WBGU

German Advisory Council on Global Change(WBGU)

Climate Protection Strategies
for the 21st Century:
Kyoto and beyond

Special Report

H. Graßl
J. Kokott
M. Kulessa
J. LutherF. Nuscheler
R. Sauerborn
H.-J. Schellnhuber
R. Schubert
E.-D. SchulzeMembers of the German Advisory Council on Global Change(as on 10. November 2003)

Prof Dr Hartmut Graßl (chair)Director of the Max Planck Institute for Meteorology, Hamburg
Prof Dr Renate Schubert (vice chair)Director of the Center for Economic Research at the ETH Zurich, Switzerland
Prof Dr Dr Juliane Kokott (until 05.10.2003)
Director of the Institute of European and International Business Law at the University of
St. Gallen, Switzerland
Prof Dr Margareta Kulessa
Professor at the University of Applied Sciences Mainz, Section Business Studies
Prof Dr Joachim Luther
Director of the Fraunhofer Institute for Solar Energy Systems, Freiburg
Prof Dr Franz Nuscheler
Director of the Institute for Development and Peace, Duisburg
Prof Dr Dr Rainer Sauerborn
Medical Director of the Department of Tropical Hygiene and Public Health at the
University of Heidelberg
Prof Dr Hans-Joachim Schellnhuber
Director of the Potsdam Institute for Climate Impact Research (PIK) and Research Directorof the Tyndall Centre for Climate Change Research in Norwich, United Kingdom
Prof Dr Ernst-Detlef Schulze
Director at the Max Planck Institute of Biogeochemistry in Jena

German Advisory Council on Global Change

Climate Protection Strategies
for the 21st Century:
Kyoto and beyond

Special Report

Berlin 2003

ISBN 3-936191-04-2

Cover:
Flashlight, clouds, rain forest (Pure Vision Photo Disc Deutschland), coral reef (Wunsch Media, Bremen), iceberg (Archiv
AWI), windmill (Dr. C. Loose, WBGU)GERMAN ADVISORY COUNCIL ON GLOBAL CHANGE (WBGU)
Secretariat
Reichpietschufer 60–62, 8th floor
D-10785 Berlin
Phone
Fax
E-MailInternet+49 (0) 30 263948 0+49 (0) 30 263948 50
wbgu@wbgu.de
http://www.wbgu.de

Translation: Christopher Hay, Darmstadt
Copy deadline: 10.11.2003

This special report is available through the Internet in German and English.

© 2003, WBGU

Acknowledgements

This special report would not have been possible
without the committed and untiring effort of the staffof the Council Members and the Council’s Secretariat in Berlin. The scientific team participating in
the work of the Council when this report was written
included:Prof Dr Meinhard Schulz-Baldes (WBGU Secretary-General), Dr Carsten Loose (WBGU Deputy
Secretary-General), Dr Carsten Agert (Fraunhofer
Institute for Solar Energy Systems, Freiburg), Anayo
Fidelis Akunne, BA MPH (Department of TropicalHygiene and Public Health of the University Heidelberg, from 01.05.2003), Dietrich Brockhagen, DEA
ök. (WBGU Secretariat Berlin, until 31.07.2003), Dr
Ursula Fuentes Hutfilter (WBGU Secretariat Berlin,
until 31.10.2003), Dr Thomas Fues (Institute forDevelopment and Peace, Duisburg), Dipl.Umweltwiss. Tim Hasler (WBGU Secretariat
Berlin), Dipl.-Pol. Lena Kempmann (WBGU Secretariat Berlin), Dr Jacques Léonardi (Max Planck
Institute for Meteorology, Hamburg), Referendarjur. Christian Lutze (MPI for Comparative Public
Law and International Law, Heidelberg, until
05.10.2003), Dr Franziska Matthies (Tyndall Centre
for Climate Change Research, Norwich, UK), Dr
Nina V. Michaelis (WBGU Secretariat Berlin, from01.07.2003), Dipl.-Volksw. Kristina Nienhaus (ETH
Zürich/Akademie für Technikfolgenabschätzung in
Baden-Württemberg,
Stuttgart),Dr
Benno
Pilardeaux (WBGU Secretariat Berlin), Dipl.Volksw. Marc Ringel (University Mainz) and Dipl.Biol. Angelika Thuille (Max Planck Institute for Biogeochemistry, Jena).
The Council also owes its gratitude to the important contributions and support by other members of
the research community.This special report builds onthe following reports:
Bill Hare (Visiting Scientist): Assessment ofKnowledge on Impacts of Climate Change – Contribution to the Specification of Art. 2 of the UNFCCC.
Potsdam: PIK.

Dr Axel Michaelowa, Sonja Butzengeiger, Martina Jung and Michael Dutschke: Beyond 2012 – Evolution of the Kyoto Protocol Regime. Hamburg:
HWWA.
Prof Dr Nebosja Nakicenovic and Dr Keywan
Riahi: Model Runs With MESSAGE in the Context
of the Further Development of the Kyoto-Protocol
as well as Scenario Data for Model Runs With MESSAGE. Laxenburg, Austria: IIASA.

Contents

Acknowledgements
Contents

V

VI

TablesVIII

Figures

IX

Summary for policymakers
Introduction

1

1

7

2.1
2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6
2.1.7
2.1.8
2.2
2.2.1
2.2.2
2.2.3
2.3
2.3.1
2.3.2
2.3.3
2.3.4
2.3.5
2.3.6
2.3.7

Avoiding dangerous climate change
9What is ‘dangerous’ climate change?
9
The Tolerable Windows Approach
9
Impacts of climate change upon ecosystems
11
Impacts of climate change on food production and water availability
Impacts of climate change on economic development
16
Impacts of climate change on human health17
Large singular events triggered by climate change
18
Conclusion: The WBGU global mean warming guard rail 20
Recommendations for research
20
From temperature limits to emission pathways
21
From temperature limits to carbon dioxide stabilization targets
21
From stabilization targets to time paths of emissions
22
Conclusions 23
Seeking compliance with given emissions profiles
24
Principles for the allocation of emission rights
24
Contraction and convergence24
Three-sector approach (‘Triptych’)25
Multi-sector convergence
25
Brazilian proposal 25
Multistage approach
25
Conclusions 26

3.1
3.1.1
3.1.2
3.2
3.2.1
3.2.2
3.2.3
3.3

Stabilization scenarios
27
Climate policy and sustainable energy systems
27
Guard rails for sustainable energy policy
27
Global climate change mitigation scenarios
27
Analysis: Contraction and convergence in selected scenarios
Regional allocation of emission rights
37
Overview of anticipated emissions trading
39
Overview of anticipated economic effects
43
Conclusions 44

2

3

36

13

VII

4
4.1
4.2
4.3
4.4
4.5
4.5.1
4.5.2
4.6

5

5.2
5.3
5.4
5.4.1
5.4.2
5.4.3
5.5
5.6
5.6.1
5.6.2
5.7
5.8

Institutional design of the future climate protection regime
Full accounting of greenhouse gas emissions and stocks(full carbon accounting)57
The ‘contraction and convergence’ (C&C) regime
57
Improving greenhouse gas inventories
58
Further development of the flexible mechanisms
59
Clean Development Mechanism
59
Joint Implementation
60
Emissions trading
61
Adoption of a protocol on the conservation of carbon stocks
Incentive and compliance mechanism
64
Existing sanctions mechanisms
64
Options for future development
65
Financing instruments
65
Instruments of global energy policy
66

6.1
6.2
6.3
6.4
6.5

Recommendations
67
Action is urgently needed to avert dangerous impacts of climate change
Shaping commitments equitably
68
Reviewing and enhanceing instruments
69
Equitable financing of adaptation measures
70
Linking climate protection consistently with global governance
70

5.1

6

7

Carbon sinks
47
The global carbon balance
47
The terrestrial carbon flux balance48
Regional carbon balance assessments
51
Verification issues
52
Assessment of the present Kyoto Protocol with regard to carbon sinks
52
Problems arising from the history of the Kyoto Protocol 52
Problems related to sink determination
55
Evaluation of the Bonn Agreements and considerations for future commitment
periods 55

References

73

57

62

67

Tables

Table 2.1-1
Table 2.1-2
Table 3.1-1
Table 4.1-1

Global warming and impacts on food production in developing countries andindustrialized countries
14
Impact of climate change on water resources
15
Characteristics of selected SRES storylines
28
The global carbon balance for the period 1990 to 2000
48

Figures

Figure 2.1-1
Figure 2.1-2
Figure 3.1-1
Figure 3.1-2
Figure 3.1-3
Figure 3.1-4
Figure 3.1-5
Figure 3.1-6
Figure 3.1-7
Figure 3.2-1
Figure 3.2-2
Figure 3.2-3
Figure 3.2-4
Figure 3.2-5
Figure 3.2-6
Figure 3.2-7

Figure 3.2-8
Figure 3.2-9
Figure 3.2-10
Figure 4.1-1

Figure 4.1-2
Figure 4.1-3
Figure 4.2-1
Figure 4.2-2
Figure 4.3-1

Visualization of climate change impacts on some ecosystem types
12
Estimated health impact of climate change (1990–2000) by region
18
Scenario naming
29
Primary energy use in the IIASA-WBGU scenarios
30
Evolution of the shares of energy sources in global primary energy
consumption 31
Emissions in the reference scenarios and in the CO2-stabilizing scenarios
33
CO2 emissions from land-use change as well as anthropogenic methane
emissions 34
Temperature change relative to the pre-industrial mean and the resulting
sea-level rise
35
Relative losses of global gross domestic product as a consequence of climatechange mitigation measures
36
IIASA world regions used in the scenarios
37
Development of per-capita emission rights under contraction andconvergence
38
Emission rights cumulated from 2000 to 2100 and mean per-capita
emission rights from 2000 to 2100
39Development of the emission rights for selected regions and all scenarios withboth years of convergence 2050 and 2100
40
Cumulative emissions trading in the stabilizing scenarios until 2100
41
Cumulative energy system related and industrial CO2 emissions
42
Comparison of the emissions in the reference scenario B1* as well as theemission rights and the realized emissions in the stabilizing
scenario B1*-400
42Development of prices of emission certificates in the stabilizing scenarios forcontraction and convergence in 2050 and 2100
43
Cumulative revenue from emissions trading in the stabilizing scenarios shownfor the macro regions
44
Effects on GDP stabilization in the years 2020, 2050 and 2100 for the IIASA
world regions in the stabilizing scenarios
45
Fossil fuel emissions and increase of CO2 concentration in the atmosphere aswell as fraction of fossil fuel emissions measured as increase in atmospheric
CO2 concentration
47
Carbon fluxes of ecosystems and definitions to describe the component
fluxes 49
Comparison of net primary productivity and net biome productivity in Siberia,
Europe and Amazonia
50
The global carbon cycle with carbon stocks and fluxes
51
Carbon stocks in topsoil under forest as a function of different land uses in thepast
52
The carbon balance of the terrestrial biosphere for different European
countries 53

Summary for policymakers

Global climate change is a threat that is already having initial tangible impacts upon humankind andnature today. Due to the inertia of the climate system, this development can no longer be prevented
entirely. However, it is still possible, through cooperation among the international community andthrough national-level efforts, to stabilize the CO2
concentration in the atmosphere and thus preventthe most severe changes. Shaping the international
climate regime will continue to be an urgent policy
task over the coming decades. With this special
report, the German Advisory Council on Global
Change (WBGU) provides recommendations for
future negotiations within the context of the United
Nations Framework Convention on Climate Change(UNFCCC), particularly relating to the Kyoto Protocol to the Convention. The report centres on threequestions:• What is ‘dangerous climate change’ within themeaning of Article 2 of the UNFCCC?
• Which socio-economically and technologically
viable pathways are available to prevent such dangerous climate change?
• How can all countries be integrated equitably
within a system of emissions reduction commitments?
To address these questions, we must lift our gaze far
beyond the time horizon of the Kyoto Protocol’s second commitment period (after 2012), as the stabilization of greenhouse gas concentrations at a tolerable
level can only be achieved by means of a long-term,
ambitious reduction of greenhouse gas emissions.
The report concentrates on the potentials to reduce
the emissions of carbon dioxide, this being the principal anthropogenic greenhouse gas. The analysis
focuses, on the one hand, on the economic and technological potentials to reduce energy- and industryrelated emissions and, on the other hand, on the relevance of biological sinks of carbon dioxide and theoptions to preserve them. Finally, based on this analysis, the report contains specific recommendations on
ways to shape political and economic instruments inthe second commitment period of the Kyoto Protocol.

1
Defining dangerous climate change
The key goal of the UNFCCC is to stabilize greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with theclimate system. Article 2 of the Convention defines
this in specific terms: Ecosystems are to be able toadapt naturally to climate change, food production is
not to be threatened and economic development is tobe able to proceed in a sustainable manner. The
Council has examined each of these three criteriawith regard to the threshold from which climate
impacts would no longer be tolerable. The present
state of science does not yet make it possible toderive these ‘guard rails’ stringently and quantitatively from the climate impacts that must be prevented. The WBGU was thus limited to providing aqualitative assessment, based on its own expertiseand on commissioned external reports and study ofthe literature.
With regard to ecosystems, the effects of climatechanges are already apparent today. The thresholdfrom which damage to the global natural heritage is
no longer acceptable cannot be determined precisely.
However, the WBGU estimates it to be in the rangeof 2°C global warming relative to pre-industrial values. For worldwide food security, too, the thresholdappears to be in this range, as above this global
warming level worldwide climate-related losses inagricultural production must be expected, as well asa steep rise in the number of people threatened bywater scarcity. Concerning health impacts, no tolerance threshold can currently be appraised due topoor data availability and a lack of mature methodologies. However, it can be assumed that for someregions the effects of climate change would alreadylead to intolerable impacts at 2°C mean global warming. Moreover, climate change has the potential totrigger singular, catastrophic changes in the Earth
System, such as a shift in worldwide ocean circulation, the melting of major ice sheets (West Antarctic,
Greenland) or the sudden release of huge methane2

Summary for policymakers

reserves. Quantitative assessments of the thresholdvalues for these effects are beset with great uncertainty.
The WBGU’s recommendation: A maximum of
2°C warming is acceptable
The WBGU reaffirms its conviction that in order toavert dangerous climatic changes, it is essential tocomply with a ‘climate guard rail’ defined by a maximum warming of 2°C relative to pre-industrial values. As the global mean temperature has alreadyrisen by 0.6°C since the onset of industrialization,
only a further warming by 1.4°C is tolerable.A global
mean long-term warming rate of at most 0.2°C per
decade should not be exceeded.
This climate window should be agreed as a global
objective within the context of the UNFCCC process.
The European Union should seek to adopt a leadingrole on this matter.

2
Acceptable emissions
The WBGU has developed tolerable emission paths
for energy- and industry-related greenhouse gasesthat remain within the WBGU climate window. However, major uncertainty still attaches to the estimateof climate sensitivity, meaning the rise in temperature that follows a doubling of CO2 concentration.
Similarly, the role of the biosphere in the carbon
cycle cannot yet be appraised with sufficient accuracy. It is also hard to assess to what extent othergreenhouse gases can also be reduced.
The WBGU’s recommendation: Adopt
ambitious emissions reduction targets
In view of the major uncertainties concerning the climate system, the WBGU recommends a hedging
strategy in which initially a CO2 concentration target
below 450 ppm is aimed at. This will only be possible
if by 2050 global energy-related CO2 emissions canbe reduced by about 45–60% from 1990 levels. Furthermore, it will be essential to achieve substantial
reductions of the other greenhouse gases (notably
methane and nitrous oxide, but also the fluorinatedcompounds) and of further indirectly radiatively
active substances (e.g. soot).Therefore, industrializedcountries must reduce their greenhouse gas emissions by at least 20% by 2020.

3
Stabilization paths: Climate protection andsustainable development
Within the context set by the WBGU’s hedging strategy, this report examines emissions profiles as totheir technological and economic viability, comparing trajectories across regions and over time bymeans of scenario computations. For this purpose theCouncil has developed, in cooperation with the International Institute for Applied Systems Analysis(IIASA, Laxenburg, Austria) CO2 stabilization scenarios based upon the scenario families used by theIntergovernmental Panel on Climate Change(IPCC). The present report examines emissions
reduction paths in scenario worlds characterized by
global convergence and rapid technological development (scenarios A1T and B1), and compares thesewith an emissions reduction path in a ‘business-asusual’ world (B2). The A1T scenario presupposes
rapid technological development, while the B1 scenario assumes that environmental aspects gain highprominence. Additional conditions are set in bothscenarios in order to ensure compliance with sustainability criteria.
Building upon these scenarios and further
assumptions on the reduction of other greenhousegases, the WBGU’s climate protection goal is attainable for climate sensitivity values of up to 2.0ºC (at astabilization level of 450 ppm) or, respectively,
2.4–2.9ºC (stabilization at 400 ppm, depending uponassumptions regarding other emissions). If it should
emerge that climate sensitivity is in fact higher thanthese values (the IPCC estimates climate sensitivity
to be in the range of 1.5–4.5°C), even lower CO2 concentrations would need to be aimed at in order not tomove outside of the WBGU climate window.
The necessary measures to reduce energy- andindustry-related CO2 emissions can be organized inthree groups: intensified energy saving, structuralchanges (in particular the use of renewable forms ofenergy and low-carbon conventional technologies)
and geological CO2 storage as a bridging technology.
In the scenarios characterized by sustainable energy
supply systems and dynamic technology development (A1T, B1), the assumption concerning structural change is that by the end of the century energy
supply is based essentially upon solar electricity andsolar hydrogen.
When assessing the costs of climate change mitigation paths, the costs of CO2 reduction need to becompared to the damage and adaptation costs arising
due to the climate change that will take place if nomitigation activities are undertaken. The comparison
also needs to take into account the other forms ofSummary for policymakers

avoided damage (such as damage resulting from air
pollution). Very high uncertainties attach to the currently available assessments.The overall damage thatwill result if no climate policy action is taken is generally underestimated because damage to goods nottraded on markets is usually neglected or undervalued. Moreover, assessments regularly fail to consider
the damage resulting from singular changes or fromthe increasing frequency of extreme events.
The WBGU’s recommendation: Alignfinancial and capital transfers todeveloping countries with sustainability
criteria
It is essential for efficiency reasons to link climate
policy consistently with global governance and development policy. This means that development cooperation activities must focus more firmly on sustainability, markets should be opened to the greatest
degree to products from developing countries, andofficial development assistance funding should beclearly raised.
The Council refers to its recommendations on
global energy policy (WBGU, 2004) for further supporting measures in this field. These include theadoption of a Multilateral Energy Subsidization
Agreement (MESA) ensuring the internationally
coordinated removal of subsidies, as well as international commitments to substantially raise the proportion of renewable energy sources in energy supply.
The WBGU’s recommendation: Increase
investment in research and development
The WBGU reaffirms its recommendation to achievea ten-fold increase in investment in researching anddeveloping sustainable technologies by 2020. Focal
areas should include, in particular, energy efficiency
and renewable energies, but also R&D on the use ofsustainable potentials to store carbon dioxide in geological repositories (WBGU, 2004).

4
Reduction of emissions caused by fossil fuels use
Compliance with a target path for stabilizing CO2
concentrations entails a specific global emissions
budget. The WBGU considers that the allocation of
the emission rights available within this budget toindividual countries should be oriented above all tothe egalitarian principle and to targetedness in termsof CO2 emissions. Abrupt changes in the permissible
emissions of individual countries should be avoided.

The Council’s recommendation: Aim towards
equal per-capita emission rights and linear
harmonization of emissions shares
The WBGU recommends that emission rights for thegreenhouse gases covered by the Kyoto Protocol beallocated according to the ‘contraction and convergence’ approach, taking 2050 as convergence year.
This means that global emissions would need to be
reduced substantially over the long term (contraction). In a further step, it would be agreed that the
per-capita emissions of all states must reach equallevels in a continuous process extending until 2050
(convergence). In particular, this means that the percapita emissions of industrialized countries, which
are still comparatively high at present, must be
reduced, while some developing countries can initially increase their per-capita emissions. The principle of constancy requires that there be no sudden
switch to equal per-capita emissions, because of theresulting stresses on the global economy. The
approach further presupposes a functioning global
emissions trading scheme, in order to reduce thecosts of the transformation process.
The WBGU’s recommendation: Provide optout clause for the poorest developing
countries as a compromise
In the event that various developing countries are
initially unable or unwilling to accept absolute emissions caps from the second commitment period
onwards, an opt-out clause could be considered forcountries with low levels of economic capacity andrelatively low per-capita emissions. Such an approachrequires criteria for mandatory participation in thecontraction and convergence process. In such ascheme, the opt-out clause could not be made use ofonce a threshold value has been exceeded, which
could be oriented, for example, to per-capita emissions and per-capita income.The reduction burden ofdeveloping countries making use of the opt-out
clause would be distributed among the participating
countries in order to safeguard attainment of the stabilization target and thus compliance with the climate window.

5
Conservation of carbon stocks of terrestrial
ecosystems
The terrestrial biosphere plays a major role in the
carbon cycle. Near-natural forests, wetlands andgrasslands are important carbon reservoirs as long as
they are not cleared, drained or ploughed. Thus
deforestation, above all in the tropics, is currently thecause of 10–30% of present anthropogenic carbon

3

4

Summary for policymakers

dioxide emissions. Nonetheless, the biosphere is currently a net carbon dioxide sink. The present way inwhich biological sources and sinks are accounted
under the Kyoto Protocol is not suitable, however, toprovide incentives to conserve these natural stocks(WBGU, 1998).
The WBGU’s recommendation: Engage infull carbon accounting
From the principle of ‘moderate anthropocentrism’
and the precautionary principle, the Council derives
the recommendation to give greater consideration inclimate policy to terrestrial biological carbon stocks
and sinks. All carbon fluxes and stocks should be
accounted fully (‘full carbon accounting’). However,at the present time the Council advises against seeking to regulate the conservation of biological terrestrial carbon stocks within the same system, with thesame allocation procedure and with the same instruments as reduction commitments for fossil carbon
stocks. Such an approach could cause an unacceptable delay of the entire climate protection process.
The WBGU’s recommendation: Take the roleof the biosphere into account through aspecial agreement
The WBGU recommends agreeing a special intergovernmental commitment to preserve the carbon
stocks of terrestrial ecosystems. Such an agreement
could be implemented as a ‘protocol for the conservation of carbon stocks’ to the UNFCCC. Thisapproach should not distinguish, as the Kyoto Protocol has done until now, between direct and indirect
human impacts (such as CO2 fertilization or climatechange) or natural factors (such as natural climate
variability). Rather, it should involve measurement
and accounting of the full carbon balance of the terrestrial biosphere.
The WBGU recommends for the conservation ofnatural ecosystems, which are major carbon reservoirs (e.g. primary forests, wetlands, grasslands), aninternational system of tradable non-utilization commitments similar to that already presented by theCouncil for the global biodiversity policy (WBGU,
2002).

6
Reviewing and enhancing instruments
In recent years, the international community has
devised a range of instruments for global climate protection. These have partly been tested in pilot phases,
and in some cases the practical deployment of these
instruments has begun. Building upon past experience, the WBGU recommends further developing

these instruments, in order to be able to attain the climate protection goal more efficiently and effectively.
The WBGU’s recommendation: Harness theopportunities of emissions trading andminimize uncertainties
In order to preclude uncertainties relating to global
emissions trading, the Council recommends establishing a Climate Central Bank, hosted by the
UNFCCC Secretariat. The primary task of the bankwould be to smooth price surges on the certificatesmarket. An automatic mechanism would need toensure that only extreme price fluctuations, but notlonger-term price trends, are prevented. Furthermore, the introduction of a variable bottom pricelimit for certificates merits consideration.
In order to generate permanent innovation pressure to develop new mitigation technologies, thescope for purchasing emission rights to meet national
reduction commitments should be limited. Intensified and continuous innovation activity is essential inorder to attain the climate change mitigation goal.
The WBGU further considers it urgent to integrate the emissions of international aviation andshipping into global emissions trading. Alternatively,
charges could be levied on the use of airspace oroceans at a global or at least European level(WBGU, 2002).
The WBGU’s recommendation: No emissions
trading without reliable inventories
The environmental targetedness of the climate protection regime should not be jeopardized throughtrade with possibly incorrectly assessed emission
rights. In order to ensure the integrity of the regime,
the WBGU recommends making participation inemissions trading conditional upon the compilationof high-quality inventories. Developing countries
should therefore receive greater support than in thepast in compiling inventories with a high information
content.
The WBGU’s recommendation: Use the CDM
as a transitional instrument
Countries that do not possess sufficiently high-quality inventories or do not participate in ‘contraction
and convergence’ can be integrated into emissions
reduction efforts through the Clean Development
Mechanism (CDM). To this end, special incentives
should be created for CDM projects in the least
developed countries, and the investment additionality approach should be made mandatory for largescale projects. In view of the dubious effects of past
projects in the field of biological sinks, and building
upon the Council’s recommendation to establish a
special protocol on the conservation of the carbon

Summary for policymakers

stocks of terrestrial ecosystems, sink projects should
be excluded from the CDM in the future. Nuclear
projects should not be supported by the CDM as amatter of principle. With regard to Joint Implementation (JI), the WBGU recommends reviewing towhat extent JI should be subsumed fully within emissions trading, or whether it can be merged with the
CDM.The CDM should not be the sole instrument to
be burdened by a tax for the financing of the Adaptation Fund. Instead, the WBGU argues that charges
should be levied on all transactions within the context of the flexible mechanisms, but only to theamount of the administrative costs incurred by handling emissions trading or the CDM and JI.
The Council’s recommendation: Financeadaptation and compensation funds
according to global warming
responsibilities
Neither is the financing of the Adaptation Fundthrough a charge raised on CDM projects purposeful, nor will replenishment of the LDC Fund and theSpecial Climate Change Fund by means of voluntaryad-hoc contributions suffice. The resources available
to these climate protection funds created under the
GEF umbrella need to be expanded substantiallyand fund design needs to be improved in order thatthe deployment of resources contributes in a targeted manner to sustainable development in therecipient states. Furthermore, an additional Compensation Fund should be set up for the second commitment period, from which payments providing compensation for climate damage would be financed.
The contributions of individual states – specially
their contribution to compensation and adaptation
funds – should be oriented to their respective contributions to global warming (cumulative emissions).
However, only emissions from 1990 onwards should
be taken into account, as the publication of the IPCC
first assessment report was the point at which theinternational community clearly recognized the
problem and the severity of its consequences.
The WBGU’s recommendation: Discuss
sanctions against free riders
The Council does not consider it an urgent priority at
the present time to reform the mechanisms envisaged for imposing sanctions on countries that fail tomeet their commitments. However, there should be
debate early on about the incentives and sanctions tobe applied against countries that refuse to join the
climate protection regime on principle. The WBGU
recommends that the international community retainfrom the outset the option of imposing hard politicaland economic sanctions, particularly on large-scale
emitters.

7
Key strategic decisions lie ahead
In the coming years, the international community willneed to take key strategic decisions in international
climate policy, if dangerous climate change is to beprevented. With every further delay of consistent climate protection policy, the scope for action narrows.
The UNFCCC provides an indispensable framework
for upcoming negotiations.

51Introduction

Six years after having been adopted in Japan, theKyoto Protocol (KP) to the United Nations Framework Convention on Climate Change (UNFCCC)
has still not entered into force. Nevertheless, many
countries have already started implementing theProtocol, expecting Russia to finally ratify and theProtocol thus to enter into force. Scientific findings
on climate change indicate ever more clearer thatgreenhouse gas emissions reductions need to be substantially more ambitious than defined by the Kyoto
Protocol. Further developing the international climate regime will therefore certainly remain an
urgent international policy task over the next
decades.
The UNFCCC, the Kyoto Protocol and the Marrakesh Accords comprise a package of agreements
for international climate protection that was negotiated over more than 10 years. At its core are quantified emission limitation and reduction commitments,
embedded within a system of reporting, monitoring,
review and compliance. The architecture is based on
the principle of common but differentiated responsibilities (Art. 3.1 UNFCCC). Commitments are so far
differentiated between two country groups – industrialized and developing countries. Binding targets
for emission reductions have been agreed upon only
for industrialized countries, including countries witheconomies in transition. OECD countries haveadopted additional financial commitments to support developing countries.
The complex structure of the Kyoto mechanisms(emissions trading, Joint Implementation, Clean
Development Mechanism) allows, in principle, forflexibility in meeting the targets and therefore
reduces compliance costs. The Clean Development
Mechanism (CDM) further has the purpose of assisting developing countries in achieving sustainable
development and in contributing to the mitigation ofclimate change (Art. 12 KP). It remains to be seen
whether these expectations will be met. Particularattention will need to be given to the new climate
fund created with the Marrakesh Accords which isintended to lead to an additional transfer of financial

resources for adaptation measures in particularly
vulnerable developing countries.
Questions can be raised with regard to the environmental effectiveness of the Kyoto Protocol as it
stands: Even if the 5% emissions reduction for industrialized (Annex-I) countries was achieved, thiswould only have a marginal attenuating effect on the
anticipated temperature rise. Real reductions will belower than the already very modest nominal reductions, because of the accounting of sinks as emissions
reduction and because some countries have been
allocated emission rights above their business-asusual projections. Moreover, the withdrawal of theUnited States of America from the Kyoto Protocol
leads to a potentially large surplus of tradable emission permits, as a state with potentially high demandis then absent from the system. This leads to reduced
incentives to lower emissions. However, countries arefree to decide to market only a part of their assigned
emissions.
Any assessment of the Kyoto system should consider that the first commitment period (2008–2012) isonly a first step, and that further steps should andmust follow. Considerably deeper emissions cuts will
be necessary in future commitment periods in orderto achieve the joint objective of the Protocol andConvention, namely stabilization of greenhouse gas
concentrations in the atmosphere at levels thatwould prevent dangerous anthropogenic interference with the climate system. The scope in terms ofglobal emissions available to prevent dangerous climate change has further narrowed in recent years.
The second commitment period will be crucial
because the reductions agreed for this period will
determine whether dangerous climate change can beprevented or not.
The German Advisory Council on Global Change(WBGU) wishes to underscore that, as there are noalternatives, calling the Kyoto Protocol into question
throws global climate policy back by many years andseverely hampers efforts to prevent dangerous climate impacts.

8

1 Introduction

Steps forward for the climate regime
The international community is faced with adilemma. To attain the Kyoto targets, global emissions have to decline steeply after having reached thepeak. This implies, on the other hand, that emissions
from developing countries have to depart from theirbusiness-as-usual path very much earlier than thesecountries may consider just. In particular, developing
countries will need to attenuate their rise in emissions and, ultimately, also reduce their emissions,
before they have reached a level of income comparable to that of Annex-I countries.
How to deal with this dilemma and to find a sustainable and equitable solution is the focus of thepresent report and will presumably lie at the heart ofthe challenges to be faced by the forthcoming negotiations on the second commitment period of the
Kyoto Protocol. These negotiations should start nolater than 2005 (Art. 3.9 KP). It is therefore crucial
that industrialized countries show demonstrable
progress towards achieving their targets as soon as
possible to build confidence among developing countries in the climate policy regime.Technology transfer
to the developing countries can also contribute tothis. Furthermore, negotiations on second commitment period targets should leave the option open for
the USA to rejoin.
The negotiation of the second commitment period
thus faces a series of challenges and will beimmensely complex. As the number of countries
committed to emission limitation and reduction has
to be expanded, negotiations necessarily will involve
much more discussion on equity principles and on
fair differentiation of commitments than was the casein the first commitment period. The need for deeper
emission cuts will spur the discussion on what is dangerous climate change and on what emission cuts are
economically and technologically feasible.
Perspective beyond 2012
With this report, the WBGU aims to present scientifically consolidated options for action to the Federal
government on its way to successful agreements on
the future of the climate regime. To do so, we need tocast our gaze far beyond the time horizon of the second Kyoto Protocol commitment period (after 2012),
as it will only be possible to stabilize greenhouse gas
concentrations at a safe level if emissions reductions
are both deep and long-term. There are three key
questions:• What is ‘dangerous interference with the climate
system’ within the meaning of Article 2
UNFCCC?
• Which socio-economically and technologically
viable paths can be travelled to prevent such dangerous interference?

• How can all countries be integrated equitably
within the system of emissions reduction commitments?
The present report concentrates upon the potential
for reducing emissions of carbon dioxide, this being
the most important anthropogenic greenhouse gas.
Nonetheless, consideration is also given to the needto reduce other greenhouse gases. In a first step (Section 2.1) the Council defines what is to be regarded as‘dangerous interference with the climate system’.
After discussing implications of the WBGU climate
window for the definition of ‘safe’ concentration targets and emission pathways (Section 2.2), the reportexamines mechanisms to allocate emission rights or
reduction commitments (Section 2.3) and the economic and technological feasibility of ambitious
reduction paths (Chapter 3). The report bases theseanalyses on detailed scenarios generated with anenergy system model with an integrated macroeconomic model. Besides climate protection, the discussion also takes into account other, especially socioeconomic guard rails.
During the negotiation of the Kyoto Protocol, theaccounting of land use, land-use change and forestry
activities was very contentious. Very early, the Council warned against the possible negative incentives
and risks associated with the present system ofaccounting (WBGU, 1998). Chapter 4 of the reportdiscusses the issue of how to deal with sources andsinks in the terrestrial biosphere in the future.
Chapter 5 draws conclusions with regard to thefurther development of the institutional architectureof the Kyoto Protocol, with particular emphasis on
the institutional modifications needed to strengthen
the emission reduction obligations and enlarge thenumber of countries to which these apply. Chapter 5
also elaborates initial proposals on how to deal in
future with all the carbon sources, sinks and stocks ofthe terrestrial biosphere.There is an emphasis on two
aspects: On the one hand there is a particular emphasis on the institutional modifications needed tostrengthen the emission reduction obligations andenlarge the number of countries to which these apply.
On the other hand initial proposals on how to deal in
future with all the carbon sources, sinks and stocks ofthe terrestrial biosphere are elaborated. Chapter 6
summarizes the WBGU’s recommendations on thefurther development of the international climate policy.

2

Avoiding dangerous climate change

2.1
What is ‘dangerous’ climate change?

2.1.1
The Tolerable Windows Approach
Article 2 of the UNFCCC sets out the ultimate objective of the Convention as follows:‘The ultimate objective of this Convention[...] is to achieve [...] stabilization of greenhouse gas concentrations in the atmosphere at
a level that would prevent dangerous anthropogenic interference with the climate system.
Such a level should be achieved within a timeframe sufficient to allow ecosystems to adapt
naturally to climate change, to ensure thatfood production is not threatened and toenable economic development to proceed in asustainable manner.’
Article 2 UNFCCC consists of two components: Firstthe objective itself (stabilization of greenhouse gas
concentrations) and second the criteria for the timeframe in which the objective should be achieved(concerning ecosystems, food production and sustainable economic development).
The WBGU notes that the focus on concentrations of greenhouse gases rather than on climatechange itself is problematic, as many uncertainties
complicate an assessment of the impacts of specificconcentrations upon the climate (Section 2.2).Therefore, the Council defines dangerous climate change
in terms of changes to climate parameters. Global
mean near surface air temperature is chosen as theleading parameter because it can be related to greenhouse gas concentrations better than other indicators(Smith et al., 2001). Global mean temperature will be
used as a global proxy for the different types of climate change factors that impact at the regional or
local level. Depending on the region, an increase inglobal mean temperature by a certain amount may
convert to an increase in the local sea level, reduced

soil moisture, increased peak wind speeds or evenreduced local air temperature.
In previous reports (WBGU, 1995, 1997, 2004), theCouncil has defined and used a ‘Tolerable Climate
Window’ based on a normative setting of non-tolerable climate change conditions. The climate window isdefined by two upper limits – one for total global
mean temperature change and one for the rate ofchange: +2˚C (relative to pre-industrial levels
between 1861 and 1890) and 0.2°C per decade. The
Council also assumed that the adaptability of ecosystems, economies and societies will decline withincreasing proximity to the +2°C temperature limit.
However, with the setting of such a tolerable climate
window the Council did not imply that compliancewith its limits would guard against all ecosystemdamage or threats to humankind, because global
maxima are unable to reflect the substantial variations between regions and sectors with respect to theprecise impacts of climate change (WBGU, 1997).
The primary limit: Global mean temperature
The upper limit of absolute global warming of 2˚Crelative to the pre-industrial temperature was basedon the observed range in the recent Quaternary
period (over the last several hundred thousand
years), that has shaped today’s climate and the development of humankind. The highest observed global
mean temperature in this period was 1.5°C above thepre-industrial global mean temperature. The Council
added 0.5°C in its 1995 annual report to account for
improved adaptive capacity. As the global mean temperature has already risen by 0.6 (±0.2)°C, the leeway
up to this limit only amounts to approx. 1.4°C. The
Council concluded that intolerable changes in thecomposition and functioning of today’s ecosystems
could not be ruled out if the global mean temperature rises by more than 2°C (WBGU, 1995). However, substantial impacts are already to be expected
below this limit. Because the scientific basis for thislimit has become firmer in the meantime, and considering that the limit can also be derived from other criteria (Sections 2.1.2 to 2.1.6), the Council reaffirms
this argumentation.

10

2 Avoiding dangerous climate change

The secondary limit: Rate of climate change
The maximum rate of change of 0.2˚C per decade
defined by the Council refers to the change of global
mean temperature averaged over several decades.
Temperature changes on regional scales have been
observed to be much higher than 0.2°C per decade
without causing harm to ecosystems. The global tropospheric mean temperature is currently rising at a
rate of 0.22˚C per decade, but was only averaged
across 24 years (Vinnikov and Grody, 2003). The
longer the period over which the average is formed,
the smaller do the observed rates of change become.
Analyses of hemispherical or global long-term timeseries show that multi-decadal average rates ofglobal mean temperature change above 0.1°C per
decade are quite unusual (Hare, 2003).
Global and, in many cases, local rates of climatechange are likely to exceed any seen in the last million years (Overpeck et al., 2003). The 0.2°C per
decade was based on the estimation that an additional climate-change induced monetary burden of
more than 5% of global GNP would not be tolerable(WBGU, 1995). Other bases would include the concern that rapid climate change could harm ecosystems due to limits to the adaptive capacity of species.
The projected global warming may require species
migration rates far in excess of those observed during
postglacial times (Malcolm et al., 2002), and thus
likely threaten the survival of many species (Davisand Shaw, 2001). Moreover, a high rate of change canincrease the risk of large-scale singular events (Section 2.1.6). Since the publication of previous Council
reports on this issue (WBGU, 1995, 1997), only little
additional scientific insight has been gathered on thetolerable rate of change of global mean temperature.
The scientific basis for this limit thus remains lessrobust than for global mean temperature.
The ecological and economic impacts beyond thislimit are hard to assess, but may potentially be verylarge. Thus, the Council maintains the limit of 0.2°C
per decade (averaged over several decades) based on
the precautionary approach, but stresses that more
research is needed in this field.
Climate impact analysis
Moreover, with this report the attempt is made to
add to the so far used ‘top-down’ a ‘bottom-up’
approach to derive the primary limit of global mean
temperature, based on our present knowledge on climate change impacts. This impact analysis is structured along the three criteria of Article 2 UNFCCC(ecosystems, food production, and sustainable economic development), as these will probably be thekey point of reference in the political negotiations on
the second commitment period under the Kyoto Protocol. The Council supplements these with further

criteria, including the IPCC’s ‘reasons of concern’(IPCC, 2001b). The WBGU thus treats the criteria of‘health’, ‘water availability’ and ‘large-scale singular
events’ in separate sections of this report. The consequences of extreme weather events are of relevanceto several of the criteria applied by the Council, andare thus treated in the respective sections.
The WBGU interprets ‘dangerous interferencewith the climate system’ as an interference that leads
to dangerous climate-change impacts. In judging
whether a certain impact should be defined as dangerous, the adaptive capacity of natural and social
systems has to be taken into account. Adaptive
capacity varies greatly between regions and systems
and also depends on the speed of climate change.The
evaluation of costs and benefits of adaptation, also incomparison to mitigation, is still incomplete and certainly beyond the scope of this special report.
The Council defines anthropogenic interferencewith the climate system as dangerous if it leads tosevere impacts across large regions or if it leads to a
globally significant accumulation of distributed
regional impacts. When defining severe climatechange impacts, the Council has to rely on value
judgements that are inter-subjective (i.e. equallyvalid for all; WBGU, 2000b) based upon on the current state of scientific knowledge – above all theThird Assessment Report of the IPCC (2000) andsubsequent relevant publications. The WBGU
assesses levels of hazard from a ‘moderately anthropogenic’ perspective. This stresses the uniqueness ofhumankind, but derives from the life-sustaining andlife-enhancing importance of nature the commitmentof humankind to preserve it for future generations(Chapter 6;WBGU, 2000b). In some cases, this judgement is easier because it can be based on known
thresholds in natural or social systems, beyond which
impact levels rise rapidly or large-scale irreversible
changes are triggered.
In the following sections, possible impacts areanalysed and then translated via expert reasoning
into levels of global mean temperature. These levels
will generally differ among the criteria outlined.
Based on this analysis the Council finally identifies athreshold, beyond which any increase of global mean
temperature will be regarded as dangerous.

What is ‘dangerous’ climate change? 2.1

2.1.2
Impacts of climate change upon ecosystems

2.1.2.1
Ecosystems and climate change
Natural ecosystems of today have already sufferedhuge losses of area due to human-induced land-use
change, causing large-scale habitat destruction andfragmentation. Land use has substantially altered theface of the Earth (Vitousek et al., 1997) and left e.g.
only 20% of forests worldwide untouched (Bryant etal., 1997). Additional to this major factor are otherhuman interventions, such as overexploitation (e.g.
through hunting, grazing, fishing, non-sustainable useof forest products), the introduction of invasive alien
species, or pollution have further environmental
impacts. Taken together, these human-induced
stresses are causing species extinction rates 2–3
orders of magnitude higher than the ‘background’
extinction rate seen in the fossil record (May et al.,1995).
Man-made climate change is a new and additional
anthropogenic factor. Ecosystems and their biological diversity may experience irreversible damage due
to climate change because of limited adaptive capacity of species. Climate change impacts today still aresmall compared to the human interventions mentioned above. They are, however, expected toincrease very rapidly in scale and importance overthe coming decades (IPCC, 2001b). Even if we could‘magically’ relieve the ecosystems from all otherdamaging human-induced pressures, rapid climatechange alone would still have the potential to lead tosignificant loss of our planet’s biodiversity.
In the 20th century the global mean temperature
has increased by 0.6 ± 0.2°C and is already causing a
discernible impact in wild animal and plant populations (IPCC, 2001b; Root et al., 2003). They are
responding with the expected trend to move tohigher elevations and polewards (shift of approx. 6km per decade toward the poles; Parmesan and
Yohe, 2003). The geographical extent and level ofdamage, and the number of ecosystems affected
increase with both magnitude and rate of climatechange (IPCC, 2001b). The consequences arechanges in the subtle balances of species interactions(e.g. competition, predation, parasitism) in both managed and natural ecosystems, which in turn may leadto species loss, disruption of species communities andecosystem succession (Hughes, 2000). An example ofsuch a risk is the serious damage suffered by coral
reefs due to the rapid rise in sea level and sea tem-

peratures (Hughes et al., 2003; other examples inHare, 2003).
Not all ecosystems are endangered by moderate
climate change, e.g. if their species can cope by migration upwards or polewards without being blocked bygeographical or anthropogenic barriers. This adaptation can be assisted by planning, managing and networking protected areas, removing barriers to migration and adjusting the management of landscapes orbioregions.
The following discussion briefly presents the stateof knowledge on the impacts of climatic changes
upon ecosystems. There is a large body of literatureon the impacts of climate change on ecosystems andbiodiversity, which has been reviewed and assessedby the IPCC in its Third Assessment Report (IPCC,
2001b) and a Technical Report (IPCC, 2002), and by
an Ad-hoc Technical Expert Group of the Convention on Biological Diversity (CBD, 2003). However,any analysis done today that is based on case studies
is limited by their coverage. The lack of comprehensiveness with regard to both ecosystem types andregions covered demonstrates the urgent need formore systematic research, especially in the field of
integrated regional impact studies.
Building on these findings, and on a study commissioned by the Council (Hare, 2003) and further
recent literature (cf. quotes in the bullets below), theCouncil arrives at the following conclusions (see also
Fig. 2.1-1):• Rise of up to 1°C above pre-industrial levels: Up to
10% of ecosystem areas worldwide will shift (Tothet al., 2002; Leemans and Eikhout, 2003). Some
forest ecosystems will exhibit increased net primary productivity, increased fire frequency andpest outbreaks. Some hotspots and protectedareas of global importance will begin to suffer firstclimate-change induced losses. Coral reefs will
suffer increased bleaching (Hughes et al., 2003).
Range shifts of species and higher risk for someendangered species are likely. Most of these
impacts can already be observed today.
• Rise of 1–2°C above pre-industrial levels: Up to
15–20% of ecosystem areas worldwide will shift.
Some protected areas of global importance andhotspots are likely to suffer severe losses of botharea and species. Wildlife of arctic ecosystems will
be harmed (e.g. polar bear, walrus). Bleaching
events will likely be so frequent that coral reef
recovery is insufficient to prevent severe losses of
biodiversity.
• Rise of more than 2°C above pre-industrial levels:
The global share of ecosystems shifting due to climate change will likely be above 20%, and much
more in some regions. Global losses of coastal wetlands may exceed 10% (Arnell et al., 2002). At a

11

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2 Avoiding dangerous climate change

Coastal wetlands
Alpine ecosystems
Coral reefs
Arctic ecosystems
Boreal forests
Hotspots, protected areas
0

1

2

3

4

Change of global mean temperature [°C]
Magnitude of adverse impact
small

moderate

large

Figure 2.1-1
Visualization of climate change impacts on some ecosystem types. The risk of adverse impacts due to different climate-relatedparameters increases with the magnitude of climate change. Global mean temperature rise since 1861–1890 is used as proxy. The
figure presents a global summary of expected adverse impacts upon some examples of global ecosystem types, in the form of ahighly aggregated conceptualization. Regional impacts may be more or less severe than the global averages shown. The figure
does not reflect a quantitative approach but a fuzzy assessment of risks, based on case studies and reviews, in a manner similar
to that of the IPCC (2001b). The assessment takes into account only the magnitude of climate change, not the rate of change.
Source: WBGU

global scale, reefs will undergo major disruptions
and species loss, but will possibly not disappear
completely (Hughes et al., 2003). A large numberof species will be endangered by range shifts.
There is a risk that some protected areas of global
importance and hotspots will lose most of theirarea due to climate change.

2.1.2.2
Tolerance limits for impacts on ecosystems
Article 2 UNFCCC refers to the capacity of ‘ecosystems to adapt naturally to climate change’.This translates into both an absolute maximum of change anda maximum rate of change of ecosystems. Once theselimits are exceeded, species loss increases which inturn can lead to ecosystem degradation or loss. Thismatters not only because losing biodiversity means
losing its intrinsic, recreational and cultural values(WBGU, 2001). It matters even more because humansociety directly or indirectly depends on the goods
and services the biosphere and its ecosystems supply.
The composition of the atmosphere and soil, thecycling of elements, and many other assets are all the
result of living processes – and all are maintained or
replenished by ecosystems (Alcamo et al., 2003).
Therefore, there will be limits beyond which the cli-mate-change induced losses of ecosystem goods andservices will have to be declared intolerable.
Because of its importance to human society, biodiversity conservation has been established as principle of international law. The Council founds its
assessment of the danger or severity of expected biodiversity losses upon rules stipulated by the Convention on Biological Diversity and other international
agreements (CITES, Ramsar Convention, World
Heritage Convention) and principles (e.g. precautionary approach; UNCED, WSSD).
However, not all biodiversity losses are necessarily unacceptable for humankind. Some are more
severe than others, and therefore less tolerable. To
describe the value of ecosystem goods and services
and their importance to nature conservation in detailwould be beyond the scope of this special report.
These issues have been covered extensively by theCouncil in a previous report (WBGU, 2001).
Based on this work and a review of the state of scientific knowledge, the Council arrives at the following statements:
1. Shifts of more than 20–30% of the area of any
large-scale ecosystem type due to climate change
are considered dangerous within the meaning of
Article 2 UNFCCC. Such a large loss would meana steep increase in risk to regional and global
ecosystems, mainly due to lack of adaptive capacity in these systems, leading to suboptimal func-

What is ‘dangerous’ climate change? 2.1

tioning of these ecosystems (Leemans and Eickhout, 2003). Many biomes have already sufferedlarge losses and degradation due to land-use
change, so that additional climate impacts will be
all the more severe.
2. Losses of areas of high conservation value should
be avoided. The hotspots of biological diversity(Myers, 1988; Myers et al., 2000; Mittermeier et al.,1999) are of particular importance, since a large
number of species are concentrated in these 25
areas that cover only 1.4% of global land area.The
Council notes that these hotspots and otherimportant areas such as wetlands of international
importance (Ramsar Convention), world heritage
sites (UNESCO’s World Heritage Convention),
tropical wilderness areas with low human population density (Mittermeier et al., 2003) or gene centres of agrobiodiversity (Hammer, 1998) harbour
biological diversity of the highest conservation
value. They should not only be protected from further habitat destruction and fragmentation due toland-use change, but also from climate-change
induced losses. This is all the more important, as
population growth in the hotspots is above average (Cincotta et al., 2000) and ecosystem destruction through land-use change appears to continue
unabated.
The conversion of these two specifications to levelsof tolerable global mean temperature is a very difficult and complex task. The knowledge and findings
represented by case studies available today do notallow for straightforward quantitative deduction oftolerable temperature limits. Therefore, the Council
had to rely on expert assessments based on reviewsof the scientific literature (e.g. IPCC, 2001b; Hare,
2003). An expert judgement of this sort emerged
from a recent international conference in the UK,
where there was agreement that global warming has
to be contained at +2°C (Green et al., 2003).
The WBGU concludes that even low levels of climate change can lead to significant impacts on
ecosystems. The risk to several globally important
ecosystem types appears to rise considerably when
warming exceeds 2°C global mean temperature
above pre-industrial levels (Fig. 2.1-1). If warming
exceeds 2°C, there is a risk that the climate-induced
shift of biome areas will exceed the stated extent of
20–30%. Analysis of further case studies similarly
suggests that severe impacts may be expectedbeyond 2°C warming (Hare, 2003). With regard to
impacts on ecosystems and biodiversity, the Council
thus deems a rise in global mean temperature bymore than 2°C intolerable.

2.1.3
Impacts of climate change on food production andwater availability

2.1.3.1
Food production and climate change
The impacts of climate change on food production
and agriculture depend on a range of factors, including the vulnerability of regional agricultural systems,
populations and their adaptive capacities. Relevant
factors in determining the response of agricultural
systems to climate change include temperature, precipitation, CO2 fertilization and socio-economic conditions such as market access, technology and theavailability of resources needed for adaptation(IPCC, 2001b). In the mid latitudes, a moderateincrease in temperature may raise crop production
provided that water availability is not compromised.
In the tropics, in contrast, crops are often close to
their thermal optimum, so that regional warming
may instead result in reductions. Extreme weather
events are likely to negatively influence crop production substantially, either directly or through increaseof pests (Iglesias et al., 2001; Rosenzweig et al., 2002).
However, most studies do not account for the interactions of food production with droughts, heavy
rains, hail storms or pest outbreaks and therefore
tend to underestimate the damages. Use of speciallydesigned genetically modified organisms could be a
way to increase the adaptive capacity of crops, but isfraught with major risks (WBGU, 2000a; The Royal
Society, 2002). Recent debate has not produced afundamentally different assessment of these risks.

2.1.3.2
Tolerance limits for impacts on food production
Article 2 UNFCCC requires ‘to ensure that food production is not threatened’. In assessing climatechange impacts on food production, the adaptive
capacity of agricultural systems has to be taken into
account. This capacity differs substantially between
regions. Unfortunately the regions affected most are
the ones with least adaptive capacity – i.e. above all
the developing countries (IPCC, 2001b).
To some extent, climate-change induced regional
disparities of crop yields can be alleviated by trade
and transport of food. It is albeit questionable
whether the agricultural market alone would lead tothe required compensation, as many of the mostaffected regions so far are not integrated into theglobal market.Thus international trade policy, as well

13

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2 Avoiding dangerous climate change

as the degree of international cooperation (e.g.
development cooperation, agricultural research policy) influences the level of impacts that might becalled ‘dangerous’.
The IPCC concludes that in many developing
countries (e.g. India) the effects of climate change arelikely to result in net losses in terms of agriculture
goods and water resources, with some regions being
especially vulnerable (IPCC, 2001b). In contrast,
agriculture may be fostered by warming of less than
2°C global mean temperature in many developed
countries in the mid and high latitudes. The available
models suggest that global production may not bethreatened dangerously up to a rise of 2°C or even3°C. However, the global disparities will increase, as
the gains are expected in the developed world andthe losses in developing countries. At all levels ofwarming, a large group of poor, highly vulnerable
developing countries is expected to suffer increasing
food deficits.Table 2.1-1 summarizes findings of studies on the link between climate change and food production.
Above 2–3°C global warming, net food production losses on a global scale set in. In this temperature
range, the number of additional people at risk offamine globally due to climate change may reachmore than 50 million (Parry et al., 2001). Models project that at 3°C warming by 2080 cereal production
on a worldwide aggregate level will decline, although
total yields could theoretically still meet needs if
properly distributed (Fischer et al., 2002a). The
Council notes that these model results still incorporate a high level of uncertainty.

GMT
increase[°C]

Impacts

1,0-1,7#

Cereal yields decrease in most tropi- Cereal yields increase in manycal and subtropical regions (* to **). high- and mid-latitude regions
Reduced frost damage to some(* to **). Reduced frost damage toarable crops (***). Increased heatsome arable crops (***). Increased
damage to some arable crops and ani- heat damage to some arable crops
mal herds (***).
and animal herds (***).

1,4-3,2#

Stronger decrease of cereal crops in
the tropics and subtropics (* to **);
mixed effects in high- and mid-latitude regions (* to **).

1,5-2,0#Income of poor farmers in developing countries declines (* to **).

Developing Countries

1,6-2,6#

Mixed effects upon cereal yields inhigh- and mid-latitude regions(* to **).

Australian crop yields begin to
decline after initial increase.

>2,0#Large drops in yield of maize andsugarcane in small island developing
states.

>2-2,5*

Crop yield losses in developing countries.

>3+

Crop yield losses in developing countries. A group of 65 countries loses
16% of agricultural GDP; Africa andIndia lose, China gains.

>2,0-6,4#

General reduction in cereal yields inmost mid-latitude regions (* to **).
General increase in food prices(* to **).

>2,6#

Asia: net losses in rice production
begin.

>4,2#

Industrialized Countries

European crop production
increases (except Portugal, Spain,
Ukraine). US agriculture suffers
losses after previous gains.

General reduction in cereal yields
in most mid-latitude regions (* to**). General increase in foodprices (* to **).

Entire areas in Australia out of
production.

Table 2.1-1
Global warming and impacts
on food production indeveloping countries andindustrialized countries. The
asterisks indicate confidence
levels (where given in theliterature):*** high (67–95%),** medium (33–67%),* low to medium (5–33%).
GMT global mean
temperature, pre-industrial
level.
Source: # IPCC, 1990;* Parry et al., 1999; + Fischer
et al., 2002a

What is ‘dangerous’ climate change? 2.1

The Council notes that a situation in which all
regions suffer significant crop yield losses due to climate change must clearly be termed unsustainable.
Threats to a growing number of people due to climate change would jeopardize efforts to attain theMillennium Development Goals, which establish thetarget of halving the proportion of people who sufferfrom hunger by 2015, with the ultimate goal of eradicating hunger.
The Council concludes that a warming above 2°C
constitutes a dangerous range for food production
both in terms of net global food production as well as
in terms of increasing international disparities. Thistemperature limit takes into account accumulated
regional effects, possible negative feedbacks between
climate change and land degradation and effects ofextreme weather events not represented in themodel runs.

2.1.3.3
Tolerance limits for impacts on water availability
Water is the most important limiting factor for foodproduction. Therefore, the models estimating future
food production take into account the impacts of climate change on both temperature and water availability. Moreover, water in itself is the most essential
food of all. 1100 million people do not have access toclean drinking water today (UNEP, 2003), and contaminated water is the cause of 5 million deaths every
year. One third of the world’s population lives incountries under water stress, defined as those using
more than 20% of their renewable water resources.
This proportion is predicted to increase to almost
two thirds in the coming decades (IPCC, 2001b).
Thus, even without the additional stress of climatechange, water security already is one of the mostpressing issues in developing countries (WBGU,
1997).

Table 2.1-2
Impact of climate change onwater resources. The
asterisks indicate confidence
levels:*** high (67–95%),**medium (33–67%).
GMT global mean
temperature, pre-industrial
level.
Source: IPCC, 1990,
modified

While mean global warming leads to increased
overall precipitation, this does not lead directly to
improved water availability. For availability, not theamount of rain is decisive, but soil moisture andgroundwater recharge. If temperatures rise, there
must be more rain merely to maintain the status quo,
as the increased evaporation means that the additional precipitation cannot be utilized in the region.
Only in regions where the growth in precipitation is
far above the average can water scarcity be reduced.
Furthermore, in many regions warming will lead tomore precipitation per rainfall event; the result of
this is that, due to the more rapid runoff, often asmaller proportion of the precipitation contributes toelevating soil moisture and thus to groundwater
recharge.
According to climate model analyses, the numberof people at risk of water scarcity increases rapidly
with temperature towards the second half of the century, with impacts in arid and semi-arid regions
expected to be much larger that global averages suggest (IPCC, 2001b; Parry et al., 2001). Thus in regions
already under water stress today, climate change will
exacerbate the situation. For many water distressedregions global mean temperature increases abovearound 1.5°C are identified as leading to decreases inwater supply and quality and to an increase of bothfloods and droughts (Table 2.1-2; IPCC, 2001b).
Models predict 500–3000 million additional people under water stress in 2050, with most numbers
being in the range of 1000–2000 million. There seems
to be a systemic threshold around 1.5–2°C global
mean temperature rise; when this is overstepped, thenumber of people affected by water shortage grows
from approx. 600 million to over 2000 million, as
megacities in Asian developing countries begin to be
severely affected (Parry et al., 2001). Such a steep
increase in the numbers of people under water stressin such a short time span is likely to overburden
available adaptive capacities such as sea-water
desalinization or long-range transport, and thus can-

GMT
increase[°C]

Impacts

1,0–1,7

Water quality degrated by higher temperatures (**). Increase in saltwater intrusion into coastal aquifers (**). Water demand for irrigation will respond tochanges in climate (***). Increased flood damage due to more intense precipitation events (**). Increased drought frequency (***). Peak river flow shifts
from spring toward winter in basins where snowfall is an important source ofwater (***).

1,2–3,2Water quality degraded by higher temperatures (***).
Water quality changes modified by changes in water flow regime (***). Water
demand effects amplified (***).

>2,0

Water supply, demand and quality effects amplified (***).

15

16

2 Avoiding dangerous climate change

not be termed tolerable. The Council concludes thatwater availability would deteriorate to a degree thatmust be termed dangerous at a global mean temperature increase above 1.5–2°C.

2.1.4
Impacts of climate change on economic
development

2.1.4.1
Economic development and climate change
Article 2 UNFCCC states that stabilization of greenhouse gas concentrations should be achieved withina time-frame sufficient ‘to enable economic development to proceed in a sustainable manner’. Thisimplies that the costs of stabilization measures must
not exceed the short-, medium- and long-term benefits. It needs to be kept in mind here that the benefitof mitigation measures results from the prevention ofclimate damage and thus from the prevention of
costs at an unaltered high level of emissions. Thus
two contrasting groups of costs need to be considered: The costs that arise if emissions are reduced,
and the costs that arise if emissions are not reduced.
Costs of climate change incurred in the case of nonreduction of emissions further break down into damage costs and adaptation costs (WBGU, 2002).
The Council focuses here on the second group of
costs, as these are the ones of relevance when assessing the impacts of climate change on economic development. The costs of mitigation are addressed in
Chapter 3 where they are compared with the estimated costs of climate change damage and of adaptation, as well as with the ancillary benefits of climate
mitigation, arising from avoided damages not related
to climate change, such as air pollution damage.
This section focuses on estimates of aggregatedmonetarized effects of climate change. These mainly
concern market sectors already dealt with in previous sections (e.g. agriculture). Other sectors relevant
for such an aggregated estimate are impacts onhuman settlements and infrastructure. In particular,socio-economic impacts of sea-level rise on coastal
regions are relevant here. These include direct loss of
economic, ecological, and cultural values throughloss of land, infrastructure, and coastal ecosystems, aswell as increased flood risk and other impacts related
to changes in water management, salinity, and biological activities (IPCC, 2001b). A large portion of
the human population now lives in coastal areas, andthe rate of population growth in these areas is higher
than average. Many large cities are located near thecoast. Nicholls et al. (1999) indicate that by the 2080s,

the potential number of people flooded by storm
surge in a typical year would be more than five times
higher than today, assuming a sea-level rise of 0.38 m
since 1990. Between 13 and 88 million people could
be affected even if the application of protective measures is taken into account.
Climate change impacts on natural systems suchas wetlands and coral reefs can have profound effects
on socio-economic systems (IPCC, 2001b). For example, severe coral reef bleaching events with high mortality rates like the one observed in the Indian Ocean
in 1998 are expected to lead to reduced fish catches
and permanent negative effects on tourism. Degradation of reefs will also lead to diminished naturalprotection of coastal infrastructure against highwaves and storm surges. Wilkinson et al. (1999) estimate the costs of the 1998 bleaching event to be
between US$ 706 and 8190 million over the next 20
years.
Aggregated climate change effects are usually
measured as changes in gross domestic product(GDP). Their scale is highly uncertain due tomethodological problems associated with monetarization as well as the regional and temporal aggregation of damage. Assessments generally exclude
effects of changes in climate variability and extremes,
as well as the possibility of abrupt climate change(Section 2.1.6). They only partially account for
impacts on goods and services that are not traded inmarkets. Non-market damages are likely to be very
high, but difficult to quantify. Thus, economic losses
are likely to be underestimated and economic gains
overestimated. Furthermore, impact estimates arehighly sensitive to inequity aversion or risk aversion
assumptions (IPCC, 2001c).
Quantitative evaluation of benefits and costs ofadaptation measures is still incomplete. Greater andmore rapid climate change poses greater challenges
for adaptation.Although studies show large potential
benefits of adaptation measures such as coastal protection, these cannot appraise the likely benefits with
sufficient accuracy, as they generally use arbitrary
assumptions on adaptation options and obstacles,
and often omit changes in climate extremes and variability, as well as imperfect foresight (IPCC, 2001c).
Models indicate that for a 1°C warming a significant number of developing countries appear likely toexperience net losses, whilst developed countries arelikely to experience a mix of damages and benefits.
Some models even predict net benefits for developed
countries (IPCC, 2001c). The projected distributionof economic impacts is such that it would increase thesocio-economic disparity between developing countries and developed countries, with disparity growing
in step with warming, as impacts will fall disproportionately upon developing countries and the poor

What is ‘dangerous’ climate change? 2.1

persons within all countries. IPCC (2001b) assesses
the results of different modelling studies for aggregated damage costs. A broad picture emerges: Developing countries are more vulnerable to climatechange than developed countries. Some regions orcountries like India and Africa, but also the EU, areestimated to suffer losses between 2% and 5% of
GDP for a warming of about 2.5°C above pre-industrial levels.
However, the numerical results as such remain
speculative. The results are difficult to compare, asdifferent assumptions are made in different studies.
Few estimates factor in the possibility of catastrophic
impact. Some of them show a rapid increase of damage with temperature rise, while others make optimistic assumptions about adaptive capacity andbaseline development trends, which results in lower
damage estimates (IPCC, 2001b). In general, thegreater the concern about distribution issues, thehigher the estimated aggregate impact as losses tothe poor cannot be compensated by equal gains to
the rich.

2.1.4.2
Tolerance limits for impacts on economic
development
In setting a tolerance limit for sustainable economic
development, the distribution of impacts, both withinregions and over time, needs to be analysed and evaluated. In a previous report, the Council (WBGU,
1997) suggested a normative ceiling – all damage andadaptation costs attributable to climate change
beyond 5% of GDP were deemed intolerable (Section 2.1.1).This very rough estimate was based on theexperience gained with German reunification, fromwhich many economists conclude that pressures andstresses of an order greater than 3–5% of GDP are
critical to a national economy. The Council concluded that a warming rate of more than 0.2°C per
decade is not tolerable as it could lead to damage andadaptation costs that reach the upper limit of 5% of
global GDP, taking into account extreme events andsynergies with other environmental problems.
Alternatively, it would be possible to simply basethe guard rail on the number of people affected byclimate change damage. Calculations suggest that amajority of people may already be negatively
affected at an average global warming of 1.5–2.5°C
above pre-industrial levels (IPCC, 2001b).
Given the high uncertainties of damage estimates,
the Council does not set a quantitative guard rail for
economic development, but only uses the normative
3–5% GDP threshold as a tentative benchmark. In
view of the major uncertainties of damage cost esti-mates, and the strong likelihood of underestimating
damage when assessing only market impacts, theCouncil concludes that already at a global mean temperature increase of 2°C above pre-industrial levels
large regions may have to face an intolerable burden
to their economies (3–5% of GDP).

2.1.5
Impacts of climate change on human health2.1.5.1
Human health and climate change
Health is an important feature of the climate change
debate for three reasons:
1. Health is recognized by all cultures, religions,states and social groups worldwide as an asset
worthy of protection.
2. Health is affected by all drivers of global environmental change (universal sensitivity).
3. A population’s state of health can be used as anindicator to measure the impacts of climatechange (Krafft et al., 2002), in a manner comparable to the key role of health within the Human
Development Index (HDI).
According to a new study by the World Health Organization, climate change is already the cause of
150,000 deaths every year. Campbell-Lendrum et al.
(2003) have estimated the present health impact ofclimate change (in 2000, compared to the baseline
scenario over the years from 1961 to 1990).They concentrated on four impacts: malaria, malnutrition,
diarrhoea and flood-related accidents. They estimated an annual health impact of 5.5 million DALYs.
DALYs (Disability-Adjusted Life Years) represent
the loss of healthy or productive life years (WHO,
2002). This cumulative measure has been developed
as an indicator of a population’s total disease burden(premature mortality, disease and disability; Murray,1994). Drastic regional disparities were found (Fig.
2.1-2), the greatest health burden arising in theregions where vulnerability and population growth
are greatest: sub-Saharan Africa and south Asia.
Detailed analysis of the health damage triggeredby climate change permits a distinction between
direct and indirect health impacts (WHO, 2000;
IPCC, 2001b).
Direct impacts include, for instance, the effects ofextreme weather events (e.g. cardiovascular disease,asthma) or weather-related disasters (e.g. coastal orinland flooding, landslides). The latter not only leaddirectly to accidents, but also damage healthcare
infrastructure which is already inadequate in mostdeveloping countries and parts of newly industrializ-17

2 Avoiding dangerous climate change

ing countries. This undermines a key element ofadaptive capacity. Even in industrialized countries, if
there is inadequate adaptation (e.g. lack of air-conditioning) heat waves can cause severe health damage.
The French government attributes 11,435 additional
deaths to the heat wave in summer 2003 (Neue
Züricher Zeitung of 30.8.2003).
However, the greatest health damage arises
through indirect effects, as in the case of vector-borne
infectious diseases (e.g. infections caused by mosquitoes, ticks or flies). The IPCC predicts that by 2080,
260–320 million more people will be exposed tomalaria worldwide (IPCC, 2001b). This may be offset
by a possible decrease in malaria exposure in otherregions as a result of climate change. However, theseeffects cannot be compared directly with each other.
When malaria enters new regions, this can cause very
severe epidemics, as the population is immunologically unprotected. The contrasting health gain provided by a decline of malaria in previously exposed
regions is comparatively small (Trape and Rogier,1996). Dengue fever or tick-transmitted meningitis
are also vector-borne infectious diseases that can be
influenced by climate change. Quantifying climate
impacts on infectious diseases poses a research challenge.
In regions where food security or water supply are
already at risk today, it must be expected that combined effects (of e.g. a regional rise in temperature,
mounting water scarcity, and salination of soils as aresult of rising sea levels) will cause harvest failuresand – if adaptation is inadequate – malnutrition or
amplified water stress among particularly vulnerable
population groups, such as children, women and thepoor (Section 2.1.3.1; WHO, 2000).

It is plausible to assume that the health effects ofmalnutrition, drinking water scarcity, the spread ofmalaria and flood disasters are synergistic. While it is
not yet possible to quantify interactions, the temperature sensitivities of the population estimated byParry et al. (1999) indicate that the additional proportion of the population suffering under water
scarcity rises sharply when temperatures rise by values ranging between 1°C and 1.8°C (Section 2.1.3.3).
Water scarcity leaves less scope for personal
hygiene, and must therefore be expected to lead to a
distinct rise in diarrhoeal illness. This threshold characteristic amplifies the continuous growth of diarrhoeal illness in step with warming. These illnesses
are estimated to grow by 3–8% per degree temperature rise (Checkley et al., 2000; Singh et al., 2001;
WHO et al., 2003).

2.1.5.2
Tolerance limits for impacts on human healthIn summary, the Council concludes as follows:• The climate impacts on human health are substantial and cumulative.
• The impacts will vary very widely in geographicalterms, whereby Africa and south Asia will be most
severely affected, i.e. regions with above-average
population growth and inadequate adaptive
capacity.
• The estimates currently available suggest that the
WBGU climate window, with a maximum of 2°C
increase of global mean temperature, will tend
rather to be too wide, certainly not too narrow.
• However, the knowledge currently available does
not permit an exact quantification of the future
Figure 2.1-2:
Estimated health impact ofclimate change (1990–2000)
by region. Calculated for
Malaria, Malnutrition,
Diarrhoea and Floods.
DALYs are a parameter forthe cumulated burden
through diseases (see text).
Source: Campbell-Lendrum
et al., 2003

3,500
3,000
DALYs / Million population

18

2,500
2,000
1,500
1,000
500
0
AfricanregionSouth-East
Asian region

Latin American
Eastern
Mediteranean and Caribbean
regionregionWestern
Pacific
regionDeveloped
countries

What is ‘dangerous’ climate change? 2.1

impacts of climate change upon human health –
impacts that are mediated by complex webs ofinterrelations (WHO et al., 2003).
• The Council specifically points out that intensified
research efforts (prospective data series, modelling) will be necessary in order to better understand and quantify the webs of interrelations linking global environmental changes with humanhealth. As a part of such efforts, the Council especially recommends applying the DALY approach(WHO, 2002; WHO et al., 2003) as a cumulative
measure of health impact.

2.1.6
Large singular events triggered by climate change

2.1.6.1
Climate change and large singular events
The risk of singular, non-linear events triggered byclimate change represent a devastating risk tohumankind. Several systemic thresholds are possible
in the complex planetary system, beyond which large
singular events can be triggered (Schellnhuber,
2002). Model simulations indicate that such systemswings lie within the range of temperature changes
that are projected for the next few centuries if greenhouse gas concentrations continue to rise (IPCC,
2001a). Crossing these thresholds can lead to unforeseeable and irreversible changes. The WBGU terms
as irreversible a process that is irreversible withinhuman time horizons (millennia), such as the meltingof glaciers or climate-related sea-level rise. It is in
general very difficult to predict when these thresholds would be reached, but it is important to note thatthe likelihood of many singular events can be
expected to increase with the rate of change of forcing. However, it is not yet possible to predict theonset, timing and scale of large-scale events. Some
uncertainties will always be associated with projections of singular climate changes, due to increased
unpredictability exhibited near climate thresholds(Alley et al., 2003).
Even if some of the effects could happen in a very
distant future, the impacts could still be so abrupt andsevere that damages would be very high and adaptation almost impossible (IPCC, 2001b). Therefore, theCouncil states that the following large-scale abruptchanges should be prevented in any event.
Thermohaline circulation shutdown
The thermohaline circulation (THC) brings warm
tropical water to the North Atlantic, thus warming
Northern and Western Europe by several ºC, andincreasing precipitation throughout the region.
Knowledge from past climate change and model simulations suggests that there are multiple equilibria
for the THC in the North Atlantic. Switching
between the equilibria can occur as a result of temperature or freshwater forcing. Complex general circulation models suggest that future climate change
could cause a slowdown or even collapse in the THC.
Some model studies suggest that the threat of acomplete shutdown increases beyond a global mean
warming of 4–5ºC, but this is still very uncertain(IPCC, 2001b). Stocker and Schmittner (1997) haveshown that the THC is sensitive not only to the final
level of warming, but also to the warming rate. Theseand other simulations (e.g. Rahmsdorf and Ganopolski, 1999) suggest that global warming could lead to abreakdown of the THC centuries later, which would
irrevocably lead to intolerable burdens on future
generations, as well as severe consequences formarine ecosystems and fisheries, and also for carbon
uptake by the ocean.
Runaway greenhouse effect
Climate change could reduce the efficiency of current oceanic and biospheric carbon sinks. Under certain conditions, the biosphere could even become asource for greenhouse gases, e.g. if marine reservoirsof methane hydrates are destabilized, releasing large
amounts of methane to the atmosphere. These
processes could generate a positive feedback, accelerating the global warming. Methane released fromthe vast reserves of natural gas hydrates in oceanic,
deep lake and polar sediments and the free gas
trapped beneath hydrate deposits could explain the –on a geological time scale – abrupt global warming
about 55 million years ago, when temperatures insome areas rose by up to 8ºC within a few thousand
years (Schiermeier, 2003). Recent model studies
show that it could be explained by a switch in thethermohaline circulation, with a resultant destabilization of large quantities of methane hydrates (Biceand Marotzke, 2002; NRC, 2002). The switch wascaused by a slow increase in the atmospheric water
cycle, as expected under increasing temperatures.
Large methane releases may also have played amajor role in the sudden events terminating glaciation at the end of the last ice age. There are large
remaining hydrate reservoirs in the Arctic and in
shelf sediments globally, and there is substantial risk
of further emissions (Nisbet, 2002).
Transformation of continental monsoons
The Asian summer monsoon is a large-scale circulation pattern driven by the disparate warming andcooling of land and ocean. Each year the predominant winds switch direction, e.g. over India from

19

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2 Avoiding dangerous climate change

northeasterlies in winter to southwesterlies in summer. The latter lead to abundant rainfall, as theybring much moisture from the Indian Ocean. Monsoon rains provide 75–90% of the annual rainfall
over India. Thus, the monsoon rainfalls play a crucialrole for agricultural and industrial production
throughout South and East Asia. The monsoon isrelated to the migration of the Intertropical Convergence Zone (ITCZ), a region of low surface pressure
where the trade winds converge. The location of the
ITCZ in summer switches between two preferred latitudes, one associated with abundant rainfall overIndia (active monsoon), the other with less rainfall
over land (break monsoon). Palaeoclimatic evidence
and the nonlinear nature of the Asian monsoon
reveal the potential for abrupt system changes in the
future (Zickfeld, 2003).
The very close correlation of Indian food production with the quantity of monsoon rainfall overrecent decades underscores the great importance ofthe summer monsoon for the population of India,
counting around one thousand million people. For
instance, some 600,000 people died of starvation innorthern India during the period 1790–1796 as aresult of limited monsoon rainfall and low soil moisture. Very weak summer monsoons are not an
unknown occurrence in the region over the past 600
years. Although the impact of drought on agriculture
can be mitigated by irrigation, this is only the case ifwater reserves, primarily groundwater, are available.
Such buffers of groundwater will most certainly not
be able to offset the next collapse of the monsoon innorthern India (Alverson et al., 2003). Although
India has succeeded since its independence in preventing drought disasters by means of country-wide
food distribution, a systemic change of the summer
monsoons poses an existential threat to its population.
Increased greenhouse gas concentrations could
intensify the Asian summer monsoon (IPCC, 2001b).
This effect is partially compensated by regionally elevated anthropogenic air turbidity, above all by sulphate aerosol particles, through which the land
warms up less. Intensification of the monsoon could
be accompanied by an increase in precipitation variability.This could lead to the occurrence of periods of
reduced monsoon rainfall as well as to periods ofintensified precipitation. Changes in timing andintensity and increased variability within seasons
could lead to severe impacts on food production andflood and drought occurrences in Asia. The state ofscience concerning the Asian monsoon differs fromthat concerning the THC: No well-defined thresholds
have yet been identified.

Disintegration of the West Antarctic Ice
Sheet
Marine-grounded ice sheets are inherently unstable.
In the past 1.3 million years, the West Antarctic Ice
Sheet has collapsed at least once. Temperatures thenmay not have been more than 2°C above today’s(Oppenheimer, 1998). Global warming projected forthe 21st century could set in motion an irreversible
melting of the West Antarctic Ice Sheet, implying
sea-level rise by 4–6 m and most severe damage(IPCC, 2001b). There is large uncertainty with regard
to the time scale of the possible disintegration. Estimates figure 400–500 years and 1600–2400 years,
leading to a contribution to sea-level rise of 10–15mm or, respectively, 2.5 mm per year (IPCC, 2001b).
The former would cause sea levels to rise by 1–1.5 m
within a century. This is well outside human experience and would widely exceed the adaptive capacityof most coastal structures and ecosystems (IPCC,
2001b).
Greenland ice under threat
The melting of the Greenland ice would cause themean sea level to rise by several metres over many
millennia (IPCC, 2001a). Model computations indicate that for this to happen the critical (local) warming over Greenland is around 3°C. Local warming
over Greenland, however, is higher than global
warming by a factor of 1.3–3.1 (IPCC, 2001a). If anamplification factor of 2 was assumed, then a global
warming by only approx. 1.5°C could already lead toan irreversible melting of the Greenland ice in its
entirety.

2.1.6.2
Tolerance limits for large-scale singular events
Due to the large uncertainties with regard to any
quantitative assessment of thresholds in the climate
system, and the inherent unpredictability exhibitedby the system near these thresholds, the precautionary approach becomes the main guiding principle insetting a quantitative guard rail. Adaptation in theface of these singular climate changes is almost
impossible, and the impacts upon large regions oreven worldwide are potentially devastating. The riskof crossing any of the thresholds described aboverises with increased warming as well as with anincreased rate of warming. Therefore, the Council
considers that a limit of 2ºC for global warming relative to pre-industrial levels, as well as a limit of 0.2ºC
per decade for the rate of global warming, should not
be exceeded. This is necessary to avoid an unacceptable risk of large singular events (WBGU, 2004).

From temperature limits to emission pathways 2.2

Even within these limits, the risk of triggering irreversible large-scale events is not negligible.

2.1.7
Conclusion: The WBGU global mean warming
guard rail
Having discussed the climate impacts of global mean
temperature rise as the prime parameter, the Council
finds its view set out in previous reports confirmed
that, globally aggregated, danger begins at 2°C global
mean temperature rise relative to pre-industrial levels (WBGU, 1995, 1997). Secondly, the long-term
average rate of global warming should not exceed
0.2ºC per decade.
Even if this tolerable climate window can be maintained many adverse consequences, particularly indeveloping countries, would still occur. Moreover,separate evaluation of the individual criteria cannot
produce any statement on how these criteria arelinked to each other and how they interact with otherfactors of global environmental change (such as soil
degradation). Warming may therefore already be
dangerous at lower levels of global mean temperature rise.

2.1.8
Recommendations for research
In view of the severe consequences of climatechange, there is a need to devote further study to theconditions under which such change might occur. To
further reduce the uncertainties of assessments, there
is a need for intensified research on the impacts ofclimatic changes upon ecosystems, food production,water supply, human health and economic development. Particular consideration must be given to theincrease of extreme weather events. In such efforts,
regional impact studies should be aligned moreclosely to the standards and be related more systematically to the scenarios developed by the IPCC
(2000). International cooperation should ensure that
all relevant regions are studied. In particular, there isa need to gain an improved understanding of thecausal chains linking global mean temperature withlocal climatic factors.
There is also a need for research on the potential
and risks of adaptation of farming to climate impacts
by using genetically modified organisms. Adaptation
to climate change should be made a priority of international agricultural research.
To provide support in defining tolerable limits ofglobal mean temperature for ecosystems, a worldwide effort should be launched to compare, in thevarious regions and ecosystems, the interannual variability of climate parameters with the anticipatedshift of these parameters as a consequence of climatechange. This would make it possible to identify, foreach level of global warming, the percentage ofworldwide ecosystem area that would probably bedamaged. An excessive shift would convert weather
events that were previously extreme into common
events, and would thus jeopardize the survival of theecosystem in question. This approach could help toimprove the scientific basis for defining tolerable
limits of climate change.
Finally, integrated impact research should study
more closely the interactions among climate change
and socio-economic factors, as well as the interactions among climate change impacts upon different
sectors. In particular, this should involve further
development of the approach of determining thenumber of people affected (‘millions at risk’; Parry etal., 2001). Such research should address, for instance,
the question of the effects of water scarcity uponsocio-economic systems, and the opportunities andlimits of adaptation measures. To quantify the healthimpacts of climate change, the DALY approachshould be used and further developed.

2.2
From temperature limits to emission pathways
After defining the maximum limit of the global mean
temperature (Section 2.1.7), the Council analyses in
the following different CO2 concentration levels andcorresponding cost-minimizing emission pathways
compatible with the WBGU climate window (Chapter 3).The determination of global CO2 emission profiles compatible with the climate window involves
two steps: First, CO2 concentration targets compatible with the climate window will be determined. This
involves some assumptions with regard to uncertainty factors (Section 2.2.1). Second, determinationof CO2 emission pathways leading to these concentration levels involves questions with regard to thebest timing of emission reductions (Section 2.2.2).

2.2.1
From temperature limits to carbon dioxidestabilization targets
There is a wide range of uncertainty associated withthe stabilization level of CO2 concentration required
to stay within the WBGU temperature limit
described in Section 2.1. The required level depends
on the emissions of other greenhouse gases and on
the climate sensitivity, as well as on the strength of

21

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2 Avoiding dangerous climate change

the carbon cycle feedback and other uncertainties
with regard to the climate system. These parameters
and uncertainties will be described in the following
sections.
Emissions from other greenhouse gases andaerosol particles
Energy- and industry-related CO2 emissions contribute most to climate change and their relative roleis expected to increase in the future without any climate policies (IPCC, 2000). These emissions can bemeasured and projected with much higher accuracy
than emissions from land-use change and emissionsof other greenhouse gases controlled by the Kyoto
Protocol (methane, nitrous oxide, HFCs, PFCs, SF6)
or by the Montreal Protocol (CFCs and HCFCs). In
contrast to the effect of these long-lived greenhousegases, the climate effect of aerosol particles (e.g.
anthropogenic sulphates are cooling) and soot(warming) as well as the indirect effect of the precursors of tropospheric ozone (CO, NOX, VOCs) areregional. Uncertainty is particularly high for theradiative forcing of aerosol particles.
The uncertainty with regard to current land-use
emissions is high. Most changes in land use are
induced by the demand for cropland and grassland.
Different assumptions about economic and demographic development as well as technology development lead to different scenarios of CO2 emissions
from land use and land-use change (IPCC, 2000). In
general, emissions increase initially because of continuing deforestation in developing countries andsubsequently decrease due to reduced population
growth and increase in agricultural productivity.
The climate impact of non-CO2 greenhouse gases(methane, nitrous oxide, halocarbons) over the past
century is roughly equivalent to that of CO2 (Reilly
et al., 2003).The emissions arise from a variety of sectors and applications and are therefore more uncertain than CO2 emissions (IPCC, 2000).
Climate sensitivity
Climate sensitivity refers to the change in global
mean surface temperature following a doubling of
the atmospheric CO2 concentration. It is by far themost important uncertainty factor when forecastingclimate change and its impacts (Caldeira et al., 2003).
The IPCC (2001a) assumes between 1.7 and 4.2˚Cwarming due to doubling of pre-industrial CO2 concentration, which is the range of values resulting
from seven coupled atmosphere-ocean general circulation models. The median of this range is 2.6˚C.
However, IPCC does not make any assumption on a
best-guess value for climate sensitivity. There havebeen several studies trying to estimate probability
distribution functions of climate sensitivity. Someshow a high likelihood for climate sensitivity being
even higher than 4.2˚C (Andronova and Schlesinger,
2001; Forest et al., 2002; Knutti et al., 2002). One difficulty in estimating climate sensitivity is the uncertainty with regard to the strength of the cooling effectof anthropogenic aerosol particles. If this effect isstronger than assumed hitherto – and empirical evidence seems to point in that direction (Anderson etal., 2003) – then it could mean that climate sensitivity,
namely the response of the climate system without
the cooling effect of aerosol particles, is higher thanpreviously estimated. This would mean that warming
rates in the 21st century, when aerosol emissions are
expected to decline (IPCC, 2000), would be muchhigher than previously estimated (IPCC, 2001a). Thiseffect is even enhanced if carbon cycle feedback istaken into account, because aerosol particles suppress the rate of warming due to greenhouse gases,
and thereby increase carbon accumulation at present. The carbon cycle feedback effect is thus
delayed, but then stronger because of the additional
release of carbon accumulated in the soils. Negative
impacts of climate change on the carbon cycle arethus shifted into the future (Jones et al., 2003).
Carbon cycle feedback
Simulations with general circulation models withinteractive land and ocean carbon cycle components
show a positive feedback, i.e., both CO2 concentrations and climate change at the end of the 21st century
are higher than without the carbon cycle feedback(IPCC, 2001a). This feedback effect can be explainedby the reduced uptake of CO2 by oceans and by theterrestrial biosphere: Warming reduces the solubilityof CO2 and therefore reduces uptake of CO2 by theocean. In addition, warming is likely to lead toincreased vertical stratification of the ocean, which
would lead to reduced ocean CO2 uptake.
Warming also reduces terrestrial uptake byincreasing the rate by which living organisms convert
organic matter to CO2.The long-term effect is not yet
clear. The net terrestrial carbon uptake observed atpresent will also decline as re-growing forests in the
Northern Hemisphere mature and the effects of CO2
fertilization and nitrogen deposition saturate. Moreover, climate change is likely to increase disturbanceand mineralisation rates, leading to a reduced terrestrial uptake (IPCC, 2001d; WBGU, 1998).
Several vegetation models project that the recent
global net terrestrial carbon uptake will peak, thenlevel off or decrease (Cramer et al., 2001). The peak
could be passed within the 21st century according toseveral model projections. Climate change, in particular shifts in precipitation patterns, can lead to largechanges in vegetation distribution and structure(Section 2.1.2).The models show large forest dieback

From temperature limits to emission pathways 2.2

caused by droughts in Africa, America and Southeast
Asia (Cramer et al., 2001). This leads to a significant
loss of carbon, as forests are replaced by grasslands.
Jones et al. (2003) calculate the effect of climatechange and changed concentration of greenhousegases on the terrestrial biosphere, coupling a global
climate model with a dynamic vegetation model, taking into account i.a. the effect of aerosol particles.The
effect of increased respiration of plants and Amazon
dieback causes the terrestrial biosphere to turn into a
net source in about 2040 (Jones et al., 2003). According to these model results, the land carbon source
reaches 7 Tg C per year by 2100, thus even exceeding
the ocean carbon sink by about 2080.The transitional
character of the contemporary terrestrial carbon sinkhas important consequences for the adequate way of
dealing with the terrestrial biosphere within theaccounting framework of the Kyoto Protocol (Chapter 4): The reduction of emissions from fossil fuelburning implies permanent storage of carbon in safe
fossil deposits. In contrast, measures to enlarge carbon stocks in the biosphere come with an increased
risk of later release of the additionally stored carbon
into the atmosphere, e.g. through changes in land use,
climate change or fire.

2.2.2
From stabilization targets to time paths ofemissions
The same stabilization level for CO2 concentration
can be reached by different emission pathways, even
if the same target year is chosen. If higher emissions
are allowed in earlier decades, steeper reductions arenecessary in later decades. Such delays in emission
reductions lead to more rapid warming in the first
decades. Whether higher reductions in the near-termor deferral of response measures lead to lower overall cost estimates for a given concentration target
depends on assumed discount rates as well as on howtechnological learning is factored in. While somestudies state that delay of response measures leads tolower costs (Wigley et al., 1996; Manne and Richels,
1997), others show that early action can stimulate
more rapid deployment of existing low-emission
technologies and thus help reduce costs (technological learning-by-doing) and avoid risks of lock-in tocarbon-intensive technologies (Grübler and Messner, 1998; van Vuuren and de Vries, 2001).
A decision on a long-term concentration target
might not be possible or even recommendable due tothe large uncertainties with regard to the tolerable
concentration level (Section 2.2.1). Therefore, decision frameworks dealing with this uncertainty havebeen developed (IPCC, 2001d). The implications of

the inertia of the energy system have to be taken into
account: If, for example, a 550 ppm target is regarded
as tolerable, but some decades later new scientificknowledge arises leading to the conclusion that alower target should be aimed at, then emissions
would have to be reduced sharply. Due to premature
retirement of capital, this could lead to higher costs
than if a lower level had been targeted from the
beginning. Once investments in long-term infrastructure have been done, it is costly to change the pathway of energy system development (lock-in effects).
Ha-Duong et al. (1997) show that the economic
risks associated with deferring abatement justify
starting to limit CO2 emissions from energy systems
immediately, if there is a significant probability of
having to maintain greenhouse gas concentrations
below about double those of the pre-industrial era(this corresponds to about 450 ppm CO2 concentration). This conclusion holds even without taking into
account technological ‘learning-by-doing’, which
would favour early action even more. The mounting
climate change damage due to a delayed abatement
must also be taken into account. The crucial factor is
the uncertainty with regard to the definition of a ‘tolerable’ concentration level, combined with the inertia of energy systems: Costs of acting too late (andhaving to shift to more stringent targets later on thebasis of new scientific evidence) then dominate costsof early action (Hourcade et al., 2001). This conclusion is even stronger if induced technological changeand ‘learning-by-doing’ is factored in, as then thecosts are minimized all the more strongly, the earlier
abatement takes place.
Uncertainty with regard to the definition of ‘tolerable’ concentration levels thus points to hedging
strategies as appropriate decision frameworks(IPCC, 2001c). Even if, for example, a CO2 stabilization level of 450 ppm is regarded as a best guess for asafe level, it is more cost effective to follow a lower
emissions path than the one leading to stabilizationof 450 ppm, as long as the tolerable stabilization levelis uncertain, in other words, as long as there is a considerable likelihood that this might turn out to be a
too dangerous target.

2.2.3
Conclusions
Based on the analysis of uncertainties with regard to
the global mean warming that follows from specific
CO2 concentration levels, the WBGU has decided toanalyse two different CO2 concentration levels (400and 450 ppm), which are compatible with the WBGU
climate window under certain assumptions withregard to climate sensitivity and other emissions (e.g.

23

24

2 Avoiding dangerous climate change

deforestation, agriculture) and other uncertainty factors (Section 2.1.1). Due to the large uncertainties
related to the climate system, the definition of a specific concentration level as tolerable would be premature. The Council recommends a hedging strategy,
leading to the recommendation to pursue lower concentration level targets (below 450 ppm) initially,rather than having to correct a higher target later on.
The uncertainty with regard to the role of the terrestrial biosphere in the carbon cycle and the transitional character of the present-day terrestrial carbon
sink make it highly risky to offset fossil fuel reduction
commitments against terrestrial sinks (Chapter 4).
As concerns research efforts, in order to operationalize Article 2 UNFCCC, there is a particularneed to pursue integrated modelling approaches thattake into consideration many actors with disparate
interests and diverse uncertainties, based upon theTolerable Windows Approach (Section 2.1.1). This
creates a methodological separation between thenormative setting of guard rails and identification of
global climate change impacts on the one hand, andthe determination of tolerable emissions paths andoptimal strategies on the other. To this end, thereduction potentials and associated costs of othergreenhouse gases besides CO2 need to be integrated
within corresponding modelling studies. This canidentify least-cost strategies by which to remain
within the WBGU climate window, that embrace allradiatively active gases. There is also a need for further analysis and research on action under uncertainty (e.g. approaches with heterogeneous agentswith potentially defective behaviour).
Finally, to study abatement strategies and theireconomic and other impacts, a broad range of stabilization scenarios should be analysed. Thereby theentire spectrum of possible futures can be taken into
consideration – such as are presented by the SRES
scenarios (IPCC, 2000) – in order to thus be able toappraise the costs. This must include study of target
carbon dioxide concentrations below 450 ppm.

2.3
Seeking compliance with given emissions profiles

rights must be allocated in such a way that the global
emission boundaries are not transgressed. By comparing such desired emission paths with those thatare to be expected if no counteracting measures aretaken (emissions in the reference scenarios), we canalso calculate a time profile for the requisite emissions reductions.
Various different regionalized emission paths arecompatible with the global emission path. The question thus arises of which criteria are to be applied toallocate the emission rights and the reduction commitments that result from these rights. A number ofdifferent approaches are under debate. These do justice to differing degrees to the principles establishedby the UNFCCC concerning an equitable assumption of climate change mitigation commitments (Art.
3(1)). One is the principle of common but differentiated responsibilities. This implies that countries
assume reduction commitments essentially according to their historical and present contribution to
global warming. A further is the principle that countries contribute to climate protection in accordancewith their capabilities, particularly in accordancewith their economic and technological capacities.The
criterion of needs is also under debate (Berk and den
Elzen, 2001; Höhne et al., 2003); this can be derived
indirectly from the Convention (Art. 3(2)) and its
preamble.Taking as a basic precept that every person
or every country is entitled to a certain level of welfare, it follows from the principle of needs that justicemust be done to the right to development and theresultant different development needs, as well as to,for instance, geographically or climatically determined differences in emissions needs. The needs
principle cannot be concretized directly from theConvention, so that it would appear that the principle can only be operationalized to a limited degree.
However, the Council sees a potential for concretization in the egalitarian principle, which can be derived
from the human right to equal treatment and, in relations among contracting parties, from the principle ofequity (Art. 3(1) UNFCCC; Kokott, 1999). In addition, the Council postulates the principle of constancy, according to which abrupt measures leading
to drastic effects should be avoided in socio-economic systems, as these may have severe consequences affecting the economies of all regions.

2.3.1
Principles for the allocation of emission rights
Proceeding from a global target path for emissions
that prevents ‘dangerous’ climate change, it is possible and essential to determine at country andregional level target paths for emissions in such a waythat compliance with the global emission path can beensured. This means that country-specific emission

2.3.2
Contraction and convergence
The model of ‘contraction and convergence’ (C&C;
Meyer, 2000) is based upon a fundamentally equal
right of all individuals to emit. This can be derived
from the human right to equal treatment, and corre-Seeking compliance with given emissions profiles 2.3

sponds to the principle of equity under the UNFCCC(Art. 3(1)), and thus corresponds to the egalitarianprinciple postulated by the Council.
Under this approach, the global emissions budget
resulting at each point in time from the target pathfor global emissions is broken down such that the
per-capita emission rights of all countries or regions
converge and are equal from a set convergence year
onwards. This process can be linear or non-linear, at
a rate that must also be set. Thus, for pragmatic reasons (principle of constancy), realization of the rightto equal per-capita emissions is aimed at with a time
lag of several decades (roughly up to the year 2050 or
2100). The approach does justice to the principle ofeconomic capability by the circumstance that industrialized countries would be subject on average tosubstantially higher reduction commitments than thedeveloping countries. There are contradictions, however, between taking the C&C approach or the capability principle as a basis for allocating emission
rights – these conflicts become particularly clear if,
instead of comparing the ‘industrialized country’ and‘developing country’ groups, individual countries arecompared. The principle of differentiated responsibilities is complied with to the extent that the percapita reduction burden of countries is greater thehigher their current per-capita share in greenhousegas emissions is. However, differences in historicalresponsibilities are largely not taken into account.
In terms of the CO2 emissions path, the C&C
approach is highly targeted, as emission budgets are
fixed over the long term and are not subject to any
fluctuation.

2.3.3
Three-sector approach (‘Triptych’)An approach giving explicit consideration to structural differences is the ‘Triptych’ approach (Berk andden Elzen, 2001; den Elzen, 2003). Under thisapproach, country-specific emission budgets are calculated for three different sectors – the energy, industrial and household sectors (Michaelowa et al., 2003).
The budgets are based upon assumptions on future
economic and technological developments in the sectors. The approach further assumes convergence ofhousehold emissions. This provides the basis onwhich to assess the reduction commitments of individual countries. Due to its dependence uponassumptions on the development of individual sectors in member states, the Triptych approach is hardto operationalize. Moreover, it can contradict the
principle of differentiated responsibilities. The emission situation created in the past may have a strong
effect if the past high emissions of a country with alarge emissions-intensive sector entail high emissions
budgets in the future. This would entail an unjustifiable advantage for historically emissions-intensive
countries.

2.3.4
Multi-sector convergence
The multi-sector convergence approach (Jansen etal., 2001) takes structural differences between countries or country groups into consideration in a manner similar to the Triptych approach. Based upon afixed convergence year, converging per-capita targets
are determined for seven sectors. Country-specificemission budgets are then determined in binding
form on this basis.
This approach shares the problems of the Triptych
approach – difficulties in operationalization, and acertain tendency to favour countries with historicallyemissions-intensive sectors. A further problem of all
sector-specific approaches lies in the high requirements that they place upon country-specific data.The
data required to calculate sector-specific emissions
budgets are frequently not available, and can be
manipulated easily.

2.3.5
Brazilian proposal
An approach that stresses historical responsibility isbased on a proposal made by Brazil for the allocationof the commitments of Annex-I states under the
Kyoto Protocol. The proposal suggests that states
must contribute all the more to emissions reduction
the more they have contributed in the past to the climate problem. Historical responsibilities are to bemeasured by the contribution to global warming.
With this approach it would be necessary to determine a reference point in time at which the international community must already have been aware of
the problem of climate change, e.g. 1990 when the
IPCC published its first assessment report. Otherwise the approach could amount to a ‘liability’ forbehaviour which, while harmful, could not be recognized as such at the time. Many industrialized andtransition countries fear that the Brazilian proposal
might entail a drastic ad-hoc transformation thatwould exceed their economic capabilities.

25

26

2 Avoiding dangerous climate change

2.3.6
Multistage approach
In contrast to the approaches towards allocating
emission rights and reduction commitments set out
above, the multistage approach is concerned less withdetermining the allocation standard, and more with apossible procedure by which to integrate individual
countries or groups of countries into the regime in a
step-wise process. Thus, while under the contraction
and convergence approach and under the Brazilian
proposal it is generally assumed that all participating
countries are integrated immediately into the reduction system, the multistage approach (Berk and den
Elzen, 2001; den Elzen, 2003) assumes gradual entry
into the reduction system. Different country groups
engage in different stages of reduction commitment.
Stages range from, for instance, the complete absenceof a reduction commitment through to a commitment oriented to economic growth, or an absolute
reduction target. This approach is flexible in terms ofthe choice of criteria for involving states in the various stages, in terms of the types of reduction targets(absolute reduction targets, intensity targets, sustainable development policies and measures, etc.) and interms of criteria for differentiating the reduction
commitments of states at any given stage (Berk andden Elzen, 2001). Depending upon the way reduction
commitments are defined specifically in a stage, different weight attaches to the individual equity principles within the multistage approach.
In terms of negotiation dynamics, the flexibility ofthe multistage approach is an advantage. However,this flexibility poses risks with respect to ambitious
reduction commitments. Moreover, most relativeemission reduction targets discussed for interim
stages (intensity targets, sustainable development
policies and measures, etc.) present major problemsof implementation, measurement and monitoring.
Ultimately, the multistage approach is more a forecast of potential negotiation processes, and less anautonomous, scientific criterion for allocating reduction commitments.

2.3.7
Conclusions
Particularly with regard to targetedness in terms of
CO2 emissions, in consideration of the fundamentallyequal right of all individuals to emissions, and further
considering the principle of constancy, the WBGU
has decided to base its in-depth analysis of the implications of emissions allocation on the contraction
and convergence model. This analysis compares thedifferences between scenarios converging by 2050,
and by 2100. In both cases, linear convergence isassumed for the sake of simplicity. No base year for
population development is assumed, as this wouldintervene severely in the policies of countries withhigh population growth rates (Section 3.2).
It is important for the concrete practical implementation of such a long-term C&C approach toclarify by which short- and medium-term measureslong-term convergence can be achieved. This must
include a deliberation of how the approach would
need to be modified if not all countries are able tofully accept this regime from the start. It may be useful in this context to make use of the procedure proposed by the multistage approach, which explicitly
envisages that individual countries join the system
successively. This aspect is discussed in more detail in
Chapter 5.

3Stabilization scenarios

3.1
Climate policy and sustainable energy systems

3.1.1
Guard rails for sustainable energy policy
In its report titled ‘Towards Sustainable Energy Systems’ (WBGU, 2004), the German Advisory Council
on Global Change (WBGU) elaborated an exemplary path for the transformation of the global
energy system. This path is characterized by ambitious climate change mitigation, strong economic
growth as well as global convergence. That reportsucceeded in demonstrating that a sustainable transformation of the global energy system is indeed possible in a way that is also in line with the guard rails
for sustainable energy policy developed by the Council (WBGU, 2004).
Proceeding from these guard rails, the Council has
analysed the realizable sustainable potential of theenergy sources available for this transformation
process. In many instances, this sustainable potential
is far lower than the technological potential of thespecific energy source, not to mention the theoreticalpotential. The sustainable potential of fossil energy
sources is determined essentially by the requisite stabilization of atmospheric CO2 concentrations (Section 2.2).This requirement produces restrictions for anumber of renewable forms of energy, too, resulting
in the following potentials: biomass 100 EJ per year,
wind 140 EJ per year, hydropower 12 EJ per year
over the medium term and 15 EJ per year over thelong term. The solar energy potential is the only one
that can be considered quasi-unlimited in relation toanthropogenic energy consumption. The use of
nuclear fission is associated with unacceptable risks,
so that the WBGU recommends shutting down existing nuclear power plants when their current operating permits expire, and not building any further ones.
Despite path dependencies, a global phase-out of
nuclear energy use by the year 2050 is deemed
acceptable and feasible. The potential hazards offusion power plants also appear substantial. As
fusion power plants will be available in the second
half of the present century at the earliest – if at all –the Council recommends that such plants should not
be considered as a part of a transformation of energy
systems.
The WBGU views CO2 capture from the exhaustsof energy conversion systems, with subsequent CO2
storage in geological formations, as a bridging technology, and assesses its sustainable potential, withparticular consideration to the safety of the repositories, at a cumulative volume of about 300 Gt C
(WBGU, 2004). Storage in oceans is considered nonsustainable (WBGU, 2004). As, overall, carbon storage can only have a transitional function, the Council
recommends its phase-out by the year 2100.
Moreover energy consumption reductions
brought about by major yearly improvements ofenergy intensity are just as important as the reconfiguration of the supply side.
It further needs to be kept in mind that technological CO2 stabilization can be jeopardized by emissions from natural reservoirs (Chapter 4). It is therefore essential to protect these reservoirs, e.g. throughappropriate land-use activities.

3.1.2
Global climate change mitigation scenarios

3.1.2.1
Development of the IPCC mitigation scenarios
The potential development paths of the global
energy system under certain CO2 stabilization levels
vary widely, depending upon demographic, economic
and technological boundary conditions (IPCC, 2000;
WBGU, 2004). To address this issue, the WBGU
already analysed in previous reports a series of different potential developments with regard to theircompliance with the WBGU guard rails (SRES andpost-SRES scenarios: IPCC, 2001c). The above-mentioned exemplary path for the transformation of the28

3 Stabilization scenarios

global energy system which modified IIASA’s postSRES scenario A1T-450, was developed upon thebasis of these analyses.
To pursue this approach in further depth and,moreover, to attain regionally disaggregated information within the various future paths, the Council
commissioned IIASA to continue the corresponding
scenario development process (Nakicenovic andRiahi, 2003 a,b). In this work, the scenarios were created with an energy system model (MESSAGE),
which was coupled and iterated with a macroeconomic model (MACRO). This permits endogenous
determination within the model of, inter alia, energy
demand and costs, whereby macroeconomic optimization is assumed. Thus, while the above-mentioned exemplary path defined by the WBGU isbased upon consistent quantification, the IIASA
models used here are optimization algorithms withendogenous parameters. The scenarios described in
the following were based upon the SRES families B1,B2 and A1T, with the properties set out in Table 3.11.The Council takes the view that the assumptions on
which the SRES A2 world is based (heterogeneous
world, no emphasis on sustainability, slow technology
development, low levels of efficiency improvementand decarbonization) make achievability of climate
protection goals extremely improbable. Hence no A2
scenario was included in the present study.
Building upon B1, B2 and A1T, various calibrations were updated. Carbon capture at biomass-utilizing installations was included as an additional CO2
sink in the underlying technology portfolios. Furthermore, the sustainability conditions of the Council(Section 3.1.1) were implemented as boundary conditions in two of these scenario families (A1T, B1),
while B2 was not made subject to the WBGU boundary conditions. The resulting reference scenarios are
termed in the following A1T*, B1* and B2 (* = created under the boundary conditions of sustainableenergy systems set out in Section 3.1.1; Fig. 3.1-1).
Subsequently, building upon these reference scenarios, challenging CO2 stabilization targets were implemented (B1* and B2: 400 ppm, A1T*: 450 ppm; Section 2.2). The corresponding mitigation scenarios are
termed in the following A1T*-450, B1*-400 and B2400 (Fig. 3.1-1).
The results for scenario A1T*-450 follow on fromthe development of the exemplary path in the Council’s ‘Towards Sustainable Energy Systems’ report.
Consequently, in order to permit comparability, a
CO2 stabilization concentration of 450 ppm wasselected for scenario development in the present
report. The A1 world has a high level of energy consumption due to strong economic growth. At thesame time, the modified scenario restricts a numberof carbon-free energy sources due to higher-levelsustainability considerations (biomass, hydro, wind,
nuclear; Section 3.1.1). Hence the scenario assumptions had to be further adjusted in a number of points
compared to the original A1T-450 post-SRES scenario. In particular, due to quantitative restrictions
upon bio fuels, it proved difficult to realize a low-carbon transport sector in A1T*-450.As a result, the relevant maximum rate of dissemination of hydrogentechnologies had to be increased in the model compared to the SRES assumptions. In addition, batterydriven electric vehicles establish themselves. Furthermore, it was assumed that the global energy system has an enhanced capacity to respond to higher
energy prices with reduced demand. This improved
global energy intensity in both A1T* and A1T*-450
by up to 2% annually. Nonetheless, it was not possible within the IIASA models (with endogenous
determination of key parameters) to achieve phaseout of geological carbon storage by the year 2100 in
the CO2-stabilizing scenario A1T*-450.
A lower stabilization concentration – of 400 ppm– was selected for the CO2-stabilizing scenarios in the

SRES world storyline
A1

Very rapid economic growth, market and technology emphasis, globalization,
increasing mobility, convergence among the world’s regions, reduction of energy
intensity beyond historical rates (1.3%/a), low population growth (9 thousand
million in 2050, 7 thousand million in 2100).
A1T: rapid development of non-fossil energy sources, broad-scale deploymentof hydrogen technology.

B1

Rapid economic growth, dynamic technology development, globalization, convergence among the world’s regions, strong emphasis on environmental andsocial sustainability, dematerialization, transition to a less materialistic lifestyle,low population growth, reduction of energy intensity beyond historical rates(2%/a).

B2

Locally and regionally specific development paths, moderate economic andtechnological development (projections in line with historical trends, businessas-usual), intermediate population growth (10 thousand million in 2100), reduction of energy intensity at historical rate (1%/a).

Table 3.1-1
Characteristics of selected
SRES storylines.
Source: IPCC, 2000

Climate policy and sustainable energy systems 3.1

SRES:
A1T, B1

WBGU
guard rails

WBGU
referencescenarios:
A1T*,B1*

SRES:
B2

CO2 target:
400/450 ppm

A1T*-450,
B1*-400

CO2 target:
400 ppm

B2-400Figure 3.1-1
Scenario naming: The scenario development described in the text was based upon the SRES families A1T, B1 and B2. In two ofthese scenario families (A1T, B1), the sustainability demands of the WBGU were implemented as constraints, and the resulting
reference scenarios termed A1T* and B1*. Challenging CO2 stabilization targets were implemented in the reference scenarios(A1T: 450 ppm, B1* and B2: 400 ppm). The resulting mitigation scenarios are termed A1T*-450, B1*-400 and B2-40.
(* compliant with the WBGU guard rails for sustainable energy systems)
Source: WBGU

B1 and B2 families, in order to reduce the uncertainties regarding climate development that must be tolerated (Section 2.2). While the B2 family marks abusiness-as-usual world, the B1 family corresponds
more to a global sustainability world (low population
growth, rapid economic growth, rapid global convergence, strong emphasis on sustainability goals, etc.).
This is expanded upon in the current B1* scenario toinclude sustainability criteria within the energy system. Comparison between B2-400 as a reference
world without sustainability requirements and B1*400 thus permits conclusions regarding the combination of climate protection policy with policy
approaches towards general sustainable development.
Emission rights allocation impacts upon financial
resource flows and thus also upon regional development paths.All CO2-stabilizing scenarios take as allocation mechanism a linear contraction and convergence approach (Section 2.3.2). Two variants were
calculated for each of the CO2-stabilizing scenarios:
one with a per-capita emissions convergence year of2050, and one with a convergence year of 2100.

3.1.2.2
Results: Global energy systems of the IIASA-WBGU
scenarios
Figure 3.1-2 shows the global primary energy portfolios of the resulting reference scenarios A1T*, B1*
and B2, as well as of the CO2-stabilizing scenarios
A1T*-450, B1*-400 and B2-400. Figure 3.1-3 displays
the corresponding global development paths as trajectories in a triangle between the corner points ofcoal, oil/gas and renewables/nuclear. It is obvious
that, with the exception of the B2 reference scenario,

all scenarios studied exhibit a clear development
towards carbon-free energy systems. The commonalities and differences between the scenarios are set
out in more detail in the following.
CO 2 -stabilizing worlds:
Electricity/hydrogen economy
Despite the fundamental differences in the underlying assumptions, the CO2-stabilizing scenarios display basic commonalities: While today not only the
primary energy sector but also the final energy sector
is still dominated by fossil energy carriers, in the CO2stabilizing scenarios a dominance of electricity andhydrogen emerges in the final energy sector – a ‘electricity/hydrogen economy’. In the technologically
optimistic scenarios (A1T*-450 and B1*-400), a largepart of the electricity is generated through hydrogenproduced at low cost in the IIASA models, while incontrast the WBGU considers a direct final energy
use of solar-generated electricity within the context
of a globally connected network (global link) to be
more probable. In all CO2-stabilizing scenarios thelaunch of the electricity/hydrogen economy starts
initially on the basis of fossil resources (e.g. steam
reformation of natural gas), whereby carbon capture
at centralized energy conversion facilities makes animportant contribution to climate change mitigation.
The conversion technologies required to produce
electricity and hydrogen from fossil sources are
already available today on an industrial scale. Thisfacilitates the inception of this structural change.
Restructuring the emissions-intensive transport sector in time is an important element: Here the development of battery- and hydrogen-driven vehicles
must be accelerated. To this end, a swift – if initiallyfossil-based – establishment of the corresponding
elements of an electricity/hydrogen economy is29

3 Stabilization scenarios

2,000
a: A1T*b: A1T*-450

c: B1*

d: B1*-400

e: B2

f: B2-400

1,600
1,200
800
400
0
2,000

Primary energy [EJ]

30

1,600
1,200
800
400
0
2,000
1,600
1,200
800
400
0
2000

2020

2040

2060

2080

2100 2000

2020

Year

2040

2060

2080

2100

Year

Solar electricity andsolar hydrogen

Nuclear

Oil

Other renewables
without solar

Gas

Coal

Figure 3.1-2
Primary energy use in the IIASA-WBGU scenarios. The figure shows the development over time of the global primary energy
portfolio in the reference scenarios (a: A1T*, c: B1*, e: B2) and in the corresponding CO2-stabilizing scenarios (b:A1T*-450,
d: B1*-400, f: B2-400). The figure shows that carbon intensity in the fossil sector is reduced through intensified use of gas, at theexpense of oil and coal. Coal use, in particular, almost expires in all CO2-stabilizing scenarios by the middle of the century(A1T*-450, B1*-400) or at least drops to a very low level (B2-400). By the end of the century, energy supply is based essentiallyon solar electricity and solar hydrogen, particularly in A1T*/A1T*-450 and B1*/B1*-400. Comparison of the reference
scenarios (a, c, e) with the CO2-stabilizing scenarios (b, d, f) shows that the A1T and B1 storylines support the technology
portfolios required for committed climate change mitigation. The same can be said for emissions (Fig. 3.1-4) and costs (Fig. 3.17). The category ‘Other renewables without solar’ comprises biomass, wind, hydro, solar thermal (only heat), geothermal andfurther renewables.
Source: Nakicenovic and Riahi, 2003b

Climate policy and sustainable energy systems 3.1

100%

Constant part coal

20%

80%

B2

B2-400ndal

B1*-400

la
s

ga

Co

B1*

Oi

1990
1970

A1T*-450

Historic emissions

60%

40%

A1T*

40%

60%
1950

80%

20%

Constant part
oil and gas

1920
1900
1850

100%
20%
Constant part
renewables andnuclear energy

40%

60%

80%

100%

Renewables and nuclear energy

Figure 3.1-3
Evolution of the shares of energy sources in global primary energy consumption, as trajectories until 2100 in a triangle
between the corner points of coal, oil/gas and renewable/nuclear. Until 1990, the figure shows the historical development.
From then onwards, trajectories split according to the development paths of the six scenarios (A1T*, A1T*-450, B1*, B1*-400,
B2, B2-400; Fig. 3.1-1). With the exception of the B2 reference scenario, all scenarios show a clear development towards
carbon-free energy systems.
Source: Nakicenovic and Riahi, 2003aessential. Over the long term, even more far-reachingchanges in energy supply are anticipated in the electricity/hydrogen economy of the scenarios: While in
the technologically more conservative B2-400 world
only biomass gasification emerges as an additionalhydrogen source and the intensified use of nuclear
power as an electricity source, in the technologicallyhighly dynamic A1T*-450 and B1*-400 scenarios
solar energy provides the greater proportion of electricity and hydrogen supply. The corresponding
developments of the technology portfolios over time
are determined strongly by the WBGU guard rails
for sustainable energy policy (Section 3.1.1).

Commonalities and differences in primaryenergy supply
A more detailed analysis of the development overtime of the volume of individual primary energy carriers evidences long-term commonalities among thetechnologically optimistic A1T*-450 and B1*-400
scenarios. At the same time, the fundamental differences to scenario B2-400 become clear: In B2-400,
nuclear power adopts a dominant role, while in
A1T*-450 and B1*-400 it is phased out over the
medium term for sustainability reasons (Section
3.1.1). Similarly, biomass use grows over the longterm to an extreme level of more than 300 EJ peryear in B2-400, while in the sustainable energy systems of A1T*-450 and B1*-400 it remains below the
maximum limit of sustainable use (100 EJ per year).

31

32

3 Stabilization scenarios

In A1T*-450 and B1*-400, solar energy provides overthe long term by far the greatest proportion ofenergy supply in the electricity/hydrogen economy,
while in B2-400 it plays a subordinate role, even overthe longer term. It is only in the sphere of fossil
energy carriers that the trends are similar in all three
CO2-stabilizing scenarios: The necessary reduction ofcarbon intensity is provided by an intensified use ofgas, at the expense of oil and coal. In all CO2-stabilizing scenarios, coal use is practically phased out by the
middle of the century (A1T*-450, B1*-400) or atleast falls to only a fraction of its previous levels (B2400). This is attributable mainly to two economic reasons: Firstly, hydrogen can be produced at lower costfrom natural gas than from coal. Secondly, even if
geological carbon storage were permitted without
limit, the higher specific CO2 arisings of coal compared to gas lead to economic disadvantages, both instorage and in the emission (entailing debits) of theremaining quantities of exhaust that cannot be captured for technological reasons. Only in regions of
the world where there are major coal reserves thatcan be extracted at low cost (e.g. China) do the scenarios anticipate a further growth of coal use for atransitional period of several decades.

3.1.2.3
Results: Emissions and resulting climate change
Figure 3.1-4 shows the emission paths of all three
CO2-stabilizing scenarios compared to the corresponding reference scenarios.
As in the IIASA models only the energy-related
and industrial greenhouse gases were subject toendogenous macroeconomic optimization whendeveloping the CO2-stabilizing scenarios, the emission profiles of anthropogenic greenhouse gases notcovered endogenously were predetermined exogenously upon the basis of equivalent stabilization scenarios.
Figure 3.1-4 breaks down the emissions prevented
in the CO2-stabilizing scenarios compared to the reference scenarios into three categories: demand
reductions following higher prices, structural changes(notably the greater use of renewable energy sourcesand of low-carbon conventional energy carriers) and,third, geological carbon storage. Energy efficiency
improvements are a part of the first two categories.
The emissions reductions shown in the figure relate
exclusively to energy-related and industrial CO2
emissions. The contribution of demand reduction iscomparatively small in all scenarios, because the mitigation-induced energy costs additional to the reference scenarios are moderate (Fig. 3.1-1). The contribution of carbon storage, in contrast, is major andremains large at the end of the century, unless it isrestricted exogenously as in B1*-400. Nonetheless, inall three scenarios total carbon storage by 2100
remains below the maximum of 300 Gt C deemedtolerable by the WBGU. The model outcomes forcarbon storage remain problematic in A1T*-450 andB2-400, however, as rates of carbon storage continue
to be significant at the end of the century, threatening
to transgress the tolerable maximum limit of safe
geological storage in the course of the following century. These results follow from the economic assumptions of the underlying models. The WBGU takes theview that policy measures should steer CO2 production and storage in such a manner that CO2 storage isterminated worldwide in 2100. Therefore the carbon
storage contained in the scenarios must not be a measure locking development trajectories into a fossil
path. One reason why it appears comparatively large
in Figure 3.1-4 is that a considerable proportion of
structural change measures (renewables, efficiency
improvement, etc.) is already contained in the reference scenarios (Fig. 3.1-1). Carbon storage in the sustainable CO2-stabilizing scenarios is associatedlargely with the use of natural gas and biomass, andnot with coal-based technologies.
It is common to all three CO2-stabilizing scenariosthat at the end of the period considered annual CO2
emissions are still falling. To ensure long-term stabilization pursuant to Article 2 UNFCCC, emissions
must continue to be reduced after 2100. Over thelong term (a period of several centuries) they must
be returned to such a low level that they can beabsorbed by persistent natural sinks. These areassumed to be very small (0.2 Gt C per year) (IPCC,
2001a).
Assumptions on other sources andgreenhouse gases
For the calculations of the climate impacts of theCO2-stabilizing scenarios, the following assumptions
were made concerning CO2 emissions from land-use
change and on the other greenhouse gases:• Emissions from land-use change (primarily deforestation in developing countries) were adopted
unchanged from the respective reference paths.
• The emissions of other greenhouse gases wereadopted from other comparable CO2-stabilizing
scenarios. Emissions of methane, nitrous oxide
and ozone precursor substances (NOX, VOCs,
CO) correspond to the scenario developed by
Swart et al. (2002). Emissions of PFCs, HFCs andSF6 were adopted from Rao and Riahi (2003).
Figure 3.1-5 shows the assumptions on CO2 emissions
from land-use change and on anthropogenic
methane emissions for the individual scenarios(IPCC, 2000; Swart et al., 2002).

Climate policy and sustainable energy systems 3.1

Figure 3.1-4
Emissions in the reference
scenarios and in the CO2stabilizing scenarios (a: A1T
storyline; b: B1 storyline; c:
B2 storyline). Avoided
emissions are seperated into
three categories: demand
reductions, structural change
and CO2 capture andstorage. Nomenclature of
scenarios as in Fig. 3.1-1.
Source: Nakicenovic andRiahi, 2003b

16

a
A1T*
12

8
A1T*-450

Carbon dioxide emissions from energy and industry [Gt C]

4

0
16

b

12

B1*

8
B1*-400
4

0
16

c

12

B2

8

B2-400

4

0
2000

2020

2040

Year
Demand reductions
Structural change
CO2 capture and storage

2060

2080

2100

33

3 Stabilization scenarios

Land-use changes lead to emissions (such as in thecase of deforestation, mainly in the tropics), but also
to the uptake of carbon dioxide (such as in the caseof afforestation). The figure shows the global net
effect of all land-use changes. For B1 and B2 this isalready negative from about 2030 onwards, for A1T
from about 2050 onwards, i.e. from then onwards theuptake of CO2 by afforestation exceeds emissions
from deforestation.
Half of anthropogenic methane emissions comesfrom agriculture, and a quarter comes from theextraction, transportation and distribution of fossil
fuels. A further important source is waste treatment.
Appraisals of future methane emissions depend on
the one hand upon assumptions about the future useof fossil fuels, and on the other hand upon assumptions about population and economic development

Carbon dioxide emissions [Gt C/a]

1.2

and agricultural practices as well as dietary habits(IPCC, 2000).
Figure 3.1-6 shows the temperature development,
calculated with the simple climate model MAGICC,
that follows from all emitted greenhouse gases relative to pre-industrial levels (underlying climate sensitivity: 2.5°C) and sea-level rise relative to the year
2000. It also indicates the uncertainty ranges of themodels, taking into consideration a climate sensitivity range of 1.5°C to 4.5°C.
The circumstance that the temperature develops
differently between B1*-400 and B2-400 despite
identical CO2 stabilization level is attributable
mainly to different energy-related SOx emissions.
The degree of safety compared to the projectedclimate changes can be expressed by the climate sensitivity value that would lead in the scenarios to along-term temperature increase of not more thana
A1T* and A1T*-450
B1* and B1*-400
B2 and B2-400

0.8

0.4

0

-0.4

-0.8
2000

2020

2040

2060

2080

2100

2080

2100

0.7
b
0.6
Methane emissions [Gt CH4/a]

34

0.5
0.4
0.3
A1T*
B1*
B2
All stabilizing scenarios

0.2
0.1
0
2000

2020

2040

2060
Year

Figure 3.1-5a) CO2 emissions from landuse change in the reference
scenarios and in the CO2stabilizing scenarios. It was
assumed that CO2 emissions
from land-use change in theCO2-stabilizing scenarios do
not differ from the reference
scenarios. Land-use changes(e.g. deforestation, mainly inthe tropics) lead to emissions
or to the uptake of CO2 (e.g.
through afforestation). The
figure shows the global net
effect of all land-use changes.
b) Anthropogenic methane
emissions from all sources(energy, industry, agriculture)in the reference scenarios
and in the CO2-stabilizing
scenarios. For methane andother greenhouse gases,
uniform emissions reduction
paths were assumed for all
CO2-stabilizing scenarios.
Source: Nakicenovic andRiahi, 2003b

Climate policy and sustainable energy systems 3.1

2°C relative to the pre-industrial era: The higher thevalue, the safer the scenario. The values generated by
the model computations are 2.0°C for A1T*-450,
2.4°C for B1*-400 and 2.9°C for B2-400, assuming
stabilized CO2 emissions and constant emissions ofother greenhouse gases after 2100.
If the scenarios had taken unaltered from the reference runs the non-energy-related non-industrial
emissions predetermined exogenously on the basis ofequivalent stabilization scenarios (i.e. mitigation
exclusively in the energy sector), then a significant
additional warming would arise for 2100. Assuming a
climate sensitivity of 2.5°C, this additional warming
would amount to 0.2°C (A1T*-450), 0.04°C (B1*400) or 0.2°C (B2-400). The low value of the B1*-400
scenario is due to the circumstance that in the reference scenario the emissions of relevant greenhousegases are already very low. Overall, these findings
illustrate that non-energy-related emissions of CO2,

Temperature change [°C]3

3.1.2.4
Results: Mitigation costs
The regional distribution of mitigation costs istreated in detail in Section 3.2 below.The present section provides a preliminary outline of overall global
costs. Relative global GDP losses were taken as theparameter to be analysed – i.e. the GDP of the three
CO2-stabilizing scenarios as a fraction of the GDP of
the respective reference scenarios. Figure 3.1-7 illustrates the results.
These effects reflect the macroeconomic consequences of the energy system costs elevated by climate change mitigation activities (discounted invest-

a
A1T*
B1*
B2

2

A1T*-450
B1*-400
B2-400

Historic
Range
1

0

-1
1860

1900

1940

1980

2020

2060

2100

2040

2060

2080

2100

80

b
70

Sea level rise [cm]Figure 3.1-6a) Temperature change
relative to the pre-industrial
mean.
b) Resulting sea-level rise
relative to the year 2000
assuming a climate sensitivityof 2.5°C. The blue shaded
area expresses theuncertainties for the CO2stabilizing scenarios. The
main factor for thisuncertainty is the climate
sensitivity ranging from
1.5°C to 4.5°C. The
temperature change of all
CO2-stabilizing scenarios
shows a slight violation of
the upper limit of 0.2°C per
decade defined by the
WBGU climate window
Source: Nakicenovic andRiahi, 2003b

methane and nitrous oxide from both technologicaland biological sources must also become a focus of
mitigation efforts.

60

A1T*
B1*
B2

50

Range

A1T*-450
B1*-400
B2-400

40
30
20
10
0
1980

2000

2020

Year

35

3 Stabilization scenarios
Figure 3.1-7
Relative losses of global
gross domestic product(GDP) as a consequence ofclimate change mitigation
measures (GDP of CO2stabilizing scenarios in
relation to GDP of thereference scenarios). The
A1T* and B1* storylines
prove advantageous from acost perspective, too. The
same applies to emissions(Fig. 3.1-4) and primaryenergy use (Fig. 3.1-2).
Source: Nakicenovic andRiahi, 2003b+0.5
GDP change compared to the baseline [%]

36

0.0

-0.5

A1T*-450-1.0
B1*-400-1.5
B2-400
-2.0

-2.5
2000

2020

2040

2060

2080

2100

Year

ment plus current operating costs). When assessingthese findings, it needs to be taken into considerationthat the technology portfolios of the reference scenarios A1T* and B1* are already very close to thoseof the CO2-stabilizing scenarios. Interpretation of the
GDP losses shown must keep in mind that the CO2stabilizing scenarios prevent a large proportion of
the external costs of climate change (climate damage
and adaptation costs) which are not contained in thereference scenarios. Over the long term the costs of
CO2 stabilization appear to be lower than the adaptation and damage costs (Sections 2.1 and 3.3). Moreover, other types of damage are also prevented, suchas air pollution and disease.
GDP losses peak in 2050 in all CO2-stabilizing scenarios, but remain well below 3% of global GDP(Fig. 3.1-7). For both A1T*-450 and B1*-400, GDPlosses are below 1.5%, averaging less than 0.7%.
After 2050, relative GDP losses drop almost to zeroby the end of the century in A1T*-450 and B1*-400,
while they remain at a significant level in B2-400.
Comparison of the costs associated with the CO2stabilizing scenarios with those associated with therespective reference scenarios shows overall thatmitigation is easier to realize in the A1T* and B1*
worlds than in B2. This is due to developments that
follow from the underlying storylines and alreadycome to bear in the reference scenarios. This may beviewed as a call upon the policy arena to base mitigation efforts upon, among other things, the key elements of the A1T* and B1* storylines. These include
technology transfer to developing countries,
strengthening international cooperation, providing
major support to research on energy sources and efficiency, and undertaking investment in technology
development and applications.

A further finding of the scenarios studied is thatboth the regional structures of the energy system andthe overall global costs are independent of the convergence year (2050 or 2100), as long as an emissions
trading system ensures the minimization of global
costs. Without emissions trading, it can be expectedthat the structural development of energy systems
will be significantly different in certain regions.

3.2
Analysis: Contraction and convergence in selectedscenarios
The following section analyses the implications of an
allocation of rights to shares in the global CO2 emission budget among individual countries or regions
according to the contraction and convergence(C&C) approach (Section 2.3). This analysis is basedon the results of scenarios computed by IIASA(Nakicenovic and Riahi, 2003a, b; on scenario
nomenclature see Fig. 3.1-1), based upon two different convergence years – 2050 and 2100. The calculations are broken down to the level of 11 aggregatedworld regions shown in Fig. 3.2-1. At a next higher
level of aggregation, these regions form four
macroregions. Linear convergence was assumed, andno base year was set for population development(Section 2.3). It was assumed for the calculation ofemissions that the USA does not participate in thefirst commitment period, but adopts proportionate
reduction commitments from 2012 onwards.

Analysis: Contraction and convergence in selected scenarios 3.2

3.2.1
Regional allocation of emission rights
Allocation of emission rights according to the contraction and convergence approach leads to convergence of per-capita emission rights in all countries orregions. Convergence is more or less rapid, depending upon the convergence year selected (Fig. 3.2-2).
The greatest difference between scenarios withdifferent convergence years (2050 or 2100) is that,compared to 2050, the slower convergence by 2100
lessens the reduction commitments of industrialized
and transition countries. As a result, less emission
rights are allocated to the developing countries, giving many scarcely any leeway for a rise in per-capita

emissions. If, in contrast, reduction scenarios converge by 2050, then this means higher emission rights
particularly for sub-Saharan Africa and South Asia
including India, which is particularly apparent in the
middle of the century. Conversely, industrialized andtransition countries then have comparatively lessemission rights from the onset of the convergenceprocess.
This effect is also apparent in the analysis of cumulative regional emission rights from 2000 to 2100 andof average regional per-capita emission rights overthe period up to 2100 (Fig. 3.2-3). Particularly theaverage per-capita emission rights over the period up
to 2100 (Fig. 3.2-3 b, d, f) illustrate the simultaneousconsideration of the egalitarian principle and theprinciple of constancy (Section 2.3). The outcome of

IIASA Scenario regions
OECD

REFS

ASIA

ALM

NAM

EEU

CPA

LAM

WEU

FSU

SAS

MEA

PAS

AFR

PAO

Figure 3.2-1
IIASA world regions used in the scenarios.
OECD:
NAM – North America (USA, Canada)
WEU – Western Europe (incl. Turkey)
PAO – Pacific OECD (Japan, NZ, Australia)
REFS:
EEU – Central and Eastern Europe
FSU – Newly independent states of the former Soviet Union
ASIA:
CPA – Centrally planned Asia and China
SAS – South Asia (incl. India)
PAS – Other Pacific Asia
ALM (Africa, Latin America, Middle East):
LAM – Latin America and the Carribean
AFR – Sub-Saharan Africa
MEA – Middle East and North Africa
Source: Nakicenovic et al., 1998

37

3 Stabilization scenarios

6
a: C&C 2050

Emission rights [t C per capita]

5

4

3

2

1

Figure 3.2-2
Development of per-capita
emission rights undercontraction and convergencein scenario A1T*-450 withyears of convergence 2050
(a: C&C 2050) and 2100 (b:C&C 2100). The figures forB1*-400 and B1-400 are very
similar but on a slightly
lower level. The values until
2010 result from thecommitments to the firstcommitment period of the
Kyoto Protocol.
Source: Nakicenovic andRiahi, 2003b

0
2000

2020

2040

2060

2080

2100

6
b: C&C 2100
5Emission rights [t C per capita]

38

4

3

2

1

0
2000

2020

2040

2060

2080

NAM

SAS

WEU

PAS

PAO

LAM

EEU

MEA

FSU

AFR

CPA

World

2100

Year

slower convergence is that industrialized and transition countries, due to their high initial emissions levels, receive on average more per-capita emission
rights than developing countries.
Figure 3.2-4 illustrates the development of emission rights for selected regions within the reference
paths and for the reduction scenarios of A1T*, B1*
and B2, for the two cases of 2050 and 2100 as convergence year. This shows that the curves of industrialized, transition and developing countries deviate
greatly from each other, but that curves are similar
within the group of industrialized countries on the
one hand and the group of developing countries on
the other.
The high emissions of the B2 scenario’s reference
path are striking. This is attributable to the low technological dynamics of the storyline and the correspondingly low levels of energy productivity

improvement. Only Western Europe and North
America do not show a similar development. The
former Soviet Union region only commands over‘surplus’ emission rights (rights for larger quantities
of CO2 emissions than arose in the reference scenario) until 2020. It is subsequently confronted in all
reduction scenarios with strikingly high reduction
commitments. For centrally planned Asia and China
there are similarly large differences in the A1T*-450
scenarios. The development of emission rights forthis region in the reduction scenarios is relatively
independent of the convergence year. However, thisis an effect that cannot be found for any other region(Figs. 3.2-3 and 3.2-4). South-East Asia including
India and sub-Saharan Africa, in particular, have surplus emission rights up to the middle of the century,
the volume depending upon the baseline scenario
and the convergence year. For sub-Saharan Africa

Analysis: Contraction and convergence in selected scenarios 3.2

120

2,5
a: A1T*-450

b: A1T*-450

100

2,0

80
1,5
60
1,0
40
0,5

20
0

0

120
c: B1*-400
100
80
60
40
20
0
NAM WEU PAO EEU FSU CPA SAS PAS LAM AFR MEA

NAM WEU PAO EEU FSU CPA SAS PAS LAM AFR MEA World

Mean emission rights per capita [t C/a]

Cumulated emission rights [Gt C]

NAM WEU PAO EEU FSU CPA SAS PAS LAM AFR MEA

2,5
d: B1*-400
2,0
1,5
1,0
0,5
0
NAM WEU PAO EEU FSU CPA SAS PAS LAM AFR MEA World2,5120
e: B2-400

f: B2-400

100

2,0

80
1,5
60
1,0
40
0,5

20

0

0
NAM WEU PAO EEU FSU CPA SAS PAS LAM AFR MEA

NAM WEU PAO EEU FSU CPA SAS PAS LAM AFR MEA World

World regions

World regions

Contraction and convergencewith year of convergence 2050

Contraction and convergencewith year of convergence 2100

Figure 3.2-3
Emission rights cumulated from 2000 to 2100 (a,c,e) and mean per-capita emission rights from 2000 to 2100. Shown are thevalues for contraction and convergence in 2050 (blue) and 2100 (red). Nomenclature of scenarios as in Fig 3.1-1, regions as inFig 3.2-1.
Source: Nakicenovic and Riahi, 2003b

this surplus ends somewhat earlier in scenarios
A1T*-450 and B1*-400, especially with a convergence year of 2100 (up to four decades in B1*-4002100).

3.2.2
Overview of anticipated emissions trading
To achieve contraction and convergence without
intolerable economic consequences, it is indispensable to establish a system of worldwide trading in
assigned emission rights (Chapter 5). Such a system
will benefit developing countries by the middle of the
century (Section 3.2.3).

39

3 Stabilization scenarios

1.2

2.5
a: NAM

1.0

2.0

b: WEU
0.8

1.5
0.6
1.0
0.4
0.5

0.2

0

0
2000

Emission rights per region [Gt C/a]

40

2020

2060

2040

2080

2100

2020

2040

2060

2080

2100

2020

2040

2060

2080

2100

2020

2040

2060

2080

2100

4.0

1.6
1.4

2000

c: FSU

3.5

1.2

3.0

1.0

2.5

0.8

2.0

0.6

1.5

0.4

1.0

0.2

0.5

d: CPA

0

0
2000

2020

2040

2060

2080

2100

2.0

2000
2.0
f: AFRe: SAS
1.5

1.5

1.0

1.0

0.5

0.5

0

0
2000

2020

2040

2060

2080

2100

2000

Year

Year

Baseline A1T*

A1T*-450-2050

A1T*-450-2100

Baseline B1*

B1*-400-2050

B1*-400-2100

Baseline B2

B2-400-2050

B2-400-2100

Figure 3.2-4
Development of the emission rights for selected regions and all scenarios with both years of convergence 2050 and 2100.
Nomenclature of scenarios as in Fig 3.1-1, regions as in Fig 3.2-1.
Source: Nakicenovic and Riahi, 2003b

For one thing, most developing countries have a
low starting level of emissions in their reference scenarios. For another, Latin America, sub-SaharanAfrica and South Asia in particular command overmajor potentials to expand solar energies and biomass. Through the intensified deployment of solarhydrogen and emissions reducing technologies suchas carbon capture at biomass-using facilities, which

are partly paid for by the revenues from emissions
trading in the stabilization scenarios, these regions
can stay far below the quantities of emission certificates assigned to them. Particularly in the reduction
scenarios that converge by 2050, these regions (Asia,
Africa and Latin America) have the opportunity tosell large quantities of emission certificates to theOECD countries (Fig. 3.2-5).

Analysis: Contraction and convergence in selected scenarios 3.2

Cumulative emissions trading [Gt C]

100
80
60

a: C&C-2050

b: C&C-2100

A1T*-450

A1T*-450

B1*-400

B1*-400

B2-400B2-400

40
20
0
-20
-40
OECD

REFS

ASIA

ALM

World

OECD

REFS

ASIA

ALM

World

Figure 3.2-5
Cumulative emissions trading in the stabilizing scenarios until 2100. a) Contraction and convergence 2050, b) Contraction andconvergence 2100. Nomenclature of scenarios as in Fig 3.1-1, regions as in Fig 3.2-1.
Source: Nakicenovic and Riahi, 2003a

A shift of the convergence year from 2050 to 2100
leads to an allocation of larger quantities of emission
rights to OECD countries, and correspondingly
smaller quantities to the developing countries. This
leads to a decline of the global volume of emission
certificates traded.
In an inter-temporal perspective, there are major
trade flow differences among all scenarios. Imports
to OECD countries peak between 2020 and 2050,
particularly in the middle of the century, when particularly strong changes are required in the process oftransforming energy systems and the marginal costsin the model rise steeply due to the rapid phase-outof specific technologies (Nakicenovic and Riahi,
2003a). As technologies compliant with the WBGU
guard rails are not yet available in sufficient volume
at economic prices during this period, demand rises
and the price of emission certificates rises steeply(Fig. 3.2-8), up to US$ 600 per tonne carbon in scenario B1*-400 and 400 US$ per tonne carbon in scenario A1T*-450 (Nakicenovic and Riahi, 2003a). Thiseffect does not arise in scenario B2-400, for which the
WBGU sustainability guard rails were not integrated.
Trade flows among developing countries are also
considerable. The model calculations suggest that in
the second half of the century China and the Near
East will be the main importers of emission rightsfrom South Asia and sub-Saharan Africa (Nakicenovic and Riahi, 2003a).
Figure 3.2-6 presents a comparison, for the four
macroregions, of all nine scenarios analysed (threebaseline scenarios and six stabilization scenarios) –showing historical emissions (1800-2000) and cumulative emissions and emission rights from 2000 up to
2100. For the stabilization scenarios, the black hori-zontal bar shows the level of emission rights. Realized emissions rising above the bar thus indicate thecorresponding purchase of emission rights, while if
realized emissions remain below it this indicates thesale of a corresponding volume of emission rights,
assuming that there is sufficient demand. The difference between the emissions of a baseline scenario
and the emissions of the associated stabilization scenarios illustrates the emissions reductions achieved.
The figure shows that the contribution of emissions
trading is relatively small compared to the volume ofemissions reductions. The fears that introduction of a
global emissions trading system would lead to only asmall part of emissions being reduced and the larger
part being purchased with ‘hot air’ thus proves
groundless, at least for the scenarios analysed here.
Figure 3.2-7 illustrates the potential heterogeneityof individual regions within a macroregion, as exemplified by the very different regions South Asia andcentrally planned Asia and China. For the above reasons, the realized emissions in South Asia remain far
below the emission rights assigned to this region, particularly up to the middle of the century. Centrally
planned Asia and China, in contrast, will need to purchase emission rights from 2020 onwards – proceeding from its baseline path, it will be confronted with
substantial emissions reductions. This is due to cheap
coal, which is used to a greater extent for energy production in the reference scenario, particularly in thefirst half of the century. In the stabilization scenario,
this must be replaced by renewables. Due to the limited potential of some regions for this transformation, centrally planned Asia and China must buy incorresponding quantities of emission rights, whichleads to CO2 trading among developing countries
within the same region.

41

3 Stabilization scenarios

400

a: OECDb: REFS

300

Cumulative CO2 emissions [Gt C]

200

100

0
Historic

Baseline

C&C 2050

C&C 2100

Historic

Baseline

C&C 2050

C&C 2100

Baseline

C&C 2050

C&C 2100400
c: ASIAd: ALM

300

200

100

0
Historic

Baseline

C&C 2050

C&C 2100

Historic

A1T*

B1*

B2

Historic emissions (1800–2000)

A1T*-450

B1*-400

B2-400Emission entitlements

Figure 3.2-6
Cumulative energy system related and industrial CO2 emissions. Compared are the historic (1800–2000) and future(2000–2100) emissions as well as the emissions for the reference and the stabilizing scenarios. Nomenclature of scenarios as inFig 3.1-1, regions as in Fig 3.2-1.
Source: Nakicenovic and Riahi, 2003a3.0

Figure 3.2-7
Comparison of theemissions in the reference
scenario B1* as well as theemission rights and therealized emissions in thestabilizing scenario B1*-400.
Shown are the values forcontraction and convergencein 2050 in the regions CPA
and SAS. Nomenclature of
scenarios as in Fig 3.1-1,
regions as in Fig 3.2-1.
Source: Nakicenovic andRiahi, 2003b

2.5

Carbon [Gt C]

42

2.0

1.5
1.0

0.5

0
2000

2020

2040

2060

2080

2100

Year
Centrally planned Asia (CPA)
Emissions of baseline B1*Emission entitlements
Realized emissions B1*-400

South Asia incl. India (SAS)Emissions of baseline B1*Emission entitlements
Realized emissions B1*-400

Analysis: Contraction and convergence in selected scenarios 3.2

Figure 3.2-8 compares the development of theprice of emission certificates for the stabilization scenarios, and illustrates the differences that result fromthe two selected convergence years. The figure shows
clearly that the price is determined primarily by theunderlying reference scenario. Variation of the convergence year produces scarcely any differences. The
certificate price develops relatively similarly in all
scenarios up to 2040. In the period from 2040 to 2060,
a differentiation occurs, above all between the B2400 scenarios on the one hand, which are subject tono WBGU sustainability guard rails whatsoever andare thus more favourable until then, and the A1T*450 and B1*-400 scenarios on the other. This isbecause the phase-out of non-sustainable technologies by 2050 produces peak marginal costs in A1T*450 and B1*-400, and thus high certificate prices.
After 2060, the situation is reversed: The price ofemission rights in scenarios A1T*-450 and B1*-400,
whose storylines have greater dynamics in the development of new technologies, drops, while it continues
to rise in scenario B2-400. The steep price increase inB1*-400 after 2090 is due to the phase-out of sequestration by 2100, a guard rail set for neither scenario
B2-400 nor for A1T*-450. Without this guard rail, theprice of emission certificates in scenario B1*-400
would be – despite the lower targeted CO2 concentration level – approximately in the region of theprice in scenario A1T*-450. This can be taken as anindication that in a sustainable scenario stabilization
costs develop more favourably (Sections 3.1 and3.2.3).

To calculate the effects of reduced emissions andconvergent per-capita emission rights upon the grossdomestic product of regions, the following analysis
examined the revenues and expenditures resulting
from emissions trading, and the energy system costs
derived from MESSAGE and MACRO iterations(Section 3.1). This did not take into account theexternal costs of climate damage and adaptation
measures prevented by climate change mitigation,
nor the external benefits of mitigation, e.g. in theform of prevented air pollution.
The expectation is frequently voiced that an allocation of emission rights according to a contraction
and convergence (C&C) approach will lead to highfinancial transfers from industrialized to developing
countries. While such transfers do indeed take placethrough emissions trading, this effect is only distinct
if the convergence year is 2050 and if stabilization
scenario B2 is used (Fig. 3.2-9).
In all C&C-2050 scenarios, the transition countries
experience net losses. Russia, for instance, is able tosell ‘hot air’, particularly in the first decades of the
century. This is a period characterized by relatively
low prices for emission certificates. However, due toa lack of technological adaptation towards low-emission or zero-emission energy sources as assumed in
the models – possible until then due to the use oflarge domestic gas reservoirs – certificates will need

1,400
Price of emission certificates [US-$1990/t C]

Figure 3.2-8
Development of prices ofemission certificates in thestabilizing scenarios forcontraction and convergencein 2050 and 2100.
Nomenclature of scenarios
as in Fig 3.1-1.
Source: Nakicenovic andRiahi, 2003b

3.2.3
Overview of anticipated economic effects

1,200
1,000
800
600
400
200
0
2010

2020

C&C 2050
A1T*-450
B1*-400
B2-4002030

2040

C&C 2100
A1T*-450
B1*-400
B2-4002050 2060
Year

2070

2080

2090

2100

43

3 Stabilization scenarios
Cumulative revenue [Thousand million US-$1990]

44

10,000a: C&C 2050

b: C&C 2100

5,000

0

-5,000-10,000

A1T*-450

A1T*-450

B1*-400

B1*-400

B2-400B2-400-15,000
OECD

REFS

ASIA

ALM

OECD

REFS

ASIA

ALM

Figure 3.2-9
Cumulative revenue from emissions trading in the stabilizing scenarios shown for the macro regions and the stabilizing
scenarios. Nomenclature of scenarios as in Fig 3.1-1, regions as in Fig 3.2-1.
Source: Nakicenovic and Riahi, 2003ato be purchased in a period in which the price rises
steeply.
In total, emissions trading leads by 2100 to a transfer from OECD and transition countries towards
developing countries amounting to some US$
8,000–13,000 thousand million. This corresponds –with major temporal fluctuations – to US$ 84–128
thousand million per year (Nakicenovic and Riahi,
2003a). By way of comparison, official development
assistance in 2000 amounted globally to US$ 53 thousand million.
The analysis, however, reveals that the financialtransfers resulting from emissions trading do notcover the reduction costs with which the developing
countries are confronted. Nor do they cover thelosses suffered by regions rich in resources (coal andoil), due to the lack of exports. As these regions must
abstain from their readily available energy sources,
they are increasingly dependent on the additionalpurchase of energy carriers such as liquefied petroleum gas or bioalcohol.
Figure 3.2-10 shows the effects on GDP for theyears 2020, 2050 and 2100 for all six reduction scenarios. This confirms the high costs in the middle ofthe century and the finding that the level of economic
effects is determined primarily by the baseline scenario – such as the economic implications of thesteeply rising marginal costs from 2050 as a result of
the rapid phase-out of non-sustainable technologies
in the B1* and A1T* scenarios, or the high burden in
the B2 scenarios as a result of the low technologicaldynamics of the storyline. Similarly, the previously
noted influence of the convergence year is apparent
in the slightly less negative values for developing
countries if convergence is by 2050 and for industrialized and transition countries if convergence is by

2100 – whereby these differences are slight comparedto the above-mentioned differences determined by
the baseline scenario.
The gains of South Asia are striking, which arevery high in 2020, particularly in the A1T*-450-C&C2050 and B1*-400-C&C-2050 scenarios (approx.
+5% and, respectively, +4% compared to the baseline scenarios). In 2050, these gains amount to morethan 4% in scenario B1*-400-C&C-2050 and morethan 2% in scenario B1*-400-C&C-2100. This can be
explained by the high quantity of emission certificates available for sale (Section 3.2.2).
By 2100, negative economic effects drop to very
low values in the stabilization scenarios A1T*-450
and B1*-400 for almost all regions. This is due above
all to dynamic learning processes that follow massive
investment in renewables. Solar electricity production and solar hydrogen generation play a key role inthis context (Section 3.1.2.2). Only the resource-richformer Soviet Union (natural gas) and Middle Eastand North Africa (mineral oil) regions suffer losses
amounting to almost 3% and, respectively, just under
2%. This is due to their foregone revenues fromresource exports.

3.3
Conclusions
Comparative analysis of the model findings reported
above (Nakicenovic and Riahi, 2003a, b) leads to thefollowing conclusions:
The CO2 emissions prevented compared to aworld without climate change mitigation can begrouped in three categories: Demand reduction due
to higher prices, structural change (particularly theConclusions 3.3
Figure 3.2-10
Effects on GDP stabilizationin the years 2020 (a), 2050(b) and 2100 (c) for the
IIASA world regions in thestabilizing scenarios. Shownare the deviations from theexpected GDP of thereference scenario.
Remarkable are the highcosts in B2-400.
Nomenclature of scenarios
as in Fig 3.1-1, regions as inFig 3.2-1.
Source: Nakicenovic andRiahi, 2003a6

a: 2020
4

2

0

-2

-4

-6

Impact on the GDP of the baseline scenario [%]AFR CPA EEU FSU LAM MEA NAM PAO PAS SAS WEU World6b: 2050
4
2
0
-2
-4
-6
-8

AFR CPA EEU FSU LAM MEA NAM PAO PAS SAS WEU World2

c: 2100
1
0
-1
-2
-3
-4
-5
-6

AFR CPA EEU FSU LAM MEA NAM PAO PAS SAS WEU World

World regions
C&C 2050
A1T*-450
B1*-400
B2-400C&C 2100
A1T*-450
B1*-400
B2-40045

46

3 Stabilization scenarios

intensified deployment of renewable energy forms
and of low-carbon conventional technologies) andCO2 sequestration. Energy efficiency improvements
fall into the first two categories.
Mitigation-related energy price increases have
only a relatively weak demand-reducing effect in all
CO2 stabilization scenarios. The contribution of carbon sequestration remains at a high level at the endof the century if it is not restricted exogenously (as inB1*-400). Structural changes are very similar in all
worlds studied. Figure 3.1-3 illustrates their characteristic features: With the exception of the B2 baseline scenario, the energy systems of all worlds studied
move far towards carbon-free systems by the end of
the 21st century. Structural change towards carbonfree systems takes the following course:• The reduction of carbon intensity in the fossil sector is achieved through intensified use of gas, atthe expense of oil and coal. Coal use, in particular,
practically expires by the middle of the century in
all CO2 stabilization scenarios (A1T*-450, B1*400) or at least drops to very low levels (B2-400).
This implies that if ambitious mitigation targets
are set over longer time scales, even the most technologically advanced coal-fired power plants are
not a sustainable technology.
• In all mitigation scenarios studied, an electricity/hydrogen economy emerges in the final energy
sector. This is particularly pronounced in A1T*450 and B1*-400. The launch of the electricity/hydrogen economy is in all cases initially based
upon hydrogen from fossil sources. The technologies to produce this are already available today on
an industrial scale.This is the only way by which torestructure the final energy sector in time. Overthe long term, electricity and hydrogen supply
becomes largely based on solar technologies inA1T*-450 and B1*-400, while in B2-400 hydrogenproduction based on carbon feedstocks remains
important.
• In A1T*-450 and B1*-400, in particular, energy
supply is based essentially on solar electricity andsolar-produced hydrogen by the end of the century. This supply-side dominance implies major
dependency upon the corresponding technological processes – processes which are still at the
beginning of their development trajectory today.
It is therefore essential to expand considerably
global research efforts in this field in order tounderpin this path.
If the global emissions budget is distributed amongindividual countries or regions according to the contraction and convergence approach, the selected convergence year (the years 2050 and 2100 have been
examined in the present study as representative
examples) modifies emission rights endowments andeconomic implications significantly at the regional
level.
If per-capita emission rights converge only by
2100, then this reduces the reduction commitments ofindustrialized and transition countries. Conversely, if
convergence is delayed until that date, the developing countries receive correspondingly less emission
rights and are subjected to higher economic burdens
than they would be if per-capita emission rights were
to converge by 2050.
To prevent dangerous climate change, the WBGU
thus recommends to urge for an allocation of emission rights following the contraction and convergence model, with per-capita emission rights converging by 2050 in the second commitment period of
the Kyoto protocol. In addition to focussing clearlyon the target of reducing CO2 emissions, thisapproach also embraces the attempt to implement, tothe largest degree possible, the fundamentally equal
right of all individuals to emissions.
Promoting global technological and economic
convergence, as well as sustainable development, andsecuring a viable emissions trading system are thekey points of departure in order to attain this goal atleast cost.

Carbon sinks

4

The surface of the Earth (land and ocean) has been a
net carbon sink of 2 to 4 Gt C per year between 1990
and 2000 (Schimel et al., 2001). This sink reacts sensible to climate events and human activities. Its size
ranges from years in which almost all the fossil fuelemissions are reabsorbed (Fig. 4.1-1a) to other years
in which the sink capacity of the earth surface isalmost zero (Prentice et al., 2001). A large fraction ofthese oscillations has been associated with El-Niño
and major biomass-burning events. Presently we arein a period of a strong but declining net surface sink
(Rödenbeck et al., 2003).
Despite all changes, the global surface sink, on
average, has increased proportionally to fossil fuelemissions and the carbon fraction remaining in theatmosphere has been surprisingly constant at 40%
over the last 40 years, apart from El Niño and fire-7

Fossil fuel burning
Annual increase in atmosphere
El-Niño incident

Carbon [Gt/a]

6

a

5
4
3
2
1

?

dependent short-term variability (Fig. 4.1-1b). Thismeans
– that the global net surface sink has continued toincrease with fossil fuel emission and atmospheric
CO2 concentration, and– that the global surface has not been saturated with
CO2, and it is uncertain at present if and when thiswill happen.
The partitioning of the earth surface CO2 flux into
oceanic uptake and land surface uptake has been
subject to long debates. Schimel et al. (2001) conclude that in the 1990s the flux into the ocean has
been fairly constant (1.7 to 1.9 ± 0.5 Gt C per year),while the net flux from the atmosphere into terrestrial systems has been much more variable (0.2 to 1.4± 0.7 Gt C per year).
The global carbon balance as summarized in Table
4.1-1 contains the regional variation in fossil fuelemissions as well as in biospheric uptake of CO2. The
emissions, originating in large part from the USA andEurope, lead to an increase of the atmospheric CO2mass by 3.2 ± 0.1 Gt C per year. The oceans and the80
Fraction of atmospheric CO2 [%]4.1
The global carbon balance

b

60

40

20

0

0
1960

1970

1980
Year

1990

2000

1960

1970

1980
Year

1990

2000

Figure 4.1-1a) Fossil fuel emissions and increase of CO2 concentration in the atmosphere. Arrows on the x-axis indicate El-Niño incidents.
A high rate of CO2 increase indicates a low surface assimilation. The difference between the fossil fuel emissions curve and theatmospheric increase depicts the global surface sink.
b) Fraction of fossil fuel emissions measured as increase in atmospheric CO2 concentration from 1960 to 2002.
Source: a) after Prentice et al., 2001 b) Heimann, personal communication

48

4 Carbon sinks[Gt C a-1][%]

Fossil fuel emissions
USA
EU-15
RussiaGermany

6.3 ± 0.4
1.6
1.1
0.8
0.3

25
17
13
4.8

Atmospheric CO2 increase

3.2 ± 0.1

Net uptake of the oceans
Net uptake of the continents
Emissions due to land-use change
Assimilation by vegetation
USA
EuropeSiberia
Tropics

1.7 ± 0.5
1.4 ± 0.7
1.6 ± 0.8
3.0
0.8
0.4
1.3
0.5

continents absorbed 1.7 ± 0.5 Gt per year and 1.4 Gt± 0.7 Gt per year respectively.The contribution of thecontinents is a net balance between the assimilationby the present terrestrial systems (3.0 Gt C per year)
and emissions from land use change (1.6 Gt C peryear). It is important to recognize that the CO2 assimilation of the land surface is not constant and exhibits
substantial regional variations. Siberia, consisting
mainly of natural unmanaged forest, contributes
most (43%) to the net global terrestrial assimilation.
From Table 4.1-1several conclusions can be drawn:• The land surface of the USA re-assimilates about
half of the US emissions.
• The land surface of Europe re-assimilates a good
third of the European emissions.
• The surface of Europe and Russia jointly reassimilate 89% of the emissions from these territories, mainly in the pristine boreal forests. Thisemphasizes the global importance of unmanaged
primary forests.
• Given the fact that the allocation of carbon emission between atmosphere and global surface isconstant, we conclude that the boreal forest and its
soil is not carbon saturated.
• The emissions from land-use change originate
mainly from utilizing primary forest, adding 25 ±12% to the global emissions. Thus the effect ofland-use change is 5 times larger than defined in
the Kyoto Protocol, and it will continue to be asource for the foreseeable future.
Current scientific knowledge of the global carbon
cycle reinforces the need to take land use and the terrestrial carbon balance into consideration for management of the global carbon budget.
Fig. 4.1-2 describes the different component fluxes
involved in the terrestrial carbon balance. The net
biome production (NBP) would be the appropriate
parameter to consider when calculating the sinkstrength of a region or country. The atmosphere does

Table 4.1-1
The global carbon balance
for the period 1990 to 2000.
Source: after Schimel et al.,
2001

27
13
43
17

not ‘see’ net primary production (NPP) nor net
ecosystem production (NEP), but only NBP.
Ciais et al. (2003) compared NPP and NBP for the
Amazonian, the Siberian and the European forests(Fig. 4.1-3). NPP is about 10 times larger than NBP.
While NPP of the Amazon is twice that of Europe
and exceeds NPP of Siberia by a factor 3, the rate of
NBP of the Amazon is even lower than that ofEurope and Siberia.
While in the Amazon region NPP and NBP can be
explained by the observed increase in CO2, this is not
the case in Siberia. Here they are most likely related
to increasing temperature. In Europe, the situation ismixed. In contrast to models and inventories, casestudies indicate a strong CO2 effect. The effect isprobably due to nitrogen deposition from the atmosphere. Hence: The global carbon sink is much larger
than the ‘Kyoto sink’ because the Kyoto Protocol
refers to small parts of the land surface only. Regions
behave differently. High CO2 concentration can
explain NPP in the tropics but not in Siberia. In
Europe, the sink is influenced by direct and indirect
human interventions.

4.2
The terrestrial carbon flux balance
The global carbon cycle is characterized by large
fluxes towards the Earth surface and away from it,connecting huge terrestrial and oceanic carbon
stocks with relatively small atmospheric carbon
stocks (Fig. 4.2-1). The net fluxes are the difference
between these large directional fluxes. Thus, the system is highly sensitive because small changes in the
directional fluxes may cause large disturbances in the
net flux.
In the context of the Kyoto Protocol, we would
like to point to the very large carbon stocks in the terrestrial biosphere. The carbon pool in plant biomass

The terrestrial carbon flux balance 4.2
Figure 4.1-2
Carbon fluxes of ecosystems
and definitions to describe
the component fluxes.
Source: after Schulze et al.,
2000

Net biome productivity
Net ecosystem productivity
Net primary productivity
CO2

Gross primary
productivity

BC

CO2 CO2

Heterotrophic respiration

new

Biomass
old

it y

l

Ha

Soil Organic
MatterM or taWoodproducts

Plant
respiration

CO2

SOM

GrowthCO2

LitterPhotosynthesis
productsr vestCarbon losses off site

CO2 CO2

Litter

Fire

new
SOM

activepassive

Black carbon(560 Gt C) is almost as large as the atmospheric one(750 Gt C). Plant biomass mainly consists of wood,and the greatest part of this is stored in unmanaged
primary forests (IGBP, 1998). The emissions causedby land-use change (Table 4.1-1) refer mainly to thedestruction of this resource. Soils contain twice asmuch carbon as the atmosphere, and land-use change
may release up to 50% of the soil carbon stocks (e.g.
through ploughing of natural grasslands). Carbon
stocks have been influenced in the past above all byland-use changes, which have had a greater impact
than climatic effects. This problem is not limited to
the less developed part of the world but also involves
industrialized nations. The building of infrastructure(e.g. surface sealing by road construction) in industrialized nations consumed large amounts of soil carbon, which were not equilibrated by afforestation
over areas of equivalent size.
Depletion and recovery of ecosystem carbon
stocks are highly asymmetric. While depletion can benearly instantaneous, e.g. by fire (clearing of land in
the tropics), recovery may take centuries. Effects ofland-use change on soil carbon stocks in Germany
can be detected even after centuries (Wirth et al.,
2003; Fig. 4.2-2).

The natural carbon accumulation in soils is very
slow, ranging from about 0.5 t C per ha and year during recovery from previous agricultural use forapprox. 100 years (Jenkinson et al., 1992) to about
0.05 t C per ha and year during forest recovery within
one rotation period in managed forests (Mund and
Schulze, 2003). Areas under continuous observation
in England – the famous Rothamsted Experiment –show that even more than 100 years after conversion
from arable land to grassland, carbon accumulation
does not reach saturation, and disturbances introduced experimentally 100 years ago are stilldetectable today in the soil carbon stocks.
The effects of fire are even more complicated.
Ground fires lead to a growth depression of theremaining stand which is followed by increased
growth due to improved cation supply. Soil carbon
may initially increase due to the production of charcoal. However, a subsequent fire could consume thischarcoal layer again. Thus the total amount of charcoal appears to be constant, unless the charcoal is cut
off from atmospheric oxygen through erosion
processes (Czimczik et al., 2003).

49

4 Carbon sinks

β: 0,20

5

0,30

0,40

0,50

0,60

0,70 0,80 0,90 1,00 1,10a: Siberia

4

3

2

1

0
0,0

0,4

0,2

0,6

0,8

1,0

β: 0,20 0,30 0,40 0,50 0,60 0,70 0,80 0,90 1,00 1,10

5b: Europe

Net primary productivity [t C/ha/a]

50

4

3

2

1

0
0,0

1,0

0,5

1,5

2,0

β: 0,20
15

0,30

c: Amazonia
0,40

10

0,50

5

0,60
0,70
0,80
0,90
1,00
1,10

0
0,0

0,2

0,4

0,6

0,8

Net biome productivity [t C/ha/a]
Plot studies

Biomass inventories

Global models

Inversions

1,0

Figure 4.1-3
Comparison of net primary
productivity (NPP) and net
biome productivity (NBP) in
Siberia, Europe andAmazonia, based on plot
studies, large-scale biomass
inventories, global models
and inversion calculations
based on CO2 measurementsin the troposphere.
The gradients show thechanges in NPP and NBP
that follow from a doublingof CO2 concentration (350
to 700 ppm), the so called
fertilization factor β.
Experiments show that adoubling of CO2
concentration leads to anincrease of NPP by 20–40%.
The position of points below
or above the 0.2-β-line
indicates whether the NPP
can be explained by thechange in CO2
concentration.
Source: Ciais et al., 2003

Regional carbon balance assessments 4.3
Figure 4.2-1
The global carbon cycle withcarbon stocks and fluxes.
Stocks are shown bold in Gt
C, fluxes in Gt C per year
and printed in normal.
Numbers in paranthesis aremean residence times. The
flux into the soil is estimatedat 1.5 Gt/a. DOC dissolved
organic carbon, DIC
dissolved inorganic carbon.
Source: after Schlesinger,
1997

6

Atmosphere750+ 3 Gt C/a(3–7 years)

122
60

Land
plants560

60
1(50 years)

Net destructionof vegetation

Soils
1,500
(5–10,000 years)

Rivers
0.4 DOC
0.4 DIC

92

90

Oceans38,000

Plankton3+ 2 Gt C/a(2–1,000 years)

Burial0.1

4.3
Regional carbon balance assessments
Only few regional carbon balances are presently
available. The European carbon balance is presented
as an example. Janssens et al. (2003a) conclude that
the European biosphere absorbs 7 to 12% of European anthropogenic CO2 emissions. This estimate isconsiderably lower than the 36% (Table 4.1-1) given
by Schimel et al. (2001).Above all the emissions fromagricultural soils have been underestimated in thepast. This means that the figures presented by the
IPCC (2001a) must be revised.
A share of 7 to 12% may not appear large at firstglance, but this is 3 to 4 times as much as the fossil
fuel emissions presently avoided by using hydropower.Thus the European biosphere is very efficient,but the sink is only partially accountable under the
Kyoto Protocol. Based on current land-based measurements, the forest sector in Europe is estimated to
be a sink of about 380 Mt C per year (flux from theatmosphere to the ground) whereas agriculture isconsidered to be a source of 200 Mt C per year (fluxfrom the ground to the atmosphere). The figure for
agriculture refers to stock changes in soils. It does notcontain the emissions from animal farming andmanure, nor the emissions of other greenhouse gases(CH4 and N2O) from animal farming, pasturelandand cropland. Thus the overall agricultural greenhouse gas emissions are even higher.
Europe consists of a mosaic of different land-uses.
An accurate assessment of land-use data as well as

information on agricultural and forest management
strategies is crucial in estimating reliably the net carbon balance of this region. The regulations concerning the accounting of sources and sinks from forestry
and agriculture according to the Bonn Agreements
negociated at COP 6 to UNFCCC are sector-specificand do not help to assess such a net carbon balance.
In forestry the change in woody biomass in the commitment period is accountable if the change was initiated by human induced activity after 1990 (grossnet approach). Only 15% of the gross change isaccountable in order to exclude indirect effects ofglobal change (increased CO2 and N deposition). In
contrast, in agriculture the net change in 1990, which
could be an emission, is compared with the netchange in the commitment period, which could again
be an emission, and if the emissions rate has
improved in comparison with the 1990 figure, the difference is accountable (net-net approach). Therefore, although ground-based estimates including
land-use data are currently submitted to the
UNFCCC data base via National Reports, and carbon sources are in principle to be included in thesereports, only few countries have done this so far.Thusfor agriculture, the net-net approach pursuant to
Article 3.4 may create a false impression since a
reduction of the source will be accounted as a sink,although in fact the system remains a source. There isno mandatory emission reduction commitment inagriculture. There are also no incentives to avoid carbon emissions in the forestry sector, e.g. the increased
use of small trees produced during short rotation
periods causes a substantial emission by the forestry51

4 Carbon sinks
Figure 4.2-2
Carbon stocks in topsoil(0–10 cm) under forest as afunction of different land
uses in the past withstandard deviation. Data for
Germany.
Source: after Wirth et al.,2003

50
Former land-use type:
Deciduous forest
Carbon stocks in top soil [t C/ha]

52

40

Coniferous forest
Agriculture

30

20

10

0
SilicateSand/sand stone

Carbonate/clay

sector, but may appear to be an increased sink in thecommitment period.
It emerges that European countries differ greatly
in the comparative balance they achieve between
forest sink and agricultural source. The ‘winners’ arecountries like Austria, Slovenia and Slovakia due totheir extensive forest areas (Fig. 4.3-1). In contrast,
small countries with a high population density, little
forest but large areas of arable land or countries withsignificant amounts of disturbance or use of wetlands
appear as net carbon emitters. Trade of food andwood products increases carbon emissions in many
countries.

4.4
Verification issues
The worry that forest sinks may not be verifiable has
lead to some of the decisions in the Bonn Agreements (Schulze et al., 2002). In the meantime, verification mechanisms have been developed; however,these are still scale dependent. For small-scale (plotsize) assessments, sound statistical approaches havebeen developed to verify even minimal changes inbiomass. The verification of changes in soil carbon
remains a difficult issue. This is important, because
compartments which do not appear to be sources
need not be reported under the UNFCCC regime. If
an inappropriate statistical approach is used, changes
can go un-reported, even if the soil has become asource. However, similar approaches for verificationof soils are currently under development. The same
approaches as for plot scale can be used at regional
scale.
For regional, national and continental scale assessments, the EU has initiated tall tower observations

Loam/silty loam

across Europe and regular flights to sample tropospheric air above the continent. Given the very large
footprint of these towers (500 km diameter) and thehigh precision of trace gas measurements, they could
become the backbone of a future monitoring network which would scrutinize by independent assessment the chemical status of the atmosphere. The tall
towers primarily measure concentrations and notfluxes. The concentration of greenhouse gases in theatmosphere – the target of climate protection efforts– is the outcome of the sum of fluxes resulting fromburning fossil fuels, land use and forestry. Concentrations are thus the ultimate parameter indicating
whether measures initiated under the Kyoto Protocol
are effective. Moreover, various attributes (isotopes,
correlating trace gases) can be used to deducechanges in sources.
In its 6th Framework Programme, the EU has initiated research in Europe that will measure carbonchanges at plot and at regional scale with 10% accuracy by combining ground-based and atmospherebased measurements.

4.5
Assessment of the present Kyoto Protocol withregard to carbon sinks

4.5.1
Problems arising from the history of the Kyoto
ProtocolThe Bonn Agreements (COP 6) and the Marrakesh
Accords (COP 7) have been critically assessed by
Schulze et al. (2002). One critical point originatesfrom the history of the Kyoto Protocol. While someAssessment of the present Kyoto Protocol with regard to carbon sinks 4.5

Relative to emissions
from fossil fuel[%]Net balance[g C / m2 / a]Albania+47-12Austria +94
Belarus -31

-49
+32

Belgium + Luxembourg

+10

-91
Bosnia-Herzegovina +34
Bulgaria +9

-144
-7

Croatia +17
Czech Republic +11-19

Denmark

-92

+25

-30
Finland +17
France +28

+24

-2

Estonia-38-16

Germany +22
Greece-8-3+5Hungary-14+8

Irish Republic

-44

+33
+4

Italy

-15

Latvia+2-4

Lithuania

-35

+48

Macedonia

-16

+14

Moldova-50+14Netherlands -193

+18

Norway +15
Poland -42+14

Portugal

-60

-39

+27

Romania +25-19

Slovakia +110

-49

Slovenia +123

-69

Spain

0

0

Sweden +28-95

Switzerland +44-16

Ukraine-31+15

United Kingdom

-34

+5

Yugoslavia

+7

-4
-200

-100

0

100

Biospheric carbon flux density [g C / m2 Land area]
Croplands

Peatlands

Trade

Forests

Grasslands

Figure 4.3-1
The carbon balance of the terrestrial biosphere for different European countries. The total net balance is presented both inabsolute numbers as well as relative to fossil fuel emissions. The net balance results from a source of carbon mainly fromagriculture and a sink mainly provided by forests and grasslands. Trade includes nunmbers for food and wood products derived
from national statistics. Positive numbers indicate a sink.
Source: Janssens et al., 2003bnations voted for the option to include sinks arisingfrom agricultural or forest management as well asafforestation and reforestation, others aimed at
restricting these options to a very limited amount of
the total emission reductions in order not to soften
the reduction commitments for fossil fuel emissions.
It was thus decided that ‘the mere presence of carbon

stocks be not accountable.’ Once intended to restrictmeasures other than direct emission reductions, thissentence from the preamble of the Bonn Agreements
leads to substantial problems related to reducing
emissions to the atmosphere. The carbon stocks inthe carbon cycle, which are mainly located in pristine
forests but also in temperate, sustainably managed

53

54

4 Carbon sinks

forests (where they may change following economic
impacts) are not acknowledged. Therefore no incentives exist to prevent these stocks from being lost if
forests or peatlands are converted into arable land or
plantations. The problem of accounting in Annex-I
and in non-Annex-I nations is presently being evaluated by the IPCC in a Good Practice Guidance
report.The following examples provide some insights
into the developments and risks of the Kyoto agreement in its present form:• The inclusion of afforestation and reforestation
bears the danger of losing pristine forests or peatlands to forest plantations containing and assimilating much smaller amounts of carbon than thenatural ecosystems. Afforestation of peatland(Cannell et al., 1993) is likely to reduce soil carbon
stocks while increasing less permanent carbon
stocks in biomass and litter. Moreover, biodiversity of the concerned ecosystems might be threatened seriously.
• Reforestation of grasslands and croplands maylead to either an increase or decrease in soil carbon stocks, depending on climatic factors, theland-use preceding afforestation and the initialsoil carbon stocks (Vesterdal et al., 2002; Paul etal., 2002). For instance, Jackson et al. (2002)
reported soil carbon changes ranging from -61 t C
per ha to +13 t C per ha within the first 30 to 100
years after afforestation of grassland – in mostregions losses prevailed but gains were reported
from dry regions.
• Balancing deforestation and reforestation for acertain region often results in negative carbon
stock changes because stocks lost due to forest
destruction are usually greater than gains in newly
forested areas, especially if old-growth forests are
replaced by short-rotation plantations. Germany
serves as an example: 1,080 ha were deforested
from 1991 until 1999 for highway building projects
in the new Länder.At the same time, 2,850 ha wereafforested. Superficially, this would be a positive
forest balance. However, taking the average
aboveground carbon stock (82 t C per ha) and theaverage soil carbon stock (107 t C per ha) as thebasis, the carbon loss despite reforestation totalled
146 Kt C, assuming 50% loss from soils upon
deforestation as well as carbon loss from soil after
afforestation. It will take more than 500 years untilchanges in soil carbon are balanced. Literature
values for losses upon cultivation of previous
forests range from 24% in a review by Murty et al.
(2002) to 63% over 90 years in a study of US
agroecosystems (Kucharik et al., 2001). These
examples illustrate the problem of defining a baseline, particularly as deforestation and afforestation activities take place on different land, and atdifferent times.
• ARD (Afforestation, Reforestation and Deforestation) in CDM countries: Schulze et al. (2003)
showed that reforestations which were carried out
in tropical regions after previous deforestation
had a negative net carbon balance. Large areas in
the tropics are covered with Imperata cylindrica, avery invasive grass species of little feed value. Its
aboveground biomass amounts to 8.5 t C per ha,which is periodically released to the atmospherewhen grasslands are burned to improve food quality for livestock. Is reforestation of these vast areas
an option to increase carbon stocks, or is it better
to use Imperata which, as a C4 grass, has a higher
NPP than that of a forest? This is what is currently
being done with the grass Stipa tenesissima in
Algeria.
• The human induced carbon storage component
was restricted for forestry to 15%, which was theresult of negotiations assuming that only 15% of
the forestry sink related to human activities since1990 be accountable. The actual carbon sequestration in forestry due to management decisions since1990 actually exceeds this fraction (Wirth et al.,2003).
Fig. 4.3-1 already shows that there is a large potential
for management to enhance the European net carbon sink. However, it remains debatable what theright tools are:• Agriculture: It has been suggested to use low
tillage as tool for reducing carbon emissions. This
practice, however, will either require greater useof herbicides together with genetically modified
cultivars that are herbicide resistant, residue burning or a crop rotation that requires deep ploughing
periodically. In many areas of Europe, sugar beet,
potato or other tuberous crops are rotated withgrain crops, and this requires ploughing that will
release the carbon saved by low tillage. Rotationof agriculture and pasture, especially using
lucerne, may offset losses, which however increase
if other greenhouse gas emissions are added.
Options to increase carbon storage must also be
evaluated with a view to the contribution of agriculture to the energy sector.
• Forestry: Many options have been considered toincrease the forest sink. At this stage, it remains
unknown if there is an upper limitation in thepotential sink of forest soils. Wirth et al. (2003) ran
models across the following options for biomass,
which generally show that it is difficult to increase
the biomass in German forests, since the stocking
rate is high already, and sustainable management
has been a primary goal for some time. The following options are discussed:

Evaluation of the Bonn Agreements and considerations for future commitment periods 4.6

Changes in the length of the rotation
periodIncreasing forest age in a rotation forest will
increase the forest sink in the short term. This
leads to an uneven age structure transitionally,
which will cause oscillations and a change from asink to a source in the long term. However, it also
leads to an increase in the volume of wood products, a part of which replace fossil fuels. Moreover,current trends in the forest industry point to the
opposite development. Especially in the case ofheartwood trees, small trees with a high proportion of sapwood (easy to treat with chemicals)have come to make up a high market share. The
management aim for pine is early harvesting ofimmature stands. This change in management will
result in a major loss of carbon stocks, including insoil. It could substantially accelerate climatechange due to emissions from logging of oldstands.
Change from rotation forest to unevenaged forest
Selection cutting does not necessarily result inhigher biomass (Wirth et al., 2003). This management system was developed to achieve a few highquality stems, not to achieve a high biomass per
area.Therefore, the average biomass can be higher
under rotation forestry than in age-structured
forests.
From coniferous to broad-leafed forest
This could potentially increase the carbon stocks
in the long term, despite an initial carbon loss
(Fischer et al., 2002b). Modelling the change fromconiferous to broad leafed forest, Wirth et al.
(2003) conclude that the accountable carbon gain
is about 0.1 t C per ha and year because the changetakes place over a long period of time (about 200
years).
Increasing the dead wood carbon stocks
Managed forests of Europe have a very low stockof dead wood. Whole tree harvesting contributes
to this. Nevertheless, increasing the dead woodcarbon stocks is a promising option for climate
mitigation in the long term, because the mean residence time of dead wood is significantly longer
that that of forest products (Wirth et al., 2003), nottaking into account their use for energy purposes.
This has consequences for accounting of wind
throw events.

Avoiding forest harvest and creating
protected areas
Avoiding harvest leads to a higher carbon sink.
Both protected and primary forests reach an
upper limit of biomass which is higher than inmanaged forests (Mund and Schulze, 2003). Obviously additional processes exist that make unmanaged forests distinct from managed forests. Carbon stocks in dead wood and soil are higher inunmanaged forests. The large proportion of alpine
protection forest in Austria, Slovenia and Slovakia
probably explains the superior effectiveness of theforest sink in these countries (Fig. 4.3-1).

4.5.2
Problems related to sink determination
Carbon sinks are calculated by different methods inagriculture, forestry and in the CDM. This makes calculations scarcely reproducible and comparisons difficult. The only common feature of all three methodologies is that nations can select projects in whichcarbon gains occur while situations where carbon isemitted are neglected. If the net changes reverse
from positive to negative and countries turn out to be
emitters between 1990 and 2008, they will not choose(by 2005) to use Article 3.4 or focus on the gain in
1990 as compared to the commitment period 2008 to
2012. In forestry, losses between 1990 and 2007 arereported in the national reports to the UNFCCC, but
are not accounted under the Kyoto Protocol because
they took place before the commitment period 2008
to 2012. In CDM, the change from a baseline isaccountable, and the result depends on the selectionof the baseline. If the carbon stocks prior to deforestation would be the baseline, none of the reforestation CDM projects would be a sink. Houghton et al.
(1999) presented the carbon balance of the USA andshowed that the past deforestation is the basis forthat country’s present carbon sink. The Annex-I
nations must decide in 2005 if they want to allow
accounting of management-related sinks according
to Art 3.4.

4.6
Evaluation of the Bonn Agreements andconsiderations for future commitment periods
The above assessment shows that the present Art. 3.3
and 3.4 of the Kyoto Protocol and the text of theBonn Agreements are not suitable for the purpose ofclimate change mitigation:• The present text does not stimulate broad-scalecarbon sequestration.

55

56

4 Carbon sinks• The Kyoto Protocol does not provide any mechanism to protect the high carbon stocks of pristineand old-growth forests.
• The accumulation of biomass in managed forests
can only buy time, because these forests will be
harvested at a later stage. Thus in the Kyoto sense
these sinks are not permanent, even though theforest continues to serve a climate change mitigation function and the forest products may serve toreplace fossil fuel. It must be kept in mind when
considering the ‘permanence’ of biological sinks inforestry that the rotation period (the period of
growth until a harvestable tree size) is between 80
and 300 years in Europe. This sequestration thus
takes place over a longer period than that considered in the present report. The modern forest
practice of creating uneven-aged stands could
equilibrate oscillations of carbon stocks, but thiswould prevent them from being accountablebecause such uneven-aged stands would notexhibit net changes in biomass even if sustainable
harvesting were practised.
Given the shortcomings of the present Kyoto Protocol in the accounting of terrestrial carbon sources
and sinks, it seems appropriate to consider changes
for future commitment periods. These changes are:• Full carbon accounting: The EU research cluster
CarboEurope already recommended during theBonn negotiations at COP 6 to amalgamate Art.
3.3 and 3.4 and base the assessment on full carbon
accounting. The atmosphere does not distinguishthe human-induced management components offorestry, but feels the impact of total changes incarbon stocks at regional scale along with the total
emissions from agriculture into the atmosphere.
The present problems of verification mainly result
from the notion of separating direct and indirect
human factors, not from any absence of measuring
techniques to detect changes. The verification of
total (not selective parts of) carbon emissions andsinks is possible at all scales, and can be checked
across scales despite their natural geographic andinter-annual variability. It is the net balance of all
fluxes (fossil plus land surface), rather than theeffect of partial fluxes, which affects the atmosphere and thus induces climate change.A full carbon accounting system would avoid debatableclassifications into direct and indirect humaneffects, and it would use different spatial scales aspart of the verification system (upscaling of terrestrial observations must match downscalingfrom atmospheric observations). This cannot bedone with the Kyoto accounting system.
• Conservation of carbon stocks: In view of the emissions from land use and land-use change, the conservation of existing carbon stocks appears more

important than the enhancement of sinks.The present accounting system is not suitable for managed
systems, or leads to situations in which only sinks
but not emissions are reported.
The present form of the Kyoto Protocol is not suitedfor management in forestry: (1) the selected minimum area for projects is too small and does not dojustice to management options; (2) the permanent
designation of an area as ‘Kyoto forest’ or ‘nonKyoto forest’ creates a conflict of interest between
climate change mitigation and management options;(3) the focus on ‘human induced’ actions is in conflictwith the multi-functionality of forests; (4) the factthat previously unmanaged (pristine) forest is notincluded in the accounting scheme or in the baselines
fails to prevent emissions from primary exploitationof these forest areas; (5) different accounting
schemes for agriculture, forestry and CDM detract
greatly from the transparency of the whole process
and enable nations to account for sinks without
reporting land-use sources.
The problem of forest management is that we are
dealing with very large carbon stocks that can bereleased in a very short time but re-established only
by relatively small fluxes over very long periods oftime. The time constants for destruction and regeneration differ by several orders of magnitude, and thisapplies to soils as much as to forests. It may take only
5 minutes to cut a tree, but it takes 50 million minutes
to grow a tree to a harvestable size. The present
Kyoto Protocol does not consider the asymmetry ofdestruction and regeneration, because it explicitly
excludes the accounting of carbon stocks (‘the mere
presence of carbon stocks be not accountable’).

Institutional design of the future climate protection regime

5.1
Full accounting of greenhouse gas emissions andstocks (full carbon accounting)To ensure effective climate change mitigation, allgreenhouse gas emissions must be covered, i.e. beside
CO2 also methane, nitrous oxide and other climate
active substances. To standardize monitoring, gases
should be converted into equivalent CO2 emissions(‘greenhouse gas basket’) as envisaged in the Kyoto
Protocol.
Institutional separation of emission
reductions and conservation of carbon
stocksFor greenhouse gas emissions from fossil fuel use andthe allocation of reduction commitments, the Council recommends the ‘contraction and convergence’(C&C) approach. Greenhouse gas stocks in the terrestrial ecosphere should be treated separately. Consequently the Council argues in favour of a separate‘stocks protocol’. This could complement the Kyoto
Protocol, as a parallel agreement, in fleshing out thedetails of the Framework Convention on Climate
Change. It should regulate, among other aspects, theaccountability of afforestation and reforestation projects. In the following Sections 5.2 to 5.4, the Council
first examines the possible shape of the Kyoto Protocol in order to limit greenhouse gas emissions fromthe use of fossil fuels. Section 5.5 then presents thebasic idea of a separate protocol on carbon stocks
and sinks, whereas Sections 5.6 to 5.8 treat incentive
and compliance measures, financing instruments andinstruments of global energy policy.
Reliable inventories as a basis for decisions
The preconditions for an effective international climate protection regime include reliable and detailed
greenhouse gas inventories. This involves both regular, reliable reports on changes in stocks, and detailed
information on the volumes and sectoral origins ofgreenhouse gas emissions (IPCC et al., 1996; IPCC,
2001e). Correct information on greenhouse gas emis-

sions from fossil fuel use is a key prerequisite for contraction and convergence (C&C), as all countries/
regions directly receive absolute emission limits andcan participate in emissions trading. If developing
countries are to be integrated fully into trading, there
is a need not only for data on CO2 emissions, but also
for more differentiated inventories of other emissions that are comparatively important in this groupof countries, such as methane or nitrous oxide.
Moreover, much higher requirements upon inventories are to be expected if full carbon accounting forthe sources and sinks of the terrestrial biosphere(Chapter 4) is introduced, as this would necessitate
complete coverage of all stocks and fluxes for bothnatural and managed ecosystems.

5.2
The ‘contraction and convergence’ (C&C) regime
For a second commitment period, the Council recommends applying the C&C approach, with linear
convergence of emissions shares towards equal percapita emission rights by the year 2050 (Chapter 3).
Ideally, all states would then adopt absolute emission
limits. This would remove the current distinction
made by the Kyoto Protocol between Annex-I states
and non-Annex-I states. The flexible mechanisms ofemissions trading, Joint Fulfillment (‘bubbles’, e.g.
burden sharing within the EU in accordance with
Art. 4 UNFCCC) and Joint Implementation would
then be basically available to all states. In order topromote willingness to adopt emission limits, theother instruments – particularly access to the climate
funds (Section 5.6.1) – should be made conditional
upon participation in C&C.
If it should emerge that various developing states
are not able or not willing to accept absolute emission limits from the outset, the Council considers a
special clause tolerable for countries that have lesseconomic capability and relatively low emissions (an‘opt-out clause’). Modelled on a reduced form of themultistage approach (Chapter 3), under this modified C&C regime states would only then need to558

5 Institutional design of the future climate protection regime

accept absolute emission limits if they transgress acertain threshold value oriented to per-capita emissions or per-capita income. Countries below thisthreshold are allowed, upon prior approval, to makeuse of the opt-out clause and must not, for the time
being, comply with absolute emission limits. To
remain within the tolerable climate window despite
an opt-out clause, the countries participating in the
C&C regime would have to commit themselves toshare the remaining reduction burdens. The threshold would thus need to be set such that the additionalburdens are bearable for the participating countries.
It also needs to be set such that at least all economically advanced developing countries and the transition countries are integrated within the commitments. As developing countries without absoluteemission limits cannot participate in emissions trading, but should nonetheless be integrated into international climate protection efforts, it is recommendable within this modified approach to retain the
CDM. A further aspect is that the countries participating in the C&C regime could reduce their burdens
by using CDM credits in emissions trading.
The Council is aware of the danger that individualstates could entirely refuse to adopt emission limits
and could thus assume a free rider position. To copewith this, the London based Global Commons Institute, which originally developed the C&C model, has
proposed a ‘Global Climate Community’: A group ofcore states (EU, some Umbrella Group states, developing countries) adopts emissions reductions according to the C&C principle. The Council similarly recommends to the coalition of voluntary participantsthat it retains the basic idea of the C&C allocation
approach despite the absence of important countries.
On the other hand, the Council expressly warns thatin such a situation the climate change mitigation goal
would most probably not be attained – this will be all
the more so the more large-scale emitters refuse tojoin the regime. The goal of coalition members must
therefore be to expand the group of participants as
swiftly and comprehensively as possible. Positive
incentives alone will probably not have sufficienteffect. The resources required to ‘buy’ the participation of all free riders could not be mustered. Therefore the coalition members should agree that they
will impose political and economic sanctions against
free rider states when the need arises.

5.3
Improving greenhouse gas inventories
The Convention commits all states parties, i.e. also
the developing countries, to compile inventories for
all greenhouse gases not controlled by the Montreal

Protocol (Arts. 4.1 and 12 UNFCCC). However,requirements regarding the completeness, accuracy
and frequency of information are currently higher
for Annex-I states. The least developed countries(LDCs) are free to determine their reporting schedule.
Introduction of C&C would necessitate the samerequirements for all countries that are currently
placed upon Annex-I states. Annex-I states must
report their inventories annually; they are also
reviewed annually by international experts. Further
commitments arise from the Kyoto Protocol. However, not all Annex-I states have met all requirements as yet (Herold, 2003).
Until now, numerous states have failed to produce
reliable inventories. One cause is that many developing countries lack the requisite technical, financial
and/or institutional capacities for compiling regularand complete inventories. To reduce such barriers,
there is a need for additional technical cooperation
activities. These activities should not be financed
from already constrained development cooperationbudgets, but rather through additional GEF replenishment (Section 5.7). A review procedure as prescribed for Annex-I states would also doubtlessly
greatly increase the quality of inventories (Herold,
2003).
The main issue at present is that of the politicalreservations to compiling and updating reliable
inventories (IEA, 2001). Such resistance can presumably be overcome if the adoption of emission limits ismade as attractive as possible in economic terms
from the outset and, at the same time, developing
countries, too, are only permitted to participate inemissions trading if inventories meet high quality
demands. Attractiveness thus depends upon themodalities for allocating emission rights, and upon
the way the emissions trading system is shaped. The
higher the anticipated revenue from emissions trading is, the bigger will be the incentive to participate
and thus also the willingness and ability to compile
inventories. The C&C approach favoured by theCouncil performs this incentive function above allwith regard to the poorer developing countries, whowill be net sellers of emission rights. The incentives
are weaker, in contrast, for developing countries
which, due to relatively high per-capita emissions,will need to curb their overall emissions in the near
future.
However, the opportunity to participate in emissions trading does not suffice as a sole incentive tocompile inventories if, through an opt-out clause, various countries have the option not to commit themselves for the time being to any maximum emission
limits. Such countries then cannot participate in emissions trading in any case. The CDM would then serve

Further development of the flexible mechanisms 5.4

as such an incentive instead: Using the CDM is also
conditional upon certain, albeit less demanding
inventory requirements. Here the willingness to compile inventories should be a more important criterion
than their quality. For the CDM to perform thisincentive function, it would need to be ensured thatthe willingness of these countries to compile reliable
inventories is an actual condition for the accountability of credits generated by CDM projects in thesecountries.

5.4
Further development of the flexible mechanisms

5.4.1
Clean Development Mechanism
Future relevance of the CDM
The Clean Development Mechanism (CDM) is
viewed as the key instrument of the Kyoto Protocol
by which to engage states without binding reduction
targets for the first commitment period in international climate protection activities. The Marrakesh
Accords provide that CDM credits are fungible inemissions trading. Estimates suggest a market volume for the CDM of between 0.2 and 2.6 thousand
million t CO2 equivalents in the year 2010; total payments are estimated at US$ 10–50 thousand million(KfW, 2001).These estimates include the USA, which
is anticipated to be the largest net buyer of emission
rights. More recent estimates of the financial transfer
generated by the CDM excluding the USA indicate acumulative transfer of only US$ 1.5 to 10.7 thousand
million for the first commitment period 2008–2012(Michaelowa et al., 2003).
Even if C&C is introduced, which would expand
the group of states with emission limitation targets,
the CDM would initially retain its key integrative
function, as it can be assumed that not all states will
be integrated fully into emissions trading from theoutset – be it because not all meet inventory compilation requirements, or because the modified C&C
approach permits a temporary opt-out of certain
countries (tolerance clause). Finally, the possibility
needs to be considered in connection with questionsof institutional restructuring that the states parties do
not agree upon C&C involving all countries, butrather agree upon a modified continuation of the
Kyoto Protocol regime (a possibility that scarcely
points in the right direction in the opinion of theCouncil). For these reasons, the Council discusses thefurther development of the CDM in detail in the following.

Strengthening the integrative function of
the CDM
In the view of the Council, the core objectives of the
CDM should be to promote technical mitigation projects in developing countries, and to move thesecountries to adopt absolute maximum emission targets or to engage in emissions trading. It follows thatas many of those countries that are not fully integrated in the reduction system should be involved in
the CDM as possible. Past experience with the CDM
within the AIJ (Activities Implemented Jointly) project phase, however, make it seem probable that projects will mostly be carried out in those developing
countries to which the bulk of foreign direct investment flows (Michaelowa et al., 2003). In order that
CDM projects increasingly take place in other, economically less attractive locations, it would be helpful
if more international resources were deployed to create the fundamental infrastructural and institutional
preconditions for CDM projects, possibly using the
Least Developed Countries Fund (Section 5.7). Specific incentives to carry out CDM projects in previously neglected countries or in LDCs would also beconceivable – e.g. in the form of higher CDM credits.
This, however, could produce distortions to the detriment of the other countries, and/or could reduce theecological effectiveness of the global climate protection regime.
Reducing free rider effects and preventing‘perverse’ incentives
The precursors of CDM projects have frequently
been ecologically dubious or have been characterized by free rider effects, i.e. credits have been
applied for projects that would have been carried out
in any case – even without the Kyoto Protocol and its
flexible mechanisms. For sinks projects, in particular,
the current accountability criteria create additional‘perverse’ incentives – the CDM effectively promotes the destruction of carbon stocks such as primary forests (Chapter 4). This presents a need forstricter registration criteria. The crucial aspect is thedefinition of additionality in relation to the baseline.
International climate policy distinguishes between
additionality criteria for sink-related projects, andother CDM projects. The following discussion is concerned only with non-sink CDM projects, as theCouncil takes the view that sinks should be taken outof the CDM entirely from the second commitment
period onwards (Chapter 4 and Section 5.5).
Investment additionality approach
In Marrakesh, three alternative approaches wereagreed for non-sink projects by which project developers can claim credit for greenhouse gas emissions
saved, i.e. the emissions that would have arisen with-

59

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5 Institutional design of the future climate protection regime

out CDM (the baseline case). Two of the approaches
proceed from the status quo as baseline, and thus
provide only limited information on the volume ofemissions that would actually have been released
without the CDM activity. The third approach –‘investment additionality’ – comes closer to providing such information. Here the baseline is the quantity of emissions that would result if the investor were
to deploy the technology ‘appropriate’ from a microeconomic perspective to meet a certain demand, e.g.
for energy, in the specific location. An investor who
deploys a technology that, while micro-economicallyless favourable, is associated with lower greenhousegas emissions, receives CDM credits to the amount of
the difference in emissions.
One weakness of this theoretically elegant
approach is that its standardization is exceedingly
difficult. For one thing, there are disparate methodsof cost, output and investment calculation. For
another, subjective criteria play an essential role
when determining the crucial parameters. Moreover,due to the complex calculations required and theirreview, the approach increases the costs of CDM projects. If the approach were made binding this would
impede the uptake of CDM activities and would
reduce the economic efficiency of climate mitigation
efforts. The WBGU thus does not consider it purposeful to reintroduce into the negotiations theinvestment additionality approach as a mandatory
method for all CDM projects. Instead, the investment
additionality approach is only made mandatory forlarge-scale projects. Both project costs and the volume of CDM credits applied for could be taken as
criteria.
Positive or negative lists of project types
The danger that CDM credits are granted to non-sustainable projects could be reduced by means of positive or negative lists of project types. Compared to a
positive list, the exclusion of certain project types
through a negative list would have the advantage that
formulation of this list requires less prospective
information, gives actors more flexibility and thus
generally has a less restrictive effect upon the uptakeof CDM activities. On the other hand, a negative list
is less focussed. Furthermore, it can appear, at least
subjectively, to be more discriminatory than a positive list, which can make it even more difficult to findagreement on fundamentally non-eligible projecttypes.
The idea of a positive list has already been
rejected by the parties – the WBGU recommends nottaking it up again for the time being. Instead, theapproach of a priority list should be pursued, which
establishes facilitated application and review procedures for certain project types (WWF, 2000). A fur-ther approach worth considering is to approve credits for projects which, due to their type, are not classified as priority, with less than 100% in emissions
trading. Finally, building upon its negative assessment of nuclear energy (WBGU, 2004), the Council
urges that the soft formulation established by thestates parties regarding nuclear projects is amended
such that these are non-eligible (‘one-item negative
list’).
CDM projects should not be impeded by acharge
The intention of the states parties to finance theAdaptation Fund by means of a charge amounting to
2% of the value of emission credits generated by
CDM projects represents a general disadvantage of
CDM credits compared to other flexible mechanisms. The charge must be expected to reduce theCDM volume and would thus impair its important
integrative function. A further point is that at least apart of the charge will presumably be passed throughto the developing countries. This would not only
reduce the incentive to participate in CDM projects,
but would also be questionable from a distributional
perspective.
Charges should be levied not only on the CDM –a mechanism that will be superseded over the longterm in any case if the C&C approach is adopted. If
at all, charges should be paid for all transactions
within the context of flexible mechanisms. Ideally thelevel of charges should not depend upon the requirements of the climate change funds, but should reflect
only the administrative costs generated by the use offlexible instruments. To finance the funds, otherapproaches should be aimed at that conform moreclosely to the principles of equitable and reliablefinancing (Section 5.7).

5.4.2
Joint Implementation
Within the AIJ pilot phase, project-based cooperation between two Annex-I countries has played only
a subordinate role.The integration of JI (Joint Implementation) emission credits into emissions trading, inparticular, may be expected to make the relevance of
JI decline further in the course of the first commitment period.
A complete integration of JI within emissions
trading is therefore worth considering. One argument in favour of this is that it would simplify theenvironmental policy toolbox. On the other hand,continuance of JI could prove purposeful in order tocontinue ongoing CDM projects – but not sinks projects – by converting them into JI projects. Moreover,Further development of the flexible mechanisms 5.4

the joint implementation approach could prove helpful for projects that are entirely or partly excluded
from emissions trading.
Thus the Council argues in favour of conducting areview of the functioning of JI towards the end of thefirst commitment period, with the option of integrating the mechanism into emissions trading, or merging
it with the CDM if the CDM should continue to exist.
An advantage of this is that JI projects which havecurrently been agreed between Annex-I states who
not meet their inventory compilation commitments(‘Second Track Joint Implementation’) could be carried forward into a modified CDM.

5.4.3
Emissions trading
Safeguarding market liquidity
Various studies on the shape of a future emissions
trading regime have expressed fears that there may
be surplus supply of emission certificates (caused e.g.
by the failure of large-scale emitters such as the USA
to meet commitments or join the regime), but also
supply bottlenecks caused by unexpectedly highemissions reduction costs or strategic hoarding ofemission certificates (Michaelowa et al., 2003). This
would lead to certificate prices that do not reflectscarcity and are very low or very high, and to extreme
price fluctuation. The functioning of the price mechanism and the stability of a market depend upon,among other factors, the liquidity and number of participants. This presents a further reason for a regime
for the allocation of reduction commitments that sets
absolute emission caps for as large a number of countries as possible. The C&C approach holds out great
potential in this regard, too.
In contrast, the Council rejects at the present timethe idea of involving the private sector directly ininternational emissions trading. Negotiations on thispoint complicate the process of finding climate policy
consensus, and implementation increases administrative effort. Moreover, the participation of the private
sector would not necessarily reduce price volatility,
and may in fact increase it.
Establishing a Climate Central Bank tosmooth price spikes
The scenario outcomes indicate that the present
Annex-I states and a growing number of other countries will need to buy emission certificates, over the
medium term at the latest. This requires that, firstly,
the total permissible quantity of emissions is reduced
to the level required to prevent dangerous climatechange (Chapter 2) and, secondly, an allocation
mechanism for emission rights is implemented pur-suant to a C&C-2050 approach. The economic modelon which the calculation of certificate prices was
based in the various scenarios can be used to derivestatements on anticipated long-term price trends
along market equilibria. In practice, however, theprice formation process can be expected to lead tooutcomes that deviate over the medium and shortterm. There is thus uncertainty concerning the development of certificate prices, for instance due tounpredictable economic, political and technologicaldevelopments, as well as the exceedingly heterogeneous group of participants in trading (Baumert etal., 2003). Furthermore, there is a danger of sharp
price surges (volatility) caused by, for instance,
strategic behaviour of market participants or cyclicalfluctuations in national economies.
The Council finds the establishment of a Climate
Central Bank (CCB) worth considering in order tosmooth disproportionately strong price spikes. Thiscan limit the uncertainty regarding the future costs ofclimate change mitigation, which increases planningcertainty for companies and private households, who
ultimately bear the costs. CCB interventions could
proceed in a manner similar to that of the ‘safetyvalve’ mechanism discussed in the literature (Jacoby
and Ellermann, 2002; IEA, 2002; Philibert andCriqui, 2003). However, in contrast to a rigid pricecap, the CCB intervention does not nullify the market mechanism, but primarily has an attenuating
function:When the market comes close to generating
upward price fluctuations that exceed a previously
determined margin, the CCB could reduce scarcity
by issuing against payment the amount of additionalemission rights needed to ensure that the price spikedoes not cross the set threshold.
Economic arguments speak in principle for suchan intervention. However, in order not to perturb
regular trading activities, such an intervention should
only proceed if upward price jumps are very high.
The prospect that jumps will be smoothed may also
make it politically easier for some countries to adopt
reduction targets. However, if the CCB were to intervene too rapidly because of a narrow volatility range,
this would seriously jeopardize attainment of thelong-term global emission budget and thus the environmental effectiveness of the climate regime. This isa fear that has also been voiced with regard to thesafety valve approach (Müller et al., 2001). It is therefore essential to establish a mechanism by which certificates created additionally by the CCB can besaved again in later periods. This can be done inphases of dropping prices, for instance, in which the
CCB re-absorbs the additionally issued emission
rights from the market. In the event that – forinstance within a period of 6–8 years – this does not
succeed, the parties would need to establish a modal-

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5 Institutional design of the future climate protection regime

ity for allocating the emissions savings. Moreover, inorder that the volatility margin presented here does
not degenerate to an inflexible price cap, it needs tobe ensured that, once it has been transgressed, theprice considered ‘normal’ is raised, for instance by acertain percentage. There is also a need for a regulatory mechanism that ensures that persistent multiannual transgressions of the permissible volatility margin lead to a correction of the price trend considered‘normal’, i.e. that after such transgression the permissible volatility margin for a set period is automatically extended, e.g. doubled. In other words, the CCB
should smooth extreme upward price surges, butshould not decouple the market price for emission
rights from the development of reduction costs.
Performance of the Climate Central Bank function does not necessitate any new international organization, but could be provided by an already existing
institution, such as the UNFCCC Secretariat. That
institution could also provide coordination between
the CCB and the Conference of the Parties, the latterbeing responsible for ensuring compliance andreviewing national greenhouse gas inventories(through the Enforcement and the Facilitative
Branche), which in turn is key to the environmental
effectiveness of emissions trading.
Exploring the concept of a flexible bottom
price
The Council further suggests examining, within thecontext of the establishment of the CCB, the introduction of a bottom intervention price for certificatesor a margin for downward price fluctuations. If themarket price threatens to drop below a politically set
limit, the CCB could support the price by purchasing
certificates. Several reasons speak in favour of suchan approach: Very low prices indicate that the costsof emissions reduction are unexpectedly low or that
too much ‘hot air’ is on the market. This justifies atightening of emission rights supply, which amounts
to more ambitious emissions reduction targets. Furthermore, bottom price limits would provide the suppliers of emission rights with a certain degree of planning certainty, as they would then be protectedagainst a complete collapse of prices. However, thebottom intervention price would have to be set very
low or the margin for downward price fluctuations
very wide in order that the market mechanism canfulfil its functions as smoothly as possible. Moreover,
if the bottom price limit is too high, this could appreciably detract from the willingness to adopt more
ambitious maximum emission targets or emissions
reduction targets, among surplus and deficit countries alike. A further point is that, in contrast to theapproach of a volatility margin or of a safety valve,
which has the potential to generate revenues for theinternational climate regime, the issue of financing
would need to be clarified. In the view of the Council
there is a need for further research to clarify thequestion whether these problems can also be solved
by rule-based mechanisms.
Expiry date for emission rights
Two reasons speak in favour of limiting the validityof emission certificates over time, and thus limiting
not only ‘borrowing’ (the advance use of future emission rights), but also ‘banking’ (use of accumulated
emission rights assigned in previous periods but notrequired then). First, unlimited banking could, atleast hypothetically, lead to a situation in which
numerous countries initially keep their emissions
low, but then, more or less arbitrarily, release simultaneously several times more than the normal average. This could lead to an accelerated climate change
in the mid term, which would infringe one of theCouncil’s goals, the general restriction of the average
global warming rate to a tolerable level. Second, theexpiry of emission rights would make strategic
hoarding less attractive, and would thus reduce priceuncertainty in emissions trading. How exactly such alimitation of banking is implemented – e.g. through a
one-off or successive devaluation of emission certificates, or through a percentage cap on banking – issecondary.
Reaffirming national-level mitigation
efforts
The Council recommends that the German federal
government underscores the priority of nationallevel mitigation efforts in a second commitment
period, too. Reasons of innovation policy, above all,speak in favour of this. Consequently the demandshould be raised again in the negotiations to limit theuse of flexible mechanisms to meet national reduction targets.
Integrating emissions of international
aviation and shipping
The emissions generated by international aviationand shipping must at last be integrated within emissions trading. Basically this would require their itemization in the individual national emission budgets.
As this would involve major attribution difficulties,
special budgets for these sectors are worth considering instead. Alternatively, or as a transitional step,
user charges should be levied at the global level, or atleast at the European level (WBGU, 2002).

Adoption of a protocol on the protection of carbon stocks 5.5

5.5
Adoption of a protocol on the conservation ofcarbon stocks
Besides reducing worldwide greenhouse gas emissions from the use of fossil fuels, conservation of the
carbon stocks of terrestrial ecosystems should bemade a prime objective for the further developmentof the Kyoto Protocol. As set out in Chapter 4, theCouncil accords the same priority to preserving existing stocks in terrestrial ecosystems as to creating
sinks.
The distinction envisaged at present in the Kyoto
Protocol between sources and sinks produced bydirect human intervention from those attributable toindirect or natural factors causes major problems(Chapter 4). It is thus essential to ensure that there isin future a full accounting of all carbon fluxes (fullcarbon accounting).
In principle, this could be done by integrating into
emissions trading or into the CDM activities to protect existing carbon stocks – e.g. primary forests, wetlands, grasslands – as well as the creation of sinks.The
idea of temporary certified emission reduction units(TCER) provides a starting point for this. Such units
would then be issued not only for sinks, but also for
abstaining from the degrading utilization of, forinstance, primary forests.
However, the Council advises against offsetting
the carbon stocks of terrestrial ecosystems against
commitments to reduce emissions from the use offossil fuels. One main reason speaking against this isthat conceiving and agreeing upon a comprehensive
system is much more time-consuming than negotiating maximum emission limits for the use of fossil
fuels. While for these emissions at least first steps
have been taken in the right direction with the Kyoto
Protocol, negotiations on the conservation of carbon
stocks would have to start practically from scratch.
Moreover, among other things, verification problems
would need to be solved, and responsibilities clarified for disturbances to the biological sequestrationof carbon that are caused externally or beyond
national boundaries. This is compounded by differences in the planability of emissions from fossil fueluse and the variability of natural fluxes.
It must be noted that the distributional effects of a
C&C regime that integrates additionally the conservation of carbon stocks will differ from those of a
C&C regime without this added element. Furthermore, it would have to be expected that negotiations
for such an expansion of the C&C regime would takea great deal of time. In view of the urgent need totake climate policy action, long periods of ‘inaction’are intolerable. The reduction of emissions from fos-

sil fuel use should thus press ahead without delay.
Indeed, if the contentious issue of the accountabilityof terrestrial biological sinks and sources is completely excluded, this may even facilitate negotiations on maximum limits to emissions from fossil fueluse, insofar as parallel negotiations commence on theconservation of terrestrial biological carbon stocks.
Despite the probably difficult negociations there isan urgent need for action concerning biologicalstocks and emissions since the amount of CO2 set
free by land use activites is many times higher thanfrom the use of fossil fuels.
The negotiations should aim at an additional protocol establishing, on the one hand, commitments topreserve stocks and providing, on the other hand,
economic incentives to forego degrading land uses.
The Council argues in favour of integrating thesecommitments within the UNFCCC regime – forinstance as a ‘Protocol on the Conservation of Carbon Stocks of Terrestrial Ecosystems’. One advantage would be that states that are not yet participating in the Kyoto protocol could be integrated into the
UNFCCC process more closely. As a first step in thisdirection, the Council recommends committing allstates to compiling inventories of the biological terrestrial carbon stocks in their territories.
In a second step, a global target would need to be
set and quantified, possibly differentiated according
to agricultural and forestry areas, pastureland andprimary forests. The ‘Stocks Protocol’ would not, as
does the Kyoto Protocol until now, distinguishbetween direct human intervention, indirect humanintervention (such as the CO2 fertilization effect) andnatural factors (such as natural climate variability).A
carbon balance of the terrestrial ecosphere compiledby means of full carbon accounting can be taken as
the basis for global targets.
In a third step, the mechanism would need to beagreed according to which the burdens are shared bystates. The simplest procedure would be to commit
each country to largely stabilize its own carbon
stocks, possibly differentiated according to types ofareas. However, this would mean that the burden isborne above all by those states which (still) host large
natural sinks. This could be viewed as inequitable.
Above all, the resource-rich states will scarcely bewilling to follow such an approach. Conservation of
the natural ecosphere with its carbon stocks thus
requires a system that distributes the costs of conservation among all countries while at the same timecreating incentives for states to protect their ecosystems – ecosystems that are valuable not only from a
climate perspective. This applies all the more as it isparticularly the natural ecosystems that represent
key carbon stocks (such as primary forests, wetlands,
grasslands; Chapter 4; WBGU, 1998). Furthermore,

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5 Institutional design of the future climate protection regime

they have the character of global commons or goodsof global value to a much greater degree than managed ecosystems (WBGU, 2002). Thus not only thebenefits of their conservation, but also the costs ofprotecting these stocks should be shared among theentire international community.
One option by which to institutionally implement
this mechanism would be to establish a worldwide
system of non-utilization obligations similar to that
already proposed by the Council for global biodiversity policy (WBGU, 2002). A system of tradable nonutilization commitment certificates would share thecosts of foregoing the degrading use of carbon stocks
among all states. Thus countries that (no longer) hostsufficiently intact ecosystems would have to buy nonutilization commitments from other, resource-richcountries. This would lead to the emergence of aninternational system of market-regulated payments
providing compensation to resource-rich countries
for their foregone returns from the degrading use ofnatural carbon stocks. A further effect of this trading
would be that carbon stocks are protected against
degradation in the locations where the opportunity
costs of non-degradation are lowest. The flexibility
and economic efficiency of the system is thus higher
than if each country would have to preserve a fixedproportion of its own carbon stocks.
In order that tradable non-utilization units can becreated, the resource in question must ideally behomogenous. In a system of tradable non-utilizationcommitment certificates under the protocol to the
UNFCCC proposed here, in contrast to, for instance,
global biodiversity policy (Kulessa and Ringel, 2003),
the ecosphere would need to be valued solely upon
the basis of carbon content in order to ensure homogeneity to the greatest possible extent. The approachof temporary certified emission reduction units(TCER) set out above provides a starting point for
the technical design of non-utilization units.
Tradable non-utilization commitment certificatesare of little assistance if carbon loss is not caused bya degrading use (e.g. forest clearance). For instance, ifmajor carbon losses are triggered solely by anthropogenic climate change then non-utilization commitments are not a sufficient response. From a climate
protection perspective it will then be necessary tooffset the impacts of such carbon losses upon the
global carbon balance. This needs to be taken into
account by the international community, be it within
the context of a ‘Stocks Protocol’ or through more
far-reaching reduction commitments relating toemissions from the use of fossil fuels.
In the Council’s view this is not the only option for
combining the protocol on the conservation of carbon stocks of terrestrial ecosystems with the protocol
for other emissions, for instance the C&C-2050

regime. It would be purposeful after the end of thesecond commitment period to compare the prices foremission certificates with those for non-utilizationcommitment units. This would provide informationon the differences between the respective marginal
costs of mitigation activities under the two regimes. If
the differences are substantial, it would be recommendable to loosen the targets under the sub-regime
with the higher prices, while at the same time tightening targets under the other sub-regime.
Overall, the WBGU sees a need for further
research on the concrete technical and institutional
design of a separate protocol on the conservation ofcarbon stocks of terrestrial ecosystems. Above all,however, there is a need for research on the questionof how the two protocols could be purposefully
linked. This includes the question of the conditions
under which it is expedient to introduce greater fungibility in trading between the two systems.

5.6
Incentive and compliance mechanism
It will be impossible to ensure the long-term viabilityof a climate regime seeking the participation of allstates without an effective compliance mechanism.
The purpose of an effective compliance and incentive
regime is to move parties to adopt and adhere to
their commitments and to substantially reduce therisk of free rider behaviour.

5.6.1
Existing sanctions mechanisms
Following several rounds of negotiations, COP 7 in2001 adopted a compliance system as a component of
the Marrakesh Accords. Under this system, parties
that fail to achieve their emissions reduction targets
must subtract their extra emissions from their budgetof emission rights for the second commitment period,
with a ‘reparation rate’ of 1.3. Moreover, they must
submit a compliance plan, and are not permitted tosell emission certificates. Furthermore, a country is
excluded from the flexible mechanisms if it does notmeet its reporting obligations.
The decision whether these sanctions are imposedon a country is taken by the ‘Enforcement Branch’ of
the Compliance Committee. Implementation problems that are not a matter of non-compliance are
addressed by a ‘Facilitative Branch’, which has anadvisory and supportive function, performing a formof early warning system function to prevent noncompliance from arising.

Financing instruments 5.7

The final decision on whether the compliance system will be enshrined in legally binding form in the
protocol will only be taken after entry into force ofthe protocol. Nonetheless, it can already be said
today that no other environmental agreement commands over comparably far-reaching means to exert
political pressure.

5.6.2
Options for future development
Measures in the event of infringement ofagreed maximum emission limits
The sanction mechanisms existing for the first commitment period appear fundamentally appropriate
to counter infringements of maximum emission limits.A point of criticism is, however, that the envisaged
sanctions mechanism does not make provisions bywhich to differentiate sanctions according to thecauses of non-compliance. A problematic aspect inthis connection is the uncertainty as to whether statesthat will not achieve their emission reduction targets
can purchase sufficient quantities of certificates. In
order to prevent a situation in which sanctions are
imposed on states despite these being essentiallywilling to meet their commitments, the establishmentof a compliance fund is under debate (Wiser andGoldberg, 1999): If a state party is unable to buy
emission rights in the ‘true-up period’, additionallycreated certificates are made available to that state
for a payment. The payment would comprise the certificate price plus an extra charge paid in addition to
the issue price. The financial resources of the compliance fund could be deployed for mitigation projects.
No agreement has yet been achieved in the negotiations on such a fund.
The proposal to set up such a compliance fundwould not need to be further pursued if the states
parties were to agree to establish a Climate Central
Bank (Section 5.4.3).
As yet, no possibilities to impose sanctions outsideof the climate regime have been created for the eventthat a country fails to meet its commitments. Conceivable options include trade or investment restrictions imposed on these countries. However, thedeveloping countries, in particular, are vehemently
opposed to linking environmental protection issues
with protectionist measures. The Council advises
against overburdening the willingness of these countries to cooperate by making any proposal concerning trade sanctions.
In general, the threat of sanctions is all the morecredible the less leverage the parties involved haveupon the actual implementation of sanctions. In viewof the discretion open to decision-makers, the possi-

bility cannot be excluded that attempts to influence
decision-makers are successful. However, before
making any concrete recommendations on, forinstance, the introduction of automatic procedures
and of firm stages within the sanctions procedure, inthe opinion of the WBGU first the experience gainedwith the existing compliance mechanisms needs to beevaluated.
Ultimately, a reform of the compliance regime will
depend crucially upon whether and how all countries
can be involved in the C&C commitment system.
Incentives to adopt maximum emission limits
If it does not prove possible for all states to agree on
a C&C regime in which all countries accept maximum emission limits from the outset – i.e. certain
countries with lower levels of economic capacity
have an opt-out clause – incentives should be established to move these countries to opt into the allocation regime as early as possible. An essential part ofthis is that only countries with a maximum emission
limit can participate in emissions trading. Moreover,it should be examined to what extent access to the climate funds should be made conditional upon willingness to accept maximum emission limits.
Measures to prevent free rider behaviour
As yet, there are no ways of sanctioning a country if
it opts out of the international climate regime after,
for instance, it has developed from a net seller of certificates to a net buyer, or in the event that a country
does not participate at all. States that reject participation should be excluded from use of the flexible
mechanisms, i.e. specifically also from the CDM. Thisis already envisaged for the compliance regime of thefirst commitment period. Moreover, free rider statesshould not gain access to the climate funds (Section
5.2). However, over the long term such exclusionfrom flexible mechanisms and funds will not be a sufficiently effective sanction. Stricter forms of sanctions thus need to be considered, although theirdeployment may lead to goal conflicts with otheragreements under international law, such as the General Agreement on Tariffs and Trade or the World
Trade Organization (Kulessa and Ringel, 2003).
States participating ‘voluntarily’ should make it clearthat they would indeed be willing to adopt various
political and economic sanctions, such as trade
restrictions, upon free rider states.

5.7
Financing instruments
Three climate change funds have been establisheduntil now under the GEF umbrella. The Adaptation

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5 Institutional design of the future climate protection regime

Fund supports measures for adaptation to climatechange in particularly affected developing countries.
The fund will be financed from a charge levied on
CDM projects. However, according to recent estimates, demand for CDM certificates may be so low in
the first commitment period (Jotzo and Michaelowa,
2001) that a serious under-financing of the fund is to
be feared. This is in marked contrast to the importance of adaptation measures, which is set to grow in
the future.
The same applies to the Least Developed Country
Fund (LDC Fund), which shall support the poorest
developing countries in preparing national climate
action programmes, and to the Special Climate
Change Fund (SCCF) which supports, complementary to GEF funding, technology transfer, adaptation
measures and mitigation programmes. Both funds
are financed by voluntary contributions. Some industrialized countries have already committed funding,but the overall sum appears too low to finance themeasures required to integrate developing countries
more firmly. This applies all the more as numerous
states are proving very reticent in making financing
commitments now that the USA has decided not to
ratify the Kyoto Protocol.
Besides financing adaptation measures and supporting mitigation activities in developing countries,
the Council considers it appropriate in a second
commitment period to make provision for an additional Compensation Fund from which payments forthe compensation of climate damage can befinanced. A more far-reaching regime, such as one
involving strict liability, appears problematic for various reasons. Above all, such an approach would be
difficult to enforce, as it would involve unforeseeable
financial consequences for the affected states. In
addition, a liability regime would have to resolve anarray of highly complex problems of causation andproof and would further need to assess damage. A
fund-based approach under the GEF umbrella could
avoid these difficulties.
As, by all appearances, the financial resources
available to the funds will not suffice to integratestates more closely into climate policy activities, nor
to bear adaptation and compensation costs, there is aneed to swiftly restructure the funds and their financing. This process needs to be put on track now.
Binding funding commitments are preferable tovoluntary ad-hoc contributions. For the Compensation and Adaptation Fund, the financing contributions of individual states should be based essentiallyon the principle of causation, i.e. oriented to the
cumulated CO2 emissions of a country. In this connection, the polluter pays principle should be applied
retroactively, starting in the year 1990. Earlier emissions also contribute to the damage and to the needfor adaptation measures, but their consideration in
the assessment of contributions would be incommensurate insofar as decision-makers were only necessarily aware of the harmfulness of the emissions
when the First Assessment Report of the IPCC was
published in 1990. The assessment of eligibility toclaim funds should further take into consideration
the ability-to-pay principle, and thus should preferabove all countries with low per-capita incomes. User
charges levied on international aviation and shipping
could provide a further source of revenue (WBGU,
2002). At all events the Adaptation Fund should not
be financed by charges raised on CDM projects alone(Section 5.4.1). As a last resort, a charge on all flexible mechanisms could come into consideration, i.e.
levied essentially on emissions trading.
Furthermore the question needs to be addressed
whether and to what extent the efficiency of funding
deployment could be enhanced by a clearer distribution of responsibilities among the funds. E.g. the relationship between the GEF and the Special Climate
Change Fund should be clarified, as well as the adaptation financing removed from the latter.

5.8
Instruments of global energy policy
Climate protection measures are – at least as regards
greenhouse gas emissions reduction – closely linked
to global energy policy measures. Emissions reduction can only be achieved worldwide without curtailment of energy supply for all people if reduction
activities are accompanied by incentives to modify
energy technologies involving e.g. improved energy
productivity or the expansion of renewable energy
sources (WBGU, 2004).
At a global level, major importance attaches
above all to energy policy instruments such as international (tradable) quotas for renewables and a swift
liberalization of trade in goods and services relating
to renewables and energy efficiency. There is also aneed for a Multilateral Energy Subsidization Agreement (MESA) that militates towards a gradualremoval of subsidies for fossil and nuclear energy,
and comprises rules governing the subsidization ofrenewables and efficiency technologies. A global
transformation of energy systems that – as recommended by the WBGU – calls for more sustainability
makes a key contribution to mitigating climatechange. It is essential to establish close linkages
between global climate protection measures, global
energy policy and global structural policy (forinstance through consistent sectoral policies or
strategic alliances between industrialized and developing countries).

6

Recommendations

6.1
Action is urgently needed to avert dangerous
impacts of climate change
Comply with the ‘WBGU climate window’
and reduce emissions
In its recommendations on climate change mitigation, the German Advisory Council on Global
Change (WBGU) proceeds from ‘moderate anthropocentrism’ (WBGU, 2000b, 2001) and the precautionary principle (Principle 15 of the Rio Declaration; UNCED 1992; Art. 2.2 UNFCCC). Moderate
anthropocentrism bases humankind’s obligation topreserve nature for today’s and coming generations
on nature’s life-maintaining and life-enhancing
importance to humanity. It is a matter not only ofnature’s utilitarian value as a natural life-support system and resource, but also of its aesthetic and cultural function. The precautionary principle posits
that the lack of scientific certainty cannot be a reason
to postpone action to avert a possible threat. Security
requirements increase with the degree and irreversibility of the potential damage.
From these two principles, the WBGU derives its
recommendation to the German federal government
to commit itself to the target of keeping global warming within the ‘WBGU climate window’: Within thiswindow, the rise in global mean temperature should
not exceed 2°C relative to pre-industrial levels andthe maximum rate of global warming should notexceed 0.2°C per decade. This rate relates to thechange in mean global temperature averaged over
several decades. As global mean temperature has
already risen by 0.6°C since the onset of industrialization, only a further warming of 1.4°C is still tolerable.
The German federal government should workwithin the climate regime negotiations towards
adoption of this target, thereby fleshing out the provisions of Article 2 UNFCCC. In view of the uncertainties in assessing the response of the climate system to anthropogenic emissions, the WBGU recommends that negotiations should not at present seek toestablish, for the long term, a fixed CO2 concentration level as a ‘safe’ level within the meaning of Article 2.
The WBGU therefore advises a ‘hedging’ strategy:
Initially, CO2 targets below 450 ppm should beaimed at, for otherwise, if climate sensitivities exceed
2°C (the IPCC assumes sensitivities between 1.5°C
and 4.5°C), the climate window can no longer becomplied with. Global energy- and industry-related
CO2 emissions must therefore be reduced by about
45–60% by the year 2050, taking 1990 as base year.
Industrialized countries must reduce their greenhouse gas emissions by at least 20% by 2020. They
have currently committed themselves to reduce
emissions by 5% by the year 2012 relative to 1990
(Annex-I states).
Full carbon accounting
From the principle of ‘moderate anthropocentrism’
and the precautionary principle, the Council derives
the recommendation to give greater consideration inclimate policy to terrestrial biological carbon stocks
and sinks. All carbon fluxes and stocks should be
accounted fully (‘full carbon accounting’). However,at the present time the Council advises against seeking to regulate the conservation of biological terrestrial carbon stocks within the same system, with thesame allocation procedure and with the same instruments as reduction commitments for fossil carbon
stocks. Such an approach could cause an unacceptable delay of the entire climate protection process.
Taking account of the role of the biospherethrough a special agreement
Consequently, the WBGU recommends agreeing a
special intergovernmental commitment to preserve
the carbon stocks of terrestrial ecosystems. Such an
agreement could be implemented as a ‘protocol forthe conservation of carbon stocks’ to the UNFCCC.
This approach should not distinguish, as the Kyoto
Protocol has done until now, between direct and indirect human impacts (such as CO2 fertilization or climate change) or natural factors (such as natural climate variability). Rather, it should involve measure-68

6 Recommendations

ment and accounting of the full carbon balance of allareas (full carbon accounting). One advantage of anew protocol could be that countries which have notyet joined the Kyoto Protocol could be integrated
more strongly within the UNFCCC process.
The first step on the path towards such a protocol
would be a commitment for all countries to compile
inventories. The second step would be the definitionof a global goal and its quantification, possibly differentiated according to types of area (e.g. agriculturalor forestry areas, pastureland, primary forest). In a
third step, a mechanism would need to be found bywhich to share burdens equitably among states. This
would need to give resource-rich states incentives toparticipate.
Especially for the conservation of natural ecosystems, which represent major carbon reservoirs (e.g.
primary forests, wetlands or grasslands), an international system of tradable non-utilization commitments could be set up, similar to that already presented by the Council in a previous report for global
biodiversity policy (WBGU, 2002). This would distribute among the international community of states
not only the benefits arising from the conservation ofcarbon stocks, but also the costs of their conservation. Such an approach would create an international
system of market-regulated compensation payments
providing resource-rich countries compensation for
their foregone yields from the degrading use of natural carbon stocks. The concept of temporary certified emission reduction units (TCER; UNFCCC,
2002) provides a starting point for the technicaldesign of a system of tradable non-utilization units.
Reducing uncertainties through research
Clearly, there is a continuing need for research inorder to limit uncertainties relating to the type andstrength of climate system responses to greenhousegas emissions, and the behaviour of biogeochemical
cycles. In view of the potentially catastrophic consequences of very fast climatic changes, the conditions
under which such events may occur must be studiedin more detail. More intensive research is alsoneeded on climate change impacts upon ecosystems,
food production, water supply, human health andeconomic development, in order to reduce prevailingassessment uncertainties. Particular considerationneeds to be given to the occurrence of extreme
weather events and their altered frequency. In thisconnection, regional impact studies should be based
more firmly on the standards developed by the IPCC
and should relate more systematically to its scenarios. There is a need for international cooperation toensure that all relevant regions are studied. In particular, a better understanding is needed of the causal

chains linking global mean temperature with local
climatic factors.
To operationalize Article 2 UNFCCC, research
activities need to pursue integrated modelling
approaches based upon the Tolerable Windows
Approach. This approach establishes a methodological separation of the normative setting of guard rails
and determination of the consequences of global climate change on the one hand, from the determination of permissible emission pathways and optimal
strategies on the other. This involves, in particular,
integrating the reduction potentials (and associatedcosts) of other greenhouse gases, besides CO2, in corresponding modelling studies. This approach produces least-cost strategies by which to comply with
the WBGU climate window, integrating all radiative
forcing gases. Similarly, there is a need for further
analysis and research on action under uncertainty.
Finally, a range of stabilization scenarios needs tobe analysed in order to study mitigation strategies
and their economic and other effects. This makes it
possible to reflect the entire range of possible
futures, as modelled, for example, by the SRES scenarios (IPCC, 2000). Target carbon dioxide concentrations below 450 ppm also need to be examined inthis context.

6.2
Shaping commitments equitably
Aiming towards equal emission rights
The WBGU bases its arguments additionally on theegalitarian principle, which can be derived from thehuman right to equal treatment. In terms of relations
among the parties to the Convention or Protocol, thiscorresponds to the principle of ‘equity’ (Art. 3(1)UNFCCC). It follows that ultimately, only an allocation of emission rights according to equal per-capita
shares can be considered just.
Implementing contraction and convergence
At the long-term global emissions must be reduced
significantly (contraction). In addition, the WBGU
postulates the principle of constancy, according towhich abrupt measures leading to drastic effects
should be avoided in socio-economic systems. A sudden switch to a per-capita allocation of tradable emission certificates is therefore not recommended: The
resulting high transfer payments from industrialized
to developing countries could have severe effects
that would impact on the economies of all regions.
For these reasons, the Council argues in favour ofmoving in a continuous process from the present
allocation of shares, which entails very great imbalance in per-capita emissions, towards allocation

Review and enhancement of instruments 6.3

according to equal per-capita shares (convergence).
Building upon the review of scenario computations
set out in Chapter 3, the WBGU recommends this‘contraction and convergence’ (C&C) approach witha linear convergence of emissions shares towards
equal per-capita emission rights by the year 2050.
This should embrace the emissions of CO2, CH4, N2O,
HFCs, PFCs and SF6 (the ‘Kyoto basket’ of greenhouse gases) from energy, industry, agriculture andwaste management. The emissions of other greenhouse gases would be accounted for as CO2-equivalent values according to their global warming potential, as already provided for in the Kyoto Protocol.
If developing countries are unable or unwilling toaccept national-level emission caps in accordancewith the C&C approach from the outset, the WBGU
recommends an opt-out clause for countries with relatively low economic capacities, i.e. relatively low
per-capita emissions and per-capita income. Thismeans that states would need to agree on a thresholdallowing to make use of the opt-out clause. For
instance, per-capita income and per-capita emissions
could be combined in one indicator. When states
exceed this threshold, they would be obliged to participate in the global C&C regime.The reduction burden of developing countries which make use of the
opt-out clause would be spread across the participating countries. This would ensure attainment of thestabilization target and thus compliance with the climate window. In this context, CDM projects in nonparticipating countries could have the function of
reducing burdens and integrating non-participants
into the system. It needs to be noted that such a gradual transition from the present structure of the Kyoto
Protocol (with its distinction between Annex-I and
non-Annex-I states) towards a global C&C regime
can only succeed if opt-out criteria are tight enoughfor the participating countries to be able to cope withthe additional emissions reduction burdens.
Examine sanctions against free riders
The WBGU is aware of the risk that individual states
could completely refuse to accept emission caps andadopt a free rider behaviour. But even then theCouncil recommends to the coalition of voluntary
participants that it stands by the basic idea of the
C&C allocation principle. The WBGU warns
expressly that the climate protection objective ishighly unlikely to be attained if many large-scale
emitters refuse to join the regime. The goal of firstmover countries must consequently be to expand thegroup of participants as swiftly and comprehensively
as possible. Moreover, they should therefore agree
that, at the appropriate time, they will impose political and economic sanctions upon free rider states.

6.3
Reviewing and enhanceing instruments
Utilizing the opportunities of emissions
trading and minimizing risks
The WBGU recommends establishing an international Climate Central Bank in support of the emissions trading system in order to safeguard stableemissions trading and limit uncertainties regarding
the future costs of climate mitigation activities. One
task of this institution would be to smoothen disproportionately strong upward price fluctuations. In
addition, the introduction of a flexible bottom pricelimit for certificates should be examined, with theaim of protecting certificate suppliers against a collapse of prices. Before any introduction of such
instruments, there is still a need to research the way
in which a Climate Central Bank may operate, andthe issues surrounding the concept of a bottom pricelimit. Also the introduction of an expiry date foremission rights should be examined.
The Council recommends to the German federal
government that it argues for limitations to the use offlexible mechanisms to comply with national reduction targets in the second commitment period, too(WBGU, 1997).
The WBGU further considers that it is now urgent
to integrate the emissions of international aviationand shipping into the emissions trading regime.
Alternatively, emissions-based user charges could be
levied on international aviation and on international
shipping at a global or at least European level(WBGU, 2002).
Ensuring regime integrity through reliable
inventories
To ensure the integrity of the climate protection
regime, the Council recommends that eligibility toparticipate in emissions trading be made conditional
upon a high quality of carbon inventories. Countries
that do not possess the requisite economic and institutional capacities must receive support to a greater
degree than in the past, within the context of development cooperation activities. Less stringent inventory criteria could be applied to developing countries
for their participation at the CDM. This would makeit possible to integrate these countries through CDM
projects in the climate regime even if they do not yet
meet the requirements for participating in emissions
trading, or reject the adoption of reduction targets or
are not yet obliged to adopt such targets.

69

70

6 Recommendations

Utilizing the Clean Development
Mechanism as a transitional solution
In order to strengthen the function of the CDM as atool by which to integrate, within the climate regime,
developing countries that do not (yet) participate in
the C&C system, the WBGU urges that targeted support be provided to building the infrastructural andinstitutional preconditions in the poorer developing
countries. Additionally, special incentives should becreated for CDM projects in the least developed
countries. Sinks projects should be excluded from the
CDM because the WBGU proposes a separate
regime for carbon stocks in the biosphere.
To prevent free rider effects in connection with
CDM projects, the WBGU recommends making the‘investment additionality’ approach mandatory forlarge-scale projects. It would need to be demonstrated explicitly that large-scale projects would not
be realized if they were not planned as CDM projects.
Furthermore, CDM projects should not be placed
at a disadvantage compared to the other flexible
mechanisms by the circumstance that only they areburdened with a charge. Instead, the Council argues
for a moderate levy on all transactions in connection
with flexible mechanisms. The revenue should be
used solely to meet the administrative costs ofdeploying the flexible instruments concerned. The
WBGU argues for a review of the instrument of Joint
Implementation towards the end of the first commitment period. Here it would need to be considered
whether JI should be fully subsumed under emissions
trading, or whether it is merged with the CDM.

6.4
Equitable financing of adaptation measures
Apportioning contributions for adaptation
to climate change equitably
From the principle of responsibilities (Art. 3.1
UNFCCC) and the polluter pays principle, the
WBGU derives the recommendation that the contributions of states to finance compensation for climate
damage and adaptation to climate change be oriented to each state’s contribution to global warming.
Although climate change can be contained so as toremain within the WBGU climate window, a need forsuch adaptation measures will remain. However, only
emissions from 1990 onwards should be taken into
consideration when assessing funding contributions.
This was when the IPCC published its first assessment report, and is thus roughly the point at which
the international community recognized the climate
problem and the severity of its consequences (IPCC,
1990). Specifically, the WBGU calls for a greater vol-ume of the funds established by the Marrakesh
Accords in order to facilitate the efforts by developing countries to adapt to climate change. Furthermore, the WBGU recommends the establishment of
a Compensation Fund to enable particularly affectedstates to compensate for climate damage. Annual
contributions should be based on the various contributions of states to emissions, assessed retrospectively until 1990.
Reviewing sanctions mechanisms
For the time being, the WBGU sees no urgent needto reform the sanctions mechanisms envisaged vis-àvis countries that do not meet their commitments.
Negotiations on this issue should be postponed to theend of the first commitment period, when experience
with the existing compliance mechanisms can beevaluated. Nonetheless, it may be expedient to raise
early on in negotiations the issue of which politicaland economic incentives and sanctions are to be
applied to those countries that fundamentally refuse
to adopt commitments, such as the USA and Australia at present.

6.5
Linking climate protection consistently with
global governanceSupporting convergence between
industrialised and developing countries
To do justice to the vision of sustainable development, social and economic exigencies must be taken
into account besides the climate protection goal. So
that the climate protection goal can be attained overthe long term at low costs, climate policy needs to belinked consistently with global governance anddevelopment policy. The aim must be to promotesocial and economic convergence between industrialized and developing countries, and to facilitate
technology transfer. In addition to development
cooperation activities focussed more firmly uponsustainability, a first step towards convergence can beto open markets to the products of developing countries. So that in the course of the globalization
process, worldwide economic and social convergencecan occur under circumstances characterized bydeclining rates of population growth over the longterm (from 2050 onwards), development cooperationneeds to be further intensified. In order to avoid anincrease of the global population beyond the year
2050, education and health programmes for womenin developing countries need to be promoted, as does
the introduction of systems of social security.

Linking climate protection consistently with global governance 6.5

Turning energy systems towards
sustainability
The Council stresses that without a fundamentallynew orientation of energy systems towards sustainability, it will not be possible to protect the world’s
climate. The energy policy measures proposed by theCouncil which are essential to turn global energy systems towards sustainability should be implemented
as swiftly as possible (WBGU, 2004). These include,for example, internationally tradable renewableenergy quotas, as well as swift liberalization of tradein goods and services in the fields of renewableenergy and energy efficiency. Moreover, a Multilateral Energy Subsidization Agreement (MESA)
should be concluded, providing for a gradualremoval of subsidies for fossil and nuclear energies
and setting rules for the subsidization of renewableenergies and efficient energy technologies.
Dovetailing efforts to reduce greenhouse gases
through a C&C regime with a system of global
energy policy measures makes it possible to protect
the global climate without incurring energy supply
losses for anyone. Such dovetailing creates incentives
on both the supply and demand sides to enhanceenergy productivity and substantially expand renewables. Emissions reductions can thus be achieved in a
way that not only ensures there is no deterioration inworldwide energy supply, but even secures an improvement in supply. Finally, it is important to notethat linking global climate protection measures or
global energy policy with global governance (such as
consistent sectoral policies or strategic alliances
between industrialized and developing countries) is
indispensable. The Council calls for specific agreements in order to achieve minimum quotas forrenewable energy carriers (WBGU, 2004) anddevelop infrastructures for a global solar electricity/hydrogen economy. In this connection, long-termcoal use is not compatible with the WBGU climate
window, even when the most modern coal-fired
power plants are used. By means of such measuresthat complement – and make feasible – emissions
reductions within a C&C regime, the policy arena
creates the preconditions for cost-effective climate
protection.
A necessary requirement for the transformationof energy systems is a clear increase in investment inresearch on and the development of sustainable technologies. To broadly underpin the development path
towards a solar electricity/hydrogen economy, relevant research efforts need to be intensified. The
Council has presented detailed recommendations forsuch research in its energy report (WBGU, 2004).

Key strategic decisions lie ahead
In the coming years, the international community willneed to take key strategic decisions in international
climate policy, if dangerous climate change is to beprevented. The UNFCCC provides an indispensable
framework for upcoming negotiations. With every
further delay of consistent climate protection policy,
the scope for action narrows. The present reportshows strategies and instruments to meet this challenge.

71

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