“Global Engagement” research topics

 A new contribution to technology transfer and diffusion.  Climate Strategies seeks to develop and communicate more widely the concept of a network of Low Carbon Technology Innovation and Diffusion Centres.  We included a basic outline of the idea in our report on ‘Options for the G8’ this summer, drawing on the precedent of the UN’s CGIAR network, and the experience of the Carbon Trust. We subsequently brought a leading Indian researcher, who contributed to the Indian government proposal along these lines in the EGTT this June, together with the Carbon Trust, to present the concept at the UN Beijing conference on Climate Change and Technology Transfer, 7-9th November. This was also incorporated as part of the UN Background paper for the conference. We seek additional support to write up this work and its intellectual underpinnings more fully as a full Climate Strategies report, with a short synthesized piece aimed to appear in one of the global journals with high global profile (potentially Nature).

Effort-sharing approaches: lessons from the EU and approaches to a second Kyoto commitment period.  Climate Strategies seeks to analyse more deeply issues that have arisen forcefully in the context of the ‘EU 2020 package’ relating to burden-sharing between Member States, and to consider implications and insights of possible relevance to target definitions in Kyoto post 2012 negotiations.  The work would include a short review of literature and approaches, but our key contribution would be to set this within the realpolitik as illustrated particularly by historical experience of the EU to date, but also drawing on other precedents. In particular we would seek to understand and consider the implications of debates over the distribution of auction revenues, and debates over the base year for aspects of target setting. The latter in particular has revealed deep-seated differences of perception that are bound to complicate the east-west dimensions of Kyoto+ negotiations unless they are more fully understood and debated.  In addition to analysts who have been engaged in some prior internal EU analysis, we would develop an expanded international team to produce a full-length Climate Strategies report.

International  support for domestic climate policy implementation (Phase 2)  This project will focus on how the frameworks for technology transfer and financial flows to developing countries can be structured to allow countries to shift to a low-carbon development trajectory. Our pilot project on South North collaboration completing this month is revealing several interesting options for approaches 'beyond the CDM' that would support the kind of structural transformations that will be required globally.  

Our proposed phase 2 of this project will commence with an international workshop in January 2009. Based on academic analysis in phase I of specific policies for developing countries, we will pursue pilot studies on domestic policy implementation for two sectors in three developing countries. Stakeholder discussions will identify the steps required for implementation, the domestic constituencies that benefit from co-benefits, the barriers, and the anchoring points for international cooperation. We will also assess the capacity and barriers for domestic financial institutions to provide finance for the investments where international support covers incremental costs.

This will be the basis for modelling to understand the potential emission reductions and incremental costs, with focus on the associated uncertainties and for assessments of the possible policy indicators that can support domestic implementation, best practice sharing, and might link up to international incentive schemes.

We will then explore the international institutional framework that can support processes to design, implement and support these domestic policies with resources from auction revenues, levies on international aviation and shipping.

Tackling Leakage project requires a contribution to funds to enable collation of additional data for sectors most affected by carbon costs under the EU ETS post 2012. This gap needs to be closed in particular for the Spanish industry and for Eastern European countries, as both regions are close to Non-EU-countries with no carbon pricing in place. But also, as aluminum and steel producers also operate internationally, comparing the carbon cost impact on investment options is crucial to learn about potential changes in location decisions.

Carbon leakage will be an interim problem creating concerns for climate policy makers, specifically on how they could prevent the relocation of production in developing and emerging countries. If Leakage, which is undesirable not only from a climate policy, but also from a competitiveness point of view, is addressed, the measures potentially will affect EU trade partners. Amongst them are many countries that do not have carbon control in place (currently the US, China, India, and poor developing regions). Tackling leakage can evolve into a severe North-South issue, if the policy approaches are taken unilaterally. This could be expected from a future US cap and trade regime which would include safeguarding US industry from Chinese competition by introducing unilateral border adjustments (e.g. obligations to surrender carbon allowances at the border).

The arguments regarding border adjustments impact employment and competitiveness. While these are not justifying trade protection, as they are running counter to a world of free trade and division of labour, from a climate perspective some solution to carbon cost differentials is desirable if there could be global net emission increases due to relocation.

The debate on measures against carbon leakage thus should and cannot be separated from other issues under negotiation in South- North cooperation, such as helping developing countries to install climate-control mechanisms in domestic policies. Their development paths for example hinge on foreign direct investment and if this is induced by stricter carbon prices in industrial countries, the developing countries could benefit economically from carbon leakage effects. It is thus crucial to learn more about relevant countries and sectors.