On 29-30 November people from all over the world gather in an attempt to solve a complicated problem as quickly as possible. The occasion is the Johannesburg Open, organised by the World Cube Association, and their task is to solve a Rubik’s Cube faster than the other competitors. (The current world record is 5.25 seconds, set in April 2015 by Collin Burns of the United States.)
There are parallels with the challenge facing world leaders at the UN Conference on Climate Change COP21 held around the same time in Paris, though the stakes are clearly far higher. While the consequences of failing to solve a Rubik’s Cube are trivial, we cannot afford to fail on climate change.
The good news is that governments are familiar with the puzzle before them; though difficult, they know how to solve it and know they must do so in double quick time.
In the run-up to the COP21 conference, countries have been announcing targets and goals to cut their emissions of heat-trapping gases such as carbon dioxide.
What progress have they made in implementing policies to reduce emissions? And how can countries better come to grips with the Rubik’s Cube of climate change? An OECD report, Climate Change Mitigation: Policies and Progress, takes a closer look at these questions in 34 OECD member countries, 10 partner economies and the European Union.
The goal agreed by all countries under the UN Framework Convention on Climate Change (UNFCCC) is clear: to avoid dangerous climate change by limiting the rise in global average temperature to below 2ºC. To achieve this, global net emissions of carbon dioxide (CO2) need to be reduced to zero by the end of the century. Moreover, the sooner global emissions peak and start to decline, the better our chances of avoiding catastrophic climate change and its costly impacts.
What really matters for climate change is the cumulative amount of greenhouse emissions pumped into the atmosphere, chiefly from burning fossil fuels. Although many countries have decreased their greenhouse-gas (GHG) emissions relative to their GDP, our overall global emissions of CO2 and other GHGs have generally increased since the 1990s in absolute terms, despite occasional dips reflecting lower economic activity.
What does this mean for policy efforts? Countries have various types of targets and goals to cut GHG emissions under the UNFCCC and its Kyoto Protocol.
But while their participation and enthusiasm are increasing, many countries are not on track to meet their mitigation targets and goals for 2020 and beyond. Even more ambitious objectives in the future (implying even swifter emission reduction rates) will be needed to meet the 2ºC goal.
Our report finds that the US would have to cut its GHG emissions by 2.3-2.8% per year to meet its post-2020 targets, up from an annual reduction rate of 1.6% in 2005-12. The EU would need to cut its emissions by 2.8% per year to meet its post-2020 goal, up from 1.8% per year over 2005-12. In short, rather than getting a head start in the early years, these major emitters will have to play catch-up in the years ahead.
Meanwhile, China and India, whose contributions to GHGs have risen sharply in the past two decades, are on course to meet their stated goals for 2020 if current trends continue, although these goals are expressed in terms of emissions relative to GDP rather than absolute levels.
Though coal, which is the most emissions-intensive energy source, accounts for 45% of electricity generation in the 44 countries surveyed, new coal power plants are still being built in significant numbers in some emerging economies. In contrast, nuclear power is being used less in several countries in the wake of the 2011 Fukushima nuclear accident, and this has led to increased use of coal and gas, as well as renewable energy sources.
Getting policy mixes right
Under such conditions, how can the world’s reliance on fossil fuels be curbed and the transition to a low-carbon economy accelerated? It is a complex question.
Take carbon pricing, whether via taxes or emissions trading systems. The aim of both is to make it economically unattractive, if not uncompetitive, to emit carbon over time and to render cleaner alternatives more competitive, thereby attracting more users and more investors.
The number of such instruments is increasing. For example, emissions trading systems are now in place in the EU, Korea, New Zealand and Switzerland, as well as in several US states, Quebec and in Tokyo. China is in pilot phase and plans to have a national emissions trading system by 2017. Meanwhile, about 15 of the 44 countries studied had carbon taxes implemented or planned, including in emerging markets such as South Africa, which has one planned for 2016.
However, there remains plenty of scope to use carbon pricing policies more effectively. The carbon prices created to date have generally been too weak to shift consumer or investor behaviour enough to have a significant impact on emissions levels. This is often because markets for emissions permits are oversupplied (in the case of emissions trading systems) or the carbon tax rates are set too low. Also, the coverage of such policies may be too limited, leaving room for exemptions and carve-outs.
Some authorities are addressing this. With France’s new Energy Transition Law the carbon price will increase from €22 per tonne of CO2 in 2016 to €56 by 2020 and €100 by 2030. California and Quebec, meanwhile, have expanded the coverage of their emissions trading systems from 35% to 85% of total emissions in 2015.
Some governments are also taking action to reduce support for the production and consumption of fossil fuels, such as Indonesia, India, Mexico and the Netherlands.
Non-market approaches also count, and the best policy mix would include a combination of strong market mechanisms and well-designed regulations to encourage energy efficiency, as well as support for research and development into next-generation technologies.
Tackling climate change is not only about energy, and other economic sectors such as agriculture, land use, industrial processes and waste are also major sources of powerful heat-trapping GHGs, including methane and nitrous oxides.
Progress on mitigating emissions from these sectors has been mixed. In general, little action has been taken by most countries to reduce emissions from agriculture, which accounts for around 8% of total emissions from OECD countries, largely because the number of affordable ways to reduce agricultural emissions while maintaining current food production and consumption is limited.
More progress has been made in other sectors, such as forestry, industry and waste. In the forestry sector in Brazil, for example, deforestation rates have been significantly lowered since 2004, leading to an 87% reduction in GHG emissions from the land use sector between 2000 and 2012. Policies being implemented to reduce emissions from industry and waste include mandatory landfill gas capture laws in the United States and market mechanisms such as India’s Perform, Achieve and Trade (PAT) scheme for industrial energy efficiency.
Like the sides of a Rubik’s Cube, the different aspects of the climate policy challenge are interlinked and a shift on one face can slow progress on another. However, shift all faces we must, since the concentration of GHGs in the atmosphere is still rising each year. We know the problem, we know how to solve it, and we know that the clock is ticking. It is time for stronger mitigation policies, because climate change is a puzzle we cannot afford to lose.
©OECD Observer No 304 November 2015