Working Paper: NBER ID: w17669
Authors: Valentina Bosetti; Jeffrey A. Frankel
Abstract: We explore a framework that could be used to assign quantitative allocations of emissions of greenhouse gases (GHGs), across countries, one budget period at a time. Under the two-part plan: (i) China, India, and other developing countries accept targets at Business as Usual (BAU) in the coming budget period, the same period in which the US first agrees to cuts below BAU; and (ii) all countries are asked in the future to make further cuts in accordance with a common numerical formula to all. The formula is expressed as the sum of a Progressive Reductions Factor, a Latecomer Catch-up Factor, and a Gradual Equalization Factor. This paper builds on our previous work in many ways. First we update targets to reflect pledges made by governments after the Copenhagen Accord of December 2010 and confirmed at the Cancun meeting of November 2010. Second, the WITCH model, which we use to project economic and environmental effects of any given set of emission targets, has been refined and updated to reflect economic and technological developments. We include the possibility of emissions reduction from bio energy (BE), carbon capture and storage (CCS), and avoided deforestation and forest degradation (REDD+) which is an important component of pledges in several developing countries. Third, we use a Nash criterion for evaluating whether a country's costs are too high to sustain cooperation.
Keywords: Climate Policy; Emissions Targets; International Cooperation
JEL Codes: Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| proposed emission targets (Q58) | political feasibility of international agreements (F53) |
| perceived fairness in emissions targets (D63) | likelihood of cooperation among countries (F55) |
| structure of the agreement (Y20) | willingness to cooperate (C71) |
| credible commitments (D86) | expected future price of carbon (Q47) |
| expected future price of carbon (Q47) | investment decisions (G11) |
| proposed formulas (C29) | emission targets (Q58) |
| emission targets (Q58) | economic costs (D61) |
| income levels (J31) | emission cuts (Q52) |