Engaging Developing Countries in Climate Protection SEI Next Steps Post-Kyoto March 30, 2005

1. Engaging Developing Countriesin Climate Protection SEI Next Steps Post-KyotoMarch 30, 2005 Kevin A. Baumert (kbaumert@wri.org)Climate, Energy, and Pollution ProgramWorld Resources Institute http://www.wri.org

2. Overview • The importance of developing country engagement • Barriers to engagement • Options for engagement • Conclusions

3. Importance of Developing Country Engagement • It is not possible to achieve the UNFCCC objective without substantial participation from developing countries • ~ 80% of world population • ~ 40% of global economy • > 50% of world GHG emissions (including all gases and sources)

4. Top 15 GHG Emitters (6 gases, 2000) 1. USA 1,890 20.6% 2. China 1,349 14.8% 3. EU (25) 1,287 14.0% 4. Russia 524 5.7% 5. India 502 5.5% 6. Japan 364 4.0% 7. Brazil 230 2.5% 8. Canada 184 2.1% 9. Korea (South) 143 1.6% 10. Ukraine 141 1.6% 11. Mexico 139 1.5% 12. Indonesia 135 1.5% 13. Australia 130 1.4% 14. Iran 120 1.3% 15. South Africa 113 1.2% Rest of World 1,908 20.8% MtC % of World Industrialized: 52% Developing: 48% Source: CAIT, WRI (2004).

5. 57% 84% 35% GHG Emission Projections Developing countries are expected to grow fastest; growth in U.S. emission is large. Millions of Tons of Carbon Equiv. World Developed Developing

6. 118% 39% 19% 42% 70% 80% 68% 26% 124% GHG Emission Projections Developing countries are expected to grow fastest; growth in U.S. emission is large. Millions of Tons of Carbon Equiv.

7. Barriers to Engagement • Perceptions that… • The U.S.—the world’s largest contributor to climate change—is not doing enough, and has dropped out of the Kyoto negotiations • Costs of climate protection are high, and technologies needed are unavailable, or prohibitively expensive • Climate protection measures compromise development interests and priorities • Technical and institutional capacity problems (e.g., lack of good data, uncertainties, etc.)

8. Options for Engagement • Emission targets (Kyoto-style) • Emission-intensity targets (GHG/GDP) • Non-binding targets • Policies and measures (SD-PAMs) • Technology/sectoral cooperation • Sector/Policy-based Clean Development Mechanism (CDM) • Project-based CDM (status quo) All of these are being explored and analyzed.

9. Options for Engagement • Emission targets (Kyoto-style) • Emission-intensity targets (GHG/GDP) • Non-binding targets • Policies and measures (SD-PAMs) • Technology/sectoral cooperation • Sector/Policy-based Clean Development Mechanism (CDM) • Project-based CDM (status quo) All of these are being explored and analyzed.

10. Emissions Targets • Targets: default “post-Kyoto” approach • “Developing country targets” view is expressed in 1998 Byrd-Hagel resolution and more recent floor statements • Main problems • Uncertainty of emission forecasts • Perceived as threat to development, rather than benefit • Technical and institutional capacity

11. Projections are Unreliable • US DOE “Reference Case” CO2 projections for China in 2010: • 1995 estimate: 1,237 MtC (range: 993 – 1520) • 2004 estimate: 1,102 MtC (range: 1041 – 1176) • Estimates vary year to year • Uncertainty range (high-low) is very large • Legally binding targets unlikely

12. Number of People without Electricity Source: WEO 2002

13. Emissions Targets are Unlikely • Implications • Global (i.e., North-South) system GHG allowance trading is unlikely in the near to medium term • Other options need further examination and pursuit

14. “Sustainable Development PAMs” • Pursue economic development and technology strategies that are also climate-friendly (SD-PAMs) • Helps overcome aforementioned barriers • Look to: • Key development needs/interests (electric power, mobility, energy security, employment, etc.) • Key countries (India, China, Brazil, others) • Key sectors (transport, power, land use change) • Key technologies (CCS, biofuels, biomass/RE, hybrids)

15. “Sustainable Development PAMs” • Examples (WRI forthcoming studies): • India: Biomass/RE power (~500 million with no electricity access) • China: hybrid and other advanced vehicles (huge transport growth, major oil security issues) • Brazil: biofuels (large social and economic benefits) • S. Africa: carbon capture & storage (CCS) (lots of potential, but high costs and low development benefits)

16. What Else Can be Done? • Incorporate climate protection considerations into public financial flows (“greening”) • World Bank lending, Export Credit Agencies, development assistance aid • Build capacity for longer-term engagement • WRI-WBCSD Greenhouse Gas Protocol project • Strengthen adaptation efforts • U.S. domestic action with “international spillovers” • Technology development and deployment • Auto sector (trade and FDI effects)

17. Conclusion • A key barrier to North-South cooperation is political; US leadership is needed • There is already a rich (and growing) menu of options for developing country engagement • Pushing for targets is not especially constructive • Look for development-climate protection linkages • Developing country engagement is a process; progressive evolution is possible over time.

18. Thank you! Kevin A. Baumert (kbaumert@wri.org)Climate, Energy, and Pollution ProgramWorld Resources Institute http://www.wri.org