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Near-Term Greenhouse Gas Emissions Targets

Russia's ratification of the Kyoto Protocol on global climate change ushers in a new era of international cooperation that will begin when the protocol goes into force this coming February. Signatories are now obligated to limit their annual emissions of greenhouse gases (GHG) beginning in 2008 to levels specified by the protocol.

However, the overarching treaty of which the protocol is a part -- the United Nations Framework Convention on Climate Change (UNFCCC) -- states the objective of the treaty is "to achieve the stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system." Thus, the treaty's objective is not limiting annual emissions, but rather stabilizing GHG concentrations. While this can occur only with reduction of annual emissions, there is no guarantee the Kyoto emission targets are consistent with any particular stabilization goal. Indeed, they are largely ad hoc targets that result from political negotiation rather than scientific process.

If a country wanted to determine a near-term GHG emission target in a scientific manner, that is, through some nonpolitical process of structured decisionmaking, how would it go about the task and what might that target be?

Senior Fellow Raymond J. Kopp addresses these and related questions in his discussion paper Near-Term Greenhouse Gas Emissions Targets. This short paper examines the conceptual foundations upon which one might base a domestic climate policy for the United States and attempts to derive a scientifically based 2010 emissions target.

There are two approaches one can take to this challenge. The first is standard cost-benefit analysis as employed in federal environmental policymaking. Cost-benefit analysis is the explicit balancing of the costs of a policy against its benefits. This method would be able to provide both a greenhouse gas goal and a mechanism by which to choose among approaches to attain the goal. The second approach is cost-effectiveness analysis, which takes the goal as given and focuses on the least-cost strategy of reaching it.

Link to Discussion Paper
Near-Term Greenhouse Gas Emissions Targets
Discussion Paper 04-41
November 2004

Kopp's paper requires several pieces of data and assumptions, including when emissions peak and how much it will cost to abate emissions, and how much countries are willing to spend to protect the global climate. Some sensitivity analysis has been applied to the most important assumptions. With that caveat in mind, the cost-effectiveness analysis suggests a near-term (2010) U.S. emission reduction target of 2 percent below business as usual or a reduction of 36 million metric tons carbon in 2010. If one varies the assumption regarding the point in time at which U.S. emissions peak, the near-term target rises considerably.

While it is possible to use models to trace out economically efficient emissions paths, in the real world it is difficult to know what near-term target best positions the U.S. social, political, and economic systems to reach the desired midterm and long-term goals. It is also difficult to know exactly how these goals will be achieved.

In addition to the language regarding stabilizing greenhouse gas concentrations at levels that would prevent dangerous interference with the climate system, the UNFCCC also requires that such a concentration level should be achieved within a time frame that "enables economic development to proceed in a sustainable manner." Many interpret this phrase to suggest that stabilization of greenhouse gases should be undertaken in a manner that won't disrupt the global economy and therefore envisions some balancing of climate and economic systems.

The challenge in setting near-term targets is to design a policy that predicts both global and country-specific emissions through time, creating a temporal path, so to speak, for each. These targets would need to achieve a balance of the economic cost of those actions against the reduced threat of global climate change mentioned above. These temporal paths would specify annual emissions rates beginning with the present and extending into the future until global concentrations were stabilized at the desired level. The proper near-term emission target for a given country can then be read off the country's temporal emissions path.

Putting this result in context, the McCain-Lieberman Climate Stewardship Act of 2003 called for U.S. emissions to be capped at 2000 levels in 2010. If implemented this legislation would require reductions in the neighborhood of 220 million metric tons of carbon. Another point of comparison is the Bush administration plan for an 18 percent improvement in greenhouse gas intensity amounting to a 95 million metric ton of carbon in 2010.

When cost-benefit analysis is applied, one finds similar results -- about a 2 percent reduction from business as usual in 2010, 3 percent in 2020, and 7 percent in 2030. If one uses the high end of the range of benefit estimates, the peak in U.S. emissions occurs earlier and thus the required near-term reductions are greater.

In his conclusion Kopp states, the important point regarding near-term targets is not the quantity of emissions reductions they call for, but rather, is the incentive properties they provide for future action. The global climate system would likely be no worse off if U.S. climate policy provided for few if any emission reductions in the near-term as long as policies necessary to generate the R&D and investment paths required by the new energy technologies were in place. Unfortunately, Kopp cautions, "we do not know if the near-term targets suggested in this paper will provide the necessary incentives for action."


Summary and Analysis of McCain-Lieberman
Understanding the McCain-Lieberman Stewardship Act

RFF Fellow Billy Pizer and Ray Kopp assess this bipartisan Senate bill aimed at cutting greenhouse gas emissions.

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