The 21st Century climate challenge

Without a credible multilateral frameworkthe world will not avoid dangerous climatechange. However, no multilateral frameworkwill deliver results unless it is underpinned bynational targets, and by policies that are alignedwith those targets. The corollary of a meaningfulglobal carbon budget for the 21 st Century isthe development of national carbon budgets thatoperate within the global resource envelope.Carbon budgeting—living withinour ecological meansNational carbon budgeting is a necessary foundationfor the post-2012 multilateral framework.At their most basic level, carbon budgets set alimit on the total quantity of CO 2e emissionsover a specified period of time. By setting a rollingbudget period of, say, 3–7 years, governmentscan strike a balance between the certainty neededto meet national and global emission reductiontargets, and the annual variation that will accompanyfluctuations in economic growth, fuelprices or the weather. From a carbon mitigationperspective, what matters is the trend in emissionsover time rather than annual variations.There are parallels between global andnational carbon budgeting. Just as the globalcarbon budget discussed in chapter 1 establishesa bridge between current and future generations,national carbon budgets provide for continuityacross political cycles. In money markets, uncertaintiesover the future direction of policies oninterest rates, money supply or price level can allfuel instability. That is why many governmentsuse independent central banks to address theproblem. In the case of climate change, uncertaintyis an obstacle to successful mitigation. Inany democracy, it is difficult for a governmentto irrevocably commit its successors to specificmitigation policies. However, fixing multilateralcommitments into national legislation aimed atachieving long-run mitigation goals is vital forpolicy continuity.National carbon budgeting is also a foundationfor international agreements. Effectivemultilateral agreements have to be basedon shared commitments and transparency.For countries participating in internationalagreements aimed at rationing global greenhousegas emissions, it is important that partnersare seen to stick to their side of the bargain.Perceived free-riding is guaranteed to weakenagreements by eroding confidence. Ensuringthat multilateral commitments are enshrinedin transparent national carbon budgets cancounteract this problem.At a national level, carbon budgets canreduce the threat of economic disruption bysending clear signals to investors and consumerson the future direction of policy. Beyondthe market, carbon budgets can also play animportant role in increasing public awarenessand holding governments to account, withcitizens using carbon budget outcomes toassess the contribution of their governments tomultilateral mitigation efforts.Emission reduction targets areproliferatingRecent years have witnessed an increase intarget-setting exercises on climate change.National governments have adopted a widerange of goals. Within countries, state andregional governments have also been active insetting emission reduction targets (table 3.1).The growth of target setting has producedsome impressive results. The Kyoto Protocolitself was an exercise in setting national limitslinked to global mitigation goals. Most OECDcountries—Australia and the United States arethe major exceptions—are committed to achievingreductions by 2008–2012 against a 1990base year. Many have even embraced additionaltargets. The European Union is an example.Under the Kyoto Protocol, the European Unionis required to achieve an 8 percent reductionin emissions. However, in 2007 it committeditself to cutting greenhouse gas emissions by “atleast” 20 percent by 2020 and by 30 percent ifan international agreement is reached, with areduction of 60–80 percent by 2050. Severalmember states have adopted national targets forreductions against 1990 levels, among them:• The United Kingdom has set itself a‘Kyoto–plus’ target in the form of a 20 percentcut on 1990 levels by 2010. LegislationNo multilateral frameworkwill deliver results unlessit is underpinned bynational targets, and bypolicies that are alignedwith those targets3Avoiding dangerous climate change: strategies for mitigationHUMAN DEVELOPMENT REPORT 2007/2008 113