Climate Change 2001:
Working Group III: Mitigation
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1.3.1 What Is the Challenge?

The challenge of climate change mitigation from an equity perspective is to ensure that neither the impact of climate change nor that of mitigation policies exacerbates existing inequities both within and across nations. The starting point for describing this challenge is the vast range of differences in incomes, opportunities, capacities, and human welfare, both between and within countries. This is combined with the fact that carbon emissions are closely correlated to income levels–both across time and across nations–which suggests that restrictions on such emissions may have strong distributional effects (Parikh et al., 1991; Parikh et al., 1997b; Munasinghe, 2000).

Income and consumption, as well as vulnerability to climate change, are distributed unevenly both within and between countries.6 Concerns about the disproportionate impacts of climate change on developing countries are mirrored in similar fears with regard to poor and vulnerable communities within developing countries (Jamieson, 1992; Ribot et al., 1996; Reiner and Jacoby, 1997). Similarly, issues of intergenerational equity have been raised to caution against shifting the burden of adjustment to future generations, which cannot influence political choices today (see Weiss, 1989),7 a theme picked up in Section 1.4 below.

Academic and policy interest has focused on income distribution as well as the poverty that underlies it. Global poverty statistics are compelling. Over 1.3 billion people, or more than one-fifth of the global population, are estimated to be living at less than US$1 per day. Other measures of poverty and vulnerability–lack of access to health, education, clean water, or sanitation–yield higher estimates of poverty. Since poverty is concentrated in non-Annex I countries–especially South Asia and Africa–whose average per capita income is less than one-quarter (in dollars of constant Purchasing Power Parity) of the average for developed countries (UNDP, 1999; World Bank, 1999), equity concerns have focused on differences between rather than within countries.

Figure 1.4: Global distribution of income and population.

Figure 1.5: Per capita carbon emission and income.

The distributional dimension of global poverty was illustrated vividly by the Human Development Report 1989 (UNDP, 1989), in the form that has come to be known as the champagne glass (Figure 1.4). This representation of global income distribution shows that in 1988 the richest fifth of the world’s population received 82.7% of the global income, which is nearly 60 times the share of the income received by the poorest fifth (1.4%). More recent statistics indicate that inequality has widened further since then and that in 1999 the richest quintile received 80 times the income earned by the poorest quintile (UNDP, 1999).

Besides average income levels, Annex I and non-Annex I countries differ in other ways, most importantly in terms of the capacity for collective action and access to technology and finance. Many non-Annex I countries face problems of governance because of weak administrative infrastructures, failure to invest in human and institutional capacity, lack of transparency and accountability, and a high incidence of civic, political, and regional conflicts (World Bank, 1992; UNDP, 1997; Kaufmann et al., 1999; Knack, 2000; Thomas et al., 2000). They also house a less than proportionate fraction of R&D infrastructure, and consequently lack access to technology and innovation. This is especially important in issues of global environmental change, which are strongly science-driven areas (Jamieson, 1992; Ramakrishna, 1992; Najam, 1995; Agarwal and Narain, 1999). Finally, many (though not all) of these countries are over-exposed to international debt–and their governments to domestic debt–and thus have less flexibility in the choice of policy options (World Bank, 1998).

Notwithstanding the diversity of initial conditions in various countries, they share a common commitment to the goal of economic growth, partly for its own sake and partly because it is perceived as one of the means of poverty eradication and capacity development. However, most analysts recognize that growth alone is not a solution and it needs to be combined with ancillary policies and safeguards to protect environmental and social resources. In fact, while national economic growth appears to be correlated with a reduction in poverty levels (and neutral with regard to national income distribution), over the past 50 years global income growth has been accompanied by a worsening of global income distribution (World Bank, 2000) and a persistence of poverty.8 The concept of sustainable development has incorporated distributional aspects mainly in response to these concerns (see Lélé, 1991; Murcott, 1997). Be that as it may, economic growth continues to be the centre of government policies and plans.

This is relevant to climate change mitigation, since a fairly robust stylized fact of historical development, consistent with both cross-country and time-series data, is the close correlation between economic growth and carbon emissions. Figure 1.5, for example, presents cross-country data on per capita carbon emissions and income (in US$(PPP); see also Box 1.1 on a controversy over the representation of data). The bold trend line highlights the proportionate increases (or, as in some economies in transition recently, decreases) in per capita emissions and income over time. Broadly speaking, developed countries have per capita incomes over US$(PPP)20,000 and carbon emissions between 2 and 6 tonnes per capita. Non-Annex I countries have much lower incomes and much lower emissions, while the economies in transition fall in the middle of the range. In particular, the bulk of the world’s poor live in a smaller number of non-Annex I countries, which are bunched at the bottom left corner of the graph, with incomes below US$(PPP)5,000 per capita, and emissions below 0.5tC/capita.

Box 1.1. A Numbers Game

A persistent theme in the literature is the explicit or implicit assignment of responsibility for global warming trends. Without going into the merits of the issue, it is useful to point out that many of the arguments revolve around the appropriate way to represent the data. For example, Agarwal and Narain (1991a) criticize the uncritical use of aggregate national emissions figures, which could imply parity between developed countries and large developing countries (China, India, and Brazil) mainly because of the large populations of the latter. Instead, they recommend the use of per capita “net emissions”–that is, emissions that exceed the per capita absorptive capacity of global carbon sinks. Other analysts distinguish between “necessary” and “luxury” emissions (Agarwal et al., 1999; Shue, 1993).

Another theme is the relative impact of CO2 emissions and that of other GHGs and land-use changes, given that the latter are less strongly correlated with per capita income. Most analyses have focused on CO2 emissions, given that it constitutes the bulk of the contribution to global warming. Others suggests that CO2 emissions are accompanied by forced cloud changes and tropospheric aerosols, which offset their warming impact (Hansen et al., 2000). There are also debates over the precision of the estimates of these associated offsets, as well as those of methane emissions in developing countries (Agarwal et al., 1999). For example, Parikh et al. (1991) identify potentially serious problems with World Resources Institute’s deforestation estimates (WRI, 1991); and Parikh (1992) shows how the IS92 IPCC scenarios may have been formulated with developed country interests hard-wired into them such that they could be very unfair to the developing countries. In response to this criticism some of the new SRES scenarios (IPCC, 2000a) explicitly explore scenarios with a narrowing income gap between the developed and developing countries.

Finally, “per capita” is not the only relevant normalization (Najam and Sagar, 1998), since emissions per unit of income can also indicate potential for efficiency improvements. Besides annual emissions, data can also be presented in terms of atmospheric concentrations, or the contribution to the global average temperature, each of which has slightly different implications for the responsibility for climate change. Given the uncertainties involved in constructing such estimates, the picture is not entirely clear. However, most estimates suggest that the developing countries may overtake Annex I countries, in terms of total annual emissions, in another 15–20 years, and in terms of the contribution to the global average temperature increase in 60–90 years (Hasselmann et al., 1993; Enting, 1998; Meira, 1999; Pinguelli Rosa and Ribeiro, 2000).

Useful analytical tools in this regard are various decomposition approaches9 that represent carbon emissions as the product of three factors, carbon intensity (emissions per unit of income), affluence (income per capita), and population. The decomposition suggests that reconciliation of the goals of emissions abatement and economic growth must involve a combination of population decline and technological and managerial improvements that lead to lower carbon intensity. Some potential for improvement is evident from Figure 1.5, namely the large differences in per capita emissions of countries and regions at the same level of affluence (e.g., Hong Kong, Switzerland, Singapore, Japan, and the USA). This suggests the possibility of technological “leap-frogging” (see Goldemberg, 1998a, Schneider, 1998), that is the lowering of emissions by a factor of two or three without impacting income levels through investment in technological development and capacity building.10 However, the operational and other obstacles against the realization of these possibilities have not been analyzed systematically in the literature.

In the absence of such investment, economic growth and conventional economic development are likely to remain strongly linked to the ability to emit unlimited amounts of carbon. Therefore, restrictions on emissions will continue to be viewed by many people in developing countries as yet another constraint on the development process. The mitigation challenge, therefore, is to decouple growth and economic development from emission increases.

However, mitigation policies in general, and its decoupling from economic growth in particular, have to be designed with specific contexts in mind. Policies designed for one context are generally not appropriate for another (Shue, 1993; Rahman, 1996; Jepma and Munasinghe, 1998), and identical ultimate goals–stabilization of GHG accumulation and maintenance or achievement of the quality of life–yield different priorities and strategies in Annex I and non-Annex I countries. In the former, these goals are translated as reducing emissions while improving the quality of life, and in the latter it is the other way around–improving the quality of life, inter alia, by maintaining the rate of economic growth, while maintaining or lowering per capita emissions.

The current global response to this situation is to exempt non-Annex I countries from climate obligations to allow them to pursue their developmental goals freely. Furthermore, UNFCCC as well as subsequent agreements stipulate the provision of financial and technological resources for voluntary mitigation actions by this group of countries. Finally, the Kyoto Protocol created the CDM to enable developing countries to contribute to emissions abatement while pursuing sustainable development.

As non-Annex I emissions continue to grow, however, this strategy may become inadequate, and more innovative mitigation efforts might be called for in non-Annex I countries. This will mean divergences of the development path of the currently developing countries from that which developed countries have displayed (Munasinghe, 1994; Jacoby et al., 1998; Najam and Sagar, 1998; Barrett, 1999). As the UNDP Human Development Report (1998, p.7) points out, “Poor countries need to accelerate their consumption growth – but they need not follow the path taken by the rich and high-growth economies over the past half century.”

Some simple calculations can help illustrate the nature of the global mitigation challenge. Current per capita carbon emissions are slightly more than 3 tonnes per year in Annex I countries and slightly less than 0.5 tonnes per year in non-Annex I countries. With about 1.3 billion people living in Annex I countries and about 4.7 billion in non-Annex I countries, total carbon emissions are in the range of (3.1)(1.3) + (0.48)(4.7) = 6.29 billion tonnes. Thus carbon emissions at a global scale average about 1 tonne per capita per year. The stabilization of CO2 concentrations in the atmosphere at 450, 550, 650, and 750ppmv will require steep declines in the aggregate emissions as well emissions per capita and per dollar of gross domestic product (GDP) as illustrated in the IPCC SAR Synthesis Report (IPCC, 1996). For example, based on the SAR Synthesis Report and a recent set of calculations by Bolin and Kheshgi (2000), stabilization of CO2 concentrations in the atmosphere at 450, 550, 650, and 750ppmv would require limiting fossil-fuel carbon emissions at about 3, 6, 9 and 12 billion tonnes, respectively, by 2100 and further reductions thereafter to less than half current global emissions. If, for example, the world population stabilized at about 10 billion people by then, an average carbon emissions per capita of 0.3, 0.6, 0.9, and 1.2 tonnes of carbon would be required to achieve the 450, 550, 650, and 750ppmv limits, respectively. We make no assumption here about how these emissions would or should be allocated globally, but simply report that the average by 2100 must work out to these levels to achieve the stabilization objectives. Thus, to achieve a 450ppmv concentration target, average carbon emissions per capita globally need to drop from about 1 tonne today to about 0.3 tons in 2100; to achieve a 650ppmv target they need to drop to 0.9 tonnes (about one-quarter of current emissions per capita in the Annex I countries) by 2100 and further thereafter. Finally, with a global economy currently producing about 25 trillion dollars of output, carbon emissions per million dollars of output are currently about 240 tonnes. If, for example, the global economy grows to 200 trillion dollars of output by 2100, the emissions per million dollars (in year 2000 dollars) would need to be limited to about 10, 25, 40, and 55 tonnes of carbon in order to achieve the 450, 550, 650, and 750ppmv CO2 limits, respectively. If further population and economic growth continues beyond 2100 additional reductions in average emissions per capita and per unit of economic output would be required.

This framing of the mitigation challenge is central to the literature on global equity and climate change. Virtually all stabilization trajectories in the literature show an initially rising trend of aggregate global emissions, followed by a declining trend; and they also show a gradual narrowing of the gap between per capita emissions of various countries and regions. In many of these scenarios, over a finite period of time, aggregate net global emissions contract to levels consistent with the absorptive capacity of global sinks, while per capita emissions of Annex I and non-Annex I countries move towards convergence in the interest of global equity. One possible international regime to achieve stabilization would initially have only Annex I emissions decline over a period of time (to make room for the growth prospects and therefore rising emissions of non-Annex I countries). At the same time, as per capita emissions of both groups decline and converge, aggregate emissions also decline–in some scenarios to close to a carbon-free situation. There are in principle many other approaches to an equitable international regime, that are discussed in Section 1.3.2.

For the purposes of this chapter, it is convenient to divide the required emissions trajectory into three segments. Phase 1, an upward sloping segment of the non-Annex I trajectory, may require only marginal deviations in baseline emissions, for which the assessment of policy options entails a central attention to the costs and benefits of mitigation. However, for options relevant for Phase 2, a downward sloping segment of non-Annex I emissions, in which deeper cuts may be called for, global equity issues will need greater attention. Finally, the policy options that can help realize Phase 3, the asymptotic segment of the trajectory, revolve to a greater extent around sustainability concerns.

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