Rio, Kyoto, Copenhagen, Cancun, Durban... what's next? A skeptical view on climate negotiations.

Transcription

1 Rio, Kyoto, Copenhagen, Cancun, Durban... what's next? A skeptical view on climate negotiations. Carlo Carraro President, University of Venice Vice Chair, IPCC WG III Chairman, Scientific Advisory Board, FEEM

2 Introduction - Climate change problem is an important but difficult challenge for human beings/our societies - Climate change control is a global public good - Long term dimension of the problem - Pervasive uncertainties on the physical and economic dimensions of the climate change problem 1

3 International Negotiations In 1997 all UNFCCC countries (189) approved the Kyoto Protocol that entered into force in The Kyoto Protocol however has a minor impact on GHG concentrations and temperature At the G8 meeting in L Aquila, then in Pittsburgh at MEF, and finally in Copenhagen at COP XV, main countries agreed to stabilise temperature increase at 2 C (no more than 2 C...) Same principles have been reaffirmed in Cancun at COP XVI. However, G8/G20 countries failed to deliver an international agreement on policy and measures to achieve such target. 2

4 3. The arithmetics of climate Concentrations of GHG (ppm CO 2 -eq) Most Likely Very Likely Above (>90%) Likely in the Range (>66%) Table 1. Most likely, likely and very likely bounds/ranges of global mean equilibrium surface temperature increase in degrees Celsius above pre-industrial temperature for different levels of CO 2 equivalent concentrations (ppm). Source: IPCC Fourth Assessment Report, WG I, Chapter 10, Table The present level of concentrations is about 430 ppm CO2-eq Uncertainty of the emissions-temperature nexus is relevant 3

5 2 C target some basic numbers According to IPCC, in order to keep temperature increase below 2 C with good probability, concentrations of GHGs should not exceed ppm CO 2 -eq. If we accept the possibility of overshooting the target, the level of concentrations can be higher but not greater than 450 ppm. The present level of GHG concentration is 430 ppm CO 2 -eq (390 CO 2 only), well above the ppm level necessary to make a temperature increase above 2 C unlikely. 450 ppm CO 2 -eq will be reached within six years, whatever world leaders decided in L Aquila and in Copenhagen. If 550 ppm CO 2 -eq are reached, there is little chance to stay below 2 C. 4

6 Reality check. - If we assume that emissions will halve by 2050, declining at a constant pace from 2010, concentrations of CO 2 in the atmosphere will be 40 ppm higher in This implies that all GHG concentrations will reach 470 ppm CO 2 -eq in 2050, assuming that emissions of non CO 2 gases are heroically cut to zero starting from The emissions path envisaged by MEF leaders is thus in line with a 550 ppm target by the end of the century. Hence, more than 2 degrees... 5

7 Even a 550 ppm target would be very difficult to achieve Given the projected dynamics of world population and economic growth, the objective of limiting concentrations below 550 ppm CO 2 - eq implies that average per capita emissions in the second half of this century are to be reduced from about 2 to about 0.3 tc per year. In other words, the world will have to emit not more than today s India s average quite a significant reduction for most industrialised countries (US average per capita emissions are about 6 tc) and for countries that aim at similar lifestyle standards. Just to provide another benchmark, 0.3 tc is the amount of GHGs emitted by an individual flying one way from the EU to the US East coast! 6

8 Required emission reductions GtC emissions since 1751 abatement to

9 If China and India don t reduce their own emissions, there is no chance to reach even the 550 ppm target BaU 12 Other Non Annex 1 G to n C OECD countries Targets SASIA China 3.7 Rad Forcing 3.5 Rad Forcing Total 4 Other LDCs India 2 China

10 9. The climate equation in brief Emissions Concentrations Temperature Climate Emissions of Greenhouse Gasses (carbon dioxide, methane,...) remain in the atmosphere for decades or even centuries Natural absorption is very slow for carbon dioxide Temperature is a function of concentrations, not of emissions In order to achieve the most ambitious targets ( *C) it is necessary to reduce the stock of GHGs: negative emissions 9

11 10. GHGs emissions Fonte: IPCC AR4 (2007). Fonte: IPCC AR4 (2007). 10

12 11 We need global action

13 What s behind the increase in emissions? strong pressure on energy supply Increasing role of renewables but the energy mix will be dominated by fossil fuels if their negative environmental effects are not internalized through appropriate climate policies Source: WEO 2009

14 Increase will be large particularly in developing countries Source: WITCH model

15 Energy poverty map About 1,8 million people without access to electricity

16 Population growth Three more billion people on Earth.

17 16. Energy and development Energy use per capita (kg of oil equivalent) Carraro and Massetti (2010) GDP per Capita (constant 2000 US$) 16 World High Income Low & Middle Income

18 17. CO2 emissions and development 14 CO2 emissions per capita (Ton) Carraro and Massetti (2010) GDP per Capita (constant 2000 US$) World High Income Low & Middle Income 17

19 Why it is hard to build an international agreement? 18

20 19. Why it is hard to build consensus? Strong inertia of the climate system requires to take costly measures now, to enjoy benefits one century from now: intergenerational coordination problem GHGs emissions get perfectly mixed in the global atmosphere: international coordination problem Large uncertainty on cost of mitigation 19 The most ambitious targets appear highly unrealistic: we are about to pass the level of concentrations that would prevent the attainment of the +2ºC target with high probability

21 20. Act now or later? 20 KAL's cartoon, Jun 17th 2010 From The Economist print edition

22 21. The importance of participation NON-OECD Emissions Trajectories GtC Stabilization at 550 ppm CO2-eq NON-OECD - BaU NON-OECD 10% at 2050 NON-OECD 20% at 2050 NON-OECD 30% at 2050 NON-OECD 40% at 2050 NON-OECD 50% at 2050 Figure 1. Emissions pathways compatible with a stabilization target at 550 ppm CO2 eq at 2100 and emissions trajectories of Non-OECD countries with various degrees of commitment. Source: WITCH model, FEEM. Carraro and Massetti. 3 September 2009.

23 22. The cost of mitigation Strong increase of costs as the target becomes more stringent Fonte: RECIPE Project (2009); Discounted consumption loss; 3% discount rate. Concentrations level of only CO2. 22

24 23. Delayed action If there is delay, or noncoordinated action costs increase considerably Delaying action beyond 2030 makes it impossible to achieve the 450ppm CO2 only target. 23 Source: RECIPE Project (2009); Cost of stabilizing CO 2 concentrations at 450 ppm, with different hypothesis of international cooperation.

25 24. The technology puzzle Problems in the deployment of key carbon-free technologies increase costs 24 Source: RECIPE Project (2009); cost of stabilizing CO 2 concentrations at 450 ppm, with different hypothesis on the availability of technologies.

26 The incentives to participate in a global agreement 25

27 26. Climate change impacts Clim a te cha nge im pa ct Percentage loss in GDP LAM SEASIA CHINA SASIA SSA MENA TE JPNKO R AUCANZ EEURO WEURO USA Time horizon The impacts of climate change are expected to vary widely across regions. Developing countries would be more affected than their developed counterparts Uncertainties are large, however, as reflected by the wide variance in damage estimates across studies 26

28 27. Abatement costs - carbon tax Discounted consumption loss Panel A. Annex I regions United States Eastern EU countries Western EU countries Aus-Can-Nzl -6.0 Japan-Korea Non-EU Eastern Europe Carbon Tax (2005 $US / t CO 2 eq) 27

29 28. Abatement costs - carbon tax Discounted consumption loss Panel B. Non-Annex I regions Middle East and North Africa South Asia South East Asia Africa China Latin America Carbon Tax (2005 $US / t CO 2 eq)

30 29. Free Riding Incentive on the GC 1.4% 1.2% CHINA MENA TE Free riding incentive 1.0% 0.8% 0.6% 0.4% JPNKOR AUCANZ EEURO LAM USA SASIA SEASIA SSA 0.2% WEURO 0.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 29 GDP loss of a 100$/tCO2 tax

31 Towards a bottom-up architecture? 30

32 Future challenges: More energy, to meet an increasing energy demand A clean energy, to control climate change A more equally distributed energy to favour economic development in poorer region and thus global economic growth 31

33 Obstacles: High financial needs for investments in the energy sector Insufficient and weak governance of global issues implies unavoidable climate change (more than 2 degrees C) Resources are also needed for investments in adaptation to climate change 32

34 Investments in the energy sector to stabilize GHG concentrations at 450 CO2 eq. additional annual investment needs in low- Level carbon technologies and energy efficiency relative to Reference Scenario to meet 450 total investment in the 450 scenario in lowcarbon power generation over incremental investment cost in GDP terms Scenario in 2020 World $430 bln almost $ 6600 bln 2020: 0.5% of GDP (72% renewable, 19% nuclear, 9% CCS) 2030: 1.1% of GDP OECD+ $220 bln almost $ 3100 bln 2020: 0.4% of GDP (65% renewable, 20% nuclear, 15% CCS) 2030: 0.8% of GDP US $ 90 bln almost $ 1100 bln 2020: 0.5% of GDP (53% renewable, 27% CCS, 19% nuclear) 2030: 1% of GDP EU $ 70 bln almost $ 1300 bln 2020: 0.3% of GDP (77% renewable, 7% CCS, 16% nuclear) 2030: 0.6% of GDP Japan $ 17 bln almost $ 200 bln 2020: 0.3% of GDP (50% renewable, 4% CCS, 46% nuclear) 2030: 0.6% of GDP China $ 80 bln almost $ 1500 bln 2020: 0.8% of GDP (73% renewable, 5% CCS, 22% nuclear) 2030: 1.5% of GDP India $ 25 bln almost $ 550 bln 2020: 0.9% of GDP (83% renewable, 2% CCS, 16% nuclear) 2030: 1.4% of GDP 33 Russia $ 8 bln almost $ 220 bln 2020: 0.3% of GDP (58% renewable, 12% CCS, 30% nuclear) 2030: 1% of GDP

35 Investments to adapt to climate change Source IIED (2009) SECTORS UNFCCC ESTIMATES SOURCES OF UNDERESTIMATIONS NEW IIED COST ESTIMATES Agriculture $ billions/year Adaptation deficit recovering it could cost up to $40-60 billions $ $40-60 billions Water $11 billions/year Transfer of water across countries, no adaptation to altered flood risk Significant underestimation, more studies needed Human health $4-12 billions/year Population grows but share of illnessrelated deaths remains constant 30-50% increase in costs Coasts $11 billions/year Sea level rise (SLR) faster than foreseen, residual damage estimation ($1 billion/year) too optimistic Overall costs could double depending on speed of SLR, residual damage costs t $2-3 billions/year Infrastructures $8-130 billions/year Infrastructural deficit removing could cost up $315 billions/year Besides deficit, $16-63 billions/year Ecosystems $65-80 billions/year for protected areas Exclusion of adaptation costs for nonprotected areas ($290 billions/year) $ $290 billions/year 34 About 175 billions per year

36 R&D investments % % % % D e c a r b o n iz a t io n % % E f fic ie n c y % H is t o r ic a l T o t E n e r g y R & D A 1 C C B A U E n e r g y I n t e n s it y R & D A 1 C C Source: WITCH model Roughly 50 Blns a year of energy innovation investments in the next two decades 35 for a total of about 650 billions/year

37 Investments: some conclusions Climate policy will induce higher investments in the energy sector (with respect to the BaU scenario) Low-carbon world requires a new energy mix: conventional fossil fuels power plants are substituted by nuclear, coal power plants with CCS and renewable sources Large investments have to be diverted in a relatively short time frame towards complex and risky technologies Significant innovative efforts are required especially outside the power sector 36

38 Green stimulus of national recovery package Ratio of green stimulus of national recovery packages, absolute volumes in bn 37 The green share of the European recovery plan (58.7% ) is high wrt other countries package Source: GEF 2009, based on Bernard et al. 2009; data from HSBC 2009

39 Conclusions Both the increased energy demand and the climate challenge require additional investments in the energy sector At the same time, policy signals are necessary to divert investments that would be undertaken anyway The development and application of green technologies can be an opportunity for Europe: it does not require additional investments but a reshuffle of their mix Net positive effect on employment Investments in energy innovation and in climate adaptation are also necessary Carbon markets can be an important source of revenue to finance part of these investments Corso Magenta 63, Milano - Italia - Tel Fax

40 Thank you! Corso Magenta 63, Milano - Italia - Tel Fax

41 40. Title 40 The realism of negotiations objectives. Can the 2 degree targets actually be achieved? Is the focus on a global agreement meaningful? The incentives for different countries or regions to participate in a climate agreement The financial resources needed to stabilize GHG concentrations The time horizon of climate negotiations and the likelihood of a climate agreement in the next decade The possibility to move away from traditional global negotiations, by focusing on a bottom-up domestic policydriven approach The necessity to invest more resources on adaptation to climate change