Global climate change: Science, economics and policy Regional viewpoints: Industrialised countries

Lee Solsbery, Head Energy and Environment Division International Energy Agency, OECD 2 rue Andre Pascal, Cedex 16, Paris, France

Mr. Chairman, distinguished panelists and participants, it is an honour to come before you today to talk about the actions of industrialised countries in carrying out the Framework Convention on Climate Change. The sponsors have asked me to address the status of national policies and commitments in OECD countries in a global context and to give the status of our collaborative work.

At the International Energy Agency, much of our recent attention has focused on integrating the environmental impacts of energy use in the formulation of energy policy, and climate change is clearly the most pressing global environmental concern to be addressed in that regard. Indeed, the successful reconciliation of energy security, economic growth and environmental sustainability is at the heart of the IEA and OECD's mission, both within and beyond the OECD family of twentyfive industrialised nations.

Energy is the largest source of anthropogenic CO2 emissions and therefore presents the largest sector for implementing responses to reduce emissions. IEA Ministers are fully engaged in finding the means to meet commitments made in their countries to stabilise or reduce greenhouse gas emissions from energy sources, recognising that each country must tailor its programme to national circumstances but present it in a transparent and comparable fashion alongside those of their fellow nations.

As of 1 May 1994, nineteen OECD Member countries have ratified the United Nations Framework Convention on Climate Change and two more have completed all but the formalities of ratification. A great deal of effort has since been devoted in OECD countries to establishing greenhouse gas emissions inventories and projections and to identifying policy measures to limit those emissions consistent with the commitments made in the Convention. Parties listed in Annex I of the Convention, which includes all members of the OECD, are charged with developing individual national plans to meet those commitments and most OECD countries have a deadline to file those plans with the Convention Secretariat later this year.

The IEA will publish a 220page book in just a few weeks time which surveys the climate change policy initiatives of all OECD countries except Mexico and gives six years of comparable energy and environment data for 1987 to 1992. [Climate Change Policy Initiatives1994 UPdate, Volume I, OECD Countries; IEA, Paris, June 1994.] Each OECD Member country has contributed to and endorsed its national country profile included in that volume, which is up to date through 1 May 1994. Thus, the publication serves as an authoritative source of information on the commitments made and policies identified by OECD Member countries to meet them, along with the key factors in the energy sector influencing those countries in establishing their positions. And, that is what I will summarise in these remarks today.

As of 1 May 1994, there were a total of 166 signatories and 69 Parties (including nineteen OECD Member countries1,2 and the EEC) to the Convention.

Specific commitments by Parties listed in Annex I to the FCCC

Limiting greenhouse gas emissions.

The principal commitment applying to Parties listed in Annex I of the Convention is the adoption of policies and measures on the mitigation of climate change, by limiting anthropogenic emissions of greenhouse gases and protecting and enhancing greenhouse gas sinks and reservoirs [Article 4.2(a)]. The Convention does not contain concrete targets with timetables for greenhouse gas emissions stabilisation to be undertaken by Annex I Parties. It specifies that these Parties recognise that the return by the end of the present decade to earlier levels of anthropogenic emissions of CO2 and other greenhouse gases not controlled under the Montreal Protocol would contribute to achieving the objective of the Convention. It furthermore states that Parties listed in Annex I shall communicate information on their policies and measures "with the aim of returning individually or jointly to their 1990 levels these anthropogenic emissions of carbon dioxide and other greenhouse gases not controlled by the Montreal Protocol" [Article 4.2(b)].

Commitments.

There is a wide diversity of approaches taken by OECD countries to meet their FCCC commitments. About half of them have adopted a target to stabilise and/or reduce anthropogenic emissions of CO2 by 2000 or 2005 at an earlier level. As the energy sector (including transport) is responsible for a major proportion of CO2 emissions (worldwide about three quarters of anthropogenic CO2 emissions come from the burning of fossil fuel), several countries have stated that their target only applies to CO2 emissions from the production and consumption of energy. Most countries with CO2 targets have chosen 1990 as their base year. Some, however, had adopted targets before that year and have thus adopted earlier base years. Finland did not adopt a base year at all, but will aim to stop growth in CO2 emissions by the end of the 1990s. France and Japan have taken a slightly different approach: they aim to stabilise CO2 emissions on a per capita basis. Finally, Spain and Ireland have announced that, given their level of economic development compared to that of other OECD countries, rather than stabilising CO2 emissions, they intend to limit growth in them.

The European Union (EU) has adopted a regional target to stabilise overall EU emissions of CO2 at 1990 levels by 2000. This target is designed to balance out the expected growth in emissions in some Community countries by reductions in emissions by other EU Members. Two EU Member states, Greece and Portugal, have not adopted a national target, but do fall under the EUwide agreement.

Six OECD countries (Australia, Canada, Iceland, the Netherlands, the United Kingdom and the United States) have announced their commitment to stabilise and/or reduce emissions of all greenhouse gases. To the extent these targets have been set within the framework of the Convention, they normally exclude gases which are already controlled under the Montreal Protocol. Some of these countries intend to stabilise and/or reduce the aggregate global warming potential of these gases.

This approach implies that emissions of, for instance, CO2 could remain above base year levels, as long as the equivalent global warming potential of that difference in CO2 emissions would be offset by reductions in emissions of other greenhouse gases. Others have taken a "gasbygas" approach and have set specific targets for various greenhouse gases individually.

The Convention does not specify whether the aim of returning to 1990 levels of anthropogenic emissions of CO2 and other greenhouse gases by Annex I Parties refers to net or gross emissions, i.e., whether or not the removal from the atmosphere of these emissions by sinks3 should be taken into account. Five OECD countries (Canada, Iceland, Italy, New Zealand and the United States) have explicitly stated that their target applies to net emissions of CO2 and/or other greenhouse gases, whereas 11 countries and the EU have made it clear that their targets apply to gross emissions.

The effect on total world emissions of the commitments by OECD countries to stabilise or reduce their CO2 emissions is likely to be limited, due to the expected growth in CO2 emissions from non-OECD countries. Even the ambitious commitments by OECD Member countries to stabilise or reduce emissions could be overshadowed by growth in emissions in the large, rapidly growing developing countries. As pointed out by the Chairman of the Intergovernmental Panel on Climate Change (IPCC) in his intervention to the INC at its ninth session (February 1994), "stabilisation of carbon dioxide emissions, the most important greenhouse gas emitted by man, by the developed countries, as is presently being aimed for, is only a very modest first step to reach a stabilisation of carbon dioxide concentrations", and, "even stabilising the total global emissions would not stabilise atmospheric concentrations for several hundred years".

Joint implementation.

Introducing the subject of global emission trends invites consideration of joint implementation. The Convention provides that Annex I Parties may implement climate change policies jointly with other Parties and may assist other Parties in contributing to the achievement of the objectives of the Convention. This concept of "joint implementation" is not defined, but one interpretation is that a country could receive credit towards its own emission objectives by reducing emissions or enhancing sinks in another country. The Convention requires the COP to take decisions on criteria for joint implementation.

While most OECD countries view the issue favourably, on the condition that criteria and guidelines are developed, they are divided as to whether or not joint implementation could apply to current commitments under the Convention. Most feel that joint implementation offers an attractive mechanism to meet the requirements of the Convention through costeffective measures that both reduce emissions and increase investment and efficiency in recipient countries. The key to resolving these disparate views remains to be found through future negotiation.

Despite the many difficult issues remaining with regard to joint implementation, there appears to be consensus on some points, namely that joint implementation should be separate from the implementation of the specific commitments by Annex II Parties regarding financial, technical and other support; that it should be additional to official development aid; and that no country should receive emissions credits until the COP has agreed on criteria.

IEA Ministers have discussed the issue of joint implementation in some detail. Although they recognise the issues which remain to be resolved, joint implementation was seen on the whole to be an essential element of any costeffective response to the global greenhouse gas emissions problem.

National communications.

Each Party listed in Annex I to the Convention is committed to communicate, within six months of the entry into force of the Convention for that Party and periodically thereafter, detailed information on its climate change policies and measures and their estimated effect on greenhouse gas emissions. Parties that had ratified the Convention by 21 March 1994 will have to submit their communications on or before 21 September 1994. Canada and the United Kingdom made their communications available to the INC at its ninth session, and indicated that those submissions were to be considered as fulfilling their commitment to communicate information under the Convention. Preliminary plans have been submitted at that and earlier INC sessions by the United States, Australia, Japan, Switzerland and the Netherlands, but these were not the "official" communications required under the Convention. Several other countries have also completed national action plans, but must still submit their official national communications.

The Convention itself provides little detail on the elements the communications by Annex I Parties should include. The INC adopted at its ninth session a set of guidelines for the preparation of first communications by Annex I Parties. The guidelines stipulate, inter alia, that:

What is the context for these national action plans by OECD countries? How tough is the job for OECD countries to stabilise their emissions, on whatever basis they have chosen, by 2000? Several indicative figures to put those issues in perspective are in~luded at the end of this paper. They are described below:

Table 1 spells out in a simplified matrix form the status of commitments of OECD countries on global climate change (up to 1 May 1994). As indicated in the text above, there is a variation among OECD countries in what exact commitment has been made, which gases and sectors are included in the commitments, which base year and which commitment year they are using, and whether these apply to net or gross emissions. This information is provided in the table, along with conditions or comments where necessary to make the entries more complete. Those interested in more details in this regard should consult the full IEA publication from which this table was drawn.

Tables 2 and 3 provide "Key Energy and CO2 Emissions Data for OECD Countries" in 1990 and in 1992. The data are based on IEA Energy Balances which are submitted annually to the IEA by Member governments as official statistics. The tables include total primary energy supply (TPES) requirements (column 1) and energyrelated CO2 emissions (column 3), along with four comparative statistical indicators, for OECD Europe, OECD North America, OECD Pacific and the total OECD. Taken together, the two tables show that aggregate OECD energyrelated CO2 emissions only went up by 0.6 per cent from 1990 to 1992 while the share of emissions among the three OECD regions shifted slightly over that period.

Table 1.Status of commitments of OECD countries on global climate change.


Country      Gases      Sectors    Action      Base   Commitment  Net or gross  Conditions/comments              
            included   included*               year      year       emissions                                    


Australia   NMP GHGs      All    Stabilisation 1988      2000          Not      Interim planning target          
                                               1988      2005       specified   conditional on:                  
                                 20%                                            "no-regrets" measures;         
                                 reduction                                      similar action by other major  
                                                                                GHG-producing countries                  

Austria       CO2         All    20%           1988      2005          Not      -                                
                                 reduction                          specified                                    

Belgium       CO2         All    5%            1990      2000          Not      -                                
                                 reduction                          specified                                    

Canada      CO2 and       All    Stabilisation 1990      2000     Net emission  Target is to stabilise the       
             other                                                              aggregate global warming         
            NMP GHGs                                                            potential of the gases           
                                                                                included.                        

Denmark       CO2         All    20%           1988      2005          Not      Target for the transport sector  
                                 reduction                          specified   alone is to stabilise CO2        
                                                                                emissions by 2005 and to         
                                                                                achieve a 25% reduction by       
                                                                                2030.                            

Finland       CO2       Energy   Stabilisation  -      End 1990s      Gross     -                                
                                                                    emissions                                    

France        CO2       Energy   Per capita     -        2000         Gross     Target is to stabilise           
                                 stabilisation                      emissions   emissions at below 2 metric      
                                                                                tons of carbon (equivalent to    
                                                                                7.3 metric tons of CO2) per      
capita per year by 2000.         

Germany       CO2       Energy   25-30%        1987      2005         Gross     25-30% reduction in CO2          
                                 reduction                          emissions   emissions is a target. There is  
                                                                                no official target for other     
                                                                                NMP GHGs, but Government is      
                                                                                striving to reduce the overall   
                                                                                warming potential of total GHG   
                                                                                emissions by 50% from 1987       
                                                                                levels by 2005.                  

Greece        CO2               (EU Agreement**)                                                                          

Iceland    All GHG's      All    Stabilise     1990      2000          Net      -                                
                                                                    emissions                                    

Ireland       CO2         All    Limitation    1990      2000         Gross     Net CO2 emissions are expected   
                                 to 20%                             emissions   to grow by 11% between 1990 and  
                                 growth                                         2000.                            

Italy         CO2         All    Stabilisation 1990      2000          Net      -                                
                                                                    emissions                                    

Japan         CO2         All    Per capita    1990      2000         Gross     The Government has also stated   
                                 stabilisation                      emissions   that efforts should be made to   
                                                                                stabilise total CO2 emissions    
                                                                                beyond 2000 at about the same    
                                                                                level as in 1990.                



Source: IEA, 1994.

Table 1 (continued). Status of commitments of OECD countries on global climate change.


Country        Gases     Sectors     Action     Base   Commitment  Net or gross  Conditions/comments             
             included    included               year      year       emissions                                   
*                                                                                    

Luxembourg      CO2        All    Stabilisation  1990      2000          Not      -                               
                                                 1990      2005       specified                                   
                                  20%                                                                            
                                  reduction                                                                      

Netherlands     CO2        All    Stabilisation 1989/90   1994/95       Gross    3% reduction, 5% reduction      
                                  3-5%          1989/90   2000         depending on international      
                                                                                 development and opportunities.
             All GHG's     All    20-25%        1989/90   2000          Gross    Gas-by-gas strategy.                                 
                                  reduction                           emissions                                            

New             CO2        All    Stabilisation 1990      2000          Net     Primary objective, the          
Zealand                                                              emissions   ultimate objective is to        
                                                                                 reduce CO2 emissions by 20%     
                                                                                 from 1990 levels by 2000        
                                                                                 conditional on "no-regrets"     
                                                                                 measures.                       

Norway          CO2        All    Stalilisation 1989      2000         Gross     Preliminary target.             
                                                                     emissions                                   

Portugal        CO2               (EU Agreement**)                                                                   

Spain           CO2       Energy  Limitation    1990+     2000          Not      -                               
                                  to 25% growth                      specified                                   

Sweden          CO2       Energy  Stabilisation 1990      2000         Gross     -                               
                                                1990   After 2000    emissions                                   
                                  Reduction                                                                      

Switzerlan      CO2       Energy  Stabilisation 1990      2000         Gross     -                               
d                                               1990   After 2000    emissions                                   
                                  Reduction                                                                      

Turkey                            (No target set)                                                                  

United         CO2,        All    Stabilisation 1990      2000         Gross     Gas-by-gas approach: specific   
Kingdom      methane.                                               emissions    targets are set for different   
            other major                                                          gases.                          
               GHGs                                                                                              

United       All GHGs      All    Stabilisation 1990      2000          Net      Target is to stabilise the      
States                                                              emissions    aggregate global warming        
                                                                                 potential of the gases          
                                                                                 included.                       

EU              CO2        All    Stabilisation 1990      2000        Gross     Target is for Union as a        
                                                                     emissions   whole.                          



NMP = Non-Montreal Protocol (refers to greenhouse gases other than those covered under the 1987 "Montreal Protocol on Substances that Deplete the Ozone Layer" and its subsequent Amendments i.e. greenhouse gases other than CPCs, HCFC, halons, carbon tetrachloride, and methyl chloroform).

GHSs = Greenhouse gases.

* Targets for the energy sector include emissions from energy use in transport, unless otherwise stated.

** "EU Agreement" means the country in question falls under the EU-wide target stated at the end of the table but has nor yet developed its own target.

Source: IEA Secretariat and country submissions.

Table 2. Climate change: Key energy and CO2 emissions data for OECD countries (1990).


                             TPES        TPES/GDP     Energy-relate  CO2/capita        CO2/GDP         % CO2 in   
                                                            d                                            OECD     
                                                           CO2                                                    
                             Mtoe      toe/1985 US$     emissions   t CO2/person    t CO2/1985 US$       (ex.     
                                           1000           (ex.                           1000          bunkers)   
                                                        bunkers)                                                  
                                                         Mt CO2                                                   

OECD Europe/EU               1215.41      0.402         3036.6          8.88               1.01        30.27 
OECD Europe/non-EU            202.53      0.409          380.7          4.28               0.77         3.77 
OECD Europe (sub-total)      1417.94      0.403         3437.3          7.94               0.98        34.03 

US                           1920.55      0.419         4869.4         19.48               1.06        48.21 
Canada                        211.51      0.528          433.1         16.28               1.08         4.29 
OECD North America           2132.06      0.428         5302.5         19.18               1.06        52.50 
(sub-total)                                                                                                       

Japan                         432.60      0.259         1067.2          8.64               0.64        10.57 
Australia+New Zealand         102.13      0.482          292.4         14.33               1.38         2.90 
OECD Pacific (sub-total)      534.73      0.284         1359.6          9.44               0.72        13.46 

OECD total                   4084.73      0.393        10099.4         11.83               0.97       100.00 



Table 3. Climate change: Key energy and CO2 emissions data for OECD countries (1992).


                             TPES        TPES/GDP     Energy-relate  CO2/capita        CO2/GDP         % CO2 in   
                                                            d                                            OECD     
                                                           CO2                                                    
                             Mtoe      toe/1985 US$     emissions   t CO2/person    t CO2/1985 US$       (ex.     
                                           1000           (ex.                           1000          bunkers)   
                                                        bunkers)                                                  
                                                         Mt CO2                                                   

OECD Europe/EU               1235.85      0.399          3026.4          8.72               0.98        29.76 
OECD Europe/non-EU            205.51      0.414           382.6          4.17               0.77         3.76 
OECD Europe (sub-total)      1441.35      0.401          3409.0          7.76               0.95        33.52 

US                           1984.12      0.427          4917.1         19.28               1.06        48.35 
Canada                        216.25      0.545           443.3         16.16               1.12         4.36 
OECD North America           2200.37      0.436          5360.4         18.98               1.06        52.71 
(sub-total)                                                                                                      

Japan                         451.08      0.256          1099.3          8.84               0.62        10.81 
Australia+New Zealand         103.47      0.481           300.3         14.34               1.40         2.95 
OECD Pacific (sub-total)      554.55      0.280          1399.6          9.63               0.71        13.76 
OECD total                   4196.27      0.395         10169.0         11.73               0.96       100.00 



These aggregate data mask, however, a very wide range of individual OECD country experiences in changing energy requirements and CO2 emissions between the base year and 1992. Indeed, the countryspecific data (found in the full IEA publication) show that seven OECD countries saw their emissions go down over this period (by an average of 5.25 per cent), while the remaining seventeen countries had rising emission levels (by an average of +4.8 per cent). The actual emissions decreases ranged from 1.0 per cent in a small country to 11.7 per cent in a large country, while the actual emissions increases ranged from +1.0 per cent in the largest emitting country to +13.7 per cent in a small country.

The reasons for these wide variations among OECD countries over such a brief period are numerous, including varying rates of economic growth or contraction, drought and/or temperature conditions and other unique or anomalous events which affect the size or composition of national energy demand and supply. The extent to which such yeartoyear changes have occurred since 1987 is shown in an indicative manner in Figure 1 entitled "OECD Countries: % Change in CO2" The intent of this graph is not to plot individual countries but to show the regular occurrence of up and down variations in yeartoyear national emission levels in the OECD. The aggregate average OECD change from yeartoyear is shown by the straight line cutting across the bars in each of the five periods in the diagram. What this suggests is that the twoyear trend shown in the aggregate data previously described should not be extrapolated in a straight line fashion, nor should those average data be used for detailed analysis without disaggregation to understand what is happening in each country in the group.

Figure 1. OECD countries: % change in CO2. CO2 emissions from energy (ex. bunkers).

Clearly, these data help illustrate the wide variety of circumstances that individual OECD countries face in confronting energyrelated greenhouse gas emissions, which is very important to recognise since some observers may be prone to look at the industrialised countries as a block with roughly identical characteristics which govern their energy sectors and climate change response options in that sector.

Recognising the challenge of meeting FCCC commitments and the differences which exist among OECD countries in responding to that challenge, IEA Ministers met informally to discuss the problem of climate change in Interlaken, Switzerland on the day that the FCCC entered into force (21 March 1994).

The choice of energy and environment primarily the problem of energyrelated greenhouse gas emissions as the topic for consideration at the informal IEA meeting in Interlaken was very timely, given the deadlines that OECD countries share this year and beyond under the Framework Convention and the commitments they have made to meet the goals stated in the Convention. The energy sector will be a principal target of policies designed to meet those commitments. And, beyond the challenge of stabilising emissions by the year 2000, the international community is already discussing further post2000 emission reduction possibilities.

It was understood in the IEA Ministers' discussion that policy responses should fit within the "three E's" of energy security, environmental sustainability and economic growth. The comments at Interlaken suggested a consensus view that there should be a mix of policy responses to climate change among OECD countries according to national circumstances not one uniform set of policies and that all policy instruments should be on the table for consideration.

Limiting greenhouse gas emissions in the residential and transport sectors was seen to be especially difficult since they are growing more rapidly and are closest to the enduse of the consumer and therefore most difficult to influence through central government policy actions.

The view was shared that policy responses should operate in the context of free and open markets, with no new restrictions to trade to be erected in the name of the environment. It was also felt that while OECD countries have to deliver first on the Framework Convention's goals, industrialised countries should also reach out at the same time to build bridges with nonOECD countries and improve cooperation with them, as well as that with industry and consumers.

To assist in that process, IEA Ministers saw a critical need for transparency and comparability among various countries' action plans and, in this regard, it was seen as a very important task for the IEA to track and analyze country responses, to promote transparency and to assist in the development of methodologies for assessing the comparability of effects of measures adopted.

Finally, IEA Ministers encouraged that the results of IEA and OECD work continue to be fed, as appropriate, into the IPCC and the INC processes to help move them forward and to support the overall implementation of the Framework Convention.

I hope this paper has helped explain where exactly OECD countries stand in the climate change process, and I would commend to the participants of this conference the full IEA publication, Climate Change Policy Initiatives 1994 Update, Volume I, OECD Member Countries, which we intend to release publicly before the end of June 1994.

1. United States, Canada, Australia, Japan, Iceland, Sweden, Norway, New Zealand, United Kingdom, Germany, Switzerland, Netherlands, Denmark, Portugal, Spain, Austria, France and Italy.

2. This number excludes Mexico, which was invited to join the OECD on 14th April 1994 but has not yet completed the formalities of membership. Mexico ratified the Convention in March 1993.

3. A "sink" is defined in the Convention as ×any process or activity which removes a greenhouse gas, an aerosol or a precursor of a greenhouse gas from the atmosphere (article 1).


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