Greenhouse Development Rights: towards an equitable framework for global climate policy

Abstract

The assignment of obligations to pay for mitigation of greenhouse gas emissions and for adaptation to unavoidable climate change is a critical and controversial component of international negotiations under the United Nations Framework Convention on Climate Change. In this article we present a new framework called ‘Greenhouse Development Rights’ (GDRs): a formula for the calculation of national obligations on the basis of quantified capacity (wealth) and responsibility (contribution to climate change). GDRs seek to preserve the ‘right to development’ by exempting from obligation any income and emissions under a ‘development threshold’. By taking into account the distribution of income and emissions within countries, and calculating national obligations as if they were the aggregated obligations of individuals, the framework treats every global citizen identically, and allocates obligations even to poor countries that are proportional to their actual middle-class and wealthy populations. When coupled to a trajectory of rapid emissions reductions (for example, 80 per cent reduction below 1990 levels by 2050), the framework results in larger reduction obligations for both rich and poor countries than they currently seem prepared to accept. However, the formula may be ‘fair enough’ to break the impasse that currently separates rich and poor countries in the negotiations.

Notes

¹ The authors gratefully acknowledge the support of many colleagues who have contributed to the development of the ideas in this article. Eric Kemp-Benedict of the Stockholm Environment Institute has provided invaluable support both to our calculations and our analysis of inequality within countries. Financial support for Greenhouse Development Rights has come from Mistra's Climate Policy Research Program, Christian Aid, the Heinrich Böll Foundation, the Town Creek Foundation, Oxfam International, and the Stockholm Environment Institute. We also thank several anonymous reviewers whose comments greatly helped this article. All remaining errors of fact and opinion are strictly our own. Periodic updates to the GDRs calculations can be found at www.ecoequity.org/GDRs

² The scientific literature on impacts through roughly 2005 was summarized by the Intergovernmental Panel on Climate Change (IPCC) in its Fourth Assessment Report (see for example the Synthesis Report; IPCC 2007a) but worrisome new reports continue to appear regularly (see, for example, Science Daily 2007).

³ Advocates of precautionary climate policy have long cited 2°C above the preindustrial mean as a threshold for ‘dangerous climate change’ to be avoided; even a 50 per cent chance of staying below this level requires emissions to peak by 2020 and drop to at least 50 per cent below 1990 levels by 2050 (IPCC 2007b, 15–16). Evidence of significant harm from the current temperature increase of 0.8°C now suggests that even the 2°C threshold may be unacceptably high—see for example, Hansen (2007) and Spratt and Sutton (2008).

⁴ The quantified obligations of the Kyoto Protocol govern the so-called ‘First Commitment Period’ from 2008 to 2012. A second commitment period would thus presumably begin in 2013 but its end date would be negotiated.

⁵ Indeed, the UNFCCC itself states that countries should ‘protect the climate system…on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities’ (UNFCCC 1992, article 3 paragraph 1).

⁶ The likelihood that any emissions pathway will lead to temperature increase over, for example, 2°C is not an objective probability (like the probability of rolling a six on a fair die). Estimates of these kinds are necessarily subjective probabilities and, given the complexity of the system and our ignorance about its mechanisms, reasonable people will disagree. Thus these kinds of risk estimates can only be reported as ‘ranges of reasonable probabilities’. These ranges here were calculated with the Monte Carlo Climate Model (MC²), calibrated to results of GCMs published in the scientific literature; calculations based on different models would presumably overlap the ranges reported here. See Baer and Mastrandrea (2006).

⁷ For comparison, the countries classified as ‘low income’ by the World Bank, with roughly 35 per cent of global population, have seen real per capita income growth (in PPP terms) averaging 4.6 per cent annually over the last five years and 3.2 per cent annually over the last 20 years; the lower-middle income group, with roughly the same population (and including China) has had growth of 5.8 per cent annually over the last five years and 5.0 per cent over the last 20 years.

⁸ This translates the purchasing power of various national currencies into purchasing power in US dollars. Because a PPP-adjusted figure shows what local incomes actually buy in dollar terms, PPP adjustments facilitate more accurate comparisons between countries than conversion using market exchange rates.

⁹ Note that we do not intend to imply by this that ‘development’ is simply a matter of economic growth and high per capita incomes, but that discussion would take us far afield.

¹⁰ Developing-country negotiators reference this distinction in speaking of ‘luxury emissions’ versus ‘subsistence emissions’ at international climate talks (Embassy of the People's Republic of China in Australia 2007), following Agarwal and Narain (1991) who first coined the expression.

¹¹ Pritchett (2006) argues that a global poverty line—as opposed to an extreme poverty line—should be on the order of $6,000 PPP adjusted; our $7,500 figure is roughly 125 per cent of this level.

¹² It is important to keep in view that $7,500 is an individual, not a family, threshold. Thus, threshold income for a family of four in the US would be a more realistic $30,000. However, since the poverty line for a family of four is not the same as four times the poverty level for an individual, no individual threshold can precisely capture the ‘capacity’ of differently-sized households. Furthermore, national plans could (and should, in our view) be designed so that the actually taxed threshold income is considerably higher than the global threshold we use to calculate countries' aggregate obligations. For instance, people with over a million dollars' annual income could certainly assume some of the obligations of individuals with incomes between $7,500 and, say, $50,000.

¹³ We have used countries' per capita income and their Gini coefficients, which are widely accepted indicators of income inequality, to calculate countries' above-threshold income. We assume that national income can be modelled as a lognormal distribution, which (compared to the bell-curve shape of the well-known ‘normal’ distribution), is ‘pushed to the left’ and has a long right-hand ‘tail’ (see Kemp-Benedict 2001). Using this model, one can estimate how many people in each country are in each ‘income bracket’, and from this calculate capacity. Inequality matters because in a country with (say) a per capita income of $5,000, if that income were distributed perfectly evenly, the country would (by our definition) have no capacity; as rising inequality shifts income towards those whose individual income is over the threshold, the country's measured capacity rises.

¹⁴ Because the First Assessment Report of the IPCC was published in 1990, it is commonly argued that policy-makers have been informed of the climate change problem—and thus nations have moral responsibility—dating from that year.

¹⁵ The G8+5 group was formed in 2005 when Tony Blair invited the heads of state of five of the largest developing countries (Brazil, China, India, Mexico and South Africa) to the G8 meeting in Gleneagles, Scotland, in part to address climate change.

¹⁶ We use the term ‘cap and allocate’ rather than ‘cap and trade’ to emphasize that, although (theoretically) economic efficiency is achieved by trading, the allocation of permits is what determines the fairness of the system and is a primary, not secondary, consideration.

¹⁷ Note that by ‘these numbers’ we don't mean narrowly the results in this particular table, but those that are derived from plausible variations in key parameters like the development threshold and the weighting of responsibility and capacity.

¹⁸ The ‘Business as Usual’ baseline is derived from projections of the International Energy Agency (2007), modified for emissions reductions through 2012. ‘No regrets’ reductions are based on the estimates of McKinsey and Company (Enkvist et al 2007) and the IPCC (2007b, Table TS 15).

¹⁹ The Brazilian Proposal of 1997 allocated shares of emissions reductions in proportion to countries' contributions to global temperature change, and took account of capacity by excluding non-Annex I countries from such shares. Otherwise it is perhaps the closest relative of the GDRs approach (Meira Filho et al undated).

²⁰ Emissions data, like most of that used in this analysis, are from the US Energy Information Administration, < http://www.eia.doe.gov/environment.html>.

²¹ For a more detailed review of Contraction and Convergence and several other equity-based climate policy frameworks, see Baer and Athanasiou (2007).

²² We use ‘post-Kyoto’ as shorthand for ‘subsequent to the first commitment period of the Kyoto Protocol’, which runs from 2008 to 2012. The ongoing negotiations under the so-called ‘Bali Action Plan’ imply that the Protocol will likely remain in effect, but with new targets established for a second commitment period.

²³ Eckersley, among others, distinguishes among the substantial range of policy approaches that reside under the umbrella term ‘Ecological Modernization’. The weak version ‘amounts to little more than a cost minimization strategy for industry’. Alternatively, ‘strong’ ecological modernization is the product of a discursive, reflexive and critical process that translates equitable and precautionary values into deep structural changes in the economy, society and state; it is thus much more than an industrial policy (Eckersley 2004, 70–77).

²⁴ Den Elzen et al (2006) assume that the US reengages with the UNFCCC/Kyoto process, and reduces its emissions 15 per cent below 1990 levels by 2020.

Additional information

Notes on contributors

Sivan Kartha

 1  1 The authors gratefully acknowledge the support of many colleagues who have contributed to the development of the ideas in this article. Eric Kemp-Benedict of the Stockholm Environment Institute has provided invaluable support both to our calculations and our analysis of inequality within countries. Financial support for Greenhouse Development Rights has come from Mistra's Climate Policy Research Program, Christian Aid, the Heinrich Böll Foundation, the Town Creek Foundation, Oxfam International, and the Stockholm Environment Institute. We also thank several anonymous reviewers whose comments greatly helped this article. All remaining errors of fact and opinion are strictly our own. Periodic updates to the GDRs calculations can be found at www.ecoequity.org/GDRs