Common Resources

Progress made Toward International Climate Treaty

From March 29 to April 8, diplomats met in Bonn, Germany to prepare for the COP-15 conference in December that is to decide where international climate policy will go from here.

The current agreement, the Kyoto Protocol, expires in 2012. Scientific evidence indicates that the process of global warming is moving more rapidly than most models had predicted and this acceleration is putting pressure on negotiators.

At Bonn two working groups considered the broad range of technical, financial and legal issues that a new climate treaty will raise. The working groups will reconvene in June in the same location.

Read More

Former RFF Scholar Outlines Treasury Role in Cap and Trade

Treasury Department Deputy Assistant Secretary for Energy and Environment William Pizer said Wednesday his office will play a critical role in designing a domestic emissions trading system, according to Greenwire’s Nathanial Gronewold.

Pizer, a former RFF senior fellow, told a carbon market conference in Washington D.C. the United States will learn from the mistakes of the European Union’s Emissions Trading Scheme as it structures its own system.

From Greenwire:

While the European Union should be credited for taking the initiative and for making adjustments and enhancements, Pizer said, crafters of the trading scheme should have thought “a little bit more about design.”

At the start of the E.U. program, Brussels grossly overallocated credits to polluters, causing the price of emission allowances to plunge to almost zero before tighter allocations and auctioning of pollution permits were phased in.

Assessing Future Climate Risk

Much of the dispute among economists over whether moderate or aggressive action to reduce greenhouse gases is warranted depends on different views about how we should discount the global warming damages to future generations from current emissions.

However, as discussed in this Weekly Policy Commentary by Dallas Burtraw and Thomas Sterner, if the value of environmental resources potentially at risk from climate change is rising over time relative to the value of ordinary market consumption, this effectively means that the future, nonmarket impacts of climate change should be discounted at a lower rate. Accounting for this possibility increases the likelihood that more aggressive near-term actions to cut emissions are justifiable on economic grounds.