The right questions

Dr. John Hollins, past chair of the Canadian Club of Rome wrote:

A think piece on climate change post-Kyoto inspired by Dr. Douglas Hill[i]
Dr. J.G. Hollins, Executive Director, Energy Council of Canada, 1998 February

Introduction in 2021

Starting in 1998, I wrote a series of briefing notes for the directors and members of the Energy Council of Canada. I had not been involved directly in Kyoto, but I had followed closely, with insight from others, including the Hon John A. Fraser. The following note was published a couple of months after the meeting of the Parties in Kyoto in December 1997. If I were to rewrite this text in 2021, I would make some changes—I have learned a few things along the way! But it is presented here exactly as it was written 23 years ago.

Sound policy

The most important step in developing effective policy on any topic is to ensure that the real issue has been identified and that the right questions are asked. The discussions and decisions in Kyoto revealed a mélange of good intentions, some clear and some muddled thinking, some naïveté, some intransigence, and much confusion. Some of the right questions were neither asked nor answered.

Three fundamental questions

In the aftermath of Kyoto, it may be useful to identify and address three fundamental questions:

How much should global emissions be reduced?
How much should emissions from the territory of each nation be reduced?
Who should pay?

The first is essentially a scientific question, the second a question of economic efficiency, and the third is generally treated as a question of equity.

Global reduction

How much should global emissions be reduced? Unless the great majority of the world’s climate scientists are wrong, the reductions agreed at Kyoto are merely a first step.

The Intergovernmental Panel on Climate Change has concluded that we are already experiencing climate change at present concentration of carbon dioxide in the atmosphere. Concentrations will continue to rise unless global emissions are reduced by two-thirds in the next century, an almost unthinkable requirement for many.

For Kyoto, the Association of Small Island States proposed that all developed countries reduce their emissions by 20 percent by 2005. The European Union initially offered to achieve an overall 15% reduction by 2010.

The reductions agreed in Kyoto, for an aggregate reduction of 5% by 2010, were based not on possible long-term consequences of climate change, but on estimates of short-term economic impacts and political leaders’ perception of the will of their constituents. Since only Annex I Parties are likely to take action in the foreseeable future, and their efforts to start addressing the first question may be compromised by the other Parties, the answers to the other two questions are very important.

National reductions

To curtail greenhouse gas emissions, a range of steps, tailored to the circumstances of each country, will be needed; for example, greater energy conservation, switching from high-carbon fuels like coal and oil to lower-carbon natural gas and renewable energy, and the introduction of more efficient technologies and processes which use less fuel.

Do the cheapest first

How far should each nation go? To secure the greatest reduction in emissions for the entire world, one should start with the cheapest options available, wherever they may exist, and then move progressively to more expensive options. The most expensive option adopted in any given country should have the same cost as the most expensive option in any other country. Otherwise, from a global perspective, it would be better to spend the money somewhere else.

The cost of curtailing the last ton of carbon dioxide is known by economists as the marginal cost of emission reduction. Undertaking actions in each country at equal marginal cost, however, is entirely different from each country making an equal percentage reduction in emissions. For example, it will be most expensive to reduce emissions in countries that depend little on fossil fuels, such as Norway where virtually all electricity is produced by hydroelectric power.

It will be much less expensive for Germany which can begin by eliminating its present subsidies on coal mining. Short of a collapse in its economy such as that experienced in Russia, a 20 percent reduction in emissions would be impossible in Norway. The same is true for other nations that depend little on fossil fuels, such as Sweden and Switzerland.

Who should pay?

It does not follow, however, that each nation should bear the costs of action taken on its territory. On the contrary, it is important to unlink the question of where to reduce emissions from the question of who pays. Again, the answer seems simple: the polluter pays.

The polluter is us

The polluter in this case is not simply the oft maligned producer of energy commodities, but the worldwide community of users of goods and services that require energy, or other inputs, that release greenhouse gases in their production.

As Amory Lovins put it two decades ago, no one wants a kilowatt-hour of electricity or a cubic metre of gas—what one wants is a cold beer and a warm shower (unless you’re British)—namely, services!

Blind alleys

Much current thinking about greenhouse gases is rooted in a recommendation made be a conference in Toronto in 1988, that countries reduce their emissions 25% by the year 2005. The notion of equal percentage reductions has evolved to include consideration of emissions per unit of GDP and emissions per capita. But this kind of thinking is leading us up a blind alley.

Furthermore, charging countries for what they did in the past does not influence what matters, which is what they do in the future. Charging only the wealthier countries would not discourage China from soon overtaking the U.S.A. as the world’s largest source of carbon dioxide. Appropriate acknowledgement of historic actions should not distract us from spending most of our time looking where we are going, rather than gazing at the rear-view mirror.

The way ahead

Paying for pollution should be used as a disincentive to pollute. In an ideal world, you would pay as you go. All countries—not just the developed countries now committed to reducing emissions—should pay in proportion to the greenhouse gases they emit. If you emit more this year, you pay more this year.

The Kyoto Protocol makes a modest beginning to achieving these aims. The door has been opened for two countries to cooperate in reducing emissions—and both benefit—if the reductions are made in the country where it is cheaper to do so, and the other country pays.

Emissions trading

A system of emission-permit trading would generalise this two-party arrangement to more countries. A successful precedent is the system of trading sulphur dioxide emission permits among electric utilities in the U.S.A. Many practical problems would have to be addressed before it could work internationally. A market place for emission permit trading would be needed. Means would be needed to measure and verify emissions around the world.

International marketplace

The scope and scale of the greenhouse gas issue is such that, in our imperfect world, the combination of political will expressed through and international treaty that engages the international marketplace is the only tool that will allow the peoples of the world to deal with it in practice.

What has come out of Kyoto is clearly not enough; asking the right questions, and then starting to answer them, would be a good way of making progress!

Acknowledgement

This text is adapted from an article written by Dr. Douglas Hill, Brookhaven National Laboratory. Dr. Hill is a systems engineer and a founding member of ETSAP, a research partnership of OECD and other countries that cooperate in modelling the future of national and multi-national energy systems.

Addendum from a report on Kyoto written by Dr. Hill

The European Union has planned “burden sharing” among its member countries whereby emissions are reduced (or in some countries allowed to increase) by different amounts to achieve an overall 10 percent reduction by 2010, but it offers the challenge of a further reduction by itself and other countries to achieve to a 15 percent reduction by then.

JGH6662 (from 6545)

[i] Dr. Douglas Hill, formerly a US Navy pilot, was a systems engineer at Brookhaven National Laboratory. He was a pioneer in computer models for energy systems, starting in 1977. He served as manager of the IEA program of Energy Technology Systems Analysis for more than a decade.