CLIMATE STRATEGY: BETWEEN AMBITION AND REALISM


Dutch Scientific Council for Government Policy (WRR)

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Summary

(Translation: Julian Ross)

There are strong indications that the climate is undergoing change, partly under the influence of human activity. A substantial reduction in emissions of greenhouse gases is needed in order to slow down the rate of climate change sufficiently. However, while the total global volume of CO2 emissions needs to fall sharply, in reality it is more realistic to expect them to increase steeply as a result of rising prosperity and population growth.

There are considerable uncertainties and all manner of complicating factors which make it difficult to formulate an effective climate policy. The magnitude of the climate effects (and sometimes the direction in which they operate) is difficult to predict. There are large gaps in our knowledge about the climate system, partly due to the extreme slowness of that system. This raises the danger of setting in motion irreversible changes. The problem of policy formulation is also exacerbated by the global setting in which it has to be achieved. Different countries have widely diverging interests and consistently place the emphasis on economic growth, leading to an increase rather than a decrease in greenhouse gas emissions. Moreover, the international coordination of the emission reduction efforts is problematic, raising the danger of inadequate policy. These uncertainties and complicating factors could lead to high costs. Given these uncertainties, climate policy ought to focus not only on optimisation, but also on robustness. A robust strategy is aimed at achieving success in a wide variety of potential scenarios.

1.1.1.1 Difficult judgments

There are wide differences in the way individual countries view the climate issue. The global divergence in perceptions, interests and preferences can make it difficult or even impossible to formulate an effective climate strategy. The effectiveness of that strategy depends on the goals that countries strive to achieve, and reaching agreement on this (in the sense of hard commitment) will not be easy. Differences in perceptions and preferences can lead to unbridgeable differences in the degree of willingness to bear the costs. One of the problems when deciding on the cost distribution is that both the costs of adaptation and of reducing the rate of climate change are unclear. Moreover, policymakers have to weigh those costs against completely different objectives which also require government intervention (economic growth, education, health care, infrastructure, pensions, military spending, and so on); the emphasis given to these objectives also varies considerably from one country to another.

Applying the prudence principle does not offer an immediate solution, because high costs have to be weighed against risks which are to some extent still unknown. This raises the paradox of trying to estimate the unknown. The prudence principle can therefore not provide an answer to the question of what constitutes a sensible mix of emission reductions and adaptation. The lack of an optimum policy mix also implies that the principle of intergenerational burden-sharing does not offer a firm basis for a solution.


1.1.1.2 No effective policy to date

The European Union (EU) determined in 1996 that the increase in global temperatures as a consequence of climate change had to be limited in the present century to 2 C relative to pre-industrial levels. This standpoint was reaffirmed in 2005, when it was also stipulated that the attainability of the reduction targets needed to be reviewed in the light of costs/benefits aspects. The EU has a well-developed emissions trading system, putting it at the head of the field. At the same time, the EU pursues a specific climate policy on various fronts. The Netherlands has played a pioneering role in this climate policy. At global level, under the Kyoto protocol the signatory countries agreed to reduce their greenhouse gas emissions in the period 2008-2012 to at least 5% below the level in 1990.

The policy pursued thus far has not proved effective, either in the EU or globally. On the contrary, policy activism in the EU has led to fragmentation, and in the Netherlands to a plethora of changes of direction. The potential for cost-effective domestic climate policy appears to be limited, and much of the effort will therefore have to be directed towards achieving objectives outside the Netherlands (and even outside Europe). Globally, the targets set by the Kyoto protocol are too limited, cover a very short period and apply only for a select group of developed countries which already have relatively CO2-efficient economies. The policy to date - both globally and at the level of the EU and the Netherlands - lacks a global, long-term perspective.


1.1.1.3 A new climate strategy

This WRR report sets out a climate strategy which gives both a rationale and direction to the Dutch policy within the EU and to the EU policy in a global context.

The Council took the following question as its starting point:
How can the Netherlands, as a member of the European Union, pursue an effective climate policy from a global and strategic perspective?
Key notions which characterise this strategy are: a global and long-term approach as inalienable principles; effectiveness of emission reduction by 2050; cost minimisation in the choice between options available now and the choice between options over a period of decades; damage limitation through timely adaptation to a climate which is undeniably changing; unflagging and energetic promotion of low-emission technology and innovation; a strategic approach to global coordination; and finally robustness, in view of the major uncertainties. The proposed climate strategy is based on three solution pathways: (1) adaptation to climate change; (2) reduction of greenhouse gas emissions; and (3) effective global coordination.

1.1.1.4 (1) High priority for adaptation

Adapting to a changing climate can reduce or prevent later damage. While adaptation policy cannot and must not replace internationally coordinated reductions in greenhouse gas emissions, for many countries - and in any event for the Netherlands - it is considerably easier to achieve. It is not an acceptance of defeat, but is in fact an attractive option because the fruits of local efforts are also enjoyed locally, something which applies to only a very limited extent for emission reductions. Adaptation is not always possible globally, or can be so costly and disruptive that ultimately total emigration becomes unavoidable in certain localities. Adaptation can therefore not be viewed at the purely local level in all cases. The world community can reinforce or supplement the adaptive capacity of poor countries, and will sooner or later have to address vulnerabilities that can threaten the existence or cohesion of entire regions or peoples.

For the Netherlands, the most relevant climate changes from a policy perspective are the prospect of a wetter climate and higher sea levels (+20 cm to +110 cm by 2100). In the first place, therefore, adaptation will be focused on water policy in relation to flood protection; this is of great importance for four reasons:

* Climate change will still occur if emission reductions are successful, albeit in milder form.

* The credibility of coordinated global emission reductions is (so far) low.

* Successful adaptation will improve the Netherlands' international negotiating position.

* There is ground to be made up in the area of cost-effective flood protection.

In addition to attention for flood protection, consideration also needs to be given to natural assets and ecology. Climate change not only brings threats to the natural landscape, but also opportunities, and to some extent these opportunities can be created in the wake of the measures taken. Synergy can often be found between flood protection and housing construction or natural recovery. This synergy can be exploited to broaden the support for adaptive measures.

The main concern in Dutch adaptation policy is to keep options open. Flood protection measures demand major investments and are long-term in nature. A phased approach could be chosen for these investments; however, the same cannot be said for the creation of space for storing any surplus river water, when it is not certain whether these reserves will ever be used. There are three further problems: first, developed areas cannot be de-urbanised, or at least only at extremely high cost; second, there is insufficient administrative impetus to push through the reservation of space; and thirdly, public support for measures to protect against the flood risk is low. Flood protection is a national interest which needs to be fitted into the local context by seeking optimum solutions, not by watering down the national objectives. In some localities water will need to be given priority over construction, and vice versa. A higher priority for water management demands the adoption of a stronger position by national government at the expense of the position of lower administrative echelons. The importance of the flood protection offered by the primary flood barriers will benefit from a greater awareness of the flood risk.

1.1.1.5 (2) Reduction of emissions: routes and timeframes

In order to achieve the EU's 2C target, a considerable reduction in global greenhouse gas emissions will have to be achieved in the coming decades, of the order of 10-11 gigatonnes of carbon (GtC) per year in 2050 compared with a 'business as usual' scenario. The fuels to be used to play a decisive role here. There is no time to wait for a transition in the energy system; for the moment existing, mature technologies must be used. Modern renewable energy sources (sun, wind, hydropower and modern biomass) offer too little potential to achieve a globally adequate reduction in greenhouse gas emissions in the period up to 2030, quite apart from the question of the relative costs. Fossil fuels will therefore continue to dominate the world energy supply until at least 2050. Coal in particular will continue to play an important role. A dozen coal-based economies, which together account for roughly two-thirds of the world population, will undoubtedly exploit the existing cheap and well-distributed coal reserves. A global climate strategy will therefore inevitably have to focus its emission reduction efforts on coal ('clean fossil energy').

In the period to 2050, the required global emission reductions (10-11 GtC per year by 2050) could be achieved via four main routes:

* Energy efficiency (3.4 GtC per year). This option saves fuel (often referred to as a 'no regret' option) and is therefore attractive, but this does not mean it comes without cost. The emphasis will have to be placed on electricity consumption, electricity generation and heating. The greatest savings are to be made in the emerging economies.

* Energy mix (4 GtC per year). This route entails CO2 sequestration and storage in combination with gasification technology and the use of biomass. The transport sector could make a significant contribution to this in the longer term, among other things by using biofuels.

* Photosynthesis (2 GtC per year). This route entails the curbing of deforestation, an acceleration in afforestation and reforestation, better utilisation of timber in products and buildings, and more sustainable agriculture. The potential of this option is of limited duration.

* Reduction of other greenhouse gases (1 GtC per year), primarily methane and (industrial) N2O.

In addition to these main routes, there are additional options for reducing emissions, such as nuclear energy and wind energy.

The emission reduction routes use mature technology, but are not enough to achieve the further emission reductions that will still be needed after 2050. By that time, the energy supply will have to undergo a transition to emission-free energy. This can only be achieved if the wealthy nations invest in a large-scale and long-term research and development effort. The Council recommends the founding of a Top Technology Institute for emission-free energy for the development of this knowledge. Precisely because of the wide distance between the existing and desired situations, a clear distinction needs to be made between technology development and technology diffusion. In the present policy of the EU and the Netherlands this distinction is not made adequately, and this in turn pushes up costs.

1.1.1.6 (3) Effective global coordination

The greatest task in the coming decades is to ensure that industrialising and poor countries realise their economic growth in an emission-efficient way. The marginal costs of emission reduction will remain low in these developing countries for several decades to come, but the reduction in CO2 emissions will only be achieved if the wealthy OECD countries meet all or part of the costs. The Council therefore believes that the Netherlands needs to focus its emission reduction efforts as a priority on the Clean Development Mechanism (CDM), if necessary in combination with development work.

The emissions trading system set out under the Kyoto protocol is a valuable instrument for the leading countries, but suffers from the effectiveness paradox: what is achievable is not effective, what is effective is not achievable. The small group of participating countries cannot develop an effective global policy without the countries which do not or are not willing to participate in Kyoto in the foreseeable future. Often, the reluctance of non-participating countries is based on fears of low economic growth and a desire to secure energy supplies. This means that, in addition to the Kyoto approach, a 'multicoloured flexibility' is needed in the array of initiatives designed to meet the interests of these countries. This will make it easier to create support for the development of technologies which facilitate the climate-friendly exploitation of coal than for the creation of emission ceilings which could put a brake on the economic growth of emerging economies. When it comes to energy efficiency, the interests of the climate and of a secure energy supply are parallel, making energy efficiency a promising policy focus.

The common interests form the starting point for the establishment of coalitions which will tackle whole or partial problems jointly. These coalitions could focus on different domains, and could for example consist of coalitions of nations (e.g. heavy polluters which together can have a decisive influence on emissions), as well as corporate coalitions (e.g. companies which agree a joint sectoral standard for energy efficiency in the market, which can be tightened up further as time progresses).

The required 'multicoloured flexibility' can take on divergent various forms, varying from a 'no-regret' policy (with enormous potential in developing countries), a 'no-lose' policy (which provides incentives to reduce emissions but imposes no sanctions if they are exceeded), technology development and diffusion and intensity targets, to self-imposed climate policy involving accountability and an emissions trading system or carbon price. As with the trade policy, it is both possible and attractive in some areas to stimulate emission reductions bilaterally and regionally, for example as part of existing special relations or development policy. In addition industry, knowledge institutions and NGOs need to be actively involved in climate policy. Interesting developments are going on at this more horizontal transnational level which should be encouraged where possible.

The UNFCCC does not offer a suitable framework for multilateral coordination; in order to make the coordination more effective, a World Climate Organisation (WCO) needs to be set up, as a permanent organisation backed by fixed diplomatic missions. This is necessary in order to create a degree of problem-ownership, so that decisions are taken and implemented. The WCO would need to act as an executive body (Special Climate Council) for permanent and rotating national members, with a gradual increase in its powers. The WCO could then in time take over the leadership from the de EU, which also implies that the EU and Japan would then no longer be setting (or be able to set) the agenda. Until then, leadership by the EU is both desirable and necessary in order for it to play a catalytic role.