A handful of countries can solve the climate problem

One of the themes at a recent climate conference arranged by the Norwegian research program RENERGI was how we can achieve an effective international climate agreement. Professor in political science Jon Hovi at the University of Oslo and CICERO has studied this topic for years. He argues that although the international community faces many obstacles in mitigating the climate problem, solutions are possible.

Continue the Kyoto Process?

Hovi doubts that an agreement that would basically extend the Kyoto Protocol for another commitment period is the way to go to achieve more effective climate cooperation.

“The Kyoto Protocol has been described as a cautious first step, one that will make it possible for others to join in later. But key countries like the United States and China have few incentives to join an international climate agreement based on the Kyoto Protocol,” says Hovi.

One suggestion for increasing the incentives for other countries to join the climate cooperation is to link the climate issue to other areas of international cooperation, such as technology, trade, or development assistance. But Hovi does not believe that such issue linkage will be credible. For example, it is not in the best interests of the Kyoto countries to undermine the World Trade Organization (WTO) by introducing trade restrictions against countries that do not participate in Kyoto – such as the United States. Moreover, the WTO’s non-discrimination principle makes it difficult to introduce trade restrictions against the United States and Australia but not against developing countries, which also do not have binding emissions targets.

“Besides, history shows that this kind of pressure rarely works on a superpower such as the United States,” says Hovi.

Another obstacle is that developing countries prioritize their own economic development. They will not accept binding emissions targets until the United States also reduces its own greenhouse gas emissions. At the same time, the United States is unwilling to jeopardize the competitiveness of its own business and industry, and thus does not wish to participate in an international agreement that does not also include the developing countries.

“To overcome this particular obstacle, we should focus on climate measures that do not threaten economic development,” advises Hovi.

The United States is also sceptical to the UN system, and Hovi believes that an alternative international climate agreement should not necessarily be put together within the UN framework, as the Kyoto Protocol is.

Point of departure in American climate policy?

Hovi believes that in the long run, a way to re-engage the United States might be to base a future climate agreement on federal U.S. climate policy.

“The United States is often more willing to cooperate when it already has a national policy in place. For example, the Montreal Protocol on substances that deplete the ozone layer in many ways represented an international extension of a regulatory framework that already existed in the United States. Thus U.S. business and industry acted as a pusher in the effort to build an international agreement.”

But the problem with this tactic is that there currently is no coherent U.S. climate policy at the federal level. Whatever policy exists is fragmented and formative at best.

The Kyoto targets are costly to meet. Kyoto thus depends on effective enforcement. The enforcement mechanism that was introduced through the Marrakesh accords is primarily based on a system whereby countries that do not meet their targets during the first commitment period are sanctioned by having to reduce even more during the second period. The problem is that there is nothing to stop a non-compliant country from putting off this additional emissions reduction – perhaps indefinitely. In addition, innocent third-parties suffer when the sanctions are carried out. As a potential buyer of emissions permits and a major exporter of fossil fuels, Norway will be particularly hard hit, because carrying out the punishment will cause the price of fossil fuel to go down and the price of emissions permits to go up. Finally, whereas the compliance system will impose penalties on a country that is a member and reduces emissions, but fails to reach its emissions target, it provides no basis for punishing a country that declines to be a member and does nothing to reduce its emissions. Thus, the compliance system is arguably unfair.

Hovi thinks that internationally it is politically difficult to achieve an effective enforcement mechanism. For this reason, it may be a good idea to focus on an agreement that does not need enforcement.

An agreement that everyone wants to be part of?

Many of the proposed alternatives to the Kyoto Protocol resemble Kyoto in that they require enforcement. For example, this is true for regional climate agreements, an agreement based on emissions intensity targets, and an agreement based on harmonized carbon taxes. One type of agreement that does not depend on enforcement is an agreement where the parties commit to using emissions-reducing technology.

Supplemented with agreements on technology development and transfer, an agreement on the use of emissions-reducing technology can set consistent technology standards in a way that makes it in best the interest of all countries to participate. Assuming that network externalities exist – that is, the costs or benefits depend on whether or not other countries also choose the same technology – then each country will want to use the same technology as other countries.

In short, the more countries that use a certain technology, the more attractive it will be for others to switch to this technology. An agreement can enable many, or even all, countries to switch to more climate-friendly technology simultaneously.

“It will thus be in each country’s own interest to join this kind of agreement when the number of participants exceeds a certain threshold. This means that the need for enforcement is reduced the more participants there are,” says Hovi. “In Kyoto, the situation is the reverse: the more countries that join, and the more ambitious their emission targets, the greater the need for enforcement.”

The problem with an agreement based on technology standards is that the technology that would significantly reduce emissions does not currently exist. Such technology must thus be developed first. An agreement on technology standards must thus be supplemented with agreements on technology development and technology transfer.

“Nevertheless, technology agreements are a very promising concept,” concludes Hovi.