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DISCUSSION BRIEF

’Fair shares’ and intended nationally determined contributions: What can we learn from an equity review?

In the lead-up to the United Nations Cli- mate Change Conference in Lima (COP 20), Parties have begun to offer previews of the contributions to global mitigation they intend to make under the compre- hensive climate agreement that is to be completed next year in Paris.

The European Union has pledged to re- duce its emissions by at least 40% below 1990 levels by 2030; the United States is aiming for a 26–28% cut from 2005 levels by 2025; China has said it will have its emissions peak around 2030, and it will cap coal use in 2020.

In the coming months, Parties will begin formalizing these ambitions by com- municating their intended nationally determined contributions (INDCs) to the United Nations Framework Convention on Climate Change (UNFCCC). As their name suggests, INDCs are based not on a top-down determination of how much ac- tion is required by science and how that effort should be allocated among countries, but rather on what the Parties themselves are currently willing to offer. Many have called for INDCs to be formally reviewed, to ensure all are do- ing their fair share, and that collective ambition is high enough to match the agreed global objective of keeping warming below 2°C. Deciding what, if any, review process to set up will be a key agenda item at the Lima conference.

This brief, which draws on the EcoEquity and SEI report Na- tional Fair Shares: The Mitigation Gap – Domestic Action and International Support,1 argues that much can be learned from a systematic ex ante assessment or ex post review of national con- tributions, and demonstrates that even an open-ended approach that encompasses a broad range of fairness perspectives can yield clear and telling results.

A fundamental premise of our report is that equity matters. This is because equity is the key to cooperation, and cooperation is indispensable in solving any commons problem. And the climate crisis is notably the most pressing commons problem human- kind has faced. As is stressed in the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report, “outcomes seen as equitable can lead to more effective cooperation”.2

1 See: http://www.sei-international.org/publications?pid=2627.

2 IPCC (2014). Summary for Policymakers. In Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. O. Edenhofer, R. Pichs- Madruga, Y. Sokona, E. Farahani, S. Kadner, et al. (eds.). Cambridge University Press, Cambridge, UK, and New York. http://www.mitigation2014.org. p.5.

A simple framework for examining ‘fair shares’

Equity is a core principle of the UNFCCC, embodied in its language of “common but differentiated responsibilities and respective capabilities”. This report presents a gen- eral, straightforward approach for examining the problem of national fair shares in a global climate effort, show- ing how a broad range of interpretations of the Conven- tion’s equity principles can be used to derive national “fair shares” of the global mitigation effort through a com- mon analytical framework.

This framework has been made available as a simple, easy-to-use online tool called the Climate Equity Refer- ence Calculator. Users can select “equity settings” relating to the definition of responsibility and capacity, which are used along with standard demographic and macroeconomic indicators (e.g., national population, GDP and carbon-inten- sity) to calculate implied national “fair shares” of the global mitigation effort.

Whatever settings are chosen, they are applied to all coun- tries, in a dynamic fashion that reflects the changing global economy. For each country, a “Responsibility and Capacity Indicator” (RCI) is calculated, based on the selected settings, and the country’s fair share of the global mitigation effort in each year is determined by its share of global RCI, Below we provide illustrative results for the EU-28, China, the U.S. and India, using a range of equity settings. These cases exemplify a notable pattern: in general, a nation’s fair share

A screen shot of the Climate Equity Reference Calculator, used to produce the analysis presented here.

of the global mitigation effort can be quite different from its domestic mitigation potential.3

• Countries with relatively high capacity and responsibility (i.e. those that are wealthier and higher-emitting) are gener- ally found to have fair shares that greatly exceed their own domestic mitigation potential; therefore, to fulfil their entire fair share, they would need to provide financial and techno- logical support for mitigation in other countries. For these countries – “Support Contributors” – national fair shares are presented as a combination of domestic and internationally supported mitigation.

• Conversely, countries with relatively low capacity and respon- sibility (i.e. those who are poorer and lower-emitting) are able to fulfil their fair share entirely through mitigation within their own borders. In order for the global mitigation objective to be achieved, it would be necessary for them to use international support to undertake mitigation in excess of their own fair shares, and by so doing exploit their full national mitigation potential. For these countries – “Support Recipients” – the national fair share is reported along with the ad- ditional mitigation that could be undertaken, assum- ing sufficient international support.

It is worth noting that nations are not taken to be “Sup- port Contributors” or “Support Recipients” in any static or absolute sense; the categories follow from users’ choice of equity settings.

Ambition and equity settings Before we present our four illustrative case studies, we should summarize the choices involved in terms of ambition and equity settings:

Level of ambition: We consider three mitigation pathways reflecting different levels of global effort, and thus different risk of exceeding 2°C: a “Strong 2°C pathway”, a “Weak 2°C pathway”, and the G8’s proposed 2°C pathway. These correspond to a likelihood of keeping warming below 2°C that is greater than 67%, somewhat less than 50%, and less than 33%, respectively, according to the greenhouse gas budgets reported in the IPCC Fifth Assessment Report.

Equity settings: We present three possible settings related to capacity, and three relating to responsibility:

• Capacity: Just as income is typically considered in a progressive manner in national tax policy, it can be consid- ered in a progressive manner for the purposes of defining capacity. Here, we examine three capacity settings that differ widely in how progressively they calculate capacity from income: the “No Progressivity” setting in which all income within a nation counts toward its capacity, with each dollar of income – even for the poorest of the world’s people – counting as much as each dollar of the world’s richest; the “Weak Progressivity” setting sets a low income threshold ($20/day in purchasing power parity terms) as a “develop- ment threshold”, below which individual income is exempt-

3 By “mitigation potential,” we mean not only techno-economic potential (efficiency, low-carbon energy technology and so on) but also emissions reductions associated with consumption-related and lifestyle changes. In the report, we consider three different indicative algorithms for estimating national mitigation potential. In this brief, for clarity and without substantively altering the conclusions, present results for only one of them.

ed from the calculation of capacity; the “Strong Progressivi- ty” setting also sets a “luxury” threshold of US$50,000, with annual income above that level counting more than income between the two thresholds.

• Responsibility: As is generally done in analyses of equitable effort-sharing, responsibility is defined in terms of a country’s cumulative emissions. We examine three options for setting the initial year from which historic emissions are included: since 1850 – the time period over which carbon dioxide emis- sions from fossil fuels have been significant, since 1950 – a time period corresponding to the typical useful lifetimes of infrastructure, and since 1990 – the time period over which a global climate regime has been under negotiation.

While nine possible cases can be composed by combining the three capacity settings and three responsibility settings, we group these into three cases that more simply capture the broad “equity band” spanned by the possible settings, as summarized in Figure 1.

More settings can be explored with the online Equity Refer- ence Framework Calculator, such as the choice of production or consumption accounting, the relative weighting of capac- ity and responsibility, and the choice of greenhouse gases, among others. However, we focus here on the “equity band” presented above as it captures a meaningfully broad spectrum of perspectives on two hotly debated issues in climate equity – the level of progressivity that is appropriate to a definition of national capacity, and the appropriate time frame to account for historical responsibility.

National results: four examples The United States The U.S. is a prime example of a high-capacity, high-respon- sibility country, and across the broad range of equity settings presented here, its share of global mitigation is so large that it could not plausibly achieve it through domestic action alone. As shown in Table 2, even under the Low Equity setting, the U.S. would have to reduce its emissions by 90% relative to 1990 levels; under the High Equity setting, it would need more than a 200% reduction relative to 1990.

Thus, we estimate that along with roughly 4 billion tonnes CO2e of domestic emission reductions in 2025, the U.S. fair share would require supporting mitigation abroad in the range of 2.7–10.3 billion tonnes, depending on the equity setting. Clearly,

Figure 1. ?????????????????

Equity settings

Low Equity Medium Equity High Equity

Capacity: No progressivity

Capacity: Weak progressivity

Capacity: Strong progressivity

Responsibility: Since 1990

Responsibility: Since 1950

Responsibility: Since 1850

Note: While we refer to these combinations as Low, Medium, and High Equity Settings, these references do not imply that the High Equity Settings case is objectively “more equitable” than Low Equity Settings, as this is ultimately a normative judgment. Rather, these references simply refer to the fact that the High Equity Settings case is the most progressive and includes the most historical responsibility, while the Low Equity Settings case is the least progressive and includes the least historical responsibility. This range of settings typically gives the widest range of results for each country, and reflects an instructively broad “equity band” for each country.

Table 1: Capacity and responsibility settings used for this analysis

United States

Low Equity Settings Middle Equity Settings High Equity Settings

Projected % of global RCI in 2025

19.3% 29.7% 41.0%

Support Contributor or Recipient

Support Contributor Support Contributor Support Contributor

Mt CO 2 e

% reduction relative to: Mt CO

2 e

% reduction relative to: Mt CO

2 e

% reduction relative to:

1990 2013 2025 1990 2013 2025 1990 2013 2025

Total mitigation ‘fair share’

6,700 -90% -91% -92% 10,400 -149% -146% -141% 14,300 -212% -207% -195%

Domestic mitigation 4,000 -46% -49% -54% 4,000 -46% -49% -54% 4,000 -46% -49% -54%

Internationally supported mitigation

2,700 -44% -42% -37% 6,400 -102% -98% -87% 10,300 -166% -158% -141%

Table 2: Calculating the United States’ fair share of global mitigation effort under different equity settings and a strong 2°C pathway.

China

Low Equity Settings Middle Equity Settings High Equity Settings

Projected % of global RCI in 2025

17.3% 11.5% 8.8%

Support Contributor or Recipient

Support Recipient Support Recipient Support Recipient

Mt CO 2 e

% reduction relative to: Mt CO

2 e

% reduction relative to: Mt CO

2 e

% reduction relative to:

1990 2013 2025 1990 2013 2025 1990 2013 2025

Mitigation ‘fair share’ 6,000 -319% +12% -31% 4,000 -382% +29% -20% 3,050 -410% +37% -16%

Total domestic mitigation

10,700 -176% -49% -54% 10,700 -176% +26% -54% 10,700 -176% -26% -54%

Internationally supported mitigation

4,700 -143% -42% -24% 6,700 -206% -55% -34% 7,650 -234% -63% -39%

Table 3: Calculating China’s fair share of global mitigation effort under different equity settings and a strong 2°C pathway.

EU28

Low Equity Settings Middle Equity Settings High Equity Settings

Projected % of global RCI in 2025

17.0% 22.4% 22.8%

Support Contributor or Recipient

Support Contributor Support Contributor Support Contributor

Mt CO 2 e

% reduction relative to: Mt CO

2 e

% reduction relative to: Mt CO

2 e

% reduction relative to:

1990 2013 2025 1990 2013 2025 1990 2013 2025

Total mitigation ‘fair share’

5,900 -114% +117% -115% 7,800 -148% -159% -152% 7,900 -150% -162% -155%

Domestic mitigation 2,800 -58% -48% -54% 2,800 -58% -48% -54% 2,800 -58% -48% -54%

Internationally supported mitigation

3,100 -56% -69% -61% 5,000 -89% -111% -98% 5,150 -91% -114% -100%

Table 4: Calculating the EU-28’s fair share of global mitigation effort under different equity settings and a strong 2°C pathway.

for the United States, a strong commitment of international financial and technological support is as important as ambitious domestic mitigation action.

China Table 2 shows the results for China. Its fair share is highest when the Low Equity settings are applied, and lowest with High Eq- uity settings. Not surprisingly, this is the opposite of the United States case, since China is projected to still be poor in compari- son with the U.S. in 2025, with roughly one-third the per capita income (on a purchasing power parity basis).

However, as the world’s top greenhouse gas emitter today, China has very substantial domestic mitigation potential, exceeding

its fair share of the global effort under all equity settings. This means that the key question here is less how much mitigation should occur in China, but what share of it should be paid for by China, and what share by international supporters.

The European Union Like the United States, the EU-28 has a greater share of the global mitigation effort than it can plausibly achieve through domestic action alone – a more than 100% reduction relative to 1990 levels by 2025 regardless of the equity case. Thus, along with roughly 2.8 billion tonnes CO2e of domestic mitigation in 2025, the EU-28 would need to support 3.1–5.1 billion tonnes CO2e of mitigation in other countries to fulfil its fair share, depending on the equity setting, as shown in Table 4.

plications for the UNFCCC process. Tables 2-5 show results only for the “strong 2°C” pathway; Figure 2 shows global results under all three emissions pathways, under both the Low Equity and High Equity settings.

Notably, for all pathways, the great majority of reductions occur in Support Recipient countries. While these developing countries have less capacity and responsibility, they are also where most of the world’s emissions now arise, and where energy needs – and hence emissions – are growing fastest. Consequently, this is where most mitigation action must take place – roughly three-quarters of it in 2025.

However, the fair share of the mitigation effort is distributed very differently. The countries that provide support – a group that overlaps very heavily with Annex 2 of the UNFCCC (Annex 1 countries that are also members of the Organisation of Economic Co-operation and Development) – have roughly

India Table 4 shows the results for India. As with China, the country’s fair share of the global mitigation effort is much higher under the Low Equity settings than with either the Middle or High Equity settings. India’s fair share is an even smaller portion of its domestic mitigation potential than China’s. Even under the Low Equity setting, about 40% of mitigation in India would have to be internationally sup- ported; under the Middle and High Equity settings, that share jumps to 92% and 99%, respectively. This is because India is projected to have a poor majority population in 2025, with very low incomes, but the Low Equity setting counts all the income of even the poorest individuals in the calculation of national capacity.

A global perspective Our broader analysis shows that the patterns that we see in these four examples also apply globally, with significant im-

Figure 2: Global allocation of mitigation and finance under three mitigation pathways (Strong 2°C, Weak 2°C, G8) and two equity cases (Low and High Equity settings).

Baseline emissions

Self-financed mitigation Support Contributors

International financed mitigation

Self-financed mitigation Support Recipients

Strong 20C pathway

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Strong 20C pathway

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G8 pathway

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half the fair share of the effort in the Low Equity case, and three-quarters in the High Equity case.

This means that much of the mitigation will need to take place in developing countries, with financial support from developed countries. In 2025, between one-third (in the Low Equity case) and two-thirds (in the High Equity case) of mitigation in devel- oping countries is internationally financed.

Our analysis shows that when key choices related to the core UNFCCC equity principles are specified, it is possible to quantify national “fair shares” meaningfully. Even a broad range of equity perspectives can be translated into an “equity band” for each country given a global mitigation pathway, and they yield useful insights into the necessary scale of both self-funded domestic mitigation and internationally supported mitigation. In the context of the INDCs, our analysis provides a means to sys- tematically review each Party’s proposed contribution relative to the requirements of equity and science.

One can also assess any country’s INDC by asking what overall global ambition level it can plausibly be considered a fair share of. One can derive this “ambition band” by assuming that all other countries make “comparable efforts” by doing their fair share according to the same equity assumptions.

Table 6 illustrates the latter approach by way of the EU’s 40% target for 2030. As shown in Table 2 earlier, under the High Equity setting, the EU’s fair share of global effort is 22% (and

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High Equity Settings Low Equity Settings

Fair share (%)

Mitigation (GtCO

2 e)

Fair share (%)

Mitigation (GtCO

2 e)

EU’s INDC 22% 2.0 16% 2.0

Rest of World 78% 7.1 84% 10.5

Total mitigation 100% 9.1 100% 12.5

G8 pathway 25.3 Gt CO 2 e

Weak 2°C pathway

37.7 Gt CO 2 e

Strong 2°C pathway

46.7 Gt CO 2 e

Table 6: Assessing the EU’s proposed contribution under the Paris deal, by inferring the global mitigation effort of which it is the EU’s fair share.

Figure 3: Global emissions implied in the EU 28’s proposed contribution, compared with 2° pathways The red band represents the range of global emissions that would be achieved if the EU 28’s proposed contribution were to be matched by comparable efforts by all other countries. The top of the band assumes the High Equity Settings case (where the EU’s proposed contribution amounts to 22% of the global effort) and the bottom of the band assumes the Low Equity Settings case (where the EU’s contribution amounts to 16% of the global effort). The three blue lines show the G8, Weak 2°C, and Strong 2°C pathways, for comparison.

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Baseline emissions

Global equivalent share, high equity settings

Ambition band

Global equivalent share, low equity settings

G8 pathway

Weak 2C pathway

Strong 20C pathway

Table 5: Calculating India’s fair share of global mitigation effort under different equity settings and a strong 2°C pathway.

India

Low equity settings Middle equity settings High equity settings

Projected % of global RCI in 2025

4.6% 0.6% 0.1%

Support Contributor or Recipient

Support Recipient Support Recipient Support Recipient

Mt CO 2 e

% reduction relative to: Mt CO

2 e

% reduction relative to: Mt CO

2 e

% reduction relative to:

1990 2013 2025 1990 2013 2025 1990 2013 2025

Mitigation ‘fair share’ 1,600 +212% +5% -32% 215 +341% +48% -4% 21 +359% +54% -0.4%

Total domestic mitigation

2,700 +111% -29% -54% 2,700 +111% -29% -54% 2,700 +111% -29% -54%

Internationally supported mitigation

1,100 -101% -34% -22% 2,485 -231% -77% -50% 2,679 -249% -83% -54%

Author contact: Sivan Kartha [email protected] +1(617) 627 3786 x. 5# Media contact: Marion Davis [email protected]

sei-international.org 2014

Twitter: @SEIresearch, @SEIclimate

Published by: Stockholm Environment Institute U.S. Center 11 Curtis Avenue Somerville, MA 02144 USA Tel: +1 617 627 3786

the rest of the world’s, 78%), and under the Low Equity setting, it is 16% (and the rest of the world’s, 84%).

We estimate that the EU’s INDC requires roughly 2 billion tonnes CO2e of mitigation effort below the EU’s projected 2030 baseline. If other countries made comparable efforts, under the High Equity setting, their mitigation would amount to 7.1 bil- lion tonnes CO2e, and 10.5 billion tonnes CO2e under the Low Equity setting.4 Adding this to the EU’s contribution, the total global ambition would amount to 9.1–12.5 billion tonnes CO2e in 2030. This would fall far short of all three pathways consid- ered here, which require 25–47 billion tonnes CO2e.

The reason for the shortfall is simply that the EU’s pledge is only a small portion of its fair share of global mitigation, even under the Low Equity setting, and even assuming the relatively low scale of mitigation required by the G8 pathway. (The EU’s 2 billion tonnes CO2e would be less than 8% of the 25.3 billion tonnes CO2e required for the relatively lax G8 pathway.)

For the EU’s pledge to be consistent with a 2°C pathway, one of two things would have to occur. First, the EU’s fair share could be found to be considerably smaller even than the 16% that we have calculated in the Low Equity case, implying some “fair shares” arrangement that is actually regressive, in essence requiring poor countries to contribute more per dollar of income to the global effort than do the richer countries. Second, and more plausibly, the EU’s pledged domestic mitigation could be supplemented by a strong commitment of international mitiga- tion support. Given the small size of the EU’s pledged domestic reductions, this support would need to be quite large.

Conclusion As the climate negotiations approach their Paris milestone, it is necessary to remember that the climate crisis is fundamen- tally a global commons crisis, and to appreciate exactly what this means. Simply stated, commons problems can be solved, but only when each party sees that the others are doing their fair share, or at least making their best effort to do so.

The goal of our analysis was to show that the fair-shares discus- sion can be more than a sterile and frustrating battle of opinions. To that end, we charted out a broad range of fair-share perspec- tives, and derived a plausible range of fair shares for countries. While these “equity bands” are in some ways quite broad, they are narrow enough to yield clear conclusions about countries’ pledged efforts. In particular, they are narrow enough to tell us if a given nation’s contribution is even remotely consistent with the demands of science and equity, and whether it marks that nation as a leader or a laggard.

The equity bands also show us that many countries’ fair shares are much larger than their plausible domestic mitigation, and thus that their contributions will inevitably be judged on the basis of both their domestic mitigation and international support.

4 Using the shares given above, 78%/22% x 2 billion tonnes CO 2 e = 7.1

billion tonnes CO 2 e; and 84%/16% x 2 billion tonnes CO

2 e = 10.5 billion

tonnes CO 2 e.

Countries must be as transparent about their international sup- port as they are about their domestic targets. Those that are not will not be trusted to be doing their fair share.

Finally, the equity bands tell us whether a country’s contribu- tion is even consistent with its own stated global goal, such as 2°C. When a country tables a national contribution (including its financial contribution, whether as part of its INDC or not), it is participating in a kind of ad hoc negotiation in which that contribution is read as an open declaration, and as an invitation to work toward an overall level of ambition.

Equipped with a range of plausible fair shares – an equity band – any national pledge can be translated into an “ambition band” that reveals that country’s de facto global goal. In a commons, all we can expect is that others will act in rough proportion to our own effort. Which is why, when a country tables a contribu- tion, it is implicitly voting for a particular future.

National contributions matter, and a systematic review can provide crucial insights about them. The question in Lima is whether the Parties will leave this task to civil society, or em- brace it as a crucial task for themselves.

This discussion brief is based on the EcoEquity and SEI report Nation- al fair shares: The mitigation gap – domestic action and international support, by Tom Athanasiou, Sivan Kartha and Paul Baer, available at: http://www.sei-international.org/publications?pid=2627.

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