Economic tools to promote transparency and comparability in the Paris Agreement

Abstract

The Paris Agreement culminates a six-year transition towards an international climate policy architecture based on parties submitting national pledges every five years 1 . An important policy task will be to assess and compare these contributions 2,3 . We use four integrated assessment models to produce metrics of Paris Agreement pledges, and show di erentiated e ort across countries: wealthier countries pledge to undertake greater emission reductions with higher costs. The pledges fall in the lower end of the distributions of the social cost of carbon and the cost-minimizing path to limiting warming to 2 • C, suggesting insu cient global ambition in light of leaders' climate goals. Countries' marginal abatement costs vary by two orders of magnitude, illustrating that large e ciency gains are available through joint mitigation e orts and/or carbon price coordination. Marginal costs rise almost proportionally with income, but full policy costs reveal more complex regional patterns due to terms of trade e ects.The pledge and review approach formalized in the Paris Agreement requires a well-functioning transparency regime. Given the discretion left with national governments on the form of their mitigation pledges, or Intended Nationally Determined Contributions (INDCs), assessments are necessary to estimate and compare their impacts. Such comparisons will be of interest to environmental stakeholders who want to pressure those countries with relatively modest mitigation contributions. Business stakeholders may focus on assessments of INDCs' economic impacts, specifically energy price and cost impacts among trade partners.Beyond stakeholder interest, transparency and comparability can promote the stability and facilitate greater ambition of an international climate agreement. Transparent reviews serve to enhance the credibility and likelihood that a party will deliver on its announced pledge, especially with repeating rounds of pledge and review [4][5][6] . Assessments of pledges reveal countries' preferences and interests 1 , enabling more-informed negotiations. International institutions to facilitate transparency-through the collection, analysis and dissemination of information on countries' pledges-can lower the costs of international agreements and enhance their legitimacy 7 . Voluntary pledge and review can result in broad participation 8,9 , as evident in the Paris Agreement. In various contexts, including international trade and common pool resource management, the demonstration of reciprocal actions has resulted in fewer deviations from agreements and positive reactions by members of the agreement 10 .The long-term success of the Paris Agreement is likely to depend on assessments of whether comparable countries undertake comparable mitigation efforts. Such assessments are complicated by the variation in the form of pledges: targets specified in terms of a base year, a forecast, or emissions intensity; peaking year; renewable energy goals; and so on. Evaluating the comparability of mitigation effort highlight...

Prove Paris was more than paper promises

“…Agreeing the correct indicators and standards for pledges will be impossible in the formal UN-based Paris framework because too many countries do not want candour 2,9 . One solution is for countries to volunteer to issue fresh pledges and to submit to detailed reviews of each other's policy efforts.…”

“…These can be central in the policy debates about how much nations are willing to spend to address climate change, as well as how such resources can be deployed most efficiently. However, the models rest on a huge number of assumptions about the design and implementation of policies, the availability of technologies and the structure of the economy that affect projected costs manyfold 1,2,9 . Ground truth will improve such models and help scientists and governments to reveal the true costs and benefits of action.…”

“…Developing countries are of course vital to driving the deep worldwide reduction in emissions that is needed to stop global warming. But so far, such countries have set targets that will be much easier to achieve 1,2 . Their policy priorities are closer to home, focusing on pressing problems such as cutting local air pollution and improving energy security.…”

Enhancing global climate policy ambition towards a 1.5 °C stabilization: a short-term multi-model assessment

“…In our 2 • C and 1.5 • C decarbonization scenarios costs are minimized (IPCC 2014) as we implement a global, unified mitigation framework where reductions are undertaken by the sectors and regions with the lowest marginal abatement costs. On the contrary, INDC emission reductions assume a fragmented mitigation action and are thus expected to result in suboptimal burden sharing and increased costs (Aldy et al 2016, Fujimori et al 2016b. In addition, it is important to note that a cost-optimal mitigation framework, like in our 2 • C and 1.5 • C scenarios, does not address any equity considerations (Raupach et al 2014), but can serve as a benchmark to indicate, among other things, the cost-optimal level of abatement as well as sectors where abatement is cheaper.…”

Future Fossil Fuel Price Impacts on NDC Achievement; Estimation of GHG Emissions and Mitigation Costs

“…Mitigation costs are evaluated mainly in terms of the marginal abatement cost (MAC). MAC is an important metric for measuring how rigorous mitigation efforts are, by region, in achieving efficient GHG emissions reductions at the global level (Aldy et al 2016a;Aldy et al 2016b). Overall, the efficiency of GHG emissions reductions improves as differences in MACs decrease.…”