NDC Archives - An Economic View of the Environment

What to Expect at COP-27 in Sharm El Sheikh

The negotiators gathering for the 27th Conference of the Parties (COP-27) of the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm El Sheikh, Egypt will try to tackle a significant number of important issues, with questions relating to increased ambition and financial transfers among those at the top of the agenda. This is the focus of my podcast conversation with Ray Kopp, Senior Fellow at Resources for the Future (RFF), in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. You can listen to our full conversation here.

Ray Kopp will be at COP-27 with the delegation of RFF. I’ll be there, as well, leading our group from the Harvard Project on Climate Agreements. At the end of this blog post, I provide a list of our activities at COP27.

Ray Kopp, who has been a leader in the design of domestic and international polices to combat climate change, explains in our conversation that the representatives gathering in Sharm El Sheikh will focus much of their attention on the implementation of the Paris Agreement, and therefore on the Nationally Determined Contributions (NDCs) – emissions reductions that individual countries have pledged under the Agreement. Under the provisions of the Paris Agreement, signatories are strongly encouraged to increase their levels of ambition and reduce emissions even further over time through the so-called “ratchet mechanism” that can bring the world closer to the goal of preventing temperature increases this century greater than 1.5 or 2 degrees Celsius, compared with pre-industrial temperatures.

In the podcast, Ray Kopp notes, “That mechanism will not be formally deployed until 2023. But I will say that there’s a synthesis report that has already come out from the UNFCCC Secretariat that gives us an idea of what those gaps look like with respect to hitting the targets, and they’re not encouraging. We already know that there’s going to be a major gap. We’ve known that for quite some time. I haven’t seen a lot of countries step forward to increase their ambition in the recognition of that gap. So, the jury is out on how effective this mechanism is going to be.”

Another very important and contentious issue on the table at COP-27, Kopp explains, is that of monetary transfers from developed to developing countries to help them with their mitigation efforts and help pay for adaptation measures. This is the well-known commitment from the developed countries to send $100 billion per year, starting in 2020, to the developing world. That target level of annual finance has not yet been achieved.

“Right now, there is a bit of a lack of trust between the developing world and the developed world with respect to the deliverability of those funds going forward. And [for] developed countries, there is the problem that to be able to hit those particular targets you need a lot of private investment, not just government funds. And the private investment has been lacking considerably,” he remarks.

Debates around the so-called “loss-and-damage” issue will also play out in Sharm El Shiekh, Kopp notes, referring to the call by developing countries for the largest global emitters to pay for current and future climate change damages in the most vulnerable countries.

“This is … one of these issues that … becomes more salient and both sides become more vocal about it [at every COP], not surprisingly, because we are now seeing the impact of climate change, not only in the developing world, where it is severe and where people are at most risk, but here in the U.S. [as well],” Kopp argues. “There’s always going to be opportunities for the U.S. to provide aid to countries that are suffering these horrific damages associated with climate change. One of the issues is whether it is going to be taking the form of aid, which means it’s more of a voluntary contribution on the part of the U.S., or whether it’s compensation associated with some formal liability that the U.S. bears for these damages?”

Kopp says that negotiators could make headway on the ‘loss and damage’ issue if they take reasonable approaches.

“If both sides stick to their hard positions, where [in] the developed world it’s only about aid, and the developing world it’s about liability, and there’s no middle ground, then this will just be a confrontational experience. Somewhere there’s got to be a middle ground … where we can think about insurance markets, [and] … other ways of financing the rebuilding after these particular [climate] episodes take place.”

When I ask Ray Kopp how he determines the success of failure of individual COPs, he responds by saying that each meeting is just one part of an ongoing process, and that in his opinion, the process is working.

“[Each COP] is an opportunity for the world to come together and talk about these things. The UNFCCC has put together an enormous amount of transparency in reporting. Sounds like things that are not all that exciting, but they’re fundamental to an understanding of where we are with respect to climate change and how to reduce emissions going forward,” he says.

=======================================================

As I noted at the outset of this blog post, I will be in Sharm El Sheikh, leading our group from the Harvard Project on Climate Agreements. Here’s some information below – in chronological order – about our five events hosted by the Harvard Project on Climate Agreements or in which my Harvard colleague, Daniel Jacob, or I are speaking.

1. Discussion of the China National Climate Change Assessment Report

Wednesday, November 16, 2022, 9:00 – 10:30 am

China Pavilion, Area E

Hosted by the Ministry of Science and Technology and the Institute of Energy, Environment, and Economy at Tsinghua University.

Robert Stavins is a panelist.

2. Frontiers in Carbon Pricing

Wednesday, November 16, 2022, 12:00 – 1:30 pm

Pavilion of the International Emissions Trading Association (IETA)

Hosted by the Harvard Project on Climate Agreements

Panel: Daniele Agostini, Head of Energy and Climate Policies, Enel Group

Lisa DeMarco, Senior Partner and CEO, Resilient LLP

Andrei Marcu, Founder and Executive Director, European Roundtable on Climate Change and Sustainable Transition (ERCST)

Robert Stavins (moderator)

3. The 8th Global Climate Change Think Tank Forum

Wednesday, November16, 2022, 4:00 – 6:45 pm

China Pavilion, Area E

Hosted by the China National Center for Climate Change Strategy and International Cooperation

Robert Stavins presents on “Carbon-Pricing Policy: Carbon Taxes vs. Cap-and Trade”

4. Using Satellite Observations of Atmospheric Methane to Advance Global Climate Change Policy
Thursday, November 17, 2022, 11:30 am – 1:00 pm, Side Event Room: Thutmose

Hosted by the Harvard Project on Climate Agreements and the Enel Foundation

Panel: Daniele Agostini, Head of Energy and Climate Policies, Enel Group

Brendan Devlin, Adviser for Strategy and Foresight, DG Energy, European Commission

Lena Höglund-Isaksson, Senior Research Scholar, International Institute for Applied Systems Analysis (IIASA)

Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry and Environmental Engineering, Harvard University

Claudia Octaviano, General Coordinator for Climate Change and Low Carbon Development, National Institute for Ecology and Climate Change, Mexico

Robert Stavins (moderator)

5. Measuring up to the Methane Challenge

Thursday, November 17, 2022, 3:00 – 4:30 pm, Pavilion of the International Emissions Trading Association (IETA)

Hosted by IPIECA

Daniel Jacob is a panelist.

We hope to see many of you at one or more of these events, other meetings, in the hallways, or elsewhere at COP27 in Sharm El Sheikh!

=======================================================

Again, I encourage you to listen to the 41^st episode of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

Insights about Climate Change Policy from Europe, New Zealand, and the USA

Suzi Kerr, the chief economist at the Environmental Defense Fund (EDF) and founder of Motu Economic and Public Policy Research, a think tank in her home country of New Zealand, shares her perspectives on climate change policy in the latest episode of our podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” I hope you can find time to listen to our conversation here.

In these podcasts, I converse with leading experts from academia, government, industry, and NGOs. I’m pleased to say that my long-time colleague and friend (and former student), Suzi Kerr, fits well in this group with her abundant experience in academia and NGOs.

Dr. Kerr was involved in the early design of New Zealand’s successful emissions trading system (ETS), which began in 2008, and is similar in some ways to California’s cap-and-trade system, about which I have written many times at this blog and elsewhere.

“It was the second [ETS] in the world and it’s economy wide. It’s what we call upstream, so it covers…basically all fossil fuels and most other emissions in New Zealand. And one of the highlights I think is that it covers the forestry sector, and New Zealand is still probably the one that covers that most comprehensively. A lot of what we were trying to do was experiment and learn so that others could learn from our experience.”

As Europe prepares to begin implementation in 2023 of its Carbon Border Adjustment Mechanism (CBAM), intended to mitigate carbon leakage and protect competitiveness while remaining in compliance with World Trade Organization (WTO) rules, Kerr expresses her belief that while the CBAM is lower cost to taxpayers and provides advantages over output-based allocation measures, there are many challenges standing in its way.

“The logistical issues of bringing in a CBAM are huge. If we all had carbon pricing, it would be pretty easy, but we don’t. We have a whole mix of policies in different countries. Some have carbon pricing, but [other nations have] other policies. That complexity is huge, and the other issue is equity across countries. Does it really make sense for us to be charging countries who have low policy stringency because they’re very poor?,” she says. “I think it’s critically important that the EU couple any introduction of CBAM with really active support for the poorest countries so that they are supported to have a climate transition rather than expected to do that entirely on their own.”

In the U.S., the Biden Administration has announced its new nationally determined contribution (NDC) under terms of the Paris Agreement, with a pledge to cut greenhouse gas emissions by 50 to 52 percent below 2005 levels by 2030. I ask Suzi Kerr whether this target is achievable, given domestic U.S. politics. She responds that she judges the pledge to be credible, but difficult to achieve.

“The research and the modeling all says it can be done. It’s certainly possible and a lot of it can even be done at very low cost. Whether it will be done is a much more challenging question and that’s where it gets really hard – actually implementing the policies that are effective. Even if you have the political will, that’s a difficult thing,” she remarks. “In general, history teaches us that policies are almost always less effective than we think they’re going to be.”

My complete conversation with Suzi Kerr is the 27^th episode in the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

The Path Ahead for U.S. Climate Change Policy

It is clear that the Biden Administration is devoting substantial attention to addressing climate change, certainly in comparison with the previous Trump administration, but there is a long road ahead for the development of substantive domestic policies to reduce greenhouse gas (GHGs) emissions. That is one of the messages that emerges most clearly from the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA). A video recording (and transcript) of the entire webinar is available here.

As you know, in this webinar series we feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. In this most recent Conversation, I was fortunate to engage with someone who has solid experience in at least three of these sectors – academia, government, and the NGO community. I’m talking about Nathaniel (Nat) Keohane, my former student, co-author, and friend.

Nat Keohane is Senior Vice President for Climate at the Environmental Defense Fund. In the Obama administration, from 2001 to 2012, he served as Special Assistant to the President for Energy and Environment, and before that, he was Chief Economist at EDF. Going back a bit further, he was an Associate Professor at the Yale School of Management, and before that, he earned his PhD degree in Political Economy & Government at Harvard University, and his BA degree in History and Environmental Studies at Yale University.

Our wide-ranging conversation took place just one week after the Biden administration’s Earth Day Climate Summit (April 22-23), and so it was a very good time to talk about the newly-announced U.S. pledge – its Nationally Determined Contribution (NDC) under the Paris Agreement – and about how the target in the NDC, a 50-52% percent reduction of U.S. greenhouse gas (GHG) emissions below the 2005 level by the year 2030, might be accomplished.

More broadly, Nat Keohane shares his insights on both the science and the politics affecting climate policy, and his hopes for the upcoming UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP-26), scheduled for November in Glasgow, Scotland.

“President Biden and his team hit the ground running immediately,” Keohane says, referring to the administration’s move to reenter the Paris Agreement on January 20th. “But there’s still a fair amount of skepticism in the rest of the world…and [there is] a need for the U.S. to demonstrate that it’s serious [about its commitment to climate policy].”

Keohane goes on to suggest that the ambitious new U.S. NDC will serve to incentivize other large emitters to increase the ambition of their pledges prior to the upcoming COP. Both Canada and Japan have already done so, Keohane notes, and there are hopes that China, India, and Brazil may follow suit if US Special Presidential Envoy for Climate John Kerry is successful in his climate diplomacy efforts with foreign leaders.

Here at home, Nat acknowledges that the Biden Administration faces an uphill battle passing significant climate legislation, but he argues that it can take very meaningful steps forward by regulating methane gas emissions, increasing investment in green technologies, and eventually building public support for a national carbon price, which would both stabilize GHG emissions and raise revenues.

“If we are going to really address climate change and reduce CO₂ emissions at the scale and scope and pace that we need to, both to solve the climate problem and to meet the President’s [GHG reduction] target … the best way to do it would include some sort of limit and price on carbon pollution across the economy.”

Keohane is very aware that the “the politics of a carbon price on Capitol Hill are challenging,” but he believes that a carbon-pricing approach could be sold to the American people as a way to raise significant revenues, as much as a quarter of a trillion dollars a year. “That’s a lot of money, and there aren’t a lot of other sources of revenue that come up with 250 billion dollars,” he says.

A carbon border adjustment – an import fee levied by countries with ambitious climate policies on goods manufactured in countries with no or less ambitious climate policies – is a controversial proposal that many countries and regions, including the European Union, are seriously considering (and in the case of the EU, moving to implement). Keohane calls it a “blunt force instrument … used to ideally help create incentives for other countries to act and to increase their ambition … but I don’t think we should think of it as a fine-tuned way to establish a carbon price that fairly addresses the carbon content of imported goods.”

As nations around the world prepare for COP-26 (assuming it does take place), Keohane expresses his hope that the U.S. will continue to leverage bilateral negotiations to encourage other large countries, particularly China, to increase their Nationally Determined Contributions (NDCs) before arriving in Glasgow. But, interestingly, Keohane also argues that climate leaders need to rethink the role of the COP moving forward.

“I don’t know exactly what that looks like. Maybe it involves more engagement among countries with best-practice sharing. Maybe it involves bringing in civil society or businesses to talk about implementation, but we need to think creatively,” he remarks. “Rather than have the object of every COP be some negotiated text in a world in which we’ve got the text … what we need is implementation.”

All of this and much more can be seen and heard in our full Conversation here. I hope you will check it out.

Previous episodes in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration,” and Ottmar Edenhofer talking about “The Future of European Climate Change Policy.”

Watch for an announcement about our next webinar. You will be able to register in advance for the event on the website of the Harvard Project on Climate Agreements.