Wednesday, 3 December 2008

Oliver Tickell's Kyoto2 proposals

Oliver Tickell's book Kyoto2 (Zed Books, 2008) proposes a sophisticated cap-and-trade plan which would auction fossil fuel production permits to companies at the international level, and use the money for adaptation and to fund the clean energy transition. Unlike other schemes, it gives poor countries of the world the means to cope with climate change. Highly recommended by Bill McKibben's and Six Degrees author Mark Lynas, who calls it an advance over GCI's Contraction and Convergence. Listen to the podcast with Lynas, Oliver Tickell, Chris Goodall. A major debate of these proposals will be held in New York 19 Mar 2009 and broadcast on BBC.

Main proposals

  1. progressively limit greenhouse gas emissions year by year in order to achieve global climate neutrality by mid-century, and long term greenhouse gas stablisation at no more than 350 ppm CO2 eq.
  2. move decisively towards an equitable low-carbon economy, in which: energy is generated increasingly from renewable and other clean sources; energy is used more efficiently; and 'energy poor' countries and people enjoy improved access to energy.
  3. support the advances in prosperity and quality of life that are so desperately sought across the world, and especially by the world's poorest people.
  4. mobilise the funds with which to pay for human adaptation to such climate change that we are already committed to by virtue of lags in the climate system, and a 'best case' trajectory of future greenhouse gas emissions, with particular regard to the needs of the poorest countries and the poorest people who are likely to be the principal victims of climate change, including climate-related health and emergency relief costs. [Principles 2 and 3]
  5. give all countries endowed with carbon-rich ecosystems such as forests, swamps and peatlands financial incentives to conserve them: to keep the carbon they contain locked up; to enhance their ability to take up more atmospheric carbon; to preserve the biodiversity they embody; and to meet human needs.
  6. reduce the emissions from agriculture through reforms in agricultural practice, to enhance the role of farmed soils as sinks and long term reservoirs of carbon, and to maintain and improve agricultural productivity in the face of climate change.
  7. give developed countries and their economies a leading role in providing the necessary finance, technology and know-how in order to bring all the above to fruition, in cooperation with developing countries who also have their own important parts to play.

The main mechanism is a market mechanism -- since markets are generally the best means of allocating finite resources without unnecessary waste, while keeping as many people as happy as possible. Kyoto2 has this in common with the Kyoto Protocol and the EU-ETS. However, due to poor design and implementation, the last two mechanisms have so far proved to be ineffective, wasteful and loaded with perverse incentives. Reforms are under way which will in time bring about improvements in these systems; however, a more effective approach is to design a new and better mechanism from scratch -- learning from both the failures and the successes of the past, and drawing from climate science, economic theory, and principles of equity that apply across nations, peoples and generations. In particular it is essential to recognise the atmosphere as a global commons to be managed for the general benefit of humanity. Accordingly, Kyoto2 proposes to:

  1. define a global cap, or a series of global caps, for greenhouse gas emissions, leading towards stablilisation at 350 ppm CO2eq in the atmosphere, and to allocate a proportion of that cap (based on current figures, 68 percent) to greenhouse gases from fossil fuels and other industrial sources.
  2. regulate industrial greenhouse gas emissions 'upstream' at or close to production by requiring that the companies responsible surrender Permits based on the greenhouse gas pollution implicit in their production, expressed in tonnes of CO2 equivalent (tCO2eq). In the case of fossil fuels this would be at the points where flows are concentrated and easily measured such as the oil refinery, coal washing station, gas pipeline or gas tanker. Other industrial greenhouse gases to be similarly controlled include:
    • CO2 from calcinating lime in cement factories
    • the mix of greenhouse gases emitted by aircraft which multiply the climate forcing of the CO2 alone (by 36 times in the first year, down to 3.7 times over 20 years and 1.7 times over a century)
    • 'potent industrial greenhouse gases' (PIGGs) such as the F-gases from chemical factories and other industrial processes
    • nitrous oxide (N2O) of industrial origin, and based on volume of nitrate fertiliser production, since a proportion of the nitrate (3-5 percent) is converted into nitrous oxide by soil and water bacteria.
  3. sell the permits by way of a global 'uniform price sealed bid' auction, subject to both reserve price and a 'safety valve' or ceiling price, with the proceeds accruing to a Climate Change Fund.
  4. credit Permits when greenhouse gases are verifiably destroyed or sequestered into secure long term storage, as with 'carbon capture and storage' (CCS).
  5. apply the Climate Change Fund to tackling both the causes and the consequences of climate change, that is a combination of mitigation and adaptation, as set out below.

Non-market solutions

No matter how well the main market mechanism works, there is a complementary role for direct regulation to constrain greenhouse gas emissions, and additional, targetted taxes, levies and subsidies. These non-market methods will be most successful where they are designed to overcome specific market failures, and where the costs of the measures (no matter who has to pay them) reflect, to a reasonable approximation, a consistent long term carbon price.

One great exemplar of this approach is the Montreal Protocol, whose regulatory role in phasing out 'ozone eater' chemicals is supported by financial assistance for technology transfer to developing countries through a 'Multilateral Fund'. This approach could well be extended to the full range of 'powerful industrial greenhouse gases (PIGGs).

Energy labelling accompanied by demanding and progressive efficiency standards for cars, appliances, lighting, other energy-demanding goods and housing has also been highly effective. This approach, already widely used within the EU, should be extended to other countries, and extended to encompass new product types, such as computers and home entertainment systems.

As for diffuse land-based emissions from deforestation, agriculture and soils, these are excluded from the market mechanism mainly due to the difficulty of measuring and monitoring them. Instead Kyoto2 proposes to finance global programs to reduce emissions from these land-based sources, as detailed below.

Kyoto2 also adopts Jim Hansen's call for an end to coal burning power plants which do not operate carbon capture and storage (CCS). This should be implemented soon in both developed countries (at generator's expense) and in developing countries (with financial support from the Climate Change Fund). Other reforms are also needed in the power sector to encourage the development of combined heat and power (CHP) and to decentralise generation into smaller units closer to the demand for power and heat.

It is also important to bring an end to perverse subsidies to fossil fuel production, which have been estimated to amount to $235-$300 billion per year, and whose continuation would directly counter the operation of Kyoto2's main market-based mechanism described above.

Allocating resources

The auction of Permits could credibly raise a sum of about €1 trillion per year for the Climate Change Fund [Chapter 6]. These funds would be allocated to:

  1. finance human adaptation to the climate change to which we are already committed by way of lags in the climate system and unavoidable future greenhouse gas emissions;
  2. pay countries who maintain their forests and other natural ecosystems in good condition (especially ecosystems which contain substantial embodied carbon in themselves or in underlying soils) and restore these ecosystems where lost or degraded, all subject to a requirement to respect the rights of traditional land / forest owners, users and dwellers;
  3. research techniques for low-emissions agriculture for and agricultural systems that will be resilient in the face of climate change impacts, and so develop best practice guidelines to be promoted worldwide to farmers, herders and ranchers by way of agricultural extension support;
  4. finance research and development into renewable and other clean energy production, and the efficient use of energy;
  5. provide supplementary finance to divert new energy infrastructure investments into renewable and other clean energy development, to retrofit 'carbon capture and storage' (CCS) where appropriate, and to accelerate the phase-out of inefficient and polluting generation capacity and its replacement with renewable and other clean technologies;
  6. support the development of appropriate standards in all countries for energy efficiency in industry, building, housing, transport, white goods, home entertainment, computer and other sectors, and in the case of poor countries to pay all or part of the supplementary costs so imposed;
  7. investigate the potential of geo-engineering projects to reduce the global temperature and so prevent a 'runaway greenhouse effect' from taking hold, with particular focus on cost-effectiveness, careful evaluation of potential hazards, and reversibility;
  8. extend access to family planning services where such access is presently limited or denied;
  9. finance emergency humanitarian relief related to extreme weather events;
  10. finance programmes to address the health risks associated with climate change.
See Tickell's website for online discussions, updates, and supporting research papers.

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