Building Backstop Technologies and Policies to Implement the Framework Convention on Climate Change

Abstract

The goal of the Framework Convention on Climate Change is to stabilize the concentration of greenhouse gases in the atmosphere at levels which avoid dangerous an thropogenic interference with the climate (United Nations, 1992). No consensus currently exists with regard to a concentration that can be regarded as “safe,” and the issue remains subject to debate, fuelled at least in part by the enormous difficulties in predicting and valuing the consequences of climate change. The attraction of efficient instruments for achieving atmospheric stabilization is great, and most of the analysis to date has focused on either tradable permits or taxes as the instruments of implementation (Hourcade et al., 1996). Clearly, efficient instruments are a first-best alternative for achieving any emissions mitigation objective. But efficient instruments have their own difficulties, not the least of which is the income distribution problem. The purpose of this paper is to examine the performance and cost characteristics of an alternative, technology based, policy instrument, which might serve as a “backstop” in the event that efficient policy instruments could not be employed. Such instruments are of interest because they potentially offer a strategy for stabilizing the atmosphere, while requiring relatively minor financial transfers and allowing economic development to proceed. They accomplish these goals at the expense of economic efficiency, although our study shows the effect of the economic inefficiency is limited to approximately 30%. On the other hand, a technology strategy approach can offer wide technological flexibility in meeting the performance standard. The backstop protocol we study here requires new powerplant and coal-based synthetic fuels capacity to scrub carbon from the waste gas stream in Annex I nations, and provides a mechanism by which non-Annex I nations can graduate into obligations. We examine this protocol under two alternative reference energy futures: one dominated by coal and the other dominated by unconventional oil and gas.

International technology-oriented agreements to address climate change

“…The only prospective TOA mandating a specific GHG mitigation technology is the CCS scenario by Edmonds and Wise (1998). In a modeling study, they explore the costs and effects of an obligation of Annex I countries to implement CCS with all fossil-fuel-based power plants and coal-based synthetic fuel facilities built in 2020 and beyond and demonstrate that such a measure would stabilize atmospheric GHG concentrations at 550 ppm, storing almost 350 Gt CO 2 cumulatively between the start of the treaty and the end of the century.…”

Global change: state of the science

“…National governments have jealously guarded the right to tax, and even if governments were able to retain revenues from an exogenously speci®ed tax, they would almost certainly ®nd it di cult to cede the power to regulate taxes and subsidies that would alter the e ective rate (Edmonds and Wise, 1998). Another option is a combination of tradable permits and a carbon tax, but applied to national governments rather than individual emitters (Harvey, 1995).…”

Stabilizing CO2concentrations with incomplete international cooperation

“…To understand the energy, economic, emissions and other implications of stabilization, researchers have been creating economic, computer-based global stabilization scenarios for over two decades (see, for example, Edmonds and Reilly, 1985). Traditionally, these stabilization scenarios have examined the implications of stabilizing greenhouse gas concentrations under the first-best assumptions of perfect 'where' and 'when' flexibility; that is, all regions of the world and all sectors of all of the world's economies undertake emissions reductions wherever and whenever it is cheapest to do so (see, for example, IPCC, 2001 andClarke et al, 2007a).…”