International Climate Change Policy & Action in the Biden Administration

Many of us are still reeling from the January 6th insurrection at the Capitol, incited by the current President of the United States.  And our thoughts are now dominated by yesterday’s impeachment of the President and the ongoing threats of violence in Washington and across the country from his extremist supporters.  But in less than one week, a new President will be sworn into office, and so it is prudent to think about the incoming administration and the challenges it will face in regard to climate change policy.  This is the focus of my essay published today by Lawfare, the superb host for analysis and debate about the law, politics, and policy of international security.  With the permission of the Lawfare editors, I’m pleased to be able to reproduce my essay below (with just very minor edits, namely, the insertion of some section headings for purposes of clarity and consistency with the standard style in my blog).  I hope you find this of interest.


The Biden Administration and International Climate Change Policy & Action

By Robert N. Stavins

Thursday, January 14, 2021

Former Secretary of State John Kerry, with grand-daughter in tow, signs the Paris Agreement in 2016 (UN Photo by Amanda Voisard)

On Jan. 20, Joe Biden will be inaugurated as the 46th president of the United States. He will face an unprecedented set of challenges, including global climate change—one of four stated policy priorities of his administration (along with the coronavirus pandemic, economic recovery and racial equity)—in addition to the immediate issue of the looming Senate trial of President Trump and ongoing threats of violence from extremist supporters. Because climate change is a global commons problem and international cooperation is necessary to limit free-rider incentives, President-elect Biden has pledged to immediately initiate the process of rejoining the Paris Agreement (from which President Trump withdrew the United States on Nov. 4, 2020—the earliest date permitted by the agreement). Thirty days after the necessary paperwork is filed with the United Nations, the United States will again be a party to the agreement. That’s the easy part. The hard part is coming up with a quantitative statement of how and by how much U.S. emissions of greenhouse gases will be reduced over time.

The Historical Context

To fully appreciate the challenge the new administration will face, it is helpful to reflect on the history of international negotiations that brought us to this point. At the Earth Summit in Rio de Janeiro in 1992, the U.N. Framework Convention on Climate Change (UNFCCC) was first negotiated, committing parties to achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would “prevent dangerous anthropogenic interference with the climate system.” Three years later in Berlin at the first annual Conference of the Parties, it was agreed that the wealthier countries (listed in UNFCCC Annex I) would commit to targets and timetables for emission reductions, but not the other 129 (largely developing) countries. This was an attempt to provide for distributional equity among nations —recognizing that the industrialized countries were responsible for the lion’s share of accumulated greenhouse gases in the atmosphere, and by virtue of their wealth were more capable of taking action. Two years after that, in 1997, the Kyoto Protocol was enacted, codifying these objectives with quantitative targets for Annex I countries only.

The Clinton administration negotiated the protocol with considerable enthusiasm under the leadership of Vice President Gore, but it did not submit the protocol to the Senate for possible ratification, knowing that the protocol’s lack of any emissions-reduction responsibility for the large emerging economies (China, India, Brazil, Korea, South Africa, Mexico and Indonesia) meant it would fail in the Senate. This was a reasonable assumption, given that the Byrd-Hagel Resolution, which said as much, had passed the Senate by a vote of 95-0 just four months before the Kyoto conference.

The Kyoto Protocol was highly flawed. First, the Annex I countries alone could not reduce global emissions, despite a particularly severe target for the U.S., as the significant growth in emissions came from the emerging economies. Second, because the protocol excluded most countries (in particular, developing countries with relatively low costs of emissions mitigation), the costs were vastly greater than need be—four times the cost-effective level by conservative estimates. Third, it was questionable whether distributional equity was even achieved, given that 50 non-Annex I countries had greater per-capita income than the poorest of Annex I nations. So, the United States never ratified Kyoto, and eventually Australia, Canada, Japan and Russia dropped out, leaving the European Union and New Zealand as the only Annex I parties participating (together accounting for 14 percent of global emissions).

Almost two decades after Kyoto, a fundamentally different approach to international climate cooperation was taken by the Paris Agreement of 2015, which was developed under the joint leadership of the U.S. and China during the Obama administration.

The Paris Agreement

The key attribute of the Paris Agreement is its hybrid structure, combining top-down (legally binding) and bottom-up elements. The former are largely procedural (but binding under international law), including a requirement in Article 4 that countries submit nationally determined contributions (NDCs), statements of their emissions reductions from 2020 to 2025/2030), and update them by the end of 2020 and every five years thereafter. The key bottom-up element consists of the set of submitted NDCs, which are not part of the agreement but, rather, are assembled in a separate public registry. The notion is that the NDCs—unlike the negotiated Kyoto targets—arise from or are at least consistent with domestic policies, goals and politics in their respective countries. The “bindingness” of the targets, therefore, comes not from the Paris Agreement itself, but from any domestic laws and regulations put in place to achieve the NDCs. It was because of this structure, which avoided binding quantitative targets in the agreement itself, that the Obama administration felt it was able to ratify it as an executive agreement, without Senate approval.

One year after its approval in Paris, the agreement came into force in November 2016, when the threshold of 55 countries representing at least 55 percent of global emissions had ratified it. Remarkably, it had required seven years for the Kyoto Protocol to achieve the same threshold for coming into force. What caused the exceptionally rapid accumulation of Paris ratifications? The explanation lies in the fact that the agreement also provides that once it comes into force, there is a four-year delay before any ratifying country may withdraw. So, from 2015 to 2016, international concern that Donald Trump might be elected president and live up to his promise to pull the U.S. out of the agreement led countries to move as fast as they could, and the Paris Agreement came into force on Nov. 4, 2016. So, global fear of Trump gets credit (and explains why Trump’s withdrawal date of Nov. 4, 2020, was the earliest allowed).

The U.S. withdrawal from the agreement had no direct effect on domestic greenhouse gas emissions. Those emissions were affected by the Trump administration’s rollbacks of Obama-era domestic climate policies. The greatest concern was that such action by the U.S. would lead China, India, Brazil and other emerging economies to rethink their Paris pledges. But this did not happen, as far as we know. Of course, the comparison ought to be with what those countries would have done had the U.S. not withdrawn, but such a comparison would be with an unobservable hypothetical. It is too soon to assess achievement with the initial set of NDCs, since those describe reductions over the period 2020 to 2025/30, but as of early January 2021, only 23 countries had submitted their updated NDCs, due at the end of 2020.

The Challenge for the Biden Administration

As I said at the outset, the easy part will be submitting the necessary paperwork on Jan. 20 to rejoin the Paris Agreement, but the hard part will be coming up with the new U.S. NDC—a quantitative statement of how and by how much U.S. greenhouse gas emissions will be reduced over time. This will be challenging because the new NDC will need to be sufficiently ambitious to satisfy (at least to some degree) both domestic green groups and some of the key countries of the international community (despite the likelihood that Biden and his special envoy for climate change, John Kerry, will initially find a warm reception and abundant goodwill from most world leaders).

This essentially means that the NDC will need to be at least as ambitious as (and probably more so than) the Obama administration target of a 26-28 percent reduction in greenhouse gas emissions by 2025, compared with 2005 (which would have been difficult to achieve even if Hillary Clinton had become president). And it will need to compare favorably with the targets now being announced by other major emitters. For example, the European Union is enacting a new target to cut its emissions 55 percent below its 1990 level by 2030. And China recently said it will achieve carbon neutrality (zero net emissions) by 2060.

But if significant ambition is one necessary condition for the new Biden NDC, the other necessary condition is that it be credible, that is, truly achievable given existing and reasonably anticipated policy actions. The only way that both of these necessary conditions can be achieved is with aggressive new domestic climate legislation.

Is Ambitious Climate Legislation Feasible?

Even with the Democratic-controlled Senate—with a one-vote margin—meaningful and ambitious climate legislation will be difficult, if not impossible. The budget reconciliation process, whereby only a simple majority is needed to pass legislation, rather than the 60 votes required to cut off Senate debate, can be used to reverse some of Trump’s last-minute policies that are connected to the tax code or mandatory spending if every Democrat or enough Republicans to make up for any defections support the given move. And the one-vote margin can be effective for confirming Biden’s appointees, and it can help for increasing the budgets of federal agencies. But for ambitious climate (or other) legislation, the 60-vote threshold will be the binding constraint.

Under these circumstances, it will be challenging, to say the least, for Democrats to enact Biden’s climate plan, including its $2 trillion in spending over four years with the goal of making all U.S. electricity carbon free in 15 years and achieving net-zero emissions economy-wide by 2050. An analysis by the Rhodium Group suggests that to be on a steady path to achieve Biden’s 2050 goal, a cut of 43 percent below 2005 levels by 2030 would be necessary—in other words, a reduction of about 3 percent every year. Also, keep in mind that the Obama administration’s major climate legislation—the American Clean Energy and Security Act of 2009 (the so-called Waxman-Markey bill)—failed to receive a vote in the Senate, even though Democrats (and independents who caucused with Democrats) then held a total of 59 seats. Although climate change is now taken more seriously by the public and receives considerably greater attention in political circles than it did 12 years ago, the prospects over the next two to four years for comprehensive climate legislation—such as a truly meaningful carbon-pricing system—are not good.

But other legislation that would help reduce greenhouse gas emissions in the long term appears more feasible. That includes a post-coronavirus economic stimulus bill, which might have a green tinge, if not a fully green hue. The Obama administration’s stimulus package enacted 13 years ago in response to the Great Recession included some $90 billion in clean energy investments and tax incentives. Another candidate will be a future infrastructure bill, something both parties seem to recognize is important to upgrade aging U.S. infrastructure. This could include funding for improvements in the national electricity grid, which will be necessary to facilitate greater reliance on renewable sources of electricity generation.

Less Ambitious, But Bipartisan Climate Legislation

Finally, there are possibilities for less ambitious but bipartisan climate legislation, with stringency and scope much less than what Biden’s climate plan calls for. The key approaches here might involve tax incentives, that is, nearly every politician’s favorite instrument—subsidies. This may fit well with Biden’s moderate approach to governing and his stated desire to work with both parties in Congress. Specific bipartisan options could include (explicit or implicit) subsidies targeting wind and solar power, carbon capture and storage/utilization, nuclear power, technology initiatives, and electric vehicles via a rebate program.

But such modest, bipartisan initiatives are unlikely to satisfy either the demands of domestic climate policy advocates or international calls for action. Because of this, the new administration—like the Obama administration—may have to opt for regulatory approaches.

Possibilities for Regulatory Actions

The new president, under existing authority, could quickly take actions through executive orders in a number of areas to reverse many of Trump’s regulatory rollbacks. Will Democrats use the Congressional Review Act, which allows Congress to nullify a rule within 60 legislative days of its adoption? Republicans used this at the end of the Obama administration, but the law prohibits Congress from later adopting a regulation that is of “substantially the same form” as the disapproved rule unless it is specifically authorized by a subsequent law.

More generally, new oil and gas leasing on federal lands could again be prohibited, and the White House could attempt to block the Keystone XL pipeline from being completed. More promising, the president could direct that the social cost of carbon (SCC) be revised, presumably returning it to the Obama administration’s appropriate use of global (not just domestic) damages and a 3 percent (rather than 7 percent) discount rate in the calculations, thereby increasing the SCC from about $1 to $50 per ton, and directing federal agencies to use the revised SCC in their own decision-making. Presumably, the new administration will move to reinstate and surpass the Obama administration’s ambitious corporate average fuel economy (CAFE) standards, which is justified by the SCC.

Also, there is the possibility of using the authority of the Securities and Exchange Commission to use financial regulation of publicly traded companies to raise the cost of capital for fossil energy development, or to set standards for disclosure of climate-related corporate information. Likewise, the Commodity Futures Trading Commission has itself begun to explore options via its Market Risk Advisory Committee.

Thus, regulatory approaches under existing statutory authority through rule-making often appear to be an attractive option, but using new regulations under existing legislation rather than enacting new laws raises another problem—the courts. Rule-making entails lengthy notice and comment periods and requires extensive records and interagency consultation. Furthermore, rules are frequently subject to litigation. The Obama administration promulgated its Clean Power Plan after the Senate failed to deliver on the administration’s comprehensive climate legislation. And the Clean Power Plan was subject to a stay from the U.S. Supreme Court even before Trump entered office. Then Trump arrived and killed the regulation outright.

But the real challenge to the regulatory approach is that new regulations are much more likely to be successfully challenged in federal courts in 2021 than they were during the Obama years. This is partly because there are 228 Trump-appointed federal judges. But more importantly, the Supreme Court’s new 6-3 conservative majority is likely to favor a relatively literal reading of statutes, giving executive departments and agencies much less flexibility to go beyond the letter of the law or to interpret statutes in “innovative ways.” In particular, the Supreme Court may move to modify or even overrule the critical Chevron Doctrine, under which federal courts defer to administrative agencies when Congress was less than explicit on some issue in a statute (such as whether carbon dioxide can be regulated under sections of the Clean Air Act of 1970 intended for localized pollutants).

Other National and Sub-National Climate Policies

During the presidential transition, there has been considerable talk about a “whole of government” approach to climate change, in which the White House pushes virtually all departments and agencies to put in place changes that are supportive of decarbonizing the economy. This would be beyond or instead of the focused statutory and regulatory policies described above. Of course, the critical question is what such an approach can produce in terms of short-term emissions reductions and/or long-term decarbonizing of the economy. This is, at best, an open question.

Of course, even if little can be accomplished at the federal level over the next two to four years, surely the new administration will not be hostile to states and municipalities taking more aggressive action. Indeed, climate policies at the state level (California) and regional level (the Regional Greenhouse Gas Initiative in the Northeast) have become increasingly important, particularly during the four years of the Trump administration. Bottom-up evolution of national climate policy may continue to evolve from the Democratic-leaning states in the Northeast, Middle Atlantic, Upper Midwest, Southwest and West Coast (and Georgia!), which together represent more than half of the U.S. population and an even larger share of economic activity and greenhouse gas emissions.

A Note of Optimism for the Path Ahead

The new administration may or may not find creative ways to break the logjam that has prevented ambitious national climate change policies from being enacted (or, if enacted, to be sustainable). My greatest source of optimism is that the Biden-Harris team, in sharp contrast to the Trump-Pence administration, gives every indication that it will embrace scientific and other expertise across the board—whether that means the best epidemiologists and infectious disease experts designing an effective strategy for the coronavirus, or the best scientists, lawyers and economists designing sound climate policies that are also politically feasible.


A Positive Take on the Future of International Climate Negotiations

In most institutions, individuals range from highly competent to barely qualified.  And they also range from a real pleasure to a real pain to work with.  Such a range of individuals may exist in any organization, and the international climate change negotiations – otherwise known as the United Nations Framework Convention on Climate Change (UNFCCC) – is no exception.

I’m pleased to say that Kelley Kizzier, my guest in the latest episode of our podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” is an outlier in both of those dimensions.  She is highly competent and exceptionally engaging.  That made me particularly happy to have an opportunity to sit down with her for this podcast.

Kelley Kizzier is well known – and highly respected – by those who have labored in the international climate negotiations over the past 15 years.  But hers may be a new name to some of you. So, please read on.

Kelley Kizzier speaking at COP-24, Katowice, Poland, December 2018

Kelley was the European Union’s lead markets negotiator in the climate negotiations for 14 years. And for the last three years of that period, she also served as the UNFCCC co-chair of the negotiations on Article 6 of the Paris Agreement, a key part of the Agreement, which we’ve had an opportunity to discuss in previous episodes of the podcast – with Andrei Marcu, Paul Watkinson, Jos Delbeke, and Sue Biniaz.

Speaking on a panel (with yours truly) at COP-25, Madrid, Spain, December 2019, organized by the Harvard Project on Climate Agreements

Before beginning work with the EU in Brussels, Kelley held senior roles in Dublin with the Irish Environmental Protection Agency. And most recently, since 2019, Kelley has served as Associate Vice President for International Climate at the Environmental Defense Fund.

Our conversation was wide ranging, including Kelley’s professional background, the evolution of the UNFCCC, the structure of the Paris Agreement, and the challenges and opportunities now facing the climate negotiations.  Through it all, she demonstrates considerable optimism, mixed with a healthy dose of realism.

In addressing a question about the postponement of COP-26 in Glasgow, Scotland, originally scheduled for November, 2020, she remarks that “the postponement of the COP should not delay urgent action by countries to step up their ambition. And I hope that no one finds comfort in that delay, that we are still urgently looking to up our game in terms of ambition.”

Kelley cites several recent positive developments in international climate policy, particularly in the EU where its new “Green Deal” may be implemented.  The Deal stipulates even more significant carbon emission reductions than the 40% cut that was previously promised by the EU member states.

“It’s a centrist acceleration of established EU climate policy,” she says. “And through that, they have announced that they’re going to take that target to 50 or even 55% reduction by 2030 [as compared with 1990 levels].”

Looking forward to the re-scheduled COP-26 in November, 2021, Kizzier expresses her optimism that nations will be prepared to finalize the rules (the so-called “Rulebook”) of international climate policy cooperation (and carbon markets) under Article 6 of the Paris Agreement.

Co-Facilitator of Article 6 discussion at UNFCCC meeting, Bonn, Germany, May 2017

“COP-26 is about ambition, and it’s going to be important, in that context, to push for us to complete The Paris Rulebook. Because the rules matter, and we can’t afford to lock in carbon market rules that undermine the integrity of the targets,” she says. “Agreement on these rules, as important as it is, should not be a barrier to action. We simply can’t afford delay.”

All of this and more is found in the latest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” Listen to this latest discussion here.  You can find a complete transcript of our conversation at the website of the Harvard Environmental Economics Program.

My conversation with Kelley Kizzier is the twelfth episode in the Environmental Insights series.  Previous episodes have featured conversations with:

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


Economics Can Still Help Solve the Climate Crisis

After climate negotiators from 195 nations at last month’s climate talks in Madrid were unable to reach agreement on rules that would govern global carbon markets, United Nations Secretary General António Guterres lamented that the international community “lost an important opportunity to show increased ambition on mitigation, adaptation, and finance to tackle the climate crisis.”  My view (as I explained in a recent essay at this blog) is that the lack of aspirational statements regarding future increases in ambition was not a significant disappointment, because such aspirational statements are really not meaningful.  Rather, the real disappointment of COP-25 was the failure to finalize rules for carbon markets under Article 6.2 of the Paris Agreement.

That said, the climate negotiators actually did accomplish something important — because of what they did not do. Instead of approving lax rules full of loopholes favored by Brazil, Australia, and a few other countries, the negotiators held the line and pushed off a decision on the rules for carbon markets until next year’s COP-26 in Glasgow, Scotland.

That is the starting point for an interview that was recently recorded for the Harvard Kennedy School’s “PolicyCast,” hosted by Thoko Moyo, HKS Associate Dean for Communications and Public Affairs.  You can listen to the interview, titled, “Economics Can Still Help Solve the Climate Crisis,” or, if you prefer to use your eyes rather than your ears, here is the transcript:

Thoko Moyo: Hello and welcome to the Harvard Kennedy School PolicyCast. I’m your host, Thoko Moyo. Today we’re joined by Harvard Kennedy School Professor Robert Stavins. Professor Stavins is the Director of the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements. He’s also just returned from Madrid, where he was participating in the 12-day UN Climate Change Conference, or COP25. So you’re just back from the UN climate talks, COP25 in Madrid. The general consensus when you’re reading the newspapers are that it didn’t really achieve what people were hoping. Would you agree with that?

Robert Stavins: Well, there’s what people were hoping and what were reasonable expectations. I would say in general the COP was moderately successful, in that it sort of advances the ball. It passes on the ball till next year. I think what people were disappointed with—that you saw reflected in the popular press—was that there was not a statement, an aspirational statement, of countries talking about new targets that they would come up with next year, not this year, but next year. And that’s what a lot of activist groups, and particularly this new wave of youth activists who are obviously very important, were looking for. But I don’t actually consider those kind of aspirational statements with no meat to be very important in the first place.

Thoko Moyo: Okay, great. Okay, so let’s come back to that. But I think because we might have some people listening who are not experts, who probably maybe need a reminder, things like COP, what is COP? And then let’s also maybe just get it out the way, because it’s going to come up in our conversation, the Paris Accord, what is that? And I know just in September we had the huge UN Climate Action Summit, so what’s that? What are those three things and how do they fit together?

Robert Stavins: It starts in 1992 with the United Nations Framework Convention on Climate Change, which grew out of the Earth Summit in that year in Rio de Janeiro. The signatories to that are the parties to that agreement, the UNFCCC, the United Nations Framework Convention on Climate Change. They met for the first time in 1995, so that was the first conference of the parties. That was COP1. This year was the 25th conference of the parties. That was COP25.

Thoko Moyo: Okay. And so that then grew into or at least led to, in 2016, to the Paris Accord, the Agreement. What was that and why is it such a big deal?

Robert Stavins: Again, I’ll put it in a historical context. I think it might be helpful. That is, in 1997 at COP3 in Kyoto, Japan, countries agreed to the Kyoto Protocol, which was the first significant international agreement on climate change. That expires in 2020, so in 2016 in Paris, the conference of the parties established a new agreement that would succeed the Kyoto Protocol beginning in 2020. That’s what the Paris Agreement is.

Thoko Moyo: And the Kyoto Protocol, if I remember correctly, had targets and sounded like it had some way of enforcing, whereas the Paris Agreement seemed to step back a little bit and make it more the onus of the countries to determine what their reductions would be or not. Is that right, and why did they move in that direction as opposed to more top down?

Robert Stavins: That’s right. The Kyoto Protocol was very much a top-down approach. A very small number of countries actually were engaged in taking on targets. It was the set of countries that were essentially the industrialized countries of the world at the time, plus what were then the emerging market economies of Central and Eastern Europe. Those countries, which were listed in an appendix, Annex 1 of the Kyoto Protocol, they took on targets and timetables, but those targets and timetables that they took on, those specific numbers, were negotiated among the set of countries. So I negotiated what your target would be, and you negotiated what my target would be. That’s the top-down nature of the approach. Everyone was involved.

The scope was very narrow, so that currently in the second commitment period of the Kyoto Protocol, approximately 14% of global emissions are associated with complying countries. That’s European Union plus New Zealand. The United States never ratified the Kyoto Protocol. Russia dropped out, Japan dropped out, Canada dropped out, and Australia dropped out. So it’s a very narrow scope, but it was of a top-down structure.The countries of the world, particularly the United States and China, who played a leadership role leading up to Paris, they realized that that approach was never going to achieve much in terms of meaningful reductions, namely because emissions are either declining or relatively flat in the industrialized countries.

The place where the emissions growth is so great is the large emerging economies, China, India, Brazil, Korea, South Africa, Mexico, and Indonesia. And so those countries had to be brought inside. It was clear that it would not be possible to bring them inside with the top-down approach, that rather each country would have to say what it felt it could do given its national circumstances as well as its domestic politics. So the approach that’s in the Paris Agreement is this bottom-up approach, in the sense of each country says what they’re going to do. There are parts that are top-down that are binding under international law, but those are simply parts that say that every five years each of the countries has to come up with a new target, not what the targets are.

Thoko Moyo: But how does it work? I mean, this is a huge emergency, affects everyone, and it’s a bit of an honor system. You say what you can and you try and keep to that, but does it actually work? I mean, do the countries set ambitious targets, and if there’s no way of enforcing it, how do you even know they’re doing what they said they’d do?

Robert Stavins: Well, there’s an interesting trade-off, that the very element of the Paris Climate Agreement that caused it to have the broad scope of participation it does, namely compared to that 14% under Kyoto, we now have 97% of global emissions associated with signatory countries. If the United States does drop out, as it has said it would approximately a year from now, that 97% drops to 85%. Either way, it’s very impressive scope, but that same element that caused the scope to be very broad and inclusive …

Thoko Moyo: Which is important.

Robert Stavins: … which is very important, it also then brings about the reality that the ambition of the individual commitments or statements is not going to be very great, because it’s a global commons problem. Any country that takes action incurs the cost of taking action, but the benefits are spread globally, meaning that for any individual country, the direct benefits it receives are going to be less than the direct costs that it incurs. So it’s a fundamental consequence of the structure of the agreement, of this trade-off between adequate scope, but perhaps not adequate initial ambition.

Thoko Moyo: I guess an obvious question, then, is why would, I mean apart from the politics, but there might be another reason, why would the US pull out of an accord that doesn’t tell it what it needs to set as targets, and certainly there’s no enforcing? Why not just reduce the scale of your ambitions and do what you can? Why is it so important to withdraw from the accord, or is it just politics?

Robert Stavins: Well, that’s a very good question, and I guess my flippant answer would be you should ask the resident of the White House, not me, but back when, you may recall that former Secretary General of the United Nations Ban Ki-moon was resident at the Harvard Kennedy School as a visiting fellow and maintains an affiliation. When he was here about two months before the White House issued its decision, before the president spoke in the Rose Garden with his decision to pull out of the Paris Agreement, Ban Ki-moon and I wrote an op-ed that was in the Boston Globe. And we posed the same question, saying that what the United States could do would be to stay in the Paris Agreement so that you have a voice in deciding what’s going on, but to change what is called its nationally determined contribution, this bottom-up pledge. It could even make that to be equivalent to business as usual, so we didn’t have to do anything. It could have set it at anything.

That would have been an approach which would have been consistent in terms of what people in the administration were saying, but what it would not have accomplished is what, in my opinion, and I’m bi-partisan, with what the president wanted to accomplish, which was the announcement. The important thing was not what we did, but what he was able to announce, in terms of his political base. And he had the positive spin on that as he was living up to a campaign pledge. He said over and over again, is that he would pull us out of the Paris Agreement, and that was the decision that was made. What the president may not have recognized, although I would hope that White House staff recognized, was that when he announced that in June of 2017, what he was actually announcing was an intention to remove us from the Paris Agreement approximately three and a half years later, because that was the soonest that it could actually become effective, which is approximately a year from now.

Thoko Moyo: And so how much of that came up in the talks, in the COP25 talks? Because we saw some coverage of the former mayor of New York, Michael Bloomberg, saying that a lot of cities in the US are committed to the Paris Accord and they’ll stay in it if they could. We didn’t really hear much about the official US position. What was said?

Robert Stavins: Well, the US did not have political level appointees present, so it is the State Department officials who have been working on these issues for 20 or 30 years. It’s what sometimes is derogatorily referred to as the deep state, although being at the Harvard Kennedy School, where we’re producing people that go into that world, whether it’s the State Department or the Department of Agriculture, we think it’s not the deep state. It’s rather an extremely important professional class, and it will be wonderful if the US had it of the quality that France and so many other countries do. Those individuals have been consistent. Some have left, but they’re still there.

And in fact, one of the things I’ll tell you that I was struck by, certainly last year when we were at the talks, which were in Katowice in Poland just one year ago, is that when we would sit down in the room to talk with a negotiating team from some other country in the world at their request, because they’re interested in the research we’re doing and looking for help with that, they would say, “Well, Stavins, you’re from Harvard, right?” “Yes.” “That’s in the United States. Before we talk about your research and what you’re doing, we just wanted to say something to you we don’t understand. You know, your president says that climate change isn’t real, and he’s pulling out of the Paris Agreement, but your delegation is here and they’re working very constructively.” And that’s something I never repeated to the press, lest it be read by some congressional staffer, and it’d get back to the White House. But the US delegation has actually continued at that level to be quite constructive. They’ve continued in particular, jointly with China, to run what’s called the transparency, which is the monitoring, reporting, and verification aspects of the climate talks.

Thoko Moyo: And is the US unique in having a sort of high profile, it seems high profile, debate about whether climate change actually exists, or are there other countries as well that have that sort of debate in a way that’s quite prominent in the politics?

Robert Stavins: The United States is close to unique. What is true is that Australia, as it’s gone from governments back and forth from right to left, when governments have been in from the right, conservative governments, they have been very resistant to any action on climate change, and the Australians played a role in that in these talks just now. What’s even more striking is certainly Brazil, President Bolsonaro, who is a right wing populist climate skeptic, so not unlike our own president. They have also played that kind of role. And then certainly the Gulf oil states, in particular Saudi Arabia, have been very vocal in the climate talks, which is perhaps understandable, because for them it’s not just increasing their costs, it’s perhaps sending their economy back to what it was 75 or 100 years ago if there was no demand for fossil fuels.

Thoko Moyo: Okay. The other thing that we were going to get out the way is the UN Climate Action Summit that was in September, and that saw one of the largest youth-led protests in history. How is that different from COP25? What was that?

Robert Stavins: Those climate summits in September is something that was started by the previous Secretary General, Ban Ki-moon, because he had decided to make climate change an important issue for himself, and so he saw a September summit as an opportunity, a cheerleading session really, to bring countries together into the General Assembly, let heads of state give speeches at lots of different sessions in meetings, before three months later when the annual conference of the parties would take place. And they have continued since then. And I would say the role that it has played is precisely what was intended. It’s a cheerleading session, by which I don’t mean to denigrate it, but just to take it at what it is. There’s no legal authority there. It’s not part of the United Nations Framework Convention on Climate Change negotiations.

Thoko Moyo: But it gets attention focused on it.

Robert Stavins: It draws attention, and it certainly does. It also ties up the traffic in Manhattan, as New Yorkers will tell you, for a week.

Thoko Moyo: Okay, so let’s actually go to the meeting, COP25 in Madrid. This year’s tagline was “Time for Action,” and it does come at a time when there’s been more and more scientific evidence to show that there are devastating effects of climate change on land, oceans, and societies. We started off by saying that you thought it was a moderate success. Let’s talk a little bit about the sort of hopes, expectations, or goals of the meeting going in.

Robert Stavins: They were twofold. I mean, there were the popular press and from the activists, expectations and hopes, and those were for statements in what is called the decision, which just means the statement that comes out at the end of the COP with no legal force, it’s just a statement that comes out at the end, the decision, that they wanted a statement that countries were committed to coming up with much more ambitious targets a year from now in 2020 when the next set of targets will be submitted at the next COP. So that was for them, and that definitively did not happen.

And that’s why those individuals, and I think much of the press, because that’s a pretty obvious sort of thing to talk about, is what are the targets, what’s the aspiration, have characterized it as a terrible failure. I know The New York Times did this morning. But for those people, both the negotiators and for those of us on the outside in NGOs and in universities who are very engaged in the process and in research, what we were looking at much more was the actual text of the Paris Agreement, what wasn’t being completed and what needed to be completed, just in order to achieve the targets that they already have pledged, let alone thinking about the next set of targets.

Thoko Moyo: And what were those things?

Robert Stavins: And that was something very specific in particular, and it ties in with the notion of international carbon markets. There’s one portion of the Paris Agreement, which is Article 6, or even to be more picky, Article 6.2, that provides for countries to cooperate with one another so that one country can help another country to accomplish something. And then the country that does the helping can take credit for that against its pledge that it’s made.

Thoko Moyo: Okay, so said another way, if you are performing poorly on your targets, you could set up a deal with a country that’s over-performing on their targets and somehow get… I mean, how? How does it work?

Robert Stavins: It wouldn’t necessarily be a country who is performing poorly. They might be performing perfectly, but nevertheless that they could finance what’s taking place in another country. So it’s a matter of finance. In fact, it’s a means of foreign direct investment. It just means that the incremental costs, what economists call the marginal costs, of reducing CO2 emissions vary tremendously across different countries, and that’s because the modern economies were already very energy efficient, and so there isn’t a lot of low-hanging fruit. But if you go to other parts of the world, there is low-hanging fruit. There are a lot that can be done at relatively low cost.

So that means if you’re in one of these countries where it’s very costly, you could finance things being done in one of those other countries. That’s to everyone’s benefit, if it’s voluntary on both sides, and it’s a means of foreign direct investment into those countries, which of course they’re very happy about. The big issue there, though, is to make sure that both countries don’t take credit for that same emissions reduction, that there isn’t double counting. That’s where the Paris Agreement comes in. That’s what article 6.2 is potentially about, are accounting measures to prevent double counting. That was not completed. That’s the one part of the Paris Agreement, what’s called the Rule Book, which is the text of the rules, that was not completed last year in Katowice. It was punted to this year. So for the cognoscenti, for those of us who are really involved a lot in the Paris Agreement and in the negotiations, the goal was to complete Article 6. That’s what it was about.

Thoko Moyo: And was it completed?

Robert Stavins: And Article 6 was not completed, but I’m going to give you an important caveat, it was not completed because Brazil and Australia, Saudi Arabia in particular, wanted some aspects in there that would have introduced loopholes that would have allowed double counting. And so what I take as the good news, and that’s why I say a qualified success, is that rather than producing what would have been a bad deal, they produced no deal. And I’m very serious about that.

We did research here at Harvard years ago with colleagues at Tufts University and MIT, in which we said what needed to be in the Paris Agreement on this issue of sharing responsibility, bringing down costs. And we said the first important thing is that they not put in the following kind of items, which would make everything worse, and that didn’t happen. So it’s in that sense that I think it’s a qualified success, that even though there’s no deal, there’s still a possibility for it at the next meeting.

Thoko Moyo: At the next meeting. So you think that something can happen in the next 12 months before Glasgow to get to a point where you have the sort of accounting rules or standards that could get Article 6 done?

Robert Stavins: That’s exactly right. I think that that can happen. I wouldn’t say that I think it will happen, because there is political opposition to it happening.

Thoko Moyo: Let’s talk a little bit about the voices at these talks. The most obvious sort of divide, as it were, would be between developed and developing nations. How does that play out? I mean, who gets to talk here and and who gets listened to?

Robert Stavins: That’s an exceptionally important point, as it is in the United Nations in general. As an economist, whereas normally most of the analysis we do, whether it’s teaching in the classroom or it’s research on the outside or it’s conversations with the government, are focused on efficiency issues. But when you get into climate change, the international aspects, the aspects of distributional equity are extremely important. Going all the way back to the beginning, 1992 Brazil Summit, there’s a very important principle in the overarching document, the United Nations Framework Convention on Climate Change, which is, although it’s a global commons problem, we’re all in it together, nevertheless, there are common, but there are differentiated responsibilities.

Different countries have contributed different amounts to the accumulated stock. United States is number one, China’s second. And there are different capabilities, different wealth. That principle is exceptionally important, and everyone in the negotiations recognizes that. Having said that, as you said, that there has been in the past a polarization between the industrialized countries and the developing countries, and that was codified in the Kyoto Protocol, because only the industrialized countries had responsibilities.

Under Paris, it’s much more of an even playing field, although obviously some countries, particularly the European Union, take on much more aggressive targets than do poorer countries. Certainly, countries in Sub- Saharan Africa, from my point of view, need not do anything, I mean, their contributions are small and they’re mired in terrible poverty. So that differentiation remains, but there are lots of other constituencies at play. A very important one are the Small Island States, because for most countries in the world, ranging from the United States to the European Union to even the Gulf oil states, when we talk about addressing climate change, we’re talking about an increase in cost to our economy or a reduction in productivity. For the small island states, climate change is existential, so it’s at a whole nother level of concern. So their voice is very important, and although they are very small in terms of population, although they are very small in terms of their share of global gross domestic product, they’re actually very vocal and very effective, I’d say, in the talks. Remember, one last point is that under the rules of the United Nations, voices are all one country, one vote. The United States has the same vote as the smallest country in the world.

Thoko Moyo: Okay. Okay. So just one more question, just looking at the actual meeting. Another thing that we’re getting used to is seeing the protests and the demonstrators, and I know in Madrid one session you had protestors actually storm the session. We read a lot about the protest out on the streets. Is that actually having an impact? Is that sort of pressure having an impact on the deliberations and the progress that could be made?

Robert Stavins: Well, I think it certainly provides support, for example, for the small island states, the countries that wanted the most aggressive pledges to be made, because they feel tremendous support there. I don’t think it had any effect on the pace of the negotiations themselves, except that they were disrupted for a few hours that one afternoon. Other than that, I don’t think it has any particular influence. I’m not making a judgment with that. Maybe it should, maybe it shouldn’t, but I don’t think it does.

Thoko Moyo: Okay. We’ve talked a little bit about, you’re an environmental economist. Why is the economic perspective important in environmental issues? I mean, what are some of the things that you think about, and necessarily, what’s in your research?

Robert Stavins: Well, what I’d start by saying is that the causes of environmental problems, whether it’s economics or it’s local hazardous waste, the causes of environmental problems are essentially economic. It’s a result of the fact that there are unintentional negative aspects, consequences, factors that are the result of fundamentally meritorious activity by private firms making the products or the services that you and I want to buy. And sometimes the result of consumers when they’re using those products. They are external to the decision-making, which is why economists refer to environmental pollution as an externality.

And there are also then consequences of environmental pollution that have economic dimensions. So surely, if the causes of environmental pollution are fundamentally economic, which they are, and if the consequences of environmental pollution have important economic dimensions, then that would suggest that an economic perspective can be helpful for understanding those problems fully.

But you know, we’re sitting here at the Harvard Kennedy School, not at the Department of Economics in the Faculty of Arts and Sciences, so it’s not understanding just for understanding’s sake, it’s understanding so that we can make a difference. And the way that this understanding can make a difference is to identify public policies that are effective. And by effective, I mean they reduce pollutant emissions, they don’t simply demonize the bad guys, that they are economically sensible, by which I mean they’re cost effective, that we don’t shoot ourselves in the foot and spend more than we have to. After all, we don’t only care about the environment, we care about the cost of education, healthcare, food, fuel, and a thousand other things. And that perhaps they’re more likely to be politically pragmatic. I think this economic perspective, although it’s not the only legitimate perspective, surely, can be helpful in those regards.

Thoko Moyo: You mentioned the private sector in that, actually, and we haven’t talked about that. What role does the private sector have in the solutions in climate change, and what sort of actions are required of, and what sort of actions are private sector taking?

Robert Stavins: Well, the private sector plays an extremely important role, because that’s where the emissions for the most part come from, either actually from private industry, from manufacturing, electricity generation, or from products that they produce, such as motor vehicles. So their role is exceptionally important, and I’ve long had the view that only working through the market can much be accomplished. You know, that’s why, if I may say, back in 1988 when I first joined the faculty at the Kennedy School, a previous dean, Graham Allison, that he and I launched a project which was titled Harnessing Market Forces To Protect the Environment with two members of the US Senate, a bi-partisan pair of senators, something you couldn’t conceive of today, because it’s so important to work through the market.

Robert Stavins: And private industry in my view is aware of that. So there’s a lot of support actually from private industry for, for example, the Paris Agreement. The lobbying of the White House on the Paris Agreement, when there was about a six-month period in which it wasn’t clear what the president was going to decide about pulling out of Paris or not, private industry, with one exception, that’s the coal industry, was lobbying to stay in the Paris Agreement. And that includes the oil and gas industry.

Thoko Moyo: Interesting. And so what sort of promising approaches have you seen, the things that you’re particularly excited about in the markets that you think could have a real impact on the goals for climate change?

Robert Stavins: Well, I think the best thing, frankly, that private industry can do is to press for public policies in this realm, so it really takes me back to government. I don’t think it’s ever going to be dealt with sufficiently through voluntary actions by private industry, because again, it’s an externality. It’s not in the interest of their bottom line. They have fiduciary responsibilities to shareholders, and it’s taking money from shareholders to spend more than your competition is. So I think the best thing they can do is what to some degree they have been doing, and that’s to press for more aggressive public policies, whether it’s in the international domain or more importantly in the domestic national policies. And then when those public policies are put in place, not to fight them, but to comply.

And actually, the largest corporations do that, partly because they’re more equipped to take on the costs, but it’s particular sectors that would be really hard pressed that find it most difficult. It’s interesting, something that’s, I don’t know if it’s even recognized in the popular press, but that if you look at the climate legislation during the Obama administration, which was called the Waxman-Markey Bill, this was going to include a cap and trade system and lots of other policies to address climate change, that at that time there was a private industry consortium supporting the legislation, and that included a lot of large corporations. But there’s something that all of those corporations had in common. They all produced energy-consuming durable goods. So in there leading it was General Electric. The automobile companies were in there, Boeing was in there, because a climate policy means an increase in energy prices. When energy prices go up, that’s good for those companies, because it renders prematurely obsolete the current stock of energy-consuming equipment, because suddenly energy is more expensive. I mean, the reason why United Airlines buys a new airplane is not because they want the one with blue lights in the ceiling instead of white lights, it’s because it’s more efficient. And it’s more efficient, actually, not because of more efficient engines, it’s more efficient because the aircraft is lighter. They use composite materials rather than metals to build the aircraft.

Thoko Moyo: So there’s a business case for it.

Robert Stavins: There’s a business case, so those are the ones that were supportive. On the other hand, you didn’t see United Airlines or Lufthansa lobbying for that, because for them it’s an increase in cost. The price of jet fuel goes up a little bit, that’s the difference between profit and loss year after year after year for commercial airlines. So a lot of industries are supportive of climate policy because of the fact that it’ll help their bottom line. There are other ones that are not affected much one way or the other, but they’re still supportive, for example, of staying in the Paris Agreement or of some climate policies, because what they want is certainty. What they really hate is the uncertainty of not knowing what’s the price on carbon going to be 10 years from now? It’s so hard to make investment decisions on that basis.

Thoko Moyo: We don’t have a lot of time left, but I do have two more questions. I want to hear a little bit about your research, what it is that you are working on and sort of key findings and any sort of policy recommendations that come out of it. And then I want to look ahead to next year at Glasgow. I mean, what are the big expectations or hopes for that meeting, and what’s your sense in the next 12 months about that?

Robert Stavins: There have been two major threads of my research over, we’ll say, the past year, year and a half or so and going forward. One we’ve already talked about, it ties in with international cooperation and how that connects with Article 6 of the Paris Agreement, so I won’t say more about that. The other thread has been looking at and comparing the two major carbon pricing policy instruments, the two ways of working through the market to address climate change. One is with a tax on the carbon content of fossil fuels, coal, petroleum, and natural gas. That’s a carbon tax. The other is with a carbon or CO2 cap and trade system.

These instruments are hotly debated. Economists around the world and most policy analysts would say yes, we need to have carbon pricing in a modern economy. We won’t be able to achieve sufficient emission reductions in any other way. Why is that? Because when we’re talking about CO2 emissions in a country such as the United States, for example, we’re not just talking about 1,500 sources, as we were for sulfur dioxide with acid rain. We’re talking about every electricity producer that uses fossil fuels, every manufacturer, every commercial facility, every residence, every motor vehicle, every backyard barbecue grill and lawn mower.

Robert Stavins: It is inconceivable that those could be regulated with conventional standards, technology and performance standards. The only way to affect all of those is with the dissemination through the market of relative prices. So there’s this agreement that carbon pricing is necessary, maybe not sufficient, for the task, but necessary. Where the disagreement has come in is carbon tax versus cap and trade.

I recently did research for the National Bureau of Economic Research, in which I think I wrote what is a relatively exhaustive and probably the most comprehensive study that’s ever been done of comparing the two instruments. And my conclusion, which surprised even me, was that actually the choice between the two, that dichotomous choice, is vastly less important than the design of either one, that actually there’s a policy continuum from a pure carbon tax to a pure cap and trade, from a pure price-based mechanism to a pure quantity-based mechanism, if both work through the market. And then it’s various points along this spectrum are determined by the design.

Thoko Moyo: So either-or or both together, well-designed.

Robert Stavins: Yeah, either one well designed, either one well designed. And so then the question comes up is, if it is well designed, gee, it’s still not happening in the United States, and that’s surely because of political factors. So what I’m working on now with a Harvard Kennedy School PhD student in public policy, Dan Stewart, and a Harvard PhD recipient, now a professor at Duke University, William Pizer, is looking at the politics of this, really, and analyzing how these different instruments, and some others that are of great interest in the Congress, compare when we really take into account the political feasibility of different approaches going forward. And that’s research that we’re just beginning at this moment.

Thoko Moyo: Okay. So to end off, we’ve talked about COP25 and how that went. Another one coming up next year in Glasgow. What’s the sort of focus there, and what’s your sense about what should be focused on between now and next year and what the meeting will center on?

Robert Stavins: My hope would be that Article 6, this last part of the Paris Agreement in which the Rule Book has not been completed, that this can be completed in ways which are simple and, if I could say so, relatively pure. This is a case in which less is more. It will be much better to have something which is five sentences long, which simply validates global carbon markets and doesn’t get in the way, than to have detailed rules that go on for four pages, but of those four pages, there are two paragraphs that cause problems.

Thoko Moyo: I can’t imagine five sentences in a UN document, though.

Robert Stavins: Well, that’s the challenge. That’s the challenge. But you know, the Paris Agreement is only 13 pages long. It’s not a long document. So there is reason to hold out hope for something which is brief and simple. Last, if you ask me what my expectations are, I think that the demonstrations will be even greater, that youth activism in this realm is surely on the rise. I’m from an era in which there was youth activism I participated in on the Vietnam War. So I applaud the youth activists. I don’t want to sound like my father did to me at that time.

Thoko Moyo: But it’s real. I mean, the young people are the ones who are really, truly going to feel the biggest effects of what’s happening today. It makes sense that they are focused on it. It’s literally their lives at stakes.

Robert Stavins: Yes. No, and continue the analogy with Vietnam, it was because for young people, we were the ones that were going to go off and fight. It wasn’t going to be the 60-year-olds who are going to go off and fight. But you’re right, there is a reason why youth have the attitude they have, and I applaud them for it.

Thoko Moyo: Terrific. Thank you so much. This is great.

Robert Stavins: My pleasure.

Thoko Moyo: Thanks for listening. Please join us for our next episode, when we’ll talk with Harvard Kennedy School Professor Archon Fung about civic engagement and responsibility and how to ensure that in 2020, American democracy isn’t a spectator sport.