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Policy Issues on Energy and Climate Change: The Case of Kyoto Protocol
This article reflects on the interface between policy questions on energy use in the Kyoto Protocol and climate change mitigation strategies.
The close link between energy use and climate change needs no elaboration. As per the International Energy Agency (IEA) about 60 percent of all Green House Gas (GHG) emissions responsible for climate change are attributed to the supply and use of energy. 67 percent of all carbon-di-oxide (CO2) emissions which is the major constituent of GHGs are energy related. Global energy related CO2 emissions increased by 3.2 percent in 2011 to reach a record level of 31.2 GT.Even if policies already in place in major energy consuming countries to facilitate a shift towards cleaner energy sources are implemented, CO2 emissions are likely to increase to 37 GT by 2035 corresponding to a 50 percent probability of limiting the long term average global increase in temperature to 3.6 C relative to pre-industrial levels. In order to limit GHG concentration in the atmosphere to 450 parts per million (ppm), emissions should peak at around 32.4 GT by 2020 and decline to about 22.1 GT by 2035 which is just 1.1 GT higher than emission levels in 1990.
The case for low carbon energy sources is thus clear and it is not something that is against the natural course of developments in the energy sector.The world has been shifting to high energy content and low carbon energies over the last few centuries.The shift from coal (carbon) to oil (hydrocarbon) increased energy content by over 10 percent (from 39.3 Kilojoules per gram (KJ/g) to 43.6 KJ/g), and reduced carbon emission per energy unit by 20 percent. Likewise the shift from oil to natural gas increased energy content to 18 percent (or 51.6 KJ/g) and reduced carbon emissions by 25 percent. The next natural shift in this context is towards hydrogen which will increase energy content by over 100 percent and eliminate carbon emissions.However hydrogen is not a primary source of energy; like electricity it is an energy carrier and must be produced from a primary source such as natural gas or by electrolyzing water with electricity.The ultimate technological hope is that hydrogen will be produced at very low cost using solar electricity or nuclear power.
The pace at which changes in the climate are progressing means that we do not have the luxury of time to wait for the ‘nirvana’ of hydrogen energy.Policy interventions especially in the context of energy supply and use patterns are essential if we want to orchestrate an accelerated shift towards low carbon fuels.The most optimistic and well known policy in this context is the Kyoto Protocol. At a fundamental level it sought to ‘mandate’ a reduction in emissions for nations within the principle of ‘common but differentiated responsibilities’ set out by the UN framework convention on climate change (UNFCC).Under this principle, developing and poor nations had to be excluded from sharing the burden of combating climate change and so the Protocol set binding targets for reducing GHG emissions only for 37 industrialized countries and the European Union by 2008-12 averaging about 5 percent below 1990 emission levels.
If we assess the achievement of the Protocol solely on the basis of Kyoto’s national targets, success may be claimed as Annex I countries (countries that had a mandate to reduce emissions) reduced emissions by 8.9 percent (higher if emissions from land use change is included) between 1990 and 2010. However at the global level this decrease was more than offset by the increase in emissions associated with developing countries outside the Kyoto Protocol.This was an expected result and also a reason why countries such as the United States opted to stay out of the Kyoto Protocol.It is important to reflect on these emissions in an appropriate light. Studies have shown that the reduction in emission achieved by developed countries through Kyoto was primarily achieved by an increase in imports from developing countries and as such, in reality, their ‘consumption’ emissions had grown faster than their ‘territorial’ emissions.The net emission transfers associated with international trade from between developing and developed countries increased from 0.4 GT CO2 in 1990 to 1.6 GT CO2 in 2008 which far exceed the reductions claimed under the Kyoto Protocol. Overall the small reduction in emission achieved by the Kyoto Protocol primarily represents displacement of emissions from one region to another and therefore has had no significant impact on climate change.
The sad testimony of Kyoto is that despite over three decades of international effort, energy and climate policies pushed by heavy weight international organizations such as the United Nations and supported aggressively by economic powers such as the EU, not much has been achieved.Carbon emissions are rising faster than they were in 1990.In 1990, GHG concentration in the atmosphere was growing at 1.5 ppm per year and now it is growing at 2 ppm per year.Supporters of the Kyoto intervention may be tempted to blame countries such as the United States which opted to stay out of the Protocol and also assign blame on countries such as India and China which were exempted from emission targets.These arguments are untenable.Data from the International Energy Agency shows that 2012 emissions in USA fell sharply again and may drop to 1990 levels, or just slightly above that important Kyoto milestone even though the USA was not party to the treaty.The economic slow-down, increasing use of natural gas for power generation along with increase in efficiency in the transport sectors have all contributed to the decrease in emissions in the United States.As for China and India, it cannot be denied that their emissions have increased substantially on account of dramatic economic growth fuelled by an equally dramatic growth in coal based power generation.India and China together are expected to add roughly 600 GW of new coal based power generating capacity by 2020 which means that their emissions will continue to increase.This is not because these countries disregard climate change or climate change mitigation policies.For India cheap coal based electricity is vital for economic growth which in turn is vital for poverty alleviation. Indian energy consumption per capita is so low now that it will reach the level of 1 tonne of oil equivalent per capita energy consumption, considered to be the bare minimum required for ‘decent’ standard of life, only in 2035.As for China most of the increase in power generation fueled production of goods for export and consumption by developed nations.Without import of energy intensive goods such as steel, petrochemicals and cheap manufactured goods from China, developed nations could not have sustained their consumptive economies.
One of Kyoto’s key difficulties is the manner in which the climate change policy is framed and what it targets. Nations and national interest is the target of policy action and the dominant unit of discourse in climate and energy policy. Under this framing, nations have an incentive to put national interest such as economic growth and trade competitiveness above the global interest issue of climate change.The climate negotiating framework thus has an in-built lacuna enabling countries to free-ride.As per game theoretical models which treat the current approach to climate and energy policies as a ‘public good’, incentives for cooperation are lower than if policies were framed aligned to game structures such as the ‘prisoners dilemma’.To illustrate this better: if size is the only parameter of difference between countries then large countries will place a higher value on mitigation while smaller countries will place a proportionally lower value.If wealth is the major parameter of difference, then poor countries will place a much lower value on mitigation compared to rich countries and will tend to free ride.
The current global climate negotiating framework assumes that all countries will assign the same value on mitigation efforts and that the differences between countries, if any, can be addressed through an appeal to scientific projections and moral sentiments.This has clearly not happened.Tons of reports that project climate calamities for developing countries based on mathematical models and strong appeals to ‘save’ the planet from coal burning power plants have not convinced India or China to significantly change their plans for power generation.
As a poor country India evidently has low incentives for mitigation action but as a large country it has relatively larger incentives for mitigation action (more victims of climate change and consequently more gain from mitigation action). However the incentives to ‘free-ride’ as a poor country far outweigh the incentive to seek greater mitigation as a large country because its domestic logic is consistent with the former rather than the latter position.More immediate concerns such as poverty alleviation and consequently the need for economic growth are seen to be more important than the distant possibility of benefitting from climate mitigation action. If the world is serious about making a radical shift in its energy supply and use patterns, it has to radically re-think the framing of the climate change problem.
Lydia Powell is Senior Fellow with the Observer Research Foundation and works on policy issues in Energy and Climate Change.