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Does Northern Mitigation Affect the
Developing World?
Marco Sakai
[email protected]
Overarching question
“How mitigative
actions undertaken
by developed
countries could affect
development in
developing and
emerging
economies?”
Hans Opschoor (2010)
Overview
• Background on climate change
mitigation.
• Consumption trends and
consumption-based
accounting.
• Trade and impacts to the
developing world.
• Method
• Results
• Limitations and conclusions
Climate Change
• Strong evidence that rise in global
average temperatures is due to the
observed increase in anthropogenic
GHG concentrations.
• Currently global warming is at 0.7 °
C above pre-industrial levels .
• Under a “business as usual”
scenario, temperatures could rise 5
to 6°C by 2100.
Source: (IPCC, 2007)
Projected Impacts of Climate Change
Source: Based on Stern Review (2006)
Multilateral emissions reduction targets
• Kyoto protocol: Some Annex B
countries agreed to reduce
emissions by 2012 relative to 1990
baseline (e.g. EU15 and other
European nations -8%).
• EU ETS: Cuts of at least 20% by 2020
and >80% by 2050 relative to 1990.
• Cancun Agreements: Industrialized
countries proposed reduction
targets, including some developing
countries (e.g. Brazil, China,
Indonesia, Mexico, South Africa).
What is mitigation?
• “Technological change and
substitution that reduce resource
inputs and emissions per unit of
output” (IPCC, 2007)
• Strong focus on technological
solutions.
•
•
•
•
Low-carbon technologies
Renewable energy
Geoengineering
Energy conservation
Can technology save us?
• 90% to 130% emission intensity
improvement is required (Jackson,
2010)
• 80% of projected 2020 emissions
from the power sector are already
locked in (IEA, 2011)
• Window for cutting emissions (to
450 ppm - 2°) is closing fast (Stern,
2011)
• Not enough just to rely on
technology (HM Government, 2005)
Other mitigation actions
• Social and economic policies
oriented towards emission
reductions and enhancement of
sinks (IPCC, 2007).
• Beneficial aspects of creating
synergies between developed and
developing nations
• Clean Development Mechanism
(CDM)
• Reducing Emissions Reducing
Emissions from Deforestation and
forest Degradation (REDD).
Demand-side options
• Demand-side options seek to modify
directly or indirectly consumption
patterns in order to achieve
emission reductions.
• Behavioural changes (business
practices, individual lifestyles)
• Instruments such as carbon taxes,
border adjustments, subsidies,
carbon labelling, awareness
campaigns, etc. can have an effect
on demand.
• EU, US (Waxman-Markey bill) and Australia to implement BCA to address the
issues of leakage and loss of competitiveness.
Consumption
• Climate change is the greatest
symptom of excessive consumption
levels.
• Consumption in developed countries
is the main driver for increasing
emissions (Sanwal, 2009)
• Consumption patterns also need to
be modified (Agenda 21, 1992; Rio
+20, 2012)
• Northern consumption causes
environmental impacts in the South.
Final consumption expenditure
(1970-2010)
40
Trillions of 2005 USD
35
30
Rest of the World
25
20
15
10
High Income Countries
(15% of world population)
5
0
1970
1974
1978
1982
1986
1990
Year
1994
1998
Sourc e: Own graph bas ed on data by UN Stats .
2002
2006
2010
Sustainable World Population at Different Consumption Levels
Per Capita Income,
2005
Biocapacity Used
Per Person, 2005
Sustainable
Population at this
level
(GNI, PPP, 2008
dollars)
(global hectares)
(billion)
Low-income
Middle-income
High-income
United States
1,230
5,100
35,690
45,580
1.0
2.2
6.4
9.4
13.6
6.2
2.1
1.4
Global average
9,460
2.7
5.0
Consumption Level
Source: The Worldwatch Institute
Humanity's Ecological Footprint
(1961-2006)
1.5
1.4
Ecological Footprint
Number of Planet Earths
1.3
1.2
1.1
World's Biocapacity
1.0
0.9
0.8
0.7
0.6
0.5
1961
1970
1980
1990
Year
Source: Own graph based on data by the Global Footprint Network.
2000
2006
Carbon accounting
• Production-based (territorial)
approach: “Greenhouse gas
emissions that take place within the
national territory and offshore areas
over which a country has
jurisdiction” (IPCC, 2006).
• Consumption-based emission
inventories consider total emissions
occurring from economic
consumption within a country
(Peters and Hertwich, 2008).
Consumption-induced emissions as a
percentage of territorial emissions
20%
15%
Percentage
10%
5%
0%
-5%
-10%
-15%
High-income countries
ROW
-20%
1990
1993
1996
1999
2002
Source: Own graph based on data by Peters et al. (2011)
2005
2008
Consumer emissions as a percentage of territorial emissions, 2004
Source: Carbon Trust Analysis, CICERO/SEI/CMU GTAP 7 MRIO model (2004)
Income-Emissions Relationship
• Panel data regressions using fixed
and random effects, between-groups
and differences including 113
countries.
• From a consumption-based
perspective, evidence rejects the EKC
inverted-U hypothesis.
• CO2 emissions increase
monotonically with income*.
higher income → higher consumption → higher emissions
Sakai and Hubacek (forthcoming)
Projected CO2 UK Household Emissions
Business as usual (1990-2050)
650,000
Total (Δ50%)
550,000
kt CO2eq
450,000
Imports
(Δ250%)
350,000
250,000
Domestic
(Δ-20%)
150,000
50,000
1992
1998
2004
2010
2016
2022
2028
Year
Source: Own graph based on data by SEI.
2034
2040
2046
Scenarios for Total UK Household
Consumption-Based CO2 Emissions
(1990-2050)
650,000
Business as usual
550,000
kt CO2eq
450,000
80% cut
350,000
250,000
150,000
50,000
1992
1998
2004
2010
2016
2022
2028
Year
Source: Own graph based on data by SEI.
2034
2040
2046
Scenarios for Total UK Household
Consumption-Based CO2 Emissions
(1990-2050)
650,000
Business as usual
550,000
kt CO2eq
450,000
80% cut
350,000
80% additional cut in
imports
250,000
150,000
50,000
1992
1998
2004
2010
2016
2022
2028
Year
Source: Own graph based on data by SEI.
2034
2040
2046
Source: Carbon Trust
Impacts on the developing world
• Changes in consumption patterns (as
mitigation actions) have been largely
analysed from a developed-country
perspective.
• The consequences of these actions in
the developing world have not been
sufficiently explored.
• ECLAC has recently expressed
concerns in Latin America, especially
to policies like border adjustments
and carbon labelling.
International Trade
• Trade has grown three times faster
than world GDP since 1990:
increasing globalisation of markets.
• The geographical fragmentation of
production has created a new trade
reality.
• Rise of global production chains and
the profound interdependency imply
that exogenous changes in one
country may induce effects in several
other economies.
Fragmentation of production
Source: WTO (2011) and Meng and Miroudot (2011)
The Method
• Increasing use of environmentallyextended MRIO Analysis to understand
environmental effects caused by
consumption.
• Shows the underlying structure of
several economies.
• Capture the interdependencies
between different industries located in
diverse regions.
• 113 countries and 57 sectors – GTAP7
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(6441*113)
Total Outputs
The MRIO Model
Technology matrix (6441*6441)
Value Added
Total Inputs
𝑋 = (1 − 𝐴)−1 𝑌
𝑇𝐼𝑀𝑆 = 𝐶𝑂2𝑖 𝑋𝑖−1 1 − 𝐴 −1
𝐼𝑛𝑑𝑖𝑟𝑒𝑐𝑡 𝑎𝑛𝑑 𝑑𝑖𝑟𝑒𝑐𝑡 𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 = 𝑇𝐼𝑀𝑆 ∗ 𝑌
CO2 emissions
Import matrices
CO2 embodied in trade
100%
80%
60%
Percentage
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
USA
EU 15
Other Other China
high- Annex I
income
Agriculture, hunting, forestry and fishing
Light industry
Transport and communications
EiT
G20
Other Low
emerg Middle- Income
ing
income
Mining and quarrying
Heavy industry
Value added embodied in trade
100%
80%
Percentage
60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
USA
EU 15
Other Other China G20
Other Low
high Annex I
emerg Middle- Income
-income
ing
income
Agriculture, hunting, forestry and fishing
Light industry
Transport and communications
Mining and quarrying
Heavy industry
EiT
Value added embodied in exports and
imports according to region
1600
Billions USD
1400
1200
1000
800
600
400
200
0
USA
China EU 15
Exports
Other Other
Annex I highincome
EiT
Low
G20 Other
Income emer- Middleging income
Imports
Share of consumption-based value added
(domestic + imports)
Other Middleincome
6%
Low Income
1%
EiT
2%
G20
emerging
8%
USA
31%
Other highincome
3%
Other Annex I
17%
China
4%
EU 15
28%
Skilled labour embodied in trade
100%
80%
60%
Percentage
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
USA
EU 15
Other Other China
Annex I highincome
Agriculture, hunting, forestry and fishing
Light industry
Transport and communications
EiT
G20
Other Low
emerg Middle- Income
ing
income
Mining and quarrying
Heavy industry
Unskilled labour embodied in trade
100%
80%
60%
Percentage
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
USA
EU 15
Other Other China
Annex I highincome
Agriculture, hunting, forestry and fishing
Light industry
Transport and communications
EiT
G20
Other Low
emerg Middle- Income
ing
income
Mining and quarrying
Heavy industry
Total intensity (GHGs/$), low-income
countries, GHGs
Total intensity (wages/$), low-income
countries, skilled and unskilled
labour
16
0.5
0.45
14
0.4
12
10
USD
Kg. CO2 eq/$
0.35
8
0.3
0.25
0.2
6
0.15
4
0.1
2
0.05
0
0
Agriculture
Mining
L-industry
GHGs
H-industry
Transport
Agriculture
Mining
Skilled labour
L-industry
H-industry
Unskilled labour
Transport
Total intensity (GHGs/$), other
middle-income countries, GHGs
Total intensity (wages/$), other
middle-income countries, skilled and
unskilled labour
6
0.4
0.35
5
0.3
USD
Kg. CO2 eq/$
4
3
0.25
0.2
0.15
2
0.1
1
0.05
0
0
Agriculture
Mining
L-industry
GHGs
H-industry
Transport
Agriculture
Mining
Skilled labour
L-industry
H-industry
Unskilled labour
Transport
Limitations
• Static model. Data for only one year.
• Price effects, production functions,
elesticities, etc. not included. (started
working on CGE modelling).
• Developing countries are very
heterogeneous.
• Additional factors not captured by the
model (climate variables, extreme climate
events, etc.).
Conclusions
• Need to lower consumption and change patterns, especially in wealthy
countries, but this may cause alterations in the structure of global trade.
• Poor countries are vulnerable to changes in structure of trade.
• Negative consequences on welfare in the developing world aggravating
adaptation costs.
• Need for financial and technological transfers and strengthening absorptive
capacities.
• Policies should be regarded from an inclusive viewpoint that considers the
needs of both developed and developing nations.
[email protected]
Projected structure of emissions for UK
households according to consumption
category
100%
90%
5.2%
80%
Percentage
70%
10.8%
8.3%
11.9%
17.3%
23.7%
60%
50%
40%
42.2%
34.6%
26.8%
30%
20%
10%
17.9%
16.5%
16.2%
0%
2025
2007
1992
Food & beverages
Alcohol & tobacco
Clothing & footwear
Water, energy
Maintenance
Health
Transport
Communication
Recreation & culture
Education
Rest. & hotels
Misc. goods & services
30% domestic and 15% import improvements in energy emission intensity
Source: Own projections based on data by SEI
Total intensity (GHGs/$), China,
GHGs
Total intensity (wages/$), China,
skilled and unskilled labour
9
0.5
8
0.45
0.4
7
0.35
USD
Kg. CO2 eq/$
6
5
0.3
0.25
4
0.2
3
0.15
2
0.1
1
0.05
0
0
Agriculture
Mining
L-industry
GHGs
H-industry
Transport
Agriculture
Mining
Skilled labour
L-industry
H-industry
Unskilled labour
Transport
Total intensity (GHGs/$), emerging
G20, GHGs
Total intensity (wages/$), emerging
G20, skilled and unskilled labour
9
0.4
8
0.35
7
0.3
USD
Kg. CO2 eq/$
6
5
0.25
0.2
4
0.15
3
0.1
2
0.05
1
0
0
Agriculture
Mining
L-industry
GHGs
H-industry
Transport
Agriculture
Mining
Skilled labour *
L-industry
H-industry
Unskilled labour *
Transport