Climate and Energy Governance for a Sustainable Future 9811998248, 9789811998249

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Climate Change Management

Rafael Leal-Arcas   Editor

Climate and Energy Governance for a Sustainable Future

Climate Change Management Series Editor Walter Leal Filho, International Climate Change Information and Research Programme, Hamburg University of Applied Sciences, Hamburg, Germany

The aim of this book series is to provide an authoritative source of information on climate change management, with an emphasis on projects, case studies and practical initiatives – all of which may help to address a problem with a global scope, but the impacts of which are mostly local. As the world actively seeks ways to cope with the effects of climate change and global warming, such as floods, droughts, rising sea levels and landscape changes, there is a vital need for reliable information and data to support the efforts pursued by local governments, NGOs and other organizations to address the problems associated with climate change. This series welcomes monographs and contributed volumes written for an academic and professional audience, as well as peer-reviewed conference proceedings. Relevant topics include but are not limited to water conservation, disaster prevention and management, and agriculture, as well as regional studies and documentation of trends. Thanks to its interdisciplinary focus, the series aims to concretely contribute to a better understanding of the state-of-the-art of climate change adaptation, and of the tools with which it can be implemented on the ground. Notes on the quality assurance and peer review of this publication Prior to publication, the quality of the works published in this series is double blind reviewed by external referees appointed by the editor. The referees are not aware of the author’s name when performing the review; the referees’ names are not disclosed.

Rafael Leal-Arcas Editor

Climate and Energy Governance for a Sustainable Future

Editor Rafael Leal-Arcas Alfaisal University Riyadh, Saudi Arabia

ISSN 1610-2002 ISSN 1610-2010 (electronic) Climate Change Management ISBN 978-981-19-8345-0 ISBN 978-981-19-8346-7 (eBook) https://doi.org/10.1007/978-981-19-8346-7 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Introduction

This book is divided into three parts and 19 chapters. Part I (Chaps. 1–4) sets the scene of the book. It provides an analysis of the Paris Agreement on Climate Change, examines COP26, and questions the political process in the USA for the creation of policy for meaningful greenhouse gas emissions reductions. Part II (Chaps. 5–12) explores various ways in which one can effectively mitigate climate change. It does so by providing an analysis of carbon pricing, the development of specific green energy technologies to promote economic prosperity, and an analysis of electric vehicles and other elements of electrification in areas with carbon-intensive electricity supply. Part III (Chaps. 13–19) analyses the international dimension of energy governance (both regional and global) and climate action. It provides an analysis of the challenges faced by small island developing states, least-developed countries, and other vulnerable places. It also offers an analysis of the prospects for a European Energy Union and explores why energy security and decarbonisation are so important. Lastly, it explores global energy governance and how its fragmentation can be reduced.

Part I: Setting the Scene Chapter 1, by Astrid Malm, argues that climate change is a serious issue in need of serious action. At present, the climate is changing faster than at any point in the history of modern civilisation. The rising average temperature gives rise to an increase in the frequency, intensity, and duration of weather extremes, as well as other environmental changes. In 2015, history was written through the adoption of the Paris Climate Change Agreement—an international treaty aimed at strengthening the global response to the threat of climate change. The Agreement was received with enthusiasm, and today, nearly seven years later, it can be questioned whether the reaction was warranted. This chapter aims to assess whether the Paris Agreement changed the trajectory of the global response to the build-up of greenhouse gas emissions. The conclusion reached is that, although it is too soon to make any firm predictions, such an effect cannot yet be ascertained. For the Agreement to be successful, v

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it needs to be legally binding, it must demand more ambitious contributions from parties, and subnational leaders and companies have to be given the opportunity to formally commit to the Agreement. Seeing to the difficulties associated with international climate change agreements, alternative approaches, like climate clubs and influencing the general public, should also be explored. The chapter by Nicole Ng Ning Xuan explores whether the Conference of the Parties (COP) 26 was critical for the implementation of the 2015 Paris Agreement. Adopted at COP21, Article 2 of the Paris Agreement seeks to limit increase in global average temperature to well below 2 °C, preferably to 1.5 °C, compared to preindustrial levels (“the goal”). This chapter focuses on how COP26, the fifth COP since COP21, was potentially critical for the Paris Agreement’s implementation in four vital areas—(a) ambition, (b) coal, (c) finance, and (d) the Paris Rulebook—and how it found some wins and losses in these aspects. The chapter then focuses on Singapore and argues that the Singaporean national climate plan falls short of the ambitions that Singapore ought to have. Chapter 2 proposes that a collaboration with Indonesia and the Association of South-East Asian Nations (ASEAN) to develop the production of solar energy would not only improve climate mitigation efforts critical for the goal but also create better energy security for the region. Finally, this chapter argues that, for countries to meet the expectations of COPs, two underlying issues must be addressed. First, a dispute resolution and enforcement mechanism by way of an international instrument like the World Trade Organization should be implemented in climate agreements. Second, all levels of society must understand that addressing climate change is not about saving the planet, but saving ourselves. Chapter 3, by Daryl Teo Yu Yang, argues that the most pertinent issue humanity faces today is climate change. Nations have recognised this and have convened and debated at length. Many treaties have been signed, of which the most current and important is the Paris Agreement on Climate Change. Adopted in 2015 and entered into force on 4th of November 2016, the Paris Agreement represents a landmark in climate change processes. The Agreement was the first legal instrument where nations agreed on undertaking ambitious efforts to combat and adapt to climate change. However, substantive portions of the Paris Agreement were not concretised. In the following six years, five COPs have taken place, with the most recent being COP 26, held in Glasgow in November 2021. After COP 26, the Paris Agreement is finally fully operational. While compromises on many issues have been reached, upon closer inspection, glaring loopholes and gaps still exist within the Paris Agreement. In particular, the existence of loopholes and issues found in Article 6 of the Paris Agreement on Climate Change could potentially undermine its implementation. Separately, the failure to provide vulnerable nations with climate financing and the lack of strong commitments promised by nations undermine the effectiveness of the Paris Agreement. This chapter discusses the issues present and calls for greater action to be taken by nations to curb climate change. Chapter 4, by Samuel Wong, argues that today, greenhouse gas (“GHG”) emissions continue to be the main perpetrator of climate change. The United States of America (the “USA”) is historically a significant contributor to global GHG emissions, and its participation in international agreements is crucial for the agreements’

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success. However, the author observes that the domestic processes within the USA’s political sphere prevent policy for meaningful GHG emissions reductions from materialising. The problem is twofold. First, the USA’s executive processes are inconsistent. Second, the USA’s congressional processes are systemically deficient and experiences strong economic interests underpinning the vote of members. Cumulatively, these political processes prevent policy targeted at reducing GHG emissions from materialising. To advance a major climate change initiative, solidifying the USA’s stance to climate change, the author puts forth three suggestions: (1) an establishment of an independent climate change committee within the USA; (2) a government spearheaded campaigned targeted at changing public perception of climate change; and (3) the USA’s entry into a “climate club”.

Part II: How to Move Forward Effectively The chapter by Brian Sim is about carbon pricing. Carbon pricing is one solution that governments use to tackle climate change. It puts a price on carbon, which enables the market to internalise the negative externality caused by carbon-emitting actions. The result is that such harmful actions are reduced due to the higher price charged. Structuring carbon pricing policies can be complicated, though. Several problematic questions come to mind: What form should the carbon policy take? What price should be charged? Should the tax be imposed upstream or downstream? What should governments do with the carbon revenue they receive? Will there be carbon leakage further down the road? What about existing policies that subsidise the use of fossil fuels? Chapter 5 examines these seven cumbersome areas and provides possible solutions to achieve a good carbon pricing policy. It is hoped that carbon policies will not only be effective in mitigating climate change but also equitable and progressive for citizens, which enable political support for the policy, making it more feasible to implement. The chapter by Masood Jaan explores the possibility of punitive taxation on beef as a carbon (and carbon-equivalent) pricing policy imposed by a group of high beef-consumption and low beef-production countries. Targeting an industry that has concentrated production in a handful of countries and an industry that is not necessary to lubricate the wheels of industry and commerce such as the oil and gas industries may be more palatable for policymakers, and indeed be more impactful in terms of carbon emission reductions. Chapter 6 first examines the challenges and failures of both large binding multilateral agreements and existing carbon pricing regimes and argues that a more assertive and unilateral approach is needed. The concentration of beef production among a handful of countries may mean that an assertive unilateral approach could be implemented without broader economic fallout. Furthermore, recent litigation at the World Trade Organization has opened the door for unilateral action by one or a group of nations. Punitive taxation is unlikely to violate trade agreements.

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Targeting the beef industry, in particular, would have many benefits beyond emission reductions, such as the possibility of vast reforestation. While aggressive unilateralism may not always be successful, this chapter concludes that the beef industry could be targeted in this manner and the cost–benefit analysis shows that the benefits far outweigh the costs. In consideration of the role policymakers play in the green energy transition, specifically on the development and promotion of specific green energy technologies, the chapter by David Lee Shao Yee, Chap. 7, opines that policymakers invariably occupy an indispensable role, in the light of the pressing climate crisis. With a focused insight on the Asia-Pacific region, this chapter seeks to unpack the intricacies behind why a government and policymaker-led approach to the green energy transition is not only beneficial but also essential, explained by the inherent power and potential vested in these high offices. Despite the apparent political deadlock and economic inefficiencies displayed by some nations when adopting meaningful climate action, overall, the unique position of policymakers in possessing the political capital, moral mandate, and economic command of a nation grants them an unparalleled ability to call for, and enact great change. They are, as Barbadian Prime Minister Mottley alluded to at COP26, the linchpin of meaningful climate action, possessing the “unique mix of voice, ambition, and action” required to prevent the impending climate disaster. We today face the spectre of ecological destruction or a hairbreadth salvation, and it is imperative that we no longer excuse and exonerate our leaders of their responsibility in the green energy transition. Annette Liew Pei Jun argues in Chap. 8 that policymakers around the world have intensified their efforts to combat the climate crisis, which include developing clean energy technologies. However, policymakers encounter several challenges in the course of their efforts. This chapter discusses the advantages, challenges, and risks of relying on policymakers to lead the development of clean energy technologies. Given the urgency of climate change, it is also important to explore alternative development pathways led by others to combat the climate crisis. To that end, advantages and risks of development pathways led by industry and the larger civic society are also discussed in her chapter. By drawing trends from case studies, future endeavourers into clean energy development can learn important lessons from those who have gone before them and identify the critical actors and ways to mitigate risks. In Chap. 9, Audrey LooWan Yi argues that access to clean, affordable, and reliable energy sources promotes economic prosperity. Clean energy technologies, such as carbon capture and sequestration as well as green hydrogen, are catalysts of the fundamental transformation process towards a more sustainable production. As clean energy is cautiously introduced into the global energy mix, fossil fuels, which once dominated the composition, are diminishing in their significance. This phenomenon is rewarding both economically and environmentally, given that fossil fuels are finite in nature and release toxic emissions when burned. Further, as clean energy technologies produce no carbon emissions in generating electricity, its adoption will enable us to achieve our ambitious climate policy goals. Finally, clean energy technologies are driving forces of energy-based economic development—promoting energy security and sustainable economic development concurrently. As such, it is found that the

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development of specific clean energy technologies is the best solution if we are aiming to combat global climate change and pursue economic-development sustainably. Hence, this chapter argues that policymakers ought to encourage the development of specific clean energy technologies. Nonetheless, the chapter acknowledges that the developmental process of these technologies may come with several threats and further contends that these risks must be mitigated before the benefits of accelerating a low-carbon pathway can be reaped. Therefore, the author posits that policymakers will have to deliberately adopt measures in fostering greater global cooperation so as to institute a robust climate-finance mechanism. To that end, Audrey Loo Wan Yi provides a snapshot of the existing climate-finance mechanism and discusses how a results-based climate-finance framework could possibly be the way forward. Chapter 10, by Ashraff Jinnah, argues that fossil fuels have been the most significant tool in humanity’s pursuit of technological development and advancement from the onset of the Industrial Revolution. Unfortunately, our utilisation of fossil fuels has resulted in a terribly drastic reaction by our planet. At the tail end of the 20th century, anthropologic climate change attributed to global warming was finally acknowledged as a significant issue that is negatively affecting the planet, its ecosystems, and humanity, and if measures are not urgently undertaken to mitigate or eliminate its cause, the consequences will be disastrous. It took about two and half decades and the sidelining of various failed international climate change agreements before the global community could finally reach a consensus on sacrifices required so as to stem the negative effects of climate change. One of the key goals of the 2015 Paris Agreement on Climate Change is the limiting of global warming to well below 2 °C above pre-industrial levels to ensure sustainability for our planet, its ecosystems, and humanity. Methods that have been proposed to reach the daunting target include the decarbonisation of the energy supply, increasing the use of electrification in our technology, promoting the use of alternative fuels, obtaining greater energy efficiency, and adopting behavioural changes in our lifestyles as well as how we eventually utilise the planet’s resources. Of the above, it appears that electrification is one of the most utilised solutions that many policymakers have since advocated in their struggles to attain their prescribed nationally determined contributions under the auspices of the Paris Agreement on Climate Change. The question is: Should policymakers continue or do more to promote electrification over the other proposed solutions, and will the electrification solution suffice in our fight against climate change? Ian Ng Yi Lee makes the point in Chap. 11 that recent research has shown that electrification only causes an immediate short-term reduction in greenhouse gas emissions when the carbon intensity of electricity supply used is below the threshold of 600 gCO2/kWh.1 In the light of this fact, some have argued that in places where the carbon intensity of electricity supply is higher than 600 gCO2/kWh, policymakers should not promote electrification at all. This chapter takes the contrary view and asserts that 1

Christopher Kennedy, “Key Threshold for Electricity Emissions” Nature Climate Change 2015; 5(3): 179–181.

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policymakers should always promote electrification. In places with carbon-intensive electricity supply, serious concurrent efforts should also be undertaken to decarbonise the electricity supply and improve energy efficiency. Two reasons are given in support of the thesis: (i) it enables carbon-intensive countries to reap the immediate non-climate benefits of electrification, (ii) it enables carbon-intensive countries to enjoy cleaner, faster, and more efficient transitions into low-carbon electric cities. To put the thesis into practice, this chapter concludes by suggesting practical handles for policymakers to encourage investments in green infrastructure to concurrently promote electrification, decarbonisation of electricity supply, and improvement of energy efficiency. Chapter 12, by Matthew Soo Yee, makes two interrelated arguments arising from the promotion of electric vehicles (EVs) as the silver bullet for tackling climate change. First, promoting EVs and other elements of electrification are necessary, even in areas with carbon-intensive electricity supplies. This is so since they generally lead to the absolute reduction of greenhouse gas (GHG) emissions. Second, to combat the increased GHG emissions, policymakers should both promote electrification, while concurrently decarbonising their electricity supply. This should be done through a combination of local and extra-local policy measures. Locally, policymakers should (i) create the necessary infrastructure to electrify and decarbonise their localities, (ii) introduce policies that effectively price carbon, (iii) encourage the development of new technology necessary to decarbonise, and (iv) take direct steps to decarbonise their electricity supply. In the extra-local sphere, policymakers should strive to coordinate their actions regionally or internationally. This is so since coordination provides the benefits of: (i) expanding the policy options available, (ii) enabling each locality to leverage on their respective comparative advantages, and (iii) facilitating the sharing of best practices—thereby driving efficiency gains.

Part III: The International Dimension The chapter by Charlotte Seethor Wen Ting examines some of the prominent efforts that the international community has embarked on and done well in the light of the unique climate change challenges faced by small island developing states, leastdeveloped countries, and other vulnerable places. As a result, these countries have benefitted from efforts such as the least-developed countries fund and are better off than before. These efforts have indeed been heartening, as it is a step forward for these vulnerable groups. However, this chapter also puts forward that a lot more can be done for these groups, as their plight has not been alleviated, and they are still suffering from the effects of such unique climate change challenges. The following major issues are discussed in Chap. 13: discussion and recognition in the climate negotiation process, climate financing for adaptation measures, and climate migration. The current situation is evaluated in order to identify why it is an issue worth tackling. After which, gaps that still exist are highlighted and suggestions for possible

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improvements are made. After all, there is a moral duty on the international community to work together and remedy this situation, for the betterment of the Earth that we all inhabit as well as for future generations. In Chap. 14, Meher Malhotra argues that Energy is both a necessity and a commodity, as well as a political tool. With the advent of interstate conflicts such as tensions between Russia and Ukraine, energy security in Europe has taken a toll. The already precarious situation has been exacerbated by rising energy prices and energy poverty. In response to the pressing need for a more coordinated and unified solution, the European Commission posed to create a European Energy Union. While this may be conceivable in a utopian world if all 27 European Union Member States were to place their heterogeneous interests aside, in reality this may be more difficult than envisaged. Effective governance and investments in infrastructure are also needed to bring this ambition to fruition. Accordingly, the purpose of this chapter is to examine how the European Energy Union can be achieved and whether it is a “mountain worth climbing”, as Maroš Šefˇcoviˇc, the Vice President of the European Commission, puts it. The chapter by Dominic Soh Shi Xuan provides a comprehension of the European Energy Union (“EEU”) for the promotion of a modern, competitive, and climateneutral economy. Understanding the EEU as a unified energy policy warranting accessible, affordable, secure, and sustainable energy, this chapter delves into the internal and external dimensions necessary to establish a truly cohesive and coherent EEU— taking into account recent initiatives to buttress the EEU and global events such as the ongoing Russia-Ukraine conflict of 2022. After analysing both the advantages and disadvantages of the EEU, Chap. 15 extrapolates the concept of the EEU to the Association of Southeast Asian Nations (“ASEAN”) region and explores the possibility as well as feasibility of an energy union in ASEAN. This chapter finally concludes that the cohesive European blueprint has ushered a new era of green growth in Europe, mitigating climate change and revitalising Europe’s energy security, despite the EEU’s drawbacks. Chapter 16, by Nur Iman Beck, argues that energy security consists of important concepts such as energy planning involving diversification and resilience. Decarbonisation is the process of reducing the amount of greenhouse gases in the atmosphere by improving the efficiency of existing energy sources or by turning to alternative sources that emit less carbon. The 2022 Russia-Ukraine war poses as a crucial point in history in destabilising energy security and decarbonisation goals. According to Nur Iman Beck, things could go either way, with countries turning either to cheap but dirty sources of energy or to clean renewable energy. It is no doubt that energy security and decarbonisation have been regarded as important goals for many countries. However, the question is whether they should be regarded as a high priority, especially during such crises. It is argued that energy security and decarbonisation should be of utmost importance. Doing so can greatly reduce energy poverty, energy dependence, and help countries adapt to the inevitable effects of climate change, all of which are important concerns of governments. In this chapter, Nur Iman Beck examines how energy

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security and decarbonisation can achieve all these through three levels of analyses: on a national level, on a regional level in ASEAN, and lastly in the European Union. In Chap. 17, Bryan Tan Zhi Yang argues that global energy governance is a deep and complex topic, a minefield of historical, economic, political, legal, and institutional issues. The multifaceted and all-pervasive nature of the global energy economy has been the subject of extensive treatment from academic experts in diverse fields—all the more so today as the urgency of energy security bears ever more heavily on the global consciousness. This chapter first examines the literature on the state and challenges of global energy governance, and its residual existence in collateral areas of cooperation. This sets the stage for analysing the fragmentation of global energy governance along three fundamental fault lines—conceptual, institutional, and political—as well as the effects of the recent COVID-19 pandemic on global efforts to minimise each of these fault lines. The author concludes that these challenges are not insurmountable if they are expressly acknowledged and actively dealt with by key players in the fragmented governance. Although the current transition to a global low-carbon energy economy is indeed fraught with uncertainty, there is reason to be cautiously optimistic on the future of global energy governance in a post-pandemic world. In Chap. 18, Iman Ali Reda states that energy governance has become increasingly discussed in academia and global politics as countries continue to combat energy insecurity set against the background of a climate crisis and global economic turbulence. Her chapter seeks to add to the discourse by uncovering the drivers that merit a global energy governance (GEG) system and therefore the objectives that a unitary regime should meet. These drivers, including global energy insecurity, market failure in a liberalised energy market, and the increasingly volatile relationship between politics and energy, have pointed to the necessary mechanisms, dialogues, rules, and collaborations that effective GEG should establish. Beyond that, this chapter explores the existing fragmented ecosystem of various regimes that try, yet largely fall short of meeting these objectives. By assessing selected significant energy and related institutions, we can learn from the deficiencies and opportunities of these organisations and, therefore, characteristics that should be incorporated or mitigated in an idealised integrated GEG system. While it may be established that no coherent GEG exists today, this chapter concludes optimistically by pointing out how we are now witnessing game-changing normative factors that may enable a unitary regime in the near future. In Chap. 19, Wen Yang Ho argues that the international community faces an increasing number of energy-related problems, such as the need to ensure energy security, eliminate energy poverty, and most importantly, tackle the current climate crisis. An increasingly popular solution that has been put forward is the idea of global energy governance. However, the current trend, instead, suggests that nations prefer to set up regional energy governance frameworks. This may, at first glance, appear to be inimical to the establishment of global energy governance. However, the author argues in this chapter that this is not the case. This is because of three different reasons. First, the establishment of different regional energy governance frameworks that work together to create a global energy governance framework provides benefits

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that a top-down global energy governance framework cannot provide. Second, the setting up of regional energy governance frameworks is conducive to global energy governance. Lastly, it is possible for regional energy governance frameworks to work with one another to set up a global energy governance framework. This chapter ends off by envisaging a possible way for cooperation between regional energy governance frameworks to take place and what can be done to promote cooperation.

Contents

Part I 1

Setting the Scene

Did the 2015 Paris Climate Change Agreement Change the Trajectory of the Global Response to the Build-Up of Greenhouse Gas Emissions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Astrid Malm

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COP26: Ambition, Coal, Finance, and the Paris Rulebook . . . . . . . . Nicole Ng Ning Xuan

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Was COP26 Critical for the Implementation of the 2015 Paris Agreement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Daryl Yu Yang Teo

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Can the Political Process in Washington Create Policy for Meaningful Greenhouse Gas Emissions Reductions? . . . . . . . . . . Samuel Wong

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Part II

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How to Move Forward Effectively

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Carbon Pricing: Some Problems and Solutions . . . . . . . . . . . . . . . . . . . Sim Wei Yang Brian

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Carbon Pricing: Punitive Taxation on Beef . . . . . . . . . . . . . . . . . . . . . . Jaan Masood

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Should Policymakers Encourage the Development of Specific Green Energy Technologies? Advantages and Risks . . . . . . . . . . . . . . Lee Shao Yee David

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Clean Energy Technologies as a Way to Combat the Climate Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annette Liew Pei Jun

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Contents

Access to Clean, Affordable, and Reliable Energy Sources to Promote Economic Prosperity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 Audrey Loo Wan Yi

10 Should Policymakers Promote Electric Vehicles and Other Elements of Electrification in Areas with Carbon-Intensive Electricity Supply? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Ashraff Jinnah 11 How to Promote Electrification, Decarbonize the Electricity Supply and Improve Energy Efficiency? . . . . . . . . . . . . . . . . . . . . . . . . . 143 Ian N. G. Yi Le 12 Promoting electric vehicles as the silver bullet for tackling climate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 Matthew SOO Yee Part III The International Dimension 13 Is the International Community Doing Enough to Address the Unique Climate Change Challenges Faced by Small Island Developing States, Least-Developed Countries, and Other Vulnerable Places? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Charlotte Seethor Wen Ting 14 The European Energy Union: How Can It Be Achieved? What Are the Pros and Cons of Such a Union? . . . . . . . . . . . . . . . . . . . 187 Meher Malhotra 15 Prospects for a European Energy Union . . . . . . . . . . . . . . . . . . . . . . . . . 201 Soh Shi Xuan Dominic 16 Why Are Energy Security and Decarbonisation Important? . . . . . . . 217 Nur Iman Binte Mohamed 17 Reducing the Fragmentation of Global Energy Governance in a Post-pandemic World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 Bryan Tan 18 Global Energy Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Iman Ali Reda 19 Is It Possible to Have Energy Governance at the Global Level? . . . . 255 Wen Yang Ho

About the Editor

Rafael Leal-Arcas is Professor of Law, Vice-Dean for Research Grants & Director of Graduate Studies and Research at Alfaisal University (Riyadh, Kingdom of Saudi Arabia) and Jean Monnet Professor of EU International Economic Law, awarded by the European Commission. Among other professorships, he was also visiting professor at New York University Abu Dhabi in the UAE and the Inaugural Lee Kong Chian International Visiting Professor of Law at the Yong Pung How School of Law of Singapore Management University, Singapore. Dr. Leal-Arcas’s research has been funded by the EU Commission’s Horizon 2020 program, most notably a grant of EUR 14 million as part of a consortium of 21 institutions to work on renewable energy and smart grids. He is also on the roster of arbitrators and trade and sustainable development (TSD) experts in bilateral disputes under the European Union’s trade agreements with third countries, selected by the Directorate-General for Trade, European Commission. In addition, he is on the roster of experts for legal services of the Energy Community Secretariat. Since 2022, he serves as an expert for the UK’s Department for International Trade’s (DIT) Sustainability Thematic Working Group. He received his graduate legal education at Stanford Law School, Columbia Law School, the London School of Economics and Political Science, and the European University Institute (Florence).

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Part I

Setting the Scene

Chapter 1

Did the 2015 Paris Climate Change Agreement Change the Trajectory of the Global Response to the Build-Up of Greenhouse Gas Emissions? Astrid Malm Abstract In this chapter it is argued that climate change is a serious issue in need of serious action. At present, the climate is changing faster than at any point in the history of modern civilization. The rising average temperature gives rise to an increase in the frequency, intensity, and duration of weather extremes, as well as other environmental changes. In 2015, history was written through the adoption of the Paris Climate Change Agreement—an international treaty aimed at strengthening the global response to the threat of climate change. The Agreement was received with enthusiasm and today, nearly seven years later, it can be questioned whether the reaction was warranted. This chapter aims to assess whether the Paris Agreement changed the trajectory of the global response to the build-up of greenhouse gas emissions. The conclusion reached is that, although it is too soon to make any firm predictions, such an effect cannot yet be ascertained. For the Agreement to be successful, it needs to be legally binding, it must demand more ambitious contributions from parties, and subnational leaders and companies have to be given the opportunity to formally commit to the Agreement. Seeing to the difficulties associated with international climate change Agreements, alternative approaches, like climate clubs and influencing the general public, should also be explored.

Introduction Earth’s temperature has risen at an average rate of 0.08° Celsius per decade since 1880, and the years between 2013 and 2021 all rank among the warmest on record (NOAA National Centers for Environmental Information, State of the Climate: Global Climate Report for 2021). The climate is changing faster than at any point in the history of modern civilization, and the rising average temperature is giving A. Malm (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] Department of Law, School of Business, Economics and Law, University of Gothenburg, Gothenburg, Sweden © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_1

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rise to an increase in the frequency, intensity, and duration of weather extremes, as well as other environmental changes (Reidmiller, et al. 2017). Floods, droughts, and wildfires plague the earth, biodiversity declines, and biogeochemical cycles are altered (Dietz et al. 2020). The world appears to be headed towards self-destruction, and humankind is the main driving force. Primarily through the burning of fossil fuel, the concentration of greenhouse gases in the atmosphere has increased, causing rising temperatures (IPCC 2014). If nothing is done to curb the current trend, the continued emission of greenhouse gases will cause further warming of the planet, resulting in long-lasting changes in all components of the climate system (IPCC 2014). In order to tackle climate change and its impact, action is necessary. In 2015, delegates from nearly 200 countries approved what is considered a historic international Agreement to address climate change: the Paris Agreement (Doc 2015). The Agreement is a milestone in international climate politics and represents a shift in multilateral efforts to address climate change (Bodansky and Rajamani 2018). Hence, it was received with enthusiasm. Was the enthusiasm warranted? The aim of this chapter is to provide the reader with information regarding the Paris Agreement and its effects. Did the 2015 Paris Climate Change Agreement change the trajectory of the global response to the build-up of greenhouse gas emissions? If so, how? If not, what can be done? The conclusion reached is that although it is too soon to make any firm predictions, the Agreement does not appear to have changed the trajectory of the global response to the build-up of greenhouse gas emissions. For the Agreement to be successful, it needs to be legally binding, it must demand more ambitious contributions from parties, and subnational leaders and companies have to be given the opportunity to formally commit to the Treaty. Alternatives to international climate change Agreements, like climate clubs and influencing the public could also be options.

Background Climate Change Primarily through the burning of fossil fuels, the concentration of greenhouse gases in the atmosphere is higher than at any time during the last 800,000 years, thereby warming the planet (Nunez 2019). Rising temperatures have been proven to cause extreme weather events, rising sea levels, and to have a range of other negative consequences (Nunez 2019). The rhythm of climate that all living organisms have come to rely on is being altered, and the impact of climate change is felt by every country, on all continents. Developing nations, the global actors least equipped to manage the effects, are particularly affected and the poorest, most vulnerable people, suffer the most (Economist and Climate change will affect developing countries more than rich ones. 2018). In order to mitigate climate change and its impact, action is necessary.

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Efforts to Mitigate Climate Change The UN Framework Convention on Climate Change, adopted in 1992, can be seen as the constitution for the international framework regime (Economist and Climate change will affect developing countries more than rich ones. 2018). In 1997, the Convention was supplemented by the Kyoto Protocol, a protocol that was later elaborated through the Marrakesh Accords. While the parties to the Convention held negotiations that gave rise to the 2009 Copenhagen Accord and the 2010 Cancun Agreements, parties to the Kyoto Protocol negotiated an amendment extending the commitment period of the Protocol. In 2015, negotiations were initiated to develop a climate regime for the years after 2020, in accordance with the Durban Platform. Finally, in 2015, the Paris Agreement was adopted.

The Paris Agreement The Overall Approach of the Agreement In contrast to the Kyoto Protocol, the Paris Agreement does not set specific reduction and limitation targets for individual parties. Instead, an overall climate change goal is established. The central aim of the Paris Agreement is to strengthen the global response to the threat of climate change by holding the global average temperature to well below two degrees Celsius above pre-industrial levels, and by pursuing efforts to limit the temperature increase to 1.5 °C (Doc 2015). To achieve this goal, the amount of greenhouse gas emissions must begin to decrease as soon as possible to enable a climate neutral world by mid-century (Doc 2015). For the aims of the Agreement to be fulfilled, parties are called to contribute. However, the degree of contribution is left at the discretion of the individual parties. Hence, all states are required to prepare, communicate, and maintain nationally determined contributions, NDCs, that they intend to achieve (Doc 2015).

Noteworthy Aspects of the Agreement The Architecture of the Agreement Through the 2009 Copenhagen Accord and the 2010 Cancun Agreements, the climate regime was introduced to a bottom-up approach (Bodansky and Rajamani 2018). National autonomy was premiered, and states were left with the capacity to determine their own commitments. In due time, it became evident that an approach of this character has its limits (Bodansky and Rajamani 2018).

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Instead of relying solely on a “bottom-up” approach, the Paris Agreement combines “bottom-up” elements with “top-down” components. While the former seeks to promote participation, the latter aims to ensure ambition and accountability (Bodansky and Rajamani 2018). The Paris Agreement grants parties the competence to determine their own commitments in the form of NDCs. However, to promote ambition and accountability, rules regarding transparency, accounting and updating have been established. The Agreement thus sets forth a hybrid architecture for addressing climate change.

Flexibility The Paris Agreement is relatively neutral and therefore quite flexible. Hence, no specific greenhouse gas, certain economic sectors or technology is given particular attention (Bodansky and Rajamani 2018). In other words, nations can subject economic sectors of their choosing to emission limits, while leaving others unregulated. Moreover, attention is placed on mitigation as well as adaptation. By providing sovereign nations with the flexibility of crafting their own greenhouse gas reduction plans, states are able to combat climate change in the manner that suits their circumstances and capacities.

Differentiation Between Parties Unlike the Kyoto Protocol, the Paris Agreement requires all countries, developed as well as developing, to limit emissions. There is no categorization of parties and no tailoring of commitments dependent upon category—all states are dutied to participate in the mitigation of climate change (Bodansky and Rajamani 2018). This allows developing countries to further ambitions over time. However, the Paris Agreement does differentiate in respect of different issue areas, creating different forms of differentiation in relation to different areas (Bodansky and Rajamani 2018).

The Effect of the Agreement The Paris Agreement was adopted in 2015 and entered into force in 2016. In December this year, seven years have passed since 196 parties adopted the Agreement—how effective has the climate pact been? In the following, some effects of the Agreement will be presented in order to ascertain whether it can be said to have changed the trajectory of the global response to the build-up of greenhouse gas emissions.

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Successes Climate change is a global problem in need of global action. However, agreeing on a universal modus operandi among a large group of highly different actors, with varying political goals and national circumstances, is difficult. Therefore, the wide participation in the Paris Agreement is, in itself, a success. However, the Agreement has managed to achieve other noteworthy things as well, besides participation. It has, for example, resulted in the normalization of 1.5 °C (Darby 2020). Hence, by including 1.5 °C as an aspirational limit on global temperature rise, the limit is now considered a reasonable aim instead of utopia. Since research has shown that even half a degree of warming makes a big difference, official recognition of 1.5 °C as a goal is of great value (IPCC 2018). Moreover, The Paris Agreement has aided the normalization of net-zero emissions, thereby turning the limits on global warming into a practical milestone with implications for investments made today. Even though the expression used in the Agreement is “carbon neutral”, not “net-zero”, the signatories did agree to aim for carbon neutrality (IPCC 2018). Due to the Agreement and its goal of net-zero emissions, many countries have come forward with long-term goals of reducing their greenhouse gas emissions to the point where they are equal to, or outweighed by, carbon sinks (Harvey 2020). This must be viewed as a success in a world where the concentration of greenhouse gases in the atmosphere keeps increasing (Nunez 2019). An additional success of the Agreement is the commitment that it has evoked. Even though the Paris Agreement imposes obligations on all parties, great resilience has been shown in relation to it. Hence, despite the withdrawal of the USA under former president, Donald Trump, remaining parties stood firmly behind their commitments. Although the USA have chosen to rejoin under current president, Joe Biden, the disengagement of the USA could easily have resulted in other parties losing faith and withdrawing as well. The fact that they did not show great political resilience. Being able to draft an Agreement in a manner that promotes commitment over time must be seen as a success—if the climate change goals are to be realized, it is essential to keep parties dedicated. Not only have the world leaders shown a sense of duty in relation to the Agreement, but a large number of companies have also pledged major emissions reductions as well (Bergen 2020). Leaders in private sectors recognize the benefits of transitioning towards an economy built on low-carbon activities. In fact, companies play an important role in reducing carbon emissions (Esty and Boyd 2018). Whereas a vast number of companies have chosen to set emissions reduction targets, some have decided to aim for net-zero. Even though the drafting of the Agreement need not be the sole reason behind the increasing engagement from companies, a global treaty with the aim of mitigating climate change does, naturally, have some impact. It creates discussion and enhances knowledge which, in extension, generates calls for change.

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Unsuccesses Under the Paris Agreement, all parties are obliged to contribute to the mitigation of climate change. The degree of contribution is at the discretion of the parties, who are called to establish NDCs. Since countries representing 97% of global emissions are parties to the Agreement, it should be attainable (Harvey 2020). However, the NDCs initially negotiated have been proven to not be ambitious enough. Instead, they are projected to result in an increase of 3 °C, which would be disastrous (Harvey 2020). In other words, the NDCs, designed as instruments to help reach the aims of the Agreement, are insufficient—even if they are all fulfilled. This must be seen as a failure on part of the Paris Agreement. New or updated NDCs have been communicated and although they do show some progress, their aggregated effect on global emissions is still not enough (United Nations Environment Programme 2021). For example, only 49% result in lower 2030 emissions than the previous NDCs. However, it is important to note that many countries have made commitments besides their NDCs. For example, the member states of the European Union, the USA, and China, have pledged to reach net-zero around mid-century. If all these countries manage to meet their goals, it is projected to lead to a temperature rise of 2.1 °C (Harvey 2020). The key issue is whether countries will be able to do so. Even though all parties to the Paris Agreement have agreed “to undertake ambitious efforts to combat climate change”, governments are falling woefully short of their climate pledges under the Agreement (Milman 2021). In other words, it seems unlikely that countries will be able to meet their goals and thereby limit the global temperature rise in accordance with the Agreement. Despite an unprecedented drop due to the pandemic, the global carbon emissions are bouncing back, and concentrations of greenhouse gases in the atmosphere continue to increase (United Nations Environment Programme 2021). As a group, G20 members are not on track to achieve neither their original nor their new 2030 pledges. Instead, they are projected to fall short of their NDCs as well as other announced mitigation commitments. Although some positive climate-related policies have been adopted by countries within the group, there are many negative examples, like fossil fuel extraction projects. Studies show that many G20 members are expected to emit more in 2030 under implemented policies than they did in 2010. In sum, it can be stated that commitments made by parties to the Paris Agreement, both in relation to their NDCs and otherwise, are, by themselves, insufficient for the goals of the Paris Agreement to be achieved. Moreover, parties are struggling to live up to their set targets. Hence, greenhouse gas emissions continue to grow, and, in turn, temperatures are rising (NOAA National Centers for Environmental Information, State of the Climate: Global Climate Report for 2021).

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What Can Be Done? Judging by the above-presented effects, the Paris Agreement does not seem to have changed the trajectory of the global response to the build-up of greenhouse gas emissions. Hence, although NDCs and other climate pledges have been established, these are not enough to reach the goals of the Agreement. Moreover, parties are failing to reach their set emission goals. As a result, temperatures keep rising. Since the general aim of the Paris Agreement is to aim for carbon neutrality and limiting the annual temperature rise, the Agreement does not seem to have changed the trajectory of the global response to the build-up of greenhouse gas emissions. However, the Agreement has only been in force for a few years, and it is therefore too soon to draw any final conclusions regarding its effectiveness. Instead, it can only be stated that at present, the Agreement does not appear to have its intended effect. Following this, the logical question is: What can be done? Why is the Paris Agreement failing? Is an Agreement of this kind the solution? If not, what are the alternatives?

The Flaws of the Paris Agreement In the following, aspects of the Paris Agreement that may have contributed to its unsuccess will be presented, together with suggestions regarding how future climate change Agreements can be constructed to avoid similar failures.

The Legal Character of the Commitments Since the Agreement is in the form of an international treaty, the Vienna Convention on the Law of Treaties establishes that all parties are bound by the terms of the Agreement. Despite this, only a few mandatory provisions, formulated in a precise and enforceable manner, can be found in the Agreement (Streck et al. 2016). Notably, the NDCs and their emission reduction commitments take the form of political aims rather than legal obligations (Streck et al. 2016). Hence, parties have the power to determine the ambitiousness of the NDCs and how to achieve them, and they are not legally dutied to live up to their set commitments. Since the NDCs are imperative for the fulfilment of the goals of the Agreement, this can very well be seen as problematic. However, the fact that many provisions of the Paris Agreement are not legally binding or enforceable, does not necessarily render the treaty ineffective. If the aims of the treaty can be achieved even though it cannot be enforced, then the lack of enforcement mechanisms is not an issue. When assessing how states have handled their NDCs since the adoption of the Agreement, it unfortunately becomes clear that the character of the commitments is an issue. Hence, as stated above, every one of the world’s leading economies is failing to meet commitments made under the Paris

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Agreement. If the knowledge of the horrendous future that lays ahead of us if climate change is not mitigated is not enough to persuade parties to act, then perhaps the fear of sanctions will do the job. The problem inherent to climate change is, after all, that success or failure depends on whether the collective goal is achieved, and for the goal to be achieved, all states must do their part. On the other hand, the difficulties associated with legally binding and enforceable provisions should not be forgotten. The Paris Agreement was approved by delegates from nearly 200 countries, all with different political goals and national circumstances. Had the Agreement subjected parties to legally binding and enforceable obligations, the participation undoubtedly would have been less impressive. For example, states like the USA have been adamant against legally binding mitigation and from experience it is evident that international Agreements addressing climate change are unlikely to succeed if the USA, the world’s largest emitter and economy, is not party to them. Moreover, the commitments of parties would have been less ambitious to avoid unfulfilment. The question regarding whether to make international climate change Agreements legally binding is a complex one. However, the aim of any international climate change agreement is to mitigate climate change. If states do not live up to their commitments, mitigation is impossible. Since compliance seems to require legally binding and enforceable provisions, the conclusion reached is that the Paris Agreement would have been more successful if its provisions had been legally binding. Wide participation is meaningless if participants do not honour their commitments.

The Ambitiousness of the National Commitments The NDCs initially negotiated by the parties to the Paris Agreement have been projected to lead to an increase of three degrees Celsius (Harvey 2020). Although new or updated NDCs have been established, their aggregated effect on global emissions is still not enough (United Nations Environment Programme 2021). If we wish to limit annual warming to 1.5 °C and to reach carbon neutrality by mid-century, the NDCs set by the parties must be more ambitious. Instead of allowing parties complete freedom in setting their NDCs, the Agreement should include provisions that demand that the NDCs collectively are enough for the goals of the Agreement to be attained. Had this been the case, the Agreement would have had a much greater chance of being successful.

The Parties As stated, the Paris Agreement combines “bottom-up” elements with “top-down” components. The character of the Agreement requires action commitments from national governments while acknowledging the important role that cities, states, provinces, and businesses need to play in the mitigation of climate change (Esty and Adler 2018). Since mayors, governors, and premiers have independent capacities

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to reduce the emission of greenhouse gases, their contribution towards the aims of the Paris Agreement is important. Hence, oftentimes subnational leaders possess greater control over policies and decisions that affect the climate impact of a state than presidents and prime ministers. In addition, many of these actors have shown great support of the Paris Agreement (Summit and for Local Leaders, Paris City Hall Declaration: A Decisive Contribution to COP21, 2015). Similarly, business leaders with the power to make decisions with considerable effects on the climate are able to furnish the path towards a future without extreme weather events and declining biodiversity (Esty and Adler 2018). Even though much of the progress in reducing emissions is being driven by mayors, governors, premiers, and corporate executives, these officials have not been given a way to formally signal their commitment to the Paris Agreement and its aims. A formal acknowledgement of their efforts would create a greater sense of responsibility and, in turn, an increased chance of fulfilment of the established climate change goals. Moreover, a formal role would enable coordination, sharing of knowledge, and tracking of progress—all beneficial for the mitigation of climate change. In other words, the Paris Agreement would be more successful if subnational leaders and companies were given the option to formally commit to the Agreement. By creating a formal mechanism for recognizing subnational climate change action commitments, such actors would be able to do so.

Alternatives to the Paris Agreement It is evident that constructing an international treaty on climate change is a demanding task. For all states to agree, the Agreement cannot impose too far-reaching obligations on the parties. On the other hand, the commitments of the parties must be ambitious enough for climate change to be mitigated. Given the issues associated with universal Agreements addressing climate change, perhaps other options are more suitable? In the following, two options will be explored briefly.

Climate Clubs Although climate change is an international issue caused by all states collectively, a few states produce more greenhouse gases than others. At present, the USA, China, and the EU member states are responsible for a majority of annual emissions. If these countries were to limit their emissions substantially, the impact would be great. Drawing from this, the idea of creating climate clubs by putting together the climate change regime with the international trading system, has been brought forward by William Nordhaus, Nobel Prize winner, and Rafael Leal-Arcas, Professor of European and International Economic Law (Nordhaus 2015). For a potential climate club to function effectively, a few of the world’s largest emitters would need to be members of the group. An ambitious suggestion for

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members is the one mentioned above; the USA, China, and the EU. Due to the small number of participants, it would be easier to agree on far-reaching commitments and meaningful action. Moreover, for the club to function effectively, non-compliance with obligations arising from the club must be met with sanctions. For example, trade-related sanctions. Lastly, for parties to willingly subject themselves to legally binding and enforceable commitments, the club needs to provide members with benefits that outweigh obligations. Being a member of the group needs to be so beneficial that all countries not part of it, want to join.

Public Opinion The solutions presented in relation to climate change often revolve around state action. However, since present international Agreements have been rather unsuccessful in making countries address climate change with full force, perhaps the solution should be found elsewhere. Around 50 years ago, it was discovered that chemicals known as CFCs were weakening the ozone layer. When the general public became aware of this environmental threat, they demanded regulatory responses (New York Times 2019). The result was the Montreal Protocol, generally regarded as successful. This example demonstrates that the actions of citizens can play a fundamental part in the mitigation of climate change. Citizens everywhere need to become more involved in the quest towards a clean future. Therefore, more time should be dedicated to trying to inform the general population on climate change and the dangers it poses. Hence, knowledge is power, and, in this case, power is needed. In a digital world, where information can be spread faster than ever before, communicating such knowledge should not be an issue.

Conclusion Climate change, one of the greatest ecological and social challenges of the century, is a serious issue in need of serious action. Over the years, various attempts have been made to mitigate climate change, one of the more recent ones being the 2015 Paris Climate Change Agreement. The Agreement differs from previous legal instruments in several ways and is remarkable for various reasons. Having only been in force for a few years, it is too soon to make firm predictions regarding its effect. However, when assessing the impact it has had thus far, it does not seem to have been successful in changing the trajectory of the global response to the build-up of greenhouse gas emission. Hence, the commitments of the parties are not ambitious enough, and countries struggle to fulfil them. The presumed failure of the Paris Agreement can be the result of several things, examples being the legal character of the commitments, the fact that subnational leaders and companies are not given the opportunity to formally commit to the Agreement, and the lack of ambition in relation to the NDCs

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of the parties. Since constructing an effective international Agreement on climate change appears to be associated with great difficulties, perhaps other options, like climate clubs, should be explored. Effective solutions need to be found—if not, we are headed towards extinction.

References Bergen M (2020) 6 Signs of progress since the adoption of the Paris agreement. World Resources Institute. Retrieved on 18 Mar 2022 from. https://www.wri.org/insights/6-signs-progress-ado ption-paris-agreement Bodansky D, Rajamani L (2018) The evolution and governance architecture of the united nations climate change regime. Glob Clim Policy Actors Concepts Enduring Challenges, 13–65 Climate Summit for Local Leaders, Paris City Hall Declaration: A Decisive Contribution to COP21 (2015) Darby M (2020) After five years, here are five things the Paris agreement achieved—and didn’t. Clim Change News. Retrieved on 18 Mar 2022 from. https://www.climatechangenews.com/2020/ 12/09/five-years-five-things-paris-agreement-achieved-didnt/ Dietz T, Shwom RL, Whitley CT (2020) Climate change and society. Ann Rev Sociol 46(135– 158):136 Esty DC, Adler DP (2018) Changing international law for a changing climate. Am J Int Law 112:279–284 Esty DC, Boyd P (2018) To move Paris Accord forward, bring cities and companies on board. Yale Environ, 360 Harvey F (2020) The Paris agreement five years on: is it strong enough to avert climate catastrophe?. Guardian. Retrieved on 18 Mar 2022 from. https://www.theguardian.com/environment/2020/dec/ 08/the-paris-agreement-five-years-on-is-it-strong-enough-to-avert-climate-catastrophe IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 pp IPCC (2018) Global Warming of 1.5 °C Milman O (2021) Governments falling woefully short of Paris climate pledges, study finds. Guardian. Retrieved on 19 Mar 2022 from www.theguardian.com/science/2021/sep/15/govern ments-falling-short-paris-climate-pledges-study New York Times (2019) The world solved the ozone problem. it can solve climate change. The New York Times. Retrieved on 21 Mar 2022 from https://www.nytimes.com/2019/12/07/opinion/sun day/ozone-climate-change.html NOAA National Centers for Environmental Information, State of the Climate: Global Climate Report for 2021, Retrieved on 21 Mar 2022 from www.ncdc.noaa.gov/sotc/global/202113#gtemp Nordhaus W (2015) Climate clubs: Overcoming free-riding in international climate policy. Am Econ Rev 105(4):1339–70; Leal-Arcas R (2021) Climate clubs for a sustainable future: the role of international trade and investment law. Kluwer Law International BV Nunez C (2019) What is global warming? National geographic. Retrieved on 14 Mar 2022 from /www.nationalgeographic.com/environment/article/global-warming-overview Reidmiller DR et al (2017) Impacts, risks, and adaptation in the United States: fourth national climate assessment, Volume II

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Streck C, Keenlyside P, Von Unger M (2016) The Paris agreement: a new beginning. Journal for European Environmental & Planning Law 13(1):3–29 The Economist. Climate change will affect developing countries more than rich ones. (2018, May 9). Retrieved on 14 Mar 14 2022 from. www.economist.com/graphic-detail/2018/05/09/climatechange-will-affect-developing-countries-more-than-rich-ones The Paris Agreement. 12 December 2015. UN Doc. FCCC/CP/2015/L.9/Rev/1 United Nations Environment Programme (2021) Emissions gap report 2021: the heat is on—a world of climate promises not yet delivered—executive summary. Nairobi

Chapter 2

COP26: Ambition, Coal, Finance, and the Paris Rulebook Nicole Ng Ning Xuan

Abstract This chapter explores whether the Conference of the Parties (COP) 26 was critical for the implementation of the 2015 Paris Agreement. Adopted at COP21, Article 2 of the Paris Agreement seeks to limit increase in global average temperature to well below 2 °C, preferably to 1.5 °C, compared to pre-industrial levels (“the Goal”). This chapter focuses on how COP26, the fifth COP since COP21, was potentially critical for the Paris Agreement’s implementation in four vital areas— (a) ambition, (b) coal, (c) finance, and (d) the Paris Rulebook—and how it found some wins and losses in these aspects. The chapter then focuses on Singapore, and argues that the Singaporean national climate plan falls short of the ambitions that Singapore ought to have. This chapter proposes that a collaboration with Indonesia and the Association of South-East Asian Nations (ASEAN) to develop the production of solar energy would not only improve climate mitigation efforts critical for the Goal, but also create better energy security for the region. Finally, this chapter argues that, for countries to meet the expectations of COPs, two underlying issues must be addressed. First, a dispute resolution and enforcement mechanism by way of an international instrument like the World Trade Organisation should be implemented in climate agreements. Second, all levels of society must understand that addressing climate change is not about saving the planet, but saving ourselves.

Introduction The Paris Agreement (“the Agreement”) was a landmark binding agreement adopted by 196 parties at COP21 in 2015 (UNFCCC n.d). Article 2(1)(a) of the Agreement seeks to limit increase in global average temperature to well below 2 °C, preferably to 1.5 °C, compared to pre-industrial levels (“the Goal”) (UNFCCC 2015). With this backdrop, COP26 was held in Glasgow, UK in 2021, after the COVID-19 pandemic postponed it (UK Government 2021c). N. N. N. Xuan (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_2

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Countries concluded COP26 by agreeing to the Glasgow Climate Pact (“GCP”) (UK Government 2021a). As the fifth COP since COP21, COP26 was potentially critical for the Agreement’s implementation in many ways. This chapter focuses on four vital areas—(a) ambition, (b) coal, (c) finance, and (d) the Paris Rulebook. In each area, this chapter explores the expectations for COP26 that made it critical for the Agreement’s implementation, and whether the results of the conference met these expectations. Next, the analysis returns home to discuss Singapore’s climate response. Finally, this chapter suggests fundamental changes to improve future COPs.

Focus Areas Ambition COP26 was essentially about ambition. Arts 3 and 4(9) of the Agreement mandate parties to communicate their progressively ambitious nationally determined contributions (“NDCs”) every five years (UNFCCC 2015). As the first deadline for countries to update their NDCs since COP21, COP26 was thought to be the “most important COP since Paris” (UK Government 2021a). Before COP26, there was anticipation for much more ambitious NDCs, which are crucial in guiding countries on plans to reduce greenhouse gas (“GHG”) emissions. To limit global warming to 2 °C and 1.5 °C, projected 2030 emissions must be reduced by 30% and 55%, respectively (UNEP 2021a). Alarmingly, even under the updated NDCs and pledges, emissions would be reduced only by 7.5% (UNEP 2021a). If current policies continue for this century, it is estimated that a warming of 2.7 °C would still be resulted (UNEP 2021a). Even with net-zero pledges committed by countries, it would only limit warming to about 2.2 °C by the end of the century (Fig. 2.1) (CAT 2021b). The ambition gap is further exacerbated by countries who communicated that it would not reduce its 2030 emissions from their previous NDCs. These countries (Australia, Brazil, etc.) account for 13% of global emissions (Fig. 2.2) (UNEP 2021a). The updated NDCs submitted at COP26 fell greatly below expectations. The failure of expectations was evident from how parties agreed to strengthen their current emission targets to 2030 in 2022, bringing the review deadline forward from COP31 to COP27 (UK Government 2021b). Hence, despite the ambition of parties being one of the most important conditions for successful implementation of the Agreement, the results of COP26 were insufficient.

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Fig. 2.1 Climate Action Tracker’s (“CAT”) global temperature increase projections by 2100 after COP26

Fig. 2.2 EGR21’s map of new/updated 2030 NDCs relative to previous NDCs

Coal To ask how countries might achieve the ambitious Goal, one must first ask where GHG emissions are from. To limit global warming, the main concern of the Agreement is to create systems that reach net-zero emissions as soon as possible. Energy sources are thus critical to the implementation of the Agreement as it “lies at the heart of all countries’ core interests” and the world’s GHG emissions (Leal-Arcas and Filis 2014). Recognising this, COP26 dedicated a substantial portion of negotiations on mitigation actions regarding energy.

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A stated goal of COP26 was for parties to agree to accelerate the phasing-out of unabated coal (UK Government 2021d). If countries could commit to phasing out coal, it would be a significant milestone in the implementation of the Agreement. Coal is the world’s greatest source of electricity generation, yet, at the same time, the largest single source of GHG emissions (IEA n.d.a). Thus, the phasing-out of coal is a great challenge because it requires careful balancing between national interests for economic development, interests in maintaining (or improving) energy security during the transitioning out of coal, and the need for speedy climate action. Eradication of coal from the world’s energy market felt far beyond reach when China and India asked for a change in the wording of the GCP, from “phaseout” to “phasedown” at the eleventh hour (Bishop 2021). As the world’s top and secondlargest consumers of unabated coal (IEA 2021), the lack of commitment from China and India would greatly dull the efforts of COP26 to “consign coal power to history” (Bishop 2021). Hence, to keep India and China as signatories, item 20 of the final GCP used the phrase “phasedown of unabated coal” instead (UNFCCC 2021a). “Phasedown” seemed to symbolise a compromise between the parties that wanted to keep coal as an engine for economic development, and parties that wanted more ambitious climate mitigation actions. The COP26 Presidency defended this change in language with the fact that the GCP marks the first time an agreement about coal was made in a COP (Bishop 2021). They argued that, despite the change in language, the GCP is still a huge leap forward as there remains 65 countries that have committed to phaseout coal, and 34 countries (including major players in energy financing like Canada, the US, and the UK) and 5 public finance institutions have committed to ending direct public support for the international unabated coal energy sector by the end of 2022 (UK Government 2021b). Viewed in this perspective, be it “phaseout” or “phasedown” of coal, it was a win for COP26 that significant steps were taken to ensure that countries and organisations would think twice before choosing to consume or invest in coal. Conversely, it could be argued that conceding the change in language from “phaseout” to “phasedown” is a great step backwards in achieving the aspirations of the Agreement. “Phaseout” means having zero unabated coal power as the end goal, whereas “phasedown” merely means reduction of unabated coal power. When “phasedown” is adopted, the GCP commits to no real end goal because parties are unsure of the extent to which phasing down is sufficient. This could explain why some countries, particularly those that would be greatly impacted by climate change like the low-lying nation of Tuvalu, initially objected to this change in language (Singh et al. 2021). That said, the GCP is not legally binding, but merely soft law that sets the global agenda on climate change for the next decade (BBC 2021). This means that countries are held accountable to fulfilling the GCP not through legal obligations, but through political power. Hence, given the unenforceable nature of the GCP, one could argue that India and China could have disregarded the phrase “phaseout”, even if the word

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“phaseout” was adopted. This would then render the difference in language meaningless, because India and China would have continued using coal on their own terms, whether “phaseout” was changed or not. However, seeking to replace “phaseout” with “phasedown” shows that, despite the soft legal nature of the GCP, India and China took the GCP as seriously directive of their national policy and international political obligations. One might even point out that it is not entirely unexpected that India and China disagreed with phasing out coal power. This is since, unlike their western counterparts who have peaked in their need for coal, India and China are still extremely reliant on coal as developing economies. Despite China’s laudable investments in renewable energy, coal still accounts for around 60% of China’s total energy supply (Fig. 2.3) (IEA(China) 2021). Coal also accounts for around 42% of India’s total energy supply (Fig. 2.4) (IEA(India), 2021).

Fig. 2.3 Total energy supply (“TES”) by source, people’s republic of China, 1990–2019 (%)

Fig. 2.4 TES by source, India, 1990–2019 (%)

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Contrastingly, coal accounts for only about 10% of the US’s energy source (Fig. 2.5) (IEA(US), 2021), whereas in the UK, less than 5% of energy is from coal (Fig. 2.6) (IEA(UK) 2021). Clearly, it is much easier for countries like the USA or the UK to phaseout coal power within the next decade when coal constitutes such a small percentage of their present total energy source. Moreover, these countries’ coal usage had once, during their own economies’ development, paralleled the proportions that China and India have now. Hence, for countries like China and India, that have yet to fully reap the benefits of coal energy as western economies have, completely eradicating coal as an energy source within the next decade would be a herculean task. Further, more than 4.3 million Chinese are still employed by China’s coal mines (Sengupta 2018), adding onto the difficulty of transiting from coal to other forms of energy. In trying to phase down coal, it cannot be said that COP26 was extremely critical for the implementation of the Agreement. However, as a complicated matter, one could argue that COP26 went as far as it could have on the issue of energy. The

Fig. 2.5 TES by source, USA, 1990–2020 (%)

Fig. 2.6 TES by source, UK, 1990–2020 (%)

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appetite for complete eradication of coal power from the world’s energy market would likely have to wait for a more opportune time when economies have peaked in development and when political will for climate action is overwhelming.

Finance Implementation of the Agreement is not possible without the finance necessary for mitigation and adaptation action. Thus, another crucial priority of COP26 was to make good the promise from developed countries to raise at least US$100bn every year in climate finance by 2020 and to sustain provision till 2025 (UK Government 2021d). This promise is extended by Art 9(1) of the Agreement. Art 9(4) also states that provision of financial resources should aim to achieve a balance between mitigation and adaptation. Politically, countries have aspired for a 50:50 balance between mitigation and adaption (UNFCCC 2021e).

Adaptation Finance Goals Unmet However, financial support for mitigation remains much greater than for adaptation, with adaptation finance remaining between 20 and 25% of committed finance (UNFCCC 2021e). Adaptation finance is extremely important for developing countries, especially Small Island Developing States (“SIDS”) and Least Developed Countries (“LDCs”), who are most vulnerable to climate change (UK Government 2021a). It is only just for the developed world, which has been historically responsible for causing climate change (Åberg et al. 2021), to compensate developing countries who did not contribute to climate change emissions. Yet, just before COP26, it was reported that delivery of US$100bn would likely only be reached by 2023 (OECD 2021), falling short of the promise to deliver by 2020. The failure to deliver climate finance severely erodes the trust from developing countries (Åberg et al. 2021). Hence, there was much expectation for some form of resolution to be reached in COP26 regarding how and when adaptation finance would be raised. By the end of COP26, item 26 of the GCP noted “with deep regret” that the goal of mobilising US$100bn for meaningful mitigation actions was yet to be met (UNFCCC 2021a). Following this recognition, the GCP merely welcomed increased pledges and urged developed countries to “fully deliver” on the US$100bn goal “urgently and through to 2025” (UNFCCC 2021a). From the GCP, it therefore remains unclear how US$100bn should be raised (Åberg et al. 2021). Nonetheless, in the matter of securing finance for the implementation of the Agreement, COP26 was potentially redeeming in some respects.

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Scaling Up Adaptation Finance COP26 sets the stage to scale up adaptation finance amount of US$100 billion beyond 2025. Scaling up is critical because the adaptation finance gap—the gap between ability to provide adaptation finance and the cost of adaptation—has been widening due to increasing impacts of climate change and the COVID-19 pandemic (UNEP 2021b). Items 23 and 29 of the GCP recognised this gap (UNFCCC 2021a). Though not directly written into the GCP, the COP26 Presidency states that this recognition creates “space for Parties to move beyond the $100bn and have a serious and inclusive discussion about how the levels of finance to deliver on Paris can be mobilised” (UK Government 2021b). Arguably, however, this recognition for scaled up adaptation finance is all talk but no action. It is unclear how exactly more than US$100bn be provided, if countries will provide it at all. Hence, until there can be some commitment and framework to increase adaptation finance beyond US$100bn post-2025, it remains to be seen how critical COP26 would be in securing finance for the implementation of the Agreement.

Financial Participation of the Private Sector COP26 mobilised wide financial participation from the private sector. Art 2(1)(c) of the Agreement upholds the importance of making financial flows consistent with climate-resilient development. The language does not suggest that only the financial flows of public actors are important. Instead, private actors contribute to ensuring that the whole of the financial system is aligned with the Agreement. In continuance of the bottom-up approach, financial inclusion of the private sector is welcomed for two reasons. First, funding for adaptation finance should tap on money in the private sector, as countries would be unable to meet US$100bn using public money alone. Second, the private sector holds the power over where money is invested in. An economy that seeks to be truly emission-free must therefore rely on the influence that private sector’s investments have over the global market (UNFCCC 2017). Commitments to invest in companies that aid adaptation would incentivise mitigation and adaptation technology development while weakening existing processes that are not emission efficient. Impressively, the second benefit of including private sector has been achieved in COP26. Item 28 of the GCP expressly refers to private institutions like banks to invest and financially support climate action (UNFCCC 2021a). This would help align trillions of dollars of private sector financial flows to implement the Agreement (UK Government 2021b). Significantly, by setting up the Glasgow Financial Alliance for Net Zero (“GFANZ”), over 450 private institutions responsible for over US$130tn private finance assets are now publicly committed to net-zero and decarbonisation targets (UNFCCC 2021b). GFANZ members must commit to review their emission targets every five years and report their emission from investments annually. Such

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an accounting system is extremely important for the decarbonisation of the global economy, which is crucial for a successful implementation of the Agreement. Yet, in COP26, raising of the US$100bn adaptation finance remains solely covered by public finance from developed nations (UK Government 2021b). As established above, finance from the private sector should also be tapped upon to raise adaptation more efficiently and effectively. After all, wealth no longer lies with the nations, but more so in assets held by private actors (Woetzel et al. 2021). It would also be just to financially rely on the private sector that historically benefitted from carbon emissions. Hence, COP26 could have included the private sector in contributing to adaptation finance funds.

The Paris Rulebook Notably, COP26 saw the completion of the Paris Rulebook, which details the rules for how the Agreement is to be implemented (UNFCCC 2018). Completion is thus critical, since it allows the Agreement to become fully operational (UK Government 2021b).

Article 6 of the Agreement Art 6 is exceedingly crucial for the implementation of the Agreement because it allows countries to voluntarily collaborate using international transferred mitigation outcomes to achieve their NDCs. Creating an agreeable mechanism for carbon offsetting is thus vital to the practical operation of the Agreement. Three constituent parts of Art 6 were agreed—(1) voluntary cooperation, (2) a new carbon crediting mechanism, and (3) non-market approaches (UK Government 2021b). Moreover, the issues that have divided Parties for many years, like the mechanism for avoidance of double counting of emissions reductions and the use of Clean Development Mechanism (CDM) credits, finally found consensus. Consensus allows for transition to the instruments of the Agreement to finally begin.

Common Time Frames and Enhanced Transparency Framework Parties also agreed on standardising the time periods and methods for reporting NDCs (UK Government 2021a). Having common time frames and adopting common reporting tables provides fairness and transparency in monitoring parties’ progress towards achieving the Goal. Accountability is tremendously important for trust between parties in the implementation of the Agreement.

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Bringing It Home On the international stage, Singapore played a key role in COP26 by facilitating the finalisation of the implementation of Art 6 of the Agreement in the Paris Rulebook (UK Government 2021a). However, within its borders, does Singapore perform as well?

Singapore’s Climate Plan Singapore’s enhanced NDC and Long-Term Low Emissions Development Strategy (“LEDS”) pledged to peak emissions at 65MtCO2 e by around 2030 (UNFCCC 2020). Emissions are targeted to be half of its peak by 2050, before achieving net-zero emissions “as soon as viable in the second half of the century” (NCCS 2020). The NDC and LEDS are grossly insufficient to meet the Goal (CAT 2021a). Being assessed to have “critically insufficient” NDCs poses a jarring contrast to the Singapore Green Plan 2030 (“SGP”) that was announced in 2021 with great government fanfare. (MSE 2021) Prima facie, the SGP is impressive. It states detailed key targets to be achieved by 2030 (Singapore Government 2021). Further, understanding that climate action must take place at all levels of society, the SGP adopts a multi-ministerial effort and has been declared a major policy priority for the government (Fu 2021). Upon closer inspection, however, the SGP is not ambitious enough for the implementation of the Agreement.

Case in Point: Renewable Energy A key target under the pillar of “energy reset” is increasing solar energy deployment by fivefold to meet around 3% of projected 2030 electricity demand (Singapore Government, 2021). As an equatorial island that receives plentiful sunlight, a 3% goal seems too modest. The government attributes this modesty to several challenges, each costing significantly more than if Singapore relies on existing non-renewable energy sources (NCCS 2022). Though locally produced solar power provides energy security, Singapore’s ability to host solar photovoltaics is constrained by cloud cover, humidity, and limited space (Andrews-Speed 2021). Moreover, it is more costly to maintain a solar panel that lasts 25 years than a gas-fired power station that lasts 40 years. With a pragmatic government concerned with providing low taxes, one can understand the hesitation to invest more in developing solar energy within Singapore. To overcome these challenges, Singapore should look towards importing renewable energy from its neighbours. Singapore could start a joint venture with Indonesia by investing its floating solar technology on Indonesian waters (Chong 2021). As the largest archipelago, Indonesia’s waters (without its land) is almost 119 times

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the area of Singapore (Embassy of Republic of Indonesia, n.d.; Singapore Government, 2020). Combining Singapore’s technology and Indonesia’s natural space would be a win–win for the economic and climate needs of both countries. Moreover, instead of importing most of its oil supply from the Middle East (US EIA 2021), diversifying imports to include renewable solar energy from Indonesia could provide better energy security given Indonesia’s geographical proximity. Eventually, this joint venture could expand to include other members of the Association of South-east Asian Nations (“ASEAN”). Presently, ASEAN’s import of oil is projected to increase from 65% today to 80% in 2040 (IEA 2019). Reliance on imports not only risks energy security but is also projected to cause net deficits in payments for energy trade of over US$300bn per year, which translates to government budget strains (IEA 2019). The caveat to investments in solar energy within the region is that there must be corresponding investments to improve the energy grid for storage and transportation of solar energy and political alignment (IEA 2019). Overall, capitalising on renewable energy production in ASEAN could alleviate the energy security concerns of the region while simultaneously allowing ASEAN members to phasedown its reliance on coal and commit to more ambitious NDCs.

Concluding Thoughts Like at the end of every COP, COP26 had some wins and some losses. These wins made COP26 consequential to parties’ future implementation of the Agreement, whereas the losses possibly point to two underlying problems that affect the Agreement’s implementation in the long term.

Dispute Resolution and Enforcement First, though difficult, the UNFCCC must have a mechanism for dispute resolution and enforcement of obligations. In COP26, the promised sum of adaptation finance necessary to developing countries remain undelivered. Although the GCP adopted “phasedown” instead of “phaseout”, the risk of China and India doing whatever best suits their national interests without regard for international promises remains. Admittedly, the non-binding nature of COPs attracts as many countries as possible, mobilising a global effort. However, in exchange for participation, international rule of law and trust can be sacrificed. One suggestion is for legally binding agreements to be formed between smaller groups of countries, so that it is easier for negotiation and enforcement of international obligations (Leal-Arcas 2020). Enforcement can then be done through an existing international dispute settlement instrument, such as the World Trade Organisation (“WTO”) Appellate Body, if all parties to this smaller UNFCCC group are also parties to the WTO. This makes sense since climate change mitigation actions

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are closely tied to international trade (Leal-Arcas and Morelli 2018). With legal enforcement frameworks, future COPs would have more teeth to implement the Agreement.

Different Mindset Second, and perhaps a more challenging problem, we need to change our mindset. Mitigating climate change is not about “saving the planet”, it is about saving us (Vox 2015). Since 1900, the number of people alive has quadrupled from 1.6 to 7.3bn, meaning that the capacity for suffering has also increased dramatically. Humans have had electricity for merely 0.07% of the 200,000 years since our species began. However, within only the next 80 years, we are on track to 3 °C if nothing is done. A 3 °C increase means a climate that directly threatens humankind’s territorial, food, and economic security (The Economist 2022). 0.07% of our time on Earth could spell the end of our species if bolder mitigatory actions are not taken. The Agreement and COPs are merely foundational steps to develop the system for climate action. Beyond COPs, nations, organisations, and individuals must recognise that climate change fundamentally threatens us, not animals or plants, but us. It is only through this recognition that there can be a real shift in mindset for solving climate change. Only then would COPs, a manifestation of political willpower at all levels of society, see more impactful actions.

References Åberg A et al (2021) COP26: what happened, what does this mean, and what happens next? Summary analysis. Chatham House Andrews-Speed P (2021) Commentary: why hasn’t solar energy in Singapore taken off in a big way after so long? Channel News Asia Bishop K (2021) China, India will have to explain themselves on coal, COP26 president says. CNBC Chong C (2021) Singapore now home to one of the world’s largest floating solar farms. Straits Times Climate action tracker: Singapore (2021a) Accessed from https://climateactiontracker.org/countr ies/singapore/ Climate action tracker: the CAT thermometer (2021b) Accessed from https://climateactiontracker. org/global/cat-thermometer/ COP26: what was agreed at the Glasgow climate conference? BBC (2021) Accessed from https:// www.bbc.com/news/science-environment-56901261 Embassy of the Republic of Indonesia: basic facts. Accessed from https://www.embassyofindone sia.org/basic-facts/ Fu G (2021) Accelerate and deepen efforts against climate change. Singapore Government, Singapore Parliamentary Debates International energy agency: coal: overview. Accessed from https://www.iea.org/fuels-and-techno logies/coal

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International energy agency: Southeast Asia energy outlook 2019 (2019). Accessed from https://iea.blob.core.windows.net/assets/47552310-d697-498c-b112-d987f36abf34/Southe ast_Asia_Energy_Outlook_2019.pdf International energy agency: total energy supply by source, India 1990–2019. Accessed from https:// www.iea.org/countries/india International energy agency: total energy supply by source, people’s Republic of China 1990–2019. Accessed from https://www.iea.org/countries/china International energy agency: total energy supply by source, United Kingdom 1990–2020. Accessed from https://www.iea.org/countries/united-kingdom International energy agency: total energy supply by source, United States 1990–2020. Accessed from https://www.iea.org/countries/united-states International energy agency, world coal consumption, 1978–2020 (2021). Accessed from https:// www.iea.org/data-and-statistics/charts/world-coal-consumption-1978-2020 Leal-Arcas R (2020) Climate clubs and international trade across the European and international landscape. Eur Energy Environ Law Rev 3 Leal-Arcas R, Filis A (2014) Certain normative aspects of the institutional architecture of global energy governance. Int Econ Law Afr Dev National climate change secretariat Singapore: submission of Singapore’s enhanced nationally determined contribution and long-term low-emissions development strategy to the United Nations framework convention on climate change (2020) National climate change secretariat Singapore: renewable energy (2022) Accessed from https:// www.nccs.gov.sg/faqs/renewable-energy/ OECD: statement by the OECD secretary-general on future levels of climate finance: developed countries likely to reach USD 100 billion goal in 2023 (2021) Sengupta S (2018) The world needs to quit coal. Why is it so hard? New York Times Singapore government: Singapore green plan 2030, Key Targets (2021) Singapore government: Singapore’s update of its first nationally determined contribution (NDC) and accompanying information’. UNFCCC (2020) Singapore Government: total land area of Singapore. Data.gov.sg (2020) Accessed from https:// data.gov.sg/dataset/total-land-area-of-singapore. Singapore ministry of sustainability and the environment: Singapore green plan 2030 promotional video (2021) Accessed from https://youtu.be/oNFeOl7pW9s Singh S, Sheldrick A, Browning N (2021) Down and Out? COP26 wording clouds way ahead on climate. Reuters. Accessed from https://www.reuters.com/business/cop/business-usual-globalfossil-fuel-firms-now-after-un-climate-deal-2021-11-15/ The Economist: This is what 3 of global warming looks like (2022) UK Government: COP26: The negotiations explained, UN climate change conference (2021a) Accessed from https://ukcop26.org/wp-content/uploads/2021a/11/COP26-Negotiations-Explai ned.pdf. UK Government: COP26: The Glasgow climate pact, UN climate change conference (2021b). Accessed from https://ukcop26.org/wp-content/uploads/2021b/11/COP26-PresidencyOutcomes-The-Climate-Pact.pdf UK Government: UN climate change conference UK 2021 (2021c) UK Government: COP26 Goals (2021d). Accessed from https://ukcop26.org/cop26-goals UNFCCC: Glasgow climate pact. Decision -/CP.26, advance unedited version (2021a) UNFCCC: new financial alliance for net zero emissions launches. External Press Release (2021b) UNFCCC: Paris agreement (2015) UNFCCC: private investments are crucial to achieve Paris goals (2017) UNFCCC: the Katowice climate package: making the Paris agreement work for all (2018) UNFCCC: the Paris agreement (Explanation) (n.d.). Accessed from https://unfccc.int/process-andmeetings/the-paris-agreement/the-paris-agreement UNFCCC standing committee on finance: fourth (2020) biennial assessment and overview of climate finance flows, Technical Report (2021e)

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United Nations Environment Programme (UNEP): adaptation gap report 2021: the gathering storm—Adapting to climate change in a post-pandemic world—Executive Summary (2021b) United Nations environment programme: emissions gap report 2021, the heat is on—a world of climate promises not yet delivered (2021a) US energy information administration: Singapore (2021) Vox: what people get wrong about climate change (2015) Woetzel J et al (2021) The rise and rise of the global balance sheet: How productively are we using our wealth?. McKinsey Global Institute (2021).

Chapter 3

Was COP26 Critical for the Implementation of the 2015 Paris Agreement? Daryl Yu Yang Teo

Abstract The most pertinent issue humanity faces is climate change. Nations have recognised this and have convened and debated at length. Many treaties have been signed, and of which, the most current and important is the Paris Agreement. Adopted in 2015 and entered into force on 4th of November 2016, the Paris Agreement represents a landmark in climate change processes. The agreement was the first time nations agreed on undertaking ambitious efforts to combat and adapt to climate change. However, substantive portions of the Paris Agreement were not concretised. In the following six years, five COPs have taken place, with the most recent being COP 26 held in Glasgow in November 2021. After COP 26, the Paris Agreement is finally fully operational. While compromises on many issues have been reached, upon closer inspection, glaring loopholes and gaps still exist within the Paris Agreement. In particular, the existence of loopholes and issues found in Article 6 could potentially undermine its implementation. Separately, the failure to provide vulnerable nations with climate financing and the lack of strong commitments promised by nations undermine the effectiveness of the Paris Agreement. This chapter will discuss the issues present and calls for greater action to be taken by nations to curb climate change.

Introduction The Paris Agreement is an international treaty on climate change, adopted in 2015 and entered into force on the 4th of November 2016 at COP 21. It was adopted by 196 parties. The Paris Agreement represents a landmark in climate change processes as it is the first time a binding agreement has been adopted, bringing all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to the its resulting effects. The Paris Agreement (n.d.).

D. Y. Y. Teo (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_3

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It has been close to six years since the Paris Agreement was entered into force. There have been five COPs since then, with the most recent being COP 26 held in Glasgow in November 2021. COP 26 had been delayed for a year due to the Covid19 pandemic. COP 26 was lauded by some as a critical moment for commitments and action, while other were disappointed that COP 26 failed to provide vulnerable nations with the money to rebuild and respond to the unavoidable impacts of climate change amongst other criticisms (Evans et al. 2021). This chapter aims to analyse whether COP 26 was indeed a critical moment for the implementation of the Paris Agreement (Conference of the Parties, Adoption of the Paris Agreement 2015) or if it would be seen in the future as merely another marker on the road of humanity’s inaction and inability to work together to combat climate change, leading to humanity’s eventual demise. This chapter argues that while some strides to combat against and mitigate climate change were indeed taken, COP 26 ultimately seems to be another nail in the coffin for humanity’s efforts to mitigate climate change.

COP 26 Finalised the Guidelines of the Paris Agreement Parties to the Paris Agreement agreed to a timeline of three years for the finalisation of guidelines as to the articles under the Paris Agreement. Subsequently, these guidelines were laid down at COP 24. COP 24 laid down guidelines such as substantive content that parties have to include in their nationally determined contribution. However, these guidelines were incomplete with regard to certain aspects of the Paris Agreement. COP 26 resolved these incomplete guidelines, namely the rules under Article 6, the framework under Article 13 and the procedures of the public registry, after which the Paris Agreement is now fully operational. A. Operative portions of Article 6 have been agreed upon, however, with loopholes and issues Article 6 is a complex article regarding carbon markets that was not agreed upon until the final day of the Paris negotiations in 2015. It was subsequently left unresolved at following COPs due to disagreements between parties on multiple issues (Evans and Gabbatiss 2019). Article 6 sets out that parties can choose to pursue voluntary cooperation in the implementation of nationally determined contributions (“NDCs”) (Conference of the Parties, Adoption of the Paris Agreement 2015) It aims to allow parties to work towards NDCs through the use of market and non-market methods. While COP 24 set out the Paris Rulebook on the substantive content to be included for NDCs, the operative parts of Article 6 were not agreed upon (Kizier et al. 2019).

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Without the operative parts of Article 6 being agreed upon, Article 6 could potentially weaken NDCs and increase global emissions through double counting, additionality and failing to deliver increased ambition and progression (Kizier et al. 2019). (1) Article 6.2 Article 6.2 covers bilateral actions to reduce or remove greenhouse gases (“GHGs”) emissions. COP 26 substantiated the cooperative approaches established in Article 6.2 by allowing parties to trade emission reductions outside of an existing international framework. This allows for existing emission programmes to be connected to other emission programmes in other countries and regions (Questions and Answers on COP26). In doing so, the trade of emission reductions is facilitated. Separately, Article 6.2 clearly states that environmental integrity, transparency and robust accounting are required in such cooperative approaches. As aforementioned, no rules were previously agreed upon for the accountability and transparency of the trading systems. This was due to some countries such as Brazil requesting for exemptions which would have led to double counting, and hence, stalling negotiations (Evans and J. 2018). Further, as parties have different goals in their respective NDCs such as targets for GHG emissions and renewable energy targets and NDCs do not cover all aspects of a country’s emissions, it remained a challenge to meld NDCs with emissions trading (Evans and J. 2018). Many parties held the view that they should be able to engage in international carbon markets with their NDCs as they were, and this stalled negotiations as well. COP 26 saw the adoption of comprehensive accounting rules for the international transfer of emission reductions (Leva and Vaughan 2021) while avoiding the potential pitfalls of double counting, additionality and failing to deliver increased ambition and progression. Parties that were previously not in agreement moved away from their positions, and an eventual outcome was achieved. Under the accounting framework adopted, two parties engaging in the transfer of carbon market units must make opposite entries to their emission reports—the country selling carbon units makes an addition to its emission levels, while the country purchasing carbon units makes a subtraction to its emission levels. Doing so would prevent potential double counting as only the buyer country can use the carbon units. Accounting was also agreed upon to be conducting in GHG emissions metrics, in tonnes of CO2 equivalent. Countries would have to quantify the impact in GHG emissions balance. The accounting rules also prevent the carrying of any carbon units from one period to another, and this would prevent parties from abusing generation of large amounts of carbon market units in one period and carry them forward to another period to meet the climate goals in another target period.

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However, the accounting framework is criticised for having a loophole—the rules to address that many countries have a climate target for a single year only (Schneider 2021). The ‘averaging’ approach is allowed under the accounting framework. This might potentially lead to increased emissions. An example of which would be when carbon credits are used by airlines to offset their emissions under the Carbon Offsetting and Reduction Scheme for International Aviation adopted by the International Civil Aviation Organisation (Schneider 2021). In doing so, half of the emission reductions would be double-counted, thus undermining the aims of the accounting framework. (2) Article 6.4 Article 6.4 established a voluntary mechanism—the Sustainable Development Mechanism (“SDM”), to contribute to the mitigation of GHG emissions (Conference of the Parties, Adoption of the Paris Agreement 2015) It creates a centralised governance system for parties and organisations to trade carbon emission credits anywhere in the world and replaces the Clean Development Mechanism (“CDM”) created under the Kyoto Protocol. COP 26 established comprehensive rules for the mechanism under the supervision of the Conference of the Parties (Report of the Conference of Parties serving as the meeting of Parties to the Paris Agreement 2022). COP 26 clarified the role of the Conference of the Parties and the rules of the procedure for the supervisory body (Report of the Conference of Parties serving as the meeting of Parties to the Paris Agreement 2022). Further, ‘activity’ and ‘emission reduction’ have been clarified with their respective definitions (Report of the Conference of Parties serving as the meeting of Parties to the Paris Agreement 2022). Guidance for the new crediting mechanism under Article 6.4 shows the ambition of parties to combat climate change, which is a step forward in the right direction. However, there are issues with Article 6.4 that are still unclarified. The new Article 6.4 mechanism creates two types of carbon credits, namely one that is authorised and backed by corresponding adjustments and one that is not. This presents an issue as purpose of the non-authorised units is unknown. While there is consensus on these units being used domestically, countries have argued that these carbon units could potentially be used to offset claims in the voluntary carbon market (Leva and Vaughan 2021). While several parties have attempted to introduce language into the agreement on how to govern the use of these credits, no consensus was reached. This presents an issue as to how governments should regulate organisations using these credits to claim for carbon offsets (Schneider 2021). Another contentious issue that stalled negotiations for Article 6.4 was the trading of surplus credits from the CDM scheme on the SDM. Nations such as Brazil, China and India argued that projects under the CDM scheme should continue to issue carbon credits and that Certified Emission Reductions (“CERs”) issued under the CDM could be used to achieve NDCs (Farand 2019). No consensus was reached on negotiation in the past COPs. COP 26 saw a compromise being agreed upon, whereby the terms of these nations were accepted in exchange for the comprehensive accounting system (Paterson 2021).

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These CDM projects are criticised to be mired in corruption and human rights abuse (Filzmoser and Wolpold-Bosien 2011), and many of these projects are also found unlikely to cut emissions (Buen and Criticisms 2013). Further, the use of CERs to achieve NDCs would undermine climate goals as these emission reductions would flood the market (Fernehough et al. 2018). Lastly, by transitioning CDM projects to the SDM scheme and allowing such projects, emission reductions that would have occurred regardless can be sold on the market. This would further undermine climate goals. (3) Article 6.8 Article 6.8 provides for the facilitation and collective coordination of non-market approaches (“NMAs”) to be undertaken by countries to implement NDCs (Conference of the Parties, Adoption of the Paris Agreement 2015) These NMAs allow for parties to invest in finance, technology transfer and capacity building amongst others. However, the text of Article 6.8 was left undefined. COP 26 saw Article 6.8 being defined and completed (Report of the Conference of Parties serving as the meeting of Parties to the Paris Agreement 2022). However, while Article 6.8 has largely been agreed upon, there are still some minor issues that remain, namely parties’ views on the topics contained in paragraphs 6(a–d) of the decision (Report of the Conference of Parties serving as the meeting of Parties to the Paris Agreement 2022). The Conference of the Parties has invited parties and observers to submit their views on these issues, and no consensus has been reached yet (Submissions–Work programme under the framework for non-market approaches referred to in Article 6, paragraph 8, of the Paris Agreement (n.d.)). With the operative parts of Article 6 being largely agreed on and implemented, Article 6 provides incentives for private sector investments in countries that are less developed, and these countries would be able to advance their technological development to combat and mitigate against the effects of climate change. While the rules in Article 6 are important and represent a significant breakthrough in the collective efforts to reduce carbon emissions, the existence of loopholes and other issues could potentially undermine these efforts and render Article 6 a failure when it comes to actual implementation. Nations and organisations that utilise Article 6 need to do more to ensure integrity and accountability to prevent the exploitation of the loopholes. B. Agreement on emissions reports and guidelines under Article 13 reached Article 13 calls for an enhanced transparency framework to provide action and support for the implementation of achieving climate goals. It ensures that parties work with each other while accounting for each country’s different capacities and builds upon collective experience (Conference of the Parties, Adoption of the Paris Agreement 2015) To ensure collaborative efforts are made, Article 13 calls for transparency between parties. However, no agreement was made on the contents of each country’s reports and guidelines were vague.

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At COP 26, an agreement was made as to the content of the reports, such as common reporting tables, common tabular formats, outlines for the biennial transparency report and a training programme for technical experts participating in the technical expert review of biennial transparency reports (Guidance operationalizing the modalities, procedures and guidelines for the enhanced transparency framework referred to in Article 13 of the Paris Agreement (n.d.) UNFCC Website). C. Common time frames for NDCs have been agreed upon Common time frames for the submissions of NDCs were not agreed upon under the Paris Agreement. Article 4.10 of the Paris Agreement simply called upon the Conference of the Parties to consider common time frames for NDCs without agreeing on a time frame. Several parties thought that there were two options for a common time frame: five and ten years, each with separate pros and cons (Vaidyula 2018), and ultimately ended with a decision not being made. At COP 26, common time frames for NDCs have been agreed upon, whereby the five-year time frame is adopted (Common time frames for nationally determined contributions referred to in Article 4, paragraph 10, of the Paris Agreement 2021). With the five-year time frame being adopted, there would be more opportunities to make adjustments to the NDCs to incorporate the effects of technological developments (Vaidyula 2018). Further, having a shorter time frame could favour enhanced ambitions as it would provide more opportunities for political moments where the issue of climate change is high on the international agenda, thus spurring on collective efforts. D. Guidelines for the implementation of a public registry were finalised Under Article 4.12 and Article 7.12 of the Paris Agreement, a public registry is to be used for the submission of NDCs, and submission and updating of an adaptation communication, respectively. The development of such a registry was stalled as modality, and procedures for the use of this public registry were not agreed upon. COP 26 finally resulted in the adoption of modalities and procedures for the operation and use of the public registry (Allan et al. 2021). At COP 26, the CMA directed the secretariat to adopt a prototype as the public registry and finalise its implementation. This public registry is to be made available for use by 1 June 2022. Regarding Article 4.12, parties are to verify their names, document titles, document file type, version number, status, language and date of submission (Modalities and procedures for the operation and use of a public registry referred to in Article 4, paragraph 12, of the Paris Agreement 2021). Regarding Article 7.12, parties are to do the same as Article 4.12, but with the additional requirement of hyperlinking to corresponding documents containing the adaptation communications (Modalities and procedures for the operation and use of a public registry referred to in Article 7, paragraph 12, of the Paris Agreement 2021). While the adoption and implementation of the public registry on its face seem minor and purely logistical, the public registry represents a collective effort by parties

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to be transparent and accountable about their national goals and dealings with climate finance.

Some Aspects Under the Paris Agreement Were Strengthened upon On a macro level, the aims of the Paris Agreement are to have a stronger response to the dangers of climate change. Article 2 broadly describes the three main goals of the Paris Agreement, which are: 1. To minimise the increase in global average temperatures to well below 2 degrees Celsius above pre-industrial levels and pursue efforts to limit temperature increase to 1.5 °C above pre-industrial levels; 2. To increase the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production; 3. Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. These three goals have arguably been strengthened in some aspects and weakened in others, which would be discussed in the following section. A. Stronger pledges under the ‘ratchet mechanism’ of the Paris Agreement The ‘ratchet mechanism’ is used to describe the requirement of nations revising and communicating their NDCs every five years as part of Article 4 of the Paris Agreement. The revision and amendment to plans and promises to tackle climate change would progressively be more ambitious, with more action being promised every five years. In the run-up to COP 26, many major emitters such as the EU, the USA and Japan have submitted significantly stronger targets. Several leading middle-income economies such as Argentina and Chile have also done the same. All of these new and updated NDCs include elements to reduce or limit GHG emissions, and most of the nations have adopted a target to reduce GHG emissions, as encouraged by the Paris Agreement (Fransen 2021). Separately, the end of COP 26 saw 74 parties having pledged to achieve net-zero targets. The increased ambition of nations bodes well for the aims of the ratchet mechanism, which is being cranked up to limit the rise in global temperatures per the goals of the Paris Agreement. If nations continuously increase their ambitions with every five-year period, there might still be hope yet that global warming could be limited to 1.5 °C. B. Agreement on phasing down coal-fuel energy

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For the first time ever in a COP text, parties have agreed to ‘phase down’ on coalfuelled energy and phase out other subsidies on other inefficient fossil fuels (Pact and UNFCC website). It is the first time that wording targeting specific energy sources was included in a COP text. Over 40 countries have agreed to phase out coal in richer countries by 2040 and in poorer countries by 2050 (Palmer 2021). This represents a momentous shift in the balance to move towards cleaner sources of energy. C. Progress made on efforts to adapt to climate change Under the Paris Agreement, Article 7 established a global goal on adaptation of enhancing adoptive capacity, strengthening resilience and reducing vulnerability to climate change. It broadly aims to support all nations in adapting to the changing global climate. Progress was made in advancing efforts to adapt to climate change at COP 26. Countries agreed to launch a two-year effort to define a ‘global goal on adaptation’ (Pringle 2021). The Glasgow–Sharm el-Sheikh work programme on the global goal on adaptation was adopted (Matters relating to Adaptation 2021). Significant steps were taken in defining the institutional arrangements, scope, objectives, modalities and activities of the work programme and are aimed to for conclusion at COP 28. Separately, nations have committed to double the collective share of adaptation finance within the $100 billion annual target for the period of 2021–2025 (Pringle 2021). These efforts are in line with the Global Goal on Adaptation under the Paris agreement, which was established to increase the status of and financial flows to countries’ adaptation activities.

Some Goals of the Paris Agreement Were not Achieved While COP 26 was a step in the right direction and disagreements on many thorny issues have been resolved, there are certain aspects of the Paris Agreement that were not addressed, namely the lack of stronger commitments to reduce emissions and the failure to agree on financing for vulnerable countries. A. Failure to provide vulnerable nations with climate financing (1) Failure in creation of a ‘loss and damage’ fund Previous discussions at COPs have resulted in pledges amounting to US$100 billion in climate financing annually from 2020. However, these pledges were broken (Timperley 2021). While the issue of climate finance was negotiated during COP 26 and there was consensus in the need to continue increasing support to developing countries as aforementioned, there was failure in concretizing future plans to provide vulnerable

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nations with the money to rebuild and respond to the unavoidable impacts of climate change. This was especially the case for the creation of a ‘loss and damage’ fund, whereby climate vulnerable nations would be compensated for damages resulting from emissions that were created by other nations (Rowling 2021). Many low-lying small island nations had called for such a fund to be created, but nations such as the USA and Australia disagreed with negotiations by pushing back that industrialised countries should not compensate others for the damage caused (Rowling 2021). Optimistically, COP 26 established the Glasgow dialogue for the discussion on the needs of vulnerable nations and the creation of a finance facility and a resource mobilisation strategy for finance for ‘loss and damage’ (Schalatek and Roberts 2021). However, it is essential that such discussions are more than talks and result in the eventual funding for vulnerable nations. Considering the pushback by developed nations in funding, it seems rather unlikely that a consensus would be achieved in subsequent years. (2) Insufficient funds pledged to meet mitigation, adaptation and loss and damage Even though COP 26 reaffirmed the $100 billion goal for annual climate finance delivered to developing countries through 2025, this sum is a meagre amount. African nations, in the lead up to COP 26, have called for financing to be scaled up to $1.3 trillion per year by 2030 as they believed that such was the sum required for adaptation purposes (Rumney 2030). While this sum might be exaggerated, it is believed that developing countries currently need $70 billion annually, with the amount rising to $300 billion annually by 2030 (Neufeldt et al. 2020). Further, looking at the history of climate financing, it seems unlikely that even the $100 billion goal would be achieved, much less the larger sum required in 2030. Research has shown that the USA has consistently fallen short of their fair share of the amount to be contributed (Timperley 2021). While US president Biden had promised that the nation would provide $11.4 billion in financing by 2024, this promise is subjected to Congress approval (Timperley 2021). While the COP can reaffirm pledges and goals, it is all for naught if no practical action is taken. B. Lack of strong commitments potentially results in 1.5 °C goal not being achievable The 1.5 °C aim under Article 2 is unlikely to be achieved. While parties have acknowledged the need to reduce emissions, agreed to report on progress annually and have taken steps to do so, COP 26 has stopped short of the ambitions made in Paris. (1) Reducing reliance on coal is not enough It is particularly noteworthy that the text in the Glasgow Climate Pact only calls on nations to ‘phase down’ on the use of coal (Pact and UNFCC website). This was done intentionally, as objections from big coal users such as China and India resulted in the change of the initial phrasing of ‘phase out’ to ‘phase down’ (Arima 2022). China and India rely heavily on coal for energy and are ranked in the top three consumers

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of coal worldwide, accounting for 64% of global coal consumption (Palmer 2021). They also account for about 35% of global GHG emissions (Palmer 2021). These countries were absent inpledges to ‘phase out’ the use of coal and as parties to the Glasgow Climate Pact, merely need to ‘phase down’ reliance on coal. Taking an optimistic view, these nations could eventually phase out the usage of coal, but on the other extreme, these nations would only very gradually reduce reliance on coal-fuel energy without making much of a change. It seems the latter is likely considering how hard the nations insisted on changing the phrasing of the text. This ‘phasing down’ on the burning of coal, although a step in the right direction, would merely slow down the pace of climate change and is arguably insufficient. Efforts also need to be focused on other ‘dirty’ sources of energy such as oil and gas and build upon the momentum generated by COP 26. (2) The NDCs pledged are insufficient to achieve the 1.5 °C goal of the Paris Agreement While it is indeed true that countries could potentially update their NDCs with progressively more ambitious goals as aforementioned, the current NDCs pledged, taken together with the net-zero targets, are insufficient to meet the 1.5 °C goal set in the Paris Agreement. Pre-Paris, GHG emissions were projected to reach 60 gigatonnes CO2 by 2030, which would be double the amount of GHGs required to limit global warming to 1.5 °C (Fransen 2021). With the current NDCs pledged, only roughly 10% of the GHG emissions are cut. Estimates of the next round of cuts would amount to another 10% (Fransen 2021). Dramatic progress would have to be made to achieve the 1.5 °C goal. Further, some nations such as China, Russia and Indonesia have not updated their NDCs with more ambitious targets. Other nations such as Brazil and Mexico have updated their NDCs with even less ambitious targets (Retallack 2021). These nations are major emitters, and without their commitment, it is unlikely that the 1.5 °C goal would be achieved. With the Paris Agreement being structured such that a bottom-up approach is taken, whereby nations volunteer commitments rather than one where nations are directed to meet certain global goals, the scope for altering each nation’s NDC is rather limited. This presents a problem as these nations cannot be strong-armed into updating their NDCs with more ambitious targets.

Conclusion COP 26 has given humanity a glimmer of hope by strengthening arguably the most important aspects of the Paris Agreement—limiting the effects of climate change, as well as preventing further escalation of global warming. While this is definitely a step

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in the right direction, many loopholes and unresolved issues still remain. Whether these issues are resolved in the future would remain to be seen. In spite of the many pledges being made at the climate summit, the world is projected to be heading to a 2.4 °C increase in global temperatures (Climate Action Tracker 2022). Nations can wax lyrical in the discussions during the COPs, but if no significant action is taken, humanity is staring into a deep abyss that might be impossible to dig out of. There will no longer be any need for discussions on how to finance adaptation and mitigation and how to limit climate change if the planet as we know it today changes into an uninhabitable wasteland. This author, for one, thinks that it might be time to look into moving to another planet after having done the research for writing this chapter of the book.

References Allan J, Bansard J, Jones N, Luomi M, Tan JM, Sun YX (2021) Glasgow climate change conference. Earth Negotiations Bull 12:793. Retrieved from https://enb.iisd.org/sites/default/files/2021-11/ enb12793e_1.pdf Arima J (2022) COP26 assessment and challenges. Vox EU website. https://voxeu.org/article/cop26assessment-and-challenges Buen J (2013) CDM criticisms. FNI Climate Policy Perspectives 8 Climate Action Tracker (2022) 2100 Warming Projections: Emissions and expected warming based on pledges and current policies. https://climateactiontracker.org/global/temperatures/ Common time frames for nationally determined contributions referred to in Article 4, paragraph 10, of the Paris Agreement (2021). UNFCC Website. https://unfccc.int/sites/default/files/resource/ cma2021_L12_adv.pdf Conference of the Parties, Adoption of the Paris Agreement (2015) U.N. Doc. FCCC/CP/2015/L.9/Rev/1. https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf Di Leva CE, Vaughan S (2021) The Paris agreement’s new Article 6 rules. Retrieved from https:// www.iisd.org/articles/paris-agreement-article-6-rules Evans S, Gabbatiss J (2019) In-depth Q&A: How Article 6 carbon markets could make or break the Paris Agreement. Retrieved from https://www.carbonbrief.org/in-depth-q-and-a-how-article6-carbon-markets-could-make-or-break-the-paris-agreement Evans S, Timperley J (2018) COP 24: key outcomes agreed at the UN climate talks in Katowice. Retrieved from https://www.carbonbrief.org/cop24-key-outcomes-agreed-at-the-unclimate-talks-in-katowice Evans S, Gabbatiss J, McSweeney R, Chandrasekhar A, Tandon A, Viglione G, Hausfather Z, You XY, Goodman J, Hayes S (2021) COP26: key outcomes agreed at the UN climate talks in Glasgow. Retrieved from https://www.carbonbrief.org/cop26-key-outcomes-agreed-at-the-un-cli mate-talks-in-glasgow Farand C (2019) What is Article 6? The issue climate negotiators cannot agree. Retrieved from https://www.climatechangenews.com/2019/12/02/article-6-issue-climate-negotiators-can not-agree/ Fernehough H, Day T, Warnecke C (2018) Discussion paper: marginal cost of CER supply and implications of demand sources. Retrieved from https://www.dehst.de/SharedDocs/downloads/ EN/project-mechanisms/Marginal-cost-of-CER-supply.pdf?__blob=publicationFile&v=1 Filzmoser E, Wolpold-Bosien M (2011) Press release: United Nations under pressure to denounce human rights abuses in carbon offsetting scheme. Retrieved from https://carbonmarketwatch. org/2011/04/18/press-release-united-nations-under-pressure-to-denounce-human-rights-abusesin-carbon-offsetting-scheme/

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Fransen T (2021) Making sense of countries’ Paris agreement climate pledges (2021). WRI Website. Retrieved from https://www.wri.org/insights/understanding-ndcs-paris-agreement-cli mate-pledges Glasgow climate pact, UNFCC website. Retrieved from https://unfccc.int/sites/default/files/res ource/cma3_auv_2_cover%20decision.pdf Guidance operationalizing the modalities, procedures and guidelines for the enhanced transparency framework referred to in Article 13 of the Paris Agreement (n.d.) UNFCC Website. https://unf ccc.int/sites/default/files/resource/cma3_auv_5_transparency_0.pdf Kizier K, Levin K, Rambharos M (2019) What you need to know about Article 6 of the Paris agreement. Retrieved from https://www.wri.org/insights/what-you-need-know-about-article-6-parisagreement Matters relating to Adaptation (2021) U.N Doc. FCCC/PA/CMA/2021/L.14 https://unfccc.int/sites/ default/files/resource/cma2021_L14E.pdf Modalities and procedures for the operation and use of a public registry referred to in Article 4, paragraph 12, of the Paris agreement (2021). UNFCC Website. https://unfccc.int/sites/default/ files/resource/cma2021_L04E.pdf Modalities and procedures for the operation and use of a public registry referred to in Article 7, paragraph 12, of the Paris agreement (2021). UNFCC Website https://unfccc.int/sites/default/ files/resource/cma2021_L05E.pdf Neufeldt H, Christiansen L, Dale TW (2020) Adaptation Gap Report. United Nations environment programme. Retrieved from https://backend.orbit.dtu.dk/ws/portalfiles/portal/238807594/AGR 2020.pdf Palmer I (2021) Coal is out at COP26. Forbes Website. https://www.forbes.com/sites/ianpalmer/ 2021/11/13/coal-is-out-at-cop26--except-for-countries-where-its-still-in/?sh=ddd442714f3a Paterson M (2021) COP26 agreed rules on trading carbon emissions. Retrieved from https://the conversation.com/cop26-agreed-rules-on-trading-carbon-emissions-but-theyre-fatally-flawed173922 Pringle P (2021) Global goal for adaptation must be locally driven. Retrieved from https://climat eanalytics.org/blog/2021/global-goal-for-adaptation-must-be-locally-driven/ Questions and Answers on COP26 (n.d). European commission website. https://ec.europa.eu/com mission/presscorner/detail/en/qanda_21_5482 Report of the conference of parties serving as the meeting of parties to the Paris agreement (2022). FCCC/PA/CMA/2021/10/Add 1 Retallack S, COP26: genuine progress? (2021) Carbon trust website. https://www.carbontrust.com/ news-and-events/insights/cop26-genuine-progress-or-too-little-too-late Rowling M (2021) Climate ‘loss and damage’ earns recognition but little action in COP 26 deal. Retrieved from https://www.reuters.com/business/cop/climate-loss-damage-earns-recogn ition-little-action-cop26-deal-2021-11-13/ Rumney E (2021) African governments want climate finance to hit $1.3 trillion by 2030. Retrieved from https://www.reuters.com/business/sustainable-business/exclusive-african-govern ments-want-climate-finance-hit-13-trillion-by-2030-2021-10-06/ Schalatek L, Roberts E (2021) Deferred not defeated: the outcome on loss and damage finance at COP26 and next steps. Retrieved from https://us.boell.org/en/2021/12/16/deferred-not-defeatedoutcome-loss-and-damage-finance-cop26-and-next-steps Schneider L (2021) COP26 in Glasgow delivered rules for international carbon markets. Retrieved from https://blog.oeko.de/glasgow-delivered-rules-for-international-carbon-markets-how-goodor-bad-are-they-cop26/ Submissions–Work programme under the framework for non-market approaches referred to in Article 6, paragraph 8, of the Paris Agreement (n.d.). UNFCC Website https://unfccc.int/pro cess-and-meetings/the-paris-agreement/the-paris-agreement/cooperative-implementation/sub missions-work-programme-under-the-framework-for-non-market-approaches-referred-to-in-art icle-6#eq-1

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The Paris agreement (n.d.). UNFCC website. https://unfccc.int/process-and-meetings/the-paris-agr eement/the-paris-agreement Timperley J (2021) The broken $100 billion promise of climate finance. Retrieved from https:// www.nature.com/articles/d41586-021-02846-3 Vaidyula M (2018) Common time frames: summary of discussions at the March 2018 climate change expert group global forum. OECD Website. https://www.oecd.org/env/cc/Common-time-framessummary.pdf

Chapter 4

Can the Political Process in Washington Create Policy for Meaningful Greenhouse Gas Emissions Reductions? Samuel Wong

Abstract In this chapter argues that today, greenhouse gas (“GHG”) emissions continue to be the main perpetrator of climate change. The United States of America (the “USA”) is historically a significant contributor to global GHG emissions, and its participation in international agreements is crucial for the agreements’ success. However, the author observes that the domestic processes within the USA’s political sphere prevent policy for meaningful GHG emissions reductions from materialising. The problem is twofold. First, the USA’s executive processes are inconsistent. Second, the USA’s congressional processes are systemically deficient and experiences strong economic interests underpinning the vote of members. Cumulatively, these political processes prevent policy targeted at reducing GHG emissions from materialising. To advance a major climate change initiative, solidifying the USA’s stance to climate change, the author puts forth three suggestions: (1) an establishment of an independent climate change committee within the USA; (2) a government spearheaded campaigned targeted at changing public perception of climate change; and (3) the USA’s entry into a “climate club”.

Introduction Greenhouse gas (“GHG”) emissions are the predominant cause of climate change in the world today.1 The most common types of GHG emissions are carbon dioxide and methane, emitted mainly through the burning of fossil fuels to produce energy.2 Such emissions trap heat within the Earth’s atmosphere, consequently exacerbating global warming. A key actor in the global climate change arena is the United States of America (the “USA”), where both its national and transnational policies with respect to GHG emissions have been the constant subject for debate. Given its historically high contributions to global GHG emissions and economic prosperity,3 the USA’s participation in any international agreement is crucial for a meaningful reduction in GHG emissions. For a concerted global effort to reduce S. Wong (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_4

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GHG emissions, the USA must be a key player, spearheading and showing its support for greater climate change reforms. However, as will be revealed in this chapter, the USA’s political processes are far from robust as they often create significant hurdles to a successful policy for meaningful GHG emissions reduction. I present this chapter in two sections. First, I argue that the political processes in the USA cannot create policy for meaningful GHG emissions reductions. Second, I suggest that there are three changes that need to be enacted for a major climate change initiative to advance. In the first section, I argue that the USA’s executive processes are inconsistent and unable to create policy for meaningful GHG reductions’ emissions. I also argue that the USA’s congressional processes suffer from systemic deficiencies and strong economic interests that prevent policies from even being enacted. In the second section, I first suggest that a Climate Change Committee to be established. Second, I suggest that public perception in the USA to be improved. Third, I suggest that at a global level, the USA should join mutually beneficial smaller-scale treaties.

The Political Process in the USA Cannot Create Policy for Meaningful GHG Emissions Reductions For GHG emissions reductions to be considered meaningful, I propose that any actual reductions must either meet or exceed the reduction target as set out by a policy, and any policy proposing reductions must have an objective that is supported by projections clearly indicating overall GHG reductions. This policy must be concretised and approved by either the legislature or executive, clearly setting out scientifically backed targets and goals for industries to meet over time. This definition of meaningful is justified from a quantitative and performative angle. For policy to be considered successful, it is logical for actual figures to meet goals. An example of this would be from the Montreal Protocol in 1987.4 Under the Montreal Protocol, the USA successfully achieved its initial goal of phasing out the use of chlorofluorocarbons by 1996.5 The USA’s complete removal of chlorofluorocarbons is meaningful as it achieved this target made under the Montreal Protocol.6 Hence, I similarly suggest that GHG emissions reductions will be meaningful when reductions meet or exceed reduction targets set out in policy. As a requirement for legitimacy, I also suggest that such a policy must have legal and political foundations. This policy should be backed by proper scientific research for any GHG emissions reductions to be considered meaningful. Turning to the first section of this chapter, I argue that the political process in the USA cannot create policy for meaningful GHG emissions reductions. In the USA, the political process on climate change predominantly includes the processes of the Executive (consisting of the President and the President’s Cabinet) and Congress (consisting of the House of Representatives and the Senate).

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First, at the executive level, I opine that the executive processes in the USA are inconsistent to create policy for meaningful GHG reductions’ emissions. Second, at the congressional level, I argue that there are systemic deficiencies and economic interests that prevent policies for GHG emissions reductions from even occurring.

The USA’s Executive in Relation to GHG Emissions Reduction The key players within the USA’s executive branch are the President and the Cabinet.7 Article II of the USA’s Constitution confers upon the President executive power to make decisions.8 During the executive administration under President Obama (the “Obama administration”) in 2016, President Obama signed the Paris Agreement without congressional approval.9 This was a brazen move by the Obama administration towards a pro-reduction position for GHGs, reaffirming the USA’s commitment to fighting climate change. Without examining the basis at which President Obama had derived such wide powers from,10 it is observed that executive action can create policy for meaningful GHG emissions reductions. On an international level, during the Obama administration, the USA had pledged a GHG reduction target of “26% - 28% below 2005 levels by 2025” in fulfilment of its nationally determined contribution (“NDC”) under the Paris Agreement.11 Although NDCs are non-binding12 and the USA is not held to its targets, this is still observed to be meaningful as it clearly projects an overall GHG reduction of “80% below 2005 levels by 2050”.13 There is therefore a clear objective to fulfil this target. Furthermore, on a national level, the Obama administration had leveraged on existing federal authority to reduce GHG emissions.14 For instance, under the “Climate Action Plan”,15 the Obama administration introduced new regulations by means of the Environmental Protection Agency, aimed at reducing methane emissions by “40% - 45% from 2012 levels by 2025”.16 Such policies create meaningful GHG emissions reductions as they project an overall reduction of “33 million tonnes”,17 clearly indicating an objective for the USA to work towards. Controversially, the executive administration under President Trump (the “Trump administration”) withdrew from the Paris Agreement in 2017,18 signifying a radical shift away from the Obama administration’s pro-GHG reduction stance. Although not directly pertaining to the reduction of GHGs, such policy can be considered meaningful as it provided a concrete plan and direction from the Trump administration on climate change. Thankfully, the current executive administration under President Biden (the “Biden administration”) re-entered the Paris Agreement in 2021—once again affirming the USA’s commitment to fighting climate change.19 In fulfilment of its NDC under the Paris Agreement, the Biden administration set a comparatively more ambitious target as compared to the Obama administration. It pledged a GHG reduction target of “50%–52% below 2005 levels by 2025”,20 with an overall aim of achieving “net-zero emissions” by 2025.21 Similar to the Obama administration,

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such policy will create meaningful GHG emissions reductions as it clearly provides an objective for the USA to work towards. Although the Obama and Biden administrations have set out policies for meaningful GHG emissions reductions, I argue that such actions are inconsistent between the administrations and therefore cannot create policy for meaningful GHG emissions reduction in the long term. Individually, the Presidential administrations have provided their respective targets for the USA to work towards. However, on a practical level, it will not bring about meaningful GHG emissions reductions as the targets are constantly shifting. The Obama administration aimed at an 80% reduction by 2025, the Trump administration denounced the Paris Agreement, and the Biden administration aimed for net-zero emissions by 2025. Such inconsistent targets within the span of three administrations frustrate companies and individuals, preventing them from setting concrete goals to achieve such targets,22 potentially failing to meet the overall targets set out for 2025. Therefore, on a specific individual level, each administration (save for the Trump administration) did attempt to make policy for meaningful GHG emissions reductions. However, holistically considering the overall direction from the Presidential office, its inconsistent approach to climate change might not, in the long run, bring about meaningful GHG emissions reductions as targets set are inconsistent. I am cognisant of the argument that different Presidential administrations deal with different challenges and climate change is an ever-evolving issue,23 thus suggesting that goals must be revised periodically. However, I observe that the climate goals as put forth by each Presidential administration radically change the USA’s climate change policy. Goals set by the Obama administration were renegaded by the Trump administration. Since there is a four-year tenure for each sitting President, climate goals cannot be meaningfully pursued before they are adjusted when a new President assumes office. Furthermore, by examining the actions of some administrations, I argue that they do not clearly set out concrete policies for GHG emissions reduction, but merely set out general guidelines. These guidelines do not achieve any meaningful GHG emissions reduction. The Biden administration has extensively leveraged on the use of executive orders, which are “directive[s] issued by the President, ‘directing the executive branch in the fulfillment of a particular programme’”.24 In the context of climate change, executive orders allow the President to direct the Cabinet to advance climate agendas without the need for Congress approval.25 The Biden administration has, through executive orders, rallied the Federal Government to adopt a pro-climate change stance. Such executive orders include E.O. 14,008 which addressed climate change in a “whole-of-government approach”.26 However, such guidelines do not contain concrete directions for federal action. Instead, they merely urge the Federal Government to “prioritise action on climate change in their policy-making and budget processes”.27 These guidelines do not result in meaningful GHG emissions reductions as they do not provide any discrete projections and targets for the Federal Government to meet. Without any target, such

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guidelines are meaningless as they might not achieve the outcome of reducing the USA’s GHG emissions. Therefore, given that the USA’s Presidential climate policy is inconsistent and shown to centre around non-binding guidelines, the executive process in the USA cannot create policy for meaningful GHG emissions reductions.

The USA’s Congress in Relation to GHG Emissions Reduction The USA’s Congress is a bicameral system, consisting of the House of Representatives (the “House”) and the Senate.28 For laws to be made and ratified, bills must be agreed upon by both sides of Congress.29 In my view, the USA’s Congress suffers from systemic deficiencies and economic interests that prevent policy from even being enacted. As such, at the congressional level, the USA’s political processes cannot create any policy for meaningful GHG emissions reductions. First, the USA’s legislative system is partisan, with party support divided between the democrats and republicans. In both the House and the Senate, the “majority party’s task is to set the legislative agenda and the minority party’s right is to attempt to amend pending legislation during the process”,30 often through debate. Since members of Congress are expected to vote in support of their party’s agenda,31 this polarises the debate on climate bills within Congress. To this end, the very nature of a democratic representation makes the passing of climate bills hard due to partisan voting between two diametrically opposite political parties. Often, the minority party would attempt to delay the passing of climate change bills through filibustering. Filibustering is a Senate rule allowing a senator to lengthen the debate on certain legislative issues, hindering legislative progress.32 Without approval from more than 60 senators, the filibuster cannot be closed and overcome.33 An example of filibustering hindering climate policy occurred during the Waxman-Markey bill during the Obama administration in 2009 which sought to introduce a “cap-and-trade mechanism to achieve a reduction in GHG emissions”.34 It proposed a hard reduction on GHG emissions over time, with a goal of 80% reduction by 2050. Although these goals were the NDC under the Paris Agreement, it is worth noting that the Paris Agreement was not accepted by Congress. Although the GHG emissions reductions proposed in the Waxman-Markey bill were meaningful as they clearly set a goal for the USA to work towards at that time, the filibuster potentially raised by the republicans failed to actuate any real progress on the bill.35 Given that the democrats had commanded 59 out of 100 of the Senate, it was one senator shy of overcoming the filibuster.36 Ultimately, the Waxman-Markey bill was never brought to the Senate floor as the unsurmountable filibuster was imminent and almost guaranteed to manifest,37 preventing policy proposing meaningful GHG reductions from being enacted. Therefore, on a systemic level, the congressional system is exploited with respect to climate change issues. The combination of uneven party politics and the right to delay legislative proceedings through filibustering results in prolonged discussions

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on climate change issues. Such delays make the passing of legislature hard, thereby preventing meaningful policy reducing GHG emissions from even being considered. Second, I argue that even if a party has a trifecta command (command over both the House, the Senate, and the Executive), it might not successfully advance its agenda.38 There are strong short-term economic interests that underpin the vote of some Congress members and the outcome of the bill. In the current Biden administration, the US Senate is evenly split between the democrats and republicans. If all democrats vote in favour of any bill, it would be ratified by the Senate as the vice-president can “cast any tiebreaking votes”.39 However, this is not the case with climate change bills. Under the Biden administration’s most recent budget for FY2022, the President proposed a further reduction on the production of GHGs under the Clean Air Act, directly impacting companies in the fossil fuel industry.40 However, the Democratic West Virginia senator Joe Manchin’s considerable economic ties to the coal industry has led him to oppose the budget.41 Evidently, economic ties between politicians and companies invested into fossil fuels can jeopardise legitimate policies directed at meaningfully reducing GHG emissions. Short-term economic interests will have significant political weight in the Senate, resulting in climate change policies not being fruitfully pursued. This is especially so when a Senator with the deciding vote has the strong economic interests, as observed with Manchin. Hence, strong economic interests can influence the policymaking processes of Congress, highlighting a systemic deficiency. Furthermore, even on an international scale, there are economic considerations that underpinned Congress. For example, the Kyoto Protocol limited the reduction of GHG emissions to only developed nations and not developing nations.42 Consequently, the USA stood to economically lose the most, and the entire Senate opposed ratification.43 The failure of the Kyoto Protocol in the USA hence highlighted how national economic interests could influence a strong bipartisan mandate amongst the legislature, preventing meaningful policy from being passed. Hence, showing how policy for meaningful GHG emissions reductions is blocked by the USA’s Congress. Therefore, given that the USA’s congressional processes are systemically deficient and easily influenced by strong economic interests, the legislative process in the USA cannot create policy for meaningful GHG emissions reductions. To conclude the first section, the political processes in the USA cannot create policy for meaningful GHG emissions reductions.

For a Major Climate Change Initiative to Advance, Change Is Needed Above, I argue that the political processes cannot create policy for meaningful GHG emissions reductions. In this section, I suggest three changes that the USA should

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undertake for a major climate change initiative advance. A major climate change initiative must solidify the USA’s position to climate change. First, I suggest that an independently established Climate Change Committee to be established. Second, I suggest that the USA improves public perception on climate change through persuasive, rather than regulatory action. Third, I suggest that at a global level, the USA joins mutually beneficial small-scale treaties.

An Independent Climate Change Committee Currently, the problems relate to the inconsistency and the lack of binding targets from the executive body. Furthermore, the congressional system is deficient and easily influenced by other interests. To tackle these issues, I suggest that the USA commissions an independent Climate Change Committee (“ICCC”). Drawing inspiration from the UK’s Committee on Climate Change (the “UKCCC”),44 the ICCC will be an independent body scientifically backed by environmental science. The UKCCC’s purpose is to “help maintain a long-term perspective in climate policy, enhancing the credibility of climate targets and ensure evidence-based policymaking”.45 I suggest that the ICCC can be commissioned for a similar purpose. The ICCC should be an independent body, providing concrete climate goals for the USA to adhere to in the long run. To directly address the issue of inconsistent policies, the ICCC should maintain a consistent approach to reducing GHGs throughout all Presidential administrations. In other words, the goals set by the ICCC must not be modified by any newly elected executive body. Furthermore, the ICCCs should not be involved with partisan views, and its recommendations and targets set must only be supported with scientific evidence. The role of science in the ICCC should form objective persuasive authority for executive policies to be crafted. However, I envisage two potential difficulties with the ICCC and resolve them in turn. First, the UKCCC’s power is derived from statute.46 However, as mentioned above, the USA’s congressional system suffers from inefficiencies. The polarised nature of politics in Congress will hence unlikely allow for the ICCC to be established by legislation. The USA’s executive might thus face significant hurdles convincing Congress to ratify the bill establishing the ICCC. In response, the USA’s government could declare a climate emergency,47 allowing the President to invoke emergency executive powers.48 Such powers could then be used to establish the ICCC. Although the ICCC will only subsist for as long as the climate emergency is active, I am optimistic that its scientific benefits will prove its worth. In the long run, it could alter the beliefs of Congress in relation to climate change, ultimately compelling them to ratify a permanent ICCC that advises all Presidential administrations with scientific data.

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Second, given that the ICCC will be appointed by the executive, it might be difficult to appoint non-partisan leaders to govern the ICCC. In response, I suggest that the basis at which the ICCC operates must be backed by scientific data. By providing cogent scientific analysis on climate change issues, it would therefore help to ameliorate any attempts to politicise the committee. Therefore, it is my view that an ICCC will tackle the issues with respect to inconsistency and political biases. Its scientific backing will help to solidify the USA’s commitment to GHG reductions in the long run, allowing for a concerted effort on climate change to materialise.

Changing Public Perception Currently, the public’s perception of climate change in the USA is divided. From the Manchin example as raised above, the economic interests of companies and individuals still outweigh the importance of reducing GHG emissions. To tackle this issue, the USA can take historical reference from the reduction of chlorofluorocarbons under the Montreal Protocol. As observed by Sunstein,49 consumers in the USA reduced their use of chlorofluorocarbons for three reasons: (1) chlorofluorocarbons directly affect health,50 (2) consumers saw a moral duty to prevent the ozone layer from depleting,51 and (3) behavioural changes were not too troublesome to make.52 Unlike the depletion of the ozone layer causing health issues,53 the effect of GHG emissions cannot be directly experienced by humans. Global warming due to GHG emissions gradually affects humans. The USA citizens are not “alarmed about the risks associated with a warmer climate”.54 Therefore, it is suggested that the USA should change this public perception with respect to reducing GHG emissions. The USA should first aggressively publicise the severity of climate change. In doing so, the USA should focus on solutions such as “fostering pro-environmental worldviews” and promoting individual responsibility.55 Such methods should seek to change public perception on climate change, thus encouraging greater support for reducing GHGs. To aggressively spur positive behavioural changes, the USA should incentivise companies to innovate in the sphere of renewable energy to reduce their carbon footprint. This can be done through subsidies. However, the USA should be cautious not to adopt regulatory action, of which could see companies less open to change. Ultimately, the end goal should be to change the perceptions of fossil fuel-dependent companies, incentivising them to utilise more carbon neutral means. In the long run, by changing the public’s overall perception on climate change issues, it could advance any major climate change initiatives the USA puts forth. This is because any policies put will be supported by the people.

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The USA on the Global Arena For the USA to take part in a major global climate change initiative, the USA should mutually benefit.56 It is suggested that such benefits experienced by the USA should not be speculative but concrete benefits, unlike that of the Kyoto Protocol.57 Under the Kyoto Protocol, the “common but differentiated responsibility” principle operated against the USA.58 Developed countries such as the USA would be the first to reduce their GHG emissions, whereas developing countries would reduce their GHG emissions later.59 The projections for the agreement negatively harmed the USA’s economy which was highly fossil fuel dependent at that time.60 I suggest that the USA enters a “climate club”,61 which “is a coalition of countries organised to encourage high levels of participation and abatement”.62 Under this model, the USA and its affiliated countries will mutually benefit through a penalty and reward system. Actions in furtherance of the agreement’s objective will be rewarded with favourable economic trade, whereas actions in breach of obligations will be penalised with trade sanctions.63 A smaller, but mutually beneficial agreement, would allow for the USA to transition from a major producer of GHG to a world leader in fighting climate change. After the right foundations are built through the climate club, it is my view that the USA would be better positioned to advance larger-scale climate agreements. Therefore, through this smaller-scale agreement, the USA’s climate position and policies are solidified. And, at the same time, the USA would be able to economically benefit. In the long run, I am optimistic that the USA can be a frontrunner for more major climate change initiatives.

Conclusion To conclude, global warming and climate change continue to be the key crisis that humans are facing today. And, GHGs are its main perpetuators. However, the USA’s political processes are not robust enough. It has been argued that they cannot create policy for meaningful GHG emissions reductions. The USA, through its policymaking processes, cannot formulate long-term strategies to meaningfully reduce GHGs. In response, I have suggested three solutions which can be summarised as such: (1) the conception of an ICCC, (2) a government spearheaded campaign to change public perception on climate change, and (3) the USA’s entry into a “climate club”.64 Although these solutions might face practical hurdles, it is argued that they would be able to provide the USA a strong foundation to advance a major climate change initiative. The USA, being a major economy and global superpower, should step up and take the lead for global climate reforms. But before doing so, the USA should rectify its

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internal processes and inculcate a pro-climate change stance within its demographic. Only then, would there be meaningful global GHG emissions reductions. References 1. 2. 3.

4. 5. 6. 7. 8. 9.

10. 11. 12. 13. 14. 15. 16.

17. 18. 19. 20. 21. 22.

23. 24.

European Commission website https://ec.europa.eu/clima/climate-change/cau ses-climate-change_en (accessed 12 March 2022). United States Environmental Protection Agency website https://www.epa.gov/ ghgemissions/overview-greenhouse-gases (accessed 16 March 2022). Cass R. Sunstein. Worst-Case Scenarios. “Chapter two: A Tale of Two Protocols.” (Harvard University Press, 2007), at pp. 72 and 74. (“A Tale of Two Protocols”). A Tale of Two Protocols, at p. 81. Id, at p. 85. Id, at p. 85. The White House website https://www.whitehouse.gov/about-the-white-house/ our-government/the-executive-branch/ (accessed on 10 April 2022). The United States Constitution (US) Article II § 3. Jessica Durney, “Defining the Paris Agreement: A Study of Executive Power and Political Commitments” (2017) Carbon & Climate Law Review, Vol. 11, No. 3, 10 Years of CCLR: Looking Back as We Go Forward, at p. 235. Id, for an in depth analysis of the legality of Obama’s actions. Congressional Research Service, “U.S. Climate Change Policy” (28 October 2021) (“US Climate Change Policy), at p. 19. Ibid. Ibid. Id, at p. 6. Id, at p. 10. The White House (President Barack Obama) website https://obamawhiteho use.archives.gov/the-press-office/2015/01/14/fact-sheet-Administration-takessteps-forward-climate-action-plan-anno-1 (accessed 9 March 2022). Ibid. US Climate Change Policy, at p. 5. Id, at p. 19. Ibid. Ibid. Sofiah Jamil and Gianna Gayle Amul, “Chapter 6: Climate Change (In)action, Shifting Goalposts”, Non-Traditional Security in the Asia–Pacific (2021), at p 28. An except was retrieved from https://www.rsis.edu.sg/wp-content/uploads/ 2014/07/NTS_Year_in_Review_2013.pdf, at p. 28. The Royal Society website https://royalsociety.org/topics-policy/projects/cli mate-change-evidence-causes/question-6/ (accessed 20 March 2022). Kenneth Mayer, With the Stroke of a Pen: Executive Orders and Presidential Paper (Princeton University Press, 2001), at Chapter 2: Executive Orders and the Law, p. 34.

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25. 26. 27. 28. 29. 30.

31. 32. 33. 34.

35.

36. 37. 38. 39. 40. 41. 42. 43. 44.

45. 46. 47.

48.

49.

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Ibid. US Climate Change Policy, at p. 22. Ibid. The White House website https://www.whitehouse.gov/about-the-white-house/ our-government/the-legislative-branch/ (accessed 26 March 2022). Ibid. Anna Kronlund, “To act or not to act. Debating the climate change agenda in the United States Congress” (2021) Parliaments, Estates and Representation, 41:1 (“Debating climate change agenda in the US Congress”), at p. 97. Ibid. Steven S. Smith and Hong Min Park, “Americans’ Attitudes about the Senate Filibuster” (2013) American Politics Research 41(5), at p. 738. Debating climate change agenda in the US Congress, at p. 97. David Robinson, “US Federal Energy and Climate Change Legislation: Some Lessons to be Learned from the Waxman-Markey Bill” (2010) Carbon & Climate Law Review, Vol. 4, No. 2, Climate Legislation and Regulation in the United States, at p. 128. Shannon Osaka, “What stands in the way of all those climate plans? The election – and the filibuster.”, Grist (22 July 2020) (“What stands in the way of all those climate plans?”), retrieved from https://grist.org/politics/whats-standing-in-the-way-of-all-those-climateplans-the-election-and-the-filibuster/ (accessed 8 April 2022). United States Senate website https://www.senate.gov/history/partydiv.htm (accessed 8 April 2022). What stands in the way of all those climate plans? Debating climate change agenda in the US Congress, at p. 97. James Politi, “Joe Manchin says he will vote against the Biden spending bill” Financial Times (19 December, 2021). US Climate Change Policy, at pp. 25–27. Oliver Milman, “Joe Manchin leads opposition to Biden’s climate bill, backed by support from oil, gas and coal” The Guardian (20 October 2021). A Tale of Two Protocols, at p. 89. A Tale of Two Protocols, at p. 89. Alina Averchenkova, Sam Frankhauser and Jared Finnegan, “The role of independent bodies in climate governance: the UK’s Committee on Climate Change” (2018), at p. 6. Id, at p. 6. Id, at p. 7. Kassie Siegal and Jean Su, “Legal authority for presidential executive action on climate: Legal analysis underpinning the #climatepresident action plan” (2019), at p. 3. Jean Su and Maya Golden-Krasner, “The Climate President’s Emergency Powers, a legal guide to bold climate action from President Biden” (2022), at p. 5. A Tale of Two Protocols.

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50. 51. 52. 53. 54. 55.

56. 57. 58.

59. 60. 61. 62. 63. 64.

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Id, at p. 77. Ibid. Ibid. Ibid. Id, at p. 102. Abigail Sullivan and Dave D. White, “An Assessment of Public Perceptions of Climate Change Risk in Three Western U.S. Cities” (2019) American Meteorological Society Vol. 11, at p. 460. A Tale of Two Protocols, at p. 95. Ibid. Paul G. Harris, “Common but differentiated responsibility: The Kyoto Protocol and United States Policy” (1999) N.Y.U Environmental Law Journal Vol. 7, at pp 28 and 29. A Tale of Two Protocols, at pp. 87–89. A Tale of Two Protocols, at p. 98. William Nordhaus, “Dynamic climate clubs: On the effectiveness of incentives in global climate agreements” (2021) PNAS Vol. 118 No. 45, at p. 1. Ibid. Ibid. William Nordhaus, “Dynamic climate clubs: On the effectiveness of incentives in global climate agreements” (2021) PNAS Vol. 118 No. 45, at p. 1.

Part II

How to Move Forward Effectively

Chapter 5

Carbon Pricing: Some Problems and Solutions Sim Wei Yang Brian

Abstract In this chapter is about carbon pricing. Carbon pricing is one solution that governments use to tackle climate change. It puts a price on carbon, which enables the market to internalize the negative externality caused by carbon emitting actions. The result is that such harmful actions are reduced due to the higher price charged. Structuring carbon pricing policies can be complicated, though. Several problematic questions come to mind: What form should the carbon policy take? What price should be charged? Should the tax be imposed upstream or downstream? What should governments do with the carbon revenue they receive? Will there be carbon leakage further down the road? What about existing policies that subsidize the use of fossil fuels? Chapter 5 examines these seven cumbersome areas and provides possible solutions to achieve a good carbon pricing policy. It is hoped that carbon policies will not only be effective in mitigating climate change, but also equitable and progressive for citizens, which enable political support for the policy, making it more feasible to implement.

Introduction The 2015 Paris Agreement tackled climate change by ensuring that the global temperature rise this century would not exceed 2 degrees Celsius, with an aim of 1.5 degrees Celsius. Carbon pricing is a solution to achieve this target. It is described as putting a price on carbon which acts as a mechanism that harnesses market forces and creates financial incentives for countries/companies to lower their carbon emissions through efficient processes and cleaner fuel.1 This research paper attempts to shed some light on how carbon pricing policies should be structured. It tackles the question by looking at seven problematic areas in the design of a carbon pricing policy. Solutions would then be put forth to address these areas in the hope of structuring a good carbon pricing policy. S. W. Y. Brian (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_5

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Form Carbon pricing policies take two forms. The first is a carbon tax which charges a direct price for each tonne of carbon emission produced. The second is a cap-andtrade system where a limit is set on the total amount of greenhouse gases that can be produced by companies. Permits are given to companies to legally emit greenhouse gases. When the permits are used up, the company buys more permits on the carbon market. A prime example of a cap-and-trade system is the EU Emissions Trading System. A perennial question then is which form of carbon pricing is more effective at reducing carbon emissions? Although both forms are technically pretty similar (since the cap-and-trade system also sets a carbon price via market forces), differences do exist. Firstly, a carbon tax gives certainty as to the price that is to be charged. The problem however is with the methodology as to how this carbon price is determined. Determining a carbon price to take into account the social cost of carbon emission is not easy. There are a myriad array of possible negative effects that carbon emissions can do to the environment and valuing these costs is an uphill task for economists. In contrast, although there is no certainty in price, a cap-and-trade system gives certainty with regard to the maximum limit of carbon emissions produced via a pre-determined cap on emissions. Secondly, a cap-and-trade system does enable “grandfathering” where permits are given out for free initially.2 This means that compliance is cheaper for the industry at the early stages of the scheme. In contrast, a carbon tax imposes an immediate cost on the industry to pay for every tonne of carbon that it emits.3 Businesses hence might not like the higher initial cost with a carbon tax. Solution This paper argues for a cap-and-trade system because this gives certainty with regard to the quantity of carbon emissions which is the end game. Using a carbon tax does not give certainty to quantity of emissions but only to price and probably should be used for countries, where pricing is very sensitive to the economy and a marginal price increase could affect the domestic industry greatly. To address price volatility in an emissions trading system, permit banking could be introduced to allow companies to save permits for later use when expected prices are high.4 Advance auctions could also be established to enable entities to buy permits at current prices for use in several years.5 Alternatively, a hybrid system could also be viable whereby a trading system is established but with restrictions on pricing via price floors or ceilings.6 This would help reduce price volatility.

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Price The price to charge is another problem when structuring a carbon tax. A negative externality exists when the production/consumption of a good results in costs to the third parties. For example, driving a car results in a negative externality because there are costs to the environment when soot is released into the atmosphere. A carbon tax internalises these negative externalities via price increment for carbon emitting actions. It aims to incentivise people to indulge less in such harmful actions. The optimal situation would hence be when the price of the carbon tax is tagged numerically precisely to the exact social cost of these carbon emissions. The problem however is that the social cost of carbon emissions is extremely difficult to value. What should be included in the calculation? The current estimates include changes in agricultural productivity, changes in health outcomes, sea level rise and coastal property damage, changes in energy consumption and declines in labour productivity just to name a few.7 However, the valuation of the physical damages can be subjective. For example, should the damage to crops be calculated based on market price or cost price? If it is market price, the valuation is bound to change with different iterations of the mathematical model. Moreover, the assumptions of the model can vary. This was evident in the US estimates of the social cost of carbon. The Obama administration estimated the cost to be $43 per tonne, while the Trump administration estimated it to be $3–$5 per tonne.8 The difference in cost was due to different assumptions within the model. The Obama administration based costs on the damage caused by US emissions on the entire world, while the Trump administration based costs only on damage within the USA.9 Moreover, the discounted rate to translate future damages to values in today’s dollars was assumed to be 3% for the Obama administration, while 7–10% for the Trump administration.10 We see vastly different social costs of carbon when assumptions differ. It is important to get the social cost as precisely as possible to the true value because any value other than that results in either an over taxation or an under taxation, that would lead to an unoptimal level of carbon emissions. Alternatively, as discussed above, a cap-and-trade system can be used which does not necessitate the carbon price to be determined. But, volatility in prices might require a hybrid system of a price floor and ceiling which leads to the same problem of having to value the social cost of carbon. Solution A possible solution then is to use a model that most scholars and governments use which is the DICE model.11 This would ensure more conformity among countries. It is admittedly true that some countries might differ in their valuation of the social cost of carbon due to different economic structures and impacts. However, the cost of carbon cannot be so different that one country charges $10 per tonne, while another country charges $100 per tonne. Additionally, reviews should be done yearly on the model to ensure that it gets the most updated estimates in the variables in the model. Climate change technology

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improves every year, and atmospheric physicists, ecologists and economists should be able to get more accurate estimates of the damage caused by carbon emissions as the years progress.

Scope The scope of the carbon pricing policy is another important area. This paper tackles the scope from two aspects. The first deals with the type of greenhouse gas emissions that the carbon price covers. Traditionally, the carbon tax only covers carbon dioxide emissions.12 However, we do know that climate change is caused not only by carbon dioxide emission but also greenhouse gas emission which includes methane and hydrofluorocarbons just to name a few. It should be noted that the carbon taxes implemented in the European countries do not cover the entire spectrum of greenhouse gases. For example, based on data from the World Bank, Spain’s carbon tax only covers 3% of greenhouse gas emissions, while Estonia’s carbon tax only covers 6% of greenhouse gases.13 More can definitely be done to improve the scope of greenhouse gas coverage when structuring a carbon policy. The second aspect deals with the economic sectors that the pricing policy covers. Not all economic sectors are covered by carbon pricing. For example, in the EU ETS, the sectors covered include power and heat generation, energy-intensive industrial sectors and aviation.14 For sectors not covered by the EU ETS, there is another scheme known as the EU Effort Sharing Regulation (“EU ESR”) which sets binding national emission reductions targets for 2021–2030 for transport, buildings, agricultural and waste management sectors.15 In line with stronger climate action, the European Commission has proposed introducing a separate emission trading system for buildings and road transport.16 In sum, we certainly see that not all sectors that produce greenhouse gases are covered by carbon pricing. Small industry, non-electric railroad and military are just a few sectors not covered by the EU ETS.17 It is heartening to note that the maritime sector is proposed to be included in the ETS in the near future.18 Solution The structure of a good carbon pricing policy should hence firstly include all types of greenhouse gases. A good example is that of Singapore’s carbon tax. The tax covers six greenhouse gases that it is currently reporting to the United Nations Framework Convention on Climate Change (“UNFCCC”) including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.19 Singapore will also start reporting a seventh greenhouse gas nitrogen trifluoride by 2024.20 All in, the carbon tax would cover 80% of the total greenhouse gas emissions.21 Secondly, more economic sectors should definitely also be covered by a good carbon pricing policy. The EU ETS is taking a step in the right direction to expand

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more sectors into its coverage. Admittedly, expanding the scope of coverage of greenhouse gases and economic sectors will not be an easy feat. Governments around the world may not have the political will to do so as carbon prices may need to be raised to cover more types of gases in the particular industry. It may also be unfeasible to implement a carbon tax for certain sectors that are price sensitive. Regardless, this is undoubtedly an aim to work towards.

Point of Taxation The point of taxation can occur either upstream, midstream or downstream. Upstream generally comprises exploration, drilling and extraction phases of fossil fuels.22 Midstream comprises transportation of the fuel, while downstream includes the actual emission phase where firms distribute and consumers use the fossil fuel.23 The choice of collection point should maximise emissions coverage and minimise administrative and compliance costs including the risk that people will evade the tax.24 Solution Traditionally, as in the case of the EU ETS, the point of taxation occurs downstream. The main reason for this is to ensure that consumers directly feel the burden of the tax and change their behaviour to consume less fossil fuels.25 This argument might be unfounded though because a tax upstream would still be passed onto consumers in terms of higher prices, and hence, they would still “feel” the burden of the tax. Additionally, it has been noted that the downstream approach in the EU ETS has missed out on about 50% of the energy-related carbon dioxide emissions.26 Downstream programmes tend to exempt entities with emissions below a certain threshold, and they need to be accompanied by programmes that cover transportation and home heating fuels.27 In contrast, an upstream approach taxes the carbon content of the product. It hence has a wider economic coverage, and there is no need for double taxation of both transportation and consumption. Further, it is administratively easier to implement. The upstream phase usually constitutes the smallest number of entities (the upstream tends to comprise just a few large corporations) which lowers compliance costs.28 It has further been noted that an upstream approach could “widen the mitigation cost curve” and result in more political pressure for climate action via the big upstream corporations.29 In sum, this paper hence argues for an upstream approach. For example, with respect to coal, it is probably best to tax at the mine mouth (production level) rather than the numerous electric utilities (consumption level) to limit collection points.30 In principle, the tax should vary slightly by the amount of carbon content in each coal type (e.g. anthracite, bituminous, etc.) although administration may have been easier without this differentiation.31

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Revenue Distribution An important consideration in structuring a good carbon pricing policy is how should the revenue collected be distributed. Studies have shown that the revenue collected can be significant. For example, the US Congressional Budget Office has estimated that a $25 per metric tonne tax on emissions coupled with a 5% real inflation rate per year could raise $1 trillion in revenue in ten years.32 Solution This paper suggests that the revenue should be recycled for three important purposes. Firstly, the revenue should be given back to the poor people to help them cope with the rise in energy costs. Evidence suggests that carbon pricing in itself is regressive in nature.33 This means that poor people are more negatively affected by it than rich people. One reason for this is that the poor people in a country tend to spend a larger proportion of their incomes on energy.34 For example, in the UK, direct and indirect emissions per capita across households rise less than proportionately with per capita income.35 The regressivity is especially acute in emissions that relate to domestic energy use, food and housing.36 One solution definitely is to use the revenue collected from a carbon tax to compensate the poor people. An important point to take note however is that the compensation should not reverse the very change in carbon pricing that the carbon tax was imposed to bring about.37 Hence, poor people can be given a lump sum payment in cash but not rebates to continue using their dirty fossil fuel energy source.38 The second way revenue should be used is for fiscal reform. Carbon tax revenue can help to reduce distortionary taxes such as labour or corporate taxes. This helps to improve economic efficiency. For example, income taxes tend to reduce labour force participation rates as the real returns from work are reduced.39 Corporate taxes paid by firms on capital investment similarly reduce capital accumulation.40 The ability to “tax swap” enables the government to drop the labour/corporate tax rate and make up for it with revenue generated from the carbon tax. The end result is a higher labour participation rate and more capital accumulation with no change in government revenue. Additionally, such a reform also helps to “lock in” the carbon tax, and future governments who would like to abandon the carbon tax would have to impose politically difficult taxes elsewhere to make up the lost revenue.41 The third way the revenue should be used is to fund other efforts and policies that reduce carbon emissions. Singapore’s carbon tax is expected to bring in $1 billion in revenue for the first 5 years.42 The government has earmarked this fund for projects that help industries improve their energy and carbon efficiency through research and development in sustainable urban solutions and low carbon technologies for deeper decarbonisation.43 Apart from that, the fund is also used, in addition to other sources of funding, for the Singapore Green Plan 2030 which aims to achieve a whole-of-nation movement to drive climate action.44 For example, to encourage active mobility and reduce vehicular emissions, more than $1 billion is set aside to expand the Islandwide Cycling Network to over 1300 km in length by 2030.45

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The revenue also helps Singaporeans upskill in green jobs such as green finance, sustainability consultancy and carbon services and trading.46

Carbon Leakage and International Competitiveness A concern in designing a carbon tax is the possibility of carbon leakage. Carbon leakage occurs when a company decides to move their production from a country with stringent carbon taxes to another country with more lenient tax policy which results in the emission of more greenhouse gases overall.47 The reason is due to competitiveness where a higher carbon tax results in a higher selling price, leading to less demand for the company’s products. Solution There are three possible solutions to combat carbon leakage. These solutions however do come with their own set of problems, and hence, this paper will refrain from advocating any particular solution. The solution should be chosen based on each country’s factual needs. The point however is that each country should take into account carbon leakage solutions when structuring its carbon pricing policy. Carbon leakage will be a growing concern in the near future with the rise in carbon tax prices as free allowances begin to be phased out and carbon taxing countries become more knowledgeable about climate change. Carbon Border Adjustment Mechanism (“CBAM”) The first solution is CBAM. The idea behind CBAM is to impose a carbon charge on imports to ensure that the price of imports is similar to the domestic price for carbonintensive goods.48 This would level the playing field and ensure that domestic goods remain as competitive as foreign goods. It would also stem carbon leakage because there would be no point for firms to shift their production units out of Europe into non-carbon-taxed countries and then export the goods to Europe since the goods will still be carbon charged regardless.49 A more noble goal of this initiative is probably to encourage countries with no carbon tax to impose one which would lead to exemption of CBAM charges.50 There are a number of problems with this initiative though. Firstly, there would be substantial costs that non-EU countries would face when exporting their products to the EU.51 Countries like Russia, Turkey and China would be greatly affected as they do export substantial goods to the EU. CBAM hence distorts the free market of trade based on comparative advantage. This can be seen as protectionist and could incur retaliation from affected non-EU states. For example, in 2012, when the EU decided to introduce CBAM for the aviation sector, there was political backlash from powerful foreign countries including Brazil, China, Russia and the USA which led to a withdrawal of the measure.52 Secondly, CBAM could infringe the World Trade Organisation (“WTO”) rules. The WTO has a most favoured nation treatment rule which states that any advantage

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granted to the imported goods of one WTO member must be accorded immediately and unconditionally to like products of all other WTO members.53 A higher tax could be imposed on a similar product in one WTO country compared to another WTO country due to differential carbon emissions between the two. This would infringe the most favoured nation treatment rule. However, if we view “like” products as inclusive of carbon content/emissions, then this rule will not be flouted because the two products would differ based on carbon content. Additionally, CBAM could also be inconsistent with the national treatment rule which requires that imported products be given no less favourable treatment than domestic products.54 This is because domestic EU goods are given free emission allowances which lowers their cost compared to foreign- imported products.55 Imported products would hence be at a competitive disadvantage. A possible way out of this would be to use Article XX of GATT which allows for exceptions. The carbon tax could be exempted because it relates to the conservation of exhaustible natural resources, notably the atmosphere, or because it protects human, animal and plant life or health by contributing to mitigating the risks of climate change.56 Thirdly, CBAM can be administratively difficult to implement. There has to be an accurate measurement or benchmarking of the production-related greenhouse gas in the foreign country.57 This is complicated. For example, with respect to steel production, different countries will have different production methods which lead to different amounts of carbon emissions. A basic oxygen furnace technology emits over four times as much carbon dioxide per unit of steel as compared to standard electric arc furnace technology.58 One way out could be to base CBAM on the carbon intensity of best available technology.59 This might be fairer as it does not discriminate based on production processes.60 Free Emission Allowances The second solution is free emission allowances. This is currently applied in the EU ETS. In essence, sectors which face a significant risk of carbon leakage would be given free emission allowances to help them cope with the carbon tax cost and not shift production to non-carbon-taxed countries.61 The problem with this approach is that it would cost the government money and the revenue could have been put to better decarbonisation policies. Moreover, by protecting carbon-intensive industries via free credits, it inevitably places more burden on the rest of the economy and drives up the carbon price to achieve a certain target.62 Linkage with Other Countries The third solution is to link carbon markets among various countries. It is practically unlikely to have a common carbon tax for all countries due to differences in economic structure, production methods and emission rates. The next best alternative would be to link up the carbon markets of countries with similar markets and climate change ambitions. For example, California and Quebec linked their carbon markets in 2014. This is not without problems though. A smaller country may need to be wary of linking up with a larger country with a larger market as the smaller country would become a price taker, with less control of the price of emissions going forward.63

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Additionally, it could cause reduced emission abatement. For example, if one country has a lot of surplus allowances, the other country which was initially sufficient capped would buy up the surplus allowances and emit more carbon, doing more climate change damage than previously.64

Pre-existing Policies In structuring a carbon pricing policy, one must also be cognisant of pre-existing energy policies. Further questions thus pop into mind. How would the new carbon pricing policy affect pre-existing energy policies? Would the goals misalign and nullify the carbon tax? Or could the policies be complementary to aid each other? Moreover, could policies be streamlined instead? Solution The solution would definitely be to review all energy policies when designing the carbon pricing policy and structure the carbon tax such that policies gel with each other. Three aspects are worth mentioning. Policy Misalignment Policies that are misaligned to the carbon tax should be cut. One example would be subsidies given to fossil fuels. Subsidies for fossil fuels are still widely prevalent given how some economies like Russia and the Middle East greatly depend on carbon fuels for economic growth.65 Such policies act in direct contrast to a carbon tax as it promotes the use of carbon emitting fuels. In 2014, G20 countries collectively provided subsidies amounting to US$354 billion for fossil fuel consumption and US$18 billion for fossil fuel production.66 The fiscal burden for the government was huge, amounting to 1.4% and 4.1% of GDP for Mexico and Indonesia, respectively.67 The solution is to definitely cut back on such policies. Timing is crucial however as a cut back on subsidies coupled with an imposition of a carbon tax would be a double whammy for both consumers and producers. Perhaps, fossil fuel subsidies can be cut first while providing income grants for the poor. After some time, carbon tax can then be imposed. Complementary Policies Carbon tax alone would not help solve climate change, and complementary policies are definitely needed. One example would be research and development coupled with technology deployment policies.68 Carbon tax only reduces the consumption/production of fossil fuels, but it does not help to replace fossil fuels. There hence should be more government support for research and development into new methods to decarbonise the economy via renewable energy. This works hand in hand with a carbon tax to mitigate climate change.

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Streamlining of Policies Policies should also be streamlined. For example, in the USA, there are existing federal policies like energy-efficiency standards and Clean Power Plan to control carbon dioxide emissions in the electricity sector.69 A possible solution is that the carbon tax could make such policies redundant. Estimates suggest that a carbon price of $30 per tonne of carbon dioxide or more by 2030 would exceed the ambition of the Clean Power Plan and hence make it redundant.70 However, some have argued that the Clean Power Plan should still be kept and separated from a carbon tax because it can act as a backdrop solution assuming the carbon tax fails.71 Additionally, there could even be a hybrid solution where the carbon tax is added on top of the price under the Clean Power Plan to hit emission targets.

Conclusion In conclusion, a carbon tax should be structured by surveying the above-mentioned seven problematic areas to ensure not only an effective mitigation of carbon emissions but also an equitable, progressive, practical and feasible one, of which countries will be able to adopt and citizens will politically support and adhere to. References 1.

S&P Global website https://www.spglobal.com/en/research-insights/articles/ what-is-carbon-pricing. 2. Grantham Research Institute, “Carbon tax v cap-and-trade: which is better?” (31 Jan 2013) https://www.theguardian.com/environment/2013/jan/31/carbontax-cap-and-trade. 3. Ibid. 4. Tom Tietenberg, “Carbon Pricing: Lessons Derived from Experience” (10 Sept 2012) https://www.elibrary.imf.org/view/books/071/12762-978161 6353933-en/ch02.xml. 5. Ibid. 6. Ibid. 7. Isabella Backman, “Stanford explainer: Social Cost of Carbon” (7 June 2021) https://news.stanford.edu/2021/06/07/professors-explain-social-cost-car bon/#Calculation. 8. Ibid. 9. Ibid. 10. Ibid. 11. William Nordhaus. “Revisiting the social cost of carbon.” PNAS (2017). DOI: https://doi.org/10.1073/pnas.1609244114. 12. Roumeen Islam, “What are the advantages and challenges of a carbon tax?” (4 Feb 2022) https://www.weforum.org/agenda/2022/02/what-a-carbon-tax-cando-and-why-it-cannot-do-it-all.

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13. Elke Asen, “Carbon Taxes in Europe” (3 June 2021) https://taxfoundation.org/ carbon-taxes-in-europe-2021/. 14. Germanwatch, Criteria for an effective and socially just EU ETS 2 (Report 1/2022) at page 6. 15. Carbon Market Watch website https://carbonmarketwatch.org/our-work/cli mate-governance/effort-sharing-regulation/. 16. Germanwatch, supra n 14, at page 6. 17. Id, at page 24. 18. European Commission website https://ec.europa.eu/commission/presscorner/ detail/en/qanda_21_3542. 19. National Climate Change Secretariat website https://www.nccs.gov.sg/faqs/car bon-tax/. 20. Ibid. 21. Ibid. 22. Investopedia website https://www.investopedia.com/terms/u/upstream.asp. 23. Ibid. 24. Ian Parry, Rick Ploeg & Roberton Williams, “How to Design a Carbon Tax” (10 Sept 2012) https://www.elibrary.imf.org/view/book/9781616353933/ch08. xml. 25. David J. Hardisty, Alec T. Beall, Ruben Lubowski, Annie Petsonk, Rainer Romero-Canyas, “A carbon price by another name may seem sweeter: Consumers prefer upstream offsets to downstream taxes” Journal of Environmental Psychology, Volume 66, 2019. 26. Ian Parry, supra n 24. 27. Ibid. 28. Ibid. 29. Joël Foramitti, Ivan Savin, Jeroen C.J.M. van den Bergh, “Regulation at the source? Comparing upstream and downstream climate policies” Technological Forecasting and Social Change, Volume 172, 2021. Ian Parry, supra n 24. 30. Ian Parry, supra n 24. 31. Ibid. 32. Peter G. Peterson Foundation website https://www.pgpf.org/budget-basics/ what-is-a-carbon-tax-how-would-it-affect-the-economy. 33. Alex Bowen, “The Case for Carbon Pricing” (Dec 2011) Grantham Research Institute at page 26. 34. Ibid. 35. Ibid. 36. Ibid. 37. Id, at page 27. 38. Ibid. 39. Ian Parry, supra n 24. 40. Ibid. 41. Ibid. 42. Ministry of Sustainability and Environment website https://www.mse.gov.sg/ resource-room/category/2021-07-05-written-reply-to-pq-on-carbon-tax/.

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43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58 59. 60. 61. 62. 63.

64. 65. 66. 67. 68. 69. 70. 71.

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Ibid. Ibid. Ibid. Ibid. Clear Center website https://clear.ucdavis.edu/news/what-carbon-leakage. PIIE website https://www.piie.com/publications/policy-briefs/can-eu-carbonborder-adjustment-measures-propel-wto-climate-talks. Ibid. Ibid. Rim Berahab, “Is the EU’s CBAM a Threat for Developing Countries?” (2022) Policy Center. Bruegel website https://www.bruegel.org/2021/07/the-european-unions-car bon-border-mechanism-and-the-wto/. James Bacchus, “Legal Issues with the European CBAM” (2021) CATO. Ibid. Ibid. Craig Emerson, “Making CBAM proposals WTO-compliant” (2021) KPMG. New Climate Economy report https://newclimateeconomy.report/2014/wp-con tent/uploads/sites/2/2014/08/NCE-Global-Report_web.pdf. Ibid. Ibid. Ibid. European Commission website https://ec.europa.eu/clima/eu-action/eu-emissi ons-trading-system-eu-ets/free-allocation/carbon-leakage_en. Carbon Trust report https://prod-drupal-files.storage.googleapis.com/docume nts/resource/public/Tackling%20Carbon%20Leakage%20-%20REPORT.pdf. OECD report https://www.oecd.org/environment/cc/carbon-market-platform/ Designing-Carbon-Pricing-Instruments-for-Ambitious-Climate-Policy-Sep tember-2017.pdf at page 7. Carbon Market Watch report https://carbonmarketwatch.org/wp-content/upl oads/2015/05/NC-Towards-a-global-carbon-market-PB_web.pdf at page 4. OECD, supra n 63, at page 11. Ibid. Ibid. Id, at page 12. Brookings website https://www.brookings.edu/research/11-essential-questi ons-for-designing-a-policy-to-price-carbon/. Ibid. Ibid.

Chapter 6

Carbon Pricing: Punitive Taxation on Beef Jaan Masood

Abstract This chapter explores the possibility of punitive taxation on beef as a carbon (and carbon-equivalent) pricing policy imposed by a group of high beefconsumption and low beef-production countries. Targeting an industry that has concentrated production in a handful of countries and an industry that is not necessary to lubricate the wheels of industry and commerce such as the oil and gas industries may be more palatable for policymakers, and indeed be more impactful in terms of carbon emission reductions. Chapter 6 first examines the challenges and failures of both large binding multilateral agreements as well as existing carbon pricing regimes and argues that a more assertive and unilateral approach is needed. The concentration of beef production amongst a handful of countries may mean that an assertive unilateral approach could be implemented without broader economic fallout. Furthermore, recent litigation at the World Trade Organization has opened the door for unilateral action by one or a group of nations. Punitive taxation is unlikely to violate trade agreements. Targeting the beef industry, in particular, would have many benefits beyond emission reductions, such as the possibility of vast reforestation. While aggressive unilateralism may not always be successful, this chapter concludes that the beef industry could be targeted in this manner and the cost–benefit analysis shows that the benefits far outweigh the costs.

J. Masood (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_6

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How Should Carbon Pricing Policies Be Structured—And to What End? This chapter seeks to answer two questions: One of the questions is very simple to answer, whilst the other has proven to be highly challenging and highly complex. The easier question of course is “to what end?” The objective of carbon pricing should be to significantly reduce carbon emissions.1 While this may seem like an obvious goal, it is unclear if this is the actual goal of governments. For example, the Singapore Government’s goals with regard to their carbon pricing scheme is to “provide a broad-based price signal to encourage companies to reduce emissions” which at the same time “gives them flexibility to take action where it makes the most economic sense.”2 For the Singapore Government, corporate economic outcomes are the priority. This should not be a surprise as the Paris Agreement is a nonbinding agreement. Article 6(2) and 6(4)(c) of the Paris Agreement which covers the trading of carbon emissions between Member States give little guidance other than to mandate robust accounting to ensure that there is no double counting of greenhouse gas mitigation.3 This chapter argues that a more assertive goal is necessary to reduce carbon emissions. The voluntary nature of carbon emissions reduction targets is currently having little impact. In 2021, carbon emissions grew at 4.1%, and 2022 forecasts are for a 2% increase.4 This leads to the second question. How should carbon pricing policies be structured? This is a highly complex issue, but this chapter offers a potentially impactful simple single-industry targeted solution.

The Carbon Pricing Dilemma There are a few fundamental problems that make fighting climate change challenging. These include free rider problems, tragedy of the commons, carbon leakage and even the Green Paradox.5 Furthermore, reaching a broad consensus with a binding agreement amongst so many participants seems to be a mathematical impossibility. The free rider problems and the tragedy of the commons are well understood issues regarding carbon emission reductions. A country bears all the costs of environmental policies but receives a fraction of the benefit because that country’s policies have a small impact on the overall problem and this leads to free rider problems, which in turn leads to a tragedy of the commons. As well as the free rider problem, targeting the oil and gas industry can lead to what is known as the “Green Paradox.” The 1

For the purpose of this paper, the author considers the carbon equivalence of other greenhouse gasses such as methane. 2 NCCS (2022). 3 Paris Agreement to the United Nations Framework Convention on Climate Change, Dec. 12, 2015, T.I.A.S. No. 16–1104 at Article 6. 4 US Energy Information Administration; Short Term Energy Outlook April 2022. 5 Daniel H. Cole and Elinor Oastrom, “Property in Land and Other Resoruces,” at Chapt. 14.

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Green Paradox encourages increased carbon energy production today by oil and gas companies in expectation of stricter rules in the future.6 ,7 Compounding the problem of a global regime for carbon pricing is carbon leakages which occurs when the strict policy in one country targeting high emission industries forces such industries to simply move to countries with lower emission standards.8 Even if a large binding agreement was to be reached, the problem of carbon leakage would likely emerge. In theory, this could be addressed through a carbon border tax. However, such measures could lead to cascading protectionism with tariffs extended to industries further along value chains. Border adjustment mechanisms could hinder climate policy. Implementing a border tax, would be challenging; it would require disclosure, which companies may not be willing to give especially with regard to their supply chains. Rules will be complicated, and compliance might be expensive causing a barrier to smaller companies. Retaliation is likely to be intense. Previous attempts to introduce carbon pricing for arriving flights from outside the EU led to Chinese threats to cancel airbus orders.9 The USA has also said that they are strongly opposed to such measures.10 In fact, it is likely impossible to reach a broad multilateral agreement on the issue of carbon emissions of pricing due to the mathematics involved. This is best explained by Atik and Juetner in “Quantum Computing and Computational Law.”11 They argue that quantum computing is necessary to solve the most complex legal issues. While their paper is a discussion on disruption in the legal industry, it offers insights into the mathematics of complex legal issues with multiple parties and multiple variables. The classical computing power required to solve multivariate problems increases exponentially. Atik and Juetrner argue that multifactor legal tests which involve lists of factors and balancing exercises fall into a class of problems where complexity increases as “some power of the number of factors.”12 For example, if a problem has two factors, then the computing power required is to the power of two. If ten units of computing power are required to solve a problem with one factor, then 100 units of computing power are required to solve the same problem with two factors. If there are twenty factors, then “ten to the power 20 or 100 quintillion units of computing power are needed.13 The issue is not simply confined to the number of factors for a particular problem. A similar exponential computational impossibility arises when there are an increasing number of parties. Eric Kades in his 1997 paper on computational complexity and law highlights that a three-creditor problem could be solved in minutes; however, based on computational complexity 6

Arezkiet al (2018). Ibid. 8 Ibid. 9 Lewis (2013). 10 Tett et al. (2020). 11 Atik and Jeutner (2021). 12 Ibid., at p. 305. 13 Tony Hey, “Quantum Computing: An Introduction.” Department of Electronics and Computer Science, University of Southampton. 7

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theory, a 100-creditor problem could take “as much time as has elapsed since the birth of our universe” to solve.14 Kades goes on to argue that legal disputes become “unmanageable quite rapidly, as the number of parties increase even modestly.”15 There are 193 parties to the Paris Agreement. Each party must optimise their own multivariate problem which spans their own national goals and objectives, as well as the interaction and intersection of their demands and decisions with 193 other states. If each state has just three variables to optimise, with three different states for each of their three variables, each state as 27 combinations of their three-state-threevariable problem (three to the power of three). With 193 states, the problem has 27 to the power 193 possible combinations of outcomes. The number of combinations of outcomes is 1.4 novemdecillion. This is 1.4e + 184, much larger than the number of atoms in the earth.16 A binding agreement, with so many parties with each party having to optimise so many factors, is therefore impossible. It is no surprise therefore that a legally binding agreements of the scale are required for climate change mitigation. It is therefore crucial that climate change is tackled with a more targeted approach, with single industries or small groups of nations similar to what is envisaged by Raphael Leal-Arcas in his important work “Climate Clubs for a Sustainable Future.”17 This chapter differs from Leal-Arcas by recommending a more assertive unilateral approach aggressively targeting a single high polluting industry through a “climate club” of countries while Leal-Arcas envisages a friendlier cooperative climate club approach.

The Failure of Current Carbon Pricing Regimes While there is currently a multitude of carbon pricing strategies, these strategies face a number of challenges. Carbon pricing leads to static economic decisions and does not in itself necessarily lead to innovation. Carbon pricing varies significantly across jurisdiction creating challenges and confusion for multinational corporations who have the resources to invest in innovation. Studies in the elasticity of carbon elasticity appear lacking, and furthermore, mathematical modelling of such complex systems is challenging. Taxes raised through carbon pricing do not appear to feed into investment in the necessary technology needed to reach net zero. These issues are discussed in more detail below.

14

Kades (1997). Ibid., at p. 474. 16 Heads Up, “How Many Atoms Are There In The World?” https://headsup.scoutlife.org/manyatoms-world/#:~:text=According%20to%20the%20US%20Department,%2C%20Magnesium% 2C%20Sulfur%20%E2%80%A6%20etc. (Accessed 14th April 2022). 17 Leal-Arcas, Rafael. (2021). Climate Clubs for a Sustainable Future The Role of International Trade and Investment Law. 15

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It has been argued that carbon pricing could create expectations of market opportunities for low carbon technology. This would drive innovation efficiency and improvements of production processes and firms exploring alternative products and services with lower carbon footprints. However, a survey by London School of Economics found that European manufacturers are only able to reduce the carbon footprint by 7% in improving their manufacturing processes.18 Innovation levels under existing carbon pricing systems have been modest.19 It has been argued that carbon pricing regimes promote static efficiency rather than dynamic efficiency.20 Carbon pricing favours financially viable emission reductions in that particular country at that particular time, at that particular pricing of carbon emissions. This has been described as “static efficiency.” However, carbon pricing has not led to the development of advanced technologies that can lead to full decarbonisation and therefore creates little “dynamic efficiency.”21 Compounding this problem is the uncertainty as to what the correct price of carbon emissions should be. To limit global temperature increases to 1.5 degrees C, there are various estimates the price of carbon emissions ranging from $75 to $1800 per tonne of CO2 by 2030.22 The marketplace is left in a state of confusion and uncertainty as to the price of carbon, and this makes cross-border corporate innovation, as a result of carbon pricing policies, challenging if not impossible. In the current form, carbon pricing be it tax based or ETS-based or unlikely to lead to meaningful technological innovation or emission cuts.23 Something altogether, more radical leading to dynamic efficiency is necessary. There also appears to be some confusion as to the elasticity of carbon energy. A 2020 study of elasticities of CO2 emissions in response to changes in carbon pricing found that the effects of carbon pricing are extremely disappointing. The study found that introducing a $1 per tonne of carbon dioxide carbon pricing resulted in a lower growth rate of carbon dioxide emissions of around 0.01%. They fully concluded that without additional carbon pricing policies, carbon pricing is not be “sufficient to achieve emission reductions consistent with the Paris Climate Agreement”.24 There are many academics and policymakers supporting carbon pricing, and 3623 economists, four former chairs of the Federal Reserve and 28 Nobel laureate economists are signatories to the economist statement on carbon dividends which states that “carbon tax is the most cost-effective lever to reduce carbon emissions on the scale and speed that is necessary.” However, empirical evaluation based on mathematical models on the impact of carbon pricing on emissions is notably lacking. Modelling the elasticity of carbon emissions is challenging due to the diverse economic social forces involved, as discussed in para [5] above. 18

Neuhoff (2009). Mehling and Tvinnereim (2018a, b). 20 Ibid. 21 Ibid. 22 Id at, p. 53. 23 Id, at p. 58. 24 Rafaty et al. (2020). 19

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Rafaty, Dolphin and Pretis attempt to address this issue in their elasticity study in 2020.25 However, their conclusions suggest a linear model of elasticities. Intuitively, it would be more likely that these elasticities would be nonlinear. Small changes in the price of carbon are unlikely to impact demand. This can be evidenced by the simple fact that a nation’s GDP is not held hostage to the ebb and flow of small changes in energy prices. However, when there are very large changes in energy prices, there is an economic effect. For example, oil price rise at 50% almost always results in a recession in the USA.26 Economic history and the response of economies to sharp rises in oil prices probably constitute a more accurate indicator of elasticities and show strong evidence of a nonlinear elasticity function. This would imply the need for a large and radical carbon tax in order to reduce carbon emissions, with the tax revenues reinvested in clean technology to offset the economic impact of lower oil and gas consumption. In reality, however, there is neither a large carbon price nor is there always tax revenue recycling into clean energy technology. In order to price carbon, countries can implement a carbon tax or an emissions trading system or a combination of both.27 Generally, carbon taxes tend to be consumer-facing taxes, while emissions trading systems tend to apply to large projects.28 In terms of carbon taxes, tax rates vary considerably. For example, Japan taxes carbon emissions at $3 per tonne and Sweden charges at $127 tax per tonne. 29 Revenue generally goes into the government budget. Only 14% of carbon tax revenue went into environmental related spending in the 30 OECD countries analysed.30 Many countries, for example, Iceland, Slovenia and the UK, use the entire revenue for the general government budget, while other countries such as Finland reduced personal income taxes after introducing a carbon tax which simply shifted society’s tax burden from labour to energy without any increase in environmental related investment by the government.31 Japan is the standout exception; all of its carbon tax revenues are directed towards environmental programmes. However, they have only a $3 tax per carbon dioxide tonne emission.32 In summary, it is clear that current pricing regimes may not lead to meaningful disruption in the near term. A more assertive solution is needed, and this chapter argues for a single-industry assertive approach to target just one high emission industry. This approach balances the need for economic growth with the need for a more rapid decline in emissions.

25

Ibid. Bloomberg (2022). 27 Yunis and Aliakbari. (2020). 28 Mehling and Tvinnereim (2018a, b). 29 Supra n 21 at p. 3. 30 Id, at p. 4. 31 Supra n 21 at p. 5. 32 Id, at p. 7. 26

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Consumption-Based Carbon Pricing: A Potential Solution It has been argued that consumption-based carbon pricing is a superior approach. This is partly due to consumption-based pricing “passing the effect all the way through the entire value chain regardless of the jurisdiction of origin.”33 Furthermore, consumption-based pricing is an alternative to border carbon adjustments which may still have the risk of WTO litigation.34 Due to the risks of a global trade war, this chapter argues that policymakers in selected countries could target a specific industry for consumption-based pricing. It would make sense to target a particularly damaging industry but at the same time to limit the economic impact for as much of the world as possible. There are four factors that aid in identifying an industry that would be suitable for aggressive consumption-based pricing. (a) The logical profile of such a targeted industry would be one that does not have broad external impact and spillover effects. For example, targeting the oil industry could lead to an economic recession as well as broad inflation as the price of oil feeds into the rest of the world’s economy. (b) Another aspect of the profile of the targeted industry would be that production should be limited to a concentrated number of countries. This could limit the political fallout and also contain the economic impact primarily to those small group of producing countries. This would allow for targeted economic support to a small group of countries, thereby lowering the costs to compensate those that lose out from this assertive approach. (c) Thirdly, targeting this industry should have a meaningful impact on global emissions otherwise, like many carbon pricing initiatives, the impact will be limited. (d) Having identified such a target industry, the consumption-based pricing model should not fall foul of World Trade Organisation rules so as not to be undone through litigation. It is argued that aggressive beef consumption tax imposed by a large group of high beef consumption (and low beef production) countries could lead to significant reductions in emissions, significant reforestation in the Amazon and limited economic fallout for most of the world and have limited economic impact on countries implementing an aggressive consumption-based pricing for beef. Recent WTO decisions open the door for countries to impose such aggressive unilateral rules that protect the environment (see below).

33 34

Rafaty and Grubb (2018). Id, at p. 4.

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The Beef Industry It is well established that one tonne of methane is equivalent to 23 tonnes of CO2 in terms of the environmental impact.35 Eating a large beef burger has the same effect on the environment as driving a medium-sized car for 10 miles.36 This is due to a combination of methane emitted through belching or flatulence by the cattle as well as the emissions related to feedstock. Beef has five times the emissions per calorie of other meats and ten to forty times the emissions of equivalent calorie production of grains and vegetables.37 The global emissions from cattle and buffalo are estimated to be around 1.9 billion tonnes of CO2 which is 5.5% of global CO2 equivalent emissions last year.38 This is only the emissions from respiration and does not include the feedstock and transport-related emissions. Compounding the problem is the deforestation related to cattle farming. Twentysix per cent of the ice-free surface of the planet is dedicated to livestock farming. Including the land needed for feed crop, 30% of the earth’s ice-free land is used.39 The deforestation risks in the Amazon, associated with cattle exports, are estimated to be 73,000–74,000 hectares per year.40 Another study found that half tropical rainforest loss occurs in Brazil and cattle ranching drives 3/4 of this loss.41 One study found a correlation coefficient of 0.918 between the number of heads of cattle and forest loss in Brazil.42 Despite this extraordinary destruction and environmental impact, Brazilian beef exports are worth just 2.33% of Brazil’s exports.43 About 350,000 square kilometres of the Amazon have been deforested between the year 2000 and 2018. If 3/4 of this is due to cattle ranching send, around 260,000 square kilometres of the Amazon rainforest has been lost due to cattle ranching. With an average tree density in the Amazon of 400–750 trees per hectare,44 260,000 square kilometres represent a loss of 10–20 billion trees. The one trillion tree campaign estimates that one trillion trees would capture 488–1000 billion tonnes of CO2 when fully grown.45 On that basis, reforesting the Amazon lost solely to cattle farming would lead to carbon capture of anywhere between 5 and 20bn tonnes of CO2 until they are fully

35

Fiala (2009). Ibid. 37 Dion (2017). 38 Steinfeld, H., Food and Agriculture Organization of the United Nations., & Livestock, Environment and Development (Firm). (2006). Livestock’s long shadow: Environmental issues and options. Rome: Food and Agriculture Organization of the United Nations. at p. 122. 39 Id, at p. XXI. 40 Zu Ermgassen et al. (2020). 41 Walker et al. (2013). 42 Columbia Climate School (2022). 43 Ibid. 44 Steege et al., “A spatial model of tree α-diversity and -density for the Amazon Biodiversity and Conservation” (2003). 45 Plant for the Planet (2022). 36

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grown. These are no insignificant numbers when one considers annual emissions worldwide which are currently 36bn tonnes.46 The beef industry is highly concentrated in terms of supply. Eighty-three per cent of the world’s beef comes from just five countries.47 The major suppliers are as follows: Country

% of world’s supply

Brazil

27%

China

25%

USA

15%

Argentina

11%

Australia

6%

Brazil, who hold over a quarter of the global cattle stock, is of particular importance to the compounding impact of the deforestation by cattle ranchers. The purchasing markets from Brazilian beef exports are China (30%), Egypt (12.4%), Russia (10.4%), Iran (7.1%) and the EU (7%).48 This chapter suggests that countries that do not produce beef in significant quantities but consume beef in large quantities could incrementally impose very high beef taxes. This could remove beef from the diet of the populations of those countries, while raising tax revenue incrementally. Roughly 50% of beef is consumed by high beef-consuming countries49 ; however, a climate club of countries including the EU, India, Mexico, Egypt, Iran and roughly 10 other nations could impose substantial taxes on the consumption of beef and incrementally increase consumption taxes to the extent that the rising tax eventually curtails consumption. As well as this approach, the USA which is both a large importer and a large producer could tax beef that originates from countries that are experiencing substantial deforestation. In aggregate these measures have the potential to radically reduce aggregate demand for beef such that the beef industry would face dramatic decline.

An Opportunity to be Radical Rather than Incremental Arguments for small and incremental increases in beef taxes may not be the right approach. The Corporate Knights magazine which markets itself as a voice for clean capitalism argued for a 50 cent per kilo beef levy. It was argued that this would reduce beef consumption meaningfully.50 However, from 2002 to 2015, the price of 46

Statistica (2022). Beef2Live (2022). 48 PNAS (2022). 49 https://beef2live.com/story-world-beef-consumption-ranking-countries-164-106879 (Accessed 14th April 2022). 50 Dion (2017). 47

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live cattle went up from $60/Lb to $170/Lb51 yet US beef consumption only dropped from 67 lb per capita to 54 lb per capita.52 Adjusting for 33% inflation in the USA from 2002 to 2015, the price of beef rose by 180% but demand declined by only 20%. Clearly even very sharp increases in price which should have the same impact of taxation-based consumption declines have a marginal impact on the industry. The elasticity of beef consumption is likely to exhibit a similar nonlinear elasticity as has been shown for oil. While the author found no study confirming this, intuitively it makes sense that very large increases of beef prices of many hundreds of per cent might lead to an extreme collapse in beef consumption. By pricing beef out of the reach of consumers except as a rare treat could potentially lead to significant reforestation of the Amazon, at a cost of only 2.33% of the Brazilian economy. The beef industry in the USA meanwhile represents around 0.5% of GDP and 0.4% of employment.53 This is substantially lower than the 8% contribution to GDP of the USA oil and gas sector.54 Brazil’s oil and gas sector meanwhile is 10% of GDP.55 Not only is the beef industry one of the most damaging industries in terms of greenhouse gases, but also the industry is far smaller than the oil and gas sectors of the major beef producers as a per cent of GDP. It is likely that it may be more palatable for policymakers to target the beef industry with punitive carbon taxes due to the lower economic impact within the economies of major beef suppliers and because it does not have the short-term negative externalities associated with a sharp rise in the oil price.

WTO Rules and Potential Litigation Article 2056 allows exceptions allowing members to enact measures necessary to protect animal health or relating to the conservation of exhaustible natural resources, so long as they “do not constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail” or are a “disguised restriction on international trade.” The Mexican tuna embargo case held that Article 20 subsections (b) and (g) should only apply to the territory of the enacting state.57 Following

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Trading Economics (2022). Statistica (2022). 53 English et al., Economic Contributions of the US Beef Industry Resilience Services, PLLC and the University of Arkansas at p. 16. 54 American Petroleum Institute “Oil & Natural Gas Contribution to U.S. Economy Fact Sheet” (2020) 55 Guilhoto (2007). 56 GATT 1994:General Agreement on Tariffs and Trade 1994, Article XX. 57 GATT Panel Report, United States – Restrictions on Imports of Tuna, DS21/R, 3 September 1991, unadopted, BISD 39S/155. 52

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this, in the tuna labelling case,58 Mexico argued that tuna labelling measures in the USA were a disguised restriction on international trade. As a large area of the Eastern Pacific, where the tuna were caught, is outside of the enacting state, Mexico argued that the Article 20 exceptions should not apply. However, Mexico eventually failed and the WTO ruled in favour of the USA.59 Prior to the tuna labelling case conclusion, the Shrimp–Turtle ruling60 banned the import of shrimp into the USA if they are caught without adherence to unilateral rules imposed by the USA. The WTO upheld the US rules despite two challenges. This was a fundamental departure from the Tuna–Dolphin embargo ruling of the 1980s. Shrimp–Turtle essentially allowed the USA to apply these exceptions outside their territorial jurisdiction, essentially allowing them to export their rules and values, imposing them on the rest of the world. The Appellate Board also found a territorial nexus as required by Article XX(g) between the exhaustible resource and the country seeking to justify its measure.61 This interpretation essentially widened the scope of the nexus requirement such that it could be argued that the decision came very close to removing the nexus requirement altogether for environmental issues. This new state of affairs has been described as “opening the door for an infinite number of unilaterally imposed rules” applied by any Member of the World Trade Organisation. This allows WTO Member States to impose punitive consumption taxes on a particular industry so long as the objective is to protect the environment. Punitive consumption taxes on beef would likely be allowed by the WTO rules, based on the Shrimp–Turtle cases and the tuna labelling case. With such punitive taxes being likely to pass muster with the WTO, it is recommended that a carbon club can be formed with the specific objective of targeting the beef industry with very high punitive taxes. The taxes would have to consider the nonlinear nature of elasticity for commodities generally. It is suggested that a radical increase in taxation on beef would be necessary through very high consumption taxes. This could be implemented in large annual increases for example, 100% per year, until the tipping point is reached, and beef becomes unaffordable. Money raised from taxation (which could be in the billions) can be used to invest aggressively in laboratory grown meat which has reached “proof of concept” stages. In line with the success of the Montreal Protocol, some technology transfer would be useful and would mitigate some of the economic impacts on beef-producing nations. For example, a private equity fund investing in food and agritech could be set up with shares issued to beef farmers and processors. Investment in alternative treebased farming could also be encouraged to reforest the Amazon in an economically

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Panel Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R, circulated to WTO Members 15 September 2018. 59 Supra n 51. 60 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, 2755. 61 Ibid.

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productive manner. The acai fruit, for example, has become so popular that in some areas, land initially cleared for cattle has now been turned over to acai orchards.62

Conclusion With the mathematical impossibility of a broad multilateral agreement on carbon emissions, as well as other problems such as free rider issues or the green paradox, this chapter argues that a single-industry approach with a limited number of participants may be easier to implement. Due to the seriousness of the climate issue, it is argued that punitive taxes could be imposed on the beef industry. This can be implemented without violating WTO rules, particularly after the Shrimp–Turtle and tuna labelling cases. Furthermore, the limited number of beef producing countries and the relatively small per cent of GDP generated from the beef industry, particularly when compared to the oil and gas industry, there would be limited economic fallout and cascading protectionist risks. With the beef industry being responsible for over 5% of greenhouse gases and responsible for ongoing deforestation of the Amazon, this industry is a local target for aggressive punitive taxation as supressing this industry will lead to a substantial reduction in emissions while at the same time also lead to substantial reforestation. A successful implementation of such measures by a climate club group of nations that have high beef consumption levels would also create a model for a more assertive approach to addressing climate change, which could be used to target other specific industries without the need for mathematically impossible broad binding agreements.

References American Petroleum Institute “Oil & Natural Gas Contribution to U.S. Economy Fact Sheet” (2022) https://www.api.org/news-policy-and-issues/taxes/oil-and-natural-gas-contribution-tous-economy-fact-sheet#:~:text=America’s%20oil%20and%20natural%20gas,our%20nation’s% 20Gross%20Domestic%20Product. Accessed 13 Apr 2022 Arezki R et al (eds) (2018) Coping with the climate crisis: mitigation policies and global coordination. Columbia University Press (Chap. 3) Atik J, Jeutner V (2021) Quantum computing and computational law. Law Innov Technol 13(2):302– 324 Beef2Live (2022) World beef consumption per capita (ranking of countries). https://beef2live. com/story-world-beef-consumption-per-capita-ranking-countries-0-111634#:~:text=The%20w orld%20consumed%20129.5%20billion,in%20the%20world%20in%202016. Accessed 13 Apr 2022 Bloomberg (2022) History suggests oil shock raises probability of U.S. recession. https://www.blo omberg.com/news/articles/2022-03-04/history-suggests-oil-shock-raises-probability-of-u-s-rec ession. Accessed 13 Apr 2022 62

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Columbia Climate School (2022) Protecting the Amazon requires changing policy and eating less beef. https://news.climate.columbia.edu/2019/08/27/amazon-rainforest-fires-beef-policy/. Accessed 13th Apr 2022 Dion J (2017) The beef with beef. Corp Knights 16(1):1, 48–49 Fiala N (2009) The greenhouse hamburger. Sci Am 300(2):72–75, 72 Forests News (2022) Açaí: could the wonder fruit also be wonderful for forests? https://forestsnews. cifor.org/10700/acai-could-the-wonder-fruit-also-be-wonderful-for-forests?fnl=en. Accessed 13 April 2022 Guilhoto JJM, Guilhoto JJM, Ichihara SM, Postali FAS, Regueira KW, de Souza, Canelas A, da Fonseca MM, Cunha N (2007, July 1) The oil and gas sector in the Brazilian Economy Kades E (1997) The laws of complexity & the complexity of laws: the implications of computational complexity theory for the law. 49 Rutgers Law Rev 403–484, 422 Lewis B (2013, May 13) Exclusive-Airbus to China: we support you, please buy our jets. Reuters Mehling M, Tvinnereim E (2018a) Carbon pricing and the 1.5 °C target: near-term decarbonisation and the importance of an instrument mix. Carbon Clim Law Rev 12(1):50–61, 54 Mehling M, Tvinnereim E (2018b) Carbon pricing and the 1.5 °C target: near-term decarbonisation and the importance of an instrument mix. Carbon Clim Law Rev 12(1):50–61, 57 NCCS (2022) Carbon tax. https://www.nccs.gov.sg/singapores-climate-action/carbon-tax/#:~:text= Singapore%20implemented%20a%20carbon%20tax,makes%20the%20most%20economic% 20sense. Accessed 13 Apr 2022 Neuhoff K (2009) Carbon pricing and investment response. Clim Strat 6 Plant for the Planet (2022) Why the world needs a trillion more trees! https://a.plant-for-the-planet. org/trillion-trees/#:~:text=Once%20these%20trillion%20trees%20are,far%20(2.2%20trillion% 20tons. Accessed 13 Apr 2022 PNAS (2022) The origin, supply chain, and deforestation risk of Brazil’s beef exports. https://www. pnas.org/https://doi.org/10.1073/pnas.2003270117. Accessed 14 Apr 2022 Rafaty R, Dolphin G, Pretis F (2020) Carbon pricing and the elasticity of CO2 emissions. University of Cambridge, Energy Policy Research Group, p 1 Rafaty R, Grubb M (2018) How can consumption-based carbon pricing address carbon leakage and competitiveness concerns? Clim Strat Statistica (2022) Per capita consumption of beef in the United States from 2000 to 2031. https://www.statista.com/statistics/183539/per-capita-consumption-of-beef-in-the-us/. Accessed 10th Apr 2022 Statistica Annual CO2 emissions worldwide from 1940 to 2020. https://www.statista.com/statistics/ 276629/global-CO2-emissions/. Accessed 13 Apr 2022 Tett G, Giles C, Politi J (2020, January 26) US threatens retaliation against EU over carbon tax. Financial Times Trading Economics (2022) Live cattle. https://tradingeconomics.com/commodity/live-cattle. Accessed 10th Apr 2022 Walker NF, Patel SA, Kalif KAB (2013, August) From Amazon Pasture to the high street: deforestation and the Brazilian cattle product supply chain. Trop Conserv Sci 446–467. Yunis J, Aliakbari E (2020) Carbon pricing systems by country. Carbon pricing in high-income OECD countries. Fraser Institute, p 1 Zu Ermgassen, Godar J, Lathuillière MJ, Löfgren P, Gardner T, Vasconcelos A, Meyfroidt P (2020, December) The origin, supply chain, and deforestation risk of Brazil’s beef exports. Proc Natl Acad Sci U S A.

Chapter 7

Should Policymakers Encourage the Development of Specific Green Energy Technologies? Advantages and Risks Lee Shao Yee David Abstract In this chapter opines that policymakers invariably occupy an indispensable role, in light of the pressing climate crisis. With a focused insight on the AsiaPacific region, this chapter seeks to unpack the intricacies behind why a government and policymaker-led approach to the green energy transition is not only beneficial, but also essential, explained by the inherent power and potential vested in these high offices. Despite the apparent political deadlock and economic inefficiencies displayed by some nations when adopting meaningful climate action, overall, the unique position of policymakers in possessing the political capital, moral mandate, and economic command of a nation grants them an unparalleled ability to call for, and enact, great change. They are, as Barbadian Prime Minister Mottley alluded to at COP26, the linchpin of meaningful climate action, possessing the “unique mix of voice, ambition, and action” required to prevent the impending climate disaster. We today face the spectre of ecological destruction or a hairbreadth salvation, and it is imperative that we no longer excuse and exonerate our leaders of their responsibility in the green energy transition.

Introduction Anything less than your best is too much to pay Anything later than now, too little, too late. Nothing will change without you. (Daley-Ward, 2021)

In the landmark UN Climate Change Conference in Glasgow (“COP26”) in 2021, the eyes of the world fell upon their leaders and delegates, gathered to deliberate the looming climate crisis. In Daley-Ward’s opening poem to COP26, she called upon the policymakers of the world to act, centring them as the linchpin of climate action, as did many keynote speakers of COP26, including UN Secretary General L. S. Y. David (B) Singapore Management University Yong Pung How School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_7

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Antonio Guterres, who pointed out the lack of action in the 6 years since the Paris Climate Agreement (Guterres, 2021), and Barbadian Prime Minister Mia Mottley, when she demanded that “Leaders must not fail those who elect them to lead” in her impassioned speech, calling for the unity of voice, ambition, and action of world leaders to resolve the climate crisis (Mottley, 2021). The climate crisis is arguably the pre-eminent existential crisis facing humanity at present, as we tether on the precipice between an ecological disaster of our making or a hairbreadth salvation through dedicated and directed climate actions taken today. Accounting for about 75% of global emissions, (Ritchie & Roser, 2020) the energy sector is one of the top contributors of greenhouse gas emissions, and should invariably be the starting point of any meaningful climate action. Thus, a concerted effort is required to reduce our reliance on emissions-heavy fossil fuel sources and transition to clean, green energy technologies, which beckons the debate: who is best placed to encourage this transition? As with COP26, this chapter shares the opinion that world leaders and policymakers occupy an indispensable position in the fight against climate change and ought to promote the immediate adoption of clean energy with fervent vigour. This is evident from the unique position policymakers possess in society, as inspired by Prime Minister Mottley, having the ability to exercise the moral voice, political ambition, and economic action to combat the climate crisis. Thus, the following argument is established: that despite ostensible weaknesses of policymakers in their deadlock and inefficiencies, overall, a policymaker-led approach in the green energy transition is beneficial, given the inherent power and potential vested in policymakers, exemplified in their political capital, moral mandate, and economic command.

Scope and Context For the purposes of this chapter, policymakers refer to national leaders capable of dictating and shaping national policies, as opposed to groups that operate outside the public sphere. The encouragement of the development of specific clean energy technologies refers to climate actions targeted at the transition of the energy sector away from fossil fuels to cleaner energies, which is defined as negligible emissions energy sources. Such actions may include research, investment, and production of such technologies. This chapter features several green energy sources, including solar, wind, and geothermal power. With the abundance of literature focused on landmark green policies from the USA and Europe, it is perhaps prudent for this chapter to offer a more focused insight into the Asia-Pacific region. The chapter seeks to unpack the sociocultural and geopolitical context of this region and demonstrate how the conundrums of a policymaker-dominated approach in the energy transition are playing out.

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Advantages of a Policymaker-Led Approach As determined, this chapter argues in favour of a policymaker-led approach to the energy transition, contingent on the inherent power and potential of policymakers in rallying efforts to prevent impending disaster. Sir David Attenborough in his COP26 speech calls humanity “the greatest problem-solvers to have ever existed on Earth” and urged the leaders that this desperate hope to resolve the climate crisis is why they are given the privilege to lead (Attenborough 2021). This potential is manifested in: (a) political capital to plan, (b) moral mandate to lead, and (c) economic command to act.

Political Capital of Policymakers The first step in understanding the policymakers’ ability to enact sweeping green energy transition policies lies in the political capital granted to policymakers as the legitimate, vested leaders of their nations. The ability to command the trust and rally the citizenry forms the basis of political capital (French 2011). This political capital takes the form of governmental institutions and power centralisation that permits policymakers to access and enact certain policies and directives otherwise inaccessible to non-state actors. We observe the ability to exercise such power in the instances of Singapore and Vietnam, wherein their pursuit of renewable energy utilised state apparatus and political legitimacy to push for sweeping energy reforms. Singapore has recently debuted one of the world’s largest floating solar farms on Tengeh Reservoir, as a joint venture between a governmental statutory board, the Public Utilities Board, and a government-linked company, Sembcorp Industries (Sembcorp 2021). The Sembcorp Tengeh Floating Solar Farm stands testament to the political capital of Singaporean policymakers, a project that installed over 120,000 solar panels onto a reservoir, boasting a 60-MW peak capacity that powers not just homes in Singapore, but also the adjacent water treatment plants, serving multiple purposes in improving Singapore’s quality of life (Mohan 2021). Most impressively, the Floating Solar Farm is situated in a reservoir that is within Singapore’s designated military training grounds, an area that is only accessible to policymakers. The success of the Floating Solar Farm serving both policy aims of water and energy security for Singapore has sprouted new proposals to expand the concept to other reservoirs on the island (Chong 2021). This instance demonstrates the policymakers’ unique ability to account for multiple policy considerations, and coupled with the political legitimacy of the government, gave policymakers the capital to plan for green energy projects. In Vietnam, policymakers have also demonstrated the centrality of political capital in pushing for the green energy transition. At present, Vietnam boasts Southeast Asia’s largest solar photovoltaics installations (“PVs”), with a growth rate outpacing China, at a 330,000% growth from five PVs in 2016 to 16,504 in 2020 (IRENA

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2021). This is attributed to the strong commitment by the Vietnamese government to decarbonise (Thang et al. 2021) and domestic motivations to avoid stark energy shortages by 2020 (Thang et al. 2020). Coupled with the high solar irradiance of Southern Vietnam, it presented the perfect environmental and social combination for policymakers to capitalise on. The opportunity was seized in part due to Vietnam’s centralised socialist government structures, throwing the weight, mandate, and resources of the government behind the swift and effective development of green energy technologies. Once more, policymakers demonstrate how political capital and ambition grant an edge in leading laudable green energy transitions.

Moral Mandate of Policymakers Regarding the moral authority and mandate of policymakers, this limb harkens to the impassioned calls of COP26 for immediate climate action from policymakers, among the most ardent by Prime Minister Mottley’s lamentation that the lack of adequate climate funding from world leaders is “immoral” and “unjust” (Mottley 2021). Considering the moral nature of the policymakers’ authority as national leaders, it is imperative for policymakers, as the vested representatives and agents of their citizenry, to act for the flourishing of their community, which invariably includes a liveable and sustainable world. To that end, the green energy transition is a moral imperative, that a task policymakers are mandated to direct and build towards. This involves exercising said moral authority to commandeer and lead the society’s resources and stakeholders in pursuit of a greener future, of which South Korean and New Zealander efforts would be studied. South Korea has made key strides in promoting the development of green energy in recent years, with President Moon Jae—in pledging over USD 60 billion for South Korea’s Green New Deal (Jones 2021). While extolled as “stunningly ambitious” (Board 2020), it nevertheless indicated the policymakers’ intentions and commitment to decarbonise South Korea. This paved the way for accompanying policies like the 9th Basic Plan for Long-term Electricity Supply and Demand (“9th Plan”) by the Ministry of Trade, Industry, and Energy, setting out concrete aims to produce 35% of its energy via renewables (Lee 2021). The moral voice of South Korean policymakers presented an insightful case into the effects national leadership has on the green energy transition, as South Korea, known for its innovation and technology, invested those skills into the transition, praised by the International Energy Agency as helping to “not only to advance its energy transition but also to improve its energy security” (IEA 2020). The commitment is further demonstrated in South Korea’s plan to construct the world’s largest offshore windfarm in South Jeolla Province, capable of producing 8.2 GW, with a host of 33 public and private entities heeding the leadership of policymakers and signing on with the project. In New Zealand, we observe further how the moral mandate of policymakers influences the development of green energy, earning the country a reputation as one of the Asia-Pacific’s greenest nations. With over 80% of New Zealand’s electricity being

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generated by renewable sources (MBIE 2021), policymakers have long earmarked the green energy transition as a national priority, with hydropower and geothermal energy experiencing the greatest investment. The moral edge of policymakers is further demonstrated in the manifesto of the incumbent Labour Party, which aims to achieve a 100% renewable electricity grid by 2030 (Labour Party 2020). Similar to South Korea, this signalled the intentions of policymakers to work towards a common goal for the betterment of the New Zealander community, to not only develop New Zealand into a global leader of green energy, but also ensure an affordable energy supply for its citizenry. With the moral voice, the government has coalesced various stakeholders behind the development of a pumped hydro storage project in Lake Onslow, promising employment opportunities and energy security (Woods 2020). Having achieved the balance of decarbonisation and energy security in the green energy transition, New Zealander policymakers provide a strong model on how leadership may wield the moral mandate to guide and facilitate the development of a greener future.

Economic Command of Policymakers While the moral voice and political ambition of policymakers explain the crystallisation of will to encourage the green energy transition, economic action is required to unlock the ability of policymakers to enact great change. Consequently, the economic command of policymakers in bringing a nation’s immense resources to bear defines the final advantage that national leaders offer in leading the green energy transition. With the weight of a nation’s wealth at policymakers’ disposal, it opens an abundance of opportunities in facilitating green energy development, especially through longterm planning, and heavy governmental investment in landmark energy projects. The case studies of China and the Philippines are selected to showcase the significance of commandeering a nation’s worth of economic resources towards green energy development. China leads the world as the largest renewable energy producer, boasting a total renewable energy capacity of above 1000 GW in 2021 (Xue 2022). With the 14th fiveyear plan continuing China’s aims to reduce emissions (UNDP 2021), it is useful to review strides made in recent memory in facilitating China’s energy transition goals. In 2017, Chinese investments in renewable energy accounted for 45% of the global share, at over USD 125 billion (UNEP 2018), while also having offered subsidies up to USD 22.5 million for the research and development of wind turbine technology (Oh 2017). Such immense financial capital is only possible at a national level, a resource unique to policymakers. The command economy of China further facilitates policymakers’ ability to wield national resources efficiently, as Chinese policymakers exploit the high winds of the Gobi Desert to build numerous wind farms (Biello 2008), amongst which is the Gansu Wind Farm Project, the world’s largest collective windfarm, at a price of USD 17.5 billion (Fairley 2009). As of 2020, the investments in the wind industry yielded a total capacity of over 280 GW of energy

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(Xu and Stanway 2021), standing testament to the immense economic command of Chinese policymakers. In the Philippines, policymakers have made financial commitments to improving the nation’s renewable industry, with the Philippine Energy Plan 2020–2040 earmarking USD 110 billion for renewable energy development, to be shared with both private and public sectors (DOE 2020). Central to the Philippine Energy Plan is the focus on geothermal power, of which the Philippines is the world’s third largest producer, being situated in the tectonically active Pacific Ring of Fire (The ASEAN Post 2021). Additionally, the Philippines have taken a cooperative stance in engaging other stakeholders to participate in the growing renewable market. Through the Renewable Energy Act, tax rebates, incentives, and loans are offered to parties seeking to build renewable plants (Dime and Eviota 2021). This plays into the policymakers’ aims to resolve the nation’s unemployment, electrical shortages, and energy transition issues. The combination of direct government financing and indirect monetary policies presents the Philippines as a model of sustainable development in the region (The ASEAN Post 2018), demonstrating how the policymakers’ economic leadership and command could bring about effective change to the green energy transition.

Risks of a Policymaker-Led Approach Opponents of a policymaker-dominant approach would often cite the weaknesses of governments and their failure to act in what has been termed, “the Lost Decade” of climate action (UNEP 2019), pointing to: (1) political deadlocks and (2) economic inefficiencies, stunting swift and effective climate policies, including that of the green energy transition.

Political Deadlock of Policymakers An oft-cited critique of a policymaker-led approach is the frequent political deadlock preventing meaningful climate legislation and policies from being passed into effect. Very often would opponents point to prominent examples, such as the highly divisive opinions on US’s Green New Deal (Friedman 2019), and the lack of consensus is not alien to the Asia-Pacific either. We observe the case Australia, how political deadlock poses a risk to policymakers being the sole arbiter of the green energy transition, specifically how corporate influence over policymakers result in empty promises. In Australia, the fossil fuel lobby has particularly strong influence among policymakers, advocating against the needful adoption of renewable energy and causing Australia to still rely heavily on coal as its main source of electricity, while advancing the non-renewable industry (Mao 2021). The inability of Australian policymakers

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to pass meaningful climate policy is attributable to the lobby-induced deadlock in Australian politics, as fossil fuel companies such as Woodside, Santos, and Adani continue to fund policymakers (Knaus 2020), warping their perceptions from fighting for their community’s interests, to representing corporate interests. Considering the political capital of policymakers, such deadlock, reflects the squandering of political capital, stunting Australia’s passage of meaningful climate policy for the past eight years (Remeikis 2021). Meanwhile, its environment ministers and policymakers continue to grace efforts of the fossil lobby by opening new coal plants (Cox 2021) and more egregiously fund the opening of the controversial Woodside Scarborough gas field project (Turner 2022). The deadlock in passing effective climate action by Australian policymakers has thus casted a shadow on the efficacy, reliability, and commitment of policymakers to the green energy transition.

Economic Inefficiencies of Policymakers Another common criticism of policymakers is their inability to efficiently command the economic resources of a nation. Proponents leverage on Adam Smith’s theory of the invisible hand to contend that governmental interference in the green energy transition results in inefficiencies that hamper, rather than promote, meaningful climate action. While such an assertion has been thoroughly debunked by studies demonstrating a need for both market forces and governmental regulations (Storm 2009), it is undeniable that certain myopic visions of policymakers would indeed cause greater harm than good in the green energy transition. The lack of understanding of the economy and overly ambitious goals create the inefficiencies faced by certain policymakers, of which India presents an insightful case study. Undeniably, India’s efforts in the green energy transition are highly laudable, having commissioned the world’s largest solar park, the 2245-MW Bhadla Solar Park in the highly solar irradiated Thar Desert (Sanjay 2020). Additionally, Indian policymakers launched the Jawaharlal Nehru National Solar Mission (“Solar India”), which aims to improve Indian energy security and turn India into a global solar leader (CDKN 2011). However, despite the government committing USD 1.978 billion to the project (Government of India 2015), the funds are not distributed effectively. Many state-owned electrical distribution companies failed to pay renewable energy projects on time, with Andhra Pradesh owed up to USD 1.314 billion (MOP 2022). Another inefficacy Indian policymakers’ encounter is the weak national transmission grid, where much of the rural population is unable to share in the immense solar energy (Nuwal and Som 2021). Large-scale grid improvement plans, like the Green Energy Corridor, are running into similar financing troubles as Solar India (Tripathi 2020). Such shortcomings in accounting for other elements of the green energy transition resulted in the creation of the inefficiencies, demonstrating that despite possessing governmental economic muscle, the brute force of policymakers is not the panacea to energy transition.

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Evaluation of Policymakers’ Role in Encouraging Green Energy Transition In ascertaining the overall role of policymakers in encouraging the green energy transition, it necessitates a holistic analysis of both the benefits and risks of a policymakerdominant approach. Overall, it cannot be denied that policymakers occupy a central role in the societies they serve and by virtue of their representative nature of their community ought to reflect and act in the interests of their citizenry. This fact renders policymakers an inalienable stakeholder in the green energy transition. Seated in the high offices of power, policymakers possess an unparalleled ability to command both political and moral authorities for good and to employ the collective resources of their populace for such purposes. Indeed, to err is human, and as various instances over the past decade have demonstrated, governments and policymakers may not always be the steadiest hand on the wheel. Despite their shortcomings, it is bereft to preclude policymakers on such basis, for the unique mix of voice, ambition, and action converges most effectively in policymakers. Japan presents an appropriate example for policymakers having failed, but returning to commit to better climate action. Following the Fukushima disaster, the populace demanded a complete phase-out of nuclear energy, which forced policymakers to defer to non-renewables, like coal, to make up for the electric shortage (Tabuchi 2020). However, with public sentiment warming back to nuclear energy as an emissions-free energy source, together with concerns over rising energy prices due to the Russian invasion of Ukraine, policymakers shifted directions to restart some nuclear power plants (The Straits Times 2022), in accordance with larger policy goals to achieve carbon neutrality by 2050 (JapanGov 2022). At present, Japan stands as among the greenest countries in Asia-Pacific (Hofmann 2019), with their policymakers playing key roles in the innovation and exploration of new renewable sources, including tidal, geothermal, and wind energy. Thus, it is imperative to observe the vital role of policymakers play in shaping national consensus and directing such national energies and resources in the pursuit of the green energy transition.

Recommendations Having assessed the inextricable role of policymakers in encouraging the development of green energy, this chapter seeks to proffer some recommendations, ensuring that the benefits of a policymaker-led approach are reaped, while minimising the risks involved. As addressed in COP26, the responsibility to our shared planet is borne not only by policymakers alone, but also by corporate groups, NGOs, and youths too, people who call this planet home. Through the chapter’s discussions, very often do the partnership between market and regulatory forces come into play, such as in the Philippines ambitious geothermal expansion projects, Singapore’s plans to build more floating solar farms, and South Korea’s wind energy consortium of private

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and public companies. This points towards the benefits of including eco-businesses, such as Breakthrough Energy, or NGOs like Greenpeace, in advocating and funding the green energy transition. The value of including such stakeholders alleviates the burden on policymakers and introduces new perspectives which may otherwise be lost to deadlock and inefficiencies should policymakers be expected to do it all.

Conclusion Be architects of something new; protectors of the day; Be shining final hopes; designers of chance and change.

In Daley-Ward’s COP26 poem, she performed this line of great hope and inspiration to national leaders, challenging policymakers across the world to embrace and exemplify their authority in leading climate action. National leaders and policymakers are ordained with a duty to care for their communities, of which the global community’s desire to live in a sustainable world is perhaps the most important. Prime Minister Mottley urged COP26, “If our existence is to mean anything, then we must act in the interests of all our people who are dependent on us. And if we don’t, we will allow the path of greed and selfishness to sow the seeds of our common destruction,” issuing a powerful reminder of the incredible office and power policymakers have to push for immediate climate action. In the hands of our leaders are the spectre of the destruction Prime Minister Mottley warned of, and simultaneously, the shining hope Daley-Ward dreamt of. As this paper discussed, the high offices of the policymakers simply possess so much gravitas and power that it would be unwise to omit their involvement in the green energy transition. We cannot continue to excuse and exonerate policymakers of their responsibility to act for a more sustainable world. We must fervently insist on their leadership to which they are elected to, on the firm hope that we may steward our community, our collective survival, to a greener future.

References Attenborough D (2021, November) David Attenborough, people’s advocate for COP26, address to world leaders. Retrieved from Youtube https://www.youtube.com/watch?v=o7EpiXViSIQ&ab_ channel=UnitedNations Biello D (2008, August) China’s big push for renewable energy. Retrieved from Scientific American https://www.scientificamerican.com/article/chinas-big-push-for-renewable-energy/ Board J (2020, May) South Korea’s Green New Deal ‘stunningly ambitious’ for one of region’s top polluters. Retrieved from Channel News Asia https://www.channelnewsasia.com/asia/climatechange-south-korea-new-green-deal-ambitious-1338886 CDKN (2011) Transforming India into a solar power. Climate & Development Knowledge Network Chong C (2021, July) Singapore’s first large-scale solar floating farm opens at Tengeh Reservoir. Retrieved from The Straits Times: https://www.straitstimes.com/singapore/singapores-firstlarge-scale-solar-floating-farm-opens-at-tengeh-reservoir

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Cox L (2021, October) Third new coal project approved by Australian environment minister Sussan Ley in just one month. Retrieved from The Guardian https://www.theguardian.com/aus tralia-news/2021/oct/05/new-coalmine-mangoola-nsw-muswellbrook-approved-australia-env ironment-minister-sussan-ley Daley-Ward Y (2021, November) Yrsa Daley-Ward at the opening of the COP26 world leaders summit. Retrieved from Youtube https://www.youtube.com/watch?v=-3ilJn3g3vA&ab_ channel=UNClimateChange Dime R, Eviota E (2021, August) The renewable energy law review: Philippines. Retrieved from The Law Review https://thelawreviews.co.uk/title/the-renewable-energy-law-review/philippines DOE (2020) Philippine Energy Plan 2020–2040. Department of Energy, Taguig City Fairley P (2009, September) China’s potent wind potential. Retrieved from Technology Review https://www.technologyreview.com/2009/09/14/209991/chinas-potent-wind-potential/ French RD (2011) Political capital. J Representative Democracy 215–230 Friedman L (2019, February) What is the green new deal? A climate proposal, explained. Retrieved from The New York Times https://www.nytimes.com/2019/02/21/climate/green-new-deal-questi ons-answers.html Government of India (2015) Revision of cumulative targets under national solar mission from 20,000 MW by 2021–22 to 100,000 MW. Government of India Guterres A (2021, November) UN Secretary General António Guterres’ at the opening ceremony of the world leaders summit. Retrieved from Youtube https://www.youtube.com/watch?v=Otk W6W9R2nc&ab_channel=UNClimateChange Hofmann W (2019, April) Top 5 greenest countries in Asia-Pacific. Retrieved from ValueChampion https://www.valuechampion.sg/top-5-greenest-countries-asia-pacific IEA (2020, November) Korea is putting innovation and technology at the centre of its clean energy transition, IEA policy review finds. Retrieved from International Energy Agency https://www.iea.org/news/korea-is-putting-innovation-and-technology-at-the-centre-ofits-clean-energy-transition-iea-policy-review-finds IRENA (2021) Renewable capacity statistics. International Renewable Energy Agency, Abu Dhabi JapanGov (2022, April) Carbon neutrality. Retrieved from The Government of Japan: Most Japanese back nuclear power for first time since Fukushima Jones RS (2021, July) The Korean new deal. Retrieved from Korea Economic Institute of America https://keia.org/the-peninsula/the-korean-new-deal/#:~:text=The%20Green%20New% 20Deal%20should,on%20track%20for%20carbon%20neutrality Knaus C (2020, February) Fossil-fuel industry doubles donations to major parties in four years, report shows. Retrieved from The Guardian https://www.theguardian.com/environment/2020/ feb/12/fossil-fuel-industry-doubles-donations-to-major-parties-in-four-years-report-shows Labour Party (2020, July) 100% renewable electricity generation by 2030. Retrieved from NZ Labour Party https://www.labour.org.nz/release-renewable-electricity-generation-2030 Lee K (2021, March) South Korea’s 9th Basic Plan for electricity—a step closer to carbon neutrality? Retrieved from Wood Mackenzie https://www.woodmac.com/our-expertise/focus/Power--Ren ewables/south-koreas-9th-basic-plan-for-electricity--a-step-closer-to-carbon-neutrality/ Mao F (2021, October) Climate change: why Australia refuses to give up coal. Retrieved from BBC News https://www.bbc.com/news/world-australia-57925798 MBIE (2021) Energy in New Zealand 21. Ministry of Business, Innovation and Employment, Wellington Mohan M (2021, July) Tengeh Reservoir floating solar farm officially opens, ‘big step’ towards environmental sustainability, says PM Lee. Retrieved from Channel News Asia https://www.channelnewsasia.com/tengeh-reservoir-floating-solar-farm-officiallyopens-big-step-towards-environmental-sustainability-says-pm-lee-2020521 MOP (2022, April) States of overdues to gencos by discoms for Apr 2022. Retrieved from Payment Ratification and Analysis in Power procurement for bringing Transparency in Invoicing of generators https://praapti.in/

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Mottley M (2021, November) Speech: Mia Mottley, Prime Minister of Barbados at the opening of the COP26 world leaders summit. Retrieved from Youtube https://www.youtube.com/watch?v= PN6THYZ4ngM&ab_channel=UNClimateChange Nuwal V, Som S (2021, August) Remaining challenges for renewables in India. Retrieved from IndiaSpend https://www.indiaspend.com/data-viz/renewable-energy-challenge-distributioncompanies-forecasting-grid-infrastructure-768928#:~:text=The%20most%20important%20c hallenge%20for,long%20and%20unsustainable%20payment%20cycles Oh S-Y (2017) How China outsmarts WTO rulings in the wind industry. Asian Surv 1116–1145 Remeikis A (2021, October) Eight years, 20 policies: how Australia’s leaders have fumbled and dithered on climate. Retrieved from The Guardian https://www.theguardian.com/australia-news/ 2021/oct/17/eight-years-20-policies-how-australias-leaders-have-fumbled-and-dithered-on-cli mate Ritchie H, Roser M (2020) Emissions by sector. Our World in Data Sanjay P (2020, March) With 2,245 MW of Commissioned solar projects, world’s largest solar park is now at Bhadla. Retrieved from MERCOM https://mercomindia.com/world-largest-solar-parkbhadla/ Sembcorp (2021) Sembcorp and PUB officially open the Sembcorp Tengeh floating solar farm. Sembcorp Industries, Singapore Storm S (2009) Capitalism and climate change: can the invisible hand. Dev Change 1011–1038 Tabuchi H (2020, February) Japan races to build new coal-burning plants, despite the climate risks. Retrieved from The New York Times https://www.nytimes.com/2020/02/03/climate/japan-coalfukushima.html Thang ND, Burke PJ, Baldwin KG, Chinh TN (2020) Underlying drivers and barriers for solar photovoltaics diffusion: the case of Vietnam. Energy Policy 1–11 Thang ND, Burke PJ, Hoang NN, Overland I, Suryadi B, Swandaru A, Yurnaidi Z (2021) Vietnam’s solar and wind power success: policy implications for the other ASEAN countries. Energy Sustain Dev 1–11 The ASEAN Post (2018, February) The Philippines tops energy ranking for environmental sustainability. Retrieved from The ASEAN Post https://theaseanpost.com/article/philippines-tops-ene rgy-ranking-environmental-sustainability The ASEAN Post (2021, February) Geothermal key to Philippines’ energy demand. Retrieved from The ASEAN Post https://theaseanpost.com/article/geothermal-key-philippines-energy-demand The Straits Times (2022, March) Most Japanese back nuclear power for first time since Fukushima. Retrieved from The Straits Times https://www.straitstimes.com/asia/east-asia/most-japaneseback-nuclear-power-for-first-time-since-fukushima#:~:text=Most%20Japanese%20back%20n uclear%20power%20for%20first%20time%20since%20Fukushima,-The%20Fukushima%20n uclear&text=SINGAPORE%20(BLOOMBERG)%2 Tripathi B (2020, July) Finance, transmission, land issues may trip India in race to meet renewables targets. Retrieved from IndiaSpend https://www.indiaspend.com/finance-transmission-land-iss ues-may-trip-india-in-race-to-meet-renewables-targets/ Turner R (2022, April) Woodside’s controversial Scarborough LNG project gets final approval amid climate warnings. Retrieved from BBC News https://www.abc.net.au/news/2022-04-07/ woodside-scarborough-lng-approval-despite-climate-emissions/100971214 UNEP (2018) Global Trends in Renewable Energy Investment 2018. United Nations Environment Programme, Frankfurt@@@ UNEP (2019, September) From “lost decade” of climate action, hope emerges. Retrieved from United Nations Environment Programme https://www.unep.org/news-and-stories/story/lost-dec ade-climate-action-hope-emerges UNDP (2021) China’s 14th five-year plan: spotlighting climate and environment. United Nations Development Programme Woods M (2020, July) 100% renewable electricity grid explored with pumped storage ‘battery’. Retrieved from Beehive.govt.nz https://www.beehive.govt.nz/release/100-renewable-electricitygrid-explored-pumped-storage-%E2%80%98battery%E2%80%99

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Xu M, Stanway D (2021, January) China doubles new renewable capacity in 2020; still builds thermal plants. Retrieved from Reuters https://www.reuters.com/article/us-china-energy-climat echange-idUSKBN29Q0JT Xue Y (2022, January) China to remain renewable energy leader with strong capacity growth in 2022, despite subsidies phase-out. Retrieved from South China Morning Post https://www.scmp.com/business/china-business/article/3161732/china-remain-renewableenergy-leader-strong-capacity-growth

Chapter 8

Clean Energy Technologies as a Way to Combat the Climate Crisis Annette Liew Pei Jun

Abstract Policymakers around the world have intensified their efforts to combat the climate crisis, which include developing clean energy technologies. However, policymakers encounter several challenges in the course of their efforts. This chapter discusses the advantages, challenges, and risks of relying on policymakers to lead the development of clean energy technologies. Given the urgency of climate change, it is also important to explore alternative development pathways led by others to combat the climate crisis. To that end, advantages and risks of development pathways led by Industry and the larger civic society are also discussed in this chapter. By drawing trends from case studies, future endeavourers into clean energy development can learn important lessons from those who have gone before them, identify the critical actors, and the ways to mitigate risks.

Introduction Admonishing world leaders for their continued climate inaction and unwillingness to wholeheartedly embrace clean energy to reduce emissions, Sir David Attenborough said in a speech at the COP26 Climate Summit: “Is this how our story is due to end? A tale of the smartest species doomed by that all too human characteristic of failing to see the bigger picture in pursuit of short term goals.”1 Historically, policymakers have been working with powerful fossil fuel industries to advance narrow economic goals of growth and expansion, at the expense of the very duties that they owe to society: environmental conservation, climate stability and public health.2 Despite their commitments to decarbonisation, G20 policymakers have continued to finance fossil fuel projects; from 2013 to 2019, they allocated more than three-quarters of their export credit and development finance to fossil fuel projects and fuel-intensive industries.3 Given the urgency of climate action, one wonders: can we afford to rely on policymakers to lead the development of clean energy technologies? A. L. P. Jun (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_8

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Scope and Value of Research This chapter examines leadership in the development of clean energy technologies. In turn, this chapter focuses on the advantages and risks of policymakers leading the development. In addition, this chapter shall only focus on nations which have made progress with clean energy; given that such nations have made relatively more efforts in developing clean energy technologies, trends may be drawn from case studies of their efforts. By doing so, other nations seeking to embark on clean energy development projects can learn lessons from those who have gone before them, and waste less resources in making the transition. By examining the complexities and demands of energy systems transitions, this chapter seeks to add value to existing literature by identifying the critical actors necessary to lead the development of clean energy. More importantly, considering the 2022 Russian invasion of Ukraine which has exacerbated the energy crisis, it is high time for countries to end dependence on Russian fossil fuels and refocus energy policies on renewable and domestic sources of energy such as solar, wind, hydroelectric energy and more. As such, this chapter will contemplate whether policymakers should lead the development of clean energy in the following parts: First, it will discuss (a) the advantages to policymaker-led development and (b) the risks of such an approach. Second, this chapter will discuss if other actors would be better poised to lead the development of clean energy instead. Third, this chapter will discuss a Climate Resilient development approach, which entails multiple actors exercising leadership at multiple levels, before finally proffering suggestions for future developments.

Whether Policymakers should lead The phasing out of fossil fuels is a complex process which will affect diverse societal stakeholders—risks occur and emerge concurrently, and some policymakers’ responses have even created new impacts and risks.4 It is therefore imperative that approaches to develop clean energy are periodically reviewed to minimise risks and unintended consequences, and policymakers should not be assumed to be the de-facto leaders in this movement.

Advantages of a Policymaker-Led Approach Despite policymakers’ compromising positions in fossil fuel financing, some believe that due credit must still be given to policymakers for whatever limited progress made in clean energy, and they must continue to lead its development; policymakers are the only ones who can establish long-term and binding clean energy targets

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and policies, undertake iterative and adaptive planning for power grids, facilitate the development and financing of emerging technologies, and support a just and equitable decarbonisation transition.5 Supporting arguments will be discussed in turn. (1) Effective governance is a key enabling factor for clean energy development Success stories have one thing in common—heavy-handed policymaking. This becomes clear we examine nations that have made significant strides in adopting and developing clean energy despite being “late to the game”; their policymakers implemented comprehensive policy prescriptions and injected substantial funds to support them.6 In recent years, China’s central government has made tremendous efforts to promote the development of clean energy technologies at the national level. This is surprising given that China is “full of energy contradictions”; as the largest emitter and producer of coal in the world, many believed that China’s entrenched fossil fuel industry would be able to resist decarbonisation efforts.7 However, China has surprisingly become one of the leading clean energy investors in the world. Despite being “later to the game” than its western counterparts, the central government’s heavy handedness in implementing focused subsidies to promote offshore wind energy and feed-in tariffs to promote distributed solar power installations has led China to surpass US spending in research and development (R&D) for clean energy technology, with spending reaching US$378b in 2020.8 In fact, China now accounts for 32% of the global capacity for generating renewable energy and is now a global wind superpower.9 Dubbed as “this generation’s most significant electricity reform[er]”, it is clear that heavy-handed policymakers have the capability to overcome strong resistance and obstacles to decarbonisation.10 (2) Complexities of clean energy development: Only policymakers have the political will and might to tackle them Endeavourers into clean energy face numerous obstacles which threaten global efforts to achieve the Paris targets: developing clean energy lacks incentives in terms of risk and reward, uncertainty of outcomes, inadequate infrastructure, and the continued financial attractiveness and concomitant investments in fossil fuels. Faced with these daunting obstacles, only policymakers have the long-term resolve to make headway in the complex and resource-intensive process of clean energy development. This is especially so, considering that clean energy sources are costly relative to fossil fuels, and they only reap benefits in the remote future.11 Emerging economies have traditionally relied on fossil fuels to support massive industrialisation projects because they are cheaper and deemed to be more accessible than sophisticated renewable energy sources. Therefore, a costly and “less-attractive” renewables-led energy generation plan will only be achieved by the great resolve and determination of policymakers who have the will and foresight to choose cleaner, and yet pricier ways to increase electrification on a large scale. Even in its rural electrification process, Vietnam’s one-party government made the daunting political commitment to support “utility scale and solar rooftop installations” in this process through high feed-in-tariffs. In addition, Vietnam was also a “first mover” in the ASEAN region to take up emerging technologies like floating solar PV and offshore

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wind projects through a feed-in-tariff scheme. The government continues to make significant strides in developing clean energy, leading the country to provide 70% of the ASEAN’s capacity for generating renewable energy.12

Risks of a Policymaker-Led Approach Despite the many advantages to policymaker-led approaches, many experts find that prevailing policy measures have failed to minimise climate risks, reverse path dependencies and facilitate climate resilient development to meet the Paris targets.13 Supporting arguments will be discussed in turn. (1) Complex bureaucracy hinders policymakers from enacting swift and timely policies IPCC’s AR6 technical summary posits that policymakers’ efforts have upended efforts to decarbonisation. This is due to the complex relationships between climate and non-climate risks, as well as the constraints of prevailing development and governance practices. Such obstacles to climate include institutional fragmentation, conflicting values, and policy domains which amplify climate inaction and deadlock.14 Unlike the aforementioned nations of Vietnam and China which have a unified one-party central government, the world has seen multi-party governments in other nations becoming “increasingly polarised” and require strong majorities to enact clean energy policies—efforts which have more often than not been futile. In one-party states, policymakers who seek to develop clean energy technologies often receive support from other bureaucrats as political consensus is often achieved within the uniform party elite; this very political structure also allows policymakers with extensive and long-term planning experience to accelerate the build-up and implementation of renewable energy plans. However, in nations like the US, the modern-day liberal party must overcome political opposition from the republicanled senate, which is well known for its climate scepticism, before it can pass policies and budget proposals to support clean energy technologies.15 Unfortunately, Republican campaigns and candidates have historically been funded by powerful fossil fuel companies, and they return the favour by “protect[ing] [fossil fuels] at almost any costs… by desperate[ly] attempt[ing] to delay… [the renewables] transition”.16 In 2015, “more than two-dozen Republican-led states” brought a lawsuit to block the Obama Administration’s Clean Power Plan (CPP), which aimed to lower CO2 emissions from power plants by closing or transforming coal plants, even before said plan could even be implemented. Naturally, the succeeding Trump Administration replaced the CPP with the Affordable Clean Energy rule (ACE), which required coal plants to upgrade their equipment to increase their efficiency—an approach that experts concluded would have burned more coal overall and increased emissions (Kolbert 2022).17 History has unsurprisingly repeated itself in Biden’s ongoing climate envoy— Republicans in West Virginia, Louisiana and Texas have allegedly been instructed

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to oppose President Biden’s 2021 “climate envoy” by pressuring and penalising financial institutions that withdrew funding from projects that worsen the climate crisis.18 Anti-clean energy politicians’ retardation of ongoing clean energy efforts sends the wrong message to society and putative investors of clean energy—they create uncertainty in policies which result in fears of “adverse risks for both public and private…project development”, rendering the costs of clean energy technologies “prohibitively high”.19 Based on the foregoing, it is increasingly clear that the worsening climate crisis cannot continue to bear the cost of politicians that work to slow down the development of clean energy technologies—the environment demands immediate action from other actors. (2) Policymakers lack the requisite expertise and knowledge to lead the development Some experts have also found that prevailing policies are overly broad and have failed to directly target negative externalities of fossil fuel industries, thereby creating more costs than benefits of adopting clean energy technologies.20 Given the complexities and intermittent nature of clean and naturally-sourced energy generation, installations of clean energy projects and their requisite funding should “vary and depend based on [the suitability of weather conditions like] solar irradiance and [even] grid characteristics” to maximise energy generation by directing resources where they would be most productive. For example, localities with higher solar irradiance that use dirtier energy sources would benefit most from transitioning to solar energy generation (see footnote 21). However, prevailing policies and subsidies intended to encourage clean energy development have been found to be largely uncorrelated with environmental suitability, and experts have argued that policymakers are not best positioned to direct the allocation of resources because of their insufficient knowledge of complex clean energy technologies; this resource misallocation has cost the US an estimated US$1 billion of potential environmental benefits relative to efficient subsidies in the US, an opportunity cost that our dying planet cannot afford. In addition, experts have found that prevailing subsidies which mandate the reduced usage of carbon fuels have inadvertently stifled innovations which can “mitigate emissions more efficiently”. Some have used the following illustration to prove this point: suppose scientists discovered an energy-efficient fuel additive which had a net carbon negative effect “in the absence of emission filters”. Prevailing filter-usage mandates would naturally disincentivise relevant stakeholders from adopting this efficient energy-alternative, and policymakers take a long time to react to new developments.21 Given policymakers’ lack of requisite knowledge to deal with the complexities of planning suitable policies, clean energy companies have even argued that “[policymakers’] least bad policy response” would be to “do nothing” and “not get in the way” of their efforts. Despite clean energy companies’ confidence in building sufficient energy capacity, the Australian federal government has made the confounding move to increase spending on gas plants (US$650 million) in 2022 to coincide with the phasing out of traditional coal plants, citing reasons of ensuring “reliable electricity supplies” amidst “unreliable” renewable energy generation.22 Oil

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Change International argues that clean energy sceptics hold the mistaken assumption that natural gas plants are required on the grid to balance variable renewable energy.23 However, gas is neither economical, clean nor necessary: the continued usage of gas, while cleaner than dirtier coal and oil energy, would not “[reduce] emissions by nearly enough” given the expected methane leakages. In addition, the declining prices of renewables are already at levels sufficient to disrupt gas-usage. In any case, policymakers should handle high wind and solar loads on the grid by “optimising a wide range of [cleaner] technologies and solutions, such as battery storage, demand response and transmission” instead of continuing to favour gas as a “bridge fuel” (OCI 2019). Like coal and oil, natural gas must be urgently phased out, and there is “no time for a bridge…Clean alternatives are ready”.24

Considering Alternative Development Pathways: Should Other Actors Lead? Experts believe that clean energy developments must be driven by rigorous R&D to progress beyond mature technologies, availability of enterprise investments, existing industrial infrastructure, and targeted government policies to expand investable markets.25 Therefore, it is important that there are multiple, adaptive development pathways to meet the ever-changing needs of such developments.26 To determine who is best positioned to lead the development of clean energy, the following sections shall explore alternative development pathways led by other stakeholders.

Should Industry Lead the Development? Given that corporations use the most amount of energy in society and are also the largest emitters as compared to other sectors, it is worth considering whether corporations should bear the responsibility of leading the clean energy development.27 The sections hereinafter consider such an approach. (1) Industry-led development will face less obstacles and propel clean energy further and faster While due credit must be given to policymakers for making advancements in clean energy, it is often hard to detect if they have hidden agendas or loyalties to fossil fuel industries; while policymakers have injected more than US$50 billion on clean energy innovation, they continue to subsidise more than US$500 billion to $800 billion annually on fossil fuels. Even if policymakers are genuinely committed to developing clean energy technologies, they face much opposition from fossil fuel incumbents and fellow bureaucrats. On the other hand, corporations that are serious about this energy transition can swiftly “take solutions to scale, with or without government support”.28

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Around the world, corporations have formed working coalitions that accelerate clean energy propaganda. Within such coalitions, industry leaders have “scale[d] the use of solutions” that promote low-carbon business practices, increased businessdemand for renewable energy, facilitated R&D and collaborated with investors to establish attractive cross-sectoral energy value chains. WBCSD is one such coalition of over 200 international and progressive corporations which has provided industry players with business solutions that are “practical, grounded in reality and designed to help companies” improve their sustainability, in a bid to deviate from prevailing “codes and principles-driven” approaches.29 Other examples include the Green Hydrogen Catapult project launched by “energy companies from Denmark, Spain, Saudi Arabia, Australia, Italy and China”, which has made hydrogen production goals beyond reputed clean energy superpower Germany’s targets.30 These coalitions demonstrate the strength of cooperative industry-led efforts to provide extraterritorial and swift solutions to inspire systemic change. Given the urgent need to address climate change, industry may be better positioned to lead and deliver timely solutions. (2) Industry has remained committed to clean energy even when policymakers have failed Amidst Trump’s shocking withdrawal from the Paris Climate Accord in 2017, corporations “forged ahead in the fight against climate change” despite the lack of government support; thousands of US businesses from all over the country came together to sign the “We Are Still In” declaration to show their “enduring commitment” to the Paris Agreement and made pledges to “match their emission reduction plans with the Paris goals”. Apple CEO Tim Cook had even sought to personally dissuade Trump from withdrawing from the Paris Agreement as well, and subsequently led Apple to issue its second US$1 billion green bond to finance renewable energy projects. Google has also committed itself to purchase enough renewable energy “to match its consumption for global operations”, creating a huge demand for wind-generated electricity from domestic wind farms.31 Having big industry leaders make strong commitments to clean energy is crucial to send a strong market signal about the desirability and feasibility of decarbonisation for other businesses—this will “set the stage” for our future of “decreasing…dependency on fossil fuels”.32 When consumers respond positively to such initiatives, the attractiveness of renewable energy for businesses will be further accentuated. Therefore, many believe that there is a strong case for an industry-led development. (2) Reservations about an industry-led approach: an economic perspective However, many economists have expressed concerns that leaving the development to laissez faire might “yield excessive emissions relative to an efficient outcome”.33 It is trite that carbon emissions from dirty energy sources are a real and serious negative externality, with detrimental costs to the environment and public health. In theory, such negative externalities generated from burning fossil fuels should be transferred to third-party purchasers in the form of higher prices to discourage further consumption or shouldered by the fossil fuel industries themselves to discourage

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further production.34 However, the negative externalities of burning fossil fuels and concomitant hazardous health effects on innocent third parties are often left unaccounted for in the real world, thereby underpricing fossil fuels and keeping demand for them high. Absent government intervention, an industry-led approach alone will not be sufficient to reduce global demand, which comes from diverse and numerous categories of consumers, to a level which corrects the socially inefficient outcome. Therefore, policymakers must intervene through the imposition of certain mandatory taxes to correct this negative externality and inefficient market outcome. In addition, firms are inherently profit-motivated. So long as producing fossil fuels remains profitable, fossil fuel firms will continue to “resist efforts to stop selling them.35 Financial institutions will also continue to finance coal, oil and gas firms: in 2021, major global banks continued to provide US$742 billion in fossil fuel financing despite having made commitments to the “Net-Zero Banking Alliance” and claiming that they were committed to achieving net-zero emissions at the 2020 Glasgow UN climate summit. Upon closer inspections of their sustainability policies, experts have found that many net-zero policy frameworks were intentionally crafted in ways that were not meaningful, which allowed the banks to continue dealing with the oil majors without explicitly breaching such policies.36 Given corporations’ questionable commitments to renewable energy, more development pathways must be considered.

Climate Resilient Development: Different Actors Must Exercise Leadership at Different Levels Considering the foregoing, it is clear that meeting Paris targets “require very fundamental changes” and no single actor can lead the development of clean energy alone to achieve them (Levermann 2019). In addition, it is important to recognise the stark reality that corporations and policymakers have competing interests that may be antithetical to supporting renewable energy: from the continued production or investments in economically-attractive fossil fuels to appease shareholders, to the preservation of domestic economies and livelihoods that are dependent on fossil fuels, Paris targets can only be achieved if different actors work together to ensure commitment and follow-through.37 The IPCC has termed such an approach as “Climate Resilient Development (CRD)”, which necessitates the “inclusion of all societal actors”—the aforementioned corporations and policymakers, individuals and communities that can help to “ensure credibility…and legitimacy, [and foster] commitment [,] …. equity and well-being”. To that end, multiple actors exercise power and leadership at many different levels which are “well integrated vertically and horizontally” (AR6 WGII), to cumulatively make good societal choices that prioritise climate change reduction in order to positively influence global development pathways of clean energy technology.38

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(1) Policymakers and Industry must work together to create investable markets for green technology Policymakers and corporations must work together to create alternative, investable and attractive markets that support and stimulate investments and innovation in clean energy technology. Policymakers should lead in some aspects, while industry should lead in others: For policymakers, market-intervention is crucial to create investable markets to assure clean energy technology companies that there is sufficient demand for their goods before they can scale up their production.39 In addition, policymakers must oversee the market to regulate the profit-appetite of financial institutions and corporations to ensure follow-through on corporate green policies and that the “right types” of investments are stimulated.40 To do both, policymakers must design wellcalculated green policy incentives that will send the “right investment signals…to the market to build the right projects in the right places”: for example, the New South Wales (NSW) government has undertaken comprehensive modelling to establish the “Electricity Infrastructure Investment Safeguard” roadmap which will support private investments in electricity infrastructure. To that end, the NSW government has offered aspiring clean energy enterprises an “electricity price floor to [all] projects that align with its strategy”. Experts applaud the NSW government’s efforts, as it will cut emissions in the electricity sector by half and even reduce energy system costs by around US$12.4b, turning NSW into one of the “lowest cost regions in the developed world”. In addition, the NSW government’s careful planning is expected to create around 23,600 jobs across 2032–2037.41 For corporations, industry leaders must continue to set new sustainable norms to send strong market signals about the desirability of renewable energy systems to other businesses; the cumulative actions of numerous businesses will be able to encourage more clean energy enterprises and lower the demand for fossil fuels to correct the negative externalities in the market. In areas where policymakers are hesitant to develop clean energy technologies, industry leaders must also use their political influence to engage in corporate lobbying efforts in order to put pressure on policymakers to encourage decarbonisation.42 Most importantly, corporations must be poised to embrace policymakers’ green initiatives and directions and do what they do best: create demand for goods, specifically clean energy technologies. (2) Civic society also has substantial power to instigate change Given the urgency of climate action, it is also necessary to consider lesser-known development pathways led by actors that will not face the aforementioned myriad of challenges that centralised energy systems currently face. Scholars believe that civic society can be a “key contributor” and crucial driver of a cleaner future.43 Through grassroot movements, public opinion surveys and elections, civic society can directly instigate policy change for developing cleaner energy systems. They can also exert substantial influence and collective power over policymakers and corporations to promote positive change by growing demand and adapting new technologies and innovations.44 More importantly, civic society forms the foundation of decentralised energy: small-scale renewable energy resources and

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demand-side resources could be harnessed at a range of scales, from households to neighbourhood communities or urban levels. Across the world, Clean Energy Communities (CEC) have been emerging, where members play the roles of “producers, consumers, or prosumers, investors [or] asset owners”. Members may own and operate their own solar PV arrays, co-generation plants, battery storage facilities, demand management facilities or invest in wind and solar farms, or even in their community microgrids. Not only can CECs achieve energy self-sufficiency, but they are also an “important centre of innovation” that can fill the gaps of incumbent centralised energy systems by tailoring their energy systems to meet their specific needs.45

Conclusion At the end of his COP26 speech, Sir David Attenborough said: “If working apart, we are a force powerful enough to destabilise our planet, surely, working together, we are powerful enough to save it.” While many believe that policymakers alone have the responsibility to encourage the development of clean energy because of their competencies and available resources, we must ultimately realise that successful and sustainable development must involve leadership from different stakeholders at every level, exercising complementary strengths to make up for the weaknesses of others, to overhaul and phase out entrenched fossil fuels systems. Notwithstanding this, one cannot deny the importance of policymakers: it is crucial that policymakers readily provide financial and technological assistance to smaller businesses or communities which have limited finances or technical expertise. This would empower them to expand their clean energy efforts beyond “one or very few local projects” and develop clean energy technologies on a larger scale.46 References 1.

2.

3.

Kow, Zi Shan. 2021. “Sir David Attenborough Admonishing World Leaders At COP26 To Act Sounds Like Narrating Wildlife Documentary”. Mothership.Sg. https://mothership.sg/2021/11/david-attenborough-cop26-speech/#:~:text= Zi%20Shan%20Kow-,Sir%20David%20Attenborough%20admonishing% 20world%20leaders%20at%20COP26%20to%20act,but%20hope%2C%22% 20he%20said. Stokes, Leah Cardamore. 2020. Short Circuiting Policy: Interest Groups and The Battle Over Clean Energy and Climate Policy in The American States. Oxford Scholarship Online. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows.

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H.-O. Pörtner, D.C. Roberts, E.S. Poloczanska, K. Mintenbeck, M. Tignor, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem (eds.)]. In: Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.). Working Group II Technical Support Unit. 2022. “AR6 Summary for Policymakers”. IPCC. https://www.ipcc.ch/report/ar6/wg2/downloads/report/ IPCC_AR6_WGII_SummaryForPolicymakers.pdf. Aleluia, J., P. Tharakan, A.P. Chikkatur, G. Shrimali, and X. Chen. 2022. “Accelerating A Clean Energy Transition in Southeast Asia: Role of Governments and Public Policy”. Renewable And Sustainable Energy Reviews 159. doi: https:// doi.org/10.1016/j.rser.2022.112226. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. Gallagher, Kelly Sims. 2013. “Why & Governments Support Renewable Energy”. Daedalus 142 (1): 59-77. doi: https://doi.org/10.1162/daed_a_00185. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. Pyper, Julia. 2017. “How Corporations ‘Bypassed the Politics’ to Lead on Clean Energy In 2017”. Greentechmedia.Com. https://www.greentechmedia.com/art icles/read/corporations-bypass-politics-lead-clean-energy-2017. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. Aleluia, J., P. Tharakan, A.P. Chikkatur, G. Shrimali, and X. Chen. 2022. “Accelerating A Clean Energy Transition in Southeast Asia: Role of Governments and Public Policy”. Renewable And Sustainable Energy Reviews 159. doi: https:// doi.org/10.1016/j.rser.2022.112226. “IPCC AR6 WGII Technical Summary”. 2022. Report.Ipcc.Ch. “IPCC AR6 WGII Technical Summary”. 2022. Report.Ipcc.Ch. Gallagher, Kelly Sims. 2013. “Why & Governments Support Renewable Energy”. Daedalus 142 (1): 59-77. doi:https://doi.org/10.1162/daed_a_00185.

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16. Milman, Oliver. 2021. “Republicans Pledge Allegiance to Fossil Fuels Like It’s Still The 1950s”. The Guardian. https://www.theguardian.com/us-news/2021/ jun/07/republicans-fossil-fuels-coal. 17. Kolbert, Elizabeth. 2022. “The Supreme Court Case That Could Upend Efforts to Protect the Environment”. The New Yorker. https://www.newyorker.com/ news/daily-comment/the-supreme-court-case-that-could-upend-efforts-to-pro tect-the-environment. 18. Milman, Oliver. 2021. “Republicans Pledge Allegiance to Fossil Fuels Like It’s Still The 1950s”. The Guardian. https://www.theguardian.com/us-news/2021/ jun/07/republicans-fossil-fuels-coal. 19. Aleluia, J., P. Tharakan, A.P. Chikkatur, G. Shrimali, and X. Chen. 2022. “Accelerating A Clean Energy Transition in Southeast Asia: Role of Governments and Public Policy”. Renewable And Sustainable Energy Reviews 159. doi: https:// doi.org/10.1016/j.rser.2022.112226. 20. Miron, Jeffrey. 2021. “What Should Policymakers Do About Climate Change?”. Cato Institute. https://https://www.cato.org/briefing-paper/what-should-policy makers-do-about-climate-change. 21. Miron, Jeffrey. 2021. “What Should Policymakers Do About Climate Change?”. Cato Institute. https://https://www.cato.org/briefing-paper/what-should-policy makers-do-about-climate-change. 22. Morton, Adam. 2022. “Clean Energy Companies Plea for Government ‘Not to Get in The Way’ Of Renewable Shift”. The Guardian. https://www.theguardian. com/us-news/2021/jun/07/republicans-fossil-fuels-coal. 23. Roberts, David. 2019. “More Natural Gas Isn’t A “Middle Ground” — It’s A Climate Disaster”. Vox. https://www.vox.com/energy-and-environment/2019/ 5/30/18643819/climate-change-natural-gas-middle-ground and “Burning The Gas ’Bridge Fuel’ Myth: Why Gas Is Not Clean, Cheap, Or Necessary - Oil Change International”. 2019. Oil Change International. https://priceofoil.org/ 2019/05/30/gas-is-not-a-bridge-fuel/ 24. Roberts, David. 2019. “More Natural Gas Isn’t A “Middle Ground” — It’s A Climate Disaster”. Vox. https://www.vox.com/energy-and-environment/2019/ 5/30/18643819/climate-change-natural-gas-middle-ground. 25. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. 26. “IPCC AR6 WGII Technical Summary”. 2022. Report.Ipcc.Ch. 27. Schwalbach, Carson. 2016. “How Renewable Energy Benefits Businesses and The Environment”. https://digitalcommons.unl.edu/envstudtheses/191. 28. Karunakaran, Naren. 2014. “Sustainable Development: If Governments Don’T, Companies Should Take Lead”. The Economic Times. https://economictimes. indiatimes.com/news/company/corporate-trends/sustainable-development-ifgovernments-dont-companies-should-take-lead/articleshow/29129615.cms.

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29. Karunakaran, Naren. 2014. “Sustainable Development: If Governments Don’T, Companies Should Take Lead”. The Economic Times. https://economictimes. indiatimes.com/news/company/corporate-trends/sustainable-development-ifgovernments-dont-companies-should-take-lead/articleshow/29129615.cms 30. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. 31. Pyper, Julia. 2017. “How Corporations ‘Bypassed the Politics’ to Lead on Clean Energy In 2017”. Greentechmedia.Com. https://www.greentechmedia.com/art icles/read/corporations-bypass-politics-lead-clean-energy-2017. 32. Schwalbach, Carson. 2016. “How Renewable Energy Benefits Businesses and The Environment”. 33. Miron, Jeffrey. 2021. “What Should Policymakers Do About Climate Change?”. Cato Institute. https://www.cato.org/briefing-paper/what-should-pol icymakers-do-about-climate-change. 34. Graylee, Kai. 2012. “Beyond the Debate: The Role of Government in Renewable Energy Finance - Science in The News”. Harvard: Science in The News. https:// sitn.hms.harvard.edu/flash/2012/energy-finance/. 35. Bernards, Nick. 2021. “Climate Change: Why Government Failure to Act Isn’t the Problem”. The Conversation. https://theconversation.com/climate-changewhy-government-failure-to-act-isnt-the-problem-165899. 36. Hodgson, Camilla. 2022. “Global Banks Keep Up Pace With $742Bn In Fossil Fuel Finance Despite Climate Pledges”. Financial Times. https://www.ft.com/ content/3eeee0f7-bb02-4950-a6d6-49da39c3cc41. 37. H.-O. Pörtner, D.C. Roberts, E.S. Poloczanska, K. Mintenbeck, M. Tignor, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem (eds.)]. In: Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.). Working Group II Technical Support Unit. 2022. “AR6 Summary for Policymakers”. IPCC. https://www.ipcc.ch/report/ar6/wg2/downloads/report/ IPCC_AR6_WGII_SummaryForPolicymakers.pdf. 38. H.-O. Pörtner, D.C. Roberts, E.S. Poloczanska, K. Mintenbeck, M. Tignor, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem (eds.)]. In: Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.). Working Group II Technical Support Unit. 2022. “AR6 Summary for Policymakers”. IPCC. https://www.ipcc.ch/report/ar6/wg2/downloads/report/ IPCC_AR6_WGII_SummaryForPolicymakers.pdf.

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39. H.-O. Pörtner, D.C. Roberts, E.S. Poloczanska, K. Mintenbeck, M. Tignor, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem (eds.)]. In: Climate Change 2022: Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.-O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.). Working Group II Technical Support Unit. 2022. “AR6 Summary for Policymakers”. IPCC. https://www.ipcc.ch/report/ ar6/wg2/downloads/report/IPCC_AR6_WGII_SummaryForPolicymakers.pdf 40. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. 41. Varley, Steve. 2021. “Reframe Your Future Landfill Green Fields If Climate Change Is Everybody’s Business, How Can All Benefit from Green Leadership by The Few?”. EY. https://www.ey.com/en_gl/sustainability/green-moneyflows. 42. Gitsham, Matt. 2021. “Here’s How to Convince Ceos to Support Government Climate Action at The Expense of Their Own Profits”. The Conversation. https://theconversation.com/heres-how-to-convince-ceos-to-support-gov ernment-climate-action-at-the-expense-of-their-own-profits-170292. 43. Gui, Emi Minghui, and Iain MacGill. 2018. “Typology of Future Clean Energy Communities: An Exploratory Structure, Opportunities, And Challenges”. Energy Research & Social Science 35: 94-107. doi: 10.1016/j.erss.2017.10.019. 44. Stokes, Leah Cardamore. 2020. Short Circuiting Policy: Interest Groups and The Battle Over Clean Energy and Climate Policy in The American States. Oxford Scholarship Online. 45. Gui, Emi Minghui, and Iain MacGill. 2018. “Typology of Future Clean Energy Communities: An Exploratory Structure, Opportunities, And Challenges”. Energy Research & Social Science 35: 94-107. doi: 10.1016/j.erss.2017.10.019. 46. Gui, Emi Minghui, and Iain MacGill. 2018. “Typology of Future Clean Energy Communities: An Exploratory Structure, Opportunities, And Challenges”. Energy Research & Social Science 35: 94-107. doi: 10.1016/j.erss.2017.10.019.

Chapter 9

Access to Clean, Affordable, and Reliable Energy Sources to Promote Economic Prosperity Audrey Loo Wan Yi

Abstract Argues that access to clean, affordable, and reliable energy sources promotes economic prosperity. Clean energy technologies, such as carbon capture and sequestration as well as green hydrogen, are catalysts of the fundamental transformation process towards a more sustainable production. As clean energy is cautiously introduced into the global energy mix, fossil fuels, which once dominated the composition, are diminishing in their significance. This phenomenon is rewarding both economically and environmentally, given that fossil fuels are finite in nature and release toxic emissions when burned. Further, as clean energy technologies produce no carbon emissions in generating electricity, its adoption will enable us to achieve our ambitious climate policy goals. Finally, clean energy technologies are driving forces of energy-based economic development—promoting energy security and sustainable economic development concurrently. As such, it is found that the development of specific clean energy technologies is the best solution if we are aiming to combat global climate change and pursue economic-development sustainably. Hence, this chapter argues that policymakers ought to encourage the development of specific clean energy technologies. Nonetheless, the chapter acknowledges that the developmental process of these technologies may come with several threats and further contends that these risks must be mitigated before the benefits of accelerating a low-carbon pathway can be reaped. Therefore, the author posits that policymakers will have to deliberately adopt measures in fostering greater global cooperation so as to institute a robust climate-finance mechanism. To that end, Audrey Loo Wan Yi provides a snapshot of the existing climate-finance mechanism and discusses how a results-based climate-finance framework could possibly be the way forward.

A. L. W. Yi (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_9

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Introduction Today, fossil fuels comprise 80% of current global primary energy demand.1 Fossil fuels have, and continue to, dominate our global energy systems; driving technological, social, economic, and development progress.2 However, burning of fossil fuels releases prodigious amounts of heat-trapping carbon dioxide into the atmosphere, making it the biggest contributor to global climate change. Carbon emissions are predicted to surpass the acceptable range by 2050 if fossil fuels continue to be burned at its present rate while energy demand doubles.3 This threatens the biosphere’s scarce “carrying capacity”.4 As such, in the wake of growing awareness towards the impact fossil fuels has on our environment, mass disruptive protests were sparked to challenge the use of fossil fuels.5 Sustainable development entails progressing towards compliance with long-term constraints like eco-centric, techno-centric, and socio-centric concerns in our pursuit of human activities, without sacrificing any in the process.6 The use of fossil hydrocarbons disturbs this equilibrium and contradicts the sustainability objectives laid out in the Global Goals.7 Addressing the issue of sustainable energy will require the collective engagement of policymakers to explore solutions that can eliminate fossil fuels from our energy mix. One promising solution is innovating and adopting clean energy technologies to decarbonise our society. When endorsed, we can tackle climate change from its core and strengthen society’s resilience to confront and combat climate-induced hazards. This chapter explores the advantages and risks of developing clean energy technologies. Notwithstanding its risks, I contend that policymakers ought to encourage its development. I will first explain my position before presenting the potential advantages and risks that may ensue. Finally, I will take steps towards explaining how fostering greater global cooperation and developing a robust climate finance mechanism can mitigate these risks and accelerate global adoption.

Definition For the purposes of this chapter, clean energy will assume the definition as noncarbohydrates originating from renewable and zero-emission sources to produce power without causing negative environmental impacts.8 By extension, clean energy technologies share a common promise to eliminate carbon as a by-product of power generation. Examples of clean energy technologies include carbon capture and sequestration, solar photovoltaic technology, and green hydrogen.

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Policymakers Should Encourage the Development of Specific Clean Energy Technologies Clean Energy Technologies Are Unavoidable Efforts in post-pandemic market recovery have generated a surge in demand for power. Global demand for power is anticipated to increase by 100 gigawatts over the period of 2021 to 2022; however, renewable energy supply will only grow by 35 gigawatts over the same period.9 This shortfall between renewable energy supply and power demand demonstrates how existing innovation efforts are inadequate to meet the gap.10 Moreover, this discrepancy will only be aggravated over time as we anticipate the reopening of economies and resumption of travels. Yet, little has been done presently to alleviate this problem. Existing strategies commonly revolve around pledges and propaganda campaigns launched by policymakers to encourage the reduction of energy consumption.11 These are counterproductive measures given that no connection has been found between curbing consumption demands and improving production efficiencies.12 In fact, the contrary has been found to be more likely since any research and development plans to achieve long-term changes in production will first require expending energy in the short-term.13 Since clean energy technologies can diversify countries’ power portfolios, increase generating capacity, reduce the cost of electricity, as well as manoeuvre the pressing issue of climate change, its adoption ought to be encouraged. The decision to adopt clean energy technologies as part of our energy policy can no longer be elective. Clean technologies have to be promptly adopted if we intend to meet our increasing energy demand.14

Clean Energy Technologies Are Beneficial The integration of clean energy technologies into our energy mix will deliver benefits of enhanced energy security and sustainable economic development, while addressing the issue of climate change.15

Energy-Based Economic Development Energy-based economic development refers to efforts that pursue both energy policy and planning goals as well as economic development and growth agenda concomitantly.16 These efforts primarily focus on developing advanced, efficient, or low-emission technologies.

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Energy Security Over 25% of the world’s population lives without electricity, with the majority residing in developing countries.17 This illustrates the extensive inequality surrounding per capita global energy consumption trend. Particularly, these developing nations are situated in geographical regions with scarce fossil fuels resource. Furthermore, they have low purchasing power to import energy. As such, these factors render them vulnerable to the problem of energy poverty. One prime example is SubSaharan Africa, where about 77% of the nation’s population lacks access to electricity, making them the country with the lowest energy access rate in the world.18 Their predicament can be attributed to their unfavourable geographical location and economically disadvantaged background. The intricate connection between economic growth and energy demand is axiomatic. Since energy is a fundamental enabler of all basic human needs and is also a primary factor of production, economic and social progression will be hampered should a steady access to energy be obstructed.19 In order to raise energy self-sufficiency, spur economic progression and increase energy diversification, policymakers have to consider developing its energy policies and planning.20 By focusing on innovating existing and new clean energy technologies, countries can expect to benefit from a reliable and steady energy flow which will reduce their reliance on imported fuels. Besides, the development of clean energy technologies will provide cost benefits that can render energy access more affordable. Consequently, countries can profit from reliable and affordable energy sources to support their economic and human development.

Sustainable Economic Development An energy mix that relies predominantly on fossil fuels will place significant dependence on energy providers. This exposes a nation and its people to price and supply fluctuations.21 Since energy is a fundamental enabler of all human needs, price variability will disrupt functions at the core of society and reformulate household expenditures and business operating costs.22 This has grave ramifications on the way people live and work. Besides, price fluctuations will result in substantial economic and social problems when entire economies transition to cheap energy sources or when households are forced to devote a significant proportion of their income on energy which demand is price inelastic.23 Therefore, this imposes an additional burden on policymakers to provide financial support that can counter the consequences of price variability. In 2013, the government of Jordan provided 100,000 Jordanian families subsidies amounting to $100 million to counter the effects of price fluctuations.24 This steered the nation’s resources away from other important political priorities and subsequently hindered progression.

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Furthermore, fossil fuels are unreliable and inefficient energy sources since it is finite by nature.25 This means that they can potentially obstruct industrial production, circumscribe economic growth, and opportunities. Unreliable and decaying electricity infrastructure is estimated to have cost Sub-Saharan Africa approximately one-quarter of a percentage point off its annual gross domestic product growth rate per year.26 This amounts to approximately $2.7 billion annually.27 Investing in clean energy technologies can cultivate a balanced energy mix over time and eradicate potential threats to economic progression. In addition, clean energy investment can stimulate economic progression by promoting job creation, boosting households’ disposable income, and facilitating a positive business climate.28 Presently, it is predicted that 750,000 people are employed in energy research and development around the world.29 The economic benefits derived from green investments are exemplified and observed in the Kingdom of Saudi Arabia’s approach. Specifically, in 2018, the Kingdom introduced the world’s largest solar project by investing $45 million into solar energy. The project is then expected to triple Saudi Arabia’s electricity generation capacity and create around 100,000 jobs, while reducing power costs by $40 billion.30 Energy policies that do not give due consideration to carbon pollution impose tremendous costs to the global economy. Notwithstanding the risks, states must assume a strong front when it comes to green investments. Green investments will lead to jobs creation, positive business climate, and a general increase in disposable income, making it a vital strategy in our elimination of persistent poverty. Ultimately, to realise these benefits, we cannot regard the greening of economies as a drag on growth but rather a new engine of growth.31

Tackling Climate Change The burning of fossil fuels releases a significant proportion of toxic materials to the atmosphere. These include greenhouse gases, sulphur dioxide, nitrogen oxides, carbon monoxide, volatile organic compounds, and particular matters.32 When compounded, these matters can create smog, tropospheric ozone, acid rain, and other threats to our global environment and endanger living creations, biological ecosystems, and human-made surfaces.33 In the United States, 94% of carbon dioxide emissions originate from the combustion of fossil fuels.34 This sets fossil fuels to be the biggest contributors of harmful materials. Today, global energy consumption rate is increasing exponentially especially in rapidly emerging economies like China.35 This trend is indicative of the forecasted intensifying demand for fossil fuels which will exacerbate existing environmental issues. Reducing atmospheric greenhouse gas concentration will require that we dramatically diminish the role of fossil fuels in our energy mix. Over the past decade, clean energy technologies have experienced remarkable growth and huge cost improvements. These technologies also promise the eradication of carbon emissions in electricity generation, making them ideal armours for our relentless fight against climate change.

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Categorically, investment in renewable energy must triple by the end of the decade if we aspire to fight climate change while retain our control over the volatile energy market.36 Therefore, clean energy technologies must substitute fossil fuels to defuse the competing tension that exists between our energy demand and environmental concerns.

Policymakers Are Best Positioned Clean energy technologies promote a resilient energy system when introduced into the energy mix. Before these innovation efforts are welcomed in the markets, they first undergo an intensive development process comprising the stages of idea generation, prototyping, demonstration, early adoption, and maturity. As each stage is rigorous, strong socio-political support is critical in encouraging the development of such ventures.37 Policymakers play pivotal functions in establishing its national energy agenda. By virtue of their authority, they are well-positioned to collaborate with key stakeholders like researchers, investors, and civil society. Specifically, they can coordinate the flow of knowledge, facilitate major demonstration projects, or engage in dialogues with key actors.38 These actions empower policymakers with the necessary foresight to determine national objectives and policy priorities for the development of practical and affordable strategies which will enable the transition to a sustainable economy. Germany’s strategic application of effective energy policies to overcome energy security issues is derived from its government’s collaborative and prudent leadership to endorse a progressive energy policy in the 1970s.39 The policy was later adapted and developed into an environmental platform in the 1990s.40 Presently, they have taken significant steps to embrace a goal of replacing nuclear generation. These efforts have crowned Germany leaders in the renewable energy field, illustrating how policymakers can influence and create impact on the energy market. Besides, policymakers are equipped with financial assets and resources necessary to procure technologies and scale its adoption in the market. Government procurement is a tactical practice to induce high uptake rates of a product.41 In Japan and America, its governments’ prudent action to promote fuel cell powered buses have led to lowered costs of fuel cell stations and widespread acceptance of these buses as a means of energy efficient transport.42 Finland’s successful commercialisation of 48% of its products between 1948 and 1998 is another testament to this approach.43 Hence, this places policymakers in the best position to both encourage the development and scale the adoption of clean energy technologies. Finally, policymakers are adept to address licensing, grid integration, or social acceptance issues that may hinder clean energy technologies development.44 Confronting these issues will enable clean energy technologies to benefit from an accelerated adoption rate which is crucial in realising economies of scale. Today, solar photovoltaic systems are the third-largest renewable electricity technology,

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accounting for 3.1% of global electricity generation in 2019.45 This accelerated technology development is a product of concerted government action among the United States, Germany, and China governments to engage in research and development as well as market-pull policies.46 Their efforts encouraged investment along the value chain to support innovation and economies of scale, culminating in significant cost reduction for the distribution of this technology.

Risks of Developing Clean Energy Technologies Insufficient Research The transition to a clean energy future is still in embryo. While existing research has speculated that clean energy technologies can deliver economic and environmental benefits, the associated risks are unsettled. Without an objective overview, our decision analysis may be skewed to overlook negative externalities. Hence, our preliminary assessment of encouraging clean energy technologies adoption may be distorted and illusory at best. Carbon capture and sequestration technology has been celebrated for its capability to purify the process of electricity generation. However, a closer inspection has found that these benefits may come at a compromise to our health and safety. The process begins with the capturing of carbon dioxide, which is then compressed into a dense liquid for injection into appropriate geological formations.47 Following, atmospheric carbon dioxide is sequestered and returned to the ground. The compressed carbon dioxide is highly hazardous upon release and may result in the asphyxiation of humans and animals where pipelines leak or rapture.48 This makes carbon capture and sequestration technology a more demanding product than power plants; where close monitoring is needful to ensure that the injected carbon dioxide is reacting as predicted. Furthermore, since the technology is in its infant development, there is generally much hesitance among policymakers to adopt the product as part of its energy mix. While this hesitance reflects a prudent approach, it also stunts the research and development process of the product. A lower adoption rate suggests fewer experimentation with the product. Trials are crucial in understanding and realising less apparent benefits and risks of a product. Without this knowledge, we are less informed to devise and put in place mitigating solutions that can remedy the risks. This creates great uncertainty surrounding the adoption of the product and may render us ill-prepared to counter any potential hazards. Moreover, the value of clean energy sources has often been overblown. It is undeniable that these sources are inexhaustible and bear substantive contributions in reducing our carbon footprint. However, they are also variable and contingent on unpredictable weather patterns. This makes intermittency a major problem when incorporating these sources into our energy mix.49 For example, solar generators are productive only when sunlight is present. In order to manage the intermittency

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problem, electricity operators will have to supplement these sources with costly backup generation that entails significant spending in investment and operations. Specifically, social costs of $138.40 per megawatt hour will be incurred for 20% solar generation.50 At the same time, solar installation costs $1.52 per watt and carbon dioxide social costs are at $39 per ton.51 Collectively, these factors accrue to make the generation of 20% solar energy to be welfare neutral at best.52 This defeats the purpose of investing into clean energy technologies and renders any investment futile.

Disharmonious Climate Finance Mechanism Climate finance endorses and funds mitigation and adaptation efforts that will address climate change.53 It reduces the costs of adoption and influences a broad market uptake of advanced clean energy technologies, as well as facilitates an enabling environment necessary for low-carbon development. Carbon pricing is one of the instruments used to generate climate finance. It promotes the successful integration of clean energy technologies in our energy mix by forcing key actors to internalise the negative externalities arising from the use of fossil fuels. This levels the playing field between emission-intensive and low-carbon economic activities, encouraging investments in low-carbon technologies. An annual level of incremental low-carbon investments on the order of $700 billion is required by 2030 to achieve our climate goals.54 Negotiations must hence progress towards a consensus to enable international carbon pricing to deliver on its potential for cost-effective development and implementation of clean energy technologies. However, market mechanisms that exist presently do not post carbon prices at a consistently high rate to encourage investors to explore clean energy alternatives. Carbon pricing initiatives were then introduced to fill this gap. Yet, they are fragmented and incongruous globally. This alters the effects carbon pricing has on international competitiveness as well as distorts the understanding consumers and corporations have on the risks-benefits of adopting clean energy technologies. Globally, international agreements, like the Paris Agreement, lack clarity when it comes to practical issues on the modalities of creating an international carbon pricing mechanism. Although Article 6 of the Agreement expressly recognises that parties can voluntarily cooperate on the implementation of their Nationally Determined Contributions (NDCs) to facilitate higher ambition in mitigation and adaptation actions, there has been no consensus surrounding the operationalisation of cooperative approaches.55 Moreover, investors are also dissuaded from pursuing clean energy innovations given that prospects for climate action and carbon pricing in most jurisdictions have either slowed or remained uncertain. For example, South Africa has delayed its launch of the carbon tax56 ; and the United States has withdrawn its allegiance to the Paris Agreement.57 This creates a gloomy climate hinting on the bleak prospects clean energy technologies have.

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Besides, the lack of a consistent carbon pricing mechanism has taken a toll on global research and development funds to advance innovation and achieve climate stabilisation. The integration of high levels of variable renewables into the electricity grid and the deployment of carbon capture and sequestration technology to facilitate the low-carbon transition can cost as much as US$120/tCO2 .58 While much of the technology has been developed, scaling its adoption will require strong business models that can only ensue with a robust climate finance mechanism.59 Thus, without this mechanism, policymakers will have to divert resources away from pursuing other national priorities to support the development of clean energy technologies. This comes at a significant risk since existing attitudes surrounding clean energy investment has been inconclusive. Hence, without a policy response that integrates domestic carbon prices, other domestic policies, climate finance and international market approaches, and issues that are salient in accelerating the adoption of clean energy technologies and achieving a low-carbon development path cannot be overcome.

Mitigating the Risks The transition to a clean energy future necessitates the mobilisation of significant investments and the implementation of policies to create an enabling environment that will fund research and development as well as encourage adoption of clean energy technologies. Climate finance must work in an integrated manner with climate markets, where it catalyses the development of climate markets to play a bigger role in the mobilisation of resources for clean energy technologies.60 In order to optimise the use of climate finance, policymakers are to ensure that funding is provided on concessional terms to the extent required to deliver the intervention. Policymakers can begin by aligning carbon pricing with complementary and enabling policies at the domestic level to ensure congruence with the broader policy framework. These revenues can then fund the transition to a clean energy future. In British Columbia, the Greenhouse Gas Industrial Reporting and Control Act establishes a feed-in tariff programme where its emitters can comply with their obligations by paying into a technology fund focused on accelerating the adoption of innovative technologies. This initiative supports and funds the government’s efforts in research and innovation. At a global level, domestic initiatives must also align with the ambition of international agreements. To that end, treaties can expressly provide for such cooperation. By employing climate finance in a strategic and integrated manner, international climate markets can develop to promote additional price signals or commercial incentives which will encourage private actors to invest in clean energy technologies.61 Moreover, international climate markets can facilitate a competitive dynamic environment to substantially reduce the cost of developing or implementing clean energy technologies.62

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Results-based climate finance is one means to support the construction and transition to international climate markets. It disburses funds from the provider to the recipient upon achievement of a pre-agreed set of climate results.63 This incites a private sector response to price signals and triggers the development of marketfriendly domestic policies since the promise of future pay-outs will drive transformative changes in many settings. Funds received can then be used to fund the delivery of power from renewable sources to the grid and to cover the cost of financing present and future investments. Results-based climate finance can conclusively serve as an important source of liquidity to support our resilient, equitable, and low-carbon recovery process. Nevertheless, results-based climate finance is not a faultless model. Its demanding requirements for data monitoring, reporting, and verification have inflicted high administrative and financial costs on less developed countries, and thereby impeded their entry into the climate market. Overcoming this limitation will require strong international cooperation to develop a universal crediting framework which can streamline processes and standardise monitoring efforts.64 By endorsing a standardised crediting framework, policymakers can shift their attention towards delivering sizable emission reduction results and facilitating technology diffusion. Therefore, an integrated approach is required to eliminate the potential risks and accelerate the deployment rate of clean energy technologies.

Conclusion Policymakers cannot afford to delay their commitments to the climate agenda any further if they intend to elect wise investment decisions that will not saddle them with sub-optimal energy solutions in the long run. A secure and sustainable future can only be achieved if the development of clean energy technologies such as carbon capture and sequestration and green hydrogen, are first pursued and later deployed widely. Since development and deployment will not arise spontaneously, the involvement of every major country and sector of the economy in committing to a strong and determined action unilaterally and in unison with others is crucial. References 1. 2.

3. 4.

Scott Foster & David Elzinga, “The Role of Fossil Fuels in a Sustainable Energy System” UN Chronicle; 52(3): 17–19. Hannah Ritchie, Max Roser & Pablo Rosado, “Energy”, OurWorldinData (2020) < https://ourworldindata.org/fossil-fuels#:~:text=Fossil%20fuels% 20(coal%2C%20oil%20and,known%20as%20the%20Hubbert%20curve > (accessed 13 April 2022). Scott Foster & David Elzinga, supra n 1. Roland Clift, “Climate change and energy policy: The importance of sustainability arguments” Energy; 32(4): 262–268, at 263.

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Damien Gayle, “Extinction Rebellion vows fossil fuels protest will ‘grind London to a halt’”, The Guardian (8 April 2022) < https://www.theguardian. com/environment/2022/apr/08/extinction-rebellion-fossil-fuels-protest-grindlondon-halt > (accessed 13 April 2022). Roland Clift, supra n 4, at p 263. The Global Goals website < https://www.globalgoals.org/ > (accessed 13 April 2022). Richard Newell, William Pizer & Daniel Raimi, “U.S. federal government subsidies for clean energy: Design choices and implications” Energy Economics; 80: 831–841, at 832. Weizhen Tan, “What ‘transition’? Renewable energy is growing, but overall energy demand is growing faster”, CNBC (3 November 2021) < https://www. cnbc.com/2021/11/04/gap-between-renewable-energy-and-power-demandoil-gas-coal.html > (accessed 13 April 2022). Bill Durodié, “Reconciling growing energy demand with climate change management” Global Change, Peace & Security; 23(2): 271–282, at 271. Id, at p 272. Ibid. Ibid. Didier Houssin, “IEA role in international cooperation on clean energy” (16 September 2013) < https://www.osce.org/files/f/documents/f/3/104885.pdf > (accessed 13 April 2022). Ibid. Sanya Carley & Sara Lawrence, Energy-Based Economic Development: How Clean Energy can Drive Development and Stimulate Economic Growth (Springer, 2014th Ed) at p 1. Id, at p 8. International Energy Agency, “SDG7: Data and Projections” (2022) < https://www.iea.org/reports/sdg7-data-and-projections/access-to-electricity > (accessed 12 April 2022). Sanya Carley & Sara Lawrence, supra n 16, at p 22. United Nations, “Affordable and Clean Energy: Why It Matters” (2017) < https://www.un.org/sustainabledevelopment/wp-content/uploads/2018/09/ Goal-7.pdf > (accessed 11 April 2022). Sanya Carley & Sara Lawrence, supra n 16, at p 6. Ibid. Ibid. Ibid. National Geographic, “Distribution of Fossil Fuels” < https://www.nation algeographic.org/encyclopedia/distribution-fossil-fuels/ > (accessed 6 April 2022). Vivien Foster & Cecilia Briceno-Garmendia “Africa’s Infrastructure: A Time for Transformation” (World Bank Publications, 2692) at p 184. Ibid. Sanya Carley & Sara Lawrence, supra n 16, at p 30.

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29. International Energy Agency, Energy Technology Perspectives 2020 (September 2020) at p 152. 30. Sherisse Pham, “SoftBank wants to build the world’s biggest solar project in Saudi Arabia”, CNN (28 March 2018) < https://money.cnn.com/2018/03/28/ technology/softbank-saudi-arabia-solar-park/index.html > (accessed 6 March 2022). 31. United Nations Environmental Programme, Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication (2011) at p 10. 32. Sanya Carley & Sara Lawrence, supra n 16, at p 5. 33. Ibid. 34. U.S. Energy Information and Administration, “Energy and the environment explained: Greenhouse gases and the climate” (8 December 2021) < https:// www.eia.gov/energyexplained/energy-and-the-environment/greenhousegases-and-the-climate.php#:~:text=In%202019%2C%20fossil%20fuels%20w ere,emissions%20resulting%20from%20human%20activity > (accessed 6 March 2022). 35. Sanya Carley & Sara Lawrence, supra n 16, at p 5. 36. International Energy Agency, World Energy Outlook 2021 (October 2021) at p 86. 37. International Energy Agency, supra n 29, at p 19. 38. Id, at p 15. 39. David Jacobs, “The German Energiewende – History, Targets, Policies and Challenges” Renewable Energy Law and Policy Review; 3(4): 223–233. 40. Ibid. 41. Sanya Carley & Sara Lawrence, supra n 16, at p 63. 42. Ibid. 43. Id, at p 64. 44. International Energy Agency, supra n 29, at p 148. 45. International Energy Agency, “Solar PV” (November 2021) < https://www.iea. org/reports/solar-pv > (accessed 13 April 2022). 46. International Energy Agency, supra n 29, at p 24. 47. Granger Morgan & Sean McCoy, Carbon Capture and Sequestration: Removing the Legal and Regulatory Barriers” (Routledge, 1st Ed, 2012) at p 12. 48. Stanford, “Researchers examine carbon capture and storage to combat global warming” (13 June 2007) < https://news.stanford.edu/news/2007/june13/car bon-061307.html > (accessed 13 April 2022). 49. Gautam Gowrisankaran, Stanley Reynolds & Mario Samano, “Intermittency and the Value of Renewable Energy” Journal of Political Economy; 124(4): 1187–1234, at 1188. 50. Id, at p 1187. 51. Ibid. 52. Ibid. 53. United Nations Climate Change, “Introduction to Climate Finance” < https:// unfccc.int/topics/climate-finance/the-big-picture/introduction-to-climate-fin ance > (accessed 13 April 2022).

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54. World Bank Group, State and Trends of Carbon Pricing 2017 (November 2017) at p 60. 55. Id, at p 32. 56. Paul Burkhardt & Monique Vanek, “South Africa Slows a Carbon-Tax Rollout That Eskom Feared”, Bloomberg (23 February 2022) < https://www.bloomb erg.com/news/articles/2022-02-23/south-africa-extends-incentives-period-tocut-carbon-emissions > (accessed 13 March 2022). 57. Matt McGrath, “Climate change: US formally withdraws from Paris Agreement”, BBC News (4 November 2020) < https://www.bbc.com/news/scienceenvironment-54797743 > (accessed 13 Apr 2022). 58. World Bank Group, supra n 54, at p 63. 59. Ibid. 60. Id, at pp 62–63. 61. Id, at p 62. 62. Ibid. 63. Id, at p 42. 64. Matt King, “Results-Based Climate Finance is a powerful tool to build back better, but only if it is within easy reach”, World Bank Blogs (24 March 2021) < https://blogs.worldbank.org/climatechange/results-based-climate-financepowerful-tool-build-back-better-only-if-it-within-easy#:~:text=Results%2DB ased%20Climate%20Finance%20(RBCF,equitable%2C%20low%2Dcarbon% 20recovery. > (accessed 13 Apr 2022).

Chapter 10

Should Policymakers Promote Electric Vehicles and Other Elements of Electrification in Areas with Carbon-Intensive Electricity Supply? Ashraff Jinnah Abstract Chapter 10 argues that fossil fuels have been the most significant tool in humanity’s pursuit of technological development and advancement from the onset of the Industrial Revolution. Unfortunately, our utilisation of fossil fuels, has resulted in a terribly drastic reaction by our planet. At the tail end of the 20th century, anthropologic climate change attributed to global warming was finally acknowledged as a significant issue that is negatively affecting the planet, its ecosystems and humanity, and if measures are not urgently undertaken to mitigate or eliminate its cause, the consequences will be disastrous. It took about two and half decades and the sidelining of various failed international climate change agreements before the global community could finally reach a consensus on sacrifices required so as to stem the negative effects of climate change. One of the key goals of the 2015 Paris Agreement on Climate Change is the limiting of global warming to well below 2 °C above preindustrial levels to ensure sustainability for our planet, its ecosystems, and humanity. Methods that have been proposed to reach the daunting target include the decarbonization of the energy supply, increasing the use of electrification in our technology, promoting the use of alternative fuels, obtaining greater energy efficiency, and adopting behavioural changes in our lifestyles as well as how we eventually utilise the planet’s resources. Of the above, it appears that electrification is one of the most utilised solutions that many policymakers have since advocated in their struggles to attain their prescribed nationally determined contributions under the auspices of the Paris Agreement on Climate Change. The question is: should policymakers continue or do more to promote electrification over the other proposed solutions, and will the electrification solution suffice in our fight against climate change?

A. Jinnah (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_10

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Introduction It would be erroneous to state that the Earth is unfamiliar with climate change (United Nations 2022a). Climate change is a natural phenomenon that occurs due to factors related to the Earth’s orbital motion, solar cycles, and variations in the Earth’s oceans or from its geothermal activity (Space and Administration 2017). However, climate change in the context of modern times is generally viewed by most scientists as being directly induced by human economic development and activities since the 1800s (United Nations 2022a). The Industrial Revolution, a period commencing sometime in the eighteenth century, revolutionised the way humanity pursued economic development and altered much of humanity’s future behaviour from then on (Editors Industrial Revolution 2022). Factories were created and housed machinery that were invented to make way for more efficient mechanised production to satisfy our pursuits and endeavours (Industrial Revolution 2022). At the onset, fuelling the industrialisation of the global economy was steam power which was, in turn, generated from the burning of coal (“Petroleum” 2022). As the hunger for trade and commerce was burgeoning, so did the demand for machinery that was smaller in size, faster, and more efficient. To cope with this increasing demand, there was a greater reliance on petroleum-based fossil fuels thereafter (“Petroleum” 2022). Even today, fossil fuels remain the dominant fuel of choice for the economy due to the convenience it offers (Petroleum 2022). It readily provides us with energy for transportation, electricity generation, and powering of machinery (Petroleum 2022). As such, fossil fuels have allowed the positive effects of globalisation to flourish and have improved the quality of our lives with increased convenience. Estimates by British Petroleum (“BP”) indicate that the global consumption of energy for the last two decades has predominantly been fuelled using fossil fuels and its dependency has not abated even with the development or maturing of alternative energy sources (Plc 2021) (Fig. 10.1). Unfortunately, the utilisation of fossil fuels has fast become viewed as the root cause of the dramatic changes we are seeing in the Earth’s climate today (United Nations 2022a). The United Nations (“UN”) believes that 75% of global greenhouse emissions and nearly 90% of carbon dioxide emissions are attributable to the use of fossil fuels (Causes and Effects of Climate Change 2022). Emissions attributable to fossil fuels are either generated from the production of electrical power, the manufacturing of goods and products, transportation, food production, deforestation, and other domestic factors (“Causes and Effects of Climate Change” 2022). These emissions blanket the planet and causes the sun’s heat to be trapped within its atmosphere (Causes and Effects of Climate Change 2022). The effects, amongst others, include erratic weather patterns and disruption to the balance of nature (Causes and Effects of Climate Change 2022). As a result, the planet is experiencing much warmer temperatures than usual, generating more intense weather systems, experiencing accelerated destruction and

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Fig. 10.1 Between 1995 and 2020, the world’s consumption of energy has primarily been derived from coal, natural gas, and oil and its dependency for power generation was ever-increasing—BP PLC

extinction of ecosystems, and sea levels to dangerously rise (Causes and Effects of Climate Change 2022). In fact, the previous decade was the warmest thus far, since records were kept (Causes and Effects of Climate Change 2022). The ill-effects of climate change are undoubtedly catastrophic for all (Causes and Effects of Climate Change 2022). The erratic weather patterns and the intensity of such weather systems have already caused alarm bells to ring. Rising sea levels will directly threaten our coastal cities and islands, and the resulting weather, is already wreaking havoc on our food supply chains, habitats, and our health and well-being (Causes and Effects of Climate Change 2022). Tackling climate change has been an ongoing debate since 1990 (BBC 2022). However, it had taken 25 years before ‘real progress’ on tackling it could be argued to have been made (Adler 2018). In December 2015, the international community gathered in Paris to forge the legally binding Paris Agreement, what many believed to be some of the first significant steps being taken to tackle the problem of climate change (The Paris Agreement 2022). The Paris Agreement sets the following goals for party states to achieve:

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(1) To substantially reduce global greenhouse gas emissions to limit the global temperature increase in this century to 2 °C, while pursuing efforts to limit the increase even further to 1.5 °C (The Paris Agreement 2022); (2) Review countries’ commitments every 5 years (The Paris Agreement 2022);and (3) Provide financing to developing countries to mitigate climate change, strengthen resilience, and enhance abilities to adapt to climate impacts (The Paris Agreement 2022). Unlike the Kyoto Protocol (Kyoto Protocol 2022), the Paris Agreement allows countries to set their own climate action plan to achieve their own ‘Nationally Determined Contribution’ (“NDC”) (The Paris Agreement 2022). This allows member states to work towards the goals of the Paris Agreement at a pace that considers the unique domestic characteristics and issues a member state may possess. Each party state is required to submit an updated climate action plan every five years (The Paris Agreement 2022). Although the goals stated in the Paris Agreement are all pertinent to the climate issues the world is facing, the goal to limit global temperature increase to 2 °C, while trying to pursue the more ambitious target of 1.5 °C, under the Paris Agreement, is the paramount focus. The Intergovernmental Panel on Climate Change (“IPCC”), a UN body for assessing the science behind climate change, notes that, relative to 1850–1900s, the global mean surface temperatures have increased by 0.87 °C (Kyoto Protocol 2022). This mean temperature increase has already brought about the various ill-effects that are very evident to the world and its population as mentioned earlier. Although, the initial target for the Paris Agreement is to limit global mean surface temperatures to an eventual increase of only 2.0 °C, the IPCC opines that limiting global warming to the more ambitious target of 1.5 °C, is expected to substantially reduce the probability of: (1) Extreme drought, precipitation deficits, and risk associated with water availability (Kyoto Protocol 2022); (2) Risk to the natural and human systems (Kyoto Protocol 2022); (3) Exposure to climate-related risks/hazards (Kyoto Protocol 2022); (4) A sea-ice-free Artic Ocean (Kyoto Protocol 2022); (5) Global mean sea level rises (Kyoto Protocol 2022); and (6) Ocean acidification (Kyoto Protocol 2022). Achieving the abovementioned target will be every bit a daunting task. It will require an extremely cooperative international community that would adopt a concerted strategy entailing large, immediate, and unprecedented steps, given the very tight emissions budget that humanity has at its disposal (Hoegh-Guldberg et al. 2018).

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Electrification to Meet the Target of 1.5 °C? The IPCC recognises that hopes to achieve the most desirable outcomes to stem the disastrous effects of climate change to our planet, requires drastic action to be applied on multiple existing global systems (Rogelj et al. 2018). Four systems are identified for transitioning to allow a 1.5 °C consistent pathway to be achievable (Rogelj et al. 2018). These are namely energy, land and ecosystem, urban and infrastructure, and industrial (Rogelj et al. 2018). For the greatest results to be achieved, the intervention required on the four identified systems include decarbonisation of the energy supply, increasing electrification, promoting alternative fuels, producing greater energy efficiency, and adopting behavioural changes in land use and lifestyles (Rogelj et al. 2018). These actions will be beneficial in mitigating the rise in global mean surface temperatures (Rogelj et al. 2018). Electrification is the concept of replacing technologies that utilise fossil fuels to generate power, with technologies that utilise electricity instead (Coninck et al. xxxx). It is lauded as a plausible solution to mainly address end-user energy consumption, and thus, its focus is directed more towards the transport, infrastructure, and industrial sectors (Coninck et al. xxxx). One of the key benefits it purports to exhibit is the decarbonisation of the aforementioned sectors via the reduction of greenhouse gas emissions generated from energy end-use (Coninck et al. xxxx). Electrification of the specific sectors is not a novel idea. Most rail systems in the transport sector already utilise electricity (e.g. Singapore Mass Rapid Transit system and the Japanese Shinkansen). Many households and urban infrastructure projects have been utilising electricity to, amongst others, generate lighting, power air-conditioning units, and power appliances. What electrification aims to target, is the reduction or elimination of technologies that are still heavily reliant on fossil fuels to function. In the transport sector, modes of transports such as cars, motorcycles, buses, and trucks are heavily reliant on fossil fuels (Enel and Sr 2022). In relation to buildings and industries, this refers to technology utilised for space heating and cooking, driving machineries, process heating, and other vital processes (Enel and Sr 2022). The IPCC notes that the electrification of energy, in combination with a slew of other substituted fuels and other emerging technologies, is one of the mitigation methods that would allow the world to greatly reduce its greenhouse gas emissions from these energy-intensive industries (Hoegh-Guldberg et al. 2018) (Fig. 10.2). As such, we are now noting a concerted effort by many countries to push for electrification in energy-intensive industries, so that they can meet their proposed climate plans. Some examples are discussed below.

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Fig. 10.2 Electrification of personal transport and infrastructure—Yale School of Environment

United States The Biden administration is pushing for a myriad of legislative frameworks aimed at providing funding for investments to pursue electrification of transportation and buildings so that those sectors can be decarbonised rapidly. These include the Infrastructure Investments and Jobs Act and the Build Back Better Act (Jadun, et al. 2050). These legislations include funding for the expansion of the national electric vehicle (EV) charging station networks, purchases of electric buses for school and public transportation, expansion of battery manufacturing and recycling, and incentivizing households to purchase electrical systems for domestic needs and electric vehicles for personal transportation (Jadun, et al. 2050).

People’s Republic of China In its thirteenth Five-Year Plan which spanned from 2016 to 2020, China aimed to increase end-user energy consumption with electricity from 25.8% to 27% by 2020 (Marcacci 2021). The Chinese policymakers have also pursued electrification for industrial processes and agricultural processes (Marcacci 2021). Examples include: (1) Running oil-rigs on electricity rather than petroleum-based fuels (Marcacci 2021); and

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(2) Electric air-conditioning/heat pumps for cooling/heating in urbanised and manufacturing settings (Marcacci 2021). There is also strong support from the Chinese government in relation to the manufacturing and purchasing of EVs (Hao 2019). The Chinese government has mandated the following: (1) (2) (3) (4) (5)

Various quotas for manufacturers and importers to meet (Hao 2019); Subsidies for manufacturing EVs (Hao 2019); Tax exemptions for consumers of EVs (Hao 2019); Government procurement of EVs (Hao 2019); and Support for a reliable charging network (Hao 2019).

European Union Under the European Union’s (“EU”) ‘Fit for 55’ plan, the EU is targeting a 100% reduction in CO2 emissions emitted by cars and vans by 2035 (Center on Global Energy Policy 2022). As such, this will eventually lead to consumers having to shift to electric or fuel cell vehicles for their personal transportation needs (European Union 2022). The EU is also looking at a heavier emphasis of renewable energy sources to provide power for heating, cooling, infrastructure, and industrial applications (European Union 2022). ‘Fit for 55’ aims to get the EU public sector to renovate 3% of its buildings to allow them to harness better electrical systems and become more energyefficient (European Union 2022). Taxation on energy products in line with EU energy and climate policies will seek to promote the purchase of cleaner technologies while phasing out outdated ones (European Union 2022).

Singapore Locally, the Singapore Government’s push for electrification can be observed in its ‘Singapore Green Plan 2030’ (Commission 2021). The Ministry of Transport is ramping up the infrastructure requirements for the EV charging network in Singapore, and by 2030, 50% of the public bus fleet and taxi fleet will hopefully be made up of EVs (SG Green Plan 2022). Additionally, Singapore also intends to fully phase out internal combustion vehicles by 2040 in favour of EVs (National Climate Change Secretariat Singapore 2022). However, unlike other countries, ownership of personal transport in Singapore is generally discouraged given the country’s small size, and as such there is a stronger focus on the promotion of using public transport for its population (Commission 2021).

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The Ministry of National Development is also focusing on a built-up infrastructure environment that is low carbon, and is seeking to support the development, transition, and eventual deployment of greener technologies for upcoming infrastructure projects in Singapore to achieve this (Commission 2021). The push for electrification by various nations and even other non-governmental organisations not mentioned above, does appear to be much stronger when compared with efforts on other proposed mitigation solutions. One must then ask, why is that so? The electrification solution could be viewed as an easier pill to swallow for most countries and their governments to implement (Rogelj et al. 2018), in comparison with measures that involve drastic and instantaneous changes to the energy mix, which could have severe consequences on a country’s economy/development if not planned cautiously (Land Transport Authority 2022). It mainly addresses end-user emissions, without requiring a drastic alteration of the consumed energy mix. Indeed, it is worth noting that even with the efforts by various governments to pursue electrification, the IPCC still notes that the current national pledges on mitigation are still lacking too far off to achieve a 1.5 °C consistent pathway (Rogelj et al. 2018). Greater scale and pace of change is needed (Rogelj et al. 2018), and this requires a multi-prong approach that includes substantial reductions in fossil fuel use, extending access to electricity, improvements in energy efficiency, and the increase the use of alternative fuels, such as hydrogen (Intergovernmental Panel on Climate Change 2022). Given the hard truth that current efforts from electrification are simply not enough to stem the disastrous effects of climate change, policymakers must ask themselves whether they should continue the promotion of electrical vehicles and other elements of electrification in areas with carbon intensive electricity supply.

Should Policymakers Promote Electrical Vehicles and Other Elements of Electrification in Areas with Carbon Intensive Electricity Supply? The simple answer is yes. 1.5 °C pathways are only achievable if rapid declines in the carbon intensity of electricity works are conducted in conjunction with an increase in electrification of energy end-use (Rogelj et al. 2018). Therefore, policymakers must continue to promote electrification in such carbonintensive sectors, but they must be mindful that it must be conducted with concerted efforts to eventually alter the energy mix for power generation. Otherwise, the energy utilised by these technologies cannot be said to be truly low carbon or clean.

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Electrification to Land Transport The European Environment Agency (“EEA”) claims that even with Europe’s current energy mix, a battery powered EVs will produce between 17–21% and 26–30% lesser greenhouse gas emissions in the context of its full life cycle, when respectively compared to a similar diesel or petrol vehicle (United Nations 2022b). This alone makes EVs an attractive solution for easily mitigating tailpipe emissions (Fig. 10.3). Modern EVs are a far cry from general motor’s (“GM”) first attempt in the 90 s at producing a purpose-built mass-produced EV for the mass market consumption. GM’s EV1 was expensive to produce and only had a range of 80 miles, despite requiring a whopping 8 h to fully charge (European Energy Agency 2018). Today, there is a plethora of EV choices for the consumer market, and they range from two-wheelers all the way to commercial vehicles such as electric buses (Department of Energy 2014). The IEA estimates that 25% of the world’s two-wheeler population is already electric (albeit mostly concentrated in China), and that there has been an uptick in registrations for electric buses and trucks (led by China, but with other nations following suit) (Department of Energy 2014) (Fig. 10.4). EVs now make up about 1% of the global car population, and there has been a 40% increase in electric car sales in 2020 as compared to 2019 (Department of Energy 2014). The largest sales recorded for electric cars occurred in Europe, with China in second and the USA trailing in third (Department of Energy 2014). Much of the growth in EVs is attributable to the policies instituted by governments (i.e. tightening fuel economy standards), and incentives and rebates that encourage

Fig. 10.3 Europe’s energy mix between 1990 and 2019—International Energy Agency (“IEA”)

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Fig. 10.4 Electric buses deployed on Singapore’s public transport system—Channel News Asia (“CAN”)

the shifting away from internal combustion engine vehicles (“ICEVs”) (Department of Energy 2014). Additionally, many countries have also set targets for the total ban of ICEVs within the next 10–30 years, prompting some, to make an early shift towards EVs (Department of Energy 2014) (Fig. 10.5). The regulatory framework and incentives currently instituted by policymakers, therefore, appear to be assisting in the promotion of EVs. However, the true question remains; is this promotion truly enough to make a real impact? The IEA notes that at the current pace, it will not be possible for the transport sector (excluding aviation and maritime) to be aligned with the desired trajectory for Net Zero (Department of Energy 2014). For such a scenario to become reality, all new

Fig. 10.5 Projected target bans on ICEVs—IEA

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light vehicles would need to be zero emissions by 2030s, a rather short timeframe about 15 years or less (Department of Energy 2014). Current figures for battery production capacity in 2030 indicate that battery manufacturers are only able to meet 50% of the projected demand for that year (Department of Energy 2014). China currently leads the way for battery production and accounts for about 70% of cell production and 50% for batteries produced for light vehicles (Department of Energy 2014). If Net Zero is to be achievable, production of batteries will have to be ramped up and more manufacturers will be needed to fill the void. Solid-state batteries, the next generation in battery technology for vehicle applications, will also need to be ready as a commercially viable solution within the next 2–8 years, to show progress from the current technology being utilised (Department of Energy 2014). Furthermore, hesitation by vehicle owners to switch to EVs continues to exist, and this is generally attributed to the belief that EVs (International Energy Agency 2021): (1) Require high upfront costs (International Energy Agency 2021); (2) Limited range compared to ICEVs (International Energy Agency 2021); (3) Long charging times compared to refuelling times (International Energy Agency 2021); and (4) Severe lack of charging infrastructure (International Energy Agency 2021). It is not surprising that EVs, in general, are still more expensive than regular ICEVs (Loveday 2020). The gap in the prices, however, has visibly narrowed over time, and the potential savings obtained from fuel and maintenance costs, or the lack thereof, are making EVs more attractive when assessed in the context of their full life cycles (Loveday 2020). Obviously, if governments are seeking to significantly push for EVs to be adopted or seen as a viable choice to consumers, more aggressive incentivisation must be made available for early adoption to go into overdrive (Department of Energy 2014). The cost related to incentivising EVs can easily be offset by introducing and enforcing harsher taxation schemes on ICEVs (Department of Energy 2014). The USA, China, and Europe are examples where incentive and dis-incentive schemes are being rolled out to encourage the adoption of EVs (Fig. 10.6). Policymakers will also need to formulate how to create or expand their charging infrastructure network to be dependable, to alleviate the range anxiety of drivers and make EVs be seen as a truly viable option for personal transportation (Department of Energy 2014). Unlike, ICEVs, which can rely on an extensive network of petrol/diesel stations to easily refuel in a short period, most charging infrastructure networks in various countries have yet to attain such levels that would allow them to be truly reliable (Loveday 2021). An example is Singapore, which plans to phase out ICEVs by 2040 or earlier. In all honesty, Singapore was rather slow to adopt the view that EVs could play a significant role in fighting climate change. In 2019, Mr. Masagos Zulkifli, the Minister of Environment at that time, was quoted as saying that EVs were more about a lifestyle choice rather than a proper solution to climate problems (International

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Fig. 10.6 In ten years, lithium-ion batteries have drastically reduced in price thereby translating into lower costs to produce EVs—Bloomberg

Energy Agency 2022). Fast forward to a few years later and we now see the islandstate scrambling to ramp up its charging infrastructure to meet its Green Plan 2030 with EVs (Musk’s electric cars 2019). Policymakers are also not putting enough effort in promoting or incentivising local businesses to move into the EV or related sectors, even though there is still tremendous potential for growth for a company to do so now. Many developed nations have the capabilities to move into battery development and manufacturing, thus undoubtedly benefitting from the inevitable job growth and innovation that will be spawned (Department of Energy 2014). Additionally, there is also a market for business owners to become service providers for the provision of charging services or develop their own charging networks and technology (Department of Energy 2014) (Fig. 10.7). So far, even though EVs and their associated technology are hot topics and a potential job creator, battery production is lacking in addition to the fact that potential service providers for charging equipment and networks are still apprehensive about moving into the sector. Without assistance or promotion from the policymakers, the sector will be viewed as uncharted waters for many potential companies and the adoption of EVs will in the author’s opinion, stutter. Although it is noted that policymakers are generally moving in the right direction to incentivise consumers to purchase EVs, there are still other avenues where much more can be done to spur the growth of the EV industry.

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Fig. 10.7 Privately operated EV charging point in a gated estate in Punggol, Singapore—CNA

Electrification of Buildings and Infrastructure The infrastructure sector is a major emitter of carbon dioxide (“CO2 ”). The IEA reports that 28% of all CO2 emissions released is directly from the infrastructure sector (Department of Energy 2014). The paradox is that the extreme weather caused by global warming, is in turn causing people to utilise more air-conditioning or heating, and this is ultimately causing emissions to rise due to the higher demand for electricity power (Department of Energy 2014). As such, more effort is required to adapt infrastructure for efficient cooling or heating by leveraging on intelligent infrastructure design and innovative technology such as heat pumps or digitalisation to counter the growing electricity demand (Department of Energy 2014). For the infrastructure sector to be in line with 1.5 °C consistent pathway, the sector will need to reduce its emissions by 80–90% by 2050 which is an extremely daunting task given that current movements in demand (Rogelj et al. 2018). The IEA recognises that electrification will play a major role in achieving this (Factsheet 2022). They project that innovative design and construction brought about by a push in regulations (i.e. revised building energy codes) paired with energy renovations will reduce the sector’s energy use by nearly 30% by 2050 (Rogelj et al. 2018). Innovative use of building materials could also assist somewhat in emissions reduction (Factsheet 2022). These policies will spur the transformation needed for new constructions or to ensure that older infrastructure will be able to adapt to the requirements of the climate action plans (Factsheet 2022). It is noted that governments have taken steps to revise their energy codes from the 2000s and are mandating more stringent requirements on building energy policies (Factsheet 2022). However, not enough has been pushed by policymakers to address the issues from this sector as floor spaces increase (Factsheet 2022).

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Singapore’s first smart and green public housing estate was announced only in 2016 (The Critical Role of Buildings 2022) and will only be ready to fully assess the feasibility of the smart and green technologies employed from 2023 (Housing Development Board 2021). The EU has, only recently, in 2021, proposed measures to quickly renovate infrastructure to modern levels to tackle climate change (Living Asean 2021). The adaptation for infrastructure projects is noted to be even slower than it is with EVs. Policymakers should note that the various solutions proposed will not just benefit their emission goals but can also provide large amounts of savings as infrastructure becomes more sustainable (Factsheet 2022). It is therefore advantageous for the policymakers to start promoting and incentivizing innovative, energy-efficient, and smart building designs quickly to reap the benefits that are still present. Projections indicate that if the sector improvements and adaptations are delayed by ten years, the energy usage will cause emissions to be more than two gigatonnes higher than present levels in 2050, and result in governments spending trillions of dollars to adapt (“Factsheet 2022).

Electrification of Industries About 33% of greenhouse gas emissions are spewed by industries. For the industrial sector to be in line with a 1.5 °C consistent pathway, the global industrial sector will need to limit itself to emissions of only two gigatonnes of carbon dioxide by 2050 (Rogelj et al. 2018). Undoubtedly, the industrial sector is possibly the most difficult of the three sectors to electrify (Rogelj et al. 2018). One reason is the extremely disruptive ramifications that electrification would have on certain industries and the lack of maturity in the technological developments for electrifying the various types of industries (Rogelj et al. 2018). The IPCC opines that at present, carbon capture and storage (“CCS”) systems would be more beneficial to the sector (Rogelj et al. 2018). It notes that electrification of the industrial sector is affected by factors relating to the availability of low-emission electricity, public perception, and economic feasibility (Rogelj et al. 2018). Policymakers would therefore be making better use of the allowable time and finances in promoting solutions that exhibit lesser issues and have performed more promisingly than electrification. However, this does not mean that they should totally ignore electrification for the industrial sector fully. Policymakers can continue to promote it in a broader sense by funding research and development to address its technical development to explore future viability.

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Electrification is not a Standalone Solution Total global CO2 emissions in 2019 was estimated to be at 32.3 gigatonnes. Power generation made up 43% of that number (Department of Energy 2014). Although advances have made solar energy, wind energy, and electricity storage technology economically viable solutions to the problem (Rogelj et al. 2018), renewables made up only 5.7% of the energy mix for generating power 2020 (Plc 2021). Combined with the other cleaner forms of “fuels” for power generation (hydroelectricity and nuclear energy), only 16.9% of the energy mix came from what we would now consider cleaner “fuels” (Plc 2021). The energy mix is, therefore, extremely carbon intensive and efforts to promote electrification will be for node if the electricity being generated for end usage continues to be derived from high-carbon fuels. This is a huge issue that needs to be tackled quickly if all efforts to mitigate the climate change issue are to be truly fruitful (Fig. 10.8).

Fig. 10.8 Although renewables are increasing in the fueling of energy production, the energy mix is still highly carbon intensive—BP PLC

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In 2019/2020, the energy mix of the three biggest emitters stands as follows: Energy source

China (2019) (%)

Oil

~ 19.5

~ 35.0

~ 32.0

~ 7.5

~ 35.0

~ 26.0

~ 62.0

~ 11.0

~ 14.0

Natural gas Coal

USA (2020) (%)

EU (2020) (%)

Biofuels

~ 4.0

~ 5.0

~ 9.3

Renewables

~ 3.3

~ 2.6

~ 4.2

Hydroelectricity

~ 0.8

~ 1.2

~ 2.7

Nuclear

~ 2.7

~ 10.6

~ 12.5

*Data obtained from IEA. Based on the above table, the three nations/region still rely heavily on fossil fuels for their powering needs. The electrification solution will, therefore, be unable to reach its full potential in its part to the fight against climate change (even if the electrification policies briefly discussed previously, are being pursued by nations/blocs are done wholeheartedly), where the current energy mix remains relatively unaltered. Therefore, the current national pledges and efforts being expressed by nations/blocs are simply not enough to achieve the goals of the Paris Agreement (Rogelj et al. 2018). While promotion of electrification is already underway by various nations/blocs, a 1.5 °C consistent pathway will require electrification to be based on clean fuel sources rather than the significantly carbon-intensive mix that the world generally relies on. Much of the reluctance for policymakers to alter the energy mix of their respective countries to counter their national emissions output, stems from factors such as national interest, energy security, and economic development. This, therefore, presents the ultimate challenge in the fight against climate change and was the reason for the Kyoto Protocol failing.

Conclusion It is noted that efforts to promote electrification in various system sectors, such as in the transport sector and the building infrastructure sector, already exist and are being actively engaged by various national governments. Both the IPCC and IEA note, however, that current trajectories from such movement, will not allow a 1.5 °C consistent pathway to be achievable and that policymakers must ramp up efforts to drastically alter the perception of their populace to embrace electrification and rapidly stamp out fossil fuels in end use altogether.

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However, the promotion of electrification is only one side of the equation to tackle climate change. For electrification as a solution, to reach its full potential, the primary source of energy fuelling it must also be generated in a clean manner and be of low-carbon intensity. The benefits of electrification will never be fully realised, if electrification technology continues to utilise electricity that is being generated by fossil fuels. Policymakers must, therefore, push for drastic efforts to alter their respective energy mix, while pursuing their active promotion of electrification, if they are serious to obtain the optimal solution to fight against climate change.

References BBC (2013) A brief history of climate change. https://www.bbc.com/news/science-environment15874560. Accessed 11 Mar 2022 BBC (2021) EU unveils sweeping climate change plan. https://www.bbc.com/news/world-europe57833807. Accessed 13 Mar 2022 BP Plc (2021) Statistical review of world energy (2021) 70th edn, p 12 Center on Global Energy Policy (2022) Guide to climate change policy: electric vehicles. Columbia University. https://chineseclimatepolicy.energypolicy.columbia.edu/en/electricvehicles. Accessed 12 Mar 2022 Department of energy (2014) The history of the electric car. https://www.energy.gov/articles/his tory-electric-car. Accessed 12 March 2022 de Coninck H et al Strengthening and Implementing the Global Response. In: Masson-Delmotte V, Zhai P, Pörtner H-O, Roberts D, Skea J, Shukla PR, Pirani A, Moufouma-Okia W, Péan C, Pidcock R, Connors S, Matthews JBR, Chen Y, Zhou X, Gomis MI, Lonnoy E, Maycock T, Tignor M, and Waterfield T (eds.) Global Warming of 1.5°C. An IPCC special report on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty In Press, at 4.3. Enel X S.r. L Electrification: definition and meaning. https://corporate.enelx.com/en/question-andanswers/what-is-electrification. Accessed 12 Mar 2022 Esty D, Adler D (2018) Symposium on climate change localism—changing international law for a changing climate. Am Soc Int Law 279 European Commission (2021) European green deal: commission proposes transformation of EU economy and society to meet climate ambitions. https://ec.europa.eu/commission/presscorner/ detail/en/IP_21_3541. Accessed 12 Mar 2022 European Union (2022) Fit for 55”. https://www.consilium.europa.eu/en/policies/green-deal/fit-for55-the-eu-plan-for-a-green-transition/. Accessed 12 Mar 2022 European energy agency (2018) Electric vehicles from life cycle and circular economy perspectives—TERM 2018 Report [2018] Publications Office of the European Union, p 7. Hao, F (2019) China’s plan to electrify its economy. China dialogue. https://chinadialogue.net/en/ energy/11466-china-s-plan-to-electrify-its-economy-2/. Accessed 12 Mar 2022 Hoegh-Guldberg et al (2018) Impacts of 1.5 ºC global warming on natural and human systems. In: Masson-Delmotte VP, Zhai H-O, Pörtner D, Roberts J, Skea PR, Shukla A, Pirani W, MoufoumaOkia C, Péan R, Pidcock S, Connors JBR, Matthews Y, Chen X, Zhou MI, Gomis E, Lonnoy T, Maycock M, Tignor, T, Waterfield (eds) Global warming of 1.5°C. An IPCC special report on the impacts of global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty In Press

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History.com editors. Industrial revolution (2022) https://www.history.com/topics/industrial-revolu tion/industrial-revolution. Accessed 12 Apr 2022 Housing Development Board (2016) Unveiling the Masterplan for Tengah: at home with nature. Government of Singapore (17 December 2021) (accessed 30 March 2022). Arijit Sen, “Why will electric vehicles benefit India irrespective of new power sector policies?”, The International Council on Clean Transportation, 29 September 2021, https://theicct.org/why-will-electric-vehicles-benefit-india-irrespective-of-new-powersector-policies/ (accessed on 30 March 2022) (“Sen”). Abhinav Soman et al., “India’s Electric Vehicle Transition: Can Electric Mobility Support India’s Sustainable Economic Recovery Post COVID-19?”, New Dehli: CEEW, 2020 at p 23 (“CEEW Report”). Ibid. Id, at p 24 citing Cambridge Econometrics reports done on UK’s, Italy’s and Spain’s electric vehicle transition. Oliver Stoner et al., “Household cooking fuel estimates at global and country level for 1990 to 2030” Nature Communications: 2021; 12(5793): 2. Ashlinn K. Quinn et al., “An analysis of efforts to scale up clean household energy for cooking around the world” Energy for Sustainable Development 2018; 46: 1–2. Manuel Barron et al., “Household electrification and indoor air pollution” Journal of Environmental Economics and Management 2017; 86: 82. Ibid. WRI Working Paper, supra n3, at p 21. Lauren Clark, “Powering Households and Empowering Women: The Gendered Effects of Electrification in sub-Saharan Africa”, Journal of Public & International Affairs 2021. Ibid. Kennedy 2018, supra n4 at p 18. See also, IPCC, Climate Change 2014: Mitigation of Climate Change. Contribution of WGIII to the Fifth Assessment Report of the IPCC, Cambridge University Press, 2014 at paras 6.3.4 and 7.11.3. Ibid. See also, David Roberts, “The key to tackling climate change: electrify everything”, Vox, 27 October 2017, < https://www.vox.com/2016/9/19/12938086/electrify-everything > (accessed on 30 March 2022) (“Roberts”). Ibid. See also, EESI, “Energy Efficiency”, < https://www.eesi.org/topics/energy-effici ency/description#:~:text=Energy%20efficiency%20simply%20means%20using,household% 20and%20economy%2Dwide%20level > (accessed on 30 March 2022). Roberts, supra n19. See also Sen, supra n7. Megha Kumar, “Vehicle Electrification in India: On Ambition and Timing”, The International Council on Clean Transportation, 24 May 2021, < https://theicct.org/vehicle-electrificationin-india-on-ambition-and-timing/ > (accessed on 30 March 2022). United Nations, “Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace”, UN News, 25 January 2019, < https://www.un.org/peacebuil ding/fr/news/climate-change-recognized-%E2%80%98threat-multiplier%E2%80%99-unsecurity-council-debates-its-impact-peace > (accessed on 30 March 2022). Sonali Goel et al., “A review on barrier and challenges of electric vehicle in India and vehicle to grid optimization”, Transportation Engineering 2021; 4: 7–8.

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26. 27. 28. 29. 30.

Ibid. Robers, supra n19. Ibid. Ibid. Elsa Wenzel, “Vehicle-to-grid technology is revving up”, Green Biz, 12 November 2019 < https://www.greenbiz.com/article/vehicle-grid-technology-revving > (accessed on 30 March 2022). Jake Duncan, “Stronger Together: Efficiency with instead of efficiency first”, Institute for Market Transformation, 6 March 2022 < https://www.imt.org/stronger-together-efficiencywith-instead-of-efficiency-first/ > (accessed on 30 March 2022) (“Duncan”). Ibid. Ibid. Ibid. WRI Working Paper, supra n3 at p 19. Jan Corfee-Morlot et al., Towards a Green Investment Policy Framework: The Case of Lowcarbon, Climate-resilient Infrastructure, OECD Environment Working Papers, 2012 at p 7 (“OECD Framework”). Kennedy 2018, supra n4 at p 23. OECD Framework, supra n35 at p 29. Ibid. Duncan, supra n30. OECD Framework, supra n35 at p 32. Id, at p 33. Ibid. See also Bill Chappell, “Electric cars hit record in Norway, making up nearly 60% of sales in March”, National Public Radio, 2 April 2019. OECD Framework, supra n35 at p 37. Ibid. ICMA, Green Bond Principles: Voluntary Process Guidelines for Issuing Green Bonds, June 2021, < https://www.icmagroup.org/assets/documents/Sustainable-finance/2021updates/Green-Bond-Principles-June-2021-140621.pdf > (accessed on 30 March 2022) (“ICMA”). CDKN, New Markets for green bonds, June 2017 at p 2–3. < https://cdkn.org/sites/default/files/files/Green_bonds_new_markets_guide_final_webres.pdf > (accessed on 30 March 2022). ICMA, supra n46. OECD Framework, supra n35 at p 46–47. Ibid. Ibid. EU Horizon 2020, About WiseGRID, 2022, < https://www.wisegrid.eu/about > (accessed on 30 March 2022). Saget, Catherine et al., Jobs in a Net-Zero emission future in Latin America and the Caribbean, ILO, 2020, at p 45–62. Id, at p 66–76. OECD Framework, supra n35 at p 47. Id, at p 46. Id, at p 49. S U Zakaria et al., “Public awareness analysis on renewable energy in Malaysia”, IOP Conference Series: Earth and Environmental Science 2019; 268. FiA, “CAA launches public awareness campaign on electric vehicles”, 23 March 2021. < https://www.fia.com/news/caa-launches-public-awareness-campaign-electric-vehicles ≥ (accessed on 30 March 2022). OECD Framework, supra n35 at p 51. Eugene C. Cordero et al., “The role of climate change education on individual lifetime carbon emissions”, PLoS ONE 2020; 15(2).

31.

32. 33. 34. 35. 36.

37. 38. 39. 40. 41. 42. 43. 44. 45. 46.

47.

48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59.

60. 61.

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References Barron M, Torero M (2017) Household electrification and indoor air pollution. J Environ Econ Manage 86 (2017) Chappell B (2019a) Electric cars hit record in Norway, making up nearly 60 percent of sales in March. National Public Radio Inc Clark L (2021) Powering households and empowering women: the gendered effects of electrification in sub-Saharan Africa. J Pub Int Affairs Cleary K (2019b) Electrification 101. Resources for the Future (2019b) Climate & development knowledge network. guide: new markets for green bonds (2017) Cordero, EC, Diana C, Todd AM (2020) The role of climate change education on individual lifetime carbon emissions. PloS one 15(2) Corfee-Morlot J et al. (2012) Towards a green investment policy framework: the case of low-carbon, climate-resilient infrastructure Duncan J (2022) Stronger together: efficiency with instead of efficiency first. Institute for Market Transformation Edenhofer O ed (2015) Climate change 2014: mitigation of climate change 3. Cambridge University Press, (2015) Environmental and energy study institute, “Energy efficiency”. https://www.eesi.org/topics/energyefficiency/description FiA (2021) CAA launches public awareness campaign on electric vehicles Goel S, Renu S, Rathore AK (2021) A review on barrier and challenges of electric vehicle in India and vehicle to grid optimisation. Transportation Eng 4 International Capital Market Association (2021) Green bond principles: voluntary process guidelines for issuing green bonds International Energy Agency (2020) Development of CO2 emission intensity of electricity generation in selected countries International energy agency (2021) Energy-related CO2 emissions intensity for an indicative refined copper production project under different energy consumption scenarios Jadun P et al (2017) Electrification futures study: End-use electric technology cost and performance projections through 2050. No. NREL/TP-6A20–70485. National renewable energy lab (NREL), Golden, CO (United States) Kennedy C (2013) Key threshold for electricity emissions. Nature Climate Change 5(3) Kennedy C, Stewart ID, Westphal MI (2019) Shifting currents: opportunities for low-carbon electric cities in the global south. Working paper. Washington, DC: World Resources Institute. https:// www.wri.org/publication/shifting-currents Kumar M (2021) Vehicle electrification in India: On ambition and timing. The international council on clean transportation Li X, Chalvatzis kJ, Pappas D (2017) China’s electricity emission intensity in 2020–an analysis at provincial level. Energy Proc 142 Quinn AK et al. (2018) An analysis of efforts to scale up clean household energy for cooking around the world. Energy Sustain Dev 46 Roberts, D (2017) The key to tackling climate change: electrify everything. https://www.vox.com/ 2016/9/19/12938086/electrify-everything Saget C, Adrien V-S, Trang L (2020) Jobs in a net-zero emissions future in Latin America and the Caribbean. Washington DC and Geneva: Inter-American development bank and international labour organization Sen A (2021) Why will electric vehicles benefit India irrespective of new power sector policies? The international council on clean transportation Soman A et al. (2020) India’s electric vehicle transition. New Delhi: council for energy, environment and water (2020) Stoner O et al. (2021) Household cooking fuel estimates at global and country level for 1990 to 2030. Nature commun 12(1)

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United Nations (2019) Climate change recognized as ‘threat multiplier. UN Security Council debates its impact on peace. UN News Wenzel E (2019) Vehicle-to-grid technology is revving up. Green Biz Zakaria SU et al. (2019) Public awareness analysis on renewable energy in Malaysia. IOP Conf Ser Earth Environ Sci 268(1)

Chapter 12

Promoting electric vehicles as the silver bullet for tackling climate change Matthew SOO Yee

Abstract Makes two interrelated arguments arising from the promotion of electric vehicles (EVs) as the silver bullet for tackling climate change. First, promoting EVs and other elements of electrification are necessary, even in areas with carbonintensive electricity supplies. This is so since they generally lead to the absolute reduction of greenhouse gas (GHG) emissions. Second, to combat the increased GHG emissions, policymakers should both promote electrification, while concurrently decarbonizing their electricity supply. This should be done through a combination of local and extra-local policy measures. Locally, policymakers should (i) create the necessary infrastructure to electrify and decarbonize their localities, (ii) introduce policies that effectively price carbon, (iii) encourage the development of new technology necessary to decarbonize, and (iv) take direct steps to decarbonize their electricity supply. In the extra-local sphere, policymakers should strive to coordinate their actions regionally or internationally. This is so since coordination provides the benefits of: (i) expanding the policy options available, (ii) enabling each locality to leverage on their respective comparative advantages; and (iii) facilitating the sharing of best practices – thereby driving efficiency gains.

Introduction This chapter makes four interrelated arguments to address the question above: (a) Policymakers should promote electrical vehicles (“EV”) and other elements of electrification in areas with carbon intensive electricity supply as part of their strategy in tackling climate-change. (b) Promoting electrification without addressing the carbon intensive electricity supply is insufficient. Policymakers should promote policies which support the M. S. Yee (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] Dispute Resolution Department, Allen & Gledhill, Singapore, Singapore © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_12

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decarbonization of the electricity supply, thereby reducing the overall amount of greenhouse gases (“GHG”) emitted. (c) Third, policymakers should adopt an integrated approach toward promoting electrification and decarbonizing their electricity supply. Ideally, they should adopt a combination of local policy measures – which can largely be implemented regardless of their respective states of economic development. This entails (i) creating the necessary infrastructure to electrify and decarbonize their localities, (ii) introducing policies that effectively place a price on carbon, (iii) encouraging the development of new technology necessary to decarbonize their localities, and (iv) taking direct steps to decarbonize their electricity supply. (d) Fourth, policymakers should, where possible, strive to coordinate their actions outside of their localities. Whether done regionally or internationally, coordination provides the benefits of: (i) expanding the policy options available to policymakers, (ii) enabling each locality to leverage on their respective comparative advantages; and (iii) facilitating the sharing of best practices – thereby driving efficiency gains. Ultimately, this chapter argues that climate-change cannot be solved solely through the promotion of EVs or other forms of electrification when the electricity supply is carbon-intensive. Instead, policymakers should adopt policies which coherently decarbonize the entire economy, while promoting all forms of electrification.

Definitions Preliminarily, we define five key terms. Firstly, “promote” is the act of “helping something develop”.1 Here, the notion of “help” suggests some form of support and should be understood in contrast to passivity – where the institution allows the endstate to occur alone. Secondly, “electrification” is “the substitution of electricity for direct combustion of non-electricity-based fuels used to provide similar services”.2 This is a functional definition which is applicable across industries apart from the transportation sector which EVs are primarily focused on. Thirdly, “carbon-intensive” is adopted as a descriptive term – being the characterization of a process where the electricity supply emits a large amount of carbon and other GHGs. This definition incorporates the generally understood technical definition of “carbon-intensive”, being “the amount of carbon by weight emitted per unit of energy consumed”.3 Fourth, a holistic understanding of “electricity supply” is adopted. It includes the electricity generation process in terms of infrastructure and load management. It also includes the fuels/methods of electricity generation.4 Finally, this chapter does not assume that the “policymakers” are national representatives. Instead, the term here encompasses individuals at all levels of government, including local and state officials.

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Relevant Facts EV adoption We first consider the increased prominence of EVs in the recent public discourse. EVs have been gaining in popularity for both the average consumer and major businesses, as reflected in their growing sales. For example, despite the impact of the Covid-19 pandemic, Electric Car registrations increased by 41% globally in 2020.5 Similarly, mega-businesses like Amazon announced the purchase of 100,000 new electric vans to support their operations.6 Importantly, the growing popularity of EVs are partially independent of direct government policies like subsidies. For example, Amazon’s investment in their EV fleet was driven partially by their Environmental Social Responsibility (“ESG”) targets.7 Further, Australian consumers have resorted to directly importing their favoured Electric Car model due to government regulations stymieing their introduction.8 Collectively, these two examples suggest that in the developed world, EVs have achieved a level of mainstream acceptability, with buyers willing to spend a premium on these goods despite the lack of any explicit government support. In addition to EVs, the academic literature has highlighted other areas of electrification. In the residential/building sector, this is primarily through the introduction of “heat pumps” as the appliance used for water and space heating, over gas pumps. In the industrial sector, this is done through the introduction of electro-technologies in areas such as “process heating” or “curing needs”.9 The studies suggests that this process of electrification will continue without direct government intervention, so long as such actions make financial sense to the end-user.10

Global electric supply Next, we consider the current state of electricity supply. Preliminarily, a broadbrush approach toward this topic is unhelpful, given that different localities have decarbonized their supply according to their individual circumstances. For example, Iceland’s early investments in renewable electricity generation means that practical 100% of its electricity supply has been decarbonized.11 In contrast, Singapore’s lack of access to geothermal or hydropower energy means that around 97% of its electricity supply is carbonized.12 Despite these globalized differences in the decarbonization of energy supply, there are two key trends. First, the cost of adopting renewable energy within the electricity supply is rapidly approaching grid parity – being the “threshold at which a grid-connected renewable energy source system supplies electricity to end-users at the same prices as traditional electric power generation”.13 This is attributable to the development in technological and production capabilities of renewable energy equipment manufacturers.14 Second, there has been a growing shift away from financing

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carbon-intensive energy supply by global financial institutions. This, driven in-part by climate activists, promises to increase the funding available for the decarbonization of global electricity supply.15 The trends of increased access to financing and price parity suggest that continued investment in carbon-based sources of electricity is unlikely to continue. However, when the fact that individual localities like Singapore lack the space or capacity to decarbonize their electricity supply is considered, it suggests that decarbonization requires cooperation between different localities.

Promoting electrification in areas with carbon-intensive electricity supply This segment argues that policymakers should encourage EV adoption and other forms of electrification even in areas of carbon-intensive electricity supply for three reasons that remain environmental benefit despite the continued carbonization of the electrical supply. Firstly, policymakers should encourage the adoption of EVs and other forms of electrification since it provides the absolute benefit of reducing the amount of GHGs released into the atmosphere. This directly accomplishes a locality’s climate goals. For example, the adoption of EVs over tradition internal combustion engine vehicles (“ICEV”) would reduce the overall amount of carbon emitted by 48%.16 This finding assumed that the energy-mix would not change and accounted for the associated environmental impact of producing these EVs. Similarly, the electrification of the industrial and building sectors in the United States would minimally reduce overall energy consumption by at least 13%.17 Secondly, this absolute reduction in the amount of GHGs emitted and fuel consumption is an important target that policymakers should encourage since this can be accomplished with minimal capital investment through amendments to regulatory requirements. In Europe, tightening CO2 emission standards for vehicles would result in a 10% increase in the adoption of EVs.18 Additionally, including a “climate” component in public contracts encourages businesses to adopt EVs and electrify their construction methods.19 Thirdly, encouraging the process of electrification has the long-term benefit of encouraging the development of more energy efficient devices and vehicles. Under standard economic theory, greater levels of investment in producing a product or piece of technology results in decreases in its overall long-run cost due to economies of scale. This funds further research and development (“R&D”), resulting in better products.20 This model holds true for EVs and other forms of electrification. Thus, EVs will be cheaper to produce than ICVEs by 2027.21 Ultimately, policymakers should encourage the adoption of EV and electrification given that these benefits are independent of any policies introduced to decarbonize a locality’s electricity supply. Instead, they arise purely through the free-market

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mechanism and associated behavioural nudges. Since these benefits can be quickly achieved, these efforts are the “low-hanging fruits” which policymakers seeking to combat climate-change should not ignore.

Decarbonizing electricity supply is necessary Policies encouraging EV adoption and other forms of electrification, however, will be less effective unless the electricity supply is decarbonized. Consequently, this segment argues that policymakers should also decarbonize their electricity supply. First, failing to decarbonize the electricity supply results in the promotion of electrification being less effective in combatting climate change because electrification increases demand for electricity. Where the electricity supply is not decarbonized, the decreases in carbon released from promoting electrification may be offset by the increases in carbon produced from the increased demand for electricity.22 For example, Singapore previously faced this issue, causing the imposition of carbontaxes on imported EVs after it found that the environment benefits of these vehicles were negated by its carbon-intensive electrical supply.23 Additionally, further investments in carbon-based sources of electricity generation risks worsening the impact of climate-change. This is especially given the extreme inefficiency of carbon-based electricity generation, with coal-plants generating 20 times more carbon than solar or wind energy.24 Further, failing to decarbonize the electricity supply would be inconsistent with the Paris-Agreement goals of preventing a more than 1.5 degrees rise in global temperatures. This requires eradicating carbon-intensive fuels like coal by 2050.25 Consequently, policymakers must simultaneously pursue the decarbonization of their electricity supply. This is possible even if they are unwilling to invest in new electrical supply, because of the power-plant lifespans. Coal plants are generally retired after 50 years of service26 while natural gas plants are retired after 30 years.27 This presents the opportunity to gradually decarbonize the electricity supply, thereby accomplishing these predetermined climate—targets. Further, where the abundance of renewable energy makes existing carbon-intensive electricity generators financially unsustainable to operate, policymakers should cooperate with existing operators to wind-down the operations of these plants.

Proposed solutions This segment argues that policymakers should adopt an integrated approach toward promoting electrification and decarbonizing their electricity supply. This requires targeted steps which accounts for their locality’s unique characteristics. Additionally, it advocates that policymakers coordinate between localities to ensure that the impact of such policies are maximized through the advantages of scale.

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Local policies Here, we focus on the specific steps which policymakers can take nationally and sub-nationally to promote electrification and the decarbonization of their electricity supply. In addition to the introduction of regulatory standards which was discussed above, this segment advocates for the creation of EV/Electrification compatible infrastructure, introducing carbon-pricing mechanisms, increasing support for R&D, and direct investments in sources of renewable energy. These proposed solutions are not novel. However, they leverage upon the policymaker’s unique convening power and can be implemented (with local variations) regardless of the locality’s state of economic development.

Infrastructure support First, policymakers should support the electrification of their transportation sectors through greater investments in infrastructure. This solution calls for both investment in EV-specific infrastructure such as charging points, and also rethinking how our cities are organized through improving urban mobility within cities. The call to support EV-specific infrastructure is not new. While there has been progress in the charging infrastructure dedicated to smaller passenger EVs, the same infrastructure has not materialized for Heavy-Duty EVs which would replace the high-polluting long-haul ICEVs. While a commercial-grade Heavy-Duty EV are still in development, it is necessary for policymakers to begin planning for and introducing Heavy-Duty EV compatible infrastructure. The planning process would be a low-cost method to decarbonizing the transportation sector.28 The transformation of urban infrastructure is another way policymakers, and only policymakers, can promote the electrification of their localities. This unique opportunity arises given that the convening and directing power of urban-planners, with commercial entities constructing the specific buildings. Here, options policymakers have include investing in carbon-neutral infrastructure like bicycle paths, building comprehensive public-transit systems that negate the need for personal vehicles, and increasing the overall density of their cities through zoning requirements.29 This solution is available regardless of the locality’s level of economic development, and is an especially potent strategy for cities which are less-developed, given the lack of legacy car-centric systems.

Carbon Pricing Secondly, policymakers should look beyond the transportation sector in promoting electrification. Industrially, this can be accomplished by introducing systems which force businesses to internalize the cost of carbon, whether through a carbon-tax, cap-and-trade system, or both. Briefly, a carbon-tax fixes the price of emissions,

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thereby forcing producers to factor these prices into their cost of sale. There is generally consensus that the price of carbon has to be minimally fixed at 60 Euros per ton of carbon for states to meet their Paris targets.30 A cap-and-trade system fixes the total permissible level of emissions within the economy and allows entities to trade emission permits. This rewards less pollutive producers, since they benefit from the carbon allowances, while also producing their products.31 While the specific choice of a carbon-tax or cap-and-trade system is best determined based on the locality’s circumstances, both options effectively impose a price on carbon. This is necessary to promote the electrification of the locality because a properly constructed system that prices carbon high enough would reduce the attractiveness of polluting production methods. Importantly, like large-scale infrastructure development, these systems are something which can only be implemented at scale by policymakers since the institutional power to tax or convene is only held by them. Further, a voluntary scheme would always result in the free-rider problem, where polluting profit-driven firms decline to participate. Finally, implementing a comprehensive set of carbon-pricing systems would enable policymakers to decarbonize relatively quickly. This is since it makes polluting industries caught by the scheme financially unsustainable.32 While issues may arise relating to a just-transition, this policy demonstrates that policymakers already have the tools necessary to accelerate the decarbonization of their economies. It also removes any basis for avoiding climate action, especially given the uncertainty which might arise from further GHG emissions.

Encouraging R&D Policymakers should increase their support for R&D of the relevant technologies necessary to promote electrification and decarbonization of the electricity supply. Here, we are not advocating that policymakers pick winners and losers amongst the different technologies. Instead, support for R&D can be done through supporting spaces that facilitate interactions amongst technical experts. This adopts the best practices of already existing government institutions in incubating start-ups or other biomedical technologies, akin to allowing various green “Silicon Valley” to arise.33 Policymakers should encourage R&D for three fundamental reasons. Firstly, such institutional support is necessary to drive the electrification of their localities, especially where there is no carbon/GHG price-incentive which the free-market would respond to. This initial support is especially relevant to the deep-technology innovations that characterizes electrification, since there is a high “Learning-by-Doing” cost before firms benefit from economies of scale.34 Secondly, encouraging R&D creates incidental economic benefits. Here, the direct economic impact can be measured in terms of jobs created, while a secondary impact would arise from the successful commercialization of the relevant electrification technology.35 Most importantly, support by policymakers for R&D is one of best means for ensuring that the locality can achieve a net-zero future in the context where

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current transitions are unaffordable or impractical. It is a practical long-term strategy which benefits could be shared beyond the locality. This arises especially in already developed cities, with legacy infrastructure that cannot be dismantled due to its high cost of replacement or the widespread disruption that replacement will cause (for example, dismantling a freeway). Here, policymakers should support R&D which addresses problems they face. This approach is exemplified by Singapore, which supported the development of waste-water treatment technologies, enabling them to reduce their dependence on less environmentally beneficial methods of water extraction such as the energy-intensive process of desalination.36

Decarbonizing the electricity supply Ultimately, these national policies should be undertaken with a concerted effort to decarbonize the electricity supply, through investments in renewable energy. Here, two specific strategies can be adopted regardless of locality. First, policymakers should invest in distributed-generation and storage capabilities. This is possible because, like the scenario of urban planning, only policymakers can build and transform public-spaces to areas which rely on renewable energy. Further, unlike firms, policymakers are immune from profit-making incentivise, hence, even minuscule marginal gains can justify the time and investment of public resources.37 Here, policymakers should directly invest in distributedgeneration and storage capabilities within their public-squares.38 This effectively creates networks of microgrids and directly decarbonizes electricity generation within their locality. Investments in storage capabilities to ensure that excess power generated can be stored for subsequent use also reduces the overall level of GHG emitting electricity consumption. Secondly, policymakers should progressively identify and replace carbonintensive sources of electricity generation within their electricity supply. They should also cease to plan for or support the creation of new carbon-based electrical generation capacity. This process likely requires expenditure which aren’t cost-saving since there may be localities where price-parity has not been accomplished. However, these can still be justified based on long-term environmental targets, where policymakers agree that decarbonization is a goal akin to security or foreign policy that is worth spending on.39 Further, recent developments in economic research suggests that such investments may also be justified for enabling economic growth through access to non-polluting sources of electricity.40

Conclusion on National Policies The recommendations here are important because solely focusing on promoting EVs or electrification with a carbon-intensive electricity supply is a suboptimal outcome. By adopting these policies, policymakers can systematically decarbonize their localities while boosting long-term innovation and economic growth. These policies,

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which only policymakers have the power to introduce, can be implemented with the private-sector, multiplying its effect, and further reducing overall GHG emissions.

Coordinating electrification and decarbonization policies Apart from leveraging upon their locality’s unique characteristics, policymakers should look beyond their borders in promoting the electrification of their economies and decarbonizing their electric supply. There are three key advantages to commend this approach. It expands the policy options available, enables localities to leverage on another’s comparative advantage, and enables the sharing of best practices.

Expansion of policy options Firstly, policymakers should cooperate beyond their localities because the scale of such coordination expands the range and effectiveness of policy options available to them. One positive example is the European Union’s (“EU”) Carbon Border Adjustment Mechanism (“CBAM”) – which addresses carbon leakage caused by asymmetrical climate policies of non-EU countries by taxing goods entering the EU. The CBAM is important given the EU’s existence as a free-trade zone, where producers can circumvent national carbon taxes by importing them into an intermediary EU member state.41 The coordination between policymakers of the 27-member states, however, prevents free-riding between these members whilst effectively allowing all members the benefit of a carbon-tax on imported goods. Importantly, the benefit of coordination is not limited to situations where the participating localities are members of a trade union. For example, policymakers seeking to create Heavy-Duty EV compatible infrastructure consider investing in these expensive chargers impractical when the long-haul logistics providers are unwilling to deploy EVs without full connectivity throughout their respective routes. However, a cross-border network of EV chargers would mitigate this issue, driving the electrification of the transportation sectors in both localities and allowing them to reap the benefits.

Leveraging comparative advantages Relatedly, coordination provides the opportunity for policymakers to leverage upon their respective comparative advantages in facilitating mutually beneficial outcomes. Preliminarily, a locality has comparative advantage when it can produce a good with a lower opportunity cost. This is especially relevant in the context of decarbonizing electricity supply – where different localities may specialize in producing different types of renewable energy. For example, Spain can increase the

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amount of renewable energy within its electricity supply by importing solar power from Morocco, which has excess solar energy capacity available for export.42 Here, Morocco has a comparative advantage in the production of solar energy because of its wide expanse of deserts. This example of comparative advantage requires coordination because the different localities need to be interconnected through the construction of transmission lines. However, they are important for policymakers to consider since they theoretically enable every country to rely on renewable energy, even while lacking the requisite natural resources. Singapore has begun discussion of purchasing solar power from Australia through the solar panels constructed in Alice Springs.43 This enables Singapore to diversify its sources of power despite having a minuscule land-area. Here, the comparative advantage means that policymakers have the option of leveraging on their neighbours’ strengths to decarbonize their electricity supply – negating the need to invest large capital sums in this process.

Sharing of best practices Further, coordination between localities enables the sharing of best practices, which contributes to reducing the overall level of carbon emitted globally. One example of this approach can be seen through the umbrella of the Climate-Ready Tribes initiative (“CRTI”). The CRTI provides funding and brings together tribal managers – training them in the best practices of Climate Adaptation. Its’ impact includes providing participating tribes with access to the resources necessary to engage in climate-change adaptation projects which leverage upon their existing indigenous knowledge.44 This approach to policy implementation is a common-sense one which benefits every locality equally since they need not reinvent the wheel in attempting to reduce their levels of emissions. Instead, they may rely on the experiences of their colleagues to promote the electrification of their own localities. Further, it is important to recognize that should the practices implement work – they directly result in progress toward electrification and decarbonization.

Conclusion on intentional coordination This segment has concluded that coordination provides policymakers with another tool in their arsenal toward electrifying and decarbonizing their economies. While the suggestions here may be more appropriate for national-level policymakers, they can be adapted by those in local government. This is an important takeaway given that decarbonization and electrification must be widespread to have a substantial impact in enabling the retardation of climate change.

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Conclusion This chapter begun by arguing that policymakers should promote EVs and other forms of electrification even if the locality’s electricity supply is carbon-intensive. This argument was fundamentally premised on the notion that some progress is better than none. Drawing upon the question’s implicit assumption that a carbonintensive electricity supply serves as a net-negative however, this chapter has further advocated for the decarbonization of the electrical supply. Ultimately, while providing policymakers with four specific national policy options, this chapter continues to recognize that political and resource availability may determine what is permissible. Here, it is submitted that progress should be the fundamental guiding principle for policymakers. Just as promoting EVs and other forms of electrification is beneficial even where the electrical supply is carbon-intensive, so too are minor policy wins that reduce the amount of GHGs emitted.

Notes 1. 2.

3. 4. 5. 6. 7. 8.

9. 10. 11. 12. 13. 14.

15.

Oxford Advanced Learner’s Dictionary (Sally Wehmeier Editor-in-Chief) (Oxford University Press 6th Ed, 2000), at 1056. National Renewable Energy Laboratory, Electrification Futures Study: Scenarios of Electric Technology Adoption and Power Consumption for the United States (June 2018) (Director: Trieu Mai) (“NREL – EFS 2018”), at 1. Energy Information Administration, US Energy-Related Carbon Dioxide Emissions 2020 (December 2021) (“EIA – US Energy-Related CO2 Emissions 2020”), at 19. NREL – EFS 2018, supra n 2, at 2. International Energy Agency, Global EV Outlook 2021 (April 2021) (Director: Timur Gul), at 5. Amazon.com, “Amazon’s custom electric delivery vehicles are starting to hit the road”, Press Release (03 February 2021). Ibid. Nick O’Malley, “Inside Australia’s growing pirate electric car market” Sydney Morning Herald (28 December 2021) . NREL – EFS 2018, supra n 2, at xii. Kenneth Gillingham & James Sweeney, “Barriers to implementing low-carbon technologies” (2012) 3(4) Climate Change Economics 1250019 (“Gillingham”), at 14. Government of Iceland, “Energy” (March 2022), . Singapore Energy Market Authority, “Energy Transformation” (June 2021) . Qunwei Wang, “Valuing investment decisions of renewable energy projects considering changing volatility” (2020) 92 Energy Economics 104954, at 11. Kyle Bakx, “Once the epicentre of the oilpatch, Texas now humming with wind and solar power Social Sharing” CBC News (23 March 2022) . Camilla Hodgson, “Banks’ green pledges under scrutiny” Financial Times (03 November 2021) .

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16. Maria-Jesus Garcia-Martinez, “Comparative life cycle assessment of conventional, electric and hybrid passenger vehicles in Spain” (2021) 291 Journal of Cleaner Production 125883, at 9. 17. NREL – EFS 2018, supra n 2, at 71. 18. Markus Fritz, “The impact of ambitious fuel economy standards on the market uptake of electric vehicles and specific CO2 emissions” (2019) 135 Energy Policy 111006, at 6. 19. Jayne Thorne, “Facilitating adoption of electric buses through policy: Learnings from a trial in Norway” (2021) 155 Energy Policy 112310, at 10. 20. NREL – EFS 2018, supra n 2, at 14. 21. Joanna Partridge, “Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027’”, The Guardian (09 May 2021) . 22. NREL – EFS 2018, supra n 2, at 59. 23. Christopher Tan, “Tesla boss calls PM Lee over CO2 surcharge levied on first Model S in Singapore” Straits Times (07 March 2016) . 24. National Renewable Energy Laboratory, Life Cycle Greenhouse Gas Emissions from Electricity Generation: Update, (September 2021), at 3. 25. Ryan Cui, “Quantifying operational lifetimes for coal power plants under the Paris goals” (2019) 10(1) Nature Communications 4759 (“Cui”), at 2. 26. Id, at 4. 27. National Renewable Energy Laboratory, Life Cycle Assessment of a Natural Gas CombinedCycle Power Generation System, (September 2020) (Director: Pamela Spath), at 8. 28. Global EV Outlook 2021, supra n 5, at 41. 29. Karen Seto, “From Low- to Net-Zero Carbon Cities: The Next Global Agenda” (2021) 46 Annual Review of Environment and Resources 377, at 385. 30. Michael Tost, “Carbon prices for meeting the Paris agreement and their impact on key metals” (2020) 7 The Extractive Industries and Society 593 (“Tost”), at 598. 31. William Pizer, Emissions Trading versus CO2 Taxes versus Standard, (November 2007), at 1. 32. Tost, supra n 30, at 597. 33. K.C Fung, “Some characteristics of innovation activities: Silicon Valley, California, China and Taiwan” (2016) 49(2-3) Economic Change and Restructuring 221, at 223. 34. Gillingham, supra n 10, at 7. 35. Qingchun Meng, “Supply chain green innovation subsidy strategy considering consumer heterogeneity”, (2021) 281 Journal of Cleaner Production 125199, at 15. 36. Public Utilities Board, “Used Water Treatment Process” (June 2021) . 37. David Brown, “Optimal policies to promote efficient distributed generation of electricity”, (2017) 52(2) Journal of Regulatory Economics 159, at 162. 38. Martin Warneryd, “Unpacking the complexity of community microgrids: A review of institutions’ roles for development of microgrids” (2020) 121 Renewable and Sustainable Energy Reviews 109690, at 2. 39. Tyeler Matsuo, “Managing tradeoffs in green industrial policies: The role of renewable energy policy design” (2019) 122 World Development 11, at 23. 40. Hammed Musibau, “Energy Security, Renewable, Non-Renewable Energy and Economic Growth in ASEAN Economies: New Insights” (2021) 66(2) Singapore Economic Review 457, at 481. 41. Council of Europe, “Council agrees on the Carbon Border Adjustment Mechanism (CBAM)”, Press Release (15 March 2022). 42. Sameh Mobarek, “Renewable energy export-import: a win-win for the EU and North Africa”, World Bank (07 January 2016). 43. Rick Hind, “’World’s largest solar farm’ near tiny NT town could help power Singapore via 4,500km undersea cable”, ABC News (30 July 2020) . 44. Paul Schramm, “How Indigenous Communities Are Adapting To Climate Change: Insights From The Climate-Ready Tribes Initiative” (2020) 39(12) Health Affairs 2153, at 2157.

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References Amazon.com (2021) Amazon’s custom electric delivery vehicles are starting to hit the road. Press Release Bakx K (2022) Once the epicentre of the oilpatch, Texas now humming with wind and solar power social sharing. CBC News. https://www.cbc.ca/news/business/bakx-texas-wind-solar-1.6390107 Brown D (2017) Optimal policies to promote efficient distributed generation of electricity. J Regulatory Econom 159 52(2) Council of Europe (2022) Council agrees on the carbon border adjustment mechanism (CBAM). Press Release Cui R (2019) Quantifying operational lifetimes for coal power plants under the Paris goals. Nat Commun 10(1):4759 Energy information administration (2020) US energy-related carbon dioxide emissions 2020 Fung KC (2016) Some characteristics of innovation activities: Silicon Valley, California, China and Taiwan. Econom Change Restruct 49(2–3):221 Fritz M (2019) The impact of ambitious fuel economy standards on the market uptake of electric vehicles and specific CO2 emissions. Energy Policy 135:111006 Garcia-Martinez M-J (2021) Comparative life cycle assessment of conventional, electric and hybrid passenger vehicles in Spain. J Clean Prod 291:125883 Gillingham K, Sweeney J (2012) Barriers to implementing low-carbon technologies. Climate Change Economics 3(4):1250019 Government of Iceland (2022) Energy”. government.is/topics/business-and-industry/energy/ Hammed M (2021) Energy security, renewable, non-renewable energy and economic growth in ASEAN economies: new insights. Singapore Econom Rev (2021) 66(2):457 Hind R (2020) World’s largest solar farm’ near tiny NT town could help power Singapore via 4500km undersea cable. ABC News. https://www.abc.net.au/news/2020-07-30/nt-sun-cables-aus tralia-project-awarded-major-project-status/12506516 Hodgson C (2021) Banks’ green pledges under scrutiny. Financial Times https://www.ft.com/con tent/0ea3267c-d61f-4120-a976-0b81b60836c5 International energy agency, Outlook Global EV (2021) April 2021. Timur Gul, Director Matsuo T (2019) Managing tradeoffs in green industrial policies: The role of renewable energy policy design. World Dev 122:11 Meng Q (2021) Supply chain green innovation subsidy strategy considering consumer heterogeneity. J Clean Prod 281:125199 Mobarek S (2016) Renewable energy export-import: a win-win for the EU and North Africa. World Bank National renewable energy laboratory (2018) Electrification futures study: scenarios of electric technology adoption and power consumption for the United States (Director: Trieu Mai) National Renewable Energy Laboratory (2020) Life cycle assessment of a natural gas combinedcycle power generation system(Director: Pamela Spath) National renewable energy laboratory (2021) Life cycle greenhouse gas emissions from electricity generation: update, (September 2021). O’Malley N (2021) Inside Australia’s growing pirate electric car market. Sydney Morning Herald. https://www.smh.com.au/business/entrepreneurship/inside-australia-s-growing-pirate-electriccar-market-20211224-p59k0y.html Oxford Advanced Learner’s Dictionary (Sally Wehmeier Editor-in-Chief) (Oxford University Press 6th edn, 2000) Partridge J (2021) Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027. The Guardian. https://www.theguardian.com/business/2021/may/09/electric-cars-will-becheaper-to-produce-than-fossil-fuel-vehicles-by-2027 Pizer W (2007) Emissions trading versus CO2 taxes versus standard Public Utilities Board (2021) Used water treatment process. https://www.pub.gov.sg/usedwater/tre atment/usedwatertreatmentprocess

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Schramm P (2020) How indigenous communities are adapting to climate change: insights from the climate-ready tribes initiative. Health Affairs 39(12):2153 Seto K (2021) From low- to net-zero carbon cities: the next global agenda. Ann Rev Environ Resour 46:377 Tost (2020) Carbon prices for meeting the Paris agreement and their impact on key metals. Extractive Indus Soc 7:593 Tan C (2016) Tesla boss calls PM Lee over CO2 surcharge levied on first Model S in Singapore. Straits Times. straitstimes.com/singapore/transport/tesla-boss-calls-pm-lee-over-co2-surchargelevied-on-first-model-s-here Thorne J (2021) Facilitating adoption of electric buses through policy: Learnings from a trial in Norway. Energy Policy 155:112310 Wang Q (2020) Valuing investment decisions of renewable energy projects considering changing volatility. Energy Economics 92:104954 Warneryd M (2020) Unpacking the complexity of community microgrids: a review of institutions’ roles for development of microgrids. Renew Sustain Energy Rev 121:109690

Part III

The International Dimension

Chapter 13

Is the International Community Doing Enough to Address the Unique Climate Change Challenges Faced by Small Island Developing States, Least-Developed Countries, and Other Vulnerable Places? Charlotte Seethor Wen Ting Abstract Examines some of the prominent efforts that the international community have embarked on and done well in in light of the unique climate change challenges faced by small island developing states, least-developed countries, and other vulnerable places. As a result, these countries have benefitted from efforts such as the Least-Developed Countries Fund, and are better off than before. These efforts have indeed been heartening, as it is a step forward for these vulnerable groups. However, this chapter also puts forward that a lot more can be done for these groups, as their plight has not been alleviated, and they are still suffering from the effects of such unique climate change challenges. The following major issues are discussed in this chapter: discussion and recognition in the climate negotiation process, climate financing for adaptation measures, and climate migration. The current situation is evaluated in order to identify why it is an issue worth tackling. After which, gaps that still exist are highlighted and suggestions for possible improvements are made. After all, there is a moral duty on the international community to work together and remedy this situation, for the betterment of the Earth that we all inhabit as well as for future generations.

C. S. W. Ting (B) Singapore Management University School of Law, Singapore, Singapore e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2023 R. Leal-Arcas (ed.), Climate and Energy Governance for a Sustainable Future, Climate Change Management, https://doi.org/10.1007/978-981-19-8346-7_13

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Introduction The Problem Climate change affects environmental preservation, state security, and human rights,1 and this is especially so for SIDS, LDCs, and other vulnerable places (“SLVs”).2 This is because SLVs face unique climate change challenges resulting from the geographic nature of their location and structural inequalities,3 inter alia. Due to their vulnerabilities, food shortages and health risks caused by climate change are more prevalent in SLVs. Additionally, climate disasters fuelled by carbon emissions drive SLV inhabitants from their living quarters, displacing some permanently. With all these unfortunate happenings, it is of utmost importance that the international community rises up and plays a part to alleviate such pressing concerns. However, while most rich countries agree that they should provide more aid, one challenge is how procedural details have been bogged down in the slow bureaucratic processes of the United Nations (“UN”) talks.4 Another issue is the lack of funds for climate adaptation compared to mitigation.

Argument Overall, while there have been commendable efforts by the international community so far, this chapter puts forward that it is simply not enough, for the gaps that need to be addressed are not insignificant, and the plight of SLVs is still not largely alleviated by existing efforts.5 These unique climate change challenges are indeed an ongoing concern for SLVs. No country should have to bear the consequences of climate issues they were not the cause of. Hence, there is a moral duty of sorts on the international community to remedy the current situation.

1

Rafael Leal-Arcas, et al. (2021) “Climate Change: Impacts (2007) 3 Nicole Greenfield (2022) 4 Brad Plummer and Lisa Friedman, “Island Nations, With No Time to Lose, Take Climate Response Into Their Own Hands” The New York Times (17 November 2017) < https://www.nytimes.com/2017/ 11/17/climate/islands-climate-change-un-bonn.html > (accessed 22 March 2022). 5 UN Website < https://www.un.org/ohrlls/news/frontline-climate-crisis-worlds-most-vulnerablenations-suffer-disproportionately > (accessed 28 March 2022); Kristalina Georgieva, “Poor and Vulnerable Countries Need Support to Adapt to Climate Change”, IMFBlog (23 March 2022) < https://blogs.imf.org/2022/03/23/poor-and-vulnerable-countries-need-support-to-adaptto-climate-change/ > (accessed 28 March 2022). 2

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Roadmap This chapter will examine three major issues that are specifically faced by SLVs: international discussion and recognition in the climate negotiation process of SLV’s unique climate change challenges, climate financing for adaptation measures, and climate migration. The current situation will first be set out. Then, efforts to address the issue will be evaluated as being done well if they have achieved an overall positive effect, and further improvements may be suggested where there are certain gaps.

The Current Situation A. Issue #1: Discussion and Recognition in the Climate Negotiation Process of SLVs’ Unique Climate Change Challenges An issue faced by SIDS and LDCs is their exclusion from major climate-oriented discussions. Outside the United Nations Framework Convention on Climate Change (“UNFCCC”), the global focus is on mitigation strategies for top emitter nations, and sometimes, the only SLVs included in discussions are nations which are strategically important to the “big” players. However, adaptation measures are especially important for SLVs, seeing as how there is less success than hoped for in mitigation, and they are the ones bearing the brunt of the problem.6

B. Issue #2: Climate Financing for Adaptation Measures There is a time lag between current greenhouse gas emissions and the effect they have in the future, so past emissions have already started to affect the earth negatively by causing changes in climate.7 Hence, regardless of future mitigation efforts, adaptation measures are needed to decrease this aforementioned impact, and SLVs would benefit from more climate financing due to their financial limitations, as well as other vulnerabilities.

6

“Climate Change and Migration in Vulnerable Countries”, International Organization for Migration (2019) < https://publications.iom.int/system/files/pdf/climate_change_and_migration_in_vul nerable_countries.pdf > (accessed 22 March 2022). 7 Arun Agrawal, “The Role of Local Institutions in Adaptation to Climate Change” The World Bank (5 March 2008) < https://openknowledge.worldbank.org/bitstream/handle/10986/28274/691 280WP0P11290utions0in0adaptation.pdf?sequence=isAllowed = > (accessed 22 March 2022).

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Issue #3: Climate Migration Since 2008, more than 318 million people have been displaced by natural disasters such as droughts, floods, and earthquakes.8 Scientists attribute this increasing trend to climate change. When such climate disasters occur, SLVs are disproportionately impacted and are less able to deal with it because of geographical disadvantages and structural constraints.9 For example, in regions such as North Africa,10 water is scarce and when further depleted by climate change causes migration for improved access to water. In relation to SIDS, they have a higher risk of marginalisation because of their remoteness and size. Also, their fragile natural environments worsen the impact of natural disasters on the population. Climate change has also resulted in the issue of sinking islands and disappearing states,11 due to slow-onset hazards like sea-level rise.12 Without migration and adaptation strategies, there could be population displacement from small island nations that are no longer inhabitable.

What is the International Community Doing Well? Issue #1: Discussion and Recognition in the Climate Negotiation Process of SLVs’ Unique Climate Change Challenges The Intergovernmental Panel on Climate Change (“IPCC”) has acknowledged small islands and atoll countries as being very vulnerable to climate change, especially in relation to sea-level rise.13 As such, the Alliance of Small Island States (“AOSIS”) was formed in 1990 to increase awareness of SIDS and their vulnerability within the UN 8

Joanna Apap, “The concept of ‘climate refugee’” European Parliament Research Service (October 2021) < https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/698753/EPRS_B RI(2021)698753_EN.pdf > (accessed 22 March 2022). 9 UN website < https://www.un.org/sustainabledevelopment/blog/2019/09/climate-change-andmigration-in-vulnerable-countries/#:~:text=Climate%20migration%20is%20a%20reality,Island% 20Developing%20States%20(SIDS). > (accessed 22 March 2022). 10 World Bank website < https://www.worldbank.org/en/news/feature/2021/08/23/going-with-theflow-water-s-role-in-global-migration > (accessed 23 March 2022). 11 Jane Mcadam, Climate Change, Forced Migration, and International Law (1st Ed, Oxford University Press, 2012). 12 Eleanor Roy, “’One day we’ll disappear’:Tuvalu’s sinking islands”, The Guardian (16 May 2019) < https://www.theguardian.com/global-development/2019/may/16/one-day-disappeartuvalu-sinking-islands-rising-seas-climate-change > (accessed 28 March 2022). 13 Timothee Ourbak and Alexandre Magnan, “The Paris Agreement and climate change negotiations: Small Islands, big players” (2018) 18 Regional Environmental Change 2201 (“Paris”) at 2201.

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system. Some of these pressing concerns include sea-level rise, ocean warming and acidification, increased precipitation variability, and extreme events like cyclones. This threatens island habitability, especially in low-lying atoll reef islands. Recognition is something that the international community has done well in because the first step to tackle any issue is identifying and naming it. This will act as the stepping stone for solutions to be formulated. Treaties like the Paris Agreement acknowledge the vulnerabilities of SIDS and LDCs too. The Paris Agreement’s preamble states that LDCs are subject to funding and technology transfer due to their special needs. Article 13 sets out a framework to recognise the needs of SIDS, and Article 15 ensures that LDCs participate in allowing non-punitive compliance of other states by establishing a compliance committee which includes at the minimum, 1 LDC member. Entrenching this recognition through the articles in the Paris Agreement is of significance because it formally validates the challenges SLVs go through. Hence, this ultimately allowed SIDS to lead by educating the world on the issues they were experiencing such as food insecurity, rising sea levels, and settlement relocations at multilateral conferences. For example, Fiji could demonstrate the response of SIDS to tackle climate change with its Presidency of Conference of the Parties (COP23) in Bonn and its Presidency of the Oceans Conference in 2017. This is counted as a success in the arena of diplomatic engagements and leadership opportunities. In respect of other past successes in this area, some leaders of AOSIS have also set up meetings ahead of COP21, and this produced the Majuro declaration in 2013 which assisted in drawing attention to climate change and the expectations for COP21. Some have used their voices in negotiation meetings in the run up and during COP21. Additionally, AOSIS members have played a successful role in the climate negotiation process, such as in shaping the Copenhagen Accord process in 2009. They have been successful in borrowing power by spreading awareness about the plight of their disappearing islands to the media and within the UN system. Consequently, the underwater cabinet meeting was held by the government of Maldives to highlight the threat of climate change for low-lying nations. Successes in gaining international recognition through discussion has resulted in tangible impacts too. In the year that Fiji lead global climate policy-making, it made a great impact.14 Development projects are being undertaken by E.U. members as a result, and institutions like the US Agency for International Development, and the German government have helped pay for relocating villages. So far, this is an area the international community has done well in because vulnerable states have inspired financial commitments from richer countries amounting up to hundreds of billions of dollars for developing countries, promoted the creation of 2018’s IPCC report that upended climate debate, and rescued international climate talks from crumbling. 14

Justin Worland, “The Leaders of These Sinking Countries Are Fighting to Stop Climate Change”, Time (13 June 2019) < https://time.com/longform/sinking-islands-climate-change/ > (accessed 22 March 2022).

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Issue #2: Climate Financing for Adaptation Measures The Global Environment Facility (“GEF”) is the biggest multilateral trust fund that aims to enable LDCs to invest in nature and supports the implementation of major international environmental conventions.15 As of 2001, the GEF manages the Least-Developed Countries Fund (“LDCF”), which was set up by 194 parties to the UNFCCC and mandated to serve the Paris Agreement.16 The LDCF assists countries in adapting to the new climate realities of extreme weather events caused by accelerating climate change, which puts LDCs at risk due to their vulnerabilities. Designating a specific fund to tackle adaptation measures to finance such projects is definitely the way forward to address this issue and is something that has been done well. This promotes a policy environment which pushes for investment in adaptation solutions and the reduction of systemic barriers to progress, as LDCF works with partner agencies at the local and national sphere. The National Adaptation Programs of Action (“NAPA”) provides a process to come up with country-specific strategies and discrete projects17 for tackling urgent adaptation needs,18 and the National Adaptation Plan (“NAP”) comes up with a holistic climate adaptation plan which builds on existing adaptation activities. These are both supported by the LDCF. As such, the LDCF backing assists LDCs in addressing their resilience needs and tries to decrease their climate change vulnerability. As a result of their hard work, the LDCF has seen successes in different areas. It has funded more than 250 projects with around $1.7 billion in grants. In Senegal, work is done to conserve and restore degraded landscapes. In Gambia, the climate change early warning systems are strengthened, and climate change awareness is being integrated into policies. In Togo, coastal areas are protected from storms and floods. Sao Tome and Principe has received a $6 million grant to join the West Africa Coastal Area Resilience Investment Program; storm surge monitoring and forecasting are being improved. Another heartening effort is the Adaptation Fund in the SIDS. $110.4 million has been allocated to 15 adaptation projects in 14 SIDS countries, and 17 SIDS countries have since gained support from the Adaptation Fund.19 Out of this fund, it 15

The GEF website < https://www.thegef.org/who-we-are > (accessed 22 March 2022). The GEF website < https://www.thegef.org/what-we-do/topics/least-developed-countries-fundldcf > (accessed 22 March 2022). 17 Heather McGray, “Clarifying the UNFCCC National Adapatation Plan Process”, World Resources Institute (11 June 2014) < https://www.wri.org/insights/clarifying-unfccc-national-ada ptation-plan-process > (accessed 28 March 2022). 18 UN Development Programme website < https://www.adaptation-undp.org/national-adapta tion-programmes-action-napas#:~:text=National%20Adaptation%20Programmes%20of%20A ction%20(NAPAs)%20provide%20a%20process%20for,costs%20at%20a%20later%20stage. > (accessed 28 March 2022). 19 Adaptation Fund website < https://www.adaptation-fund.org/wp-content/uploads/2017/11/Ada ptation-Fund-in-the-SIDS-1.pdf > (accessed 22 March 2022). 16

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has contributed to 8300 ha of natural habitat being protected and restored and 99 km of coastline being protected. These examples are proof that climate financing can improve SLVs’ adaptation measures as seen by the positive impacts of restoration and protection of their immediate environments.20 Such efforts by the international community are a fantastic start in an attempt to eradicate the climate challenges faced by SLVs. However, there is still much to be done if that goal is to be reached.

Issue #3: Climate Migration Since 2010, there has been migration-related work being carried out under UNFCCC and the 2015 Paris Agreement on climate change, which have been instrumental in promoting awareness on climate migration. Additionally, the Global Compact for Safe, Orderly and Regular Migration endorsed in 2018 recognises the urgency of migrant displacement due to climate change and seeks to tackle this challenge. Within this agreement is a specific section dedicated to environment degradation, disasters and climate change, which sets out responses to address drivers of migration using climate change adaptation and mitigation measures, disaster risk reduction, and disaster response. COP24 addressed this issue as well. So, we can see that in the area of increasing awareness and opportunities to tackle this issue, the international community has done well. Additionally, the Nansen initiative was launched in 2012, and the international community has since then begun to think about external climate migration, as compared to internally displaced persons, which is what most available data focuses on. The Nansen initiative had the goal of filling the legal protection gap regarding migrants externally displaced by climate disasters through a protection agenda and treatment standards. This led to a non-binding “agenda for the protection of crossborder displaced persons in the context of disasters and climate change” which enshrined 10 action points and was endorsed by 109 states. These action points relate to responsibilities of stakeholders, preparation, and response to disasters, and the addressing of normative gaps in tackling this issue. Also, a more tangible effort worth mentioning would be the Refugee Environmental Protection Fund set up by the UN Refugee Agency which invests in reforestation and clean cooking programs in climate-vulnerable refugee situations globally.21 It is definitely a start that the problem is now being highlighted, and there are attempts to address it, but there still has not been any legal protection or official 20

Benjamin Sovacool et. al., “Climate change adaptation and the Least Developed Countries Fund: Qualitative insights from policy implementation in the Asia–Pacific” (2016) 140 Climate Change 209. 21 UN Refugee Agency website < https://www.unhcr.org/refugee-environmental-protection-fund. html > (accessed 28 March 2022).

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status of climate migrants yet. Hence, while such efforts have been done well, they are insufficient because it does not nip the problem in the bud by offering climate migrants adequate protective measures.

What Gaps Can Be Addressed? Issue #1: Discussion and Recognition in the Climate Negotiation Process of SLVs’ Unique Climate Change Challenges The Gap In terms of discussions, SLVs have indeed made headway in the international arena throughout the climate negotiation process as previously mentioned. They have also gained recognition as seen by acknowledgement of the unique difficulties they face in international agreements and treaties. However, the general sentiment now reflects that this is not enough. SLVs are upset that their needs and requests are still insufficiently addressed by other countries.22 Emissions-reduction targets remain uninspiring, and the lagging financial commitments of developed countries stand in the way of SLVs taking up additional climate resilience measures. While richer countries have vowed to fulfil certain climate-related financial commitments, they have failed to deliver fully. Only an estimated $80 billion was provided instead of the pledged $100 billion per year by 2020.23 This raises the question of whether there is true, actual recognition and understanding for the plight SLVs are in, despite the aforementioned discussion and formal recognition. If there is true, actual recognition, it should be reflected as favourable results from climate negotiations. Otherwise, such international discussion and “recognition” would prove unhelpful, and be merely empty talk.

What Can Be Done? Negotiation decisions should recognise that economies require the mobilisation of trillions, not just billions, when the new climate finance goals are set-up. Due to

22

Mima Holt, “What Vulnerable Countries Need from the COP26 Climate Summit”, World Resources Institute (22 September 2021) < https://www.wri.org/insights/what-vulnerable-countr ies-need-cop26-climate-summit > (accessed 22 March 2022). 23 Julie Bos, “Are Countries Providing Enough to the $100 Billion Climate Finance Goal?” World Resources Institute (7 October 2021) < https://www.wri.org/insights/developed-countries-contribut ions-climate-finance-goal > (accessed 22 March 2022).

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the pandemic which exacerbated inequalities,24 it worsened the plight of countries lacking climate finance. This means that it is of paramount importance that the ambition of making climate finance more accessible be achieved in future negotiations, which would require a change in overall perspective. Unfortunately, many have criticised the COP26’s outcome as lacking.25 Additionally, adaptation finance only accounts for a mere 25% of total climate finance going from developed to developing countries as of 2021, which means that financial support is still skewed towards mitigation. Hence, it is key that in climate negotiations, adaptation measures are perceived as just as essential, especially so for SLVs who are the least responsible for contributing to climate change, but bear the brunt of its effects. This preferred perspective that funding countries should adopt can be brought about through general education using posters, websites, and presentations, informing funding countries about the need for and positive impacts that adaptation measures can bring. For example, efforts of the GEF should be broadcasted and highlighted. It is when such education causes a shift in perspective of funding countries that SLVs might be able to benefit from true, actual recognition of the issues that they face as a result of the end goals of climate negotiations.

Issue #2: Climate Financing for Adaptation Measures The Gap It is true that there have been various climate financing initiatives which are commendable as mentioned above. However, the reality is that the $100 billion promise of climate finance was broken.26 This could stem from the fact that there is insufficient actual recognition of the importance of adaptation measures. However, it is also said that economic constraints are one of the biggest barriers to actual adaptation.27

24

Amat Adarov, “Global income inequality and the COVID-19 Pandemic in three charts”, World Bank Blogs (7 February 2022) < https://blogs.worldbank.org/developmenttalk/global-income-ine quality-and-covid-19-pandemic-three-charts > (accessed 22 March 2022). 25 Ben Abraham, “Good COP, Bad COP” Just Security (24 November 2021) < https://www.justse curity.org/79313/good-cop-bad-cop-after-the-mixed-results-of-cop26-whats-next/ > (accessed 22 March 2022). 26 Jocelyn Timperley, “The broken $100-billion promise of climate finance” nature (20 October 2021) < https://www.nature.com/articles/d41586-021-02846-3 > (accessed 23 March 2022). 27 Ian Holman, “Improving the representation of adaptation in climate change impact models” Regional Environmental Change 2019; 19: 711–721.

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What Can Be Done? In response to the above gap, it would be ideal to set aside more climate funds for SLVs and keep to commitments that have been made. However, this is easier said than done, since such commitments do not have teeth28 and do not disincentivise countries from not keeping to them. As such, a bottom-up approach is suggested instead, as the barrier to entry is low, and a huge impact can be made when a large group with collective will decide to band together to adopt a course of action.29 Further, private sector-led climate action is important in the financing of adaptation efforts of capital-deficient developing countries.30 For example, capacities on the ground can be made stronger through grouping enterprises, farmers or projects into networks to create synergy, peer learning opportunities, and shared resources.31 This group can then be utilised to mobilise new stakeholders and investors like banks and private corporations as new sources of adaptation financing, including even consumers from the wider public by tapping into underutilised markets such as the online game community. The gamification approach tries to use games to create value and impact for climate financing, reaching new target groups as a result. Such funding can then be invested into innovative tech-driven solutions. Another area that can be improved upon is the rigidity in the World Bank’s income classification in fund distribution to SIDS and LDCs for climate vulnerabilities. For example, when developing countries reach upper middle-income status, they only may obtain loans from the International Bank of Reconstruction and Development. Hence, when middle-income countries are met with climate disasters which ruins their economy overnight, their income status disallows them from receiving other forms of assistance.When Cyclone Winston attacked Fiji in 2016, the damage done after amounted to 31% of the nation’s GDP.While Fiji needed greater international assistance, it was “stuck” as an upper middle-income country.Due to this dilemma, LDCs could be disincentivised from trying to grow economically as they will have less foreign aid in the face of climate disasters. It is suggested that the foreign aid system should be based on climate vulnerability rather than income classification, as this would give LDCs an incentive to grow economically. This metric might include the following factors: frequency of climate disasters, income levels and purchasing power of citizens, ability to meet the 2030 SDGs, and governmental positions on civil liberties.

28

India Climate Dialogue website < https://indiaclimatedialogue.net/2019/10/29/no-money-noteeth-in-paris-agreement/ > (accessed 22 March 2022). 29 Jason Gallup, “Top-Down versus Bottom-Up: Two Approaches to Sustainability” Office of Sustainability (3 July 2018) < https://sustainability.wisc.edu/top-down-bottom-up-sustainability/ > (accessed 22 March 2022). 30 Rafael Leal-Arcas, Solutions for Sustainability (Springer Nature, 1st Ed, 2019). 31 Jonas Restle-Steinert, “Bottom-Up Innovation for Adaptation Financing” Adelphi (2019) < https://www.adelphi.de/en/system/files/mediathek/bilder/Bottom-up%20Innovation%20for%20A daptation%20Financing%20%20-%20adelphi%20SEED.pdf > (accessed 22 March 2022), at 13.

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Issue #3: Climate Migration The Gap It has been said that the international response to climate migration and protection for those affected is meagre. Adding on to the issue is that international law does not recognise the term “climate refugee”,32 and they are not being protected by the 1951 Refugee Convention. On the flip side, an alternative perspective is that in the small Pacific island States of Kiribati and Tuvalu, the refugee label is rejected as it is seen as helpless and lacking in dignity,33 which puts the stigma on victims instead of the offenders. So, this issue is not easy to navigate. It will be most ideal to assist SLVs in tackling the issue of climate migration, while not disempowering them. However, the advantage of recognition in international law is that it can seek to bolster an ethical claim to assistance and protection, which could entail rights and entitlements which allows for a starting point where states can agree about solutions. While host countries are focused on the long term by looking at the root issue of reducing pollution, climate change migrants continue to “find themselves in a legal void”. The issue now is that while negative climate effects are dangerous and deadly, they do not reach the threshold of “persecution” as understood in international law. This is because in refugee law, for deprivation to move beyond a “mere” non-realisation of a right to a violation of a right amounting to persecution, discrimination is a required element. Simultaneously, nothing in the Refugee Convention prevents acknowledging environmental harms amounting to persecution as long as the requisite elements can be established. Alternatively, a relevant claim that could be put forward relates to how environmental harms might involve other practices that are persecutory, such as where the adverse effects of climate change interacts with armed conflict.34 For now though, international law does not really assist climate migrants due to issues of legal uncertainty.35

32 “Climate Refugees’: The expected climate change migration” Lee Kuan Yew School of Public Policy (14 October 2020) < https://lkyspp.nus.edu.sg/gia/article/climate-refugees-the-expected-cli mate-change-migration > (accessed 22 March 2022). 33 Mcadam, Forced, supra n 24, at 40. 34 UN Refugee Agency website < https://www.unhcr.org/climate-change-and-disasters.html > (accessed 23 March 2022). 35 Rafael Leal-Arcas, Climate Change and International Trade (Edward Elgar Publishing, 1st Ed. 2013) at p 44. Rafael Leal-Arcas, Climate Change and International Trade (Edward Elgar Publishing, 1st Ed. 2013) at p 44.

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What Can Be Done? It is suggested that merely adding environmental motives in the 1951 definition is not feasible due to disagreeing receiving countries.36 Going forward, it might be possible to enhance international cooperation to assist in sharing the burden of helping with and preventing disasters faced by impacted vulnerable countries and allowing for emigration by recognising environmental push factors in international instruments of protection. However, that is not to say that this is a problem-free solution. For example, from a legal perspective, a hybrid law approach can be taken where climate change is examined from the lens of environmental, refugee, and human rights law. A cause in environmental law could be recognised as impacting human rights law, and this violation of rights will create a category of refugees who migrate to protect their human rights. Resultantly, climate refugees will be recognised and afforded protection. This approach allows for principles to be identified in existing international law, and there would be no need to invent new legal obligations. Additionally, it would be ideal for developed countries to address their climate change obligations and house climate refugees, since they might be said to have breached environmental law. From a perspective of physical safety, resilience against the negative effects of climate change is fundamental to decreasing forced migration, and this would involve increased access to capacity building resources and climate finance. Planned and managed migration can also be a coping strategy for populations facing serious climate change effects.

Is the International Community Doing Enough? It is heartening to know of international efforts that have been executed well and, hence, sustained positive results for SLVs. However, there are fundamental issues and gaps that definitely can be worked on to improve the current situation that SLVs face due to climate change. Some of which, could have already been done if only there were a stronger collective will of international players. With COP27 coming up, it is with bated breath that we await further positive improvements for SLVs, as we have seen that such efforts are increasing; slowly and steadily. As of today however, we conclude that the international community is not doing enough, as climate change continues to contribute to the plight of SLVs, possibly due to the gaps mentioned in this chapter. It is with hope that we anticipate the drastic improvement of this situation in the near future.

36

Etienne Piguet, “New Issues in Refugee Research” The UN Refugee Agency (January 2008) < https://www.unhcr.org/uk/47a316182.pdf > .

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