Harvard Professor Jeffrey Frankel: Emissions Reduction by the Numbers

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Discussions in Beijing between US President Barack Obama and Chinese President Xi Jinping – the leaders of the world’s two largest carbon-emitting countries –produced an unexpected, groundbreaking bilateral agreement on greenhouse-gas emissions. Under the new deal, the US is to reduce its emissions by 26-28% from 2005 levels within 20 years, and China’s emissions are to peak by 2030. In the absence of a binding global agreement, such unilateral or bilateral commitments by countries to rein in their contribution to global warming represent the most realistic hope for addressing climate change.

The 1997 Kyoto Protocol marked a major step forward in efforts to head off the most disastrous consequences of climate change, establishing a precedent for legally binding limits on emissions. But it lacked commitments by large developing countries, such as China and India, and, largely for that reason, the United States never ratified the treaty.

A loose system of individual commitments, in which each country unilaterally sets emissions targets, can help build trust and momentum for a more inclusive successor to the Kyoto Protocol, which many hope will be forged at the United Nations Climate Change Conference in Paris in 2015. But if such a system is to work, general agreement would need to exist about what constitutes a fair target for each country. Then advocacy groups and researchers could compile scorecards that would show which countries are meeting the standard – and shame those that are not.

At first blush, there would seem to be no agreement on what fair cuts would look like. India point outs that an average American emits ten times as much as an average Indian, and argues that emissions allowances should therefore be allocated according to population. The US insists that it would be unfair to burden its companies if energy-intensive industries could simply relocate to developing countries that had not yet constrained their emissions. Both sides have a point.

Fortunately, a study of the emissions targets to which countries have already agreed – in Kyoto and at the 2010 UN Climate Change Conference in Cancún – allows us to describe, and even quantify, what has historically been considered fair and reasonable. Emission targets implicitly tend to obey a formula that quantifies three major principles: all countries should rein in their emissions, but rich countries should accept bigger cuts than poor countries; countries where emissions have recently increased rapidly should be given some time to bring them back down; and no country or group of countries should suffer disproportionately large economic costs.

In Kyoto, every 10% increase in per capita income corresponded to an agreed emissions reduction of 1.4%. In Cancún, every 10% increase in incomecorresponded to a cut of 1.6%. If this pattern continues through the rest of the century, with emphasis gradually shifting from historic levels to per capitatargets, economic models predict that no country need suffer a loss of more than 1% of GDP in present discounted value (assuming that market mechanisms such as international trading are allowed).

To be sure, the question of how to share the economic burden of any particular global emissions path is completely different from the question of how environmentally ambitious overall climate-change mitigation efforts should be. But, as negotiations proceed, this approach can allow us to evaluate whether the burden of reducing the harmful effects of climate change is being fairly distributed, and to judge whether individual countries are doing their part as they head into the 2014 UN Climate Change Conference in Peru next month.

The graph below compares the per capita income of countries with the emissions cuts that they have pledged to deliver in 2020. Each country’s cut is measured relative to a particular baseline that averages its actual emissions level in 2005 with emissions expected in 2020, absent international action.

The slope of the line corresponds remarkably well with the data from Kyoto and Cancún, indicating that what is considered fair has remained stable over time. On average, each 10% increase in income corresponds with a 1.4% cut in emissions. The fact that countries cluster close to the line indicates that the relationship is statistically significant.

The graph reveals further interesting insights. For example, India’s targets are modest, but also appropriate, given its residents’ low income. Norway offers the biggest cuts of all. This can be explained partly by its high income; but it is doing more than its share. Singapore, Turkey, and Moldova appear to be shirkers.

Most important, the graph allows us to evaluate the targets that China and the US – the two most prominent holdouts from the Kyoto protocol – have proposed. As the figure shows, these targets are roughly in line with what has historically been considered their fair share, though each could do slightly more.

As others join China, the US, and the European Union in setting targets for 2030 and beyond, this statistical yardstick for judging fairness can serve as a powerful tool for establishing what share of the burden is appropriate for each country to assume.

Jeffrey Frankel is Professor of Capital Formation and Growth at Harvard University. 

Copyright: Project Syndicate, 2014.
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