Climate Change: The Move to Action (AOSS 480 // NRE 480) Richard B. Rood Space Research Building (North Campus) Winter 2010 April 1, 2010

Class News Ctools site: AOSS W10AOSS W10 On Line: 2008 Class2008 Class –Reference list from courseReference list from course Rood Blog Data Base

Projects Final presentation discussion; –April 20 last day of class Summary lecture discussion –How to talk science? –Climate intertwined with everything? After class meetings –3/30: Transportation –4/1: Efficiency, New York Utility –4/6: Near-term solutions –4/8: Michigan’s response

Events Arun Agrawal Driver of tradeoffs and synergies between livelihoods and carbon storage in forest commons –April 1, 2010 –Room 1024 Dana –Time: 4:00 - 5:00 (There will be refreshments)

Events Jim Hansen Global Climate Change What Must We Do Now? –April 6, 2010 –Blau Auditorium, Ross School of Business, –Time: 4:00 - 5:30, Reception following

News of Climate Interest New Federal Automobile Mileage StandardsNew Federal Automobile Mileage Standards Off-shore drilling and national security Opinion piece on Obama and Energy (and Climate?)Opinion piece on Obama and Energy (and Climate?)

Readings on Local Servers Assigned Readings –Dembach: Climate Change Law: An IntroductionDembach: Climate Change Law: An Introduction Very important Reading –Farber: Legal Status of Climate ModelsFarber: Legal Status of Climate Models

From Last Time Introduced a set of “big” issues –Energy summary –Atmospheric stabilization –Role of efficiency –Divide between oil consumers and oil producers –Divide between rich and poor –Motivation to respond Policy response Scientific uncertainty and policy Policy Catalysts

What is short-term and long-term? 25 years 50 years75 years100 years0 years ENERGY SECURITY ECONOMY CLIMATE CHANGE Pose that time scales for addressing climate change as a society are best defined by human dimensions. Length of infrastructure investment, accumulation of wealth over a lifetime,... LONG SHORT There are short-term issues important to climate change. Election time scales

We arrive at levels of granularity TEMPORAL NEAR-TERMLONG-TERM SPATIAL LOCAL GLOBAL WEALTH Small scales inform large scales. Large scales inform small scales. Need to introduce spatial scales as well Sandvik: Wealth and Climate Change

The Official Policy is: United Nations Framework Convention on Climate Change –Framework Convention on Climate ChangeFramework Convention on Climate Change

What is COP? COP is the Conference of Parties –Parties are those countries who have signed the United Nations Framework Convention on Climate Change. There are 192 signatories.Framework Convention on Climate Change Essential Background UNFCCC

Michigan Observer Status Framework Convention Parties and ObserversParties and Observers –Parties are signatories of Framework Convention –Observers are invited to the meeting for participation, transparency, and accountability United Nations Representatives Intergovernmental Organizations Non-governmental Organizations –Virtual ParticipationVirtual Participation

Framework Convention on Climate Change (US in part of this.) UN Framework Convention on Climate Change (1992, non-binding, voluntary, 192 signers) –Reduce CO 2 Emissions in 2000 to 1990 levels –Inventories of greenhouse gas emissions –Mitigate Climate Change Mid-1990’s –No reduction in emissions –Evidence of warming and impacts

Framework Convention on Climate Change

Development of International Approach to Climate Change IPCC established Kyoto Protocol ?????Framework Convention (UNFCCC) Scientific assessment Non-binding aim Binding emissions target

Dangerous climate change? What is dangerous?

Stern Report Draws on recent science which points to ‘significant risks of temperature increases above 5°C under business-as-usual by the early part of the next century’ — other studies typically have focused on increases of 2–3°C. Treats aversion to risk explicitly. Adopts low pure time discount rates to give future generations equal weight. Takes account of the disproportionate impacts on poor regions.

Dangerous climate change? Stern, 2006

Stern Report Considered a radical revision of climate change economics. –If we don’t act now it will cost between 5% and 20% of gross domestic product (an aggregate measure of economy.) Stands in contrast to many studies that usually come to numbers of closer to 1% –The idea that initiation of a policy with a slow growth rate will have little impact on the economy or environment in the beginning, but will ultimately become important when the nature of expenditures is more clear.

Some carry away messages Determine what is a tolerable ceiling for carbon dioxide. -Gives cap for a cap and trade system. -Tolerable ceilings have been posed as between 450 and 550 ppm. -Ice sheet melting and sea level? -Oceanic circulation / The Gulf Stream? -Ocean acidification? -Determine a tolerable measure of increased temperature -Copenhagen Accord (2009)  2 o C

Dangerous climate change? Stern, 2006

Back to Stabilization

Basic constraint on carbon policy 350.org

Basic constraint on carbon policy Stabilizing concentrations Means Action Now … Max Year Max Emission Start Date Ceiling (ppmv) Too late – 1.8 tons // 1990 – 5.8 tons // 2000 – 6.5 tons Thanks to Rosina Bierbaum

1992 Convention Commitments All Parties agree to: 4.1.b. Mitigate emissions and enhance sinks 4.1.c. Promote technology development and transfer 4.1.e. Cooperate on research and observation Developed Countries’ aim to return emissions to 1990 levels by the end of the century

Assessment Mid-1990’s –No reduction in emissions –Evidence of warming and impacts 2001 –No reduction in emissions –Evidence of warming and impacts 2007 –No reduction in emissions –Evidence of warming and impacts

Increase of Atmospheric Carbon Dioxide (CO 2 ) Data and more information “ This generation has altered the composition of the atmosphere on a global scale through … a steady increase in carbon dioxide from the burning of fossil fuels. ” --Lyndon Johnson Special Message to Congress, 1965

Kyoto Protocol followed 1995 assessments Why is the Kyoto Protocol still relevant?

Kyoto Protocol Kyoto Protocol (December, 1997, binding limits on or reduction of emissions) –Must be signed (155 signers (?186)) and ratified At least 55 countries That represent 55 % or more of emissions –Open for signatures on March 16, 1998 –Went into effect on February 16, 2005 After Russia signed and ratified

Kyoto Protocol Requirements Developed nations reduce their emissions 5.2% below 1990 emissions –Reduction (increases) vary across countries –Relaxed a little over the years to attract signers –(Treaty: U.S. 7% reduction: Actual: 12% higher in 2004, 30% by 2012) Addresses “six” greenhouse gases (CO 2, Methane CH 4, Nitrous Oxide N 2 O, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride) Commitment period Set of other activities –Improve “local emission factors” –Inventories of emissions and sinks –Mitigation and adaptation plans –Environmentally sound technology diffusion to developing nations

Kyoto Protocol Issues Amount and distribution for limits and reductions What greenhouse gases to include Developing countries in or out of emission requirements Trading, market-based mechanisms Role of removing greenhouse gases

Kyoto Protocol: Important Add ons Market-based mechanisms –Emissions trading –Joint implementation –Clean development mechanisms “Common but differentiated responsibilities” Thanks to Rosina Bierbaum

Flexibility in Achieving Targets “What” flexibility –Targets apply to CO 2 -equivalent emissions of basket of six GHGs –Can use carbon sinks (e.g. forests) as offsets “When” flexibility –Five-year commitment period –Banking “Where” flexibility –Market mechanisms: ET, JI, CDM Thanks to Rosina Bierbaum

Kyoto Mechanisms: Bubbles (Art. 4) –Any group of Annex I countries may pool emissions targets German Target Greek Target Thanks to Rosina Bierbaum

Kyoto Mechanisms: Emissions trading (Art. 17) –Developed countries and firms can trade parts of their “assigned amounts” of emissions –Successfully used in US in sulfur dioxide program US Norway AAU Thanks to Rosina Bierbaum

Kyoto Mechanisms: Joint implementation (JI) (Art. 6) –One Annex I country undertakes a project in another country to reduce emissions or enhance sinks –The project generates an “emission reduction unit,” which can be transferred –ERUs subtracted from transferor’s assigned amount and added to transferee’s assigned amount Thanks to Rosina Bierbaum

Kyoto Mechanisms: Joint Implementation (Art. 6) US Norway ERU Thanks to Rosina Bierbaum

Kyoto Mechanisms: Clean Development Mechanism (Art. 12) –Annex I party can undertake mitigation project in developing country –Win-win approaches Developing countries get climate-friendly technology Projects generate “certified emission reductions” (CERs), which developed countries can use to meet emission targets US IndiaCER Thanks to Rosina Bierbaum

Kyoto Protocol: Issues with Market-based Mechanisms Trading with countries who do not have emission limits / non-ratifying countries Integrity in the trading market –“false” credits –Reporting –Measurements –Verifying

“Flaws” in Kyoto Protocol Participation of Developing Countries –Large populations, large projected growth Participation of the United States –25 % of greenhouse gas emissions Other “flaws” –Does not go far enough: Emission goals don’t adequately mitigate dangerous climate change – commitment period – then what?

Elements of “U.S. Position” Will not be ratified unless developing countries are included in emission limits Continuing concerns –Impact on economic growth and gross national product CO 2, currently, directly related to enterprise, economy … –Robustness of scientific justification and observations –Winners outweigh losers Policy defines winners and losers in a different way.

Issues of implementation Rules that govern compliance The rules of development and transfer of cleaner, low emission, technologies The role of carbon sinks: trees, removal technology, …. The reward/punishment for those who take the initiative to address their emissions unilaterally

Constituencies in the community “G-77” and China: ~130 developing countries, work by consensus (generally represent The Africa Group) –Economic development and emission limits –Sell their potential carbon credits for profit The Alliance of Small Island States (AOSIS) –Tightest control on global emissions Organization of Petroleum Export Countries (OPEC) –Protection of their economic well being

Constituencies in the community European Union (EU) –Coordinated position as environmental leader with very ambitious emission reduction goals Japan, U.S., Switzerland, Canada, Australia, Norway, New Zealand (JUSSCANNZ) –Non-EU developed countries –Cost of tackling the climate problem U.S., Canada, Australia: Low-efficiency energy use Japan, Switzerland, Norway, New Zealand: High-efficiency energy use

Constituencies in the community Environmental Non-Governmental Organizations (ENGO) –Accept climate change science –Differ on acceptance of market-based mechanisms –Differ on role of businesses in tackling climate problem –Differ on role of geo-engineering Business and Industry Non-Governmental Organizations (BINGO) –“Green” companies: Accept science and see business advantage or necessity –Middle ground: Accept science and cautious approach to mitigation –“Gray” companies: Mostly U.S. fossil-fuel based industries: Question science and impact, Cost of mitigation outweighs benefits Global Climate Coalition Climate Council –Relationship with OPEC?

Beyond 2012 Pew: International Climate Efforts Beyond 2012: Report of the Climate Dialogue at Pocantico Pew: International Climate Efforts Beyond 2012: Report of the Climate Dialogue at Pocantico –This is a report published by Pew of a collection of experts on climate change –It is very soft in its recommendations Like keep the international community together Identification of what is important in any viable treaty Important problem, keep international attention

Beyond 2012 Conference of Parties, Copenhagen 2009 Copenhagen Accord

Where we sit at a national level SEC. 16__. SENSE OF THE SENATE ON CLIMATE CHANGE. (2005) (a) Findings.—Congress finds that— 1)greenhouse gases accumulating in the atmosphere are causing average temperatures to rise at a rate outside the range of natural variability and are posing a substantial risk of rising sea-levels, altered patterns of atmospheric and oceanic circulation, and increased frequency and severity of floods and droughts; 2)there is a growing scientific consensus that human activity is a substantial cause of greenhouse gas accumulation in the atmosphere; and 3)mandatory steps will be required to slow or stop the growth of greenhouse gas emissions into the atmosphere. (b) Sense of the Senate.—It is the sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that— 1)will not significantly harm the United States economy; and 2)will encourage comparable action by other nations that are major trading partners and key contributors to global emissions.

Scales: Time scale and “spatial” scale GREEN HOUSE GAS INCREASE SURFACE WARMING GLOBAL CONSEQUENCES GLOBAL POLICY (MITIGATION) LOCAL POLICY (ADAPTATION)

Scale What is the best scale to measure vulnerability and adaptive capacity? –National: inform states on needed policy response; allow for better decision making; allows for comparison of differential vulnerability –Regional Impacts are likely not to be defined by national borders –Local Ground truth Allows for the understanding of the local factors that mediate sensitivity and resilience Thanks to Maria Carmen Lemos

Regional based Initiatives Changing very rapidly

Scales of Policy: U.S. –Pew: State-based Initiatives (Update, 2007)Pew: State-based Initiatives (Update, 2007)

Basic constraint on carbon policy 1990 by 2020

Motivations for State Activity Economics –States (and cities) are very aggressive at promoting policy that they perceive as offering economic advantage. –Branding: To attract, for instance, the “creative class” Belief and Culture –Reflection of political constituencies

States can be viewed as: (from Rabe (2006)) What has changed? Hostile to climate change policy –Michigan (Auto industry, manufacturing) –Colorado (coal and energy) Stealth interest? –Texas (aggressive renewable portfolio) –Nebraska (sequestration site) Out in front –California (Water, water, water?) –Northeast alliance

Policy: Regional and State and Local California Climate Change Regional Greenhouse Gas Initiative United Conference of Mayors –U.S. Mayors: Climate Protection AgreementU.S. Mayors: Climate Protection Agreement Map of US Mayors Climate Protection Agreement Cool Cities

Policy: Regional and State and Local Local Governments for Sustainability –International Council for Local Environmental Initiatives (ICLEI)International Council for Local Environmental Initiatives (ICLEI) –ICLEI’s CO2 Reduction / ClimateICLEI’s CO2 Reduction / Climate National Governors Association (NGA) –NGA Transportation and Land UseNGA Transportation and Land Use –NGA Environmental Best PracticesNGA Environmental Best Practices

Brief return to Economics

The role of economics An assertion: When thinking about responding to climate change we often first think of policy. When we think about how to promote policy where do our thoughts first land? –Conservation? –Public Health? –Water Resources? –Agriculture? –Economics? – …

From Class NOTES Economy – climate change impacts security, leads to uncertainty in economic system, agriculture, energy security Economy – when economy is bad climate change takes back burner, energy security, national security, green energy Leadership change Disasters – how good is the data, can we make attribution, link to climate change Process takes longer – short term dominate, long term Framing as opportunity More … ?

The convergence to economics Conservation, public health, etc., touch economy. Hence it is sensible to place attention on the economics of climate change. –Production, Distribution, and Consumption of goods and services –Macroeconomics is generally the summation of the economy of states, regions, countries, world. Measured broadly by gross domestic product

Where we sit at a national level SEC. 16__. SENSE OF THE SENATE ON CLIMATE CHANGE. (2005) (a) Findings.—Congress finds that— 1)greenhouse gases accumulating in the atmosphere are causing average temperatures to rise at a rate outside the range of natural variability and are posing a substantial risk of rising sea-levels, altered patterns of atmospheric and oceanic circulation, and increased frequency and severity of floods and droughts; 2)there is a growing scientific consensus that human activity is a substantial cause of greenhouse gas accumulation in the atmosphere; and 3)mandatory steps will be required to slow or stop the growth of greenhouse gas emissions into the atmosphere. (b) Sense of the Senate.—It is the sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that— 1)will not significantly harm the United States economy; and 2)will encourage comparable action by other nations that are major trading partners and key contributors to global emissions.

Economy We have built economy into our response to climate change. States cite economic incentives as a reason for developing policy.

Exponential Growth U.S. views 2-3% Growth / year as a Stable Economy Consider this gross domestic product (GDP) Do you know the rule of 72?

Exponential Discount This is how we discount the value of investments into the future.

Exponential Discount This is how we discount the value of investments into the future. How to value future return on investment versus near-term focus on investment.

Exponential Discount Economic growth versus discount In general. must also account for inflation or deflation

Exponential Discount Real growth of wealth must address the loss of wealth through inflation, taxes, discounting.

Global economic analysis –Stern Review: Primary Web PageStern Review: Primary Web Page –Stern Report: Executive SummaryStern Report: Executive Summary –Nordhaus: Criticism of Stern ReportNordhaus: Criticism of Stern Report –Tol and Yohe: Deconstruction of Stern ReportTol and Yohe: Deconstruction of Stern Report

Stern Report Draws on recent science which points to ‘significant risks of temperature increases above 5°C under business-as-usual by the early part of the next century’ — other studies typically have focused on increases of 2–3°C. Treats aversion to risk explicitly. Adopts low pure time discount rates to give future generations equal weight. Takes account of the disproportionate impacts on poor regions.

Dangerous climate change? Stern, 2006

Stern Report Considered a radical revision of climate change economics. –If we don’t act now it will cost between 5% and 20% of gross domestic product (an aggregate measure of economy.) Stands in contrast to many studies that usually come to numbers of closer to 1% –The idea that initiation of a policy with a slow growth rate will have little impact on the economy or environment in the beginning, but will ultimately become important when the nature of expenditures is more clear.

Stern Report included very small discount rate. The discount rate of Stern Report is very small. (Represents high valuation of ethical issues. Assumptions about value of environment.) (represented qualitatively by the red line)

Impact of low discount rate Amplifies the impacts of the decisions we make today. –Note: Even a 1% discount rate over 100 years generally leads to the conclusion that what we do today does not matter to the economy. Also brings attention to our poor explicit valuation of the environment.

Stern Review: Criticisms Document is fundamentally political: An advocacy document. Not up to the standards of academic economic analysis Not based on empirical observations of the economy –Observed discount rates –Observed behavior

Strengths of Stern Review Explicitly linked economic goals and environmental goals –Considered a major flaw of the Kyoto Protocol (Recall: Kyoto did include market mechanisms) Showed explicitly the necessity of having the cost of carbon dioxide, the cost of greenhouse gases, the valuation of the environment in environmental policy.

Return to the interface with policy

Climate Science-Policy Relation CLIMATE SCIENCE KNOWLEDGE UNCERTAINTY POLICY PROMOTES / CONVERGENCE OPPOSES / DIVERGENCE

Economics-Policy Relation ECONOMIC ANALYSIS KNOWLEDGE UNCERTAINTY POLICY PROMOTES / CONVERGENCE OPPOSES / DIVERGENCE Economic analysis is not the compelling catalyst to converge the development of policy – at least on the global scale. Different story on the local scale.

The economics argument Comes to the conclusion that we must provide valuation to the environment, the cost of energy, the disposal of our waste. –Usually collapses to the argument of a market versus a taxation problem. –Economic efficiency.