US Domestic Climate Policy and the Shape ofInternational Agreements:
Political Economy Analysis of the Copenhagen Accord

Ray Kopp
Resources for the Future
IIASA-RITE International Symposium
Tokyo, Japan February 8, 2010

Outline of Presentation• Evolution of domestic US greenhouse gas
mitigation policy and recent developments• Developments in global climate policy as
embodied in the Copenhagen Accord• Domestic policy and the US position infuture international negotiations.

US Domestic Climate Policy (1)• Comprehensive legislation passed in theHouse of Representatives this past June Covers 85% of all US GHG emissions
 17% below 2005 levels in 2020
 83% below 2005 levels in 2050
 Cap and Trade is the main regulatory
mechanism Allowances are used to diminish the cost
impact to consumers and industries

US Domestic Climate Policy (2)• Additional features of Waxman-Markey
 2 billion tons of offsets —1 billion fromdomestic sources 1 billion from international
 Unlimited banking, some borrowing Rudimentary price collar
 Estimated allowance prices in 2020 about$30/ton CO2e (in 2007 dollars) Democratic : 211 yes, 44 no Republican: 8 yes, 168 noUS Domestic Climate Policy (3)• Action in the US Senate Produced a similar bill, but no votes have beentaken and no debate scheduled.
 The Senate requires a “super” majority of 60%
in favor to pass legislation
 At the current time there are 59 Democratic
Senators and 41 Republicans.

 No Republicans are supporting the Senate billand only 40 Democrats are currently
supporting the bill

US Domestic Climate Policy (4)• Why so little support in the US Senate?
 The Senate gives equal votes to low and highpopulation states
 Low population rural states rely on fossil fuels
and fear economic impact of the emission
reductions.
 Same for Democrats or Republicans.

 The recession makes matters worse Climate change matters, but it has a very low
priority when compared to economic issues•sUS Climate Policy – Plan A• President pushes stalled Senate legislation.
• Kerry, Lieberman, Graham craft a bi-partisan
option (perhaps working with the White House) To get Republicans he will need a strong nuclear
policy and expanded domestic oil and gas explorationand extraction.

• Work with senators Cantwell & Collins
 Cap-and-dividend plan Robust price collar

US Climate Policy – Plan B (1)• Give up on C&T and carbon price and pass energylegislation
 Government $ to energy R&D
 National RPS – 15% by 2021
 Federal push behind new transmission grid overriding state authority
 More energy efficiency policies
 Open the Eastern Gulf of Mexico to oil and gas
 Expanded incentives for nuclear

US Climate Policy – Plan B (2)• Energy legislation helps some with respect toGHG emissions• Regulate transport emissions under theClean Air Act using tailpipe standards• Craft separate legislation that would set up
a cap & trade on just the electric power
sector• Piece meal approach, likely highly inefficientand producing unknown emission reductions

US Climate Policy – Plan C• The Energy bill passes – since it is mostlycarrots• A bill by Senator Murkowski passes andpre-empts the Clean Air Act.
• The US takes no real action on climatechange for the foreseeable futureCopenhagen Accord: US Negotiating Position• Rules of engagement Do not pre-empt congress on setting reduction goals
 US cannot legally bind itself to any internationallyagreed to actions
 US action conditioned on emission cuts by major
developing economies (China, India, Brazil)
 AWG-KP is no longer valuable, effort placed on AWGLCA Support REDD+ as well as sectoral offsets
 Support mitigation and adaptation funds
 Support global carbon market

The Copenhagen Accord: What went well
• Developed and developing countries committed toput targets and/or actions in a registry, and while
they are not enough to solve the climate problem,
they are a step forward.
• Science is clearly represented by the 2 degrees C
global goal.
• Transparency (national communications) language isin the deal, although it is somewhat tortured.
• Financing pledges are a huge step forward, and evenapproaching the lower end of what is needed to solve
the problem.

The Copenhagen Accord: What went Badly• Talks would have failed without direct intervention fromheads of state.
• The severe dysfunctionality of this COP was clear• Copenhagen Accord was not officially adopted by theParties• Key elements were missing from the text 80% reduction
target by developed countries by 2050, 50% global
reduction by 2050
• Developing countries were unwilling to make the outcome
legally binding on themselves• Lots of discussions moved forward without having text
adopted, including forestry, technology, and adaptation.

Post Copenhagen: What Happens Now (1)• Venue: MEF or G20 for mitigation negotiations
 UNFCCC for issues like CDM, sectoral offsets,
REDD, adaptation and funds• Adaptation – once the MEF leaves the UNFCCC,adaptation might garner less attention• A comprehensive, legally binding agreement
setting emission reduction targets for developed
countries is not achievable

Post Copenhagen: What Happens Now (2)• 2 degrees C in doubt – politics not science
will determine the outcome• If a global carbon market fails tomaterialize the amount of wealth that willbe transferred from the north to the south
will be small and will get smaller over time.
• Long term funding for adaptation will be
particularly difficult to come by

US Negotiating Position Post Copenhagen (1)• Domestic policy forms foreign policy• Venue or mitigation talks: Major Economies Forum• Form of commitments:
 Pledge and review with MRV• Kyoto track: Will not be supported by the US• Mitigation targets: US pledged mitigation actions will be identicalto those passed by the US congressUS Negotiating Position Post Copenhagen (2)• Funds:
 Yes, if the congress passes a cap & trade,
limited otherwise• Developing country participation:
 Meaningful reductions will be required for US
mitigation actions, otherwise trade sanctions
seem assured.

• REDD+ and sectoral offsets: Will be supported by the US.