Full Title: Three Key Elements of a Post-2012 International Climate Policy Architecture
Author(s): Sheila M. Olmstead and Robert N. Stavins
Publisher(s): Review of Environmental Economics and Policy
Publication Date: January 1, 2012
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Description (excerpt):
This paper has identified and assessed three elements that are likely to be essential aspects of a future global climate change policy architecture that is meaningful and feasible, and that can serve in some sense as a successor to the Kyoto Protocol. These three elements will be key regardless of whether the ultimate architecture is achieved through a centralized top-down agreement, a set of harmonized national policies, or a decentralized bottom-up approach.
To summarize these elements, first, key nations have to be involved, including major emerging economies, through the use of economic trigger mechanisms such as growth tar- gets. Second, cost-effective time paths for emissions targets are required: firm but moderate in the short term, and much more stringent and flexible in the long term. Third, to keep costs down, market-based policy instruments—whether emissions trading, carbon taxes, or hybrids of the two—need to be part of the architecture. International linkage of regional, national, and even subnational market-based instruments will most likely be the means through which this third element is implemented.
The overall structure proposed here can be designed to be scientifically sound, economically rational, and perhaps even politically pragmatic. The agreements emerging from the 2010 Conference of the Parties to the UNFCCC in Cancun are roughly consistent with the three key elements emphasized here: (a) the distinctions between the Kyoto ProtocolÕs Annex I and non–Annex I countries have been blurred, in that all countries will take on responsibilities post-2012; (b) although the focus is on 2020, aspirational targets stretch to 2050; and (c) market mechanisms are explicitly endorsed (over the objections of a handful of dissenting countries).
Although there is no denying that the successful implementation of this climate policy architecture faces significant challenges, they need not be insurmountable. Moreover, these challenges are no greater than those facing other approaches aimed at addressing the threat of global climate change.