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 27th 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:

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

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Environmental Economics – A Personal Perspective

Today, I wish to take a brief hiatus from reflecting on the current status of climate change policy, whether in the often traumatic context of policy pronouncements – or rather, Twitter messages – from U.S. President Trump and his administration, or in the broader, longer-term context of global actions.  Rather, I want to seize on this mid-summer opportunity to think about the past rather than the present.  In particular, I would like to reflect on the four decades in which I have been engaged in the world of environmental policy, most recently – for the past 30 years – as a scholar, from my professorial perch at Harvard.

This reflection is facilitated by the fact that two years ago, I was asked by the editor of the Singapore Economic Review, Professor Euston Quah, to write about the evolution of the field of environmental economics.  I was pleased to do so, and I decided to take a quite personal approach to summarizing what otherwise would have required a rather Herculean effort.  The result was published earlier this year:  “The Evolution of Environmental Economics:  A View from the Inside,” Singapore Economic Review, volume 62, number 2, 2017, pages 251-274.

[By coincidence, in just a few days, I am travelling to Singapore to make two presentations – on August 4th at the 2017 Singapore Economic Review Conference, and on August 6th at the 7th Congress of the East Asian Association of Environmental and Resource Economics.]

Evolution of the Field of Environmental Economics

Over the past three to four decades, environmental and resource economics has evolved from what was once a relatively obscure application of welfare economics to a prominent field of economics in its own right.  The number of articles on the natural environment appearing in mainstream economics periodicals has continued to increase, as has the number of economics journals dedicated exclusively to environmental and resource topics.  Likewise, the influence of environmental economics on public policy has increased significantly, particularly as greater use has been made of market-based instruments for environmental protection.

My article this year in the Singapore Economic Review provides one economist’s perspective on this twenty-year evolution, first by tracing it through personal reflections on the professional path that has led to my research and writing, and then by summarizing some highlights of my research.  That article was itself rendered feasible because of two previous book projects.

In 1998, my tenth year on the Harvard faculty, I was asked by the British publisher, Edward Elgar Publishing Limited, if I would be willing to assemble my selected papers for a book.  I responded with enthusiasm, and selected 23 articles from the 80 (published and unpublished) papers I had produced as of then – frequently with co-authors – from the time I received my Ph.D. in 1988 through 1999.  Making the selection was not any easy task, but it was a rewarding one.  I categorized my research into seven topic areas:  generic issues in environmental economics; benefits and costs of environmental regulation, and the potential use of efficiency and other criteria for evaluating environmental goals; normative analysis of policy instruments; positive analysis of policy instruments; environmental technology innovation and diffusion; land-use change; and global climate change policy. The resulting volume, Environmental Economics and Public Policy:  Selected Papers of Robert N. Stavins, 1988-1999, was published in 2000.

In 2011, ten years after the publication of my first set of selected papers (1988-1999), Edward Elgar Publishing Limited suggested a second volume.  I selected 26 articles from the many more (published and unpublished) papers I wrote over the decade.  The papers again fell into seven (somewhat different) categories:  generic issues in environmental economics; methods of environmental policy analysis; economic analysis of alternative environmental policy instruments; the economics of technological change; natural resource economics; domestic (national and sub-national) climate change policy; and international dimensions of climate change policy. This led to the publication in 2013 of Economics of Climate Change and Environmental Policy:  Selected Papers of Robert N. Stavins, 2000-2011.

In those two volumes and in the recent article in the Singapore Economic Review, I not only summarized highlights of my research, but I also provided a description of the professional path I have taken.  In this blog essay, I am pleased to offer an abridged version below (with the addition of some relevant hyperlinks).

A Professional Path

In retrospect, my professional path may appear somewhat direct, if not altogether linear, but it hardly seemed so as I travelled along it.  The path I describe took me back and forth across the United States and to several continents, and it took me from physics to philosophy, to agricultural extension, to international development studies, to agricultural economics, and eventually to environmental economics.  During this time, much has changed in the profession.

The early ascendency of the field of environmental economics, during the period from 1970 to 1990, was centered within departments of agricultural and resource economics, mainly at U.S. universities, and at Resources for the Future (RFF), the Washington research institution.  Within most economics departments, environmental studies remained a relatively minor area of applied welfare economics.  So, when I enrolled in the Ph.D. program in Harvard’s Department of Economics in 1983, and when I received my degree five years later, no field of study was offered in the field of environmental or resource economics.

Fortunately, Harvard permitted its graduate students to develop an optional, self-designed field as one of two fields on which they were to be examined orally before proceeding to dissertation research.  Without a resident environmental economist in the Department of Economics (Martin Weitzman had yet to move to Harvard from the Massachusetts Institute of Technology), I developed an outline and reading list of the field through correspondence with leading scholars from other institutions, most prominently Kerry Smith, then at North Carolina State University.  My proposal to prepare for and be examined in the field of environmental and resource economics (along with my other field, econometrics) was approved by the Department’s director of graduate study, Dale Jorgenson.  So began my entry into the scholarly literature of the field.

But my interest in environmental economics pre-dated by a considerable number of years my matriculation at Harvard.  Like many others before and since, I came to the field because of a personal interest in the natural environment (the origin of which I describe below).  This personal interest evolved into a professional one while I was studying for an M.S. degree in agricultural economics at Cornell University in Ithaca, New York, in the late 1970’s, where my thesis advisor and mentor was Kenneth Robinson.  I had originally gone to Cornell to study for a professional degree in international development, but found agricultural economics more appealing, largely because of the opportunity to examine social questions with quantitative methods within a disciplinary framework.

The faculty at Cornell and the care given to graduate students (including masters students like myself) were outstanding.  Kenneth Robinson, my first mentor within the economics profession, became my ongoing role model for intellectual integrity.  It was a sad day many years later, in 2010, when Professor Robinson passed away.

A course in linear algebra, brilliantly taught by S. R. Searle, inspired me to pursue quantitative methods of analysis, and I was fortunate to have the opportunity to study econometrics with Timothy Mount.  One summer I had the privilege of learning about comparative economic systems in a small workshop setting from George Staller of the Cornell Department of Economics.   Working with Bud Stanton, I had my first experience teaching at the university level, and with Olan Forker, I had my first try at serious writing.  All of this led to my research and writing of an M.S. thesis, “Forecasting the Size Distribution of Farms:  A Methodological Analysis of the Dairy Industry in New York State.”  The methodology in question was a variable Markov transition probability matrix, the cells of which were estimated econometrically in a multinomial logit framework.  Much to my surprise, this work subsequently received the Outstanding Master’s Thesis Award in the national competition of the American Agricultural Economics Association.

Armed with my M.S. degree, I moved from Ithaca to Berkeley, California, where I eventually met up with Phillip LeVeen, who had until shortly before that time been a faculty member in the Department of Agricultural and Resource Economics at the University of California, Berkeley.  Phil was another superb mentor, and from him I learned the power of using simple models — by which I mean a set of supply and demand curves hastily drawn on a piece of scrap paper — to develop insights into real-world policy problems.  He introduced me to a topic that was to occupy me for the next few years — California’s perpetual concerns with water allocation.  I remember many afternoons spent working with Phil at his dining room table on questions of water supply and demand.

This work with Phil LeVeen led to a consultancy and then a staff position with the Environmental Defense Fund (EDF), the national advocacy group consisting of lawyers, natural scientists, and — then almost unique among environmental advocacy organizations — economists. This marked the beginning of what became an ongoing professional relationship with this rather remarkable organization.  At EDF, I was able to experience for the first time the use of economic analysis in pursuit of better environmental policy.  With W. R. Zach Willey, EDF’s senior economist in California, as a role model, and Thomas Graff, EDF’s senior attorney, as my mentor, I thrived in EDF’s collegial atmosphere, while thoroughly enjoying life in Berkeley’s “gourmet ghetto,” as my neighborhood was called.  Sadly, Tom Graff — without whose passionate and wise mentorship I would not be where I am today — passed away in 2009 after a heroic battle with cancer.

Although I found the work at EDF rewarding, I worried that I would eventually be constrained — either within the organization or outside it — by my limited education.  So, like many others in similar situations, I considered a law degree as the next logical step.  In fact, I came very close to enrolling at Stanford Law School, but instead, in 1983, I accepted an offer of admission to the Department of Economics at Harvard, moved back east to Cambridge, Massachusetts, and began what has turned out to be a long-term relationship with the University.

But where did my interest in the natural environment begin?  Not at Cornell; it was present long before those days.  But it had not yet arisen when I was studying earlier at Northwestern University, from which I received a B.A. degree in philosophy, having departed from my first scholarly interest, astronomy and astrophysics.

Rather, the origins of my affinity for the natural environment and my interest in resource issues are to be found in the four years I spent in a small, remote village in Sierra Leone, West Africa, as a Peace Corps Volunteer, working in agricultural extension (in particular, paddy rice development).  It was there that I was first exposed both to the qualities of a pristine natural environment and the trade-offs associated with economic development.

So, I had begun in astrophysics, moved to philosophy (both at Northwestern), then to agricultural extension in a developing country (Sierra Leone), then to international development studies and subsequently to agricultural economics (both at Cornell), then to environmental economics and policy (EDF), and eventually to graduate study in economics at Harvard.

My dissertation research at Harvard was directed by a committee of three faculty members:  Joseph Kalt, Zvi Griliches, and Adam Jaffe.  Joseph Kalt was the first faculty member at the Department of Economics to validate my interest in environmental and resource issues, and he was unfailingly generous to me and many other graduate students in making his office (and personal computer, then a rather scarce resource) available at all hours.  Later a colleague at the Kennedy School, Joe provided examples never to be forgotten — that economics could be a meaningful and enjoyable pursuit, and that excellence in teaching was a laudable goal.

Zvi Griliches was not only my advisor and mentor, but my spiritual father as well.  Generations of Harvard graduate students would offer similar testimony.  My own father had died only a year before I entered Harvard, and Zvi soon filled for me many paternal needs.  It is now approaching two decades since Zvi himself passed away.  I felt as if I had lost my father a second time.

If Zvi Griliches provided caring and inspiration, Adam Jaffe provided invaluable day-to-day guidance.  It was Adam who convinced me not to go on the job market in my fourth year with what would have been a mediocre dissertation, but to put in another year and do it right.  That turned out to be some of the best professional advice I have ever received.  Our intensive faculty-student relationship from dissertation days subsequently evolved into a very productive professional (and personal) one that continues to this day.  The name of Adam Jaffe appears frequently in my curriculum vitae as a co-author; he has been and continues to be much more than that.

Although they were not members of my thesis committee, I should acknowledge two other faculty members at the Harvard Department of Economics who played important roles in my education.  I was fortunate to take two courses in economic history (a department requirement) from Jeffrey Williamson, who had recently arrived from the University of Wisconsin.  Williamson’s class sessions were as close as anything I have seen to being economic research laboratories.  In class after class, we would carefully dissect one or more articles — examining hypothesis, theoretical model, data, estimation method, results, and conclusions.  If there was any place where I actually learned how to carry out economic research, it was in those classes.

The other name that is important to highlight is that of Lawrence Goulder, then a faculty member at Harvard, and now a professor at Stanford.  I say this not simply because he was willing to be my examiner in my chosen field of environmental and resource economics, nor because he subsequently became such a close friend.  Rather, what is striking about my professional relationship with Larry is the degree to which he has been an unnamed collaborator on so many projects of mine.  Although he and I have co-authored no more than a few articles, his name probably appears more frequently than anyone else’s in the acknowledgments of papers I have written.  There is no one whose overall judgement in matters of economics I trust more, and no one who has been more helpful.

When I began graduate school at Harvard in 1983, it was my intention to return to EDF as soon as I received my degree.  But by my third year in the program, I had decided to pursue an academic career, although one that was heavily flavored with involvement in the real world of public policy.  Within the context of this professional objective, it was not a difficult decision to accept the offer I received in February, 1988, to become an Assistant Professor at the Kennedy School.  Although some of the other offers I received at that time were also very attractive, the choice for me was obvious, and I have never regretted it — not for a moment.

I remain at the Kennedy School today, where I was promoted to Associate Professor in 1992 (an untenured rank at Harvard), and to a tenured position as Professor of Public Policy in 1997.   In 1998, I accepted an appointment as the Albert Pratt Professor of Business and Government, and in 2017, I was appointed the A. J. Meyer Professor of Energy and Economic Development.

In the year 2000, I launched the Harvard Environmental Economics Program, which today brings together — from across the University — thirty-two Faculty Fellows and twenty-seven Pre-Doctoral Fellows, who are graduate students studying for the Ph.D. degree in economics, political economy and government, public policy, or health policy.  The Program, which I continue to direct, forms links among faculty and graduate students engaged in research, teaching, and outreach in environmental, natural resource, and energy economics and related public policy, by sponsoring research projects, convening workshops, and supporting graduate (and undergraduate) education.

A key reason why the Program — and its various projects, including the Harvard Project on Climate Agreements — have been so successful is the marvelous administrative leadership and staff support it enjoys.  Everyone who has been involved in virtually any way has come away impressed by our Executive Director, Robert Stowe, Program Manager, Jason Chapman, and Bryan Galcik, Communications Coordinator.

At the Kennedy School, I have had an excellent mentor, William Hogan, and a superb advisor and friend, Richard Zeckhauser.  Over the years, six successive deans have provided leadership, guidance, and support (including abundant time for my research and writing) — Graham Allison, Robert Putnam, Albert Carnesale, Joseph Nye, David Ellwood, and Douglas Elmendorf.  At Harvard more broadly, I have benefitted from regular interactions with Daniel Schrag, director of the Harvard University Center for the Environment, and Martin Weitzman of the Department of Economics.  For two decades, Marty and I have co-directed a bi-weekly Seminar in Environmental Economics and Policy, which has provided me with frequent opportunities to learn both from seminar speakers and from Marty’s questions and comments.

I will also note that Harvard President Drew Faust has provided superb leadership of Harvard’s increasing research, teaching, and outreach activity on global climate change, and has been exceptionally supportive of my work on climate change policy.  I will refrain from naming the many others at Harvard and elsewhere from whom I continue to learn — including my many co-authors — only because the list of such valued colleagues and friends is so long.  Included have been a most remarkable set of Ph.D. students, many of whom have gone on to productive — indeed illustrious — careers.

Along the way, I have had my share of administrative responsibilities at Harvard, including serving as Director of Graduate Studies for the Doctoral Program in Public Policy and the Doctoral Program in Political Economy and Government, and Co-Chair of the Harvard Business School-Harvard Kennedy School Joint Degree Programs.  Outside of Harvard, I have had the privilege of being a University Fellow of Resources for the Future, a Research Associate of the National Bureau of Economic Research, and the founding Editor of the Review of Environmental Economics and Policy, as well as a member of the Board of Directors of Resources for the Future, the Scientific Advisory Board of the Fondazione Eni Enrico Mattei, and numerous editorial boards. I must also note that I serve as an editor of the Journal of Wine Economics.  In 2009, I was elected a Fellow of the Association of Environmental and Resource Economists.

What originally attracted me to the Kennedy School was the possibility of combining an academic career with extensive involvement in the development of public policy.  I have not been disappointed.  Indeed, a theme that emerges from my professional engagements over the past twenty-five years is the interplay between scholarly economic research and implementation in real-world political contexts.  This is a two-way street.   In some cases, my policy involvement has come from expertise I developed through research, following a path well worn by academics.  But, in many other cases, my participation in policy matters has stimulated for me entirely new lines of research activity.

Finally, what I have characterized as involvement in policy matters is described at the Kennedy School as faculty outreach, recognized to be of great institutional and social value, along with the two other components of our three-legged professional stool — research and teaching.  I should note that my outreach efforts have fallen into five broad categories:  advisory work with members of Congress and the White House (for example, Project 88, a bipartisan effort co-chaired by former Senator Timothy Wirth and the late Senator John Heinz, to develop innovative approaches to environmental and resource problems); service on federal government panels (for example, my role as Chairman of the Environmental Economics Advisory Committee of the U.S. Environmental Protection Agency Science Advisory Board); on-going consulting — often on an informal basis — with environmental NGOs (most frequently, the Environmental Defense Fund) and private firms; advisory work with state governments; and professional interventions in the international sphere, such as service as a Lead Author for the Second and the Third Assessment Reports and a Coordinating Lead Author for the Fifth Assessment Report of the Intergovernmental Panel on Climate Change, professional roles with the World Bank and other international organizations, and advisory work with foreign governments.

Reflections on Common Themes

Preparing the brief professional autobiography for the 2000 and 2013 books and for the 2017 SER article caused me to review many of the several hundred articles, book chapters, and essays I have written over the years.  This allowed me to identify some common themes that emerge from these more than two decades of research and writing.

First, there is the value — or at least, the potential value — of economic analysis of environmental policy.  The cause of virtually all environmental problems in a market economy is economic behavior (that is, imperfect markets affected by externalities), and so economics offers a powerful lens through which to view environmental problems, and therefore a potentially effective set of analytical tools for designing and evaluating environmental policies.

A second message, connected with the first, is the specific value of benefit-cost analysis for helping to promote efficient policies.  Economic efficiency ought to be one of the key criteria for evaluating proposed and existing environmental policies.  Despite its limitations, benefit-cost analysis can be useful for consistently assimilating the disparate information that is pertinent to sound decision making.  If properly done, it can be of considerable help to public officials when they seek to establish or assess environmental policies.

Third, the means governments use to achieve environmental objectives matter greatly, because different policy instruments have very different implications along a number of dimensions, including abatement costs in both the short and the long term.  Market-based instruments are particularly attractive in this regard.

Fourth, an economic perspective is also of value when reflecting on the use of natural resources, whether land, water, fisheries, or forests.  Excessive rates of depletion are frequently due to the nature of the respective property-rights regimes, in particular, common property and open-access.  Economic instruments — such as ITQ systems in the case of fisheries — can and have been employed to bring harvesting rates down to socially efficient levels.

Fifth and finally, policies for addressing global climate change — linked with emissions of carbon dioxide and other greenhouse gases — can benefit greatly from the application of economic thinking.  On the one hand, the long time-horizon of climate change, the profound uncertainty in links between emissions and actual damages, and the possibility of catastrophic climate change present significant challenges to conventional economic analysis.  But, at the same time, the ubiquity of energy generation and use in modern economies means that only market-based policies — essentially carbon pricing regimes — are feasible instruments for achieving truly meaningful emissions reductions.  Hence, despite the challenges, an economic perspective on this greatest of environmental threats is essential.

 A Personal Message

On a personal level, the professional path I have taken offers confirmation that research can influence public policy, and that involvement in public policy can stimulate new research.  The quest — both professional and personal — that took me from Evanston, Illinois, to Sierra Leone, West Africa, to Ithaca, New York, to Berkeley, California, and finally to Cambridge, Massachusetts suggests some consistency of purpose and even function.  I find myself doing similar things, but in different contexts.  It is fair to say that my professional life has taken me along a path that has brought me home.  The words of T. S. Eliot (1943) ring true:

                        We shall not cease from exploration

                        And the end of all our exploring

                        Will be to arrive where we started

                        And know the place for the first time.

Writing these essays, this year’s article, and today’s blog post have forced me to reflect on the past, and think about the future.  The twenty-two articles that comprised the first book of my selected papers and the twenty-six essays that comprised the second volume were the product of twenty-three years on the Harvard faculty (now almost 30 years).  I continue to learn about environmental economics and related public policy from colleagues, collaborators, students, friends, and inhabitants of the ”real world” of public policy – individuals from government, private industry, advocacy groups, and the press.  I hope my learning will continue.

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What to Expect at COP-20 in Lima

On Monday, December 1st, the Twentieth Conference of the Parties (COP-20) of the United Nations Framework Convention on Climate Change (UNFCCC) commences in Lima, Peru. Over the next two weeks, delegations from 195 countries will discuss and debate the next major international climate agreement, which – under the auspices of the Durban Platform for Enhanced Action – is to be finalized and signed one year from now at COP-21 in Paris, France.

What to Expect in Lima

Because of the promise made in the Durban Platform to include all parties (countries) under a common legal framework, this is a significant departure from the past two decades of international climate policy, which – since the 1995 Berlin Mandate and the 1997 Kyoto Protocol – have featured coverage of only a small subset of countries, namely the so-called Annex I countries (more or less the industrialized nations, as of twenty years ago).

The expanded geographic scope of the incipient Paris agreement – combined with its emerging architecture in the form of a pragmatic hybrid of bottom-up nationally determined contributions (NDCs) plus top-down elements for monitoring, reporting, verification, and comparison of contributions – represents the greatest promise in many years of a future international climate agreement that is truly meaningful.

A Diplomatic Breakthrough:  The Key Role of the China-USA Announcement

If that confluence of policy developments offers the promise, then it is fair to say that the recent joint announcement of national targets by China and the United States (under the future Paris agreement) represents the beginning of the realization of that promise. From the 14% of global CO2 emissions covered by nations participating (a subset of the Annex I countries) in the Kyoto Protocol’s current commitment period, the future Paris agreement with the announced China and USA NDCs covers more than 40% of global CO2 emissions. With Europe, already on board, the total amounts to more than 50% of emissions.

It will not be long before the other industrialized countries announce their own contributions – some quite possibly in Lima over the next two weeks. More importantly, the pressure is now on the other large, emerging economies – India, Brazil, Korea, South Africa, Mexico, and Indonesia – to step up. Some (Brazil, Korea, Mexico?) may well announce their contributions in Lima, but all countries are due to announce their NDCs by the end of the first quarter of 2015.

The announced China-USA quantitative contributions are themselves significant. For China, capping its emissions by 2030 (at the latest) plus increasing its non-fossil energy generation to 20% by the same year will require very aggressive measures, according to a recent MIT analysis. For the USA, cutting its emissions by 26-28% below the 2005 level by 2025 means doubling the pace of cuts under the country’s previous international commitment.

Thus, the China-USA announcement begins the fulfillment of the promise of the Durban Platform. A sufficient foundation is being established for meaningful future steps, and thereby the likelihood of a successful outcome in Paris has been greatly increased.  The talks in Lima over the next two weeks will produce at least a rough draft of the the Paris agreement, which can then be elaborated and finalized over the coming year, and signed (with abundant photo opportunities for heads of state) in Paris in December, 2015.

Keeping Our Eyes on the Prize

There will be — indeed, already have been — pronouncements of failure of the Lima/Paris talks from some green groups, primarily because the talks will not lead to an immediate decrease in emissions and will not prevent atmospheric temperatures from rising by more than 2 degrees Celsius (3.6 degrees Fahrenheit), which has become an accepted, but essentially unachievable political goal. These well-intentioned advocates mistakenly focus on the short-term change in emissions among participating countries (for example, the much-heralded 5.2% cut by the Annex I countries in the Kyoto Protocol’s first commitment period), when it is the long-term change in global emissions that matters.

In other words, they ignore the geographic scope of participation, and do not recognize that — given the stock nature of the problem — what is most important is long-term action.  Each agreement is no more than one step to be followed by others.  And most important now for ultimate success later is a sound foundation, which is precisely what may finally be provided by the China-USA announced contributions under the Durban Platform structure of a hybrid international policy architecture.

All in all, this may turn out to be among the most important moments in two decades of international climate negotiations. And this means – at a minimum – that the next two weeks in Lima should be very interesting indeed.

Upcoming Events at COP-20 in Lima

As with previous Conferences of the Parties, we – the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements (HPCA) – will be at the Lima talks for their second week, December 7-12. We will be participating in a number of events, and will be holding bilateral meetings with key national delegations.

In all cases, our contributions to the discussions will draw on our compendium of knowledge from our 70 research initiatives in Argentina, Australia, China, Europe, India, Japan, and the United States. Our purpose continues to be to help identify and advance scientifically sound, economically sensible, and politically pragmatic policy options for addressing global climate change.

For those of you who will be in Lima (as well as the rest of you), here is the schedule of COP-20 events that are co-sponsored by HPCA or in which I am participating as HPCA Director. It is going to be a very busy week, but I will try to blog – or at least tweet – about these events and other developments. After I return from Lima, I will follow up with an assessment.

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Monday, December 8, 4:45 – 6:15 pm, Room: Machu Picchu

Sponsors: Harvard Project on Climate Agreements, Centre for European Economic Research (ZEW), and Enel Foundation

“Implications of the energy-efficiency gap for reducing greenhouse-gas emissions”

The discussion will be based on our Duke-Harvard research project (sponsored by the Alfred P. Sloan Foundation) on the “energy-efficiency gap”—the apparent difference between predicted and measured rates of adoption of energy-efficiency technology. Panelists will explore the implications of this gap for climate-change mitigation.

Speakers:

Daniele Agostini, Head of Low Carbon Policies and Carbon Regulation, Enel Group

Andreas Löschel, Chair of Microeconomics, and Energy and Resource Economics, University of Münster, and Research Associate, ZEW

Richard Newell, Gendell Professor of Energy and Environmental Economics, Nicholas School of the Environment, Duke University, and Director, Duke University Energy Initiative

Robert Stavins, Director, Harvard Project on Climate Agreements and Albert Pratt Professor of Business and Government, Harvard Kennedy School

Jesus Tamayo Pacheco, President of the Supervisory Body for investment in energy and mines of Peru

See also background paperhttp://belfercenter.ksg.harvard.edu/publication/24749

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Tuesday, December 9, 12:00 – 2:00 pm, China Pavilion

Sponsors: National Center for Climate Change Strategy and International Cooperation (NCSC), National Development and Reform Commission (NDRC), People’s Republic of China

“International Cooperation: Towards the 2015 Agreement –A perspective from international think tanks”

This event aims at exchanging ideas from various international think tanks on the design of the 2015 Agreement with consideration of interaction and cooperation of parties on bilateral and multilateral basis, with a view to provide for inputs to the debates of the negotiation of the 2015 Agreement.

Speakers:

H.E. Minister Xie Zhenhua, Head of Chinese Delegation to COP-20 and Vice Chairman, NDRC

Li Junfeng, Director General, NCSC

Zou Ji, Deputy Director, NCSC

Robert Stavins, Director, Harvard Project on Climate Agreements

Du Xiangwan, Former Vice President, Chinese Academy of Engineering

Martin Kohl, President, South Center

Jennifer Morgan, Global Director of Climate Program, World Resources Institute

Teresa Ribera, President, Institute for Sustainable Development and International Relations

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Tuesday, December 9, 4:30 – 6:10 pm, International Emissions Trading Association (IETA) Pavilion

“What Role will Markets Play in the 2015 Climate Agreement? How can the Agreement Facilitate Linkage of Carbon Pricing Policies?”

Speakers:

Dirk Forrister, President & CEO, IETA

Robert Stavins, Director, Harvard Project on Climate Agreements

David Hone, Chief Climate Change Adviser, Shell Research

Anna Lindstedt, Ambassador for Climate Change, Government of Sweden

Mary Nichols, Chair, California Air Resources Board

Amber Rudd, Parliamentary Under Secretary of State, Department of Energy and Climate Change, Government of the United Kingdom

See also background paperhttp://belfercenter.ksg.harvard.edu/publication/24568

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Thursday, December 11, 11:30 am – 1:00 pm, Room: Caral

Sponsors: International Emissions Trading Association, Arizona State University, Harvard Project on Climate Agreements

“Linkage among climate policies in the 2015 Paris agreement”

Panelists will discuss how the Paris agreement might facilitate or impede linkage among cap-and-trade, carbon tax, and non-market regulatory systems. Panelists will also address related issues involving market mechanisms in the new agreement.

Speakers:

Daniel Bodansky, Foundation Professor of Law, Sandra Day O’Connor College of Law, Arizona State University

Dirk Forrister, President & CEO, IETA

Robert Stavins, Director, Harvard Project on Climate Agreements

Alexia Kelley, Senior Climate Change Advisor, U.S. Department of State

Nathaniel Keohane, Vice President for International Climate, Environmental Defense Fund

Ulrika Raab, Senior Advisor Climate Change, Swedish Energy Agency

See also background paperhttp://belfercenter.ksg.harvard.edu/publication/24568

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