its working group report that will ultimately be released as part of the IPCC 5th Assessment Report. The report articulated a target threshold of one million metric tons for the planet’s human population in order to impede global warming in excess of 3.6 degrees Fahrenheit from a preindustrial baseline. If warming exceeds that temperature, the panel warned of perilous consequences across the entirety of the climate system. Remarkably, the IPCC estimates the remainder of this “carbon budget” will be completely expended by the year 2045. Indeed, the National Ocean and Atmospheric Administration of the United States earlier the same year logged measurements that indicated atmospheric carbon dioxide had reached an average daily level in excess of 400 parts per million—a level of carbon dioxide in the atmosphere that is not believed to have been reached in the preceding three million years.

HUMAN CAUSES OF CLIMATE CHANGE

May 2013

A survey has found that 97 percent of scientific studies on climate change conclude human activity, due to the consumption of fossil fuels, is causing global warming. The survey, published in Environmental Research Letters, examined the work of nearly 12,000 peer-reviewed research papers published over the last two decades. Of these, over 4,000 papers took a position on the causes of climate change, of which 0.7 percent disputed the consensus of anthropogenic-induced warming. A further 2.2 percent argued that the science is unclear one way or another. "Our findings prove that there is a strong scientific agreement about the cause of climate change," says survey director John Cook, "despite public perceptions to the contrary." Indeed, a public opinion survey conducted by the Pew Research Center in October 2012 reported that only 45 percent of Americans held the belief that "scientists agree Earth is getting warmer because of human activity."

CHINA TO CUT HCFCS

April 2013

The Multilateral Fund of the Montreal Protocol struck an agreement with the Chinese government on the elimination of the industrial production of ozone-depleting substances (ODS). In exchange for $385 million over a seventeen-year period, China committed to retiring all production capacity of hydrochlorofluorocarbons (HCFCs) by 2030. Beijing also agreed to retire any surplus capacity of HCFCs that is not currently in use. China is the world’s largest producer and consumer of HCFCs. Since ratification of the Montreal Protocol in 1987, state parties have eliminated ninety-seven percent of ODS, and HCFCs represent one of the last remaining sources of ozone pollution that the Protocol aims to curb.

CALIFORNIA-CANADIAN INITIATIVE

April 2013

On April 22, the State of California officially linked its cap-and-trade program with a similar scheme in Quebec province. Established in 2006 under a landmark global warming law (AB 32), California’s program places a price on carbon emissions and allows companies to buy and sell carbon credits issued at state auctions. Under themerger, which formally begins on January 1, 2014, California businesses will be able to use Quebec’s permits and California’s permits will be valid in Quebec.

Options for Strengthening the Climate Change Regime

INTRODUCTION

The multi-faceted threats posed by climate change demand policies that address both mitigation and adaptation. Operationally, this will require a variety of flexible partnerships among national, bilateral, and multilateral actors, and a combination of short-term and long-term strategies.

These recommendations reflect the views of Stewart M. Patrick, director of the program on international institutions and global governance.

POST-KYOTO FRAMEWORK

Adopt a 2020 vision toward the future

While the Durban Platform, approved by nearly two hundred countries in December 2011, may have provided a small window of breathing room concerning the development of a successor accord to the Kyoto Protocol, much work remains to be done. In moving towards a post–Kyoto agreement due to come into force in 2020, the international community should remain cognizant of certain trends that emerged during and immediately after the COP-17.

This, for one, includes acknowledging growing cracks among countries in the developing world regarding accepting binding emissions targets—an issue of critical concern to small island developing states in the Pacific and other areas. These fissures should be explored as much as possible to both create a global consensus regarding the creation of major greenhouse gas emissions targets and to isolate intransigent countries. Second, the global financial crisis cannot become a catch-all excuse to avoid meeting pledges for global climate change finance mechanisms like the Green Climate Fund. While the $50 million in seed money promised during the COP-17 is an excellent start, more—much more—is needed as the environmental effects of climate change become increasingly apparent around the world. Importantly, the narrative among developed economies must change because waiting to act will be substantially more costly than action now. Third, the international community must not let its existing accomplishments on climate change—such as the Kyoto Protocol itself—fall by the wayside as it struggles to develop new alternatives for a comprehensive climate change accord. Canada’s December 2011 decision to withdraw from the Kyoto Protocol should be interpreted as a crystal clear warning that the agreement is increasingly at risk of unraveling. As a result, countries such as the United States, China, and India need to place a fresh emphasis on their commitments to combat climate change, including providing clear, reasonable, and practical indications as to their expectations for a post-Kyoto accord. Even though the Durban Platform’s call for a 2020 accord—which would apply both to developed and developing states—with "legal force" does not necessarily imply "legally binding," the time for big emitters like the United States to simply stay the course on climate change has expired.

CLEAN DEVELOPMENT MECHANISM

Reform, refresh, and renew the Clean Development Mechanism

The Clean Development Mechanism (CDM) has come under fire on many fronts. Some have argued that too many nonadditional projects (those that would have reduced emissions even without the CDM) have been approved; others argue that the project approval process is too stringent. And others have argued that because it has no legal life beyond Kyoto, it will fail to bring about lasting results. These criticisms have on various occasions been right.

Scrapping the CDM entirely is not likely to be politically feasible, especially considering the COP-17 decision to extend the Kyoto Protocol for at least another five years. Reforming the CDM will thus be necessary to ensure that money is not wasted and that large volumes of offset credits remain available. The international community should reform CDM to focus on the least developed countries and on activities that are unquestionably additional. It should focus on sector-based trading for other countries. This could allow crediting for sectors that beat aggressive preset baselines, without penalizing them for exceeding those baselines. At the same time, the UNFCCC will need to work on streamlining the CDM approval process. Ideally, the CDM bureaucracy could be substantially reduced if CDM governance were shifted more to the countries providing funds.

The recent announcement of a year-long CDM reform consultation process process as well as the decision during the COP-17 in Durban to formally include carbon capture storage projects under the CDM are significant first steps. However, both must be followed by firm policy action to keep the CDM relevant and economically sustainable.

U.S DOMESTIC POLICY

Force progress in U.S. domestic climate change policy

The failure to pass comprehensive U.S. climate legislation, with a sweeping carbon cap-and-trade at its base, is a significant setback to U.S. mitigation efforts. Cutting U.S. emissions remains an essential step toward a climate-change solution at home and abroad, providing not only an environmentally sound solution to the problem, but giving the United States leverage in international bargaining as well. The increasingly intractable position of the United States became more apparent during the COP-17 meeting in Durban. There, the United States faced nearly universal criticism for not showing the leadership necessary to address climate change.

While a cap-and-trade system remains ideal, deep cuts in U.S. emissions can be pursued in a variety of ways, including energy-efficiency regulations, subsidies for renewable energy, and tax incentives for low-carbon technologies. Effort to reach consensus on these solutions should be pursued in the short term, keeping in mind that a broad-based and economy-wide price on carbon is essential to driving the very deep emissions cuts that will be needed through 2050 and beyond at a reasonable economic cost.

Facing a divided Congress and significant pressure to reduce the federal deficit, President Obama seems to have limited options with regard to advancing an effective domestic climate change policy; nonetheless the picture isfar from hopeless. One way for Obama to force progress is to issue more executive orders and administrative rulemakings to partially substitute for Congressional opposition to his climate and energy agenda. Working through the EPA and the Clean Air Act, he could enact tougher rules that would cut carbon pollution from power plants and mitigate the potential effects of the failure to enact a national cap-and-trade program. An agreement reached with the auto industry in July 2011 to double fuel standards to fifty-four miles per gallon by 2025 is also a step in the right direction, provided that its stipulations are enforced. Other significant measures the administration can take include government procurement of renewable energy and energy-efficient products and services, and reductions in subsidies for fossil fuel-related research and extraction. Perhaps one of the most significant steps President Obama can take towards realizing his climate change policy is to strike a deal with China to reduce global emissions of CO2. The two nations combined account for 40 percent of the world’s carbon pollution, so a bilateral agreement could mollify Obama’s opponents in Congress and encourage other nations to follow suit.

In the longer term, the United States and its international partners should consider the following steps:

MEASURING AND MONITORING EMISSIONS REDUCTIONS

Build a credible institution or institutions for measuring, reporting, and verifying global emissions and emissions-cutting efforts

Countries will not make strong efforts to reduce emissions unless they are confident that others are playing their part. Nor will wealthier countries provide financial or technological assistance to poorer counterparts unless they are confident that the efforts they support will actually be implemented.

This demands robust institutional capacity to verify that countries are making the cuts and investing in the emissions-cutting actions that they claim to be. The precise approach to this could take multiple forms, with the task falling primarily to the international level at one extreme, and domestic institutions at the other. At a minimum, an international institution will need to aggregate national-level reporting; this might usefully happen under the aegis of the UNFCCC. Other lessons in monitoring and verification might be learned from experience with the WTO, IMF, and OECD.

CLIMATE STRATEGIES IN DEVELOPMENT INSTITUTIONS

Reform Bretton Woods and UN institutions

Institutions that support global economic development have a large potential role in promoting low-carbon growth and adaptation to climate change. The World Bank, along with the regional development banks, has unique capacity to mobilize large amounts of capital for the sorts of investments that will be needed in low-carbon infrastructure. Several UN organizations, such as the United Nations Development Program and United Nations Environment Program, lack the ability to handle such large infrastructure projects but can play a major role in building relevant capacity in developing countries. All these organizations would benefit from both clear strategies for supporting climate action and increased related funding.

They might also, more controversially, consider promoting policy shifts through conditionality on their assistance. For example, the World Bank might condition assistance in increasing energy supply on efforts to moderate demand through subsidy reform. Such steps would be difficult politically but would not be unprecedented.

REDIRECT MONEY FROM OFFSETS

Set up substantial international funds for low-carbon technology finance

International financial transfers in support of low-carbon development have occurred principally through carbon finance (i.e., offsets). Yet offsets are often an inefficient way of financially supporting low-carbon development. Many countries lack the capacity to administer robust offset systems yet could benefit from financial support for emissions-cutting activities. Offset schemes also often overpay, sometimes massively, for reductions; dedicated funds could remove that waste. Funds can also be targeted at eliminating specific problems that stand in the way of private financial flows, by offering tailored products like risk guarantees and concessional loans. Funds can also target opportunities that are difficult to quantify for the purposes of offsets, such as investments in public transportation and long-distance grid infrastructure, or avoided deforestation, where measuring emissions changes is difficult.

CLIMATE ON G20 AGENDA

Make climate change a regular Group of Twenty agenda item

Dealing with climate change will require high-level political leadership and deal-making of a sort that is difficult to achieve through formal negotiations with the 194 parties to the UN Framework Convention on Climate Changeby dedicated climate diplomats alone. Smaller gatherings that include heads of state and powerful cabinet ministers have the potential to unlock less rigid forms of cooperation and to find opportunities to trade across issue areas.

Such meetings also provide a regular spotlight that can help hold leaders accountable for past promises in the absence of strong formal compliance mechanisms. The Group of Twenty (G20) has effectively replaced the Group of Eight (G8) as the main multilateral consultative forum for economic decision-making. Climate issues will largely be transferred there, though in the short term the G20 will remain primarily focused on finance as it was during its most recent summit in November 2011. The United States and other big emitters should likewise continue regular meetings of the Major Economies Forum, as a minilateral negotiating framework parallel—and complementary—to the ongoing UNFCCC process.