From G8 to L20 EMF 22: Subgroup Transitional Climate Policy - - PowerPoint PPT Presentation

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From G8 to L20 EMF 22: Subgroup Transitional Climate Policy - - PowerPoint PPT Presentation

May 20, 2023 94 likes •299 views

EMF 22 From G8 to L20 EMF 22: Subgroup Transitional Climate Policy Christoph Bhringer, Ulf Moslener ZEW, Mannheim, Germany EMF 22, Tsukuba, Japan December 12-14 1 EMF 22 From G8 to L20 Kyoto framework 160-nation bureaucracy of the

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From G8 to L20 EMF 22: Subgroup Transitional Climate Policy

Christoph Böhringer, Ulf Moslener ZEW, Mannheim, Germany

EMF 22, Tsukuba, Japan December 12-14

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From G8 to L20

  • Leverage on negotiation outcomes by focusing on a small number
  • f countries (key players) – at least initially
  • Game-theoretic analogon: “narrow and deep versus broad and shallow”
  • 160-nation bureaucracy of the UN process

Kyoto framework

  • Too inclusive for effective negotiation process

Research questions Key idea of L20 approach (e.g. Victor 2004, Kopp 2005)

  • Composition of L20: selection criteria (ex ante)
  • Political feasibility of L20: cost incidence of L20 leadership (ex-post)
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L-20 Summary Statistics

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  • Regional participation:
  • Leader (L20)
  • ROW (Rest of the World)
  • Global emissions cap: 30 Gt of CO2 from 2015 onwards

Climate policy scenarios (Cap & Trade)

  • Comprehensive “where-flexibility”

Scenarios – Assumptions

Reference scenario (“doing-nothing case”)

  • BaU: Business-as-Usual reference scenario

N.B.: Regions which do not participate obtain BaU emissions!

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Egalitarian Ability to pay Polluter pays Allocation rule Entitlement based on population Reduction based on GDP* Reduction based on emissions ega atp ppa

Scenarios – Dimensions of Analysis

Timing of Participation Global L20trans L20eternal > 2015 > 2015 > 2015 > 2015 > 2035 never Leader ROW

N.B.: ATP is equivalent to sovereignty (SOV) rule.

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Analytical Framework

Key features:

  • Intertemporal framework (time horizon: 2030): Ramsey-type growth model
  • Multi-sector, multi-region computable general equilibrium (CGE) model:
  • Input-output tables and bilateral trade flows for 87 regions and 57 sectors
  • Harmonized energy flows (IEA energy balances and statistics)

Base year calibration: GTAP6 Baseline projections: IEO/DOE

  • Sensitivity analysis: alternative baselines (low – ref – high)
  • Region-specific projections for GDP, energy use and crude oil production
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Emissions – BaU and Ceiling

30 35 40 45 50 55 60 65 2010 2015 2020 2025 2030 2035 2040 2045 2050 Emissions (in Gt of CO2) Time BaU CO2 Ceiling

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Emission Reduction versus BaU

Target (global aggregate) Leaders (in case of L20) ROW (in case of L20)

10 20 30 40 50 60 70 2010 2015 2020 2025 2030 2035 2040 2045 2050 Emission reduction requirement (% from BaU) Time

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Carbon Value (Marginal Abatement Cost)

20 40 60 80 100 120 2015 2020 2025 2030 2035 2040 2045 2050 CO2 value (in US$ per ton of CO2) Time

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Implications of L20 versus Global

  • 15
  • 10
  • 5

5 10 15 20 2015 2020 2025 2030 2035 2040 2045 2050 Additional reduction requirement for Leader (in % pts) Time atp ega ppa

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Aggregate Welfare – L20eternal versus Global

Welfare Implications (% HEV from BaU)

  • 1,5
  • 1
  • 0,5

0,5 1 1,5 L20eternal Global_ega Global_atp Global_ppa Leaders ROW

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L20 as Transitional Approach

Welfare Implications (% HEV from BaU)

  • 1,5
  • 1
  • 0,5

0,5 1 1,5 L20eternal L20trans Global L20eternal L20trans Global L20eternal L20trans Global Leaders ROW

ega atp ppa

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From G8 to L20

  • Scenarios: Income transfers via carbon endowments (overall efficiency is

warranted through comprehensive “where-flexibility”) Conclusions

  • Egalitarian allocation rule: Leaders (“L20” countries) prefer leadership to

global coverage due to population dynamics

  • Leadership is much less costly (to the Leaders) if restricted to transitional

phase

  • Ability-to-pay and polluter-pays (sovereignty): global application of

allocation rule makes “Leaders” group better off than leadership

  • Economic impacts within L20 can be quite different

(and not resolved in this analysis…)

  • Comprehensive sensitivity analysis with respect to
  • key elasticities
  • global target trajectories for emissions
  • BaU projections
  • Limited “where-flexibility” (leakage)

Caveats

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Backup

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Aggregate Welfare Implications (% HEV from BaU)

Scenario L20 ROW Total L20_ega

  • 0.47

0.13

  • 0.38

Global_ega

  • 0.63

1.21

  • 0.37

L20_atp

  • 0.47

0.13

  • 0.38

Global_atp

  • 0.31
  • 0.85
  • 0.39

L20_ppa

  • 0.47

0.13

  • 0.38

Global_ppa

  • 0.28
  • 1.05
  • 0.39

L20_sov

  • 0.47

0.13

  • 0.38

Global_sov

  • 0.28
  • 1.05
  • 0.39

L20eternal:

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Aggregate Welfare Implications (% HEV from BaU) L20trans: Costs for Leaders substantially reduced!

Scenario Leaders ROW world L20_ega

  • 0.56

0.72

  • 0.38

Global_ega

  • 0.63

1.21

  • 0.37

L20_atp

  • 0.33
  • 0.71
  • 0.39

Global_atp

  • 0.31
  • 0.85
  • 0.39

L20_ppa

  • 0.31
  • 0.87
  • 0.39

Global_ppa

  • 0.28
  • 1.05
  • 0.39

L20_sov

  • 0.31
  • 0.87
  • 0.39

Global_sov

  • 0.28
  • 1.05
  • 0.39
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  • 1

,5

  • 1
  • 0,5

0,5 1 1 ,5 L20 Eternal L20 Trans Global L20 Eternal L20 Trans Global L20 Eternal L20 Trans Global Leaders ROW Leaders Hi ROW Hi Leaders Lo ROW Lo

Baseline-Sensitivity - Welfare (% HEV from BaU)

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Baseline-Sensitivity - Welfare (% HEV from BaU)

  • 2
  • 1,5
  • 1
  • 0,5

0,5 1 1,5 2

L20 Eternal L20 Trans Global L20 Eternal L20 Trans Global L20 Eternal L20 Trans Global

Leaders ROW