COP 28, as the prior 27, failed to accomplish the most important goals
Two weeks of intense negotiations in the United Arab Emirates resulted in progress and frustration. This is what 195 countries finally agreed to at COP 28:
“We call on countries to contribute to global efforts to transition away from fossil fuels in energy systems in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.”
It is easy to make fun of this “agreement” as platitudes without operational content. But I see little value in debating whether the COP 28 glass is more full or more empty. Instead, I will focus on the “good, the bad and the ugly” in the meeting recently concluded in Dubai.
News Flash #1: Like the previous 27 meetings, COP 28 clearly did not accomplish its mission. We have no international climate treaty or agreement.
What is the COP?
COP stands for Conference of the Parties. It was created in 1992 at the Earth Summit held in Rio de Janeiro by the United Nations Framework Convention on Climate Change, or UNFCCC. Its mandate was to organize future meetings and make whatever decisions were necessary to “(1) stabilize greenhouse gas emissions and prevent dangerous interference with the climate system, while also (2) enabling sustainable economic development to proceed.”
News Flash #2: An international agreement is necessary. In future articles, I will describe impressive things Portland and the Biden Administration have done. But no matter what cities, states or nations do on their own, without an effective international agreement, there is no chance we will avoid cataclysmic climate change. It’s that simple.
News Flash #3: As more and more climate disasters frighten more and more people, and therefore, pressure on international negotiations increases, it is possible to see how voluntary national pledges to reduce emissions, known as “nationally determined contributions” or NDCs, could be revised to become meaningful commitments for which countries could be held responsible.
Buried beneath the all-too-familiar stench of failure at COP 28, which the media highlighted, are barely visible sprouts of seedlings that could blossom into an effective international agreement before it is too late.
Why is an international agreement necessary?
When any country reduces its carbon emissions, its citizens bear the entire cost. But most of the benefits from averting climate change — preventing more hurricanes, floods and natural disasters — are enjoyed by citizens of other countries. For example, consider China, where roughly 1 billion of the 6 billion people on earth live. Five-sixths of the benefits from reductions in China are enjoyed by people living outside China.
For less populous countries the fraction of the benefit resulting from its emissions reductions is even smaller. This is why countries will predictably reduce emissions by far less than needed.
Economists have given this dilemma a name, the “free rider problem,” because there is perverse incentive for countries not to reduce its emissions but instead “ride for free” on other countries’ emission reductions.
The key to overcoming the free rider problem, which plagued efforts to reach an international agreement at 28 COPs and counting, is to offer countries a new option: In exchange for a country’s promise to reduce emissions, its citizens will benefit from emission reductions in other countries.
When countries mutually agree on reductions, the benefits each country wins for its citizens are greatly expanded. For example, Chinese citizens will benefit not only from China's emission reductions but also from reductions in the United States and every other country.
This difference is “a game changer,” but it requires mutual agreement on reductions. The trick, of course, is to negotiate such a deal successfully. Twenty-eight COPs failed to achieve this goal, but it must be achieved if humanity is to avoid cataclysmic climate change.
In words immortalized by the movie “Apollo 13”: “Failure is not an option.” We must have a successful international agreement.
What should an international agreement hope to achieve?
1. It should reduce global emissions enough to reduce the danger of cataclysmic climate change to an acceptable risk.
2. It should assign responsibilities to countries based on how much they contributed to the problem and how capable they are of contributing to its solution.
3. It should minimize the overall cost of reducing global emissions.
An international agreement should be effective, equitable and efficient.
Effective: How much and how fast must global carbon emissions be reduced to decrease the risk of cataclysmic climate change to an acceptable level? Climate scientists say, in no uncertain terms, unless global emissions are reduced by at least 80% by 2050, and possibly by even more, humanity is taking a risk no sane person would take. This conclusion is spelled out by United Nations Framework Convention on Climate Change scientists in what is called the Global Stocktake available on its website.
Equitable: Why isn’t the solution to hold every country responsible for an 80% reduction in its carbon emissions by 2050? It would be so unfair to lesser developed countries, or LDCs, they will never agree to it, and in some cases, could not do it even if they tried. This is why beginning in Rio in 1992, and at every international meeting since, those assembled have unanimously agreed the following principle should guide distributing global emission reduction among different countries:
Responsibilities for national emission reductions should be in accord with each country’s responsibility for having created the problem, and each country’s capability to contribute to solving the problem.
Over the years, some countries put much less greenhouse gas into the upper atmosphere per inhabitant than other countries. Because they are less developed economically, some countries are far less capable of bearing costs to reduce emissions. In short, for 30 years, the principle of differential responsibility and capability has been repeatedly reaffirmed as how each country’s “fair share” of emission reductions should be determined.
For decades, economists did not know how to operationalize this principle, i.e. to quantify and calculate NDCs based on differential responsibility and capability. But fortunately, that intellectual problem is now solved. Several research centers successfully “operationalized” differential responsibility and capability.
EcoEquity’s website hosts a “climate equity reference calculator,” which allows visitors to calculate every country’s fair share of emission reductions and to compare it to the latest pledge or NDC the country made.
The good
The good news is even before COP 28 convened, almost every lesser developed country already pledged to take responsibility for its fair share of emission reductions given its lower level of responsibility and capability. And if all countries would do likewise, an effective and equitable international agreement would be within reach.
The bad
The bad news is not a single more developed country, or MDC, pledged to take responsibility for its fair share of emission reductions given its higher levels of responsibility and capability.
However, before throwing in the towel and concluding MDC obstinance dooms any hope of achieving an effective and equitable international agreement at a future COP, it is worth considering a silver lining in the pledges MDCs have made. For example, the United States’ pledge falls short of our fair share by 7.9 metric tons of CO2 equivalent per person, and the United Kingdom’s pledge falls short of its fair share by 5.6 metric tons of CO2 equivalent per person. However, both countries and many other MDCs pledged to reduce domestic emissions sufficiently.
Both the United States and United Kingdom pledged to reduce emissions by what they can reasonably be expected to accomplish domestically. They failed to pledge to pay for additional reductions they should take responsibility for, which could be done cheaper elsewhere.
This is a common pattern for most MDCs. The problem is MDCs’ greater responsibility and capability require them to pay for considerably more emission reductions than they can accomplish reasonably cheaply through domestic reductions. But that need not mean “game over.”
Efficient: As a lifelong economist, I can assure you efficiency is always the foremost, if not the only, goal many of my fellow economists are concerned about. But even for those not particularly concerned with efficiency, there is a compelling reason to want an agreement to reduce the overall cost of achieving global emission reductions to a minimum.
It is painfully obvious how difficult it is to get MDC governments to agree to take responsibility for their fair share of emission reductions. We just finished COP 28, and no MDC pledged a fair NDC; therefore, we have no agreement.
If we make it much more expensive for MDCs than it needs to be to accept responsibility for their fair share, they will be less willing to do so. However, a well-designed international carbon market can considerably reduce the MDCs’ cost of doing their fair share and be of great benefit to LDCs as well.
An International Carbon Market: Nothing disgusts many climate activists more than the idea of selling the right to pollute, and there have been many bogus carbon credits and failed carbon markets to criticize.
However, the hard truth is it is impossible to reduce the cost of MDCs' fair share of reductions if they must all be done domestically.
For example, while the first half of reductions in the United States could be done reasonably cheaply, the second half would be terribly expensive. But if the United States can meet its obligations by buying the second half more cheaply through purchases of CERs from countries like India, where they cost far less, the burden on the United States is more bearable.
It is possible to insulate an international carbon market from the kinds of loop-holes and shenanigans plaguing ill-designed carbon markets to date:
1. Any country should be allowed to certify emission reduction credits for emitters within its national territory who apply for credits to sell in an international carbon market.
2. When calculating whether or not a country complied with its national pledge to reduce emissions, any emission reduction credits purchased by anyone within the country should be added to and raise the country’s emission cap. Any CERs sold by anyone within the country should be subtracted from and lower the country’s emission cap.
A future column will explain why and how an international carbon market along these lines avoids problems critics have raised and provide estimates of how much it would reduce costs for MDCs while providing funds for LDCs to develop using alternative energy sources.
The idea is to take advantage of the fact that many MDCs have already pledged to reduce their domestic emissions sufficiently. We need to make it cheaper for them to take responsibility for the additional reductions at a reasonable cost by buying credits from sources in LDCs. Hopefully, this may overcome their reluctance to do their fair share at some future COP before it is too late.
A recent study by the Political Economy Research Institute at the University of Massachusetts estimated the cost of domestic reductions plus purchases of emission reduction credits allowing the United States to do its fair share would be roughly 1.5% of GDP, which is far less than the 3.5% of GDP the United States currently spends on its military.
The ugly
The alternative of attempting to achieve fairness through MDC donations to various climate funds at COP 28 was ugly. According to the Heinrich-Boll-Stiftung Washington D.C. office, “discussion of loss and damage finance should use $400 billion per year as a floor, and we should expect to have to revise it upward over time.” But pledges at COP 28 from MDCs totaled a meager $400 million. When a fund needs billions but contributions are in millions, you don’t need a weatherman to know which way the wind blows. The United States pledged a meager $13.5 million. In comparison, a single aircraft carrier in the U.S. fleet costs $13.3 billion.
Unfortunately, it is painfully apparent that guilt and charity are far less powerful incentives in today’s world than self-interest. Therefore, no matter how well-intentioned efforts to prevent climate change by appealing to MDC governments to donate funds to help LDC governments, it will inevitably yield much less than what is deserved and needed, as explained.
But if national emission reductions are set fairly, which almost all LDCs have already pledged to do, self-interest would drive emitters in MDCs to purchase emission reduction credits from sellers in less developed countries, yielding the largest flow of payments from the global North to the global South in world history. Unfortunately, not only did MDC delegations fail to increase their pledges to loss and damage funds significantly, discussion of how to create an effective international carbon market remained a verboten subject in Dubai.
Human civilization will not survive unless we achieve an effective international climate agreement. COP 29 is scheduled to take place November 2024 in Azerbaijan, like the United Arab Emirates, also a Petro State. The climate doomsday clock is still ticking. It’s not too late to stop it before it hits midnight.
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