第 5 章研究報告会 前章までで得られた結果の紹介を行うとともに 同分野の専門家を内外から招聘し意見交換を行うために 研究報告会 ( 公表名は 京都議定書の達成とポスト京都の主要課題 ) を開催した 発表イ ) インセンティブと組織 - 気候変動解決に向けた国際戦略 -

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1 第 5 章研究報告会 前章までで得られた結果の紹介を行うとともに 同分野の専門家を内外から招聘し意見交換を行うために 研究報告会 ( 公表名は 京都議定書の達成とポスト京都の主要課題 ) を開催した 5.1 プログラム 1. 日時 :2007 年 3 月 16 日 ( 金 ) 2. 会場 : 三田共用会議所第一特別会議室 (2F) 3. 議事次第 : (9:50~9:55) 開会広瀬哲樹 内閣府経済社会総合研究所次長 (9:55~10:50) 発表イ ) インセンティブと組織 - 気候変動解決に向けた国際戦略 - Carlo Carraro ベネチア大学教授 コメンテータ :Lee Huey-Lin ( 独 ) 国立環境研究所地球環境研究センター NIES フェロー 質疑応答 (10:50~11:45) 発表ロ ) 長期の経済展望と技術評価手法の開発について 川崎泰史内閣府経済社会総合研究所上席主任研究官坂下信之内閣府経済社会総合研究所上席主任研究官

2 (11:45 12:20) (12:20)

3 Prospects of the Kyoto Protocol. Targets and Major Issues in the Post Kyoto Scenario Tokyo, March 16, 2007 Incentives and Institutions. Global Strategies to Address Climate Change Carlo Carraro University of Venice and FEEM Background (1) The cost-effectiveness of the Kyoto Protocol (or any similar non-global climate treaty) would be enhanced by attracting as many new countries as possible among the signatories, and by achieving these additions as soon as possible. In particular, the participation of the US and of the main developing countries in a co-operative effort to reduce GHG emissions is crucial to effectively control climate change. Any real progress in stabilizing emissions below 550 ppm can be achieved mostly through technological advances and drastic changes in the energy sector

4 Background (2) However, broad participation to a global cooperative initiative to reduce GHG emissions is hard to achieve because of: - Large economic and environmental asymmetries among world regions. - Intrinsic instability of environmental negotiations. Even in the absence of asymmetries, some countries may prefer to free-ride (climate change control is a global public good, no supranational authority, myopic behaviour, etc). 2 Approaches to address climate change 1) A Hybrid International Trading Program with Safety Valve (Kopp, Morgnestern and Pizer, 1997; Aldy, Orszag, and Stiglitz, 2001) 2) A Research and Development Protocol (Barrett, 2001, 2003) 3) Harmonized Domestic Carbon Taxes (Cooper, 1998, 2001) 4) Domestic Hybrid Trading Schemes (McKibbin and Wilcoxen, 1997, 2000) 5) Global Carbon Taxes (Nordhaus, 1998; Stiglitz, 2006) 6) A Global Climate Marshall Plan (Schelling, 1997, 1998, 2000) 7) Emission Intensity Regime (Pizer, 1998)

5 Alternative approaches (2) 8) Quotas to Attract Developing Countries (Stewart and Wiener, 2001) 9) Increasing Compliance through Buyer Liability (Victor, 2001) 10) The Global Public Good Purchase System (Bradford, 2002) 11) Regional Climate Agreements (Carraro, 1998, 2002; Egenhofer, 2003; Jaeger et al, 2006) 12) Fragmented Carbon Markets (Victor, 2006) 13) Graduation and Deepening (Michaelowa, 2006) 14). 4 Two groups of approaches: Extension of the Kyoto Protocol (support from the EU and Japan) Deviation from the Kyoto Protocol (support from countries currently outside the Kyoto framework)

6 Kyoto s weaknesses: The Kyoto Protocol s architecture has been criticised on a variety of grounds, including: it imposes high costs and unfair burdens on some industrialised countries; it effectively forbids developing countries from taking on emissions commitments; it provides ineffective incentives for participation; it generates modest short-term climate benefits while failing to provide a long-term solution. 6 Building on Kyoto Proposals based on the Kyoto framework address the above issues by introducing: limits on costs or relative targets; more ambitious reductions targets beyond 2012; technology cooperation and transfers in particular with developing countries; broader permit market with longer time horizon to provide incentives to innovation

7 Departing from Kyoto Proposals with a different policy architecture may: replace targets and markets with taxes; focus on issue linkage (trade tariffs, technology transfers); give up with large conventions and global negotiations (G12 or G20) insists on domestic or regional policies rather than on global ones. 8 Main message (1) The real issue is not Kyoto vs. non-kyoto, or cap and trade vs. other policy instruments. We need a basket of instruments anyway (including technological cooperation, adaptation funds, etc). The real issue is whether the proposed policy framework contains incentives for broad participation and institutions that guarantee compliance

8 Incentives and Institutions Real world incentives and institutions cannot lead to a global permit market. Markets are going to be fragmented. Economic theory also concludes that incentives and institutions are unlikely to lead to global agreements on emission reduction targets. Climate agreements based on emission targets are going to be partial and multiple (fragmented). 10 Fragmentation Fragmentation because of diversity of interests and institutions. Fragmentation even in the case of perfectly identical symmetric countries. Self-interest leads to fragmentation anyway. Coalitions between zones of countries. Coalitional prisoners dilemma. Fragmented equilibrium is suboptimal (from an economic viewpoint) but is an equilibrium

9 Bottom-up approach: A bottom-up, country-driven approach to defining national commitments should be adopted. Instead of top-down, global negotiations on national emission targets, each country or group of countries would determine its contribution to a cooperative effort to curb GHGs and choose the partners with whom it intends to cooperate. In a process analogous to trade negotiations, each country would put its offer of commitments on the negotiating table and invite proposals from other countries for similar commitments. 12 RTAs Strong increase in the number of trade bloc agreements registered with the World Trade Organisation. Some 250 regional trade agreements (RTAs) have been notified to the GATT/WTO up to December 2002, of which 130 were notified after January About 200 RTAs are currently in force. An additional 70 to 100 are estimated to be operational although not yet notified. All but one WTO members are now parties to one or more RTAs. As of August 2006, all 146 WTO Members, with the exception of Mongolia, participate in or are actively negotiating regional trade agreements

10 Variety and Variability Basic ingredients of a bottom up policy architecture: The coordination of a variety of efforts. Countries would agree on things to do rather than on emission reduction targets. A variable geometry of participation. Some countries would agree on more efforts than others. A sufficient accountability system to ensure that commitments become connected to action. 14 Tools How can this be achieved? Limit on the number of negotiating countries (e.g. the 20 top polluters) Issue linkage: trade (e.g. Stiglitz s proposal), energy security, migrations, Transfers, e.g. through economic cooperation (e.g. Victor on energy infrastructure, use of ODA, ) Review and scrutiny

11 Focus on Institutions: A bottom up approach is to be favored because: the underlying participation incentives inevitably leads to a fragmented climate policy regime the institutions which are capable to implement an effective climate policy do not yet exist at the international level, but sometimes exist at the domestic and regional level. i.e. a club approach, in which cooperation takes place on specific dimensions where (a few) participating countries have institutions that guarantee compliance and effectiveness. 16 Environmental effectiveness In terms of incentives and institutions, a bottom-up approach is the only one with chances to succeed in curbing GHG emissions. A set of coordinated efforts with a variable participation geometry is likely to be the future of climate policy. However, by relying only on self-interests, this approach may not succeed in achieving the large emission reductions that most scientists believe to be necessary to control climate change

12 Equity and burden sharing Equity concerns may not be addressed. If countries agree on different sets of efforts, how can the costs of these efforts be assessed and compared? For example, is there a way to claim that the effort to develop new energy technologies (e.g. in the US) is larger or costs more than the effort to replace coal power plants (e.g. in Germany or China) or the effort to accept higher temperatures at home and at work in the summer (as recently suggested by the Japanese Minister of the Environment)? Is there a metric of efforts? 18 Adaptation Whatever we do to reduce GHG emissions and whatever the anthropic influence on climate change, adaptation will be needed. Can a bottom up approach also include adaptation to climate change? Given the policymakers discount rate, the costs of adaptation (to be paid far in the future) is likely to be smaller than the costs of mitigation (to be paid in the coming years), unless some catastrophic impacts of climate change are expected. Does this mean that a coordination of efforts to adapt our economic systems and lifestyles to climate change will crowd out most efforts to reduce GHG emissions?

13 Adaptation (2) Adaptation implies investments to protect: coastal zones and small islands (from sea level rise,...) agriculture production (from water stress, droughts...) poor countries (from loss of natural resources,...) ageing population (from heat waves and other extreme events,...) infrastructures (from floods, ) national security (migrations, political instability..) etc. 20 Crucial questions? What is the optimal level of adaptation? Do investments in adaptation crowd out resources to be devoted to mitigation? Does adaptation reduce incentives to undertake mitigation? What is the relationship between technical change and the time profile of optimal adaptation and mitigation? How effective is adaptation in protecting economic systems from impacts of climate change?

14 Summing up (1) A bottom up framework to climate policy: Number of negotiating countries: As recently proposed by the Canadian Prime Minister, 20 is probably the right number, but a slightly smaller number (12?) would also be appropriate. Issues on which these countries will negotiate: Technological cooperation, climate relate trade rules, carbon taxation, carbon sinks, contribution to a global adaptation fund, forestry preservation, biofuels, development aid, energy infrastructures, are some examples. 22 Summing up (2) Rules For each issue a number of countries, not necessarily the same countries, not necessarily the same number, decide to cooperate. Verification A regular verification process of how different measures are implemented in each country or group of countries (and of their impacts and costs) is also agreed upon. Given that all measures are implemented domestically or within a bilateral or regional cooperative setting (e.g. the European Union or Mercosur), the establishment of new global or supra-national institutions would not be necessary

15 Summing up (3) Update Regular meetings can be organised to update the set of countries cooperating on each issue. Whenever the verification process identifies an insufficient effectiveness of the adopted measures or an unequal sharing of the burden of controlling climate change, new measures or a new distribution of existing measures have to be negotiated. This framework implies that climate change is no longer an environmental problem to be dealt with specific environmental policy measures. It is a global economic problem to be dealt with global economic policy measures. 24 WITCH The Ferrari of climate economy models Richard Eckaus, MIT

16 WITCH WITCH: a TOP DOWN optimization framework, with a energy sector description and a game theory set up. World, 12 regions Economy: Ramsey-type neo-classical optimal growth (dynamic, perfect foresight) Energy: Energy input specification (bottom-up) Electric and non electric energy use 6 Fuels types (Oil, Gas, Coal, Uranium, Trad. Biofuels, Adv. Biofuels) 7 Technologies for electricity generation The two modules are hard-linked The 12 regions interact strategically (open-loop game) The model is solved numerically and detrmines optimal investment and R&D strategies for all technologies, all years, all regions of the world. 26 Numerical ANALYSIS/2 OUTPUT 1/2 KL ES K L HE EN 1/2 NEL EL TradBiom OGB COALnel 1/2 ELHYDRO EL2 2 OILnel GASnel Biofuel ELCOAL ELFF 2 ELNUKE+BACK ELW&S 0 Kren- O&Mren Trad Biofuel Advanced Biofuel ELPC ELIGCC ELOIL ELGAS ELNUKE 0 ELBACK 0 Kpc- COALpcel- O&Mpc Koil-OILel- O&Moil Knuke- URANIUM- O&Mnuke - Kback Kigcc- COALigccel- O&Migcc Kgas- GASel- O&Mgas

17 Industrial CO2 Emissions World Industrial Carbon Emissions (GtC) BaU ppmv 0 28 Energy Intensity and Carbon Intensity 60% 50% 40% 30% 20% 10% Energy intensity vs. carbon intensity of energy w.r.t. first period % % 20% 40% 60% 80% 100% -10% Reduction in Energy Intensity w.r.t. first period 450 BAU Reduction in carbon intensity of energy the most needed. How to achieve this?

18 2. Energy savings/factors substitution Oil Use (conventional and non-conventional) BAU 450 Stabilization policies reduce fossil fuel consumption Technical Change 0% LbD: Investment cost of wind&solar plants wrt to BAU -5% -10% -15% -20% 450 Learning by Doing -25% -30% -35% 200 Energy R&D investments 150 and energy R&D BAU

19 BAU Scenario 1 World Electricity Generation Shares Back Nuclear Hydroelectric Oil Gas Trad Coal Adv Coal+CCS Wind&Solar ppmv stabilization scenario 1 World Electricity Generation Shares Nuclear Hydroelectric Oil Gas IGCC+CCS Trad Coal Wind&Solar

20 450 ppmv stabilization scenario 1 W orld Ele ctric ity Gene ration S hare s Nuclear Hydroelectric Oil Gas IGCC+CCS Trad Coal Wind&Solar ppmv stabilization scenario without nuclear energy expansion 1 World Electricity Generation Shares Backstop Nuclear Hydroelectric Oil Gas IGCC+CCS Trad Coal Wind&Solar

21 Investment in Renewable power generation BAU

22 Tokyo Workshop on "Prospect of the 'Kyoto protocol' Targets and Major Issues in the post-'kyoto protocol' period Mita-kaigisyo, 16 March 2007 A Research on Economic Effects of GHGs Emission Reduction and Exploration of Technological Assessment Techniques (Progress Report) Economic and Social Research Institute (ESRI) Cabinet Office, Government of Japan This Year s Research Objectives The first step of numerical analyses of GHGs emission by models. To present a progress report and receive advices from authorities. The next step is to realize (1) globalization of model structure; (2) dynamic analyses of emission reduction

23 1. Overview 1-1. Current Situation of GHG Emission in Japan Total Carbon dioxide (CO2) Base year ,261 1,144 FY2004 1,355 1,286 Ratio to base year +7.4% +12.4% % rise to FY % +0.8% (megaton of CO2) FY2005 (Provisional Data) Ratio to base year 1,364 1, % +13.3% Energy-originated CO2 1,059 1, % +0.8% 1, % Non-energy originated CO % +1.1% % Methane (CH4) % -1.1% % Nitrous oxide (N2O) % -0.2% % Three fluorinated gases % -11.6% % Hydrofluorocarbons (HFC) Perfluorocarbons (PFC) Sulphur hexafluoride (SF6) % -14.5% % -10.2% % -8.1% 4.1 Ministry of the Environment (Oct.2006) -64.7% -59.6% -75.7% Official Target for the Kyoto Protocol Kyoto Protocol Target Achievement Plan (Apr.2005)

24 1-3. Achievement of GHG Emission Reduction by 2005 Three fluorinated gases Nitrous oxide (N2O) Methane (CH4) Non-energy originated CO2 Energy originated CO2 Energy conversion sector Non-manufacturing sector Manufacturing sector Passengers transport sector Freight transport sector Service etc. Residential sector Proportion in base year emission 4.1% 2.6% 2.6% 6.7% 84.0% 5.4% 3.1% 35.2% 8.9% 8.4% 13.0% % rise from base year to FY % GHG inventory etc % -21.3% -27.6% +6.3% +13.9% +9.7% -25.6% -1.3% +39.7% -4.8% +42.2% +37.4% What remains to be done? 14.1% reduction of CO2 needed from 2005 to meet the Kyoto protocol target. To draw a plan to set targets in the post Kyoto protocol period and device comprehensive policy measures that major CO2 emitting countries can engage

25 1-5. Comparison of 2 models 1. ORANI 2. LTMM Sector 36 industries, 46 commodities 25 industries, 28 commodities Type Comparative Statics, CGE Dynamic, LP CES (constant elasticity of substitution) among factors, etc. Armington assumption between import and domestic production, export and domestic use Full mobility of capital and labor Solver GAMS/MPSGE GAMS/LP Ex-ante coefficient of production technology; assume the direction of technology change Choose the best technology among various ones so as to maximize PV of utility Putty-Clay capital stock (The basic data of both models are the Input Output Tables in 2000.) 7 2. Japanese version of ORANI model Model Structure: Production Function (OR-1) Output (s=0) (s: elasticity of substitution) Value added + Energy (s=0.1) Composite of Non-energy Armington goods (s=0) Value added (s=1) Energy Composite (s=0.1) Non-energy Armington good 1.. Non-energy Armington good n Labor Capital Energy Armington good 1.. Energy Armington good m

26 (OR-2) Model Structure: Output Transformation (Compound Output & Export) Output (t=0) Output 1.. Y i Y Y i i, j j Y i, j : output of : output of Output (t=2 ; o for services; 0.1 for energy goods) commodity i commodity i by industry j Output k Domestic use Compound outputs in the model are petroleum refinery (gasoline, kerosene, ), fuel mining (coal, oil, LNG), and scraps & by-products of the Input Output Table. Export (t: elasticity of transformation) Model Structure: Utility Function (OR-3) Utility (s=1.5) Consumption (s=1) Leisure Energy Armington good 1.. Energy Armington good m Non-energy Armington good 1.. Non-energy Armington good n