Climate change: The challenge continues
The problem of climate change has not gone away, nor will it be wished away. Governments must act.
Certain impacts of climate change may already be observed, and much more is expected if the rise in greenhouse gas concentrations cannot be slowed down. The growing number of extreme weather events in recent years is one example of the kind of impacts that may be in store.
Worldwide economic losses due to natural disasters increased from about US$40 billion per year in the 1990s to US$60 billion in 2003, according to estimates by the United Nations Environment Programme (UNEP) Finance Initiative. Numerous weather and climate-related disasters occurred in 2003, some unprecedented in intensity. Thousands of people died in Europe and North America as a result of the impacts of heat waves, and significant damage was caused by widespread forest fires. In Korea, a typhoon caused over 100 deaths, 25,000 homeless and an estimated US$4.1 million in property damage. Developing countries were seriously hit. In Pakistan, floods killed 162 people, displaced 900,000 and destroyed nearly 48,000 homes. Drought affected the livelihood of 23 million people in eastern and southern Africa.
In general, it is developing countries that are most vulnerable. They rely heavily on climate-sensitive sectors, such as agriculture and forestry, and their lack of resources, infrastructure and health systems leaves them at greater risk to the adverse impacts of climate change. Particularly at risk are low-lying areas and deltas, large coastal cities, squatter camps located on flood plains and on steep hillsides, settlements in forested areas where seasonal wildfires may increase, as well as those stressed by population growth, poverty and environmental degradation. Helping countries to adapt to climate change has become a key component of overall climate change policy, but much remains to be done to implement it, in such areas as infrastructure development and land management.
One of the main goals of the Convention was to demonstrate that in about 10 years developed countries could return their emissions to 1990 levels. Indeed, industrialised countries, referred to as Annex I Parties, have cut greenhouse gas emissions by almost 7% between 1990 and 2001. But this is primarily due to a 40% decline in emissions in countries whose economies are in transition. Greenhouse gas emissions in the highly industrialised countries (Annex II Parties) increased by about 7.5% during that period (See fig 1).
Many countries will have to do a lot more to get their emissions down. Under the Kyoto Protocol, reduction targets will force some Annex I Parties to put in place stringent measures to cut carbon dioxide emissions. While the overall emission reduction of 5% under the Protocol might not appear to be very ambitious, the instrument, even though it is not yet in force, has already set in motion the vital process of decoupling the pace of increase in CO2 emissions from economic growth.
Carbon intensity, which describes the relationship of carbon emissions and world economic output, has decreased continuously since the industrial revolution and this trend accelerated in the 1990s. But there seems to be a level towards which different carbon intensities globally converge. The world has been moving together in the last 30 years with, for instance, China having brought its energy intensity down to US levels, at the same time as the US has approached levels of developing and European countries. The challenge is to move this level of convergence further down, and the efforts that countries make to meet their Kyoto commitments are an important step in that direction.
But we all know that the Kyoto Protocol, important as it is, is only a first step in meeting the long-term objective of the Convention “to achieve […] stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. […]” (Article 2 of the United Nations Framework Convention on Climate Change).
I must admit to being surprised at some experts and leaders – including at the OECD – who argue that we should focus more on adaptation, because the Kyoto Protocol would not solve the climate change problem. Yet, no one has ever claimed that the Kyoto Protocol would achieve that.
It is important, though, that research and development focus on technologies that will bring down the carbon-intensity of the economy and contribute to reducing greenhouse gas concentrations in the atmosphere to levels that can be considered “safe”. These efforts are already being pursued with vigour, alongside the implementation of the Kyoto Protocol provisions.
Renewable energy sources, hydrogen-based fuel and carbon sequestration are today’s catchwords. But we should not forget that major policy decisions will be needed to allow these and possibly other breakthrough technologies to penetrate the market. Today’s experience shows that this remains a challenge for many governments.
The Kyoto Protocol has set in motion new policy instruments that allow combining economic efficiency with environmental effectiveness. Emission trading has now become a reality. 2004 will see the first projects under the Protocol’s Clean Development Mechanism (CDM), which is gaining wider interest in the developing world. This innovative financial mechanism promotes sustainable development in developing countries by channelling private-sector investment into emission reduction projects, while offering industrialised countries credits against their Kyoto Protocol targets. Work to prepare for joint implementation under the Kyoto Protocol is also under way.
The EU is in the process of implementing an agreed emission trading scheme and the difficulties associated with this process show the effort it requires on the part of the affected industries. The scheme is developed so that it can be linked to the Kyoto mechanisms. Similarly, there are many national and corporate CO2 emission trading schemes, including in the US, where the Chicago Climate Exchange provides an interesting tool for the development of a new market.
The first 10 years of the Climate Change Convention have prepared the ground for a major policy breakthrough in the coming years. It has become clear that there is no quick fix. Action will be required on all fronts. Much needs to be done to help the most vulnerable societies to be able to cope with imminent climate change. At the same time, a more intense effort is needed to curb greenhouse gas emissions, in particular from fossil fuels. Emission trading schemes being developed in conjunction with the Kyoto Protocol flexibility mechanisms will help to focus on the most cost-effective measures and provide incentives for much-needed innovations. There are clear indications that the second decade of the Convention will see us make major strides towards meeting this global challenge.
For more information, check the Convention web site at http://unfccc.int
Find out more about the UN Environment Programme’s Financial Initiative at http://unepfi.net/fii/
More information on weather and climate-related disasters at the World Meteorological Organisation’s web site at http://www.wmo.ch
© OECD Observer No 242, March 2004