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Global carbon pricing and the “Common But Differentiated Responsibilities”: the case of China

Abstract

This paper analyzes whether using carbon pricing as the major mitigation policy instrument is compatible with the implementation of the “common but differentiated responsibility” principle in a global climate agreement. We focus more specifically on China, a key player in climate negotiations. This is done by adopting the Imaclim-R model to assess the economic effect of carbon pricing on the Chinese economy in different climate architectures which, despite aiming at the same stabilization target, differ in terms of the temporal profile of emission reductions and the regional distribution of efforts (different quota allocation schemes). Model outcomes prove that neither temporal nor regional flexibilities provides a satisfactory answer since the Chinese economy remains significantly hurt at certain time periods. This suggests the recourse to complementary measures to carbon pricing in order to help smoothing the necessary shift toward a low-carbon society. This means in particular that, to build a climate policy architecture that could be compatible with the “common but differentiated responsibility” principle, climate negotiations must go beyond global top-down systems relying on cap-and-trade to include bottom-up measures likely to complement the carbon price and make carbon mitigation acceptable in countries like China.

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Notes

  1. They consider regimes that play a major role in scientific literature and that are oriented at developing countries: (1) regimes with immediate and full participation (Contraction and Convergence, Grandfathering, Equal per capita allocation, Historical responsibility, Tryptych (based on sectoral considerations) and Carbon tax) and (2) those with gradual participation (Common but Differentiated Convergence, Income distribution, Multi-Stage and South–North Dialogue proposal). Moreover, in addition to this broad range of regimes, their review considers a large sample of models and articles (corresponding to what is available and well documented in the literature).

  2. The Intergovernmental Panel on Climate Change (IPCC) scenarios that belong to category II aim for a radiative forcing between 3 and 3.5 W/m2 to a CO2-equivalent concentration between 490 and 535 ppm and an increase in the global temperature between 2.4 and 2.8 °C above the pre-industrial level.

  3. A notable exception is a recent paper by Lucas et al. (2013) who find that “postponing mitigation action increases the lock-in in less energy-efficient technologies and results in much higher cumulative mitigation costs”. But this assessment is run at a 2050 horizon, considers a +2 °C temperature target and adopts bottom-up models that fail to capture the complexity of macroeconomic interplays driven by the adjustment of energy systems.

  4. The version of the Imaclim-R model used in this study divides the world into 12 regions (USA, Canada, Europe, OECD Pacific, Former Soviet Union, China, India, Brazil, Middle East, Africa, Rest of Asia, Rest of Latin America) and 12 sectors (coal, oil, gas, liquid fuels, electricity, air transport, water transport, other transport, construction, agriculture, energy-intensive industry, services and light industry).

  5. An ongoing work on the model will allow integrating CO2 emissions from LULUCF (Land Use, Land Use Change and Forestry).

  6. These coefficients are equal to 3.79, 2.82 and 2.07 tons of CO2 per toe (ton oil equivalent) for coal, petroleum products and natural gas, respectively.

  7. TPES refers to total primary energy supply.

  8. Historical trend from the World Energy Council Report (2013).

  9. This trajectory is consistent with forecasts by US Energy Information Administration which estimates a 2.6 % increase in Chinese emissions over 2010–2035 in their reference case scenario (International Energy Outlook 2011).

  10. This objective is intermediate between the two more constrained objectives considered in the RCP literature (2.6 and 4.5 W/m2 and has been chosen in line with scenarios belonging to the category II of the IPCC, on which we focus the analysis (see discussion in introduction)).

  11. i.e., Each year of the whole period (2010–2100).

  12. This approach to a climate policy applied uniformly to all regions and sectors and relying on a world-level carbon price instrument is obviously a simplification of what can be reasonably expected in the future. It poses in particular number of implementation issues that are far beyond the scope of this paper but that are worth noting here, like the possibility of tax exemptions to protect certain specific activities (Hamdi-Cherif et al. 2011) and the role of accompanying measures like fiscal reforms (Combet et al. 2010; Jiang and Shao 2014), action on labor market (Guivarch et al. 2011) or complementary infrastructure policies (Waisman et al. 2013).

  13. Note that Chinese efforts are proportionally more important than global averages because the uniform carbon price affects particularly carbon-intensive economies like China.

  14. In this sense, the “delayed action case” is more in line with the “common but differentiated responsibility” principle.

  15. Note that the negligible macroeconomic effect of C&C is specific to China. The conclusion is, for example, very different for India for whom this scheme is very beneficial, generating a much better economic situation including almost 50 years of absolute GDP gains with respect to the baseline scenario.

  16. A very small domestic carbon tax, not exceeding 25 $/tCO2, is applied to control the surplus of carbon emissions due to leakage effects from carbon-constrained economies.

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Acknowledgments

For their very helpful comments which contributed to improve the paper a lot, we thank the two anonymous referees. The authors acknowledge funding by EUFP7 Milesecure and the Chair “Modeling for sustainable development” driven by Mines ParisTech, Ecole des PontsParisTech, AgroParisTech and ParisTech, supported by ADEME, EDF, SCHNEIDER ELECTRIC and GRTgaz. The views expressed in this article are those of the authors and do not necessarily reflect the views of the above-mentioned institutions.

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Correspondence to Meriem Hamdi-Cherif.

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Hamdi-Cherif, M., Waisman, H. Global carbon pricing and the “Common But Differentiated Responsibilities”: the case of China. Int Environ Agreements 16, 671–689 (2016). https://doi.org/10.1007/s10784-015-9289-2

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Keywords

  • Mitigation costs
  • China
  • Timing of emission reduction
  • Quotas allocations
  • CGE
  • Second best