International Conference on Opportunities and Problems
of Early Actions for Climate Protection
30-31 March 1997, Kyoto, Japan Draft Chairperson's Summary
1. The International Conference on Opportunities and Problems of Early Actions for Climate Protection was held in Kyoto, Japan from 30-31 March 1997 organized by the Environment Agency of Japan in cooperation with the World Resources Institute (WRI), the Woods Hole Research Center (WHRC), the Kyoto Prefectural and Municipal Governments, and with support of the Ministries of Foreign Affairs and International Trade and Industry.
Participation
2. The conference was attended by experts from thirteen foreign institutions, government agencies, business communities, and other organizations, namely, the Alliance of Small Island States (AOSIS), the Department of Environment and Natural Resources (Philippines), ENRON Corporation (U.S.), the European Business Council for Sustainable Future, the Intergovernmental Panel on Climate Change (IPCC), the Natural Resources Defense Council (U.S.), the Royal Institute of International Affairs (UK.), the Tellus Institute and Stockholm Environment Institute (U.S.), the Thailand Environment Institute (Thailand), U.S.EPA, WRI , WHRC (U.S.), and Wuppertal Institute for Climate Environment and Energy (Germany). It was also represented by the following United Nations agencies, namely the United Nations Environment Programme/International Environmental Technology Center (UNEP/IETC), the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat. Various Japanese experts including those from universities, business communities and government agencies both at national and local levels attended the conference (List of participants is attached as Annex).Objectives of the Conference
3. The objectives of the conference were (i) to evaluate the opportunities and problems of early actions for climate protection towards promoting sustainable development, (ii) to assess the potential impacts of early actions on developing countries and to explore possible mechanisms to reduce adverse impacts, and (iii) to explore strategies responsive to the need for early actions to reduce greenhouse gas (GHG) emissions consistent with the objective contained in the UNFCCC.Opening Session
4. The conference commenced with opening addresses by Ms. Michiko Ishii, State Minister and Director General of the Environment Agency of Japan, Dr. George M.Woodwell, President of WHRC, and by Jonathan Lash, (read by Dr. Jim MacKenzie) President of WRI. The Conference elected Professor Takamitsu Sawa, Kyoto University as the Chairperson, Dr. Edda Mueller, Wuppertal Institute for Climate Environment and Energy, and Ambassador Tuiloma N. Slade, Ambassador of Western Samoa to the United Nations in New York, and the Vice-chair of AOSIS as the Vice-chairs and Dr. Kilaparti Ramakrishna, WHRC as the Rapporteur.
5. A keynote address was delivered by Dr. Robert Watson, IPCC Chairman Elect, on the "Timing of Actions for Climate Protection - Scientific Implications". Dr. Watson reviewed the latest scientific information pertaining to the timing of actions for climate protection. In his address, he emphasized that the composition of the atmosphere is changing because of energy and land-use policies, and this is accompanied by changes in the Earth's climate: regional and global mean temperatures have increased, there has been a significant change in the spatial and temporal patterns of precipitation with an increase in heavy precipitation events leading to more floods and droughts, sea level has risen, and glaciers have retreated globally.
6. He further noted that the climate will change even further unless global policies to limit greenhouse gas emissions are taken in the near future: global mean temperatures are projected to increase by between 1.0 and 3.5 degrees Centigrade by the year 2100, accompanied by an increase in sea level of 15 to 95 cm. These projected changes in climate are expected to result in adverse effects on human health, ecological systems, and socio-economic sectors. Dr. Watson emphasized that greenhouse gas induced global warming, and it's adverse effects, can only be reversed very slowly because of the century-scale atmospheric residence times of the gases and the thermal inertia of the oceans.
7. Dr. Watson then reviewed the emission implications of different stabilization levels (350-1000 ppmv of carbon dioxide). He noted that any stabilization level below 750 ppmv would require lower emissions than IPCC IS 92a (business as usual scenario) during the next century. Specifically, stabilization at 450 and 550 ppmv would require emissions to deviate from IS 92a within the next ten to twenty years. He further noted that increased concentrations of methane and nitrous oxide could equal to another 50 to 100 ppmv of carbon deoxide. Hence if the goal is to stabilize "equivalent" atmospheric carbon dioxide at twice pre-industrial levels, carbon dioxide will have to be stabilized at 450 to 500 ppmv rather
than 550 ppmv.
8. Dr. Watson then demonstrated that even strict control measures on Annex I countries (for example as proposed by the Netherlands), without non-Annex I obligations, would not lead to stabilization of the atmospheric concentrations of greenhouse gases. Stabilization at 450 and 550 ppmv of carbon dioxide will need non-Annex I obligations around 2025 and 2050, respectively.
Promoting Sustainable Development through Early Actions for Climate Protection
9. It was emphasized that our society, particularly in industrialized countries need structural change with less production and consumption to attain long-term sustainable development. There is significant room to improve the social and economic well-being of our society by using less materials and energy. Different communities in various countries have already successfully worked with such ideas. The climate challenge can and should promote the adoption of similar ideas.
10. It was pointed out that a protocol, expected to be adopted at the Third Session of the Conference of the Parties to UNFCCC (COP3) should include legally binding CO2 target for Annex I Parties, additional but separate targets for other GHGs. It was also pointed out that the year 2005 could be a good benchmark year for promoting early actions and therefore should remain as one of the target years. Some other items proposed include an establishment of an International Solar Energy Agency and an introduction of international tax on aviation fuel.
11. Climate protection actions, particularly no regret strategies, are in line with sustainable development, since they will not only reduce GHG emissions and air pollutants but also enhance economic efficiency. This should be emphasized particularly in the context of developing countries, since some of them are reluctant to take climate protection measures now, assuming that they are not affordable for caring climate change problems. However, climate protection actions, especially no regret actions, could facilitate a transition to a more efficient society and thus promote sustainable development.
12. It was also stressed that inactions could cause serious potential damages for the society, particularly in developing countries, since they could be more vulnerable for effects caused by climate change, although such damages have not been well quantified yet.
13. The key point of Berlin Mandate is early action. Without early action, sustainable development cannot be attained. The promotion of sustainable development and the protection of the climate system, on the basis of precautionary principle, for present and future generations are essential requirements of the UN Framework Convention on Climate Change.
Timing of Actions to Reduce GHG Emissions - Implications for Technological Development and Market Penetrations
14. There are some who believe that there are good reasons to delay actions to safeguard climate. One of the critical assumptions for this speculation is that better technologies will be available in the future and these will meet the imperative of achieving greater and faster reductions in a shorter time. Many participants in the Conference, however, pointed out that such assumptions do not have a sound bases, that technological development could be significantly facilitated with the clear message which could promote technological innovation. Unless such a message through international agreements and/or national regulation is advanced, such innovation does not get the needed boost . It also ignores the fact that significant opportunities are available for short-term cost effective emission reduction options.
15. Another assumption is that faster reductions in greenhouse gas emissions in the short term will cause significant adverse impacts in economy. Disagreeing with this view, several participants emphasized that the need for faster reductions will encourage investment decisions that in turn provide opportunities for creating markets for new business, such as those for cleaner and more energy efficient production technologies, and further employment opportunities, and would foster technological innovations and cost reductions. All these activities in turn will accomplish faster reductions.
16. It was pointed out that the choice of discount rate in a cost-benefit framework is another problem giving rise to significant debates, particularly among economic modellers working on climate policy issues. Existing gaps in the discounting debates could be narrowed down by making relevant assumptions more explicit. Another point raised is the weakness of traditional economic models in representing the process of cultural, political and economic factors affecting energy efficient and low-carbon intensive technological changes including policy-induced changes. Thus they often neglect this types of phenomena that would have net positive effects on the economic outcomes of climate protection policies, particularly in the long-term.
17. It was emphasized that sustainable development will be advanced by diffusing green technologies into use around the world as soon as possible. Policy decisions about the timing of actions will determine how fast this happens and how much the cost. Through early actions, regulators could send a signal that markets for green technologies are real, driving industry investments in facilities that utilize these technologies. The prospect of increased sales and profits will also bring new technologies from the drawing board into the market. It was suggested that a cap on CO2 with gradual declining reductions would create an effective planning horizon for the private sector, but that long emissions budget periods would retard the development of new technologies. Further, if action is postponed, the marketplace will be deprived of large scale demand that will bring costs down.
18. Many participants pointed out that there are many currently available technologies and promising ones which are effective in all countries to drastically reduce GHG emissions, but are underutilized for various reasons. One reason is low energy prices and other market barriers including unfavorable investment climate. Elimination of market barriers is essential to promote market penetration of such technologies. It was also stressed that investment on R & D for more energy efficient technologies have declined in 1990's due to low energy prices. Some policy measures seem to be required to reverse this unfavorable trend.
19. It was also pointed out that flexible and progressive approaches and policies are needed to effectively promote diffusion of currently available and promising technologies. Such policies may include public information and education, development, diffusion and transfer of technologies, adoption of economic instruments and regulations, and investments for infrastructure. Specific options may include reduction or elimination in subsidies encouraging use of carbon-intensive fossil fuels, provision of limited subsidies or portfolio standards to offset risks with less carbon emitting options, adoption of environmental labeling and performance standards, and education of energy users.
20. It was noted that beginning early and proceeding steadily could also help to avoid more hurried and costly solutions at a later date, when the infrastructure, practices and preferences are already sedimented in place. While policies that affect market conditions and prices are essential, they are not enough. Changes in institutions, firm and consumer behavior will also be needed, and these too can be shaped by policy.Past Lessons and Perspective of Industries
21. It was pointed out that there has been no significant and broad-based environmental problems in the past like climate change. However, some lessons learned, such as those from stratospheric ozone layer protection policies seem to give us various important suggestions on how we should proceed with climate protection policies. In particular, they demonstrate that policy can foster technological innovation and diffusion.
22. Some lessons learned from stratospheric ozone layer protection are that the key factors for success include (i) strong policy message such as binding agreement with simple accounting and flexible national implementation, (ii) international cooperation and constructive involvement of industries, (iii) technological cooperation with developing countries. Another important lesson learned is that first technological choice may be incorrect unless we carefully assess and select them. The participants pointed out that the speed of technological development was much quicker than thought possible before the regulation, and actual costs for phasing out CFCs are also much less than the estimated ones before the regulation.
23. Japanese experiences for pollution control revealed that huge investments for pollution control in 1970's and 1980's did not hurt the national economy, and rather created new business opportunities for environmental equipment industries and new employment. Strong emission regulations for automobiles enabled faster technological innovations which had been considered impossible, and strengthened their competitiveness. Economic analysis of air pollution damages also indicates that Japan would have been better off if actions had been taken to reduce air pollutants a several years earlier, while macro-economic loss would have been much greater if reductions had been further delayed.
24. Experts of industries in Europe, U.S. and Japan presented various on-going efforts by industries, such as investments for technological development, voluntary program for climate protection. They suggested that no regret policies should be promoted first, and a next range of carbon effective technologies could be developed in a certain time frame if political necessity and corresponding strategies are explicitly expressed.
25. It was noted that an Japanese automobile company is committed to clean manufacturing, use, and recycling of automobiles. Environmental improvements to date have been driven primarily by urban air pollution concerns. Global scale problems, such as climate change, now call for reductions in CO2. If early actions are required, the company will advance its already vigorous efforts to improve fuel efficiency. Further, it was pointed out that alternative energy vehicles offer promise for the protection of the global environment, but many of these technologies are still in their infancy. A new hybrid vehicle has recently been introduced at one and a half times the cost of a conventional automobile. Technological development and market demand could eventually bring the price down to the same level.
26. Substantial progress has been made to reduce energy consumption in some energy-intensive industries in response to market signals. For example, in the early 1970's the Japanese steel industry accounted for roughly 20 percent of all energy consumption, and now it uses less than 12 percent. Improvement in energy conservation was initially stimulated by air pollution abatement efforts. More recently, high energy prices and the need for international competitiveness has spurred improvement. The Japanese steel industry has contributed to an overall reduction of 10 percent in the nation's energy consumption. It was noted that, in addition to early actions for climate protection, the steel industry in Japan must promote international cooperation to improve energy efficiency around the world. For example, in China, the steel represents 10 percent of domestic energy consumption and provides with significant opportunities for CO2 reductions.
Implications of Early Action to Reduce GHG Emissions for Developing Countries
27. While it is commonly believed that the industrialized countries should take measures to reduce greenhouse gas emissions in the near term, the question of the implications of such measures for developing countries, both positive and negative, has received intensive interest and scrutiny in recent times. The Convention recognized in article 4.8 that the Parties take into account the impact of actions adopted in meeting the commitments under the Convention to also meet the specific needs and concerns of developing country Parties arising either from the adverse effects of climate change and/or the impact of the implementation of response measures. The Alliance of Small Island States as well as the Oil Producing and Exporting Countries have persuasively argued both the positive and negative impacts of actions by industrialized countries in reducing their greenhouse gas emissions. This session explored specifically what those implications might be and came to the following general conclusions.
28. Participants took note of a series of studies that concluded that the developing countries could face two percent losses in their annual GDP as a consequence of measures adopted by developed countries to reduce their greenhouse gas emissions. When this statement is read in conjunction with the conclusion reached
after surveying the projected impacts of a 2-3 degree warming on GDP, contained in the IPCC 1995 Synthesis Report, it becomes clear that the developing countries have a strong economic incentive to push for aggressive GHG reductions by industrialized countries.
29. A series of other studies looked at the impacts of climate change policies on countries dependent on income from fossil fuel production and exports. These studies have tried to evaluate such impacts based on a variety of long-term energy scenarios and economic models and come to the conclusion that some negative impacts are likely. This is true, however only when compared with business-as-usual scenarios. With the business as usual scenarios the widespread implications of climate change on the world as a whole as quite severe.
30. The discussion that ensued broadly agreed that the negative impacts include: loss of export revenue, especially for fossil fuel exporters, increased barriers to trade and deterioration in the terms of trade, and the spill-over effects of a possible slow down in global economic activity. The potential benefits for developing countries include: technological innovation and its transfer to developing countries, leading to greater efficiency, lower costs and reduced capital investments. While the positive effects of renewed global economic growth based on low-emission activity is possible, participants also drew attention to the additional benefits in terms of positive impacts on local scale environmental problems such as acid rain and air pollution.
31. The broader conclusion seem to be that developing countries are most vulnerable to climate change. Therefore the short term costs that they might face as a result of industrialized country emission reduction policies would be dwarfed by the greater long term negative effect of inaction by the industrialized countries. The participants agreed that the developing countries do not bear a disproportionate cost in tackling climate change and that there is a need to achieve equitable burden sharing through global cooperation.
32. Such cooperation could take the forms of well-designed cost-effective responses which stimulate technological innovation and promote improved efficiency to ensure that benefits are maximized and costs are minimized. In this context the potential for an improved system of activities implemented jointly to lower the costs and maximize the benefits of global action to deal with climate change, particularly through technology transfer.
Panel Discussion - Policy Options for Climate Protection
33. Panelists representing diverse perspectives on climate change problems discussed the ideas on policy options which should be addressed in a protocol or another legal instrument to be adopted at COP3 as well as in the follow up to Kyoto.
34. The Chairperson wrapped up the discussions as follows.
(1) A policy framework which establishes a short-term legally binding emission reduction target by 2005 for Annex I Parties is important. This is necessary to provide a clear signal to the private sector in order to further their efforts in areas of development and diffusion of low cost energy efficient and other climate protection technologies. Long-term targets are also essential to guide the transition to a sustainable energy future. The Kyoto protocol to be adopted at the COP3 should establish such a policy framework.
(2) Participants suggested that possibility of tax on international aviation fuel should be explored. The funds arising from the tax could help developing countries for sustainable development. A mechanism should also be examined to further promote extensive use of solar energy.
(3) In addition to the international framework, domestic legal and institutional frameworks are needed to reward companies taking early actions. Such frameworks could include elimination of unfavorable subsidies, adoption of economic instruments and regulations, providing public information and education and promoting development and diffusion of technologies. The innovation and diffusion of such technologies could provide low cost options for climate protection as well as economic and other environmental benefits.
(4) Actions should be taken now and proceed steadily to avoid more hurried and costly solutions at a later date, when the infrastructure, practices and preferences are already cemented in place. Changes in institutions, firm and consumer behavior will also be needed, and these too can be shaped by education and policy.
(5) A range of technologies and their practices are currently available to cost effectively reduce CO2 emissions up to 10-30 percent. There are also many promising technologies to become available in the near future. Elimination of market barriers, such as removal of unfavorable subsidies, and financial and institutional reform are essential to promote market penetration of such technologies.
(6) Clear signals, inter alia target setting, pricing, public education, are also needed to advance development and diffusion of such technologies.
(7) It is urgently required to accelerate transfer and diffusion of technologies from developed to developing countries. Participants suggested a number of institutional and organizational and financial arrangements, including better use of existing institutions such as UNEP International Environmental Technology Center.
(8) Efforts made by some Japanese industries were highlighted as good cases of early actions. Companies which have been taking early actions in Europe, U.S., and Japan are expected to take a leading role in promoting such actions globally.
(9) These early actions will also provide other economic and environmental benefits for both industrialized and developing countries.