On Design Flaws in the Regime to Control Global Climate Change and Their Consequences

1. On Design Flaws in the Regime to Control Global Climate Change and Their Consequences Or Why We Need to Start Over

2. Definitions • INSTITUTIONS = clusters of norms (standards of behavior) that crystallize in particular pattern to guide social practices in large areas of human social activity, e.g., law, government, religion, diplomacy, international commerce, etc. • They constitute the rules of the game that create complementary expectations about permissible behavior in various circumstances. This is the glue that holds societies together. • May include grants of authority (jurisdiction) to prescribe policy in domains of varying scale, along with organizations, & their stipulated decision-making procedures.

3. Definitions, cont’d. • Regimes = one type of institution dealing always with governance of human social activities at any/all scales, from local to global. Governance = right to manage; scope of authority, type of rules, mgmt. approaches, etc. • Examples of international regimes = international air & maritime transport, marine fisheries beyond national jurisdiction, long-range transport of atmospheric pollution (acid rain), etc.

4. What Goes Around…

5. Background • Sept. 1989: beginning project with Norwegians to evaluate performance of 15 international environmental regimes re design & effectiveness (Miles et al. 2002). Aim to apply lessons to GCC problem. Initial joint consultations with Norwegian Min. Envir. at their invitation. • Deadline for results Spring 1991. Plan to table treaty for signature at Rio summit, June 1992. This deadline totally artificial. • Informed 2 processes at work: national level and global (IPCC). 1st workshop scheduled for October 1989; 2nd will be U.S. workshop for IPCC. U.S. objective to slow down push for policy; focus on research, but UNEP setting up small group with WMO. Norway says they need a lot of basic ideas by Spring 1990.(!!)

6. Background, cont’d. 1 • Nor. Min. Envir. wants to know: what should be in legal instrument? How phase? What should be left out? What changed from usual approaches--Montreal Protocol vs more elaborate? But remember: “The more elaborate the attempt, the less the productivity of the global level” • [Life is complicated]. NME not sharing Brundtland (PM) view. Not in favor of rush to regulate by treaty. Not sold on GLOBAL treaty; don’t want to repeat UNCLOS III experience. Sees Nor. PM & MFA as problems, but constrained to support PM initiative. • ELM & Nor. Colleagues say we can’t meet their deadlines. Just starting project; applications to GCC regime the 2nd stage.

7. Reality Check, cont’d. 2 • Back in U.S. ELM asked by State Dept. to react to Canadian (& Elliott Richardson) push for “Law of the Atmosphere” Conference, similar to recently completed UNCLOS III. ELM arguing strongly against. • Reasons: GCC problem the ultimate collective action problem--rife with Prisoner’s Dilemma situations. This combined with long time scale & vertical disintegration of policy problems. Result is both international system as whole & treaty negotiation under those conditions = Pandora’s box. Gridlock the most likely outcome. Even if able to get outcome eventually, governed by Law of the Least Ambitious Program.

8. Objectives of Parts II & III of Study with Norwegians • Expectation that Part I would yield understanding of determinants & dynamics of achieving increasing levels of int’l. collaboration & relative effectiveness of joint action on int’l. collective goods problems involving large ingredients of S & T. On that basis, apply findings to elaborating combination of strategies/incentives to be devised for achieving adequate levels of joint action re GCC. • Strategies to be derived from two sources: Axelrod. The Logic of Cooperation, (1984) & Keohane. “Reciprocity in International Relations”, (1986).

9. Axelrod (1986) • 3 central questions: 1. Under what conditions will cooperation emerge in a world of egoists w/o central authority? 2. What type of strategy can thrive in a variegated environment containing players using a wide diversity of more or less sophisticated strategies? 3. Once a cooperative strategy established, how resist invasion by less cooperative strategies? • Axelrod’s findings show that two conditions necessary & sufficient for emergence of cooperation in PD situations: existence of norm of reciprocity (individual perceptions of self interest) & repetitive interactions between players over long time horizons (long shadow of the future).

10. Axelrod. Changing the Strategic Interaction Pattern • If interaction repetitive, TIT FOR TAT strategy most robust, i.e., begin with cooperation & then respond with whatever the other player did on the previous move. Retaliation can take many forms; defection doesn’t always have to be paid back in same coin. • Strategic setting can be transformed by:a). making the future more important than present through making interactions either more durable/and or more frequent; b) changing payoffs to players such that long-term incentive for cooperation becomes greater than short-term incentive for defection; c). teaching players facts, values, & skills that will promote cooperation, i.e., changing perceptions of self interest.

11. Keohane’s (1986) Test of Axelrod: International Trade Policy in 19th & 20th Centuries • Reciprocity has two distinct meanings: “…situations in which specified partners exchange items of equivalent value in a strictly delimited sequence”, called specific reciprocity; & situations where “…the definition of equivalence is less precise, where one’s partners may be viewed as a group rather than as particular actors, and the sequence of events is less narrowly bounded”, called diffuse reciprocity, e.g., the EU “bubble” in the Kyoto negotiations. • Diffuse reciprocity better fits situations in which “…sequential negotiations will take place in the context of extensive interdependence”--like re GCC.Specific reciprocity not a compelling strategy because retaliation for defection threatens achievement of collective good, risks denunciation by other parties, & may increase benefits to party responding to defection only marginally. • Diffuse reciprocity may be more effective in situations representing the dilemma of common aversions rather than the PD, e.g., Montreal Protocol. Objective of former to establish stable equilibria rather than worrying about cheating & compliance.

12. Miles’ Caveat re Axelrod & Keohane re GCC Case • “All of these suggestions take on particular power when one realizes that the process of regulation vis-à-vis the global change problem will indeed be cast in the form of iterated games where not only is state action contingent upon choices made by others, but not acting in a timely fashion will also generate its own perils. These perils will loom larger as knowledge accumulates. The moral responsibility of doing something to reduce that peril will be a powerful goad to action over time and give room for social pressures to be brought to bear. At the same time, we recognize that different actors may be playing different games and that the problem of global climate change is malign”. [cf. EU vs US]. • White (1989): The GCC problem a classic dilemma of policy formulation involving possibly severe but unknown levels of risk of undesirable consequences; great uncertainty about causes, costs, & consequences; & consequences will be visited on future generations unevenly.

13. Miles’ Anticipation of a “Hard Regulation” Approach in 1991 • “Hard regulation” may not be politically feasible because scope of effort would be too large. • Would involve clear global agreement on standard or standards of GHG concentrations. This very difficult to do given painful cost implications for AICs & adverse impacts to economies. • Negotiation of freely transferable quotas between states (emissions trading) & within states between firms. This very complex undertaking & will take time. • Negotiation of a monitoring/surveillance system; effective enforcement provisions; & a dispute settlement procedure. • All of the above will entail an extremely difficult, time-consuming process (>1-2 decades). In interim, few ameliorative actions may be taken. Decision process itself would be very uncertain (Pandora’s Box); & the Law of the Least Ambitious Program would be dominant.

14. Additional Problems re Hard Regulation • Level of ignorance re GCC problem in all its aspects very high. • World community faced with combination of high complexity & great uncertainty re physical process and re magnitude & timing of impacts. • Under those conditions, setting hard targets essentially an arbitrary exercise. • Need to let research process work its way forward, but that need not stop all attempts to regulate.

15. If Hard Global Regulation Not Possible, What Are the Alternatives? • Assess in detail possibility of pursuing “soft regulation” in decentralized fashion as strategy for buying time in face of uncertainty. • “Soft regulation” = avoiding clear standards, precise goals, & firm targets. Seek to initiate process combining diffuse & specific reciprocity strategies between OECD members, the USSR [now Russia], Central Europe [avoid coal], China, & India, & eventually the Third World. • Begin process in OECD group. Significant reductions in emissions would leave room for growth for Third World w/o necessity of triggering major confrontation in global setting. [Use carbon tariffs on trade as penalty]. • Process requires heavy reliance on side payments vis-à-vis Russia, China, & Third World, in addition to epistemic communities & building of consensual knowledge [the IPCC]. • Design decision process to maximize learning potential over time to build confidence participants would need for iterative rounds of cuts, [cf. LRTAP].

16. Miles’ Alternatives, cont’d. • As part of preparatory process seek answers to following questions: • On what scale does regulation have to proceed? Since group size is an important criterion, what can effectively be done on a regional as opposed to a global basis? • Is it possible to mute the potential North/South dimension to conflict by initially focusing most regulatory action on the North? • What strategies are available for ensuring maximum participation with the least potential for conflict? • How can states most effectively appraise the performance of decentralized actions so that they can have confidence that the standards are being met?

17. Outcome • Proposal presented to Dept. of State, Bureau of Intelligence and Research, (External). • State (and CIA) initially excited by the ideas. Contract moving through process. Then Major policy shift in Bush I Administration; whole initiative killed by Sunnunu in Sept. 1991. [See Miles, 1999].

18. Miles’ Conclusions re Process by 1994 • Mitigation, i.e., reducing emissions not likely to yield significant benefits in short run as result of magnitude of required pain & “law of the least ambitious program” in international negotiations. • Mitigation likely to yield significant benefits only if built into 2X change in lifecycle of energy systems in next 100 years. • Therefore, an equally important governmental response to GCC in short term is planning for adaptation to the consequences (impacts) of climate change. Two ingredients critical: rate of change & governmental capacity to learn.

19. Fast-forward to the Present

20. Dealing with the Consequences of a Failed Initial Global Approach at Control of GCC • What failed? System design in Art. 2, FCCC (see next slide) because assumption of linearity in generation of impacts false. Earth’s climate system highly nonlinear, consequently probability of extreme effects of different levels of GCC increases. Larger than expected impacts come faster than expected; lot of thresholds involved. Thresholds amplify rates of change & often shift systems into new states. • Kyoto also failed even before US rejection given dynamics of Law of the Least Ambitious Program as predicted by Miles & evaluated by Bolin ( 1998). • Residue of US rejection of Kyoto requiring turn around in US policy re GCC to demonstrate credibility. But US leadership absolutely necessary for a decentralized strategy to work; plus fact that US accounts for 25% of global emissions.

21. The Framework Convention on Climate Change (FCCC), Art. 2 • The ultimate objective of this Convention …is to achieve…stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened, and to enable economic development to proceed in a sustainable manner. • [Severe problems with this formulation: 1. Stabilization not the most appropriate objective; 2. No single measure of “dangerous interference” exists; 3. Assumptions about time to significant impacts false because ignoring internal feedbacks, nonlinearities, and thresholds in earth’s climate system].

22. Technical Implications of Kyoto Protocol: Comments of Prof. Bert Bolin, Chair of IPCC, Nature,16 Jan. 1998 • Within “basket”, increase of CO2 alone accounting for 70% of total increase of radiative forcing. Not many measures available for decreasing CH4 & Nox. Other components contribute only few % to radiative forcing. • Even with full compliance of Protocol, by 2010 AICs still contributing 4X CO2 emissions of LDCs. • Even with full compliance, accumulated emissions of CO2 from 1990 to 2010 = 140Gt C, implying increase in atmospheric concentration by ~29ppmv to 382ppmv. • The Kyoto Conference did not achieve much with respect to limiting the buildup of GHG in atmosphere. • US (Bush II) rejecting agreement. For Protocol to be functional, EU needing Japan & Russia to sign & ratify. Side deal made with Russia re admission to WTO. Japan requiring watering down of compliance provision. No penalties for non-compliance. By 2006 compliance low generally.

23. Victor. 2001. The Collapse of the Kyoto Protocol • Main impediment to effective international policy to the GW problem is lack of a viable architecture for international cooperation. • Targets & timetables constitute fundamental flaws in the regulatory system for controlling emissions. Latter vary with economic growth & technological change. Rigidity of targets & timetables make them unresponsive to former. • Emissions trading meant to compensate firm, reduce costs of compliance, & provide flexibility. Allocation permits worth hundreds of billions of $. Integrity of system requires compulsory membership of all the major players, but system can’t guaranty that. • Montreal Protocol the wrong template to apply. Global warming a fundamentally different type of problem.

24. Alternative View of Ted Parson. 2002. “Breaking the Policy Deadlock on Climate Change: A New Role for Technology Assessment”, Issues in Science and Technology, (Summer) • Montreal Protocol highly successful but not because problem uniquely benign. Policy deadlock for 10 years. Reasons for success different. • 1988 organization of Technology Assessment Panel operating differently from others. Dominated by representatives of firms, using knowledge of technology and what firms could and would adopt to solve the problem. • Problem solving capability of the panel greater than even that of the largest firm. • Representation providing expertise, but not to extent that swallowed up by inter-firm rivalries. • Firms could get help meeting regulatory controls in a highly feasible way based on expert knowledge. “…[T]echnology assessments have much greater capability to alter the reality they are assessing….” • Lack of such a capability in IPCC & FCCC a serious design flaw.

25. …Comes Around!

26. Trigger for Starting Over • OECD participants now convinced the Kyoto Protocol cannot produce effective solutions, perceive that urgency of problem has increased, & are prepared to pursue less than global pathway.

27. Return to the Buying Time Option: EU Vision • Preferences are for eschewing search for immediate global agreement and shift to decentralized, coordinated policy agreements beginning in OECD group, with or without formal legal arrangements at initial stage. Would require formal agreement on monitoring & reporting system to create transparency. • Would also require coordinated agreement on carbon taxes & approaches to carbon sequestration, particularly from coal-fired power & industrial plants. • Would require US leadership which becoming increasingly possible. Significant bottom-up shift in policy views at city, state, & industry levels in view of rate and magnitude of CC impacts. Split in fundamentalist coalition on this point in US politically significant. • The more significantly adverse climate change impacts are experienced, the stronger will be public support for the policies which are required.

28. So What Changes Are On The Horizon? Observations & Conversations, September 2006 • Widespread agreement among high-level government officials, excluding US, from OECD countries that they shouldn’t try to renegotiate UNFCCC & Kyoto Protocol in same manner as before. Would take too long. Developing countries unlikely to accept binding targets at level satisfying to AICs. • Strong agreement to seek energy security most immediately through increasing efficiency. For instance, IEA calculating that if all household appliances made with same capability of laptops (battery capacity for independent ops.), would save 15GW electricity/yr. • Accept that rejecting global approach means accepting individual/group approaches among like-minded. • Aware that in next 30 yrs. globally, nuclear power & renewables providing only c. 10% of global energy needs. So coal is the real option for the near term. This a huge problem [and why C sequestration req’d.]

29. Additional Views of Industry re Future Policy • Growth in energy use inevitable, world not running out of energy. Moving beyond conventional resources in the right way is THE major challenge. There are no silver bullets; lot of different things have to be done. • Pressing up against the limits of conventional oil & gas resources, but still room for moving towards unconventional oil & gas resources, plus coal, nuclear & solar. However, lot of objectives here contradictory. Application of biology to energy as yet unexplored. Needs heavy investment. • Don’t wait for global treaty & certainty in science. Industry should stake out bold positions. Move out of R&D into demonstration projects at large scale. Accept risks.

30. Discussion: How to Make Things Happen? • Yes, get industry to step out, but what is the appropriate regulatory environment? And do we move from domestic to regional to global? And does government leave business to take the full risk of stepping out? To have the capital to take the risks is necessary for getting the market to work. • Re the regulatory environment, the ideal system would be a global carbon tax, but how likely is that? • Is energy storage technology a silver bullet, especially for renewables which are use it or lose it technologies? • Speeding up action resolves into NATIONAL policy, even though it’s a global problem and the patchwork quilt of outcomes will need to be integrated if we are to avoid 550ppmv by 2050. • So doubling by 2050 is the best they think we can do, but they’re aware that such a concentration level means a world of enormous environmental destruction, given the observable nonlinearities.

31. Hansen et al. (2006) on the Need to Act Now • Earth’s thermal inertia delays the planet’s responses to climate forcing of different types. Delay provides opportunity to reduce magnitude of anthropogenic climate change before fully realized. Can do on timescale of 5 decades. The longer mitigation delayed, the more difficult to avoid magnitude of change. • New measurement of net climate forcing, i.e., difference between energy emitted & absorbed = 0.75W/m2 ± 0.15W/m2. This a large imbalance in history of planet. • Imbalance, combined with warming already “in pipeline”, complicates task of avoiding any specified level of climate change. Near term anticipatory actions of critical importance.

32. Conclusions: Transportable Design Elements • Need for flexibility & responsiveness in control structure. Utility of iterative assessments of state of problem and of regime performance in context of high transparency. • Deliberate mechanisms which facilitate learning & for linking that learning to policy formulation & revision. • NGOs should be able independently to evaluate governmental performance. • Find the most appropriate architecture for international collaboration. • Adopt a management approach to enforcement. • Epistemic communities & political entrepreneurs may be more important at the beginning but the importance of national and international administrative communities grows with time.

33. But Consider Following Points from Discussion of Kennedy School Global Environmental Assessments Project, May 1999 • With the ozone problem, the important interface with decision makers is technology, not science. • If one accepts that technological fixes exist to environmental problems and that experts can be left alone to find solutions based on market acceptability [TEAP], then the role of science is to demonstrate that there is an environmental imperative and that technology has the solution. • Economic models are not very good at anticipating technological innovation, so the only real test is market acceptability. TEAP successful because only those executives who made those kinds of decisions could participate. Companies that did not have technological options were deliberately excluded from participation. • Who is excluded a very important question--has impacts both on the framing of the issue & the urgency with which it is pursued.

34. How Imminent is Action? • Not clear , although interesting re-alignment of forces under way. • Forces for Delay: • The Org. filter--Dynamics of Bureaucracy • Perceptions of winners & losers within & between nations • Slow rate of environmental change • Forces for Change • Fast rate of change • Governmental capacity to learn • So we shall see