Global Policies for Global Problems: the Case of Climate Change

Abstract

Global environmental problems pose unique difficulties and climate changes poses the most daunting challenges. The impacts of climate change will differ greatly between countries but may be devastating for some, amplifying the political and legal complications associated with the impacts of transboundary pollution. The risks and inertia involved mean that steps to limit emissions must be taken despite considerable uncertainty, but extensive emisssions abatement may affect the structure of economic development and thus face major political obstacles. Many diverse countries contribute to emissions so international agreement is essential, but such an agreement has to meet many diverse requirements, including those of being reasonably efficient, flexible and equitable.

This paper explores different international approaches to quantified agreement on limiting emissions. It draws a clear distinction between agreement on fixed national commitments (such as agreement on fixed emission targets or domestic carbon taxation) and the more powerful but largely unprecedented use of international market instruments. The latter are not only theoretically appealing but overcome many of the practical difficulties of conventional approaches.

Of these, offsets could provide a useful extension of existing, geographical commitments (depending upon how they are formulated) but are limited by practical objections, arising from baseline and monitoring problems and political objections. Interest in growing in the possible use of tradeable permits, perhaps evolving from an initial system of offsets. In detail there are many variants upon such a system and its key characteristics (including its flexibility and equitability), would depend upon careful design. But despite initial resistance, it seems to be becoming more broadly accepted that the use of such instruments, if properly structured, offers the most promising approach to effective international control of global pollutants such as CO₂

This paper draws upon the author’s contribution to Chapter 1 and 2 of UNCTAD (1992) and to M. Grubb and J. Sebenius, (1991). The helpful suggestions of various co-participants in the UNCTAD and OECD studies are gratefully acknowledged.