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Explaining the Variation in Commitment to the Kyoto Protocol in Annex I and Non-Annex I Countries Nicholas Schneider1 & Glenn Fox2 September 28, 2007 1. MSc Guelph, now Fraser Institute 2. Professor, Food, Agriculture and Resource Economics, Guelph Background • United Nations Framework Convention on Climate Change (1992) – “…stabilization of [GHG] concentrations [to] prevent dangerous anthropogenic interference with the climate system.” • Groups countries into – Annex I: Developed and some EIT countries – Non-Annex I: Everyone else • Only Annex I countries have GHG reduction responsibilities – Singapore both affluent and emissions intensive, but not Annex I Reduction targets • Kyoto Protocol (1997) set out reduction targets relative to 1990 – Canada agreed to a 6% reduction – Iceland agreed to “reduction” target of a 10% increase Emissions Target (% Change Relative to Base Year Emissions) 0 Norway Australia Iceland 5 Luxembourg Denmark Germany Austria United Kingdom Czech Republic Estonia Latvia Liechtenstein Lithuania Monaco Slovakia Switzerland Belgium Italy Netherlands Finland France Slovenia Sweden Romania Bulgaria Ireland Spain Greece Portugal United States Canada Japan Hungary Poland Croatia New Zealand Russian Federation Ukraine Targets reported by the UNFCCC 10 -5 -10 Country However… • The “reduction” targets for non-1990 base year countries (such as Slovenia – 1986) • The “reduction” targets EU BSA countries – Agreed to common 8% reduction target in 1997, reallocated in 1999 – In the end, only about half of Annex I countries agreed to reduce emissions relative to 1990 Emissions Target (% Change Relative to 1990) 10 0 -10 -20 -30 Norway Slovenia Sweden Romania Bulgaria Australia Iceland Ireland Hungary Spain Poland Greece Portugal 20 Luxembourg Denmark Germany Austria United Kingdom Czech Republic Estonia Latvia Lithuania Slovak Republic Switzerland Belgium United States Canada Italy Japan Netherlands Croatia Finland France New Zealand Russian Federation Ukraine Actual targets relative to 1990 30 Status of ratification Ratified Austria Belarus (no target) Belgium Bulgaria Canada Czech Republic Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Italy Japan Latvia Kazakhstan (no target) Liechtenstein Lithuania Luxembourg Monaco Netherlands New Zealand Not Currently Ratified Norway Poland Portugal Romania Russian Federation Slovak Republic Slovenia Spain Sweden Switzerland Ukraine United Kingdom + 138 Non-Annex I Countries Australia Croatia Turkey United States Emissions reductions • Canada is about 30% above 1990 levels • Portugal, Spain and Turkey are more than 30% above • Most former Communist Bloc countries are more than 30% below Percentage Change in Greenhouse Gas Emissions, 1990-2004 20 0 -20 -40 -60 -80 Switzerland Belgium Netherlands Japan Slovenia Norway Italy Finland Austria USA Liechtenstein New Zealand Ireland Australia Greece Canada Portugal Spain Turkey 40 Latvia Lithuania Ukraine Estonia Russia Belarus Bulgaria Romania Slovakia Czech Republic Hungary Germany Poland United Kingdom Croatia Iceland Sweden Monaco Denmark France Luxembourg Change in GHG emissions, 1990-2004 80 60 Background - Summary • There is a wide variation in actual targets, emissions, and progress towards meeting targets • Why? That’s a good question, which the federal government is asking. • Especially if Canada is to continue into further rounds of Kyoto-like agreements Current Policy Statements “[A]ny future approaches to new targets for developed countries should reflect a country’s specific national circumstances – considerations such as the nature of the economy and energy sources” Hon. Rona Ambrose (2006) “The future international climate change arrangement needs to reflect differences in economic and social conditions among economies and be consistent with our common but differentiated responsibilities and respective capabilities.” (APEC, 2007) Research Problem • How have various economic and political factors specific to each country thus far influenced commitment to the Kyoto Protocol? Measure of commitment? • Existing measures use ratification as proxy for commitment – Doesn’t allow for any variation in commitment among those that ratified – Doesn’t account for “symbolic” ratification • Ratification doesn’t fulfill the main objective of the Kyoto Protocol – “[T]o pursue a stabilization of GHG concentrations in the atmosphere…” Better measures of commitment • Two different measures of Kyoto commitment – The chosen greenhouse gas reduction target – The actual change in GHG emissions, 1990-2003 More commitment if: – A stricter reduction target is chosen – GHG emissions (1990 to 2004) shows a larger reduction (or smaller increase) What affects commitment? • Existing literature tends to use only a few explanatory factors • Instead, we test most, and adopt a Public Choice perspective • 5 categories of explanatory factors, identified from previous literature – – – – – Interest group pressure Geophysical characteristics Economic growth Economic structure Previous climate change policy decisions Interest group pressure Size of Environmental NGO (ENGO) lobby Size of Coal energy lobby Size of Academic lobby Level of commitment Higher Higher or lower? Higher Geophysical characteristics Level of commitment Risk of coastal flooding Higher Average temperature Higher (approximated by latitude) – REMOVED Economic growth Level of commitment Population growth Lower GDP per caput growth Lower GHG intensity growth (GHG/GDP) Lower • Why these three factors? How to reduce emissions? 1. GHG = GHG/GDP * GDP/Pop * Pop = Emissions Intensity (e) * GDP per caput (y) * Population (p) 2. %∆E = %∆e + %∆y + %∆p • Situation in Canada (1990-2004) - 14% emissions intensity + 28% income per caput + 15% population = Overall increase in GHG emissions -100 Latvia Lithuania Ukraine Estonia Russia Belarus Bulgaria Romania Slovakia Czech Republic Hungary Germany Poland United Kingdom Croatia Iceland Sweden Denmark France Luxembourg Switzerland Belgium Netherlands Japan Slovenia Norway Italy Finland Austria USA New Zealand Ireland Australia Greece Canada Portugal Spain Turkey Percentage Change, 1990-2004 Decomposition in Annex I countries 100 50 0 -50 Population GDP per Capita Emissions Intensity GHG Emissions Economic structure Economic Freedom Affluence Level of commitment Higher or lower? Higher Transportation intensity Lower Size of primary resource sector Lower Share of global CO2 emissions Lower Previous climate change policy decisions Level of commitment Reduction target (higher is less strict) Lower Kyoto Protocol ratification Higher Empirical framework • Reduction targets estimated using OLS • Change in GHG emissions indirectly measured as system of 3 equations GHG = GHG/GDP * GDP/Pop * Pop Explaining the target: significant results (OLS) A lower (-) target is stricter (higher commitment) • GHG intensity growth (+) • GDP per caput growth (+) • Population growth not significant – 2 of 3 economic growth variables are +, significant • Transportation dependency (+) Emissions change in Annex I • Change in population and GDP/caput explained by: education, life expectancy, economic freedom, gross capital formation, and inflation • A few variables significant to explaining the change in GHG intensity, but one variable explains most of the variation: • A higher (less strict) reduction target was associated with a larger increase in GHG emissions (1990-2003) Emissions change in Annex I and non-Annex I • Only 2 variable significant to explaining the change in GHG intensity (proxied by CO2/GDP) • A higher transportation dependency is associated with a larger increase in GHG[CO2] emissions intensity • Annex I countries are associated with lower increases in emissions intensity Summary of results • Joint significance tests of categories Category F-Statistic Target GHG Emissions CO2 Emissions Interest Group Pressure Significant Geophysical Economic Growth Significant Economic Structure Significant Previous Climate Change Policy Decisions Significant Significant Significant Conclusions • Results suggest that Kyoto targets and emissions best explained by expectations of future economic growth (or lack thereof) – Those countries that could more easily agree to strict targets did so. – Those who could more easily chose stricter targets, more easily reduced emissions – This may suggest that compliance with the Kyoto Protocol is a by-product of changes in national emissions, rather than the goal. • Interest group lobbying has been mentioned frequently in policy discussions – Lobbying is likely occurring, but these results suggest not dominant influence Future research • First commitment period (2008-2012) hasn’t even started. Some countries may have significantly different level of emissions by 2012. • Some approximations could be improved – ENGO pressure proxied by number of ENGOs/caput – Actual membership or donation per caput would be better • Are other international environmental agreements more symbolic than substantive? Thank you. Any questions?