Working Paper: CEPR ID: DP3299
Authors: Barbara Buchner; Carlo Carraro; Igor Cersosimo; Carmen Marchiori
Abstract: The US decision not to ratify the Kyoto Protocol and the recent outcomes of the Bonn and Marrakech Conferences of the Parties drastically reduces the effectiveness of the Kyoto Protocol in controlling GHG emissions. The reason is not only the reduced emission abatement in the US, but also the spillover effects on technology and countries? relative bargaining power induced by the US decision. Therefore, it is crucial to analyse whether an incentive strategy exists that could induce the US to revise their decision and to comply with the Kyoto commitments. One solution, occasionally proposed in the literature and in actual policymaking, is to link negotiations on climate change control with decisions concerning international R&D cooperation. This Paper explores this idea by analysing on the one hand the incentives for EU, Japan and Russia to adopt this strategy, and on the other hand the incentives for the US to join a coalition which cooperates both on climate change control and on technological innovation. The extended regime in which cooperation takes place on both dimensions (GHG emissions and R&D) will be examined from the view-point of countries? profitability and free-riding incentives. Finally, after having assessed the effectiveness and credibility of the issue linkage strategy, we explore the economic and environmental benefits of a new, recently proposed regime, which aims at achieving GHG emission control by enhancing cooperation on technological innovation and diffusion (without targets on emissions).
Keywords: agreements; climate; incentives; negotiations; policy; technological change
JEL Codes: C70; H00; H40; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. withdrawal from the Kyoto Protocol (F64) | reduced environmental effectiveness of the Kyoto Protocol (F64) |
| U.S. withdrawal from the Kyoto Protocol (F64) | decreased demand for emission permits (Q31) |
| decreased demand for emission permits (Q31) | lower permit prices (D41) |
| lower permit prices (D41) | diminished incentives for emission abatement across all participating countries (F64) |
| U.S. withdrawal from the Kyoto Protocol (F64) | enhanced Russia's bargaining power in climate negotiations (F69) |
| enhanced Russia's bargaining power in climate negotiations (F69) | leverage for concessions (C78) |
| U.S. perceives substantial benefits from R&D cooperation linked to climate commitments (O36) | reconsider its stance on Kyoto commitments (F64) |
| conditions for effective issue linkage are not likely to be met (O19) | linkage strategy is not a credible or effective method to induce U.S. compliance with the Kyoto commitments (F12) |