The Outcome of COP26 and the Path Ahead

Robert N. Stavins
A. J. Meyer Professor of Energy and Economic Development
John F. Kennedy School of Government, Harvard University

ALPS International Symposium
March 2022

Science → Economics → Geopolitics of Climate Change• Greenhouse gases mix in the atmosphere, so the location of emissions
has no effect on impacts – in economic terms, climate change is a
global commons problem▪

Any jurisdiction taking action incurs the costs of its actions▪

But climate benefits are distributed globally▪

Therefore, for virtually any jurisdiction, the climate benefits it reaps fromits actions will be less than the costs it incurs ….
➢ despite the fact that the global benefits may be greater – possibly
much greater – than the global costs• This presents a classic free-rider problem, ….
▪

which is why international, if not global, cooperation is essential, and why
the highest levels of effective governance (typically countries) are key.

• There’s also a temporal dimension that takes us from science toeconomics to politics and policy …
1

More Science → Economics → Geopolitics of Climate Change▪

Greenhouse gases accumulate in the atmosphere (100+ years for CO2)

➢ Damages are a function of the stock, not the flow
➢ If CO2 emissions begin falling tomorrow by 5%/year, the rate of warming won’t
begin to change in a detectable way until after 20 years (Nature 2020)➢ So, greatest benefits of climate policies will be in the long term, but climate change
policies and the attendant costs of mitigation will be up front▪

This combination of up-front costs and delayed benefits presents a great politicalchallenge➢ Political incentive in democracies is to give benefits (to voters) today, and placecosts on future generations➢ The climate problem asks politicians to do precisely the opposite!

▪

Together, the global commons nature of the problem plus its intertemporal asymmetry
make climate change a very tough political challenge.
2

COP 26 – Major Issues and Outcomes• For the Press• For Most Delegates• For Policy Wonks• For Everyone

3Big Issues for the Press• Do the old and the new NDCs add up to consistency with the Paris Agreement’s
2 degree C target, let alone the 1.5 C aspirational target?
▪

Outcome: 3.7 C before Paris → 2.7 C w/Paris NDCs → 2.4 C w/updated NDCs →low as 1.8 C w/additional 2050 statements? (But just targets, not policies/actions)• PM Boris Johnson called it “the last best hope,” wanted enhanced NDCs▪

Outcome: By the end, pushed instead for more ambition in NDCs in 2022 COP(Note: After COP, U.S., EU, & UK said they will not deliver more ambitious NDCs)• Some wanted statement in Decision (“Glasgow Climate Pact” – GCP)
endorsing phase out of coal and elimination of fossil fuel subsidies?
▪

Not endorsed by G20 in Rome▪

Outcome: “phase down unabated coal” and “reduce inefficient fossil fuel subsidies”

4Big Issues for Most Delegations• Most delegations are from developing countries• Finance – achieving the $100 billion/year commitment (& more) for adaptation;and making up for the shortfall due to previous years below $100 billion/year?
▪

•

Outcome: Glasgow Climate Pact “urges” countries to double commitment

Loss & Damage▪

Finessed in Paris Agreement: Unmitigated/unadapted impacts on the mostvulnerable countries are important, but not a basis for compensation or legal liability▪

Glasgow Outcome: U.S. & EU blocked proposal for new fund for loss and damage
payments; instead set up a dialogue for research and discussion at future COPs
(Greta Thunberg: “bla, bla, bla”)
5Big Issues for Some Policy Wonks• Can China and USA return to global co-leadership on climate policy by returningto spirit & reality of cooperation (Obama) vs confrontation (Trump, Biden)?
▪

Outcome: Surprise joint announcement by USA & China, but did not advanceambition or influence other countries• Is the Article 6 rulebook completed with sensible text, as opposed to counterproductive text?
▪

Outcome: Not perfect, but both “overall mitigation of global emissions” and “shareof proceeds” included in Article 6.4 only, but not in Article 6.2• Outside of UNFCCC: 103 countries signed “Global Methane Pledge” to cutemissions 30% below 2020 by 2030 (but not China, and measurement highly
uncertain – current research using satellite data to invert country emissions)
6Issue for Everyone• The “Elephant in the Room” for everyone – delegates, civil society, & press• Is the U.S. NDC (50-52% below 2005 by 2030) achievable with reasonably
anticipated policies▪

Probably not▪

But outcome: all three groups – delegates, civil society, & the press – were so happy
to have Biden instead of Trump administration, with U.S. rejoining Paris, that …

▪

… there was a remarkable “willing suspension of disbelief” by delegates and others,▪

… and this issue was hardly discussed in polite conversation.

• Why did I say that U.S. NDC is probably not achievable?
7

Is the U.S. NDC (50-52%↓ CO2 2005→2030) credible?
••

Is this achievable with reasonably anticipated policy actions? The only way this canbe met is with aggressive new legislation▪

But Senate requires 60 votes, unless “Budget Reconciliation” procedure is used (butcan apply only for limited types of legislation, and still need 51 votes)▪

So, prospects for major, comprehensive climate legislation are not good.

But non-climate legislation can reduce GHG emissions▪

•

Other, truly bipartisan climate legislation can be politically feasible▪

•

Infrastructure bill: electricity grid upgrades (for greater reliance on renewablesources and greater penetration of electric vehicles), EV charging stations, etc.

Tax incentives (that is, subsidies): wind & solar power, carbon capture & storage,
nuclear power, technology initiatives, electric vehicle rebates, etc. (some above)

But sum of all of this is unlikely to satisfy demands of domestic greens,international calls for action, or Biden’s NDC …
▪

… so, Biden administration may have to opt for regulatory approaches.
8Regulatory Approaches••

Executive Orders to reverse Trump regulatory rollbacks▪

Reinstate and surpass Obama’s CAFE standards (for motor vehicles)▪

Reinstate Obama rule re methane leaking from wells & pipelines▪

New rule under December 2020 legislation will implement in USA the KigaliAmendments (2016) for CFCs to the Montreal Protocol (1987)▪

Recalculate “Social Cost of Carbon” ($50→$1→$51→$100?)

But new regs more likely to be challenged successfully than during Obama years▪

There are 245 Trump-appointed Federal judges (> ¼ of total)▪

Supreme Court 6-3 conservative majority➢

Favors literal reading of statutes, less flexibility to departments & agencies➢

May modify/overrule Chevron Doctrine (under which Federal courts defer toagencies when Congress was not explicit)
9Two Sources of Optimism for U.S. Policy Action••

State-level policies and actions can be effective▪

Sub-national policies (West Coast, Northeast) have become important▪

Bottom-up national policy may continue to evolve from Democrat-leaning states,▪

… which represent more than half of U.S. population, and an even greater share of
economic activity and GHG emissions!

Biden administration seems to embrace first-rate scientific and other expertise,▪

… some of the best scientists, lawyers, & even economists may be able to design
sound climate policies that can – perhaps – be politically feasible!

10Thank You!
11

For More Information
Harvard Project on Climate Agreementswww.belfercenter.org/climate

Harvard Environmental Economics Program
www.hks.harvard.edu/m-rcbg/heep

Websitewww.stavins.com

Blog
http://www.robertstavinsblog.org/

Twitter@robertstavins
12