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Les termes de la négociation climat:
un exemple d’économie publique
appliquée
ENPC Cours n°12
Jean-Charles Hourcade
Untying the development/environment
Gordian Knot
Le problème à résoudre … comment répondre
à la motion Byrd – Hagel (1997)
• Kyoto ne contraint que 37% des émissions de GES
• Comment embarquer les USA dans un accord?
• En même temps que la Chine, l’Inde, le Brésil,
• Sans être bloqués par l’Opep (pays du Golfe mais
aussi Mexique, Venezuela, Indonésie)
• Sans marginaliser les autres pays du G77
• Tout ceci très vite parce que le temps passe
Lessons from the past: Back to Stockholm
• After Rio two political stances:
– EU: forcing the US to act + demonstration effect vis-à-vis DC
– US: minimizing abatement costs
• A reciprocal EU/US hypnosis leading to :
–
–
–
–
treat climate policy as an isolated issue
treat the Third World as a spectator
overlook the political consequences of the cap & trade option
preserve diplomatic compromises at the cost of selfdefeating rhetorics
• No convincing power of moral attitude if no serious
consideration of the Stockholm compromise
Avoiding six rhetoric traps
• The fairness debate (thanks for the fairness but without the burden)
• The “competitiveness” argument
• Tension between significant world carbon prices and
their distributional effects
• The debate between Grand accord, expanding
coalitions, favella approach
• The Clintons’ mistake: a necessary domestic
momentum
• Visions of compliance: international ‘law’, economic
mechanisms and the « indulgence quarrel»
Equity: burden sharing in 2030, convergence rule
Normalized net costs of climate mitigation
-3
-2
-1
1= what Parties should pay with a per capita GDP
pro-rata rule (BLS like),
>1 if Party pays more,
<1 if Party pays less,
<0 if Party gains from trading
0
1
2
Hb
Ha
Lb
La
3
4
CNZ
EITs
FSU
JAP
USA
WEU
Region
CHI
IND
ROW
Untying the environment-development Gordian Knot
• What obstacles in front of current development
patterns?
• Which of them can be removed synergistically
with the search for low carbon development
pathways?
• Which aspects of climate policies intrinsically
cannot but result in an obstacle to development?
• An intellectual pre-condition: from what baseline
are we talking about?
Conventional baselines deny sustainability issues
Carbon
emissions
Development
Goals
Cost
t
Baseline
Clean Development
Upside down: from the real baselines to
detecting the deadlocks for development
Carbon emissios
≠ No Pain
Deadlocks
and Constraints
Baseline
Venise – July 2005
Real
Sustainable Development
t
Obstacles to sustainable development
• Capital Constraints and funding of infrastructures
– Capital Scarcity or problem of direction of capital flows
– Changing context for overseas aid and funding
• Decreasing amounts in ‘ageing societies’
• Sovereign funds
• LDCs → still the adaptation and capacity building
• Macro-economic Constraints: oil prices, technology
imports, public indebtedness
• Distorted technology choices, unfulfilled basic needs and
social dualism (A.K. Sen, I. Sachs)
• Local environment disruption (water, air) land
exacerbated in case of climate change
Les vrais enjeux: soit un prix du carbone croissant dans le
temps pour assurer un ‘plafonds’ de 450 ppm
10%
Inde
5%
Chine
Reste PED
0%
2000
-5%
UE
2010
2020
2030
2040
2050
Reste OCDE
USA
-10%
OPEP
-15%
CEI
-20%
Financing structural change
Price Différenciation
What Compensation for OPEC and CEI ?
F4, une croissance mondiale à peine affectée et de vrais
perdants?
• taux de croissance annuel : - 0.45% pour MO et CEI
World
OCDE
USA
EUR
CHN
IND
CEI
MO
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
-25.0%
Variation de PIB en 2050 entre scénarios REF et 450 ppm / F4
Pourquoi le F4 lève un obstacle au développement :
l’allègement de la facture énergétique des ménages
18%
16%
14%
12%
2001
10%
2050 REF
8%
2050 F4
6%
4%
2%
0%
CHN
IND
Parts des dépenses énergétiques dans le budget des ménages
Un autre bénéfice du F4: baisse de la dépendance
énergétique des pays hors OPEP et Russie
7.00%
6.00%
5.00%
4.00%
2001
2050 REF
3.00%
2050 F4
2.00%
1.00%
0.00%
USA
EUR
CHN
IND
Ratio du solde commercial énergétique sur PIB – scénario REF vs. F4
Pays exportateurs d’énergie: fortes pertes de rentes
mais question du syndrôme ‘or des Incas’
Moyen-Orient
CEI
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
2001/2025
2025/2049
REF
F4
2025/2049
2001/2025
REF
F4
Profit cumulé des exportateurs d’énergie (*1000 milliards de $), par période
Un paramètre central de la transition: le fardeau
énergétique des ménages
fardeau énergétique REF
fardeau énergétique F4
30%
30%
25%
25%
20%
20%
15%
15%
10%
10%
5%
5%
0%
0%
USA
EUR
CEI
CHN
IND
MO
USA
EUR
CEI
CHN
IND
MO
International trading system: may export
revenues imply welfare losses?
$/T
• EU
43 ( 56)
• US
43 ( 43)
• Japan 43 ( 52)
• China 43 (189)
• India 43 (391)
• Brazil 43 (163)
DC (%)
- 0.3
- 0.94
- 0.62
- 1.57
- 2.16
- 0.12
T (G$)
- 12.2
- 33.6
- 4.6
- 4.2
+ 22.2
- 1.1
USA – Europe: différences et similitudes
Comparaison des dépenses énergétiques des ménages F4 vs. REF
2020
2050
USA
+62.64%
-11.88%
EUR
+23.18%
-25.71%
Comparaison des prix de production industrielle F4 vs. REF
2020
2050
USA
+4.76%
-3.68%
EUR
+5.57%
-4.07%
Une simulation pour réfléchir au cas des pays émergeants
Real GDP - China
Real GDP - India
10000000
billions of dollars (US2001)
billions of dollars (US2001)
20000000
15000000
10000000
5000000
0
2000
2010
2020
2030
2040
2050
8000000
6000000
4000000
2000000
0
2000
2010
2020
2030
2040
2050
Low Growth
High Growth
Low Growth
High Growth
Low Growth + energy frictions
High Growth + energy frictions
Low Growth + energy frictions
High Growth + energy frictions
Une simulation pour réfléchir au cas des pays émergeants
Real GDP losses - China
Real GDP losses - India
1.0%
2010
2020
2030
2040
0%
2000
-2%
2050
% of real GDP
% of real GDP
0.0%
2000
2%
-1.0%
-2.0%
-3.0%
2010
2020
2030
-4%
-6%
-8%
-10%
-12%
-14%
-4.0%
-16%
Low Growth + energy frictions
High Growth + energy frictions
Low Growth + energy frictions
High Growth + energy frictions
2040
2050
How climate policy costs are
dependant upon monetary policies
Real GDP losses w.r.t. baseline scenario - China
0.5%
% of real GDP
0.0%
2000
2010
2020
2030
2040
2050
-0.5%
-1.0%
-1.5%
New international economic
strategy
Unchanged international
economic strategy
-2.0%
The beginning of the wisdom: to understand
the meaning of the “Kyoto surprise”
“I did not like this proposal, (CDM), but it got a wide
support and I facilitated its approval …. it can be
called ‘extraterritorial implementation’ …. the
hypothesis that mitigation costs are lower in
developing countries is true only if market
distortions of values are adjusted, because
otherwise everything is cheaper in developing
countries including labor and natural resources.
That disparity has been at the root of every
colonization since the time of the Greeks”.
Raul A. Estrada-Oyuela
… a call for re-ranking priorities
CDM in the KP is not a form of JI … . It is worded as a
tool aiming at, in descending order:
- assisting countries in achieving their Sustainable
Development objectives
- assisting non Annex B countries in contributing to
the UNFCCC objectives
- helping Annex B countries in meeting their Kyoto
commitments
An illustration on the Electrical Sector in India
• Impact on land productivity, health and labor productivity of ‘local’ air
pollution,
• the electrical sector ‘should’ absorb 25% of investments in the
following decade
• State Electrical Boards in deficits
• Important transmission losses
• Power shortages several hours per day
• Problems of rural electrification
Domestic policy packages
•
•
•
•
•
•
•
•
Incentives to Private investments
Readjusment of selling prices
Tax on non renewable energy inputs: 20% in 2035
Compensation for the redistributive effects of higher
energy prices
Subsidies for nuclear or renewables energy
Decrease of distribution losses: from 21-23% to 6%-9%
Increase of energy efficiency of thermal plants (6%)
Increase of the share of Gas by 20 to 42%
6
10 ro
3500
3000
Baseline scénario
2500
2000
CDM investments
1500
Domestic investments
1000
500
0
1995 2000 2005 2010 2015 2020 2025 2030 2035
Assessing the economic leverage
• Basic mechanism: inflow of foreign capital ->
reallocation of domestic capital
• Key parameters:
– return on capital in the energy sector (-10%; 2%);
– marginal productivity of capital (6%; 9%)
– share of energy investment replaced by foreign inv.
• A 1.7 to 7 leverage
2nd example: carbon credits revenues to remove local
barriers: the LNG Vehicles at Delhi
• Individual motor vehicles: twice the Indian average, low
taxation on diesel, weak public transports (rickshaws)
• 72% of local air pollution from transports
• Program voted by the Delhi Supreme Court to develop
LNG
Obstacles
Bus
Cars
Capital costs
+
+/-
Infrastructures, gas
distribution
+
+
Extending the CDM concept …
taking some risks on the accuracy
• Credits to the Delhi municipality: only possible actor
given the diversity of operators
• Conventional determination of the abatement per
vehicle (accuracy of measurements vs incentive
efficacy)
• Acceptable because of the absence of rebound effects
• CDM revenues allocated to:
– Fund a system of annual control of the vehicles
– Lower the tax on diesel for down market vehicles
– Or finance the distribution network
Lessons for post 2012: timing of constraints
and opportunities
 Climate policies may be beneficial to emerging economies over the long
run even with high carbon prices
 But carbon prices will hurt emerging economies over the short run …
when they are low!!!
 This will not be solved in terms of « compensation » and fairness of the
burden sharing
 The Marshall Plan metaphor revisited to reorient infrastructure
investments
 A non intuitive but real link with monetary policies
Du global au sectoriel: vraies et fausses questions
de compétitivité internationale
Faut-il vraiment mettre toutes les activités dans
un même marché?
• Frictions entre industries différentes par:
– L’intensité en carbone
– Le degré d’exposition internationale
– La place dans la filière de production -> taux de transfert Pc -> Pv / > valeur de la firme
• Quel partage de l’effort entre industries et infrastructures?
– Faible élasticité – prix (apparente) du secteur transport
– L’hypothèse anticipations rationnelles est elle acceptable en la
matière?
– Dépendance au sentier et irréversibilités
• Comment gérer les autres gaz (incertitude sur le GWP) et la
séquestration biologique (incertitude sur le bilan net)?
Séminaire FONDDRI – Paris – 4 Avril 2006
Direct emissions
Indirect emissions
from electricity
Lime*
40%
Precious metals*
10%
Basic iron & steel
20%
Price increase:
CO2:
€20/t CO2
Electricity: €10/MWh
Fertilisers & Nitrogen
Other inorganic basic chemicals
30%
Cement
Potential Maximum Gross Value Added at Stake
CO2 cost screen: sectors potentially exposed under unilateral CO2 pricing
Pulp&
Paper*
Non-wovens
Dyes and pigments
Finishing of textiles
Rubber tiers
Man-made fibres
Aluminium*
Refined petroleum
Household paper
Malt
Coke oven*
Industrial gases
Hollow glass
0%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0% UK GDP
Demailly, Grubb, Hourcade, Neuhoff and Sato (2007),Cambridge/ CIRED. Convened by Climate Strategies
Cement sector
Illustrative for UK - but numbers can still change significantly
Electricity GVAS/ CO2 GVAS
70% Clinker
Cost increase electricity
60%
Cost increase ele+CO2
50%
Cost increase electricity from clinker
Cost increase ele+CO2 from clinker
40%
Cement
30%
20%
Concrete products (concrete products
for construction; mixed concrete etc)
10%
0%
0
500
1000
1500
2000
GVA (million Euro)
2500
3000
3500
Most leakage concerns from clinker – easily transportable
Steel sector
Illustrative for UK - but numbers can still change significantly
Cost increase electricity
Semi Finished
50%
Electricity GVAS/ CO2 GVAS
Cost increase ele+CO2
40%
Cost increase electricity
from slab
Cost increase ele+CO2
from slab
Hot rolled
30%
iron&
steel
20%
10%
0%
0
500
1000
1500
2000
2500
3000
Gross value added (million Euro)
• Most exposure from BOF (and possible coke oven)
• Steel can be transported at semi-finished stage
350
0
Profil du prix du carbone dans les
secteurs d’infrastructure
Un modèle simple à deux périodes
 2

1
1
max 
   qt 
t-1 (p t yt  Ct(·)) +
(1+)
(1+)
q, y
2
 t=1
t=1
C1(·) = C1(y1, q1)
C2(·) = C1(y2, q2, q1)
 2

C1
1 C2
1

0=
+

'   qt 
q1 (1+) q1 (1+)
 2

C2

0=
 '  q t 


q2
 t=1
TranSust – October 28th 2004

 t=1


Quelle structure de base pour un régime
international?
Cap&Trade, for lack of anything better
• Internationally coordinated carbon tax (Nordhaus, Cooper)
– Distributional effects : the BSL theorem requires differentiated C-taxes
or compensations
– No net transfers to developing countries
• Coordination of “P&Ms” : the essence of a nightmare
• R&D investment on carbon-free techniques:
– Some misunderstandings about the nature of innovation
– OK but where are the incentives?
– OK but are you sure to put the money on technologies appropriate to
our specific contexts?
Le système de Kyoto ... et ce qu’il n’est pas
• Kyoto repose sur des engagements quantitatifs des Etats qui peuvent (ou
pas) importer des permis et n’instaure pas de marché mondial généralisé
• Les Etats signataires sont libres de gérer comme ils veulent leur contrainte
globale … et de diffracter le prix du carbone comme ils l’entendent
•Kyoto n’est pas une Grande Architecture rigide; il permet :
– Une incitation pour que les gouvernements mettent en jeu les
mesures (prix de l’énergie, politiques urbaines, transports
– Une diversification des modalités d’application vis-à-vis des secteurs
industriels pour lesquels l’impact sur la valeur de la firme pourrait
provoquer des risques majeurs de délocalisation et de ‘fuite de
carbone’
•Sa faiblesse: pas de système sérieux d’observance;
Amending Kyoto: a workable architecture
if no crispation on the entitlement issue
• no global binding cap until the Portuguese per capita
income level is reached (principles to be discussed)
• a menu of
– non binding national emissions caps
– sectoral binding quotas allowing to a direct access to ICT and
allowing to help domestic PAMs
– CDM redesigned as a support to domestic policies
• price-caps and price-floors
– Safety valve Hedging against uncertainty
– A compliance tool and a levy for development
• Risk mitigation instruments to secure (early) investments in
carbon saving infrastructures
… and if no crispation on the “favella” vs
“grand archictecture” debate
• The climate regime can’t pretend to dictate all core
decisions contributing to decarbonisation
• Carbon prices will not “do the job” alone
• They will have weak (and possibly perverse)
influence on informal activities and will be swamped
by high noise from other price signals (interest rates,
real estates, land, shadow price of security, insurance costs)
• But they can operate as an attractor aligning bottomup initiatives with pledges and review and the are a
pre-condition for securing their consistency
An architecture which does not avoid
confronting four sensitive issues
• Coal and sequestration: serious
environmental integrity question + the «
loophole » rethoric
• Biological sequestration: when, where, under
what condition?
• The reform of ODA and the regulation of
international capital flows
• Climate regime, WTO and the compliance
system; an intra-european divide?
What Issue linkages and real motives to
act for a compromise?
• Developed countries perspectives
– Will the North consider climate only damages
likely to affect them directly?
– Will they interpret climate damages in the
developing countries as source of instability
– Will there be a link with other strategic issues
• Developing countries perspectives
– Degree of concern about global warming:
– Not to be isolated from an emerging regime
– Opportunity to reform the ‘international economic
order
The last good news? Gleneagle G8:
• “ We will act with resolve and urgency to meet our
shared and multiple objectives of reducing GHGs
emissions, improving the global environment,
enhancing energy security and cutting air pollution
in conjunction with our vigorous efforts to reduce
poverty”
• “We face a moment of opportunity” given the
demand for infrastructure investment in DCs; back to
the Marshall plan metaphora?
• To respond the discontents of globalisation: universal
solidarity triggered by well-informed perceptions of
self-interest