Appendix A: IDGEC Carbon Management Research Activity Scoping Report
The Carbon Management Research Activity (CMRA) will
investigate the institutional issues associated with controlling
greenhouse gas emissions, the cause of global climate change. This
scoping report describes the two priority themes of the CMRA's research
and the questions to be explored in each theme. It summarizes the
analytical approaches to be used, the links to be made with other
projects and programs, and the steps needed for implementation.
CMRA research is a flagship activity of the International Human
Dimensions Program's (IHDP) long-term project on the Institutional
Dimensions of Global Environmental Change (IDGEC). The flagship
activity will determine critical near- and long-term institutional
issues facing the international community as it develops a global
climate change regime. Additionally, the findings will prove key
in designing and modifying institutional arrangements in other settings.
Introduction
A great institutional challenge facing the world is the need
for a complex system of regimes to control and ultimately reduce
emissions of greenhouse gases (GHGs). Since the beginning of the
industrial revolution, human activities have substantially increased
the concentration of greenhouse gases in the atmosphere. Scientists
expect that the resulting "enhanced greenhouse effect"
will warm the earth's climate by as much as 5 degrees Celsius over
the next century (Houghton, Filho et al. 1996). This warming could
lead to numerous adverse impacts, including rising sea levels, changes
in rainfall and evaporation patterns, and the increased melting
of snow and glaciers in mountainous regions.
The international community has embarked on an effort
to develop a global regime that will address the climate change
problem. Creating this regime, however, is extraordinarily difficult.
The causes of the problem are embedded in the basic economic and
social activities of both developed and developing countries. Much
about climate change remains poorly understood, and its most significant
impacts will not be felt for decades. Global temperatures are projected
to change over the course of decades to centuries, and uncertainties
remain about the timing and magnitude of this change. Finally, addressing
climate change requires facing many convergent issues and interests.
Each of the many countries and non-governmental organizations (NGOs)
participating in the climate change treaty negotiations has different
concerns about climate change. Each contributes differently to the
climate change problem, each confronts unequal risks from its potential
impacts, and each faces dissimilar abatement costs (Bodansky 1995).
All these factors make creating effective climate change institutions
a monumental challenge.
CMRA Priorities: The
Administration and Adjustment of the Climate Change Regime
Two international treaties, the Framework Convention on Climate
Change (FCCC) and the Kyoto Protocol (KP), form the core of this
emerging climate change regime. The FCCC establishes its overall
framework. This agreement, which entered into force in 1994, sets
the regime's objective as the stabilization of greenhouse gas concentrations
in the atmosphere at a level that will not disrupt the Earth's climate
system. It requires all countries to develop national programs addressing
emissions by sources and removals by sinks of greenhouse gases.
Industrialized countries and countries with economies in transition
("Annex I" countries) must also adopt national policies
and measures that will limit their emissions and enhance their GHG
sinks and reservoirs. The 1997 Kyoto Protocol further requires Annex
I countries to reduce by 2008-2012 their collective GHG emissions
to five percent below 1990 levels.
CMRA research will be directed towards two"
themes" - important to policymakers and researchers - associated
with this regime. Because the international community is particularly
concerned with the nearer-term issues of implementing the FCCC and
the Kyoto Protocol, the first CMRA theme explores those institutional
issues associated with administering these existing agreements.
The second theme focuses on the longer-term issues of adjusting
the climate regime to changes in technology, scientific understanding,
and global socioeconomic conditions. This ability to adapt to change
will determine the regime's long-term effectiveness.
Theme 1: Administering the
Current Climate Regime
The first substantive area of CMRA analyzes the institutional
issues associated with administering and operationalizing the FCCC
and the Kyoto Protocol. With the FCCC in force and the Protocol
in the process of ratification, both Annex I and developing countries
are moving forward with the development and implementation of measures
to meet their commitments. For Annex I countries, this includes
not only the development of policies to reduce emissions from sources
and enhance sinks and reservoirs, but also the development, transfer,
and diffusion of environmentally-sound technologies, practices,
and processes to developing countries.
Annex I countries can adopt a range of market-based
and regulatory policy instruments to meet these commitments. Some
are "market"-based in that they use economic forces to
change behavior, such as: energy pricing strategies; changes in
agricultural and forestry subsidies; tradable emissions permits,
product labeling, and advanced technology development and demonstration
programs. Others employ the more traditional regulatory approach,
such as: minimum energy efficiency standards, technology standards,
and fuel restrictions (Fisher, Barrett et al. 1996; Watson, Zinyowera
et al. 1996). Countries will generally adopt a mix of these instruments
depending on national circumstances (Lenstra and Bonney 1993; Arrow,
Parikh et al. 1996; Watson, Zinyowera et al. 1996). The degree to
which these instruments are effective in mitigating climate change
will be a function of mix of the instruments adopted, the design
and implementation of the policies themselves, and the institutional
framework within which they must operate (Fisher, Barrett et al.
1996).
The Protocol's call for the development of three
interlocking mechanisms complicates the administration of the climate
change regime and the development of national climate change policies.
The clean development mechanism (CDM), joint implementation (JI)
and emissions trading (ET) will allow Annex I countries to obtain
some a portion of their required reductions through collaborative
efforts with other countries. Under the CDM, Annex I governments
and private companies may obtain Certified Emissions Reductions
(CERs) by participating in projects in developing countries that
reduce GHG emissions and satisfy local development needs. These
credits can be put toward the Annex I countries' Protocol obligations
during the 2008-2012 compliance period. Under joint implementation,
two Annex I governments or private companies can share Emission
Reduction Units (ERUs) for projects undertaken jointly in that country
for which emissions reduction costs are lowest. Finally, emissions
trading is the purchase of Assigned Amount Units (AAUs) by Annex
I governments and companies with high marginal abatement costs from
those with lower costs.
The role that the Protocol establishes for private
sector in the development and operation of these mechanisms also
adds complexity to the regime, as it will require the private and
public sectors to interact on an unprecedented scale. Annex I governments
are expected to adopt policies that will pass their emissions reductions
commitments on to companies in those industrial sectors most responsible
for the emissions. They are also expected to develop programs that
will allow these industries to buy and sell AAUs and acquire ERUs
and CERs on a global basis (Barrett 1998; Matsuo 1998; Maddison
1999). The governments remain the responsible parties in the regime,
however, and the system through which this trading will occur, while
market oriented, will be constrained by domestic and international
institutions established by these governments. These constraints
include the rules that the international community adopts governing
the operation of the Kyoto mechanisms, the rules each country creates
to manage the exchange of permits domestically and internationally,
and the interactions among these different international and domestic
institutions.
To explicate these complexities and their ramifications,
the CMRA will explore two related sets of institutional issues:
(1) the implications of the regime's market orientation for the
operation of the Kyoto mechanisms and the nature of measures that
nations adopt; and (2) the implications of these measures and mechanisms
for the balance between climate protection and sustainable development.
In the remainder of this section, we describe these two sets of
issues and outline the important questions that arise in each.
International and National
Implications of the Development of the Kyoto Mechanisms
As the CDM, JI and ET are developed, institutional questions
will need to be addressed concerning both interactions among the
operational international rules and between these international
rules and concomitant national rules. For example, it has been proposed
that an international registry be established to track and provide
information on the transfers of AAUs and the acquisition of CERs
and ERUs. For countries to track domestic trades, however, each
transaction would have to be processed through a national registry
as well, raising questions about the relationship between international
and domestic trading rules.
The development of these mechanisms and the market
for ERUs will also raise a number of institutional issues about
the mix of policy instruments that nations adopt. Each nation's
institutional structure and experience, resource endowment, and
level of industrialization will determine the mix of market-based
and regulatory instruments that each nation that it adopts (Fisher,
Barrett et al. 1996; Barrett 1998). However, rules governing the
operation of the CDM, JI and ET will also shape this mix. For example,
while the Protocol specifies that AAUs acquired through Emissions
Trading are to be supplemental to domestic action, the international
community has not yet agreed on a definition of the term 'supplemental'.
Each of the options being considered has a different affect on emissions
reduction costs, however. The choice of definition, therefore, could
substantially alter the nature and mix of policies instruments that
different countries choose to adopt.
Questions also exist about the applicability of the
emissions trading model to the global scale needed to control GHG
emissions. While considerable experience at the national level with
the use of market-based approaches such as tradable permits exits(OECD
1992), international tradable permit systems have been limited (Fisher,
Barrett et al. 1996). The effectiveness of tradable permits in implementing
national responsibilities to alter climate change is also not well
understood. Finally, important questions arise concerning whether
or not these mechanisms are to function as the primary means for
the transfer of technology to developing countries and how technologies
being transferred through these mechanisms can be screened to ensure
their appropriateness and long-term effectiveness.
The core question with regard to this set of issues
is: from an institutional perspective, what are the implications
of this market-oriented climate change regime for operation of the
Kyoto mechanisms and the mix and effectiveness of policy instruments
adopted by national governments? Specific issues include:
- How will international rules governing each of the Kyoto mechanisms
affect the administration of the others?
- How do the rules governing this regime affect the development
and implementation of policy measures in different countries?
- How do these rules affect the development, transfer and diffusion
of environmentally sound technologies, practices and processes?
- What are the relative merits of market-based versus regulatory
instruments in the context of the regime?
- What are the implications of differences among these national
and international rules for the effectiveness of the climate change
regime and the goal of sustainable development?
- Climate Protection and Sustainable Development
A second set of issues surrounding the FCCC and the
Kyoto Protocol involves how the mix of market-based and regulatory
measures adopted to implement these agreements could affect the
goals of protecting the global climate and achieving sustainable
development. Two aspects of these issues will be considered here.
The first of these pertains to the affect that the mix of measures
could have on the balance between reductions of GHG emissions from
sources and the enhancement of GHG sinks and reservoirs. The second,
more general issue pertains to the relationship between these measures
and the larger issues of sustainable development.
As the Kyoto mechanisms become operational and the
"carbon" market emerges, Annex I countries can be expected
to pursue those activities that offer the greatest GHG emissions
reductions at the lowest cost. Forestry measures are particularly
attractive to the governments and private companies these countries,
as they tend to view these measures as being relatively inexpensive,
absorbing large amounts of CO2, and having the potential to provide
additional development and environmental benefits. It is therefore
likely that the number of carbon sequestration activities will increase
substantially as countries move forward to implement the FCCC and
the Kyoto Protocol. Because tropical forests have the greatest potential
for storing carbon, issues associated with this increase, as well
as those associated with deforestation and land use changes, are
of particular concern to developing countries. Many developing countries
are concerned that removing land from productivity for periods of
fifty to ninety years could cause greater them greater harm in terms
of economic losses than any benefits they might gain from the sequestration
effort. They are also concerned with the implications of this increase
for the balance between forest conservation and forest plantation
efforts.
One aspect of the balance between emissions reductions
and carbon sequestration pertains to differences among the Kyoto
mechanisms. For example, the relationships among AAUs, ERUs, and
CERs are not clear, and critical differences exist among the mechanisms
through which they are earned. For example, most economic models
that forecast savings through emissions trading assume these potential
savings will occur through CDM projects in developing countries.
However, the realization of these savings could be substantially
effected by the rules regarding the value of CERs relative to that
of AAUs and ERUs. Should CERs be given the same value of AAUs and
ERUs, the demand for CDM projects could increase. This in turn could
shift the global balance between emissions reductions and sequestration
(Parkinson, Begg et al. 1999). This balance could also be affected
by differences in the timing of the implementation of these mechanisms,
as well as differences between the CDM and the other mechanisms
in market orientation. ,
Another aspect of this balance is the impact that
uncertainties associated with the future availability of GHG sinks
and reservoirs. Terrestrial ecosystems and soils now absorb approximately
ten percent of the annual GHG emissions from the burning of fossil
fuels (Watson, Zinyowera et al. 1996). This percentage could grow
in the future should sink enhancement activities increase substantially.
While terrestrial ecosystems are expected to absorb carbon from
the atmosphere for decades to come, their capacity to do so is not
without limit (Cao and Woodward 1998; Walker, Steffen et al. 1999).
If and when this saturation will occur is unclear, however, as it
is highly dependent on a wide-range of factors that are difficult
to forecast with any degree of confidence. The international community
faces a considerable challenge in developing rules to regulate the
use of sink enhancement measures that take into account these uncertainties.
Critical questions also exist regarding the relationship
between the measures adopted under the Kyoto Protocol and the larger
issues of sustainable development in both Annex I and developing
countries. The Protocol has two objectives: to promote sustainable
development and to protect the global climate in a cost-effective
manner. While these two objectives are not necessarily incompatible
(Wagner 1996; Banerjee and Taplin 1998; Barrett 1998), rules adopted
to implement one objective can create conflicts with the other.
For example, the choice of rules governing supplementarity could
have important implications for the sustainable development path
of Annex I countries. Similarly, rules restricting the use of ODA
for CDM investments could force developing countries to choose between
emission reduction/sequestration measures and other development
objectives.
The core question for these issues is: what are the
implications of the emerging regime, and of the mix of market-based
and regulatory measures adopted under it, in terms of climate protection
and sustainable development? Specific issues pertaining to this
question include:
- What are the critical factors that determine a country's ability
to manage the balance between GHG emissions reduction and sequestration
measures?
- What might be the impacts, both direct and indirect, of shifts
in this balance?
- What are the critical issues associated with the balance between
climate protection and sustainable development?
- What institutional structures might be adopted at both the
national and international levels to better manage issues associated
with this balance?
Theme 2: The (Re)Design the
Climate Regime Through 2005 and Beyond
The CMRA's second theme focuses on the longer-term on the evolution
and redesign of the climate regime itself. The Kyoto Protocol sets
the year 2005 as a point at which Annex I countries are to have
achieved their emissions reduction targets. It is thus a useful
landmark around which to build research efforts on questions about
the adjustment of the climate change regime to both national experiences
and changes in technology, scientific understanding, and global
socioeconomic conditions. The CMRA will explore two important sets
of institutional issues in this regard: (1) those issues pertaining
to the evolution of compliance mechanisms and the long-term implementation
of the regime; and (2) the processes of regime adjustment and learning
to account for changes in knowledge and external conditions.
Compliance and Long-Term Implementation of the
Evolving Climate Regime
Changes in social and economic systems of the scale required
to meet the mandates of the FCCC and the KP take time to accomplish.
While the FCCC has existed for seven years and the KP for two, mechanisms
for managing the implementation of and ensuring compliance with
the regime remain underdeveloped and poorly understood. This set
of issues focuses on the institutional challenges of treaty compliance
and the means through which the climate regime can evolve to meet
these challenges.
One difficulty facing the international community
in crafting more effective environmental treaties is that the relationship
between international agreements and domestic policy change is not
well understood. A core assumption of most international relations
theories is that a nation will only ratify an agreement if it is
prepared to make the policy changes necessary to comply with it
(Milner 1997). Treaty ratification is thus viewed as synonymous
with treaty implementation. However, ratification and implementation
are separate political processes, and implementation is the more
difficult of the two. While no comprehensive study has been conducted,
anecdotal evidence suggests that compliance with international environmental
agreements is mixed at best and highly dependent on regime design
(Mitchell 1994; Chayes and Chayes 1995, U.S. General Accounting
Office, 1992; Victor, Raustiala et al. 1998; Weiss and Jacobson
1998).
A better understanding of compliance and long-term
implementation problems is particularly critical for an effective
climate change regime (Adger 1995; Harvey 1995; Clark, Eindoven
et al. 1999). In 1994 industrialized countries committed to reducing
their emissions to 1990 levels; most pledged to do so by the end
of the decade. However, emissions have continued to rise unabated,
due in part to a failure by these countries to implement fully policies
contained in their initial action plans (Climate Action Network
1995; Wolsink 1996; Climate Action Network 1997). Resource and other
constraints make these implementation challenges even greater for
developing countries (Gupta 1997). Because implementation is difficult,
an understanding of how nations make policy changes in response
to international treaties and which factors influence this process
is crucial to the effective design and long-term evolution of the
climate change regime.
Chayes and Chayes (1995) suggest that the problems
of compliance and implementation failure are most often situations
that the international community can manage through routine political
processes. Improved dispute resolution procedures can address problems
of ambiguity; technical and financial assistance may help resolve
domestic capacity problems; and increased transparency can help
mobilize domestic constituencies to bring national policies in line
with international obligations. While mechanisms for managing compliance
with the climate regime have yet to be developed, many issues associated
with their design and implementation are appropriate for exploration
under the CMRA. Compliance issues that arise in the context of a
global emissions trading regime, such as that of liability, are
particularly important because of the private sector's unique role
in this regime.
The core question regarding this set of issues is:
what are the essential factors shaping compliance with and long-term
implementation of the evolving climate change regime? Specific issues
pertaining to this question include:
- How have coalitions of interests at the national and international
levels shaped the development and implementation of national climate
change policies?
- What are the implications of these influences for future compliance?
- How does the unique role of the private sector in this regime
affect compliance and implementation?
- How might the regime be redesigned to better promote compliance
and implementation?
Adjustment and Learning Processes in the Evolving Climate Change
Regime
The second set of longer-term issues on which the
CMRA will focus is the adjustment and learning processes that enable
the climate change regime to adapt changing technology, scientific
understanding, and global socioeconomic conditions. All regimes
must adapt to changing circumstances and underlying conditions if
they are to persist (Chayes and Chayes 1993). Adaptation and evolution
are particularly important for regimes addressing large-scale environmental
problems such as climate change, as these problems involve poorly
understood complex systems that are subject to rapid, nonlinear
change over short time frames (IDGEC 1999).
Because the processes through which international
treaties are negotiated unfold over years to decades (Dubey 1985),
opportunities exist for learning and adaptation. Negotiations on
the FCCC and the Kyoto Protocol were initiated in 1988 and are expected
to continue into the foreseeable future. Considerable progress has
been made over this period in resolving some of the scientific and
economic uncertainties, and more will be made over the next ten
years (Jager and O'Riordan 1996; Shackley 1997; Agrawala 1998).
The processes through which national climate change policies are
developed and implemented have also been found to foster learning
and adaptation (Victor and Salt 1995; Brunner and Klein 1999).
Questions remain, however, as to how regimes can
adapt to changes in science and socioeconomic conditions. For example,
the current process for incorporating new scientific information
into the negotiating process entails the periodic assessments by
the Intergovernmental Panel on Climate Change (IPCC) of the current
state of knowledge. Critics of the process, however, have complained
that it is slow, unresponsive to the negotiators' and national decision-makers'
needs, and reflects a predominately western view of both the climate
change science and associated policy issues (Leiv 1991; Boehmer-Christiansen
1994; Bate 1996; Agrawala 1998). There are also concerns about lack
of attention paid to important social science issues. Finally, questions
exist concerning the role of environmental and business interests,
the media and the public in overall learning and adaptation process
(Ungar 1992; Kempton 1993; Ungar 1995; Bord, Fisher et al. 1998;
Dunlap 1998; Levy and Egan 1998; Mazur 1998; McComas and Shanahan
1999; Paterson 1999).
The core question in this set of issues is: how can
flexibility, self-correcting procedures, and social learning processes
be incorporated into the evolving climate change regime? Specific
issues pertaining to this question include:
- How effective are current processes and procedures in informing
decision-makers at the national and sub-national levels about
the science of climate change?
- What kinds of information do decision-makers, both private
and public, require?
- What are the roles of the media, interest groups, and the public
in learning and adaptation process at both the national and international
levels?
- How might the regime be redesigned to better promote learning
and adaptation?
Analytical approaches and methodological concerns
The complexity of both the specific issues of climate change
and the general problems of institutions poses challenges for researchers
attempting to study them. Research efforts conducted under the CMRA
will employ a range of analytical techniques, including quantitative
studies, modeling, and structured case studies. To narrow the scope
of the project and to maximize the potential for comparative analyses,
emphasis will be placed on the Artic and Southeast Asia, the IDGEC's
two core regions, and on the international, national, and local
efforts to enhance GHG reservoirs and sinks. Because of the broad
scope and complexity of issues being investigated, a considerable
initial effort will be devoted to elaborating the questions pursued
under each theme, the nature of the independent and dependent variables
for these research efforts, and the sources of data for each case
study. Many of these questions are expected to be resolved during
a follow-up workshop in the spring of 2000.
Organization and Linkages
CMRA research will be initiated and conducted through a network
of researchers and research institutions with expertise in fields
relevant to the institutional questions being examined. The CMRA
Scientific Steering Committee and the IDGEC International Program
Office will work together ensuring that CMRA research projects are
coordinated both with each other and with other relevant research
efforts through workshops, formal and informal meetings, and other
means of communications. The IDGEC will elaborate on the details
of this network and coordination mechanisms in a follow-up workshop
in the spring of 2000.
Like other global change projects, the IDGEC will
undertake the CMRA through extensive collaboration with other projects.
Such partnerships can stimulate scientific progress, produce practical
benefits, and increase the likelihood that research results will
find their way into the policy stream. These collaborations include
coordination with other IDGEC research activities and with other
programs and research projects that have institutional dimensions.
The IDGEC will strive to forge strong links to other
policy and natural science research efforts related to global carbon
management. These include activities being undertaken by the International
Geosphere-Biosphere Program (IGBP), the World Climate Research Program
(WCRP), and other programs of the International Human Dimensions
Program (IDHP), as well as policy research efforts being undertaken
by the FCCC Secretariat, non-profit organizations, and industry
groups.
Particular emphasis will be placed on building strong
partnerships with natural science research activities, as understanding
the institutional drivers of climate change, particularly in the
context of carbon sequestration, requires a sophisticated grasp
of the biogeophysical dynamics of the climate system and forest
ecosystems. In this context, linkages with a number of IGBP programs,
including the Global Change and Terrestrial Ecosystems (GCTE) project
and the joint IGBP/IHDP Land-Use and Land-Cover Change (LUCC) project
will be important. An explicit linkage will also be made to the
IGBP's crosscutting activity on the carbon cycle. Other linkages
with be made with the IHDP's Global Environmental Change and Human
Security (GECHS) and Industrial Transformation (IT) projects. Finally,
efforts will be make to coordinate activities with research being
conducted under the auspices of the World Climate Research Program
(WCRP) and activities being conducted by or for the FCCC Secretariat.
The IDGEC will strive to forge associations with
other relevant research efforts as well. A range of organizations
is conducting research relevant to the CMRA. These organizations
include UN agencies (e.g., the UN Environment Program, the UN Development
Program, the World Meteorological Organization), other intergovernmental
organizations (e.g., the World Bank, the Organization for Economic
Cooperation and Development), national research organizations (e.g.,
Japan's National Institute for Environmental Studies, the U.S. National
Science Foundation), environmental groups (e.g., the World Resources
Institute, the Natural Resources Defense Council, the Foundation
for International Law and Development, the South Centre), industry
associations (e.g., the Edison Electric Institute, the International
Climate Change Partnership) and research organizations (e.g., the
International Institute for Applied Systems Analysis, the Royal
Institute of International Affairs, the Tata Energy Research Institute).
While this list is not inclusive, it is illustrative of the range
of organizations with which opportunities for collaboration will
be explored.
Future Steps
Comments on this draft plan will be solicited from persons
involved in research and practice relating to the issues discussed
here. The IDGEC CMRA Steering Committee will then revise this scoping
paper based on these comments. The revised paper will serve as the
basis for a follow-up workshop in the spring of 2000 involving researchers
interested in conducting research under the auspices of this activity.
The purpose of this workshop would be to make further refinements
to this paper, to elaborate on the organizational structure of the
CMRA and mechanisms for coordination, and to flesh out more specific
proposals for research efforts to be conducted under the auspices
of the CMRA.
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