The Climate Change Policy Puzzle
Introduction
Climate change is a complex problem that requires solutions on many fronts. Policy responses to climate change can be divided into two broad categories—mitigation and adaptation. Mitigation seeks to reduce greenhouse gas (GHG) emissions in order to limit the degree of climate change that will occur in the future. Adaptation seeks to respond to the effects of climate change that have occurred or that will occur as a result of the GHG emissions that have entered the atmosphere. This book will analyze these issues against the backdrop of two central themes: technology diffusion (rather than transfer, which implies donations or transfer of property rights) and unilateral responses to multilateral negotiation failure.
Policy responses to climate change can be divided along jurisdictional lines— subnational, national, and international; and unilateral, bilateral, regional, and multilateral. Examples of subnational measures include changes to zoning by-laws to account for expanded flood zones or changing the choice of trees planted on city streets to account for higher temperatures and changing rainfall, both of which are adaptation measures. Examples of national measures include higher energy efficiency requirements for housing construction, eliminating subsidies on fossil fuel consumption and taxing fossil fuel consumption, all of which are mitigation measures. Measures taken by the European Union are examples of regional measures. The United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol are examples of international measures.
To these “jurisdictional” categories we also could add individual actions, such as hanging the laundry to dry in the sun instead of using a dryer (mitigation), taking public transportation or walking instead of driving a car (mitigation), and planting drought-tolerant plants in the garden to reduce watering requirements (adaptation). Governments can create incentives for such individual actions, by increasing the cost of electricity, gasoline, and water; implementing watering restrictions for gardens; improving public transportation; making cities more walkable; and implementing public education campaigns. Thus, government policy has a role to play even in the realm of the individual choices that we make.
Unilateral measures refer to measures taken without reaching international agreement on the appropriate policy response. They can be taken, and have implications, at the subnational, national, or international level. If Chicago changes its street trees from maples to magnolias, its actions do not require international agreement and do not risk violating the international obligations of the United States. Any legal implications are likely to be strictly local. If New York changes the building code and land-use zoning in some of the areas flooded by Hurricane Sandy, there could be international legal implications for the US federal government if these changes are made in a way that violates the rights of foreign investors under international investment agreements (for example, if the rezoning is tantamount to expropriation without adequate compensation). When the Province of Ontario introduces renewable energy subsidies, they may be inconsistent with Canada’s World Trade Organization (WTO) obligations. When the European Union applies its Aviation Directive to airline emissions that occur outside its territory, it creates an incentive to improve progress in multilateral negotiations on the regulation ofairline emissions, but also increases its litigation risk. Thus, unilateral measures may be taken to address local or global concerns and may be used to create incentives for multilateral action. They may be consistent with international obligations or not, depending on the circumstances of each case. Regardless of whether climate change measures are unilateral, regional, or multilateral, they may be implemented or applied in a manner that is consistent with international economic law, or not.
In a multipolar world, it is difficult to reach multilateral agreements with respect to climate change, intellectual property rights, and technology transfer; protections for international investors; or international trade in goods and services. In the case of the WTO, deadlock at the multilateral level has led to unilateral, bilateral, and regional policy responses. The same may happen with respect to climate change negotiations, unless some unanticipated catalyst will permit a breakthrough in multilateral negotiations. However, catalysts that trigger new regulation may produce unilateral responses, rather than multilateral responses.
Weather events, such as Hurricane Sandy, are potential catalysts. The issue is not whether climate change caused Hurricane Sandy, but whether it will serve as a catalyst for unilateral or multilateral action on climate change. It is not uncommon for a trigger event to serve as a catalyst for regulation. When the event gets the attention of voters it also gets the attention of politicians.
The 2013 Draft Report may serve as a catalyst in the United States. It represents a significant change in tone with respect to the discussion of climate change:
Climate change is already affecting the American people. Certain types of weather events have become more frequent and/or intense, including heat waves, heavy downpours, and, in some regions, floods and droughts. Sea level is rising, oceans are becoming more acidic, and glaciers and arctic sea ice are melting. These changes are part of the pattern of global climate change, which is primarily driven by human activity.[1]
Indeed, the Joint US-China Statement on Climate Change, which was issued three months later, indicates that recent weather events may also lead to increased bilateral cooperation between the world’s two largest GHG emitters:
The two countries took special note of the overwhelming scientific consensus about anthropogenic climate change and its worsening impacts, including the sharp rise in global average temperatures over the past century, the alarming acidification of our oceans, the rapid loss of Arctic sea ice, and the striking incidence of extreme weather events occurring all over the world.[2]
Like weather events, unilateral measures can serve as catalysts for multilateral action on climate change, by prompting the affected economic actors to pressure their governments to seek a solution, through litigation or negotiation. For example, when litigation by private actors against the EU Aviation Directive in the European Court of Justice (ECJ) failed, the EU measure had the effect of prompting other countries to make a greater effort to negotiate a multilateral agreement on airline emissions.
In addition to unilateral and multilateral actions, policy responses may be taken at the bilateral or regional level. However, these categories are not mutually exclusive. The EU Aviation Directive is a unilateral measure with respect to non- EU members, but it was taken at the regional level of the European Union. An example of a bilateral/regional measure is the agreement between the EU and Australia to fully link their emissions trading systems with the mutual recognition of carbon units between their two cap and trade systems.[3] Bilateral or regional actions need not be formalized in an international agreement. For example, Canada is likely to follow the lead of the United States on climate change. Bilateral and regional initiatives, like unilateral initiatives, may serve as a stepping stone to multilateral initiatives.
Regardless of the shape that climate change law and policy negotiations take— unilateral, bilateral, regional, or multilateral responses—they will need either to comply with or to modify existing international economic realities, with respect to international economic law, global models of economic governance, and economic and financial realities.
Rather than seek to predict how climate negotiations might succeed, this book analyzes the manner in which these other factors constrain possible policy outcomes. Existing international economic law places limitations on the right of national and sub-national governments to regulate to address climate change. Given the current difficulty in reaching multilateral agreements, we assume for the most part that countries will have to develop climate change policy and law within the constraints of the existing legal, economic, and financial framework. We will only suggest efforts to negotiate changes to that framework where we identify particularly egregious lacunae in the existing framework.
This chapter begins with a brief overview of the science of climate change, and its implications for the environment, human health, and the global economy, to demonstrate the severity and urgency of this environmental problem. We then examine how the evolving political and economic context has paralyzed multilateral negotiations, both with respect to climate change mitigation and adaptation and with respect to multilateral trade negotiations at the WTO. We argue that the shifting fortunes of developed and emerging economies have altered the dynamics of global governance, and will continue to do so for the foreseeable future. As a result, we are unlikely to break the multilateral logjam through negotiation alone. Rather, unilateral action by countries and regions will be necessary to create incentives to address climate change.
This chapter also examines regulatory capture. Regulatory capture at the national level has translated into regulatory capture of negotiating positions, contributing to multilateral negotiation paralysis. Regulatory capture also risks distorting unilateral measures in unacceptable ways. Thus, while we advocate unilateral means to achieve multilateral ends, unilateral measures should be taken within a range of acceptable actions, both in terms of their consistency with international law and their economic viability.
Finally, this chapter introduces the themes that we will examine in subsequent chapters.
- [1] National Climate Assessment Development Advisory Committee, Draft Climate Assessment Report(January 11, 2013) 3
- [2] Joint US—China Statement on Climate Change, Media Note, Office of the Spokesperson,Washington, D.C., April 13,2013
- [3] Australia and European Commission agree on pathway towards fully linking Emissions Tradingsystems, EU Doc. IP/12/916, 28/08/2012
