Shinichiro Fujimori, guest researcher in the IIASA Energy Program, discusses the implications of a recent paper with IIASA Science writer and Editor Daisy Brickhill.
The climate mitigation costs of the Paris Agreement are fairly distributed between countries, but they are not fair for future generations, a new IIASA study has found. This suggests that the relative differences between countries’ climate commitments can be kept the same, but to ensure equity for our descendants they must all be raised .
The Paris Agreement allows each country to set its own climate commitments (known as the Intended Nationally Determined Contributions, or INDCs), and while this autonomy encourages more states to enter into the agreement, it may result in some countries freeloading by not making their fair share of cuts. There is also a trade-off between the mitigation investments we make now, and how much we leave for our descendants to deal with. The study by Fujimori and colleagues examines the issue of equity from different angles.
How did you measure the equity of the climate commitments?
We designed four scenarios: there was the baseline, which has no climate policy, and therefore no emission constraints at all. Then there was a scenario with a carbon price that is the same all over the world, set high enough to put us on course to meet targets to keep warming well below 2°C by 2100. The third scenario allowed different countries to have different carbon prices, meaning that they followed their current INDCs until 2030, but at that point a global carbon price was again put in place to ensure that we reach 2°C targets by the end of the century. Finally, we created a scenario where all emissions reduction targets were 20% higher than the INDCs until 2030. Again, after that a global carbon price was set. For all of the scenarios we also varied what is known in economics as the “discount rate.”
What is a discount rate?
People tend to devalue the future. So, for example, given the choice of €100 now or €150 in five years, many people would choose the €100 now. This is known as a time preference. You can add to this an “inequality aversion.” This is the amount that a wealthy person is willing to reduce their consumption by in order to increase the amount a poor person can consume. Together they make the discount rate.
We used different values of discount rate to see what might happen if people cared a lot about future generations, or poorer countries, or if they did not.
And, are the INDCs fair?
We found that delaying emissions reductions will push the costs onto future generations. In all our scenarios, regardless of the discount rate, there was inequality between the generations. The best scenario for equity between current and future generations was the second scenario with high, globally uniform carbon taxes that start immediately.
The inequity between generations was not unexpected, but what was surprising was that under the Paris Agreement the equity between countries was good. The third scenario, which followed the INDCs until 2030, has much better equality between the regions until the global carbon price began in 2030. This is because low-income countries tended to set lower carbon prices, and more developed countries had higher carbon prices.
That means that the last scenario is the ideal. We can keep the relative differences between the INDCs the same but raise them all so that we can meet the targets. That would give us both inter-regional equity and inter-generation equity.
What about the costs of the impacts of climate change? The Paris Agreement mentioned the need for a mechanism to support the victims of climate-related loss and damage. Might that not create a completely different picture of equity?
That is not something we covered in the study, but it is very important. We need many more studies in that area. We need flood teams, agricultural teams, and others, all collaborating across disciplines. Very much how IIASA works, in fact. Fortunately, the model we constructed for this study can incorporate all of these aspects, as they become available, and translate them into a comprehensive economic assessment.
Liu JY, Fujimori S, & Masui T (2016). Temporal and spatial distribution of global mitigation cost: INDCs and equity Environmental Research Letters, 11 (11): 114004.
This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.