The Oxford Handbook of International Climate Change Law 9780199684601, 019968460X

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The Oxford Handbook of

INTERNATIONAL CLIMATE CHANGE LAW

The Oxford Handbook of

INTERNATIONAL CLIMATE CHANGE LAW Edited by

CINNAMON P. CARLARNE KEVIN R. GRAY RICHARD G. TARASOFSKY

1

1 Great Clarendon Street, Oxford, ox2 6dp, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © the several contributors 2016 The moral rights of the authors have been asserted First Edition published in 2016 Impression: 1 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Crown copyright material is reproduced under Class Licence Number C01P0000148 with the permission of OPSI and the Queen’s Printer for Scotland Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016, United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number: 2015945192 ISBN 978–0–19–968460–1 Printed and bound by CPI Group (UK) Ltd, Croydon, cr0 4yy Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.

Cinnamon P. Carlarne For my lovely and inspiring daughter, Matilda, and all of the other creative and hopeful minds of her generation. Kevin R. Gray For my family, Claudia, Sebastien, and Maya, who continue to shed bright light on my path and to the planet, which I hope will benefit from the words of wisdom contained in this book. Richard G. Tarasofsky For my fabulous family—Meike, Jacob, and Yael—who I missed greatly during those long UNFCCC negotiations, and all the wonderfully dedicated and talented people I met along the way working to address one of the greatest challenges of our times.

Foreword

Climate change is one of the greatest challenges of our times. It is a challenge at multiple levels. Energy production and use is the primary source of most of the greenhouse gases responsible for global warming. Yet energy production and use is the key driver of economic growth and social welfare. Measures to mitigate climate change raise issues of development needs, economic competitiveness of countries, historical and contemporary responsibility, equity, and fair burden-sharing as well as technological and technical capabilities. Climate change is also a security and existential challenge to many countries. It has adverse effects on economic production systems, ecosystem health, human health and welfare, and the enjoyment of human rights. Projected impacts of temperature rises above 2°C include mass migrations, displacement of populations, and the disappearance of states. The scale, implications, and global nature of the problem dictate robust international cooperation within a structured framework. International law provides a framework for structured cooperation amongst states on key global challenges. It embodies mutual reassurances and multifarious reciprocal obligations amongst cooperating states. The need for an effective international framework for cooperation was recognized quite early in the diplomatic discourse on responses to climate change. The United Nations General Assembly (UNGA), in its resolution 43/53 of 6 December 1988, the earliest resolution on the issue, recognized that climate change is ‘a common concern of mankind’ and ‘determined that necessary and timely action should be taken to deal with climate change within a global framework’. To this end, in its Resolution 45/212 of 21 December 1990, it decided to establish a single intergovernmental negotiating process under the auspices of the UNGA for the preparation by an Intergovernmental Negotiating Committee of ‘an effective framework convention on climate change, containing appropriate commitments, and any related instruments as might be agreed upon . . .’. The United Nations Framework Convention on Climate Change (UNFCCC) was adopted in New York on 9 May 1992 and entered into force on 21 March 1994. It is a framework-legal instrument setting out broad objectives, general principles, and basic obligations. As was presaged in UNGA Resolution 44/207, the intent was that ‘concrete commitments’ would be contained in ‘associated protocols’. Consequently, the normative content of the emergent international climate change regime was significantly augmented through the adoption of the Kyoto Protocol in 1997 which

foreword   vii established individual, internationally legally binding emission targets for industrialized countries supported by a robust reporting, review, and compliance regime. Annual meetings of the Conference of the Parties to the Convention and the Conference of the Parties (COPs and CMPs) serving as the meeting of the Parties to the Kyoto Protocol have resulted in an important body of ‘soft law’ rules, implementation guidance, and institutional arrangements established through COP and CMP decisions. Thus, the UNFCCC with its near-universal membership has become the central focus of global efforts to address climate change. However, the slowness of the process and the apparent dysfunctional nature of its decision-making procedures have at times led to the questioning of its appropriateness as a forum for global solutions. This was acutely demonstrated in the various post-mortems that followed the Copenhagen debacle. The disenchantment has seen calls for fragmentation of the international regime through ‘plurilateralism’. Nevertheless, the UN in general and the UNFCCC in particular remain, in the view of many, the most representative and legitimate locus for international responses to climate change. The international climate change regime is currently in flux and on the cusp of two competing visions. The current negotiations under the Durban Platform point to a general rethinking of a ‘top-down’ approach of the Kyoto Protocol model with internationally binding quantified commitments supported by a rigorous compliance assessment and enforcement. A more flexible ‘bottom-up’ approach is characterized by nationally determined mitigation contributions, a diversity of mitigation actions, and legal bindingness at the domestic level supported by an international measurement, reporting, and verification system seems to be gaining some currency. The core principles underpinning the regime—that is, the principles of equity and common but differentiated responsibilities and respective capabilities—have come under fresh scrutiny. There is concerted political drive by some countries that the regime should transition from the binary world of 1992 and that there is need to reconceptualize the principle of common but differentiated responsibilities and respective capabilities as a dynamic concept that evolves with changing global economic realities and specific socio-economic circumstances of states. There is also growing interest in the specific role and contribution of non-state actors and of sub-national authorities within the international climate change regime. As a discipline, international climate change law is still in its infancy. Legal doctrine has always played a significant role in the evolution and development of new areas of law. It plays this role by delineating the province of the new discipline, clarifying its theoretical and conceptual underpinnings, and analysing its substantive institutional and normative content. The Oxford Handbook of International Climate Change Law is an important addition to the growing doctrinal work in this field. It analyses the foundations of international climate change law, its basic principles and concepts, the overlaps and articulation with other areas of international law, the institutional and governance arrangements, and its substantive normative content.

viii   foreword The volume is enriched by an examination of existing legal regimes in regions and countries that play key roles in international climate change diplomacy either because of their position as major emitters of greenhouse gases, their historical responsibilities and current capabilities, or their susceptibility to disproportionate adverse impacts of climate change. The Oxford Handbook of International Climate Change Law should be a useful companion to students of international climate change law, legal practitioners, policy-makers, and negotiators. Dan Bondi Ogolla, Ph.D. Coordinator and Principal Legal Adviser, UNFCCC Secretariat

Table of Contents

List of Abbreviations Notes on the Contributors

xiii xxi

PART I  INTRODUCTION 1. International Climate Change Law: Mapping the Field

3

Cinnamon P. Carlarne, Kevin R. Gray, and Richard G. Tarasofsky

2. Climate Change and International Law beyond the UNFCCC

26

3. Science and Climate Change Law—The Role of the IPCC in International Decision-making

55

4. Economics and International Climate Change Law

72

Alan Boyle and Navraj Singh Ghaleigh

Navraj Singh Ghaleigh Navraj Singh Ghaleigh

PART II  INSTITUTIONAL 5. The United Nations Framework Convention on Climate Change—The Basis for the Climate Change Regime

97

David Freestone

6. Compliance under the Evolving Climate Change Regime

120

7. The Global Regime for Climate Finance: Political and Legal Challenges

137

Sebastian Oberthür

Alexander Thompson

x   table of contents

PART III  CLIMATE CHANGE—PRINCIPLES AND EMERGING NORMS CONCEPTS IN INTERNATIONAL LAW 8. Precaution and Climate Change

163

Jonathan B. Wiener

9. Principles and Emerging Norms in International Law: Intra- and Inter-generational Equity

185

10. Common Concern of Humankind

202

11. Human Rights Principles and Climate Change

213

Catherine Redgwell Friedrich Soltau John H. Knox

PART IV  SETTING UP THE INTERNATIONAL MITIGATION REGIME: CONTENTS AND CONSEQUENCES 12. International Market Mechanisms

239

Shi-Ling Hsu

13. Legal Frameworks for Linking National Emissions Trading Systems

257

14. Carbon Leakage and the Migration of Private CO2 Emitters to other Jurisdictions

285

15. National Measures and WTO Consistency—Border Measures and other Instruments to Prevent Carbon Leakage and Level the Carbon Playing Field

313

16. The Design and Implementation of Greenhouse Gas Emissions Trading

332

Michael A. Mehling

Andrew Shoyer, Jung-Ui Sul, and Colette van der Ven

Francesco Sindico

Harro van Asselt

table of contents    xi

17. International Law and the Renewable Energy Sector

357

18. Intellectual Property and Climate Change, with an Emphasis on Patents and Technology Transfer

391

Martijn Wilder Am and Lauren Drake

Joshua D. Sarnoff

PART V  CLIMATE CHANGE LITIGATION 19. International Dispute Settlement

417

Roda Verheyen and Cathrin Zengerling

20. Institutions and Expertise: The Role of Science in Climate Change Lawmaking

441

21. Climate Change and Damages

464

22. Human Rights and Climate Change: Broadening the Right to Environment

495

Timothy Meyer

Christina Voigt

Philippe Cullet

PART VI  LIVING WITH CLIMATE CHANGE AND CLIMATE CHANGE ADAPTATION MEASURES 23. Climate Change-related Displacement of Persons

519

Jane McAdam

24. Climate, Oceans, and the Law of Special and General Adaptation 543 Josh Eagle and U. Rashid Sumaila

25. Forestry and Agriculture under the UNFCCC: A Jigsaw Waiting to be Assembled?

563

26. Climate Change and Disaster Law

588

Charlotte Streck and Darragh Conway Daniel Farber

xii   table of contents

PART VII  REGIONAL AND COUNTRY-SPECIFIC PERSPECTIVES 27. United States Climate Change Law

607

Michael B. Gerrard

28. Climate Change Policy and Law in China

635

29. Climate Change Law and Policy in the European Union

670

30. Climate Change Law and Policy in India

688

31. Russian Law on Climate Change

700

32. Brazilian Climate Change Law

724

33. The Least Developed Countries and Climate Change Law

740

34. Small Islands and the Big Issue: Climate Change and the Role of the Alliance of Small Island States

761

Index

779

Alex L. Wang

Sanja Bogojević

Deepa Badrinarayana

Anna Korppoo, Max Gutbrod, and Sergey Sitnikov Karen Alvarenga de Oliveira Joyeeta Gupta

Espen Ronneberg

List of Abbreviations

AAU assigned amount units AB32 California’s Global Warming Solutions Act ADFD Abu Dhabi Fund for Development ADP Ad Hoc Working Group on the Durban Platform AF Adaptation Fund AfCHPR African Commission on Human and Peoples’ Rights AfCtHPR African Court on Human and Peoples’ Rights AFOLU agriculture, forestry, and other land uses AGF High Level Advisory Group on Climate Change Financing AGGG Advisory Group on Greenhouse Gases AILAC Independent Alliance of Latin America and the Caribbean ANA National Water Agency (of Brazil) AOSIS Alliance of Small Island States APEC Asia-Pacific Economic Cooperation APG associated petroleum gas AR4 Fourth Assessment Report AR5 Fifth Assessment Report ASCM Agreement on Subsidies and Countervailing Measures ASEAN Association of Southeast Asian Nations AUD arbitrary or unjustifiable discrimination AWG-DPEA Ad Hoc Working Group on the Durban Platform for Enhanced Action AWG-KP Ad Hoc Working Group on the Kyoto Protocol AWG-LCA Ad Hoc Working Group on Long-term Cooperative Action AWK-KP Ad Hoc Working Group, Kyoto Protocol BASIC Brazil, South Africa, India, and China BC Canadian province of British Columbia BEE Bureau of Energy Efficiency BiNGO business-friendly international NGO BM&FBOVESPA Brazilian Mercantile and Futures Exchange and São Paulo Stock Exchange merged BNDES National Bank for Economic and Social Development (Brazil) Boiler MACT Boiler Maximum Achievable Control Technology BRIC Brazil, Russia, India, and China BRL Brazilian Real BTA border tax adjustments BUND German branch of Friends of the Earth BVRio Rio de Janeiro state government-created programme called Bolsa Verde CAA Clean Air Act

xiv   list of abbreviations CAFE CARICOM CBD CBDR CBDRRC CCD CCL CCS CCX CDIAC CDM CEA CEDAW

Corporate Average Fuel Economy Caribbean Community Convention on Biological Diversity common but differentiated responsibilities common but differentiated responsibilities and respective capabilities Convention to Combat Desertification Climate Change Levy carbon capture and storage Chicago Climate Exchange Carbon Dioxide Information Analysis Center clean development mechanism Council of Economic Advisers Convention on the Elimination of All Forms of Discrimination Against Women CEQ Council on Environmental Quality CERCLA Comprehensive Environmental Response, Compensation, and Liability Act CERD International Convention on the Elimination of All Forms of Racial Discrimination CERs Certified Emission Reductions CFC chlorofluorocarbon Ci-Dev Carbon Initiative for Development CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora CLRTAP Convention on Long-Range Transboundary Air Pollution CMP Conference of the Meeting of the Parties CO2 carbon dioxide CO2e carbon dioxide equivalent CODEMA Municipal Environmental Agency COP Conference of the Parties CP commitment period CRC Carbon Reduction Commitment CRU Climatic Research Unit CTCN Climate Technology Centre and Network CTF Clean Technology Fund DG DG Directorate-General DG CLIMA Directorate-General for Climate Action DNA Designated National Authorities DSB Dispute Settlement Body DSU Dispute Settlement Understanding ECJ European Court of Justice ECT Energy Charter Treaty ECtHR European Court of Human Rights EDPRS Economic Development and Poverty Reduction Strategy EEDI Energy Efficiency Design Index EEZ exclusive economic zone EGC European General Court

list of abbreviations    xv EIA US Energy Information Administration EIS environmental impact statement EITI energy-intensive and trade-intensive ENGO environmental non-governmental organization EPA Environmental Protection Agency EPCA Energy Policy and Conservation Act ERT expert review teams ERU Emission Reduction Unit ESA Endangered Species Act ET International Emissions Trading EU ETS European Union Emissions Trading System EUA European Union emissions allowances EVI Economic Vulnerability Index FAO Food and Agriculture Organisation FAZ Fundação Amazonia Sustentável FCCC Framework Convention on Climate Change FDI foreign direct investment FIELD Foundation for International Environmental Law and Development FMRL Forest Management Reference Levels FNMC National Fund on Climate Change FY Financial Year G20 Group of Twenty G77 Group of 77 G8 Group of Eight GAL global administrative law GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade GCF Green Climate Fund GCSDSIDS Global Conference on the Sustainable Development of SIDS GDP Gross Domestic Product GEF Global Environment Facility GFDRR Global Facility for Disaster Reduction and Recovery Gg gigagrams GHG greenhouse gas GNP gross national product GtCO2e Gigatons of carbon dioxide equivalent GW gigawatts ha hectares HAI Human Assets Index HCFC hydrochlorofluorocarbon HFC hafnium carbide IAC InterAcademy Council IACHR Inter-American Commission on Human Rights IAR International Assessment and Review ICA International Consultation and Analysis ICAO International Civil Aviation Organization ICC Inuit Circumpolar Conference

xvi   list of abbreviations ICCPR International Covenant on Civil and Political Rights ICESCR International Covenant on Economic, Social and Cultural Rights ICJ International Court of Justice ICSID International Centre for Settlement of Investment Disputes IEA International Energy Agency IEF Forest State Institute (Brazil) IEP Integrated Energy Policy IFFG In Fairness to Future Generations IGO International Governmental Organizations ILC International Law Commission IMF International Monetary Fund IMO International Maritime Organization INC Intergovernmental Negotiating Committee INDC Intended Nationally Determined Contributions INR Indian Rupee IP Intellectual Property IPCC Intergovernmental Panel on Climate Change IPTU Urban Property Tax (Brazil) IRA International Reserve Allowances IRENA International Renewable Energy Agency IRU International Relief Union ITLOS International Tribunal for the Law of the Sea IUCN International Union for Conservation of Nature IUU illegal, unregulated, and unreported (fishing) JISC Joint Implementation Supervisory Committee JNNSM Jawaharlal Nehru National Solar Mission KP Kyoto Protocol LCFS Low Carbon Fuel Standard LDC Least Developed Country LDCF Least Developed Country Fund LEED Leadership in Energy and Environmental Design LLDC Landlocked Developing Countries LRD legitimate regulatory distinction LUCF land use change and forestry LULUCF land use, land use change, and forestry MAC Market Advisory Committee MACT Maximum Achievable Control Technology MARPOL International Convention for the Prevention of Pollution from Ships MDB multilateral development banks MDG Millennium Development Goals MEA multilateral environmental agreements MFN most favoured nation MoEF Ministry of Environment and Forests MOP Meeting of the Parties to the Kyoto Protocol MRV measure, report, and verify; also measurement, reporting, and verification

list of abbreviations    xvii MtCO2e million metric tonnes of carbon dioxide equivalent MW megawatts NAMA Nationally Appropriate Mitigation Actions NAP National Adaptation Plans NAPA National Adaptation Plans of Action NAPCC National Action Plan on Climate Change NCP National Contact Points NEPA National Environmental Policy Act NGO non-governmental organization NHTSA National Highway Traffic Safety Administration NOx nitrogen oxides NRC National Research Council NSPS New Source Performance Standard OAU Organization of African Unity ODA Official Development Assistance ODK Open Data Kit ODS ozone-depleting substances OECD Organisation for Economic Co-operation and Development OHCHR Office of the High Commissioner for Human Rights OPEC Organization of the Petroleum Exporting Countries oPt occupied Palestinian territory PCA Permanent Court of Arbitration PES payment for environmental services PICs Pacific Island Countries PIL private international law PM2.5 fine particulates PNMC National Policy on Climate Change PP Precautionary Principle PPA power purchase agreement ppm parts per million PPM process and production method PRSP Poverty Reduction Strategy Papers PSAG Private Sector Advisory Group PSD prevention of significant deterioration PV photovoltaic PX Paraxylene QELRC Quantified Emission Limitation and Reduction Commitments R&D research and development RDD&D research, development, demonstration and deployment RE renewable energy REC renewable energy certificate REDD reducing emissions from deforestation and forest degradation REDD+ REDD, which also includes conservation, sustainable management of forests, and enhancement of forest carbon stocks REEEP Renewable Energy and Energy Efficiency Partnership RFF Resources for the Future

xviii   list of abbreviations RGGI Regional Greenhouse Gas Initiative RIA regulatory impact assessment RMU Removal Units RUB Russian rubles SBI Subsidiary Body for Implementation SBSTA Subsidiary Body for Scientific and Technological Advice SC Security Council SCCF Special Climate Change Fund sCER secondary Certified Emissions Reductions SCM Subsidies and Countervailing Measures SDPC State Development and Planning Commission SE4ALL Sustainable Energy for All SEA strategic environmental assessment SEC Securities and Exchange Commission SEEMP Ship Energy Efficiency Management Plan SIDS Small Island Developing States SO2 Sulphur dioxide SPM Summary for Policymakers SPREP South Pacific Regional Environmental Programme SRFC Sub-Regional Fisheries Commission SRM Solar Radiation Management SSRN Social Science Research Network TBT Technical Barriers to Trade TEC Technology Executive Committee TEPCO TEPCO (the Tokyo Electric Power Co TFEU Treaty for the Functioning of the European Union TNC The Nature Conservancy (Brazil) TPES Total Primary Energy Supply tpy tons per year TRIMs Agreement on Trade-Related Investment Measures TRIP Trade-Related Aspects of Intellectual Property Rights TTE team of technical experts UNCED United Nations Conference on Environment and Development UNCLOS United Nations Convention on the Law of the Sea UNDESA United Nations Department for Economic and Social Affairs UNDP United Nations Development Programme UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNFCCC United Nations Framework Convention on Climate Change UNFSA United Nations Fish Stocks Agreement UNGA United Nations General Assembly UNHCR United Nations High Commissioner for Refugees UNHRC United Nations Human Rights Council UNHRC United Nations Human Rights Commission UNISDR United Nations International Strategy for Disaster Reduction

list of abbreviations    xix UNSC VAT WHO WMO WTO

United Nations Security Council value added tax World Health Organization World Meteorological Organization World Trade Organization

Notes on the Contributors

Karen Alvarenga de Oliveira Ph.D., is Team Leader, Writer, and Editor at Earth Negotiations Bulletin, International Institute for Sustainable Development. Deepa Badrinarayana is Associate Professor, Chapman University School of Law. Sanja Bogojević is Associate Professor in Environmental Law, Lund University. Alan Boyle is Professor of Public International Law, University of Edinburgh and barrister, Essex Court Chambers. Darragh Conway is a lawyer specializing in international environmental and climate change law at Climate Focus. Philippe Cullet is Professor of International and Environmental Law at SOAS. Lauren Drake is a lawyer at Baker & McKenzie, Sydney. Josh Eagle is Solomon Blatt Professor of Law at the University of South Carolina School of Law. Daniel Farber is Sho Sato Professor of Law, University of California, Berkeley. David Freestone is Visiting Scholar and Professorial Lecturer in Law at George Washington University, Washington, DC. Michael Gerrard is Andrew Sabin Professor of Professional Practice at Columbia Law School. Navraj Singh Ghaleigh is Lecturer in Public Law at the University of Edinburgh and a barrister. Joyeeta Gupta is Professor of Environment and Development in the Global South at the Group on Governance and Inclusive Development of the Amsterdam Institute for Social Science Research of the University of Amsterdam and at UNESCO-IHE Institute for Water Education, Delft. Max Gutbrod is a partner at CIS Limited. Shi-Ling Hsu is Larson Professor at Florida State University College of Law. John H. Knox is Henry C. Lauerman Professor of International Law at Wake Forest University School of Law.

xxii    notes on the contributors Anna Korppoo is Senior Research Fellow at Fridtjof Nansen Institute. Jane McAdam is Director at the Andrew & Renata Kaldor Centre for International Refugee Law, UNSW, Scientia Professor of Law and Australian Research Council Future Fellow, UNSW, and Non-resident Senior Fellow, Brookings, Washington, DC. Michael A. Mehling is Executive Director, Center for Energy and Environmental Policy Research, Massachusetts Institute of Technology, and Visiting Professor at the University of Strathclyde. He is also Editor-in-Chief of Carbon & Climate Law Review. Timothy Meyer is Professor of Law and Enterprise Scholar at Vanderbilt University Law School. Sebastian Oberthür is Academic Director at the Institute for European Studies. Catherine Redgwell is Chichele Professor of Public International Law and Fellow of All Soul’s College, University of Oxford. Espen Ronneberg is Climate Change Adviser at the Secretariat of the Pacific Regional Environment Programme, Apia, Samoa. Joshua D. Sarnoff is Professor of Law at DePaul University College of Law. Andrew Shoyer is a partner in the Washington, DC office of Sidley Austin LLP. Francesco Sindico is reader in International Environmental Law, University of Strathclyde Law School, Glasgow, Scotland, UK and Director of the Strathclyde Centre for Environmental Law and Governance. Sergey Sitnikov is a partner at Causa Privata Law Firm, and Visiting Professor at MGIMO University, Russia. Friedrich Soltau is Sustainable Development Officer, Division for Sustainable Development at the United Nations Department of Economic and Social Affairs. Charlotte Streck is Director at Climate Focus. Jung-ui Sul is an associate in the Brussels office of Sidley Austin LLP. Rashid Sumaila is Director and Professor at the Fisheries Economics Research Unit, Fisheries Centre, University of British Columbia. Alexander Thompson is Associate Professor of Political Science and a Faculty Affiliate of the Mershon Center for International Security Studies at The Ohio State University. Harro van Asselt is Research Fellow at the Stockholm Environment Institute and Visiting Research Associate, University of Oxford. Colette van der Ven is an associate in the Geneva office of Sidley Austin LLP.

notes on the contributors    xxiii Roda Verheyen is a partner at Rechtsanwälte Günther, Hamburg. Christina Voigt is Professor at the Department of Public and International Law, and coordinator for the environmental law sector at the Center of Excellence, PluriCourts, at the University of Oslo, Norway. Alex L. Wang is Assistant Professor of Law at UCLA School of Law. Jonathan Wiener is Perkins Professor of Law, and Professor of Environmental Policy and Public Policy, at Duke University and is University Fellow, at the Resources for the Future (RFF). Martijn Wilder AM is a partner at Baker & McKenzie, Sydney. Cathrin Zengerling is a lawyer at Rechtsanwälte Günther, Hamburg.

Part I

INTRODUCTION

Chapter 1

INTERNATIONAL CLIMATE CHANGE LAW MAPPING THE FIELD

Cinnamon P. Carlarne, Kevin R. Gray*, and Richard G. Tarasofsky*

1. The Emergence of International Climate Change Law

4

2. Evolution of the Field

7

3. The Legal Framework for Climate Change

14

4. Conclusion: The Future of International Climate Change Law

23

*  The views expressed in the book are those of the authors and in no way do they represent the views of the Government of Canada, the Canadian Department of Justice or the Global Affairs Canada.

4   part i. introduction

1.  The Emergence of International Climate Change Law The field of international climate change law emerged and evolved rapidly. In the span of a quarter of a century, the international community identified climate change as a global problem, negotiated a framework treaty and a protocol to define the parameters of a global response, and developed domestic laws and regulations to implement such a response through a network of complex legal and political agreements at every level of governance. In 1990, the United Nations General Assembly (UNGA) initiated the development of the field of international climate change law by passing Resolution 45/212 that launched formal negotiations for an international climate change treaty.1 Within two years, these negotiations culminated in the adoption of the United Nations Framework Convention on Climate Change (UNFCCC).2 The UNFCCC, as a framework instrument, sets the parameters for global discourse and provides an essential forum for dialogue and decision-making on climate change matters. It is and always has been the focal point for the development of the norms and principles of international climate change law. The UNFCCC is complemented by the hard-fought-for Kyoto Protocol. The Kyoto Protocol is a treaty that sets out legally binding emission reduction obligations for developed country Parties, provides for a series of market-based mitigation tools, and generally adds further contour to the legal framework established under the UNFCCC. Together, the UNFCCC and the Kyoto Protocol form the backbone of the international climate change regime. But, it is a backbone that is bending under the weight of ongoing patterns of climate change coupled with the pressure exerted on the system by State and non-State actors in the international community to respond to changing physical, scientific, political, and economic realities. Indeed, it is now evident that the Kyoto Protocol itself is no longer considered by the international community to be an appropriate basis for moving forward in the longer term, given that its second commitment period for emission reduction obligations,3 which is still not in force at the time of writing, will not be followed by a subsequent commitment period. The international climate change regime, thus, stands at a crossroads. There is an international law foundation in place but the structure has not yet produced   Protection of Global Climate for Present and Future Generations of Mankind, G.A. Res. 45/212, UN Doc. A/RES/45/212 (21 December 1990). 2   9 May 1992, 1771 UNTS 107, available at (hereinafter ‘UNFCCC’). 3   Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol on its Eighth Session, held in Doha from 26 November to 8 December 2012, Doha Amendment to the Kyoto Protocol, Decision 1/CMP.8, UN Doc FCCC//KP/CMP/2012/13/Add.1 (28 February 2013). 1

1. international climate change law   5 the type of changes in state behaviour that are necessary to effectively address the contemporary challenges of climate change; it is a foundation in need of further development if not reconceptualization. Recognizing this need, the Parties to the UNFCCC are currently engaged in negotiations with the ultimate goal of creating ‘a protocol, another legal instrument or an agreed outcome with legal force’ for the period from 2020 onwards.4 The mandate for these negotiations derives from the Durban Platform for Enhanced Action (the Durban Platform), adopted in December 2011. The vague wording in the Durban Platform and the absence of any language about binding commitments both differ from the path set forth in the 1990 UNGA Resolution with its call for a framework convention that includes binding obligations, and reflects continuing resistance by a few developing country Parties to agree to legally binding commitments that would be ‘applicable to all’. The resistance poses a fundamental challenge that the international community must overcome in order to reach a consensus on how the international climate change regime and, in particular, the law that underscores the regime, can evolve. The ongoing negotiations also reveal how efforts to develop international climate change law challenge the traditional paradigm of international environmental law and, in particular, traditional reliance on treaties with enforceable obligations. The vigour of the existing international law regimes developed in the last century is being put to the test. The uncertainty about the future legal regime is juxtaposed with increasing certainty about human-induced climate change. In 2014, the lead scientific body on climate change—the Intergovernmental Panel on Climate Change (IPCC), which Ghaleigh in Chapter 3 calls ‘a remarkable success’ despite its weak mandate— released its Fifth Assessment Report (AR5).5 This Report, which is the most comprehensive assessment of climate change to date, warns of the increasing scope and intensity of the effects of climate change on human and non-human life. In critical part, the AR5 concludes that ‘[h]‌uman influence on the climate system is clear’6 and that: [w]‌arming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the 4  Report of the Conference of the Parties on its Seventeenth Session, held in Durban from 28 November to 11 December 2011, Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action, Decision 1/CP.17, Preamble, UN Doc FCCC/CP/2011/9/Add.1, (15 March 2012). 5   IPCC, Fifth Assessment Report (AR5), (accessed 8 July 2015). More than 830 authors representing up to eighty-five countries contributed to this Report. IPCC, Activities, (accessed 8 July 2015). 6   IPCC, (2014), Fifth Assessment Report (AR5): Climate Change 2014: Impacts, Adaptation and Vulnerability, Working Group I, Summary for Policy Makers 15, .

6   part i. introduction concentrations of greenhouse gases have increased.7 . . . Each of the last three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850.8

The AR5 confirms that unless the international community modifies its collective behaviour—by reducing emissions of greenhouse gases substantially—we will witness further warming of the planet and continued changes in all components of the climate system. These changes will be significant.9 The AR5 deepens our understanding of what we already knew: climate change creates new threats to the planet, exacerbates existing dangers, and contributes to the perpetuation of existing social and economical inequalities at both the global and local levels. Scientific consensus creates the imperative to act. Yet, the political will of States has not risen to the challenge. Despite these failings, there is still near-unanimous political consensus on the need to act. Engagement in the UNFCCC process is nearly universal, with 195 Parties having ratified the treaty.10 This means that 195 States (as well as a regional economic organization), representing all United Nations (UN) Member States, concur that ‘human activities have been substantially increasing the atmospheric concentrations of greenhouse gases, that these increases enhance the natural greenhouse effect, and that this will result on average in an additional warming of the Earth’s surface and atmosphere and may adversely affect natural ecosystems and humankind’.11 They also share the goal to ‘stabiliz[e]‌ . . . greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system’.12 Within this context, The Oxford Handbook on International Climate Change Law offers insight into the evolving shape and structure of international climate change law. As editors, we have attempted to compile a book that delineates climate change law, re-enforcing how this area of international law deserves specific scholarly attention. International climate change law is a unique area of international law that demands comprehensive analysis and thinking. Although climate change law can be considered a subset of international environmental law, the range of cross-cutting themes and interdisciplinary considerations (e.g. energy, trade, forests, agriculture), coupled with its contemporary significance and the fluid context of international negotiations, highlights the need for a publication dedicated to this unique area of international law. This chapter explores the evolution of 8   Ibid, at 4.   Ibid, at 5.   Ibid, at 20 (According to the IPCC, ‘[g]‌lobal surface temperature change for the end of the twenty-first century is likely to exceed 1.5°C relative to 1850 to 1900 for all RCP scenarios except RCP2.6. It is likely to exceed 2°C for RCP6.0 and RCP8.5, and more likely than not to exceed 2°C for RCP4.5. Warming will continue beyond 2100 under all RCP scenarios except RCP2.6’). 10   UNFCCC, Status of Ratification of the Convention, (accessed 11 March 2014). There are now 195 State Parties that have ratified the UNFCCC, while there are 192 Parties that have ratified the Kyoto Protocol. 11 12  UNFCCC, supra note 2, Preamble.  UNFCCC, supra note 2, Article 2. 7

9

1. international climate change law   7 international climate change law as revealed through international negotiations, and examinations of the norms, systems, actors, and debates that shape and inform the field.

2.  Evolution of the Field Although international climate change law has its grounding in the UNFCCC and the Kyoto Protocol, the antecedents for the field stem from the basic tenets of inter­national environmental law. This includes the international laws of state ­responsibility,13 the international treaties governing transboundary air pollution,14 as well as the normative principles that underlie the foundations of international environmental law (e.g. common but differentiated responsibility, the ‘polluter pays’ principle, and the common heritage of humankind).15 The corpus of inter­national environmental law, including both customary international law and general principles, has set the foundation for climate change law. However, climate change law forged its own identity once the UNFCCC was concluded. As discussed in detail by David Freestone in Chapter 5, the UNFCCC is a framework convention signed in 1992. The UNFCCC provides for ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system’.16 Further, it establishes the fundamental principles underlying the development of international climate change law, including common but differential responsibilities and respective capabilities,17 precaution,18 as well as Principle 2 of the Rio Declaration.19 Following the entry into force of the UNFCCC in 1994,20 the Parties began negotiations on a protocol that would delineate State roles and responsibilities. These negotiations culminated in 1997 with the conclusion of the Kyoto Protocol, which subjects developed country Parties to explicit targets and timetables in meeting   Trail Smelter Arbitral Tribunal Decision (United States v Canada), 11 March 1941, Ad Hoc International Arbitral Tribunal, 3 UN Rep. Intl. Arb. Awards 1911, 1938 (1941). 14  E.g. Convention on Long Term Transboundary Air Pollution (Geneva, 13 November 1979), UKTS 57 (1983), Cmd. 9034, TIAS No. 10521, 18 ILM 1442 (1979). 15   All of these principles are reflected, either explicitly or by implication, in the UNFCCC and the Kyoto Protocol. 16 17  UNFCCC, supra note 2, Article 2.  UNFCCC, supra note 2, Articles 3(1), 4(1). 18  UNFCCC, supra note 2, Article 3(3). 19   Rio Declaration on Environment and Development, (1992) 31 ILM 876. See UNFCCC, Preamble. 20   UNFCCC, supra note 2. Opened for signature 9 May 1992, and entered into force 21 March 1994. 13

8   part i. introduction their obligations to reduce global greenhouse gas emissions.21 Developing country Parties were not assigned any emission reduction targets. From an early point in international climate change negotiations, a handful of States have played a pivotal role in shaping the regime. In 1997, for example, the United States was one of the key architects of the Kyoto Protocol. It was also the largest net global greenhouse gas emitter at the time the Protocol was negotiated. Accordingly, climate negotiators knew that the United States’ response to the Protocol was critical. If the United States ratified the Protocol, then two primary results would follow: (1) the largest global polluter would agree to meaningful emission reductions, thus significantly limiting free-rider problems and offering the real possibility of net global emission reductions; and (2) the international climate change regime would receive an important boost of support. This would help legitimize the institution in the eyes of the global community and create added incentives for both developed and developing country States to engage in the process moving forward. Following the negotiation of the Kyoto Protocol, the newly minted Bush Administration signaled that the United States would not be ratifying the Protocol. There initially remained, however, some hope that, due to international pressure, the United States would eventually reverse course. As a result, while the European Union (EU) and other supporters of the Protocol made efforts to increase the number of ratifications so as to allow the Protocol to enter into force, both State and non-State actors pursued a diverse set of strategies designed to incentivize US reengagement in multilateral efforts to address climate change. These efforts vis-à-vis the United States came to naught. Nonetheless, enough States ratified the Kyoto Protocol, with Russia’s being the final necessary ratification that resulted in the agreement entering into force in 2005.22 From a legal point of view, the most significant legal development that enabled many States to ratify was the Marrakesh Accords agreed at the seventh Conference of the Parties (COP-7) in 2001, which set out detailed rules on implementing the Protocol. These included the rules on the flexible mechanisms as well as the compliance regime. During the interim period between adoption and ratification of the Protocol, the greenhouse gas footprint of the rapidly developing economies of developing country Parties grew exponentially. In particular, emissions in China drastically increased beginning in 2002. By 2006, China had surpassed the United States as the largest net emitter of greenhouse gas emissions.23 21   Kyoto Protocol to the United Nations Framework Convention on Climate Change, opened for signature 16 March 1998, 37 ILM 22 (entered into force 16 February 2005) (hereinafter ‘Kyoto Protocol’). 22  Ibid. 23   In 2007, the US Energy Information Administration (EIA) projected that ‘by 2030, carbon dioxide emissions from China and India combined are projected to account for 31 percent of total world emissions’. Energy Info. Admin., US Dept of Energy DOE/EIA-0484(2007), International Energy Outlook 74–86, .

1. international climate change law   9 After a decade of concerted efforts by the Parties to ensure that the Protocol was ratified and to push for collective action in its implementation, a roadmap for negotiating a post-2012 climate agreement was accepted at the 13th COP in Bali, Indonesia in 2007. The tone of the negotiations in Bali reflected a turn in global climate negotiations. The growing presence of civil society in these negotiations reflected mounting frustration with global climate change politics. Both members of civil society and some States began to redirect the conversation during the negotiations away from the failures of key developed country Parties to commit to obligations towards a more nuanced discussion about the relative roles and responsibilities of developed and developing country States. By 2007, the global community no longer seemed to hold onto hope that the United States would reengage meaningfully in global climate change negotiations. At the same time, China and other States with rapidly developing economies that have become some of the biggest producers of greenhouse gas emissions, remained adamantly opposed to committing to legally binding obligations to reduce greenhouse gas emissions. By 2007, the role of the rapidly developing country Parties in a negotiated solution to international climate change had become one of utmost importance. In the wake of unprecedented rates of emissions growth in these States, the global community had to adjust to a new reality: achieving meaningful emission reductions could not be accomplished without full engagement on the part of the rapidly developing country Parties. Between 2007 and 2009, progress was made in developing negotiating texts for the all-important 2009 UNFCCC COP and the Meeting of the Parties of the Kyoto Protocol (MOP) in Copenhagen. Following multiple years of stalled negotiations, the year 2009 brought the promise of progress. With Barack Obama assuming the Presidency of the United States on a platform that promised to prioritize its domestic efforts to address climate change, and with the new administration following up shortly thereafter with modifications to its US climate change law and policy, progress seemed possible. As the 2009 COP neared, the United States, China, India, and Brazil indicated they were willing to come to the negotiating table. The Copenhagen Climate Change Conference (COP-15/MOP-5) was an important turning point in the development of the climate change regime. Following multiple years of negotiations defined by frustrations directed towards the United States and the rapidly developing country Parties (particularly China and India), the Copenhagen Conference marked, for the first time since the 1997 meeting in Kyoto where the Protocol was adopted, a credible possibility that all major emitters would actively engage in climate change negotiations with a view to raising collective ambition. The Copenhagen meeting proved to be a tumultuous event wherein tempers and emotions ran high and efforts to negotiate a substantive way forward to respond to

10   part i. introduction climate change proved elusive. Unlike the meetings of the preceding years where the negotiations were largely left to lower-level diplomats and ministers, with a modest role for the handful of Heads of State in attendance, in Copenhagen, the hard work of the State negotiators was ultimately overshadowed by the presence of Heads of State from the United States, Europe, China, India, and elsewhere. In the end, the primary output of the Copenhagen Conference was a watereddown instrument with little gravitas: the Copenhagen Accord.24 Heads of State and negotiators representing the United States, China, India, Brazil, and South Africa, drafted the Copenhagen Accord during the course of a private meeting. The threepage Accord committed parties to continuing efforts to facilitate long-term cooperative action to combat climate change and to providing ‘[s]‌caled up, new and additional, predictable and adequate funding’.25 It also laid the groundwork for a new ‘Green Climate Fund’ (see Thompson, Chapter 7).26 However, this agreement was not formally adopted by the COP, having been objected to by a handful of small developing country Parties. The fact that international consensus could be thwarted by a small number of negotiating Parties, fundamentally questioned how international climate change issues can be effectively governed by the international community. Ultimately, the COP-15 failed to live up to the expectations of many that were kindled in the run-up to Copenhagen—that being the conclusion of an agreement including legally binding emission reduction obligations—but it gave the UNFCCC Parties a basis upon which to move forward. For example, the Copenhagen Accord called for deep cuts in emissions premised on the need to ‘[h]‌old the increase in global temperature below 2 degrees Celsius’,27 a benchmark that has underpinned subsequent negotiations. It also set up a process by which all Parties, pledged mitigation actions—marking the first time that developing country Parties made such commitments in the UNFCCC forum. Beyond mitigation, the Accord emphasized the urgent need for ‘[E]‌nhanced action and international cooperation on adaptation’,28 a theme that the COP has since prioritized. Similarly, as noted above, the Accord called for the creation of a ‘Green Climate Fund’ that would constitute the operating entity of the financial mechanism for the UNFCCC.29 Thompson provides a comprehensive account of 24  UN Framework Convention on Climate Change Conference of the Parties, Copenhagen, Denmark, 7–19 December 2009, Report of the Conference of the Parties on its Fifteenth Session, Decision 2/CP.15, UN Doc FCCC/CP/2009/11/Add.1 4 (30 March 2010), available at (hereinafter ‘Copenhagen Accord’). 25   Ibid, at 4. 26   Ibid, para 10. See also Rob Fowler, Analysis of the Copenhagen Accord: An Initial Assessment of the Copenhagen Outcomes, Teaching Climate/Energy Law & Policy, available at (accessed 8 July 2015). 27   Copenhagen Accord, supra note 24, at 5, para 2. 28   Copenhagen Accord, supra note 24, para 3. 29   Copenhagen Accord, supra note 24, para 10.

1. international climate change law   11 the Fund in Chapter 7. Developed country Parties agreed to mobilize (from public and private sources) US$100 billion per year starting from 2020. The COP has subsequently followed through in setting up the Green Climate Fund. Finally, the Accord called for the creation of a new mechanism for enhancing technology development and transfer. At the subsequent COP, held in Cancún in 2010 (COP-16/MOP-6), the Parties concluded a set of agreements, known as the Cancun Agreements.30 In these Agreements, the key components of the Copenhagen Accord were formalized and expanded on through decisions with respect to monitoring mitigation efforts, developing the principles of the new Green Climate Fund, creating a new mechanism to facilitate technology development and transfer, and establishing the Cancún adaptation framework to facilitate action on adaptation, including the creation of a new Adaptation Committee. In key part, the Cancun Agreements reaffirmed the need to achieve cuts in greenhouse gas emissions ‘deep enough to hold the increase in global average temperature below 2°C above preindustrial levels’.31 By the time COP-17 began on 28 November 2011 in Durban, South Africa, negotiators were more pragmatic in their efforts to achieve a consensus, bearing in mind the experiences leading up to the Copenhagen COP. This is not to say that many State and non-State actors did not continue to push for a comprehensive, legally binding framework that would contain further emission reduction commitments; they did. Parties such as the small island States, the EU, and those from the ‘umbrella group’ consisting of, inter alia, the United States, Canada, Australia, Russia, and Norway, continued to pursue a legally binding instrument.32 The primary outcome of COP-17 was the Durban Platform for Enhanced Action.33 In two pages, the Durban Platform for Enhanced Action created a roadmap for the   See generally, Report of the Conference of the Parties on its Sixteenth Session, held in Cancún from 29 November to 10 December 2010, The Cancun Agreements: Outcome of the Work of the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention, Decision 1/CP.16, UN Doc FCCC/CP/2010/7/Add.1 (15 March 2011), available at . 31   Ibid, at para. 4. 32   See e.g. Press Release, Council of the European Union, Environment (10 October 2011), available at declaring that 30

[t]‌he E.U. remains of the view that a single legally binding instrument would be the best framework for the period after 2012, but the Council agreed in confirming the EU’s openness to a second commitment period [to the Kyoto Protocol], on the condition that it should be the last one before convergence between the Kyoto Protocol and Convention outcomes, and that in any case it should last no longer than 2020. 33  Framework Convention on Climate Change, Report of the Conference of the Parties on its Seventeenth Session, 28 November–11 December 2011, Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action, Decision 1/CP.17, Preamble, UN Doc FCCC/CP/2011/9/ Add.1 (15 March 2012).

12   part i. introduction next three years of negotiations with the end goal being the completion of a new global agreement by 2015, as described above. Beyond this, the Durban meeting resulted in other noteworthy developments. First, one of the most significant developments in Durban was the COP Decision on the Green Climate Fund, which set out the Fund’s broad design.34 This fulfilled a commitment made by developed country Parties in the Copenhagen Accord, which proved essential in securing developing country States’ support for the entire package of decisions adopted in Durban. Second, the Parties to the Kyoto Protocol, noting the ‘importance of ensuring continuity in mitigation action’,35 saved the Protocol from falling into desuetude by setting out a second emission reduction commitment period that began on 1 January 2013 that is scheduled to end on 31 December 2020.36 The salvaging of the Protocol is legally significant because the mechanisms under the climate change regime will continue (see Freestone, Chapter 5). For instance, the second commitment period has prolonged the use of the project-based Clean Development Mechanism.37 This reinforces support for the existing legal infrastructure and system already established in international climate change law, even amidst uncertainty over the longer-term future direction of the climate regime. The third significant development at COP-17 was the progress made on the issue of adaptation. In Durban, the COP adhered to the proposition set forth at COP-16 in Cancún that ‘[a]‌daptation must be addressed with the same priority as mitigation and requires appropriate institutional arrangements to enhance adaptation action and support’.38 In key part, the COP agreed on the composition of, and modalities

34   Report of the Conference of the Parties on its Seventeenth Session, 28 November–11 December 2011, Addendum, Launching the Green Climate Fund, Decision 3/CP.17, UN Doc FCCC/CP/2011/9/ Add.1 (15March 2012). 35   See Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol on its Seventh Session, held in Durban from 28 November to 11 December 2011, Outcome of the work of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol at its Sixteenth Session, Decision1/CMP.7, FCCC/KP/CMP/2011/10/Add.1 (15 March 2012), available at . 36  Ibid. 37   Ibid. Decision 2/CMP.7. See also UNFCCC, REDD Web Platform, ; Carbon Planet White Policy, The History of REDD Policy (2009), available at (accessed 28 September 2015). 38  Report of the Conference of the Parties on its Sixteenth Session, held in Cancún from 29 November to 10 December 2010, The Cancun Agreements: Outcome of the Work of the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention, Decision 1/CP.16, UN Doc FCCC/CP/2010/7/Add.1 (15 March 2011), available at (accessed 25 September 2015).

1. international climate change law   13 and procedures for, the Adaptation Committee,39 and agreed upon a decision on National Adaptation Plans (NAPs).40 Following the basic framework and pursuing the call for action issued in Cancún, the COP formalized the structure for the Adaptation Committee with the objective of finalizing it before COP-18. Fourth, the COP continued to develop a system to measure, report, and verify (MRV) Parties’ greenhouse gas emissions and the actions taken to reduce them.41 This was done through the adoption of revised guidelines for developed country Parties’ annual greenhouse gas inventories. The guidelines provide a platform for ensuring that these inventories are ‘transparent, consistent, comparable, complete, and accurate’,42 although they leave questions concerning national reporting by developing country Parties unanswered. Nevertheless, the progress in measurement, reporting, and verification was evident in the Parties agreeing to a common set of guidelines to ensure regular and consistent reporting of emissions. In the years following COP 17, the Parties to the UNFCCC addressed individual issues, such as: adopting the amendments to the Kyoto Protocol in Doha that created the second commitment period, adopting a set of decisions on Reduced Emissions from Deforestation and Forest Degradation (REDD+), agreeing upon a new mechanism to address loss and damage caused by climate change,43 and developing the framework for post-2020 climate action based on a system of Intended Nationally Determined Contributions (INDCs).44 Further, the Parties made progress towards laying the groundwork for a new global agreement. Leading into COP-21 to take place at the end of 2015, the Parties to the UNFCCC continue to develop the terrain of international climate change law. At the time of this publication, the possibility of creating a legally binding agreement still remains on the table.  Report of the Conference of the Parties on its Seventeenth Session, held in Durban from 28 November to 11 December 2011, Outcome of the Work of the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention, Decision 2/CP.17, UN Doc FCCC/CP/2011/9/Add.1 (15 March 2012). 40  Report of the Conference of the Parties on its Seventeenth Session, held in Durban from 28 November to 11 December 2011, National Adaptation Plans, Decision 5/CP.17, UN Doc FCCC/ CP/2011/9/Add.1 (10 December 2011; 15 March 2012). 41  Report of the Conference of the Parties on its Seventeenth Session, held in Durban from 28 November to 11 December 2011, Revision of the UNFCCC reporting guidelines on annual inventories for Parties included in Annex I to the Convention, Decision 15/CP.17, UN Doc FCCC/CP/2011/9/Add.2 (15 March 2012), available at . 42  Ibid. 43  See UNFCCC, Warsaw Mechanism for International Loss and Damage Associated with the Climate Change Impacts, (accessed 25 September 2015). 44  Report of the Conference of the Parties on its Twentieth Session, held in Lima from 1 to 14 December 2014, Lima Call for Climate Action, Draft Decision 1CP/.20, UN Doc FCCC/CP/2014/10/ Add.1 (1 February 2015). 39

14   part i. introduction

3.  The Legal Framework for Climate Change 3.1 Principles and Emerging Norms The UNFCCC firmly places ethical concerns at the centre of the international climate change regime. In characterizing the Earth’s climate system as being of common concern to humankind (Soltau, Chapter 10), promoting a precautionary approach to addressing climate change (Wiener, Chapter 8), and articulating concerns about future generations and intra- and inter-generational equity (Redgwell, Chapter 9), the UNFCCC establishes a normative framework that supports ethical grounds for decision-making. Yet the implementation of these underlying norms remains a constant point of consternation for States, because the drivers of implementation operate firmly in the realm of national interests and realpolitik. A particular point of normative controversy concerns the implementation of the principle of common but differentiated responsibilities (CBDR). The UNFCCC provides that Parties to the treaty ‘should protect the climate system . . . on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities’.45 This provision sets the parameters for one of the most salient ethics-based climate debates: what does common but differentiated responsibilities mean and how should it be realized? There are numerous examples of treaties that differentiate the responsibilities of States.46 The specific phrase ‘common but differentiated responsibilities’ was first formally used in 1992 in Principle 7 of the Rio Declaration on Environment and Development.47 That same year, the UNFCCC became the first multilateral environmental agreement to include the phrase.48 In the UNFCCC, the phrase is suggests that the international community shares a common responsibility  UNFCCC, supra note 2, Article 3(1).  See Christopher Stone, ‘Common but Differentiated Responsibilities in International Law’ (2004) 98 AJIL 276, 278. The 1972 Stockholm Declaration laid the foundations for CBDR in environmental law: 45

46

Without prejudice to such criteria as may be agreed upon by the international community, or to standards which will have to be determined nationally, it will be essential in all cases to consider the systems of values prevailing in each country and the extent of the applicability of standards which are valid for the most advanced countries but which may be inappropriate and of unwarranted social cost for the developing countries. ‘Report of the United Nations Conference on the Human Environment’ (Stockholm, Sweden, 5–16 June 1972) (16 June 1972) UN Doc A/CONF.48/14. 47   Rio Declaration, supra note 19, principle 7; UNFCCC, supra note 2, Article 3. 48  UNFCCC, supra note 2, Article 3.

1. international climate change law   15 for  protecting the global atmosphere, but that the responsibility for addressing global climate change should be differentiated among States (arguably) based on historical contribution to the problem as well as present capacity to respond.49 Inclusion of CBDR provisions in the UNFCCC divided the international community. Many developed country Parties, including the United States, resisted the inclusion of CBDR, fearing that it would create additional legal obligations. Developing country Parties were more inclined to support CBDR as it allocates more of the burden of combatting climate change to developed country Parties. Ultimately, the CBDR principle was included and emerged as the ‘overall principle guiding future development of the regime’,50 although it is important to note that the addition of the words ‘and respective capabilities’ mark an important departure from the usual CBDR formulation, particularly as it appears in Article 4(1) of the UNFCCC, which creates obligations for all parties. Debate surrounding the legal meaning and application of the CBDR principle is the most prominent question of principle preoccupying climate policies and negotiations. How it is understood and applied will affect how the collective burden of climate change obligations is met by each individual Party. A static interpretation of the CBDR principle—that places the burden of achieving emission reductions solely on developed country Parties (as defined in 1992 in Annex 1 of the UNFCCC), while excluding the Parties with rapidly developing economies (e.g. China, India, and Brazil) from any type of legally binding emissions reduction commitment—is now untenable as it no longer reflects current realities. Not only does this interpretation potentially place developed country Parties in a position of economic disadvantage, but it also undermines the importance of truly effective collective action, where all States work to address climate change. More dynamic notions of the meaning of CBDR are evident not only in the positions taken by certain EU member states and the United States, but also in the positions taken by many developing country States within the G77—and in particular, Least Developed Country (LDC) members (see Gupta, Chapter 33) and the Alliance of Small Island States (see Ronneberg, Chapter 34), who argue that any effective international climate regime must include the world’s biggest emitters. There is an increasing, yet not universal, consensus that notions of CBDR must evolve to more closely attribute responsibilities based not only on past responsibilities but also on present contributions and capacities. Adding to the challenge, the Parties to the UNFCCC, by including a list of developed countries directly in the treaty (Annex I), constrained the ability of the COP to adopt an evolving approach to understanding the concept of CBDR. In order formally to embrace a more dynamic approach to CBDR, the COP would need to adopt an amendment 49   Lavanya Rajamani, ‘The Principle of Common but Differentiated Responsibility and the Balance of Commitments under the Climate Regime’ (2000) 9 Rev Eur Community & Intl Envtl L 120, 121. 50   Ibid, at 124.

16   part i. introduction to the UNFCCC, which is a difficult process. For example, even Russia’s relatively benign amendment proposal in 2011 to create a regular review of Annexes I and II which would only envisage changes with the approval of any Party affected has still not been accepted.51 Efforts to achieve consensus on the normative foundations for a future agreement, in addition to the problems noted above, are further complicated by a variety of other perspectives such as the evolving notions of human rights and the impact of related judicial decisions (see Knox, Chapter 11 and Cullet, Chapter 22). At root, current efforts to address climate change require dramatic societal changes that touch upon sensitive public policy and economic questions, including those relating to energy, transportation, infrastructure, agriculture, food security, and forestry. A new global agreement for the twenty-first century must transcend the traditional mode of bargaining and search for reciprocity upon which most international law rests. What is at stake with climate change is a profound challenge to the way States legally bind themselves in order to voluntarily assume obligations that will, by definition, affect prosperity and development unevenly (at least in the nearmedium term), but improve the collective good. What is clear is that the current UN negotiating framework has so far proved unable to meet this challenge.

3.2 The Mitigation Regime: International and National Elements Mitigating climate change—through measures to reduce greenhouse gas emissions or to enhance carbon sinks—so as to avoid ‘dangerous anthropogenic interference with the climate system’, lies at the heart of the international climate regime.52 Article 4(1)(b) of the UNFCCC contains general commitments by all Parties to take mitigation measures, while the Kyoto Protocol contains quantified emission reduction targets only for developed country Parties, which to date are the only internationally legally binding specific mitigation commitments. The Protocol also contains an ambitious compliance mechanism for those targets, which Oberthür assesses and seeks to draw lessons from as the UNFCCC Parties negotiate the post-2020 regime (see Chapter 6). In response to the UNFCCC and the Kyoto Protocol, and affected by domestic concerns and interests, many UNFCCC Parties have developed a diverse and impressive set of emission reduction measures. Among others, these measures include efforts to set emission limits, establish energy intensity targets, create markets in greenhouse gas emissions, promote energy efficiency and conservation, and develop the 51   See Proposal from the Russian Federation to amend Article 4, paragraph 2(f), of the Convention, UN Doc FCCC/CP/2011/5 (26 July 2011), (accessed 25 September 2015). 52  UNFCCC, supra note 2, Article 2.

1. international climate change law   17 renewable energy sectors. For example, in Chapter 17, Wilder and Drake explore how the international community has attempted to cooperate in developing the renewable energy sector but note how further governance is needed at the international level. In choosing what mitigation measures to take, States generally seek to achieve positive environmental outcomes in the most economically efficient manner possible. As a result, some States—mainly developed country States—have complemented command and control style regulatory approaches with a move towards market mechanisms that provide incentives for economic actors to comply. As Hsu argues in Chapter 12, market mechanisms are policy instruments that seek to harness market forces to either reduce pollution or reduce compliance costs. Both are essential for successful environmental regulation. Indeed, market-based approaches appear regularly in the climate context. At the international level, the Kyoto Protocol created flexible mechanisms for Parties to meet its obligations,53 the most important of which are the market-based rules created under the Clean Development Mechanism. Although notable in its sophistication, its actual mitigation impact has been limited due to the low market prices for its ‘Certified Emission Reduction Units’. More successful have been some prominent domestic emissions trading systems such as the ones developed in the EU, some states in the United States and provinces of Canada, and even South Africa (See Shoyer, Sul, and van der Ven, Chapter 14). A common debate about mitigation policies and measures concerns their impact on domestic industry and whether additional measures should be taken to address any negative economic consequences. Furthermore, facing new and often costly compliance burdens, representatives of regulated industries often contend that their counterparts operating in jurisdictions with less stringent climate change commitments have a competitive advantage. Governments, naturally, are sensitive to these concerns when designing climate mitigation measures. In Chapter 14, Shoyer, Sul, and van der Ven examine how divisions between UNFCCC Parties willing to take on more aggressive climate change reduction commitments and those that are not have led to proposals designed to alleviate the economic burden for firms and businesses subject to stricter emission reduction requirements. Mehling, in Chapter 13, explores how linking between emissions trading systems can be effective in both achieving emissions reductions while addressing economic competitiveness concerns. However, as States develop a diverse and complex set of mitigation measures, along with measures to shield their domestic industry from economic disadvantages, 53   These mechanisms are known as (a) ‘Joint Implementation’, which is a project-based mechanism allowing developed country Parties to earn credits towards meeting their targets by investing in emission reduction projects in other developed countries, (b) ‘Clean Development Mechanism’, which is a project-based mechanism allowing developed country Parties to earn credits towards meeting their targets by investing in emission reduction projects in developing country Parties, and (c) ‘emissions trading’, which allows developed countries Parties to purchase emission reduction credits from other developed country Parties.

18   part i. introduction a key question can arise as to whether such measures are consistent with a Party’s international trade obligations. In Chapter 15, Sindico assesses this issue in the light of World Trade Organization (WTO) obligations. Although evidence of economic uncompetitiveness and even carbon leakage (where producers relocate to States with less stringent emission reduction requirements) is varied and anecdotal, States are taking heed of these concerns in designing measures while being cognizant of the risks of the measures’ WTO inconsistency. Meanwhile, Sarnoff (Chapter 18) examines how the patent system, as anchored in the WTO rules, may risk colliding with innovation and technology development policies of States as they ramp up their efforts to combat climate change. Since the Copenhagen Accord, which triggered non-binding pledges for mitigation action by both developed and developing countries, Parties have struggled with how to design an effective and appropriate international architecture that would capture and further leverage mitigation actions. Important steps included the adoption of guidelines for ‘measuring, reporting and verifying’ mitigation actions, with processes for ‘international assessment and review’ for developed country Parties and ‘international consultation and analysis’ for developing country Parties. But the central issue of what legal status future emission reduction targets should have has so far eluded consensus. At root is a central dilemma. On the one hand, an architecture that fixes hard mitigation targets along with strong consequences for non-compliance may have the advantage of enhancing predictability, but risks deterring States from being ambitious in their commitments. On the other hand, a more flexible architecture may allow States to take on higher mitigation commitments, but may lack the clout and credibility to ensure that the targets set are ultimately met.

3.3 The International Adaptation Regime Even as States develop increasingly complex mitigation measures, the absence of mitigation results coupled with incontrovertible evidence confirming the inevitability of some degree of climate change is prompting increased attention to adaptation planning. Leading to a further sense of urgency surrounding adaptation, the IPCC has cautioned that ‘[r]‌ecent climate changes and climate variations are beginning to have effects on many other natural and human systems’.54 As a result, we are witnessing increased efforts to develop adaptation strategies in both the developed and developing world.55 54   ‘Summary for Policymakers’, in Martin L. Parry et al. (eds), Impacts, Adaptation and Vulnerability, Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, 9 (Cambridge: Cambridge University Press, 2007). 55   See UNFCCC, Climate Change: Impacts, Vulnerabilities and Adaptation in Developing Countries (2007), available at (noting the particular vulnerabilities of developing countries to climate change).

1. international climate change law   19 Adaptation governance differs fundamentally from the traditional methods of assessing governing in the context of mitigation. International efforts to mitigate climate change to date have concentrated on collective action and therefore demanded centralized, consensus-based top-down decision-making. States recognize that adaptation efforts will require greater diversification and, often, decentralization of decision-making authority. Leading climate experts have noted that ‘[a]‌dapting to climate change involves cascading decisions across a landscape made up of agents from individuals, firms and civil society, to public bodies and governments at local, regional and national scales, and international agencies’.56 Financial aid and capacity building are traditional means employed under many multilateral environmental agreements to assist developing country States in implementing their commitments. But the imperative of adapting to climate change is profound and defies traditional paradigmatic approaches. This imperative is not limited to developing country Parties, but it is developing country Parties who are most vulnerable to the adverse impacts of climate change. While there is widespread recognition of the need to develop more comprehensive adaptation strategies, very little attention has been made to coordinate adaptation efforts, particularly at the global level. Policy-makers continue to grapple with approaches other than a top-down system of adaptation governance or, conversely, fragmentary and uncoordinated local efforts. Within this context, the UNFCCC, as the primary instrument of international climate change law along with its decision-making institutions, has a critical role to play. The progress the COP has made since COP-15 to develop a strategy for climate change adaptation efforts demonstrates that adaptation is at the top of the international climate change agenda. There is an underlying, if unstated, recognition by the COP that adaptation governance is better suited to global facilitation rather than centralized decision-making. The UNFCCC Parties are devoting efforts to create an institutional framework for national adaptation planning in developed countries (particularly in the leastdeveloped countries),57 and operationalize a financing mechanism for adaptation planning and adaptation efforts in developing countries.58 Given the nascent and still evolving nature of the debate over approaches to adaptation, however, the question of how the climate change regime develops instruments to address adaptation will be a subject of discussion for the foreseeable future. As the recent debates around loss   W. Neil Adger et. al., ‘Successful Adaptation to Climate Change Across Scales’, 15 Global Envtl. Change 77, 79 (2005). 57   As it exists, the UNFCCC adaptation framework focuses on the least-developed country Parties. UNFCCC adaptation efforts focus on facilitating country-driven approaches, complementing other ongoing adaptation planning efforts and avoiding being prescriptive or duplicative. 58   Report of the Conference of the Parties on its Seventeenth Session, 28 November–11 December 2011, Addendum, UNFCCC, Launching the Green Climate Fund, Decision 3/CP.17, UN Doc FCCC/ CP/2011/9/Add.1 (15 March 2012; 10 December 2011). 56

20   part i. introduction and damage reveal, reaching outcomes that place additional burdens on developed country Parties to provide financial assistance will be difficult to reach.

3.4 National and Supranational Actors As previously discussed, international climate change law is significantly influenced by a handful of States acting both in their individual capacity and in their capacity as members of negotiating blocs. As explored in Part VII of this book, these States include developed country Parties responsible for the brunt of historic emissions but whose emissions have largely evened off, such as the United States of America (see Gerrard, Chapter 27) and the EU (see Bogojević, Chapter 29)—and developing country States with rapidly developing economies whose net emissions have risen rapidly and continue to climb—China (see Wang, Chapter 28), India (see Badrinarayana, Chapter 30), and Brazil (see Alvarenga de Oliveira, Chapter 32). Both developed and developing country States will be indispensable to future efforts to develop the international climate change regime. Although politically important, the largest polluting States are not the only actors that play key roles in the negotiations and, more broadly, in global climate politics. From the G77 to the increasingly influential negotiating blocs, including the BASIC (i.e., Brazil, South Africa, India, and China), to the Alliance of Small Island States (see Ronneberg, Chapter 34), to the Least Developed Countries (see Gupta, Chapter 33), these States and groups of States have come to play increasingly important roles in shaping the narrative of climate politics generally, and the focus of global climate change negotiations more specifically. In particular, as the physical processes of climate change have advanced amidst slow and stalled negotiations, those States most affected by climate change, buoyed by support from civil society, have become increasingly prominent voices in calling for not only more effective mitigation strategies (see Ronneberg, Chapter 34 and Gupta, Chapter 33), but also improved mechanisms for adaptation and climate finance (see also Thompson, Chapter 7).

3.5 International Organizations The UNFCCC and its constituent bodies and processes are at the centre of international climate change law; yet a host of other international organizations are playing increasingly prominent roles in structuring mitigation and adaptation measures. The roles these institutions play vary. Institutions such as the Conference of the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer59   (1987) 1513 UNTS 323; 26 ILM 1529.

59

1. international climate change law   21 make decisions that can contribute towards emission reductions, while dispute settlement bodies at the World Trade Organization (see Sindico, Chapter 15) or the International Court of Justice (see Verheyen and Zengerling, Chapter 19) or human rights tribunals such as the European Court of Human Rights (see Cullet, Chapter 22) or the Inter-American Commission on Human Rights (see Knox, Chapter 11) may be able to clarify the meaning of international obligations with respect to climate change. The UN Security Council has also discussed climate change, but so far no outcomes have emerged, nor have there been resolutions identifying climate change as an international security threat. The continuing emphasis placed on adaptation has led to many specific adaptation programmes being funded and facilitated by International Governmental Organizations (IGOs). Among the most prominent IGOs engaged in adaptation is the United Nations Development Programme (UNDP). The UNDP, together with its partner agencies—the United Nations Environment Programme (UNEP), the Food and Agriculture Organization (FAO), the United Nations International Strategy for Disaster Reduction (UNISDR), the World Health Organization (WHO), and the World Bank, among others—facilitates ongoing adaptation efforts. These and other institutions play an increasingly important role in international efforts to respond to climate change and, thus, inform the practice of international climate change law. Finally, as noted by Verheyen and Zengerling in Chapter 19, international courts and tribunals have already had an important influence on international climate change law and will likely become increasingly important.

3.6 Non-State Actors Civil society has played a vital role in shaping climate change debates and strategies. The involvement of civil society groups in environmental policy dates back to the late 1960s, when the growing social movement around environmental protection helped mobilize support for the development of new environmental laws at the domestic and eventually the global level. Civil society continued to influence environmental decision-making, culminating in the outcomes at the 1992 United Nations Conference on Environment and Development in Rio de Janeiro (Earth Summit). The Rio/Earth Summit brought together political and civic leaders from all over the world. As a result of the energy and initiative civil society brought to the Rio/Earth Summit, the States adopted two prominent multilateral environmental agreements (the UNFCCC and the Convention on Biological Diversity), as well as a number of soft law instruments. Since the Rio Earth Summit, the climate change debate continues to be influenced by civil society. Civil society campaigns have helped to mobilize awareness

22   part i. introduction of climate change and related issues through various initiatives, including massive climate change litigation campaigns in the United States and at inter­national forums (Gerrard, Chapter 27, and Verheyen and Zengerling, Chapter 19), the global campaign (including litigation) to reinforce the linkages between ­climate change and human rights (see Knox, Chapter 11, and Cullet, Chapter 22), ­ongoing efforts to develop new frameworks for responding to displaced peoples (see McAdam, Chapter 23), compensating losses and damages caused by climate change (see Voigt, Chapter 21), and focused campaigns to stop new fossil fuel ­projects or divest financial resources away from fossil fuel development. These civil society initiatives have affected both public opinion and the concurrent development of national measures. Yet, in recent years, the influence of civil society on the outcomes of UNFCCC negotiations has been hard to discern, even though the UNFCCC is one of the most open and transparent international negotiating processes. The private sector in particular has an indispensable role to play in addressing climate change. The IPCC notes in the AR5 that ‘[i]‌n many countries, the private sector plays central roles in the processes that lead to emissions as well as to mitigation. Within appropriate enabling environments, the private sector, along with the public sector, can play an important role in financing mitigation’.60 The private sector is both a primary contributor to climate change and also a possible source of hope for mitigating climate change through mobilizing changes in consumer behaviour, and, perhaps most critically, by investing in the development of clean and renewable energy. The IPCC AR5 emphasizes the importance of private sector investment, stating that there needs to be huge shifts in investment in order to avoid the worst impacts of climate change, noting in particular that ‘[s]ubstantial reductions in emissions would require large changes in investment patterns’.61 The pace of investment cannot be slow. According to the AR5, investment in renewables and other low carbon sources ‘needs to at least treble by the middle of the century, while money flowing into fossil fuels has to diminish’.62 The massive shift towards decarbonization and the investments needed to generate that shift will require extraordinary levels of private sector involvement. How that shift materializes will be influenced by governmental policy and the ability of governments to create the right incentives.

60  IPCC, (2014), Fifth Assessment Report (AR5): Climate Change 2014: Mitigation of Climate Change, Working Group III, Summary for Policy Makers 15, at 5.1 p. 32, . 61   Ibid, at 5.1, p. 29. 62   The Report notes, in key part, that ‘[t]‌he reduction of subsidies for GHG [greenhouse gas]-related activities in various sectors can achieve emission reductions, depending on the social and economic context (high confidence)’. Ibid, at 31.

1. international climate change law   23

4.  Conclusion: The Future of International Climate Change Law International climate change law is a field that sits on the precipice of great advancement. The boundaries of international climate change law are being redrawn. Global climate change is a problem defying traditional geographic and geopolitical divisions. How the international community divides, coordinates, and enforces its responsibilities to address climate change will determine success. Responses will need to be thoroughly assessed to face climate change scenarios that transcend such divisions, and will involve governing bodies from the local to the inter­ national. For instance, issues of water supply and flood control will often involve watersheds that span national and internal boundaries. Similarly, climate change may in the future lead some actors to attempt to limit the effects of climate change using new technologies designed to remove carbon dioxide from the atmosphere and manage solar radiation—often collectively referred to as geoengineering—that will raise profound questions around responsibility and liability (see Eagle and Sumaila, Chapter 24). In these and other ways, climate change poses complex governance challenges. The urgency of climate change necessitates considering what types of governance options are available when the existing approaches are failing. It requires innovative responses to an environmental problem that is characterized by extreme heterogeneity, in terms of needs, capacities, and challenges across multiple levels of governance. The issues here are not ones where traditional modes of bargaining between States based on self-interest have, or will likely provide, sufficient answers. Arriving at effective legal solutions entails critical assessment of, and obvious self-reflection by, the UNFCCC process. The 2014 meeting of the COP in Lima, Peru (COP-20), and the resulting Lima Call for Climate Action,63 reflect the challenges and the changing perceptions of the gap between what can be achieved through the sometimes-clumsy processes of the UNFCCC, and what needs to be achieved in order to address climate change. The Lima Call for Climate Action challenges the rigidity of the dominant legal strategy that characterized the first two decades of negotiations in two important ways. First, the Lima Call for Climate Action abandons the premise that the Parties should agree to an overarching emission reduction objective that will be achieved through corresponding, emission reduction obligations for State Parties met within a specific timeframe. Instead, the Lima Call for Climate Action ‘invites 63  Report of the Conference of the Parties on its Twentieth Session, held in Lima from 1 to 14 December 2014, Lima Call for Climate Action, Draft Decision–1CP/.20, UN Doc CCC/CP/2014/10/ Add.1 (14 December 2014; 2 February 2015).

24   part i. introduction each Party to communicate to the UNFCCC Secretariat’ an ‘intended nationally determined contribution’64—contributions formulated through domestic policymaking processes. Second, the Lima Call for Climate Action erodes the long-standing divide between developed and developing country Parties with respect to their climate change mitigation obligations. That is, it calls on all States—not just developed countries—to communicate their ‘nationally determined contributions’. Negotiations in Lima and the subsequent Lima Call for Climate Action were spurred, in part, by the announcement by the United States and China before the COP in which they committed to bilateral cooperation on climate change and announced respective emission reduction targets.65 This announcement was seen as a breakthrough; it demonstrated that the two largest polluters were open to negotiations and that the lines between developed and developing country States were beginning to blur. This shift is critical, simultaneously reflecting the realities of what can and cannot be achieved through the channels of the UNFCCC. Reflecting these dual realities, at the end of COP-20, UNFCCC Executive Secretary, Christiana Figueres, noted: ‘The negotiations here reached a new level of realism and understanding about what needs to be done now, over the next 12 months and into the years and decades to come if climate change is to be truly and decisively addressed’.66 In the run-up to the next COP (COP-21) in Paris, there is widespread recognition of the challenges climate change poses to long-term physical, social, and economic stability. There is also widespread acceptance that our existing governance systems are inadequate for addressing these challenges. The results of the Lima COP begin to break down the walls between the developed and developing world that separate the approaches on mitigation efforts, although it does little to envision how the collective mitigation measures will be achieved. The Lima Call for Climate Action reiterates the seriousness of the issue and the need for enhanced action on mitigation, adaptation, financing, and more. It confirms the depth of the problem, embeds fairness concerns at the heart of global efforts and reminds us how much still needs to be achieved. In the end, however, the Lima Call for Climate Action creates only a skeletal road map for how to get where we need to go. Fundamentally, it reveals the extent to which climate change is an issue of such scale and complexity that it defies resolution through traditional governance approaches and, in particular, through the constraints of the UNFCCC process.   Ibid, para. 9.  US–China Joint Announcement on Climate Change (11 November 2014), (accessed 8 July 2015). 66  ‘Lima Call for Climate Action Puts World on Track to Paris 2015’, UNFCCC Press Release (14 December 2014), (accessed 8 July 2015). 64 65

1. international climate change law   25 Behind these efforts are a series of questions that inform the future of the field of international climate change law. Key among these questions are: how to determine the relative roles and responsibilities of different groups of State actors in addressing climate change in a world characterized by rapid change; how to balance the parallel need to continue to search for effective and efficient mitigation strategies with the growing need to develop comprehensive adaptation strategies; how best to mobilize civil society and the private sector in efforts to address climate change; and, how to maximize the effectiveness of law at every level of governance in ongoing efforts to mitigate and adapt to climate change. The aim of this handbook is to provide a comprehensive exposition of the field of international climate change law. The chapters in this book examine the unique nature of climate change, the complexities that complicate international efforts to address climate change, and the legal instruments, mechanisms, and processes that have resulted from those efforts.

Chapter 2

CLIMATE CHANGE AND INTERNATIONAL LAW BEYOND THE UNFCCC Alan Boyle and Navraj Singh Ghaleigh

1. Introduction

27

2. The Evolving Regime

32

3. Institutional Problems: The Negotiating Framework

36

4. Human Rights Perspectives

40

5. Environmental Impact Assessment and Climate Change

43

6. Law of the Sea Perspectives

46

7. Trade Law Perspectives

49

8. ICJ Advisory Opinion

51

9. Conclusions

53

2. beyond the unfccc   27

1. Introduction Few global problems reveal the competing forces exercised on the international order as sharply as climate change. Whilst the science speaks with ever greater clarity about the causes and effects of anthropogenic climate change and its prospects for the climate system,1 the societal mechanisms for dealing with climate change continue to disappoint. Whether we consider the effectiveness of the Kyoto Protocol flexibility mechanisms, progress in the United Nations Framework Convention on Climate Change (UNFCCC) negotiations, or prospects for effective national action, the inability to respond adequately to the requirements of science poses challenges to our institutions and processes, including those of international law. Writ large, ‘the need [is] to capture shared and common interests, to manage unequal power, and to mediate cultural diversity and value conflict’.2 Given that Hurrell provides chapter and verse on the institutional shortcomings of past and present international society, what hope is there that it can resolve one of the greatest challenges to international cooperation the United Nations has ever faced?3 Climate change is par excellence a global problem—the ‘common concern’ of humanity, to use the language of the UNFCCC—potentially affecting all States, and for which global solutions are essential. That was the reason for negotiating the two principal multilateral environmental agreements (MEAs) on the subject—the UNFCCC and the Kyoto Protocol. It is the reason for trying to negotiate a further post-Kyoto global agreement. The process of elaborating these regimes has been characterized as one of ‘interactional dialogue’,4 but its essential feature is negotiation and bargaining leading to adoption of a text agreed by consensus. Negotiations on climate change have always been difficult, not only because of the complexity of the issues and the diversity of the interests at stake,5 but   Intergovernmental Panel on Climate Change, ‘Climate Change 2013: The Physical Science Basis. Working Group I Contribution to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change’ (Cambridge University Press 2013) (accessed 16 September 2015). 2   Andrew Hurrell, On Global Order: Power, Values, and the Constitution of International Society (Oxford University Press 2007) 2. 3  See inter alia Rosemary Gail Rayfuse and Shirley V Scott, International Law in the Era of Climate Change (Edward Elgar 2012); John S Dryzek, Richard B Norgaard, and David Schlosberg (eds), The Oxford Handbook of Climate Change and Society (Oxford University Press 2011). 4  Jutta Brunnée, ‘COPing with Consent: Law-Making Under Multilateral Environmental Agreements’ (2002) 15 Leiden Journal of International Law 1. See also Jutta Brunnée and Stephen J Toope, Legitimacy and Legality in International Law: An Interactional Account (Cambridge University Press 2010). 5   Irving M Mintzer and J Amber Leonard (eds), Negotiating Climate Change: The Inside Story of the Rio Convention (Cambridge University Press 1994); Urs Luterbacher and Detlef F Sprinz, International Relations and Global Climate Change (MIT Press 2001). 1

28   part i. introduction also owing to the centrality of the ‘public bad’ under discussion (carbon and its by-products) to global systems of production, distribution, and consumption.6 In a pluralist and multi-polar world, we cannot assume that global interdependence will be reflected in a willingness to cooperate on common solutions, nor has it been.7 Moreover, as Oran Young explains: ‘[T]‌he problem here is that the climate regime is not based on principles of fairness that are broadly acceptable to all the major players.’8 Developed States (‘Annex I States’ in the language of the Convention) want to keep the costs down and the timescales long. A small number have serious problems convincing electorates and legislatures, much less industry, that more needs to be done.9 Although, in this respect, the European Union (EU) has been more willing to make commitments on greenhouse gas (GHG) emission reductions than other developed economy Parties,10 European diplomacy has failed to move the United States or the major developing country States. The newly industrialized economies such as China, India, and Brazil want the Annex I States to show that they will live up to their commitments to shoulder most of the burden. However, the emissions data show that the Annex I States cannot constrain increases in global temperature on their own. Even if Annex I emissions fell to zero by 2030, projected non-Annex I State emissions would be sufficient to effect a 2°C rise.11 Many of the States most likely to be seriously affected by climate change are poorly resourced developing countries that rely heavily on developed and certain developing country States,12 the United Nations, and the World Bank to come up with the money and resources they need to adapt to the worst effects of climate change. They have little or no 6   Nicholas Stern, The Economics of Climate Change: The Stern Review (Cambridge University Press 2007) xiii–xix. 7   Hurrell (n 2) Chapter 1. 8   Oran Young, ‘Improving the Performance of the Climate Regime’ in John S Dryzek, Richard B Norgaard, and David Schlosberg (eds), The Oxford Handbook of Climate Change and Society (Oxford University Press 2011). See Steve Vanderheiden, Atmospheric Justice: A Political Theory of Climate Change (Oxford University Press 2008). 9   The United States is the most obvious example, but Japan has similar characteristics. See respectively, Navraj Singh Ghaleigh, ‘Anti-Americanism and the Environment’ in Brendon O’Connor (ed), Anti-Americanism: History, Causes, Themes, vol 1 (Greenwood World Publishing 2007) and Yves Tiberghien and Miranda A Schreurs, ‘Climate Leadership, Japanese Style: Embedded Symbolism and Post-2001 Kyoto Protocol Politics’ in Kathryn Harrison and Lisa McIntosh Sundstrom (eds), Global Commons, Domestic Decisions: The Comparative Politics of Climate Change (MIT Press 2010). 10   Legally binding steps include a unilateral emission reduction target of 20 per cent by 2020, a (heavily criticized) emissions trading scheme, and a plethora of complementary measures on energy efficiency, carbon capture and storage, biofuels, eco-labelling, etc. See Navraj Singh Ghaleigh, ‘Two Stories about E.U. Climate Change Law and Policy’ (2013) 14 Theoretical Inquiries in Law 43. 11   Mattia Romani, James Rydge, and Nicholas Stern, ‘Recklessly Slow or a Rapid Transition to a Low-Carbon Economy? Time to Decide’ (2012) Centre for Climate Change Economics and Policy, Grantham Research Institute on Climate Change and the Environment 12. 12   Consider the emerging role of China. See Paul Collier, The Plundered Planet: How to Reconcile Prosperity with Nature (1st edn 2nd Impression, Allen Lane 2010) 91–2, 122–5.

2. beyond the unfccc   29 leverage over the main players, while in some cases, the major players have a great deal of leverage over them.13 International agreement on further measures nevertheless remains essential for future progress. Whilst unilateral and national actions are less incoherent in the climate change area than in other areas of international law such as trade, uncoordinated national policies and measures will nonetheless struggle to achieve either the necessary level of ambition or legitimacy. In both trade and climate change, international regulation provides the indispensable basis for collective action based on agreed objectives and common standards.14 But it does not follow that the existing structure of global climate change regulation created by the UNFCCC and the Kyoto Protocol is the right one for the future or that it can succeed without support from other international regimes and institutions.15 The UNFCCC is a ‘framework convention’, that is, it does not itself regulate climate change but only creates a basis for negotiating multilateral solutions.16 The model’s most evident weakness, as demonstrated by the process to agree the Marrakesh Accords17 or the Copenhagen negotiations, is that it depends on the ability of the Parties to reach an agreement under an appropriate timescale. This cannot be taken for granted. Nor can the participation of all the important players be guaranteed, as both the continuing opposition of the United States to the Kyoto Protocol and the refusal of Japan, New Zealand, and the Russian Federation to take on obligations under the Protocol’s second commitment period show only too well. While the Kyoto Protocol requires reductions in GHG emissions for some Annex I Parties based on 1990 levels, even if the reductions had been met, the reductions fall well short of what will be needed to achieve a meaningful effect on atmospheric concentrations of GHGs.18 The Protocol represents at best only a first step in the development of a stronger regime—in the optimistic words of an EU official at the time of its coming into force: ‘the Kyoto Protocol . . . represents a promising start of a long-term process 13   Some small island states have considered trying to litigate climate change or asking the UNGA to request an advisory opinion but the political obstacles have proved insuperable. 14   For a contrary view though, see Richard B Stewart, Michael Oppenheimer, and Bryce Rudyk, ‘Building a More Effective Global Climate Regime through a Bottom-up Approach’ (2013) 14 Theoretical Inquiries in Law 273. 15   Rayfuse and Scott (n 3), Chapter 1; Alexander Proelss, ‘International Environmental Law and the Challenge of Climate Change’ in Thomas Giegerich and Alexander Proelss (eds.) 53 German Yearbook of International Law 65 (Duncker & Humblot 2010). 16   Nele Matz-Lück, ‘Framework Agreements’, in Rüdiger Wolfrum (ed.), Max Planck Encyclopedia of Public International Law (Oxford University Press 2008). 17   See the Marrakesh Ministerial Declaration, (2001) Decision 1/CP.7—originally conceived of as a two-year work programme, defining meaningful rules for the flexibility mechanisms, sinks, etc. extended over five COPs and four years of negotiations. 18   See section 2 below.

30   part i. introduction of change in the way the world produces and consumes goods and services’.19 Young, however, sees the picture more clearly, noting that the Kyoto Protocol addresses emission reductions at a marginal level, focusing on ‘modest reductions from current levels on the part of major emitters rather than setting overall emissions levels and confronting the question of how to allocate emissions permits on a global scale’.20 Just as importantly, the UNFCCC’s articulation of the principle of common but differentiated responsibility, replicated by Kyoto, has to date relieved developing country States of any obligation to constrain greenhouse gas emissions, however significant they may become.21 Whilst this may have been an understandable policy choice for State Parties in 1992,22 or even in 1997,23 by 201224 the absence of constraint on some of the largest net emitters requires stringent justification25 at the very least. The rapidly rising GHG emissions generated by China and India remain largely unregulated under the Kyoto Protocol or any other international legal instrument.26 At the same time, the globalization of industrial production and consumption has in large measure outsourced production from Annex I States (some covered by the Kyoto Protocol’s emission reduction targets) to non-Annex I states that have no such obligations. The World Trade Organization (WTO) trade regime has facilitated this trend. At the same time, a strict adherence to WTO rules that admonishes 19   Jos Delbeke, ‘The Emissions Trading Scheme (ETS): The Cornerstone of the EU’s Implementation of the Kyoto Protocol’ in Jos Delbeke (ed), EU Energy Law, Volume IV: EU Environmental Law: The EU Greenhouse Gas Emissions Trading Scheme: 4 (Claeys & Casteels 2006) 1. 20   Young (n 8) 628. 21  See Article 4(2)(a) UNFCCC and the Berlin Mandate, 1/CP.1 (1995). See generally Lavanya Rajamani, Differential Treatment in International Environmental Law (Oxford University Press 2006), especially Chapter 6. 22   At the conclusion of the UNFCCC, the combined emissions of China and India, respectively the second (2694MtCO2) and sixth (783MtCO2) largest emitters in the world, were less than those of the United States (4918MtCO2). See TA Boden, G Marland, and RJ Andres, ‘Global, Regional, and National Fossil-Fuel CO2 Emissions: Carbon Dioxide Information Analysis Center (CDIAC), Oak Ridge National Laboratory’, accessed via the Tyndall Centre’s Global Carbon Atlas, at (accessed 14 July 2015). 23   By the conclusion of the Kyoto Protocol, the combined emissions of China and India, then the second (3467MtCO2) and fifth (1043MtCO2) largest emitters in the world, were equivalent to those of the United States (5415MtCO2), ibid. 24  The combined current emissions of China and India, now the first (9621MtCO2) and third (2240MtCO2) largest emitters in the world, dwarf those of the United States (second at 5118MtCO2). 2012 figures provisional, ibid. 25   Obvious candidates would be to compare per capita emissions, or emissions per unit of Gross Domestic Product (GDP), or indeed eschew territorial emissions altogether and focus on consumption emissions. 26   Although outwith the scope of this chapter, it should be noted that the period 1981 to 2004 saw China lift more than 500m of its people out of poverty, an achievement of world-historical proportions. See The World Bank, ‘From Poor Areas to Poor People: China’s Evolving Poverty Reduction Agenda—an Assessment of Poverty and Inequality in China’ (The World Bank 2009) 48058. Indian performance in the same period is not comparable.

2. beyond the unfccc   31 discriminatory measures between WTO Parties, would also entail challenging the principle of common but differentiated responsibilities among State Parties, which is one of the cornerstones of the UNFCCC and the Kyoto Protocol. Thus a key issue in the climate change negotiations remains whether to preserve the architecture of historic responsibility agreed at Rio de Janeiro in 1992, or to rethink assumptions about who must take responsibility for reducing greenhouse gas emissions in the future. For the climate change regime to work effectively, it seems obvious that significant restructuring is essential.27 If climate change is to be tackled successfully, it is not just the United States but also the non-Annex I industrialized States—especially China, India, Iran, and Saudi Arabia—that have to be brought into the GHG emissions and carbon management control regime. If international trade obligations present obstacles to this, alterations to the WTO trade regime may also have to be part of the answer. Climate change policy cannot be implemented through the UNFCCC alone but requires coordination of policies and measures by a range of international institutions inside and outside the UN system. The difficulty of ensuring coherence among institutions with competing mandates should neither be underestimated28 nor overstated. For example, carbon capture and storage (CCS) entails using subseabed depositories and must be compatible with the Law of the Sea Convention29 and the London Dumping Convention.30 Establishing such depositories requires cooperation by the parties to these treaties, which has in large part been achieved with some expedition. Negotiations to allow the disposal of CO2 streams for sequestration within the London Protocol31 commenced in 2005 and concluded with the entry into force of the amended Annex I in February 2007,32 and amendments to the Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR Convention) to facilitate CCS in the North East Atlantic were adopted in June 2007.33 Within the UNFCCC itself, the inclusion of CCS as clean development mechanism (CDM) project activities has been considered by various bodies   Young (n 8) 629, and see section 2 below.  See Martti Koskenniemi, ‘International Legislation Today: Limits and Possibilities’ (2002) 23 Wisconsin International Law Journal 64. 29   United Nations Law of the Sea Convention, (1992) 33 ILM 1309. 30   Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter (London Dumping Convention), (1972) 11 ILM 1294. 31   1996 Protocol to the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, 1972 (1997) 36 ILM 1. 32  IMO, Report of the Twenty-Eight Consultative Meeting and the First Meeting of the Contracting Parties, LC 28/15 (6 Dec 2006) Annex 6. Note however that while amendments to London Protocol Article 6 to allow transboundary CO2 export have been agreed (2009 LP4 (30 October)), they have yet to enter into force. 33  See generally Chiara Armeni, ‘Legal Developments for Carbon Capture and Storage under International and Regional Marine Legislation’ in Ian Havercroft, Richard Macrory, and Richard B Stewart (eds), Carbon Capture and Storage: Emerging Legal and Regulatory Issues (Hart Publishing 2011). 27

28

32   part i. introduction (e.g., the Conference of the Parties serving as the Meeting of the Parties (CMP), the Subsidiary Body for Scientific and Technological Advice (SBSTA), and the CDM Executive Board) since November 2005, leading to a CMP decision at Cancun in 2010 to include CCS as CDM project activities—a major breakthrough.34 In a similar fashion, controlling GHG emissions from shipping requires regulatory action by the International Maritime Organization (IMO) if it is to be globally effective. In 2011, the IMO adopted amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI,35 making the Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP) mandatory from 2013 subject to certain conditions.36 Moreover, GHG emissions also cause marine pollution and affect the marine environment, marine living resources, biodiversity, and ecosystems.37 Pollution standards adopted within the UNFCCC regime may also constitute ‘internationally agreed rules and standards’ for the purposes of Part XII of the 1982 United Nations Convention on the Law of the Sea (UNCLOS). There is thus a close relationship between what is negotiated within the climate change regime and what is applicable law within the UNCLOS regime. As these examples show, any attempt to understand the relationship between climate change and international law cannot be confined to the UNFCCC regime.

2.  The Evolving Regime The key feature of the Kyoto Protocol is its establishment of quantitative restrictions on emissions from advanced industrialized States of the six greenhouse gases listed in Annex A.38 Since the Kyoto Protocol’s modest targets are focused on GHG emissions rather than on consumption, and given disciplines imposed by the Protocol’s compliance mechanism,39 all parties to the Kyoto Protocol are likely to meet their targets, except Canada (which withdrew from the Protocol in December 2012), subject to the UNFCCC’s reporting and review process, ongoing at the time of w ­ riting. 34   Decision 7/CMP.6, ‘Carbon dioxide capture and storage in geological formations as clean development mechanism project activities’. Modalities and Procedures followed with Durban’s Decision 10/ CMP.7. 35   International Convention for the Prevention of Pollution from Ships, Annex VI—Regulations for the Prevention of Air Pollution from Ships (entered into force, 19 May 2005). 36  See James Harrison, ‘Recent Developments and Continuing Challenges in the Regulation of Greenhouse Gas Emissions from International Shipping’ in A Chircop, S Coffen-Smout, and M McConnell (eds), Ocean Yearbook, vol 27 (Martinus Nijhoff Publishers 2013). 37 38   See section 6 below.   Kyoto Protocol, Article 3(1) and Annexes A and B. 39   Kyoto Protocol, Article 18 and Decision 27/CMP.1, ‘Procedures and mechanisms relating to compliance under the Kyoto Protocol’.

2. beyond the unfccc   33 It is difficult to infer from this that Kyoto has caused any reductions in ‘business-asusual’ emissions. True though it is that EU GHG emissions fell by 17 per cent from 1990 to 2010, such reductions would have resulted in any case because of deindustrialization and energy efficiency.40 The achievement, such as it is, is somewhat unclear. The EU’s reductions are more than offset by increased GHG emissions in those developing countries from which the EU now imports manufactured goods (most of all China), but its aggregate consumption emissions have remained constant, diverging from its downwards territorial emissions trajectory. Thus, the EU’s consumption has not lessened over time, merely its production.41 Naturally, the numbers take on a different character when viewed on a per capita basis. Chinese emissions are less than one-half of the United States,42 and even EU and Japanese per capita emissions are closer to those in China than the United States.43 Whilst this might suggest that the United States is one of the least efficient users of energy on the planet, it actually ranks only fourteenth on a per capita basis, with significant emitters such as Qatar, Kuwait, UAE, and Saudi Arabia leading the way.44 In terms of climate impacts, the Kyoto Protocol has been ineffective in reducing the rate of increase in atmospheric GHGs, or global mean temperature.45 The IPCC concludes that evidence of warming of the climate system is unequivocal, with the atmosphere and oceans warming, snow and ice mass depletion, sea level rises, and greenhouse gas concentrations increasing.46 But for the capacity of the oceans to absorb the bulk of global warming, however, these atmospheric figures would be significantly greater. Ocean warming dominates the increase in energy stored in the climate system, accounting for more than 90 per cent of the energy accumulated between 1971 and 2010, with it being virtually certain that the upper ocean (0−700 m) has warmed.47 Other oceanic changes, such as to salinity, provide indirect evidence that evaporation and precipitation rates over the oceans have changed.48 It is in the cryosphere, however, that some of the most visually apparent changes to the climatic system have occurred. The Technical Summary of the IPCC’s Fifth Assessment Report states with high confidence that over the last two decades, the Greenland and Antarctic ice sheets have been losing mass, glaciers have continued 40   EEA Technical Report No 2/2011, European Union greenhouse gas inventory 1990–2009 and inventory report 2011: Submission to the UNFCCC Secretariat (Copenhagen, EEA, 2011). 41   The EU’s 1990 consumption emissions were 4947MtCO2, 4814MtCO2 in 2012—a reduction of 2.5 per cent. Compare 1990 territorial emissions of 4255MtCO2, 3543MtCO2 in 2012—a reduction of 17 per cent. Boden, Marland and Andres (n 22). 42  7.0tCO2/person versus 16.0tCO2/person in 2012. Ibid. 43   Japanese per capita emissions in 2012 were 9.9tCO2/person and 7.1tCO2/person in the EU28. Ibid. 44   Respectively 44.0, 30, 19, and 18tCO2/person in 2012. Ibid. 45   See generally, Intergovernmental Panel on Climate Change, ‘Climate Change 2013: The Physical Science Basis. Working Group I Contribution to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change’ (n 1). Hereafter ‘IPCC 2013’. 46 47 48   Ibid, 2.   Ibid, 3.2, Box 3.1.   Ibid, 2.5, 3.3, 3.5.

34   part i. introduction to shrink almost worldwide, and Arctic sea ice and Northern Hemisphere spring snow cover have continued to decrease.49 The decline of Arctic sea ice is not something that has escaped the attention of international lawyers,50 or of oil and gas multinationals as new trade routes and exploration opportunities arise. As regards sea levels, these have risen in the past 150 years faster than in the previous two millennia, as a consequence both of glacier loss and ocean thermal expansion from warming.51 Finally, as regards atmospheric greenhouse gas concentrations, these stand at levels unprecedented in the past 800,000 years, according to ice core samples. In the case of CO2, concentrations have risen by 4 per cent in the industrial period (from fossil fuel combustion and land use changes). Again, the buffering role of the oceans has been significant with 30 per cent of the emitted anthropogenic CO2 being absorbed by the oceans, with acidification consequences.52 With all this in mind, limiting the increase in average global temperatures to 1.5°C is highly unlikely to be achievable and even holding the increase to 2°C seems unattainable.53 Given these conclusions, the Kyoto Protocol alone will clearly not meet the ‘ultimate objective’ of stabilizing GHG concentrations ‘at a level that would prevent dangerous anthropogenic interference with the climate system’.54 Much more is needed, and would be even if the United States were a party and everyone complied fully with their existing Kyoto emissions reduction requirements. Even with United States participation, the developed State parties cannot by themselves do all that would be necessary to contain the global temperature rise to 2°C. As Romani et al. note: ‘Total emissions from developing countries could be as high as 37–38 billion tonnes of carbon dioxide equivalent (CO2e) in 2030 (around 70 per cent of global CO2e emissions), and total global emissions for a 2°C path can only be around 32–33 billion tonnes in that year.’55 The developing economies—and above all China—will have to carry some of the burden. From this perspective, common but differentiated responsibility, as articulated in the UNFCCC and the Kyoto Protocol, is not a viable basis for saving the climate. A more nuanced approach to differentiation is embodied in the Durban Platform for Enhanced Action (Durban Platform/ADP) and its passage to a binding, comprehensive agreement at the Paris COP in 2015, to have effect from 2020. In this   Ibid, 4.2–4.7.   Tore Henriksen, ‘The Future of Navigation in Ice-Covered Areas: A View from the Arctic’ in Richard Caddell and DR Thomas (eds), Shipping, Law and the Marine Environment in the 21st Century: Emerging Challenges for the Law of the Sea—Legal Implications and Liabilities (Lawtext Publishing Ltd 2013). 51 52   IPCC 2013, 3.7, 5.6, 13.3.   Ibid, 2.2, 3.8, 5.2, 6.2, 6.3. 53  IPCC, Climate Change 2007: Synthesis Report (Bangkok, IPCC, 2007); UNEP, The Emissions Gap Report: Are the Copenhagen Accord pledges sufficient to limit global warming to 2°C or 1.5°C? A preliminary assessment (Nairobi: UNEP 2010). 54  UNFCCC, Article 2. Michael Oppenheimer and Annie Petsonk, ‘Article 2 of the UNFCCC: Historical Origins, Recent Interpretations’ (2005) 73 Climatic Change 195, 2. 55   (n 11). 49 50

2. beyond the unfccc   35 current phase of UNFCCC negotiations we see the prospects for a more nuanced vision of differentiation among state responsibilities. Whilst it does not amount to a repudiation of the principle of common but differentiated responsibility, the future terms of engagement between developed and developing economies will be significantly changed. Tasked to ‘develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all parties’,56 by 2015 the Ad Hoc Working Group on the Durban Platform (ADP) seeks to close the gap between the Parties’ voluntary ambitions (as set out in the Copenhagen Accord) and that identified by the IPCC’s Fifth Assessment Report. The Copenhagen Accord itself significantly challenged the pre-existing, crude distinction between developed (Annex I) and developing (non-Annex I) States. In key part, the Copenhagen Accord provided for developed States to assume non-binding, bottom-up commitments to make additional reductions in GHG emissions,57 while also providing the opportunity for developing State parties, for the first time, to make a commitment to reduce their own emissions. These commitments are considerably less certain than those made under the Kyoto Protocol, and are purely voluntary, but represent the first time that emission constraints have been extended to developing countries.58 Rajamani argues that this is a shift in the understanding of differentiation, with ‘symmetry rather than differentiation . . . intended to be the central organizing principle of the future climate regime’.59 That may be debatable—a departure from the status quo is not the same as equivalence or symmetry. At the time of writing, the two streams of the ADP were close to their 2015 deadline. The prospects of a comprehensive, legally binding, agreement at the Paris Conference of the Parties to the UNFCCC (COP) seem as distant as ever. Familiar cleavages persist, viz the concerns of India and China about the use of the word ‘commitments’, a term later softened to ‘contributions’. Moreover, ‘intended nationally determined contributions’ raise the prospect of highly asymmetric (and therefore contentious) emission reductions. Although the Durban Platform provides that mitigation efforts be undertaken by ‘all Parties’, the Dracula-like fear of legally   The tortuous formulation arose from India’s opposition to the original wording, ‘a legal framework’.   Among the more important but heavily conditional GHG emission reduction ‘commitments’ are the following: Australia: 5 per cent unconditionally or 25 per cent by 2020 if further agreement; Belarus: 5–10 per cent if access to technology etc; Canada: 17 per cent aligned with the United States if legislation enacted; EU: 20 per cent unconditionally or 30 per cent conditionally; Japan: 25 per cent if comprehensive agreement; Russia: no specific target—range of reductions ‘will depend on’ various conditions; Ukraine: 20 per cent, if agreement among Annex I parties; United States: ‘In the range of ’ 17 per cent against a base year of 2005, subject to legislation (which has not been passed). 58   Commitments include: China: 40–50 per cent per unit of GDP by 2020, and an increase in forests and non-fossil fuels; Brazil: 36–38 per cent by 2020 through reduced deforestation, new farming practices, energy efficiency, and alternative fuels; India: 20–25 per cent voluntary reduction by 2020 (base year 2005); South Africa: 34 per cent reduction by 2020 and 42 per cent by 2025, depending on financial support/technology transfer etc. and the conclusion of a binding agreement. 59   Lavanya Rajamani, ‘The Durban Platform for Enhanced Action and the Future of the Climate Regime’ (2012) 61 International & Comparative Law Quarterly 501, 502. 56 57

36   part i. introduction binding commitments shared by many developing States suggests a preference for voluntary ‘actions’. The last-minute compromise text at the Warsaw COP used the language of ‘determined contributions, without prejudice to the legal nature of those contributions’, suggesting a certain attachment to strong differentiation. From the position of non-believers (say, Americans unwilling to commit without parallel Chinese commitments, or recent victims of climate catastrophes60), this all too easily appears to be more of the same—piecemeal and self-interested, with a comprehensive solution remaining as distant as ever. The ‘patient progress’ promised by the framework method has, to date failed to match the urgency of the challenge. At the time of writing, it remains to be seen whether the Paris COP can act with greater alacrity.

3.  Institutional Problems: The Negotiating Framework Participation in the UNFCCC regulatory process is open to all members of the United Nations.61 In theory, any State can stay outside the regime: there is no compulsion to become a party. In practice, participation is nearly universal. At the time of writing, there were 195 Parties to the UNFCCC62 and 192 Parties to the Kyoto Protocol. The United States and Canada are the only significant non-parties to the Kyoto Protocol, with the latter having withdrawn in December 2012. Diversity of political interests among the participants is a prominent feature of the UNFCCC/Kyoto Protocol process. The United States and Canada are the only significant non-parties to the Kyoto Protocol, with the latter having withdrawn in December 2012. Diversity of political preferences among the participants is a prominent feature of the UNFCCC/ Kyoto process. This is not a regime that can be understood in terms of a simple split into developed (Annex I) and developing States (non-Annex I).63 While the 60   After Typhoon Haiyan devastated the Philippines during the Warsaw COP, their chief negotiator condemned the negotiations as a ‘farce [and] an annual carbon-intensive gathering of useless frequent fliers’. 61   UNFCCC, Article 20. 62   This includes the EU and two non-UN members (Niue and Cook Islands). The Holy See participates as an observer. 63   The various negotiating groups are outlined in Lavanya Rajamani, ‘The Making and Unmaking of the Copenhagen Accord’ (2010) 59 International & Comparative Law Quarterly 824. New and additional negotiating groups hone in and out of view, however, including the BRICs (Brazil, Russia, India, and China), the Like-Minded Developing Countries (Bolivia, China, Ecuador, Egypt, India, Malaysia, Nicaragua, Pakistan, Philippines, Saudi Arabia, Thailand, and Venezuela), and AILAC (Independent Alliance of Latin America and the Caribbean), each of which overlaps with existing groups.

2. beyond the unfccc   37 major developed States are nearly all members of the Organisation for Economic Co-operation and Development (OECD), they disagree over climate policy. Similarly, many developing State parties have little in common. Notable examples are the small islands states, which may disappear with sea level rise and the Gulf oil producers who have an existential interest in producing more fossil fuels. Brazil, Russia, India, and China (BRIC) are now major GHG emitters themselves. In contrast to when UNFCCC negotiations first began, the BRIC countries now represent at least as big a threat to small island or low-lying states as any OECD member, and are increasingly coordinating their positions distinct from the framework of the G77.64 The UNFCCC negotiating model involves near universal participation by States with very diverse views. Its other key feature is a consensus-based negotiating process, rather than majority voting on the text. Even though Article 7.2(k) of the UNFCCC provides that the COP ‘agree upon and adopt, by consensus, rules of procedure’, and draft rules of procedure were drawn up for adoption by COP 1, the absence of agreement on voting arrangements65 prevented COP 1 from reaching consensus. Parties have subsequently agreed to apply the draft rules of procedure, with the exception of Rule 42, meaning that negotiating by consensus has become the default position. The benefit of this model is that it allows complex, comprehensive, and inclusive agreements to be negotiated despite widely differing interests, relying on the ‘politics of interdependence’ that characterizes regulation of world trade, the oceans, or the global environment. Like the UNCLOS III Conference, the consensus negotiating procedure used in the UNFCCC process generates a greater need to engage in diplomacy, to listen, and to bargain than would be the case when decisions are taken by majority vote.66 Every group of States has to be accommodated in this process—none can be ignored. Powerful States or groups of States cannot simply dictate what should be in an agreement without risking ultimate breakdown. This explains the influence of the Alliance of Small Island States (AOSIS) during the original UNFCCC negotiations,67 but also the need to keep the United States on board during the current negotiations. This model was used successfully at Rio and Kyoto to negotiate the UNFCCC and its Protocol, but it is does not always work, and it has not worked smoothly in the current phase of negotiations on climate change.

  Karl Hallding et al., ‘Rising Powers: The Evolving Role of BASIC Countries’ (2013) 13 Climate Policy 608. 65   FCCC/CP/1996/2, ‘Draft Rules of Procedure of the Conference of the Parties and its Subsidiary Bodies’, Rule 42. 66   See Jens Evensen, ‘Working Methods and Procedures in the 3rd UNCLOS’ (1986-IV) 199 Recueil des cours 425, 455; Alan Boyle and Christine Chinkin, The Making of International Law (Oxford University Press 2007), Chapter 3. For a more critical view, see Robbie Sabel, Procedure at International Conferences: A Study of the Rules of Procedure at the UN and at Inter-Governmental Conferences (2nd edn, Cambridge University Press 2006) 335. 67   See Mintzer and Leonard, Negotiating Climate Change (n 5) (Cambridge University Press 1994). 64

38   part i. introduction The delicate balance at the heart of consensus has been highlighted in recent COPs. The gavelling through of the Cancun Agreements, in the face of Bolivian opposition, in 2010 has become part of the lore of the climate regime. COP President Patricia Espinosa became a folk hero in some quarters by ignoring the concerns of a Party perceived to be obstructive to the consensus-based decision-making process. In 2012, COP President Abdullah bin Hamad Al-Attiyah repeated the trick to force through the Doha Amendment to the Kyoto Protocol,68 despite Russian objections. On this occasion, however, the Russians (with Ukraine and Belarus) insisted that ‘procedural and legal issues relating to decision-making’ be put in the Subsidiary Body for Implementation (SBI) agenda for the Bonn intersessionals of 2013,69 so as to get agreement that no future decisions could be adopted over a party’s objection. The Russian blocking tactics meant that the SBI was unable even to adopt its agenda and so its work on crucial issues such as Nationally Appropriate Mitigation Actions (NAMAs), the Kyoto Protocol review, adaptation finance, and more was left undone. Whatever its tactical merits, the strategic costs of gavelling through are not inconsiderable to a regime that already suffers from a legitimacy deficit. The failure of the Copenhagen negotiations in 2009, however, shows that consensus requires compromises that may be unobtainable, or may result in a text that is weaker or more ambiguous than many States are prepared to accept. Negotiations can only proceed at the pace of the slowest learner. But if the compromises necessary to engineer consensus cannot be reached, then nothing will be agreed, and some way must be found to overcome that outcome. For that reason the option of adopting a text by majority vote is normally retained as a fallback if all else fails. Much will then depend on how many States are in the minority and how important their participation may be. The Copenhagen Accord shows how the process can fall apart when consensus is not achievable.70 Whether to join in a consensus is thus a potentially delicate decision. A State that refuses to do so may find itself ignored, as Bolivia was eventually ignored at Cancun (albeit at a cost to procedural values), or it may simply be part of a tiny minority if it forces matters to a vote, a position in which the United States regularly finds itself. But if the participation of a State is essential to the deal under discussion then other States may have no option but to keep negotiating if stalemate is to be avoided. Are there alternatives to a global consensus deal? Possibly, but they all have serious drawbacks. The easiest alternative is a coalition of the willing within the OECD—in effect an agreement among the Kyoto Protocol Annex I parties. The obvious problem is that the OECD does not include the BRICs, or major Gulf emitters. A G20 agreement is possibly a better model because it includes some of these 69   Decision 1/CMP.8  FCCC/SBI/2013/1/Add.1   Rajamani, ‘The Making and Unmaking of the Copenhagen Accord’ (n 59); Jorge E. Viñuales, ‘Du bon usage du droit international: les négociations climatiques en perspective’ (2010/11) 26 AFDI 437. 68 70

2. beyond the unfccc   39 States. Nevertheless, even that would remain useful only in tandem with UNFCCC negotiations, which alone can provide the necessary ambition and legitimacy. But the G20 could supply the necessary political input for a broader settlement if it could agree on one. Does the United Nations have the potential to influence the UNFCCC negotiating process effectively? If consensus cannot be achieved through the UNFCCC process, it seems unlikely that the United Nations General Assembly (UNGA) would be any more successful—it would face exactly the same political obstacles. Only the UN Security Council (UNSC) has the necessary status and legal authority to change the mould and legislate for climate change without the consensus agreement of other States. Measures to promote environmental protection may in some circumstances be necessary for the maintenance of international peace and security, thus giving the UNSC power to take mandatory action under Chapter VII of the United Nation Charter. However, ‘the language of the Charter, not to speak of the clear record of the original meaning, does not easily lend itself to such an interpretation’.71 That said, it is increasingly recognized that climate-related events can have consequences beyond the capacity of the affected societies or global systems to manage, and that these may have global security implications.72 Seen in this light, the UNSC is no longer viewed as an inappropriate forum for climate change negotiations. Moreover, although the UNSC is not formally a law-making body, since the terrorist attacks on the World Trade Center (9/11), it has started to use its mandatory powers to adopt a small number of binding resolutions on anti-terrorism measures laying down general rules for all States.73 There are some obvious advantages to UNSC law-making in contrast to the more formal processes of negotiation through the UNGA or a treaty conference. First, all UN Member States are bound to comply with Chapter VII resolutions—there is no room for opt-outs or reservations. Second, such resolutions prevail over other international agreements and they do not have to conform to existing general international law.74 UNSC law-making could thus enhance the coherence of international law if used appropriately. To that extent the UNSC could become an instrument of 71   Paul Szasz, in Edith Brown Weiss (ed) Environmental Change and International Law (Tokyo 1992), p. 359. 72   John D Steinbruner, Paul C Stern, and Jo L Husbands, Climate and Social Stress: Implications for Security Analysis (The National Academies Press 2013). See also the series of climate change-related reports by the US Director of National Intelligence, available at (accessed 14 July 2015). 73   Two striking and unprecedented examples are SC Resolutions 1373 (2001) and 1540 (2005), both Chapter VII Resolutions passed in the aftermath of the 11 September 2001 attacks in New York and Washington and the later atrocities. 74   Lockerbie Case (Provisional Measures) 1992 ICJ Reports 114, para 42. ‘The Charter does not provide that decisions . . . in order to be enforceable must be in conformity with the law which exists at the time they are adopted’, Hans Kelsen, The Law of the United Nations (New York, United Nations University Press 1950), pp 294–5. See UN Charter, Article 103, and commentary in Bruno Simma, The Charter of the United Nations (2nd edn, Oxford University Press 2002).

40   part i. introduction law reform, overcoming the problem of the ‘persistent objector’ in customary law and the ‘free-rider’ in multilateral treaties. Nevertheless, to give the UNSC an enhanced role as an international legislator in areas such as climate change would be a tenable option only if the process can be legitimized and made generally acceptable to states.75 The problems are obvious if we consider current UNSC membership from the perspective of major GHG emitters: the United States, China, and Russia are already on the UNSC, but India and Brazil are not permanent members. The EU is fully represented only if Britain, France, and one other non-permanent EU Member State on the UNSC can present a coordinated European position. Most of the other GHG emitters and oil-producing states are only represented in the UNGA: a UNSC law-making process would have to involve UNGA participation to be inclusive. Law-making by fifteen States for the rest of the world is not attractive or likely to work without broader support. In any event, it would be no use unless the United States, Russia, China, and Europe could agree on what to do, since they all have a veto over the UNSC. But if they can agree then it is probably unnecessary to resort to the UNSC in the first place, subject to considerations of legitimacy and ambition. Thus, in the end, there seems little practical alternative to the present UN negotiating framework, however slow it may be. The Durban Platform thus offers at least the illusion of progress while holding open the possibility of a comprehensive agreement. Can the process now be influenced or moved along in some other way? Various possible options have been suggested, and in the second half of this chapter we examine some of them.

4.  Human Rights Perspectives This section will focus on climate change from a human rights perspective.76 As a ‘common concern’ of humanity,77 climate change is an issue in respect of which all states have legitimate concerns. The UN Human Rights Council is therefore correct   David Caron, ‘The Legitimacy of the Security Council’, 87 AJIL (1993) 552 and Paul Szasz, ‘The Security Council Starts Legislating’, 96 AJIL (2002) 901, but contrast T Sato, in Jean-Marc Coicaud and Veijo Heiskanen, The Legitimacy of International Organisations (Tokyo 2001), 327–9. 76   See Alan Boyle, ‘Human Rights and the Environment: Where Next?’ (2012) 23 EJIL 613 on which this section is based. See also Stephen Humphreys, ‘Climate change and international human rights law’, in Rayfuse and Scott (n 3), Chapter 2; Dan Bodansky, ‘Climate Change and Human Rights: Unpacking the Issues’ (2010) 38 Georgia J Int & Comp L 511; John H Knox, ‘Climate Change and Human Rights Law’ (2009) 50 Virginia JIL 2. 77   See UNGA Resolution 43/53 on Global Climate Change (1988); 1992 Convention on Climate Change, Preamble. 75

2. beyond the unfccc   41 to take an interest in the matter.78 Nevertheless, two observations in the 2009 Office of the High Commissioner for Human Rights (OHCHR) report are worth highlighting. First, ‘[w]‌hile climate change has obvious implications for the enjoyment of human rights, it is less obvious whether, and to what extent, such effects can be qualified as human rights violations in a strict legal sense’.79 Second, ‘human rights litigation is not well-suited to promote precautionary measures based on risk assessments, unless such risks pose an imminent threat to the human rights of specific individuals. Yet, by drawing attention to the broader human rights implications of climate change risks, the human rights perspective, in line with the precautionary principle, emphasizes the need to avoid unnecessary delay in taking action to contain the threat of global warming’.80 On the view set out here, a human rights perspective on climate change essentially serves to reinforce political pressure coming from the more vulnerable developing states. Its utility is rhetorical rather than juridical. It is easy to see that governments have a responsibility to protect their own citizens from pollution that affects the right to life, private life, or property.81 However, in the climate change context, where the impacts are global, the key question is whether GHG-emitting States also have a legal responsibility to protect people in other States from the harmful impacts of those emissions on the global climate system. Human rights treaties generally require a State party to secure the rele­ vant rights and freedoms for everyone within its own territory or subject to its jurisdiction.82 For this reason, the question of whether these treaties can have extraterritorial application is a difficult one. There are some precedents in favour of this ­ 83 interpretation, but mainly where a State exercises control over territory or persons. The obvious problem in applying human rights law to climate change is that the States principally responsible for GHG emissions do not have jurisdiction or control over territory or inhabitants beyond their own borders, however seriously affected they may be. Moreover, the multiplicity of causes and States contributing to the problem makes it difficult to show any direct connection to the victims. The inhabitants of sinking   UNHRC Resolution 10/4 (2009) on Human Rights and Climate Change. 80   OHCHR 2009 Report, para 70.   Ibid, para 91. 81   The Social and Economic Rights Action Center and the Center for Economic and Social Rights v Nigeria, ACHPR, Communication 155/96 (2002), paras 52–3; Lopez Ostra v Spain (1994) 20 EHRR 277; Guerra v Italy (1998) 26 EHRR 357; Fadeyeva v Russia [2005] ECHR 376; Öneryildiz v Turkey [2004] ECHR 657; Taskin v Turkey [2004] ECHR, paras 113–19; Tatar v Romania [2009] ECHR, para 88. 82   1950 European Convention on Human Rights, Article 1; 1966 UN Covenant on Civil and Political Rights, Article 2. 83   See e.g. Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, ICJ Reports 2004, para 109; Al-Skeini v United Kingdom [2011] ECtHR, para136; Ecuador v Colombia (Admissibility) [2010] IACHR Report No.112/10, paras 89–100; Cyprus v Turkey [2001] ECHR No.25781/94; Loizidou v Turkey (Preliminary Objections) [1995] ECHR Sers. A/310, para 87; Loizidou v Turkey (Merits) [1996-VI] ECHR, para 52. Contrast Bankovic v Belgium [2001] ECHR No. 52207/99. 78

79

42   part i. introduction islands in the South Seas may justifiably complain of human rights violations, but who is responsible? Those States like the United Kingdom, the United States, and Germany, whose historic emissions have unforeseeably caused the problem? China and India, whose current emissions have foreseeably made matters worse? The United States or Canada, which have failed to agree on, or to take adequate measures to limit further emissions or to stabilize global temperatures at 1990 levels? Or, the governments of the Association of Small Island States, which may have conceded far too much when ratifying the Kyoto Protocol or in subsequent climate negotiations? As easy as it is to see that governments have a responsibility to protect their own citizens’ rights, it is much harder to frame such a problem in terms of jurisdiction or control over persons or territory as required by the human rights case law. It is also harder to contend that any of the major GHG emitters have failed to strike the right balance between their own state’s economic development and the right to life or private life in other states when they have either complied with, or are exempt from greenhouse gas emissions reduction targets established by the Kyoto Protocol and agreed by the international community as a whole.84 Inadequately controlled transboundary pollution is clearly a breach of general international law,85 and may also be a breach of human rights law.86 However, given the terms of the Kyoto Protocol and subsequent commitments, it is far from clear that inadequately controlled climate change violates any treaty obligations or general international law.87 In those circumstances, the argument that it nevertheless violates existing human rights law is far harder to make. At this point, one may ask whether further negotiations through the UNFCCC process are the only realistic answer, however unsatisfactory that might be. If it wants to take climate change seriously then the UN Human Rights Council (UNHRC) must find a better way of giving human rights concerns greater weight within the UNFCCC negotiating process. Arguably that can best be achieved by using the International Covenant on Economic, Social and Cultural Rights and the notion of a right to a decent environment to pressure governments into cooperating in order to mitigate the global impact of climate change on human rights.88 Climate change is a global problem. It cannot easily be addressed by the simple process of giving human rights transboundary effect. It affects too many States and too much of humanity. Its causes, and those responsible, are too numerous and too widely spread to respond usefully to individual human rights claims. The   Greenhouse gas emission reduction targets under Kyoto apply only to Annex I developed state parties, not to developing countries, including China, India, and Brazil. Compare 1997 Kyoto Protocol, Articles 2–9, which apply to Annex I parties, and Article 10, which applies to all parties. 85 86   Pulp Mills case, 2010 ICJ Reports, paras 101, 187.   Boyle (n 76). 87 88   Supra, section 2.   Knox (n 76); Boyle (n 76). 84

2. beyond the unfccc   43 response of human rights law—if it is to have one—needs to be in global terms, treating the global environment and climate as the common concern of humanity. In that context, focusing on the issue within the corpus and institutional structures of economic, social, and cultural rights makes sense. The policies of individual states on energy use, reduction of greenhouse gas emissions, land use, and deforestation could then be scrutinized and balanced against the evidence of their global impact on human rights. This is not a panacea for deadlock in the UNFCCC negotiations, but it would give the rights of humanity as a whole a voice that at present is scarcely heard. Whether the UNHRC wishes to travel down this road is another question, for politicians to answer rather than lawyers, but that is where the UNHRC must go if it wishes to do more than posture on climate change.

5.  Environmental Impact Assessment and Climate Change Should the potential greenhouse gas emissions of large industrial or energy projects be the subject of an Environmental Impact Assessment (EIA) if they are likely to contribute to climate change and cause damage in other States? In principle there seems no reason why not. Some States include climate change impacts in their EIA process where appropriate.89 EIA in international law is normally required for planned ‘activities’ or ‘projects’ that are likely to cause significant transboundary harm to other states.90 However, the 1991 Convention on EIA in a Transboundary Context (1991 EIA Convention) defines transboundary impact as ‘any impact, not exclusively of a global nature, within an area under the jurisdiction of a party’.91 Does this exclude GHG emissions which make a significant contribution to climate change from triggering the obligation to do an EIA? Possibly, but in addition to their impact on global temperatures, GHG emissions are especially 89   E.g. Canada, on which see N Craik, The International Law of EIA (Cambridge University Press 2008), pp 212–16. 90  1991 Convention on EIA in a Transboundary Context, Article 2(3); 1987 UNEP Goals and Principles of Environmental Impact Assessment, Principle 1; ILC, 2001 Articles on Transboundary Harm, Articles 1, 2(a), 7; Pulp Mills on the River Uruguay case (2010) ICJ Reports, paras 204–5. 91   Convention on Environmental Impact Assessment in a Transboundary Context (Espoo Convention), Article 1(viii), (1991) 30 I.L.M. 800. The Protocol on Strategic Environmental Assessment to the Convention on Environmental Impact Assessment in a Transboundary Context, (21 May 2003) Doc. ECE/MP.EIA/2003/2., contains no comparable limitation: see Article 10.

44   part i. introduction likely to cause transboundary harm in States that are low-lying and vulnerable to sea level rise, acidification of the oceans, and loss of marine productivity. Here the impact is arguably not ‘exclusively of a global nature’ but specific to those particular States.92 In this regard, Article 206 of the UNCLOS requires Parties to assess the potential for ‘significant and harmful changes to the marine environment’ of activities under their jurisdiction or control. Article 206 has been construed broadly to include ‘activities with an impact on the environment in an area beyond the limits of national jurisdiction’.93 Whatever the 1991 EIA Convention may say, there seems no reason to read the 1982 UNCLOS as excluding GHGemitting activities from the obligation to carry out an EIA for potential impacts on the marine environment.94 EIAs of this kind embrace the licensing or approval of industrial, energy, and transport undertakings, inter alia,95 but would not cover plans or policies of a more general kind—whether to use coal or oil for power generation, for example. However, Article 4(1)(f) of the UNFCCC adopts a broader perspective, requiring Parties to take climate change into account when formulating ‘social, economic and environmental policies and actions’. It envisages, inter alia, impact assessments ‘determined nationally’. In effect, this is a reference to ‘strategic environmental assessment’ (SEA). SEA applicable to policies and plans has been developed in some of the more advanced jurisdictions, including the EU and the United States.96 The United States has, for example, subjected free trade agreements to an EIA.97 Article 2(7) of the 1991 EIA Convention provides for parties to ‘endeavour’ to apply EIAs to ‘policies, plans and programmes’, but more importantly a 2003 Protocol on Strategic Environmental Assessment (SEA Protocol)98   In 2010 Micronesia made representations to the Czech Republic concerning an EIA for a lignite power station: see Rayfuse and Scott (n 3), 336–7. 93   See Advisory Opinion on Responsibilities and Obligations of States Sponsoring Persons and Entities with Respect to Activities in the Area, 2011 ITLOS Seabed Disputes Chamber, paras 145–50. 94   For a review of other precedents see CBD, ‘Background on the Development of Voluntary Guidelines for the Consideration of Biodiversity in Environmental Impact Assessments and Strategic Environmental Assessments in Marine and Coastal Areas’, UNEP/CBD/SBSTTA/16/ INF/16, 11 April 2012. 95   See the activities listed in the 1991 Convention on EIA, Annex 1. 96   Directive 2001/42/EC, OJ L197/30, on which see S Marsden, ‘The Espoo Convention and SEA in the EU’ (2011) 20 RECIEL 267. In R (ex parte Greenpeace Ltd) v Secretary of State for Trade and Industry [2007] EWHC 311 the UK’s plans for nuclear power were successfully challenged. See generally B  Sadler and R Verheem, Strategic Environmental Assessment: Status, Challenges and Future Directions (Netherlands Ministry of Housing and Environment, 1996); R Therivel and MR Partidario, The Practice of Strategic Environmental Assessment (Earthscan 1996); R Therivel, E Wilson et al, Strategic Environmental Assessment (Earthscan 1992). 97   US Executive Order 13141 (1999) 39 ILM (2000) 766. Canada also conducted an EIA of the North American Free Trade Agreement. 98   Protocol on Strategic Environmental Assessment to the Convention on Environmental Impact Assessment in a Transboundary Context, (21 May 2003) Doc. ECE/MP.EIA/2003/2. 92

2. beyond the unfccc   45 has significantly broadened the obligations of States Parties in this respect.99 Unlike the 1991 EIA Convention, the SEA Protocol is not limited to transboundary effects, and it also requires parties to promote SEAs in international organizations and ‘decision-making processes’ (presumably treaty conferences).100 It applies in full only to ‘plans and programmes’, but ‘policies and legislation’ are covered to a more limited extent.101 Article 4 requires an SEA for plans and programmes relating inter alia to energy, forestry, and industry, so its potential relevance to climate change is obvious. An EIA/SEA is fundamental to any regulatory system that seeks to identify environmental risk, integrate environmental concerns into development projects, and promote sustainable development.102 It may facilitate transboundary cooperation and has the potential to place some restraints on policies that could exacerbate climate change. Both the 1991 EIA Convention and the Arhus Convention103 recognize that transboundary applicants have a right to participate in the EIA process,104 and this possibility could open the door to representations by international non-governmental organizations (NGOs) or even foreign governments.105 The SEA Protocol’s strong provision for public participation also represents a considerable expansion of environmental democracy in many states and international organizations if fully implemented.106 Whether as a matter of law or policy, it is hard to see why states likely to be affected by climate change should not be heard when decisions on energy-related projects or programmes are subject to an EIA or SEA. Of course an EIA or SEA does not determine whether a project should proceed or how it should be regulated. Those decisions are for the relevant public authority, balancing the information provided by the EIA or SEA against whatever other considerations are considered decisive, including economic development. Seen from this angle, it is clear that a ‘satisfactory’ EIA or SEA need not show that there will be no risk of global or transboundary harm. It will be sufficient if it provides the necessary information about the project’s likely impact and follows the proper process.   See Jan De Mulder, ‘The Protocol on SEA: A Matter of Good Governance’ (2011) 20 RECIEL 232.   Articles 3(5) and 4. 101   Article 13. See UNECE, Resource Manual to Support Application of the Protocol on SEA (Geneva, 2012). 102   See for example SEA Protocol, Article 1, although note De Mulder (n 99), at 237: ‘the objective of the SEA Protocol is not clearly situated within a policy framework aimed at sustainable development.’ 103   Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention) 2161 UNTS 447; 38 ILM 517 (1999). 104  1991 Convention on EIA, Article 2(6); 1998 Arhus Convention, Articles 2(5) and 3(6); SEA Protocol Article 8. 105   E.g. the representations made by Micronesia to the Czech Republic (n 92). 106   See Article 8. See Jonas Ebbesson, ‘A Modest Contribution to Environmental Democracy and Justice in Transboundary Contexts’ (2011) 20 RECIEL 248. 99

100

46   part i. introduction

6.  Law of the Sea Perspectives This section addresses climate change from a Law of the Sea perspective.107 For low-lying and small island States, sea level rise and changes in the marine ecosystem are the most immediate threats posed by climate change. The UNCLOS provides a fairly comprehensive regime for the protection and preservation of the marine environment and the prevention, reduction, and control of marine pollution damage to other States. Its provisions are increasingly relevant to climate change insofar as GHG emissions cause marine pollution and harmful changes to the marine environment. In particular, Article 192 provides that ‘[S]‌tates have the obligation to protect and preserve the marine environment’. Later treaties, such as the Convention on Biological Diversity,108 suggest that, consistently with the objects and purposes of UNCLOS, Part XII can readily be interpreted to cover protection of marine ecosystems and marine biodiversity in general.109 Atmospheric deposition of CO2 into the marine environment arguably falls within the terms of Article 192 and the subsequent provisions of Part XII. Article 194 requires states to take measures necessary to prevent marine pollution ‘from any source’. While anthropogenic GHG emissions are not specifically listed, it is entirely plausible to read Article 194(3) as covering atmospheric depositions of CO2 resulting in marine pollution. A significant proportion of marine pollution already comes from airborne depositions, and it has never been suggested that this is excluded from UNCLOS. These CO2 emissions have caused marine pollution. Article 1(1)(4) of UNCLOS defines ‘pollution of the marine environment’ to include the introduction of substances or energy resulting in harm to the marine environment. CO2 emissions appear to have resulted in the deposition of excess anthropogenic carbon into the oceans, altering their chemistry, and making them more acidic.110 They also appear to have added ‘energy’ to the oceans, either directly by causing ocean temperatures to rise, or indirectly by melting ice caps and glaciers, resulting in sea level rise. Evidence evaluated in reports from various UN specialized agencies has shown that 107   This section is based on an article previously published in 27 IJMCL (2012), 831. For an overview of other issues not covered here see ‘Climate change and the law of the sea’, in Rayfuse and Scott (n 3), Chapter 6. 108 109   1760 UNTS 79; 31 ILM 818 (1992)   See 1982 UNCLOS, preamble and Article 194(5). 110   The surface ocean is thought to absorb around one quarter of the carbon dioxide emitted to the atmosphere. See CBD, Scientific Synthesis of the Impacts of Ocean Acidification on Marine Biodiversity (CBD Technical Series no. 46), p 9; IOC/UNESCO, Building Stewardship for the Ocean: The Contribution of UNESCO to Responsible Ocean Governance, Our Changing Oceans: Conclusions of the First International Symposium on the Effects of Climate Change on the World’s Oceans (Gijon 2008), ICES Journal of Marine Science Advance Access (4 June 2009), 1, and generally, M Allsopp et al, State of the World’s Oceans (Springer 2009), Chapter 5.

2. beyond the unfccc   47 these depositions have caused or are likely to cause the kind of harmful effects listed in Article 1(1)(4).111 Article 194(2) of UNCLOS is directed at protecting other States from marine pollution damage. It is particularly pertinent to climate change insofar as States are required to take measures to control and regulate polluting ‘activities’ within their jurisdiction. Examples of such activities would include industrial installations that generate CO2, power generators that use oil or coal, oil extraction industries, coal-mining, or possibly deforestation. This does not mean that corporate polluters would be responsible under UNCLOS, or that the contribution of each plant would have to be quantified. UNCLOS does not address private parties directly. But it does make State parties responsible under Article 194 for regulating and controlling the risk of marine pollution damage to other States resulting from the activities of the private sector. Fundamentally this is an obligation of due diligence—States must take the measures necessary to prevent or minimize harmful pollution, including environmental impact assessment, regulation, and use of best available technology, application of the precautionary principle, and enforcement.112 On that basis, States have an obligation to control and reduce CO2 emissions from any source likely to pollute the marine environment and cause harm to other States. The most obvious way of showing a failure to take the measures required by Articles 192 and 194 is to argue that the Kyoto Protocol sets a standard for giving effect to these provisions—that, in other words, UNCLOS developed State Parties must comply with their emission reduction targets under the Kyoto Protocol. This argument thus presents a very clear pathway through which compliance with the Kyoto Protocol’s GHG emission reduction standards could be litigated in UNCLOS proceedings. Of course it would have to be shown that the Parties to the Kyoto Protocol have not complied with their emission reduction commitments and that any alleged failure to comply with UNCLOS has been the subject of an exchange of views between the parties indicating the scope of the dispute.113 It is, however, quite likely that all of the Annex I State Parties will have met their emission reduction targets for the first Kyoto Protocol commitment period, ending in 2012; only Canada would have been in non-compliance had it remained a Party. 111  CBD, Scientific Synthesis, ibid; FAO, Fisheries Report No. 870: Report of the FAO Expert Workshop on Climate Change Implications for Fisheries and Aquaculture (Rome, FAO 2008); IPCC, Climate Change 2007: Synthesis Report (Geneva, IPCC 2008). 112   ILC, 2001 Articles on Prevention of Transboundary Harm, Article 3 and commentary, ILC Report (2001) GAOR A/56/10, 391–5, paras (7)–(17); Pulp Mills on the River Uruguay, 2010 ICJ Reports, paras 197 and 223; Advisory Opinion on Responsibilities and Obligations of States Sponsoring Persons and Entities with Respect to Activities in the Area, 2011 ITLOS Seabed Disputes Chamber, paras 115–20. 113   1982 UNCLOS, Article 283; Barbados v Trinidad & Tobago (2006), XXVII RIAA 149, para 198. See also Case Concerning Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v Russian Federation), Preliminary Objections, 2011 ICJ Reports, paras 157–9; Questions relating to the Obligation to Prosecute or Extradite (Belgium v Senegal), 2012 ICJ Reports, paras 54–8.

48   part i. introduction Developing State Parties to the Kyoto Protocol have no obligation to reduce GHG emissions, even if, like India and China, they are large GHG emitters. They will still be in compliance with the Kyoto Protocol even though their GHG emissions have greatly increased since 1997. They would also not be in breach of UNCLOS Articles 192 and 194 if the Kyoto Protocol defines the content of those articles. Nor would the United States, which is not a party to the Kyoto Protocol or UNCLOS. Moreover, developed state Parties to the Kyoto Protocol have different emission reductions targets, and in some cases they are permitted to increase emissions above historic levels. Taking the Kyoto Protocol as a standard of diligence for non-parties simply begs the question: what standard, and for whom? Could we argue that compliance with the Kyoto Protocol is not enough to satisfy the requirements of UNCLOS Part XII? UNCLOS, it might be said, is more demanding, especially if interpreted by reference to the precautionary principle and the duty of due diligence referred to earlier. This is an attractive argument precisely because it would set a common higher standard for GHG emission reductions for all developed States and would address the obvious inadequacy of the Kyoto Protocol emission reduction commitments. Marine pollution will worsen even if every Party fully complies with the Kyoto Protocol, since GHG emissions overall will still continue to rise—they will simply do so less quickly. If the evidence of serious or irreversible harm to the marine environment is good enough, then surely we could say that stronger precautionary measures must not be postponed? Attractive though this may be as an argument, the counter-arguments are ­considerably easier to make. Can it plausibly be claimed that UNCLOS regulates climate change impacts on the oceans in splendid isolation from the Kyoto Protocol? Other marine pollution agreements are directly relevant to the interpretation and application of Part XII obligations, including the 1973/78 MARPOL Convention and the London Dumping Convention. Why should the Kyoto Protocol be different? The argument that compliance with agreed standards of pollution control (such as the Kyoto Protocol) is not enough to satisfy the more general duty of due diligence has been tried unsuccessfully in the Mox Plant and Pulp Mills cases. Both developed and developing State parties would undoubtedly point to Article 193 of UNCLOS, which refers to their ‘sovereign right to exploit their natural resources pursuant to their environmental policies and in accordance with their duty to protect and ­preserve the marine environment’. This could be interpreted as a reference to the right to sustainable development, in accordance with the case law of the ICJ.114 Taking these decisions into account, and the two previous points, it seems very likely that any tribunal would view reduction of GHG emissions as an exercise in balancing ­continued economic development against environmental protection, and that it 114   Gabčíkovo-Nagymaros Dam Case (1997) ICJ Reports 7, para 140; Iron Rhine Railway Arbitration (2005) PCA, paras 58–9; Pulp Mills Case (Provisional Measures) (Argentina v Uruguay) (2006) ICJ Reports, para 80; Pulp Mills Case (Merits) (2010) ICJ Reports, para 177.

2. beyond the unfccc   49 would be reluctant to require more of States than they have agreed to under the Kyoto Protocol, or under Article 2 of the UNFCCC, which refers to enabling ‘economic development to proceed in a sustainable manner’. The relationship between UNCLOS and climate change is not clear-cut, despite its obvious importance. Part XV provides for compulsory settlement of UNCLOS disputes by a variety of international courts and tribunals, and this may give weaker States with limited influence in UNFCCC negotiations the opportunity to exert greater pressure on GHG emitters through litigation. Nevertheless, it is doubtful whether viewing climate change through the law of the marine environment greatly alters the overall picture. At best, it provides a vehicle for compulsory dispute settlement notably lacking in the UNFCCC regime. Realistically, while UNCLOS may import any newly agreed standards for the control of GHGs, it is not a substitute for further agreement.

7.  Trade Law Perspectives The preamble to the 1994 Marrakesh Agreement establishing the WTO acknowledges115 that expansion of trade must allow for ‘the optimal use of the World’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development’. To that extent, protecting the world from climate change is a legitimate concern of those charged with developing and applying WTO law. Reflecting the objectives of the WTO, a commitment to an ‘open international economic system’ is expressed in Article 3 of the UNFCCC. Yet it is the lack of GHG emissions controls on developing States under the UNFCCC or the Kyoto Protocol, that has in effect enabled developed States to export GHG emissions to China, India, Brazil, and other developing Sates. By doing so they have neatly evaded the emissions constraints placed on Annex I-developed States by the Kyoto Protocol. Those constraints focus on emissions of GHGs within the country concerned; they ignore emissions generated by goods produced elsewhere that are then imported.116 As we 115   For a more comprehensive treatment see Navraj Singh Ghaleigh and David Rossati, ‘The Spectre of Carbon Border-Adjustment Measures’ (2011) 2 Climate law 63 and Markus Gehring, Marie-Claire Cordonnier-Segger, and Jarod Hepburn, ‘Climate Change and International Trade and Investment Law’ in Rosemary Gail Rayfuse and Shirley V Scott (eds), International Law in the Era of Climate Change (Edward Elgar 2012). 116   Contrast the Montreal Protocol on Substances that Deplete the Ozone Layer (1987) 1522 UNTS 3; 26 ILM 1550, which regulates both production and consumption of ozone-depleting substances for all

50   part i. introduction saw earlier, the EU’s net consumption of GHGs has remained unchanged whilst its territorial production has plummeted, because of imports from China and other developing countries. In that sense free trade and the globalization of production and transport have exacerbated the difficulty of regulating GHG emissions. It is an obvious question whether a post-Kyoto accord can sustain the status quo—leaving trading patterns unchanged will certainly make climate change harder to solve. At the very least, it may be necessary to factor imports from non-Annex I countries into Annex I GHG reduction commitments, but it also raises larger questions about whether WTO rules on free trade can survive if we want to get serious about oil and coal consumption or deforestation.117 Article XX of the General Agreement on Tariffs and Trade (GATT) allows for exceptions from GATT obligations, including measures ‘necessary to protect human, animal or plant life or health’, or ‘relating to conservation of exhaustible natural resources’.118 It seems clear that climate change is or will become a risk to human health, as evidenced by 2009 OHCHR Report on the relationship between climate change and human rights.119 Equally obvious, climate change is a threat to exhaustible natural resources.120 The term potentially covers, inter alia, forests, biodiversity, terrestrial and marine living resources, and the quality of air and water.121 Unilateral trade restrictions are likely to be regarded as arbitrary or discriminatory for the purposes of Article XX if, inter alia, the State concerned has not first sought a cooperative solution through negotiation.122 What is less clear is whether unilateral measures are permitted where both sides have negotiated in good faith but have simply been unable to reach agreement, for example because they differ in their view of what tackling climate change requires. It is one thing to say that States must negotiate in good faith, but what constitutes a failure to do so? There are legitimate differences of opinion on what measures should be taken to address

of its parties. This effectively prevented the outsourcing of production. The Kyoto Protocol negotiators could not reach agreement on a similar approach.  See Scott Barrett, Climate Change and International Trade: Lessons on their Linkage from International Environmental Agreements (Geneva, CTEI 2010); UNEP/WTO, Trade and Climate Change (Geneva, UNEP/WTO 2009). 118   General Agreement on Tariffs and Trade, Article XX(b) & (g). 119   UN HRC, Report of the Office of the United Nations High Commissioner for Human Rights on the relationship between climate change and human rights, GAOR A/HRC/10/61, 15 January 2009, citing IPCC, Climate Change 2007: Synthesis Report (Geneva, IPPC 2008), 48. 120   Supra, nn 110 and 111. 121  In Standards for Reformulated Gasoline, WT/DS2/AB/R (1996), the WTO Appellate Body found that clean air is ‘an exhaustible natural resource’. 122   US—Import Prohibition of Certain Shrimp and Shrimp Products, WTO Appellate body (1998) WT/DS58/AB/R, paras 168–72. See Lorand Bartels, ‘The WTO Legality of the Application of the EU’s Emission Trading System to Aviation’ (2012) 23 EJIL 429. 117

2. beyond the unfccc   51 climate change, how soon they should begin to operate, and whether they should be in a form binding on all States or only on developed States. The idea that Europe or any other party could resort to unilateral trade sanctions under GATT Article XX if climate negotiations fail is tenable only if it can be shown that the other party has failed to cooperate.123 Whatever the problems evident in the current negotiations, it would be difficult to argue that any particular UNFCCC Party has failed to negotiate in good faith. Any attempt to take unilateral trade measures in response to a mere breakdown in bona fide negotiations is thus likely to be characterized as arbitrary and unjustifiable discrimination contrary to the chapeau of Article XX of the GATT. Even if the conditions for resorting to unilateral trade sanctions are found to exist, however, the real problem with using them to pressurize reluctant States into reducing GHG emissions is that this would represent a desperate last resort. Sanctions might work against an oil-exporting state like Saudi Arabia, but could Europe really use them against China or the United States? The only likely outcome would be a trade war. Legally, it might be possible in certain circumstances. Politically, it seems only likely to worsen relations.

8.  ICJ Advisory Opinion Bearing in mind how little progress has been made in building on—or even sustaining—the Kyoto Protocol, it is not surprising that some developing State Parties have thought about alternative approaches. The possibility of seeking an advisory opinion from the International Court of Justice is one of them. That begs the question what general international law has to say about climate change apart from the UNFCCC regime. Do States have an obligation in international law to apply Rio Principle 2124 and the obligation of due diligence to the emission of greenhouse gases? The general obligation of States to take measures to

  US—Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5, WTO Appellate Body (2001) WT/DS58/AB/RW, p 37. 124   Principle 2 provides: 123

States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction. U.N. Conference on Environment and Development, June 3-14, 1992, Rio Declaration on Environment and Development, Principle 2, U.N. Doc. A/CONF.151/26/Rev.1 (Vol. 1) (June 14, 1992).

52   part i. introduction prevent, reduce, and control transboundary pollution and pollution of the marine environment was elaborated in the 2010 Pulp Mills case and in the International Tribunal for the Law of the Sea (ITLOS) Advisory Opinion on Seabed Activities of 2011. If this obligation can apply to nuclear fallout,125 there seems no reason not to apply it to GHG emissions. Both cause pollution of other states and of the global environment. But as we saw when considering the UNCLOS, it is more than likely that, whatever general obligation States may have to deal with climate change, will be fulfilled by complying with the Kyoto Protocol and any other measures agreed in that context. The Kyoto Protocol is, in effect, the agreed standard of due diligence for the Parties. For all the reasons already set out in the section on law of the sea, it seems unlikely that an international court will hold that more must be done than has so far been agreed. A study undertaken by an ILA Committee has not challenged that conclusion.126 At best, an international court may be persuaded to exhort the parties to negotiate in good faith, and to cooperate, as the ICJ did in the Gabčíkovo-Nagymaros case.127 It cannot compel the parties to agree, or to agree to measures that are stronger or more effective. This is not to argue that the UNFCCC regime is a selfcontained regime. On the contrary, the problem is precisely the inter-­relationship between the general obligation of due diligence and the treaty regime. It is characteristic of most environmental treaties that they build upon the due diligence obligation and require parties to take internationally agreed measures or apply international rules and standards.128 Once those measures, rules, or standards are agreed it is very difficult to sustain the argument that the due diligence obligation has some separate and, if necessary, stronger character. Due diligence inevitably represents a compromise between what is possible and what is economically acceptable—a compromise fatally reflected in the UNFCCC and the Kyoto Protocol. Reformulating that problem in terms of the precautionary principle or approach does not change things. The UNFCCC already acknow­ledges the applicability of the precautionary approach,129 but that has not resulted in States going any faster or any further. They can legitimately say that what has been agreed represents their adoption of a precautionary approach. Is any international court likely to disagree?

125  IAEA/GC(SPL.1)Res./1 (1989); Phoebe Okowa, State Responsibility for Transboundary Air Pollution in International Law (Oxford University Press 2000) Chapter 4. In the dispute over nuclear testing in the Pacific, France accepted ‘its duty to ensure that every condition was met and every precaution taken to prevent injury to the population and the fauna and flora of the world’ (note to New Zealand of 19 February 1973). 126   ILA, Legal Principles Relating to Climate Change, 2nd Report, Sofia Conference (2012). 127   1997 ICJ Reports 7. 128   See for e­ xample 1982 UNCLOS, Articles 194, 207–12; 1994 Convention on Nuclear Safety. 129   UNFCCC, Article 3(3).

2. beyond the unfccc   53

9. Conclusions At best, international regulation based on the UNFCCC and the Kyoto Protocol provides a foundation for coordinated action by governments and the private sector, but it can only be effective to the extent that politicians allow it to be. The fundamental challenge is to secure a stronger commitment from all Parties to take the necessary measures, and therein lies the core of the problem. A global solution requires near-global consensus, and that consensus has only come slowly and reluctantly on the part of some key States. There is some movement by developing industrialized states, and that is both necessary and welcome, but the developed states are still unable to agree on a common vision of the way forward. The current consensus is based on a lowest common denominator approach because, as we have seen, there is no viable alternative to consensus negotiations, but this consensus represents only what is politically feasible, not what is scientifically necessary or technologically possible. It remains to be seen whether that limited consensus generates measures sufficient to restrain global temperature rises to 2°C. Future progress will depend on a number of pivots – that is the United States and China agreeing to limit emissions, on Europe not hiding behind the distinction between territorial and consumption emissions. The challenge at this point is essentially political rather than legal. For all of the reasons set out earlier there seems only limited scope for using human rights law, WTO law, or the Law of the Sea as weapons to pressure governments to act on climate change. Nor is an ICJ advisory opinion likely to add anything new. Litigation is not the answer. In this context there really is no useful alternative to negotiation, except at the margins. But those negotiations do not have to take place only in the UNFCCC process. Rather, the important lesson is that climate change should be on the negotiating agenda of all international institutions whose mandate is affected by it. It is a human rights issue. It is a trade issue. It is an issue for the IMO and convention secretariats responsible for protecting the marine environment, and so on. These institutions and their various intergovernmental and civil society processes can and should be mobilized to pressure the key States into taking more effective action to deliver on the promises they made at Cancun and Durban. In particular, the UN Covenant on Economic, Social and Cultural Rights has obvious relevance to climate change. More needs to be heard from that perspective. The same can be said about the UN Convention on Biological Diversity. Koskenniemi has drawn attention to the potential for fragmentation in international law and policy arising from the competing mandates of international institutions.130 But when an issue such as   Koskenniemi (n 28) at 61.

130

54   part i. introduction climate change has over-arching implications for a range of different mandates, it seems wiser to emphasize instead the potential for coordination and more effective action when the international system as a whole is more comprehensively engaged. Put another way, climate change is too serious a problem to leave to the UNFCCC alone.

Chapter 3

SCIENCE AND CLIMATE CHANGE LAW— THE ROLE OF THE IPCC IN INTERNATIONAL DECISION-MAKING Navraj Singh Ghaleigh*

1. The Pre-History of the IPCC

56

2. Establishment, Principles, and Status

58

3. The Structure of the IPCC

62

4. Reform of the IPCC

63

5. Public International Law and Scientific Evidence

66

6. The Lens of Global Administrative Law

68

7. Conclusion

70

* Sincere thanks to David Rossati for his research assistance. Errors and opinions are the author’s alone.

56   part i. introduction Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia . . . Continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system.1

The scientific basis for climate change has now been widely accepted, and this blunt warning from the Intergovernmental Panel on Climate Change (IPCC)’s Fifth Assessment Report (AR5) affirms successive reports issuing from it and other bodies. In a loose causalistic sense, each of the key stages of the climate regime to date has been driven by the demands of science as articulated by IPCC Assessment Reports. Rio (1992) and the United Nations (UN) Intergovernmental Negotiating Committee (1990) were preceded by the First Assessment Report, Kyoto (1997) by the Second, Copenhagen (2009) by the Fourth, and the long run-up to Paris (2015) by the Fifth, with each ‘presenting the problem in steadily starker terms’.2 Indeed, the thud of IPCC reports periodically hitting desks has been accompanied by the steady drumbeat of scientific warnings from authoritative scientific bodies such as the American Association for the Advancement of Science, the US Global Change Research Program, the Royal Society, Netherlands Environmental Assessment Agency, and many others. There is strikingly little divergence in the messages of these variously constituted bodies, and the IPCC as the global clearing house of climate research leads the way.

1.  The Pre-History of the IPCC The early climate regime can be divided into five periods, characterized by the emergence of the scientific consensus (1960s to 1980s), agenda-setting (late 1980s), prenegotiation (1988–90), formal intergovernmental negotiation (to May 1992), and implementation and Kyoto negotiation (to 1997).3 In the first of these, scientific advances driven in part by computational advances, helped to crystallize the 1   ‘IPCC, 2013: Summary for Policymakers’ in Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)). (Cambridge University Press, United Kingdom and New York) 4. 2   Anthony Brenton, ‘“Great Powers” in Climate Politics’ (2013) 13 Climate Policy 541, 544; Soltau F, Fairness in International Climate Change Law and Policy (Cambridge University Press 2011) pp.25–7. 3   Daniel Bodansky, ‘The History of the Global Climate Regime’ in Urs Luterbacher and Detlef F Sprinz (eds), International Relations and Global Climate Change (MIT Press 2001) pp.23–40. See also

3.  science and climate change law    57 scientific consensus around key features of anthropogenic climate change. These understandings moved into political and public realms by a number of interconnected mechanisms, including leading scientists4 acting as ‘knowledge brokers’ to international organizations (especially the UN Environmental Programme (UNEP) and the World Meteorological Organization (WMO)) and national governments. The agenda-setting period itself came towards the end of the two-decade-long era of making global environmental agreements. International agreements on the seas, fresh water resources, and the ozone layer not only created a context in which international legality was seen as capable of responding to long-term, non-local, environmental challenges, but firmly embedded the notion that humankind was making decisive and deleterious impacts on a planetary scale.5 In each of these contexts, ‘science represents an important decision premise for decision-makers in international environmental regimes’.6 Moreover, in these initial stages, the primary actors were not nation states but scientific communities, non-governmental organizations (NGOs) and international organizations.7 A rider to this is the pivotal role played by the United States. Uniquely, the United States had undertaken governmentsponsored research into climate change since the mid-1960s.8 This accumulation of expertise was not only a function of broader scientific excellence but also due to the United State’s heightened stakes in the issue as the world’s largest emitter, the strength of the fossil fuel lobby in its domestic politics, being the largest donor to the UN system, and the fact that the various government agencies and research establishments in the United States viewed the climate change problem differently.9 It was in the prenegotiation phase that national governments moved towards the centre stage, albeit sharing the space with WMO and UNEP, and latterly their progeny, the IPCC. Whilst these debates were principally the preserve of western governments, cleavages emerged between ‘north’ and ‘south’ (what would become the UN Framework Convention on Climate Change (UNFCCC)’s ‘Annex I’ and ‘non-Annex I’ parties), the latter seeing the UN General Assembly (UNGA) as the proper focal point for negotiations of a future climate treaty, rather than the more technical IPCC, in which developing countries felt less able to participate.10 This feeds into debates about the autonomy of science and political involvement in international decision-making, and the proper places and times of each. While Shardul Agrawala, ‘Context and Early Origins of the Intergovernmental Panel on Climate Change’ (1998) 39 Climatic Change 605.   Bodansky highlights the role of Bert Bolin, future IPCC chair. Bodansky (n 3) 26.   Mostafa Kamal Tolba and Iwona Rummel-Bulska, Global Environmental Diplomacy: Negotiating Environmental Agreements for the World, 1973–1992 (MIT Press 2008). 6   Steinar Andresen and Jon Birger Skjærseth, ‘Science and Technology: From Agenda Setting to Implementation’ in Daniel Bodansky, Jutta Brunnée and Ellen Hey (eds), The Oxford Handbook of International Environmental Law (Oxford University Press 2008) p.200. 7   Bodansky (n 3).    8  Agrawala (n 3) 606, 608–9. 9  Ibid 609.   10  Bodansky (n 3). 4 5

58   part i. introduction developed countries may regard the insulation of scientific knowledge from political processes as desirable or even essential, developing countries tend to harbour unease with the notion, not least since that science was done elsewhere,11 raising a powerful legitimacy challenge for the climate regime, and its institutional design.12

2.  Establishment, Principles, and Status As all students of climate change know, the IPCC came into being following joint decisions in 1987 of the WMO and UNEP to ‘establish an ad hoc intergovernmental mechanism to carry out internationally co-ordinated scientific assessments of the magnitude, timing, and potential impact of climate change’.13 Less well-known is that it was preceded by the Advisory Group on Greenhouse Gases (AGGG), a small taskforce established inter alia by the WMO and UNEP in 1986. In its 1987 meetings it proposed a series of policy actions, viewed as aggressive by the United States.14 Indeed, Agrawala suggests that US concern with the AGGG provoked it to seek, via the WMO, the establishment of an intergovernmental mechanism to conduct scientific climate change assessments.15 The precise form of intergovernmental cooperation was ‘primarily a back-room effort of design, negotiation and compromise [and] the hub of activity was in the US,’ in which national representation was raised above that of international organizations, and the scope of the mechanism should comprise the science of climate change, its impacts and response strategies.16 The following year, the WMO/UNEP proposals, much influenced by the United States, were endorsed by a resolution of the UN General Assembly albeit with the term ‘ad hoc’ removed and reference to ‘realistic response strategies’ added.17 Moreover, in line with US concerns for the scope of the mechanism, the Resolution determined its mandate to ‘initiate action leading to . . . comprehensive review and recommendations [on] the science of climate and climatic change . . . social and economic impact of climate change [and] response strategies’.18 These three limbs map closely onto the IPCC’s Working Groups.   Andresen and Skjærseth (n 6).  For a full consideration, see Shardul Agrawala, ‘Structural and Process History of the Intergovernmental Panel on Climate Change’ (1998) 39 Climatic Change 621, 628–32. See also Friedrich Soltau, Fairness in International Climate Change Law and Policy (Reissue, Cambridge University Press 2011) pp. 36–7. 13   WMO Thirty-Ninth Session of the Executive Council General Summary 3.4, 1–5 June 1987; UNEP Governing Council Decision 14/20, 17 June 1987. Emphasis in original. 14 15 16   Agrawala (n 3) 610.   Ibid 611, 614.   Ibid 615. 17   UNGA Res 43/53 (6 December 1988) UN Doc A/RES/43/53 ¶5.    18  Ibid ¶10. 11

12

3.  science and climate change law    59 As far as the operation of the IPCC is concerned, the Principles Governing IPCC Work is the key document.19 (The Principles are regularly reviewed and amended,20 most recently at the Thirty-Seventh Session in 2013.) The role of the IPCC is to ‘assess on a comprehensive, objective, open and transparent basis the scientific, technical and socio-economic information relevant to understanding the scientific basis of risk of human-induced climate change’.21 Notably absent are references to the IPCC undertaking primary research—assessment being its stock-in-trade, to be undertaken by ‘experts from WMO and UN Member countries’.22 As to the IPCC’s status in international law, whilst it is independent of its two parent entities, UNEP and WMO, it is not an international organization.23 Although competing definitions abound,24 neither the decisions establishing the IPCC,25 nor its constitutive instrument (Principles Governing the IPCC Work), satisfy two necessary elements: that the institution is established under an international agreement covered under international law, and that it holds international legal personality. Rather, those instruments point to the conclusion that the IPCC is an international institution, belonging to that loosely defined category of ‘soft organizations’,26 created by a ‘co-operative arrangement’ between two UN Agencies.27 Soft organizations have the peculiarity of being entities that, despite engaging with and being managed by states, nonetheless act outside the realm of international law. As a consequence, the regulatory activities of the IPCC and its organs28 do not directly participate into the complex enterprise of international lawmaking, in the sense that the resolutions and decisions of the IPCC do not affect member states via either binding norms or ‘soft’ obligations. How then does the IPCC engage with the UNFCCC? Do its assessments feed into a formal process or a black hole? The Convention itself gives only limited guidance, its sole reference to the IPCC being that the Secretariat ‘will cooperate 19   Approved at the Fourteenth Session (Vienna, 1–3 October 1998) on 1 October 1998. Available at , (accessed 3 November 2014). 20  Ibid ¶16.   21 Ibid ¶2.   22  Ibid ¶9. 23  See generally Reparation for Injuries Suffered in the Service of the United Nations, Advisory Opinion, (1949) ICJ Reports 174, 179–80; and International Law Commission, ‘Draft articles on the responsibility of international organizations’, Report on the work of its sixty-third session (UN GAOR 66th Sess. Supp. No 10, 2011), Article 2(a). 24   Henry G Schermers and NM Blokker, International Institutional Law: Unity within Diversity (4th (revised) edn, Brill 2004), ¶34ff; CF Amerasinghe, Principles of the Institutional Law of International Organizations (2nd edn, Cambridge University Press 2005) p.10; and Philippe Sands and Pierre Klein, Bowett’s Law of International Institutions (Sweet & Maxwell 2009) pp.10–15. 25   Ibid nn. 11, 12. 26   Jan Klabbers, ‘Institutional Ambivalence by Design: Soft Organizations in International Law’ (2001) 70 Nordic Journal of International Law 403. 27  Philippe Sands and Jacqueline Peel, Principles of International Environmental Law (3rd edn, Cambridge University Press 2012) pp.70, 76. 28   The Plenary, Bureau, and recently established, Executive Council.

60   part i. introduction closely with the Intergovernmental Panel on Climate Change to ensure that the Panel can respond to the need for objective scientific and technical advice. Other relevant scientific bodies could also be consulted’.29 The specification of cooperation with the Secretariat is a very narrow form of engagement, making no mention of relations with the Convention’s subsidiary bodies, much less the Conference of the Parties. Each is accordingly, as a formal matter at least, entirely at liberty to depart from the conclusions of the IPCC, consistent with the desire for national government primacy articulated above. Furthermore, despite oblique references in the Preamble to the WMO/UNEP,30 to ‘intergovernmental programmes’,31 and for the Conference of the Parties (COP) to ‘seek and utilize . . . information provided by competent international organizations and intergovernmental and non-governmental bodies’,32 the hesitancy of the Convention to embed formal structures between itself and the relatively unknown quantity of the IPCC is unsurprising. Its First Assessment Report was after all published only in 1990.33 In short order, however, the IPCC became primus inter pares amongst the various international organizations, NGOs, and international government organizations in UNFCCC’s orbit. Both input and output legitimacy account for the institutional leadership of the IPCC. In respect of the latter, the publication of an updating Supplement in 199234 and a Special Report35 for the first COP, ensured that by 1995 the IPCC’s credentials were established and its Reports became the means by which the UNFCCC process gauged the science of climate change. Decisions from the Berlin COP made repeated and specific reference to the IPCC, its reports, and their role in ascertaining the ‘best available scientific information’,36 contributing to methodological issues,37 as named consultees to the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI),38 and prioritizing the consideration of the (then) forthcoming Second Assessment Report prior to the next COP.39 No less importantly, the IPCC was swift in undertaking a significant number of institutional reforms. These included the decision to produce   UNFCCC, Article 21.   ‘Conscious of the valuable analytical work being conducted by many States on climate change and of the important contributions of the World Meteorological Organization, the United Nations Environment Programme and other organs, organizations and bodies of the United Nations system, as well as other international and intergovernmental bodies, to the exchange of results of scientific research and the coordination of research.’ 31 32   Article 5(a) and (b).   Article 7(2)(l). 33   JT Houghton, GJ Jenkins, and JJ Ephraums (eds), Climate Change: The IPCC Scientific Assessment (Cambridge University Press 1990). 34  Intergovernmental Panel on Climate Change, IPCC First Assessment Report Overview and Policymaker Summaries and 1992 IPCC Supplement (Cambridge University Press 1992). 35  JT Houghton et al (eds), Climate Change 1994: Radiative Forcing of Climate Change and An Evaluation of the IPCC IS92 Emission Scenarios (Cambridge University Press 1994). 36 37   COP Dec. 1/CP.1, ¶3, in FCCC/CP/1995/7/Add.1.   COP Dec. 4/CP.1, ¶1, in ibid. 38 39   COP Dec. 6/CP.1, ¶6, in ibid.      Ibid Annex II, ¶1. 29

30

3.  science and climate change law    61 a summary for policymakers (1989), the establishment of a Special Committee for Participation of Developing Countries (1989–90), starting a dialogic with UNFCCC officials (1993–to date) and producing ‘rapid response’ papers for UNFCCC bodies (1996–to date).40 Thus, while the formal position remained unchanged and the COP was under no binding obligation to follow IPCC recommendations, UNFCCC decision-making processes de facto regarded the IPCC as singular in its expertise, independence, and legitimacy.41 That 1997’s Kyoto Protocol assigns specific prominence to the IPCC42 is testament to the same, and subsequent COP Decisions repeatedly affirmed the UNFCCC’s appreciation of IPCC outputs, not least by urging Parties to contribute to its funding, and need for continued cooperation.43 At the bureaucratic level, co-working between the UNFCCC Secretariat and the IPCC has been common, in the organization of workshops and methodological standard setting,44 development of the adaptation agenda in the wake of the Third Assessment report,45 identifying priority areas,46 and much else. Even Annex I parties are advised to be guided by the IPCC’s guidance, in addition to UNFCCC’s own reporting guidelines, on reporting for the purposes of greenhouse gas inventories.47 A further reason for the elevation of the IPCC above other scientific inter- and non-governmental organizations may be a pragmatic recognition of the need for coordination.48 There is a potentially wide array of international bodies which have been established to undertake tasks similar to those attributed to the IPCC, or regional bodies doing such work, or multiple bodies each addressing an aspect of the IPCC’s remit. In the absence of coordination the risk arises of duplication, omission, and conflict. As such, the IPCC’s position in the UNFCCC process and beyond can be seen as an act of de facto prioritization which, owing to the exceptionally broad base and preeminence of its membership, has been able to avoid generating disgruntlement from other potential competitors. Certainly, as between the WMO and UNEP, the IPCC operates as a common organ to reduce coordination costs.49

  Agrawala (n 12) 638.   LA Kimball, ‘Treaty Implementation: Scientific and Technical Advice Enters a New Stage’ (1996) 28 Studies in Transnational Legal Policy 177, 196–7. 42   Articles 3(4), 5(2)(3), and 10(d). 43   Especially COP Dec. 19/CP.5 (Cooperation with the IPCC). See also 25/CP.7 (Third Assessment Report), 1/CP.11 (Dialogue on long-term cooperative action) and 9/CP.11 (Research needs of the Convention). 44   I.e. FCCC/SBSTA/2001/INF.4. (accessed 14 July 2015). 45   COP Dec. 1/CP.8 (Delhi Ministerial Declaration on Climate Change and Sustainable Development). 46   I.e. FCCC/SBSTA/2002/Misc.15 . 47   COP Dec. 13/CP.9 (Good practice guidance for national greenhouse gas inventories). 48   Henry G Schermers and NM Blokker, International Institutional Law: Unity within Diversity (4 Revised, Brill 2004)¶1702–1741. 49   Ibid ¶1716. 40 41

62   part i. introduction

3.  The Structure of the IPCC The distinction between research science and policy science is well established: ‘[W]‌hereas research science places greatest value on published papers, certified by peers as true, original, and significant, science conducted for policy is rarely innovative.’50 Moreover, ‘regulatory science’ frequently seeks to answer a specific question asked by a non-scientific agency, can be predominantly synthetic, and is often predictive.51 Viewed in this light, that the IPCC is a scientific body providing an authoritative view of climate change knowledge and its impacts without actually conducting any original research of its own is consistent with the notion of regulatory science produced for policymakers. The IPCC’s teams of authors, nominated by its 195 member countries, summarize and evaluate the peer-reviewed literature on climate change science to inform decisions and policy debates. The process is vast—authors and peer reviewers number in the thousands and include preeminent scientists who work collaboratively in thematic groups to produce their assessment, through extensive processes of draft, comment, and review. All authors sign a conflict of interest statement affirming their non-partisan character (such as membership of NGOs, or other forms of activism, political affiliation, or bias arising from funding concerns), a key mechanism by which scientific objectivity is sought.52 As a matter of practice, it very much appears that the carefully honed processes and procedures of the IPCC, combined with the scientific professionalism of those involved, are effective in insulating its work from plausible allegations of bias or other shortcomings. Moreover, notwithstanding the fact that nomination of authors is in the gift of national governments and that its reports require the endorsement of the same, evidence of political interference is absent. Although some have questioned this,53 several IPCC lead authors with decadal experience of serious science have stressed that very absence.54 The core of the IPCC’s work is its Assessment Reports, produced at the end of five-year (approximate) cycles of collation, drafting, and peer review, and divided into three working groups, dealing respectively with the ‘Physical Science Basis of Climate Change’, ‘Climate Change Impact, Adaptation and Vulnerability’, and ‘Mitigation of Climate Change’. The volumes are substantial, technical reports, 50   Sheila Jasanoff, The Fifth Branch: Science Advisers As Policymakers (Harvard University Press 1990) p. 188. 51   Ibid 187–8. 52   See (accessed 7 August 2014). 53   Soltau (n 12) 38. 54  House of Commons, Energy and Climate Change Committee, ‘Intergovernmental Panel on Climate Change Fifth Assessment Report: Review of Working Group I Contribution’ (House of Commons 2014) First Report of Session 2014–15, HC 587, citing Professors Myles Allen and Sir Brian Hoskins, at 11.

3.  science and climate change law    63 running to thousands of pages. The Synthesis Report distils the findings of the working group contributions55 into a more manageable form, and a Summary for Policymakers (considered further below). Furthermore, the IPCC regularly assesses the science of specific issue areas. Recent reports have addressed renewable energy,56 disaster management,57 and climate engineering.58 These reports are influential in their own right but are also folded into the Assessment Reports.

4.  Reform of the IPCC The Assessment Reports of the IPCC are now questioned principally by the mischievous and mendacious. It was ever thus. Agrawala notes the alacrity with which the US fossil fuel industry lobby, so well trained in Washington DC, decided to discredit the messenger whose message so alarmed it.59 One unintended consequence of these attacks was to formalize the IPCC’s peer review process such that they became ‘more comprehensive, by many orders of magnitude, than that in an average journal’.60 The authoritativeness of the Second Assessment Report, so critical a driver for the Ad Hoc Group on the Berlin Mandate (and as such, the Kyoto Protocol) was questioned by some UNFCCC parties61 and industry lobbies.62 More recently, after the production of the Fourth Assessment Report, the IPCC’s review processes have come under scrutiny in the form of the ‘climategate’ episode. This lamentable tale originated at the Climatic Research Unit (CRU) at the University of East Anglia—a globally prominent climatology research centre. Two of CRU’s data sets related to global temperature developments and were used in IPCC reports. Hacked emails from scientists working on these data sets were 55   AR5 also integrates the two Special Reports produced during the cycle (on Renewable Energy, and Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation). 56   ‘IPCC, 2011: IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation’, Prepared by Working Group III of the Intergovernmental Panel on Climate Change (O. Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G. Hansen, S. Schlömer, C. von Stechow (eds)) (Cambridge University Press 2011). 57  ‘IPCC, 2011: IPCC Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation (SREX)’, Prepared by Working Group I and II of the Intergovernmental Panel on Climate Change (Field, C.B., V. Barros, T.F. Stocker, D. Qin, D.J. Dokken, K.L. Ebi, M.D. Mastrandrea, K.J. Mach, G.-K. Plattner, S.K. Allen, M. Tignor, and P.M. Midgley (eds)) (Cambridge University Press 2012). 58   Ottmar Edenhofer and IPCC Working Group III Technical Support Unit, ‘IPCC Expert Report on Geoengineering, Lima Meeting Report’ (IPCC 2012). 59   Agrawala (n 12) 625.    60  Ibid 624. 61   Bodansky (n 3).    62  Agrawala (n 12) 626.

64   part i. introduction published online. References to phrases such as ‘tricks’ and ‘hiding the decline’ were represented by online climate deniers as evidence of systematic attempts to manipulate the data and exaggerate the extent of climatic change. A detailed inquiry into the affair was conducted by the UK House of Commons Science and Technology Select Committee,63 taking evidence from a large number of individuals and bodies, from both sides of the controversy. The Committee dismissed the core allegations of manipulation as inferences incorrectly drawn from colloquial terms used in informal and private emails. To the secondary allegation that prominent researchers at CRU were reluctant to share raw data and methodologies with others, this was judged to be acceptable: ‘It is not standard practice in climate science to publish the raw data and computer code in academic papers’. However, noted the inquiry, ‘climate scientists should take steps to make available all the data that support their work (including raw data) and full methodological workings (including the computer codes). Had both been available, many of the problems at the University of East Anglia could have been avoided’.64 Following these and other procedural criticisms, which often have the character of ‘higher-level rhetorical strategy’,65 a review was undertaken by the InterAcademy Council (IAC) in 2010, at the request of the UN Secretary-General, and the IPCC Chair, focusing on the IPCC’s processes and procedures.66 The report, led by a college of twelve non-climate scientists (i.e. not involved in the IPCC’s own processes), made some fairly sweeping recommendations in terms of the governance of the IPCC as well as a number of not-so-thinly-veiled criticisms of various IPCC actors and processes (Working Group (WG) II in particular). The conclusion that ‘significant improvement [to IPCC processes and procedures] are both possible and necessary for the fifth assessment and beyond’67 was both stinging and well received. Key recommendations included improved updating procedures to correct errors post-publication, more consistent language to express uncertainty across Working Groups (although the latter was already under consideration by the IPCC),68 and the creation of an ‘Executive Team’ to meet regularly between IPCC meetings and better coordinate the activities of the 194 member governments.69 Collectively, these measures should ensure that the Assessment Report process is strengthened, that 63   Science and Technology Committee, The Disclosure of Climate Data from the Climatic Research Unit at the University of East Anglia (2009–10, HC 387). 64   Ibid 3. 65   Andrew Dessler and Edward A Parson, The Science and Politics of Global Climate Change: A Guide to the Debate (2nd edn, Cambridge University Press 2010). 66   InterAcademy Council, ‘Climate Change Assessments: Review of the Process and Procedures of the IPCC’ (InterAcademy Council 2010) . 67   Ibid 26. 68   Independently of and prior to the InterAcademy recommendations, the IPCC held a workshop with the aim of synchronizing the uncertainty guidance between the working groups in the summer of 2010, which produced a guidance paper. 69   InterAcademy Council (n 67).

3.  science and climate change law    65 the risk of errors is minimized and rectified more quickly should they occur. One member of the IAC review panel has, however, criticized the IPCC’s failure to incorporate the recommendation that the Executive Team include a number of independent non-climate scientists, a measure that would ‘improve transparency, openness and good governance’.70 The paucity of non-climate scientists in the Assessment Report process at the review stage has also been noted, leading to the suggestion that ‘experts from outside the climate field [could] bring the rigour and expertise of other scientific disciplines to bear’.71 It may be the case that such additional layers of scrutiny are redundant (the assessment process being less important than the underlying science) or could bring an already cumbersome process to a grinding halt, but given the intense scrutiny that the institution, processes, and outputs of the IPCC are under, present conditions cannot be assumed to be either beyond reproach or set in stone. The potentially least robust aspect of the Assessment Report process is also its most high-profile output—the ‘Summary for Policymakers’ (SPM). Given the complexity and length of the underlying technical reports, the SPM is the only part of the Assessment Reports that most readers (already a small constituency) will ever read. They are necessarily highly condensed—by way of example, the Working Group I contribution to Assessment Report 5 was reduced from 1,536 pages of Full Technical Report to 33 pages of SPM—and here the controversy enters. The former are subject to an open process of review in which expert reviewers comment on particular chapters to which the authors must respond in turn. Each review comment is logged and overseeing Review Editors ensure that comments have been properly taken account of and addressed. This is all in addition to the fact that the Reports themselves draw from a published literature that has already been subjected to rigorous scientific peer review. SPM, however, are drafted in a very different manner. The abovementioned SPM for WG1 AR5 took place between the report authors and IPCC member government representatives over four days in September 2013, with no published record of the closed door meeting. The collaborative nature of SPM production is not in itself a weakness—if science is to be communicated effectively beyond the academy and into the policy community and beyond, it is prudent to include representatives of such bodies to participate in the drafting. The proviso is of course that scientific integrity is not compromised by political negotiation and prominent participants have affirmed that that is the case,72 in particular because of the ‘traceability’ requirement that ensures propositions in the SPM have an anchor in the Full Technical Report.73 Moreover, observer organizations are permitted to sit in on the process and have likewise affirmed the absence of political tinkering.74   House of Commons, Energy and Climate Change Committee (n 54).   Ibid, per Dr Ruth Dixon at 10. 72   Ibid, per Professor Sir Peter Williams at 17. 73 74   Ibid, per Professor Sir Brian Hoskins at 18.   Ibid, per World Wildlife Fund at 17. 70 71

66   part i. introduction It is of course possible to alter the main report so that it coheres with the SPM without doing damage to the substance of the science. However, doing so will always raise eyebrows, the appropriate response to which is to demonstrate through full disclosure that indeed the integrity of the science is unaffected. Ensuring such confidence in the process is possible only with comprehensive and timely transparency mechanisms. Moreover, to pick up on the notions of scientific autonomy and involvement raised above, ‘autonomy is good for the production of science, while involvement is essential for the transformation of science into policy’.75

5.  Public International Law and Scientific Evidence It is important to distinguish the IPCC from those scientific or technical bodies which are the creations of given multilateral environmental agreements (MEAs) and dedicated to them so as to be fully integrated into their lawmaking and implementation processes.76 In the UNFCCC, these would include the Subsidiary Body for Scientific and Technological Advice and Subsidiary Body for Implementation,77 the Subsidiary Body on Scientific, Technical and Technological Advice under the Convention on Biological Diversity,78 the Openended Working Group of the Basel Convention,79 and the Scientific Council of the Convention on the Conservation of Migratory Species of Wild Animals.80 The membership of these bodies is open to all parties, and as such is to be contrasted with those expert bodies with limited membership such as the three Advisory Committees under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).81 As an independent advisory body, sharing similarities with Group of Experts on the Scientific Aspects of Marine Environmental Protection,82 it is arguable that the IPCC’s arm-length relationship with the UNFCCC contributes to its prominence and accumulated esteem, and may account for its model being replicated to some extent in the Millennium Ecosystem Assessment.83 Moreover, the fact that IPCC participants are unpaid   Andresen and Skjærseth (n 6).   See generally, Steinar Andresen et al. (eds), Science and Politics in International Environmental Regimes: Between Integrity and Involvement (Manchester University Press 2000). 77 78   UNFCCC Articles 9, 10.   CBD Article 25. 79 80   COP Dec. VI/36/CP.6 (institutional arrangements).   Article VIII. 81   CITES for COP 11 amendments to committee structure.    82  Sands and Peel (n 27). 83   See (accessed 4 November 2014). 75

76

3.  science and climate change law    67 and cannot extract rents from a ‘hardened bureaucracy . . . reduces incentives for maintaining the status quo’.84 The way in which the IPCC relates scientific knowledge into international decision-making, including the annual Conference of the Parties of the UNFCCC, shares something with the general approach for the treatment of expert evidence by international courts and tribunals. However, as international environmental law has increased in prominence in the firmament of Public International Law, it has brought its own challenges, one of which being that MEAs typically rely on scientific and technical knowledge in a manner that is distinct from other international agreements.85 One means by which international law addresses this challenge is by way of the ICJ’s familiar ratio that ‘evidence obtained [by independent persons] experienced in assessing large amounts of factual information, some of it of a technical nature, merits special attention’.86 Although not specific to scientific knowledge, this emphasis on independence, specialized knowledge, and the evaluation of data shares much with the scientific method.87 Indeed, as the work load of international tribunals has in recent years been increasingly occupied by ‘environmental’ disputes, the necessity of engaging with, reviewing, and assessing scientific data has become pressing.88 Cases such as Pulp Mills,89 the Whaling in the Antarctic case,90 and the Aerial Spraying case91 have all raised evidential questions about the handling of scientific materials. In these cases, the tribunals paid close attention to independent scientific assessments; respectively, Environmental Impact Assessment reports commissioned by the International Finance Corporation, reports of the International Whaling Commission’s Scientific Committee and reports by the UN Special Rapporteurs investigating the Ecuador–Colombia border area.92

  Agrawala (n 12) 638.   Sheila Jasanoff, ‘Contingent Knowledge: Implications for Implementation and Compliance’ in Edith Brown Weiss and Harold Karan Jacobson (eds), Engaging Countries: Strengthening Compliance with International Environmental Accords (MIT Press 2000) 63. 86   Case Concerning Armed Activities on the Territory of the Congo (Democratic Republic of Congo v Uganda) (2005) ICJ Reports 168, ¶61. 87   ‘ “[S]‌cientific method, n.” . . . is now commonly represented as ideally comprising some or all of (a) systematic observation, measurement, and experimentation, (b) induction and the formulation of hypotheses, (c) the making of deductions from the hypotheses, (d) the experimental testing of the deductions, and (if necessary) (e) the modification of the hypotheses.’ OED Online. Oxford University Press, September 2014. Web. 1 October 2014. 88   See generally, Alan Boyle and James Harrison, ‘Judicial Settlement of International Environmental Disputes: Current Problems’ (2013) 4 Journal of International Dispute Settlement 245. 89   Case Concerning Pulp Mills on the River Uruguay (2010) ICJ Reports 14. 90   Case Concerning Whaling in the Antarctic (Australia v Japan: New Zealand intervening) (2014) ICJ Reports XX. 91   Case Concerning Aerial Herbicide Spraying (Ecuador v Colombia): application filed on 31 March 2008; removed from the ICJ’s list on 13 September 2013 at the request of Ecuador. 92   See Boyle and Harrison (n 88). 84 85

68   part i. introduction Accordingly, international law’s means and processes, and indeed willingness, to engage with scientific materials are reasonably well developed, at least as far as dispute settlement is concerned. Drawing on general rules of evidence, a set of judicial practices are emerging in parallel with the expansion of the environmental caseload of the international tribunals.

6.  The Lens of Global Administrative Law Much of the foregoing is very deliberately written in a descriptive, style. It would be fair to question aspects of its relevance to law. To bring this discussion into legal focus, the lens of global administrative law (GAL) may be helpful.93 This is not to suggest that the IPCC itself is an administrative body which is bound by such norms but rather that GAL principles can serve as useful benchmarks against which to judge the performance of the IPCC. GAL trains its attentions on the plethora of regulatory bodies operating internationally and transnationally beyond the state, which are often conceived as increasingly dense systems of global governance. Whilst these do not fit easily into traditional public international law (being principally concerned with inter-state relations), GAL asks whether such systems conduct their business through administration, and if yes, whether familiar techniques of administrative law can control public power of this sort, channel it to make global governance more effective, check abuses to make it more acceptable and where there are mistakes or abuses, catch them. At this very general level, GAL seems an apt approach but does this bear scrutiny? A preliminary issue to be decided in all GAL discussions is the ‘publicness’ of the body under scrutiny.94 Does it exercise power beyond the state which affects individuals, and corporations, as well as states, and as such raise the risk of injustice? In the case of the IPCC, this test is satisfied. Of the taxonomy of administrative types, the IPCC exhibits constitutive characteristics of administration both by formal international organizations (it is after all an ‘intergovernmental’ entity)95 and transnational networks of government officials (that is, nominees of

  See the locus classicus of this approach, Benedict Kingsbury, Nico Krisch, and Richard B Stewart, ‘The Emergence of Global Administrative Law’ (2005) 68 Law and Contemporary Problems 15. 94   Benedict Kingsbury, ‘The Concept of “Law” in Global Administrative Law’ (2009) 20 European Journal of International Law 23. 95   For the status of the IPCC in international institutional law, see nn 23–8 above and attendant text. 93

3.  science and climate change law    69 member countries).96 Similarly in functional terms, the IPCC’s outputs are explicitly intended to ‘provide the world with a clear scientific view on the current state of knowledge in climate change and its potential environmental and socio-economic impacts’.97 The absence of binding legal form is typical, rather than an exclusionary characteristic, of GAL entities.98 With the threshold issue settled, it will be apparent that many of the critiques of the IPCC, whether by the IAC or others which address the standards which should apply to public bodies conducting scientific research, cohere very closely to standard administrative law techniques. Familiar notions of accountability, participation, review mechanisms, transparency, and reason-giving figure prominently, notwithstanding that none of the IAC review members were lawyers. Whether or not this suggests that they reasoned in ‘legal ways’, or that legal normativity is universal in character, there is clearly scope for asking how more can be made of administrative law techniques. Consider accountability. At the institutional level, the detailed IAC review can be seen as a straightforward instance of supervisory accountability as between the IAC and IPCC in that in the face of controversy surrounding the Fourth Assessment Report (AR4), the latter was required to give an account of their exercise of power, to defend it, and to trigger a process of review. Moreover, the IPCC is ­accountable to governments, its founders and funders, both individually (consider the Bush Administration’s request that the US National Academy of Sciences review the 2001 Third Assessment Report) and collectively, through processes such as the drafting of SPMs, and indeed the requirement that reports are endorsed by member countries. Similarly the concept of participation as an administrative value is reflected in existing IPCC practices (all 195 member countries are entitled to nominate experts, participate in review processes and plenaries, etc.), and criticisms of them. As regards the latter, recommendations that greater use of non-climate scientists be made has not been accepted by the IPCC. Moreover, is there a case for increasing the range of interest groups, stakeholders, and others who have a normative view? This may not be apt at the stage of drafting and reviewing Full Technical Reports, but at the intergovernmental stage where SPMs are being agreed, there is a case for a more corporatist model, such as that used in the International Labour Organization where trade unions and employers’ representatives can participate. In the case of the IPCC, there may be a case for greater involvement of those NGOs/environmental non-governmental organizations (ENGOs)/business-friendly international NGOs (BiNGOs), etc. that are well known to participate in the COPs. The risks though are obvious—of politicization, duplication of the COP, creating insuperable problems of institutional design, the risk of paralysis, and so on. The first of these is 96  Kingsbury, Krisch, and Stewart (n 93). Alternative ‘types’—administration by hybrid intergovernmental–private arrangements—and combinations are also plausible. 97   (accessed 7 August 2014). 98   Kingsbury, Krisch, and Stewart (n 93).

70   part i. introduction perhaps the greatest and requires us to recall that ‘a scientific assessment body, not a purely scientific one [the IPCC] sits between the worlds of science and policy, and must manage the resultant tensions’.99 Overly ambitious corporatist designs would play havoc with the delicate balance that has been so carefully crafted. Finally, both reason-giving and transparency do a similar job in the IPCC. The risk of asymmetric information enhancing some voices at the cost of others is not a problem unknown to the IPCC and is substantially undercut by procedures such as published notice-and-comment. The requirement to give reasons for decisions, as is the case at the review stage may well slow the drafting process but in the absence of other forms of legitimation (i.e. electoral), reason-giving can be an effective substitute, demonstrating that reasons were taken into account, taking the form of persuasion, and providing a reason for buy-in. But where decisions are not justified, this form of legitimation is absent and may leave the IPCC vulnerable. Indeed, the closed drafting procedure of the SPM of the WGI AR5 was recently lambasted on exactly these terms by a prominent climate-sceptic member of the UK House of Commons Energy and Climate Change Committee: ‘Representatives from a hundred governments were involved in a secret four-day long meeting . . . [the SPM] is clearly a negotiated political statement . . . the IPCC is fundamentally a political body that from its inception has been subject to undue influence from governments and “activists”’.100 Each of these allegations can be readily swatted away, but the IPCC could forestall them if its processes were less obscure at various critical stages. Given the precipice upon which its authority balances, such measures may be prudent.

7. Conclusion The IPCC’s central task is unenviable. Striking the right balance between scientific precision and clear communication is profoundly demanding. It must communicate the risks of climate change and its myriad indirect impacts in a way that is effective, accurate, and policy-relevant. When the underlying science is as complex and wide ranging as that pertaining to the climate, this is arguably the global community’s most ambitious exercise in knowledge exchange. Writ both large and small, the IPCC has been a remarkable success. In the macro sense it has organized climate science in such a way that the urgency of the UNFCCC’s task has been brought home to senior decision-makers in national   Dessler and Parson (n 65).   House of Commons, Energy and Climate Change Committee (n 54).

99 100

3.  science and climate change law    71 governments. In the absence of the IPCC, it is unlikely that the issue would ever have reached the international political agenda.101 Institutionally, the IPCC is no less impressive. Despite being born with a weak mandate and in a highly politicized context, it has managed to overcome these potentially fatal shortcomings. What might have been insurmountable barriers to establishing its expertise and influence have instead been overcome by remarkably nimble institutional reforms that have placed the IPCC at the very crux of global climate decision-making. In Agrawala’s apt phrase from 1998, ‘the IPCC has not demanded hegemonic status but instead may have commanded it’.102

  Andresen and Skjærseth (n 6).

101

  Agrawala (n 12) 640.

102

Chapter 4

ECONOMICS AND INTERNATIONAL CLIMATE CHANGE LAW Navraj Singh Ghaleigh*

1. Introduction: Economics and International Lawyers

73

2. The Economics of Climate Change

76

3. Immanent Critiques

86

4. Conclusion

93

*  This chapter draws on, with gratitude, co-teaching and conversation with my colleague, Drew Scott. The usual disclaimers apply.

4.  economics and int’l climate change law    73

1.  Introduction: Economics and International Lawyers The editors’ suggested title for this chapter—Economics and International Climate Change Law—generates a number of connected thoughts, not least the recognition that a, perhaps the, central work of climate change debates was written not by a physical scientist, much less a lawyer, but an economist. It is unlikely that any research commissioned by Her Majesty’s Treasury has ever had the global influence of the Stern Review.1 Although much of the ‘international climate regime’ predates it, Stern’s analyses provide an influential if not uncontroversial diagnosis, prognosis, and course of treatment. Related is the recognition that market mechanisms have been the dominant regulatory approach in climate action.2 After the Kyoto Protocol,3 market-based approaches to environmental problems are not merely a possibility of social scientific rumination but the keystone of global climate policy. From ‘New Market Mechanisms’ under the UNFCCC to the EU’s Emissions Trading Scheme and new trading schemes being established in California and across China, marketbased approaches are the default tool for climate policymakers. Markets for pollution led then to the realm of microeconomic theory and what is routinely described as both the most cited law review article and the least wellunderstood one—‘The Problem of Social Cost’ (PSC).4 The link between that paper and the central feature of the global climate regime (mutatis mutandis its regional, national, and subnational spillovers)—markets for pollution—is direct. One of the goals of this chapter is to map the basics of Coase’s approach, its implications for climate law, and the claims made on its behalf. Although elementary, this task is often poorly done by environmental lawyers.5 Moreover, when our decade-long 1   Nicholas Stern, The Economics of Climate Change: The Stern Review (Cambridge University Press 2007). ‘In Gordon Brown’s Britain there is always a review . . . Passing a child drowning in a duck pond, he would leap into action and set up a committee to look at the matter of aquatic safety for the under-fives’. Simon Hoggart, ‘Parliamentary Sketch’, The Guardian (24 July 2007). 2   Although emissions trading schemes are only one of the economic instruments in the climate action tool kit—consider carbon taxes, feed in tariffs, regulation, capital subsidies—they are the most prominent and form the focus of this chapter. See generally, Cameron Hepburn, ‘Carbon Taxes, Emissions Trading, and Hybrid Schemes’ in Dieter Helm and Cameron Hepburn (eds), The Economics and Politics of Climate Change (Oxford University Press 2011). 3   Kyoto Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, 2303 UNTS 162. 4   R. H. Coase, ‘The Problem of Social Cost’ (1960) 3 Journal of Law and Economics 1–44. For a contextual commentary, see Harold Demsetz, ‘Ronald Coase’ in Peter Newman (ed), The New Palgrave Dictionary of Economics and the Law, vol 2 (Palgrave Macmillan 1998). 5   Elizabeth Fisher and others, ‘Maturity and Methodology: Starting a Debate about Environmental Law Scholarship’ (2009) 21 Journal of Environmental Law 213, 237; Navraj Singh Ghaleigh, ‘Two Stories About E.U. Climate Change Law and Policy’ (2013) 14 Theoretical Inquiries in Law 43.

74   part i. introduction experiences of carbon markets are assessed on Coase’s own terms, their shortcomings are rudely exposed. The present discussion operates within ‘mainstream economics’. It deploys its assumptions of individuals as rational, fully informed, utility maximizers, the homo economicus.6 No challenge is made to these assumptions or the methodology of mainstream economics. They are accepted provisionally and subjected to immanent critiques, tested against own standards. Indeed, many of the prescriptions that mainstream economics advocates in the climate arena—that so many climate lawyers find so objectionable7—are sunderable by its very own terms.8 In this way, mainstream economics can sharpen our critique of the climate regime, principally by exploring transaction costs but also by considering path dependency and ‘what counts’, and scrutinizing the claim that trading schemes drive innovation. The conclusion will briefly sketch further critiques. These considerations apart, and as a preliminary matter, at the back of the collective mind of international (environmental) lawyers there may be an awareness that whilst the economic analysis of law has proved so influential in other fields of law, it has scarcely made an impression in their own. The economic analysis of law forces important questions about the effects of legal rules, their formulation and reform: ‘Do these legal rules achieve the objectives at which they aim, and would alternative rules do any better?’9 For the international climate regime, which has to date so comprehensively failed to achieve its objective10 and is in clear need of alternative rules, these are not obviously bad questions. Given the singular contribution of economic thought in developing understandings of anthropogenic climate change and shaping responses to it, such a mode of analysis seems apt. As MacKenzie notes, the role of economics has not been to analyse an already-existing market, but to help bring a new market into existence. While meteorologists and other natural scientists have been the experts on   Richard A Posner, The Problems of Jurisprudence (Harvard University Press 1990) 353.   For a roughly representative sample, all of which trade on loose understandings, or the straightforward misrepresentation, of basic economic ideas see Sanja Bogojević, ‘Ending the Honeymoon: Deconstructing Emissions Trading Discourses’ (2009) 21 Journal of Environmental Law 443; Chris Hilson, Regulating Pollution: A UK and EC Perspective (Hart Publishing 2000); Gerd Winter, ‘The Climate Is No Commodity: Taking Stock of the Emissions Trading System’ (2010) 22 Journal of Environmental Law 1—further discussed at 2.3 infra. 8   This proceeds on the basis that the new institutional or transaction cost economics, propounded first by Coase and Williamson, falls within mainstream economics, requiring only modifications to its model, rather than the rejection of its tenets. 9   Brian Bix, Jurisprudence: Theory and Context (6th edn, Carolina Academic Press 2012) 206. 10   United Nations Framework Convention on Climate Change stated, ‘The ultimate objective of this Convention . . . is to achieve . . . stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.’ See generally, Michael Oppenheimer and Annie Petsonk, ‘Article 2 of the UNFCCC: Historical Origins, Recent Interpretations’ (2005) 73 Climatic Change 195. 6 7

4.  economics and int’l climate change law    75 the extent to which human activities are increasing the ‘greenhouse’ warming of the planet, economists have played a leading role in discussing what should be done in response.11

The broad indifference of public international law to the economic analysis of law is a curiosity. As Malloy notes, ‘for better or for worse, and without regard to one’s politics, the borrowing of market concepts has transformed legal reasoning and captured an authoritative position in the legal imagination’.12 This is, writ small, merely an instance of the remarkable imperial ambitions of economics in recent decades13 Writ smaller still, someone forgot to tell the international lawyers. In contradistinction to practically every other field of scholarly legal enquiry, international law is almost entirely untainted by the economic analysis of law.14 To the extent that there are counter-examples, they are overwhelmingly North American. This may not be surprising given that singular influence of the economic analysis of law in US legal teaching, scholarship, and practice and this may feed the latent antagonism between international lawyers on either side of the Atlantic.15 Yet the scholarly indifference is at odds with the tools of much international law, international environmental law in particular,16 and international climate change law above all. Noting the absence of serious engagement by environmental lawyers with economic thought is not novel, but it remains substantially unaddressed.17 This chapter seeks to sketch some preliminary avenues of engagement. Whilst elements will be familiar to climate lawyers, it will argue that the accurate treatment of mainstream economics enriches lawyers’ understandings of key features of the climate regime. It also better directs and sharpens the criticisms of those who are wary of the economic method.

11   Donald MacKenzie, Material Markets: How Economic Agents Are Constructed (Oxford University Press 2008). 12  Robin Paul Malloy, Law in a Market Context: An Introduction to Market Concepts in Legal Reasoning (Cambridge University Press 2004) 3. 13   Edward P Lazear, ‘Economic Imperialism’ (2000) 115 The Quarterly Journal of Economics 99. The phenomenon, and hostility to it, is far from recent, however—see infra Swift (n 101) and Weber (n 102). 14   Though see Joel P Trachtman’s, The Economic Structure of International Law (Harvard University Press 2008), in part a rejoinder to an earlier, less sophisticated foray into the genre—Jack L Goldsmith and Eric A Posner, The Limits of International Law (Oxford University Press, USA 2006). 15   Guglielmo Verdirame, ‘“The Divided West”: International Lawyers in Europe and America’ (2007) 18 European Journal of International Law 553. For a specific instance in the context of international environmental law, see Alan Boyle’s Book Review—The Art and Craft of International Environmental Law by Dan Bodansky (2011) 2 Climate Law 291–4. 16   For the non-novelty of using economic incentives to achieve environmental goals, see Gro Harlem Brundtland and World Commission on Environment and Development, Our Common Future (Oxford University Press 1987) 162, 167. 17   Supra (n 5).

76   part i. introduction

2.  The Economics of Climate Change 2.1 Economic Elements The ‘science’ of economics is the study of the allocation of scarce resources between competing ends.18 It comprises a number of foundational insights, two of which are rehearsed below. The first is that the free exchange of goods tends to move resources to their highest valued use, in which case the allocation of resources is said to be ‘Paretoefficient’.19 Indeed a situation in which all resources across the world are so allocated constitutes, for the economist, the optimal allocation of resources—that is an allocation that cannot be improved upon, being an outcome that if disturbed (e.g. by government intervention) will impose losses on some for which the gains to others provides no compensation.20 However, underpinning this insight are a number of assumptions or requirements that may be difficult to meet: • that a price can be determined for all goods (and services) to ensure they can be traded—which requires that all products are capable of being assigned property rights; • that the price of goods and services reflects the true social costs as well as private costs incurred in the production of the good or services; • price comprises all relevant information needed by the consumer to make a Pareto-improving transaction; and • that markets are competitive. If any of these assumptions are violated then the operation of market forces will not result in a Pareto equilibrium being achieved, and the actual outcome achieved by markets could be improved upon by appropriate government 18   ‘Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses’. Lionel Robbins, An Essay on the Nature & Significance of Economic Science (2nd edn, revised and extended, 1949), Ch. 1.3. 19   Whilst efficiency is obviously not the only value, ‘it is valuable for the policy-maker to have information as to the economically appropriate approach even where another value is to prevail . . . the efficiency characteristics of legal principles [are] valuable even if the principal objective of the legal principle in question is something other than wealth-maximisation’. AI Ogus, Costs and Cautionary Tales: Economic Insights for the Law (Hart Publishing 2006) 26, 14. For a magisterial dismantling of the use of efficiency in law and economics, see Duncan Kennedy, ‘Cost–Benefit Analysis of Entitlement Problems: A Critique’ (1981) 33 Stanford Law Review 387. 20   For critiques, see Amartya Sen, ‘The Impossibility of a Paretian Liberal’ (1970) 78 Journal of Political Economy 152; Guido Calabresi, ‘The Pointlessness of Pareto: Carrying Coase Further’ (1991) 100 Yale Law Journal 1211. For a rare deployment of paretianism in International Environmental Law, see Jonathan Baert Wiener, ‘On the Political Economy of Global Environmental Regulation’ (1998) 87 Georgetown Law Journal 749.

4.  economics and int’l climate change law    77 intervention. That should deliver a Paretian improvement, albeit unlikely to yield Pareto optimality. The second, and closely related, foundational insight is that economic agents respond to incentives. Economic agents are rational utility maximizers, meaning that they will undertake those actions which raise their level of utility. Smith’s ‘invisible hand’ insight argued that by so doing, economic agents would collectively deliver the optimal allocation of society’s resources—albeit he used slightly different language!21 The economics of climate change—and environmental economics more generally—draws on both insights. From these building blocks, a number of concepts of more direct application to climate change appear: temporality, property, and public goods.

A. Temporality One way to look at this is to recall that economics is the study of the allocation of scarce resources between competing ends, and then to recognize that the environment itself has become a scarce resource which requires to be allocated between competing ends. The difficulty, however, is that unlike most goods and services, the challenge facing environmental (or climate change) economists is not the allocation of the environment between competing uses at any point in time, but rather the allocation of ‘the environment’ over different time periods. That is, what type of environment do we wish to bestow upon future—as yet unborn—generations and what decisions do we need to take now in order to achieve this outcome? But determining the time preference for society in its consumption of the environment is not the sole—or even the principal—problem. After all, we all save for the future despite the fact we have no fixed idea of what we will spend our savings on when the future arrives. All we know is that if we are to save for the future, then we expect a reward for doing so—that is, an interest rate payment that exceeds the rate of inflation in order that our future real savings value exceeds the aggregate amount we have actually saved. Why? Because we value future consumption less than we value present consumption. We need to be rewarded for postponing our consumption— that is, we need to be rewarded for saving. The same holds for the environment. If we are to ‘save’ the environment for future generations then we need to be rewarded for doing so. We will not do so out of altruistic reasons, even where a sizeable number of individuals may be altruistic about saving the environment. So we have to be incentivized if we are to ‘save the planet’ for future consumption.   The notion that the self-interested actions of individuals may have the unintended consequence of benefitting society is often attributed to Smith but certainly predates him, at least to Bernard Mandeville, The Fable of the Bees: Or Private Vices, Public Benefits (FB Kaye (ed), Facsimile edition, Liberty Fund Inc 1988). See also Mikko Tolonen, Mandeville and Hume: Anatomists of Civil Society (Voltaire Foundation 2013). 21

78   part i. introduction But who are ‘we’ in this context? Who is to save the planet? Whose planet is it? This raises an additional problematic feature of climate change economics (and environmental economics generally) which is that nobody can claim to own the climate in the sense of enjoying a property right upon the planet which she/he can invoke if others undertake activities that damage her/his planet. How then are we to go about persuading rational economic agents to desist from harming a planet given that there is nobody who is able to legally require the delinquents to stop damaging ‘their property’? After all, underpinning the savings and investment decisions that are made daily by rational economic agents is the certain knowledge that they enjoy legal ownership of the savings or investment medium which they purchase, and which provides the vehicle for their ‘consumption in the future’. Certainly there will be risks associated with any financial (or other) instrument by which we purchase future consumption. But these risks will be factored into the decision-making of the economic agent—for instance in terms of the rate of return they require in order to hold any particular investment instrument. Economists approach this issue by reference to the notion of discount rates.22 These can be thought of as the inverse of compound interest rates. Whereas compounding measures the future value of a present-day investment, discounting measures how much a future benefit is worth today. A low or zero discount rate will value future generations at the same rate as the present one (even though they may be wealthier than us). A high discount rate reduces or ‘discounts’ the welfare of future generations. The flipside of discount rates is the question of altruism and reward. Expenditure to ensure a given future environment is expenditure that cannot be used for present consumption. Since preserving the environment is costly, those making the expenditure require more than the warm glow of giving. Even if large numbers of individuals are so motivated, the lukewarm successes of the Kyoto Protocol suggest that few states are similarly disposed. Discount rates stand at the heart of the debates surrounding the Stern Review. Stern’s core argument for strong and early action to mitigate climate change is premised on a low discount rate (of 1.4 per cent p.a.).23 In other words, a trilliondollar cost of addressing climate change within the coming century is worth $247bn today. Others, however, such as Nordhaus, prefer a higher discount rate of six per cent, and as such, downgrade the present value of a future environment (to $2.5bn).24 This then has profound implications, both general (‘how much, how fast, how costly?’) and specific (‘what is carbon price is necessary to make the necessary investments in society?’). In respect of the former, higher discount rates suggest   Partha Dasgupta, ‘Commentary: The Stern Review’s Economics of Climate Change’ (2007) 199 National Institute Economic Review 4. 23   Stern (n 1) 50–54. 24   William Nordhaus, ‘A Review of the Stern Review on the Economics of Climate Change’ (2007) XLV Journal of Economic Literature 686. 22

4.  economics and int’l climate change law    79 that climate action can be deferred; for the latter, the inability of the climate regime to reward adequately those making significant postponements in their present consumption on the promise of future benefits (or dis-benefits avoided) to others, is a key challenge.

B. Property A particularity of the environment is that nobody can claim ownership over it in the form of a legal entitlement. Creating a market for the atmosphere or climate quickly faces the challenge of ‘property’. Markets exist for the purchase and sale of property but is there property in the climate? Ownership is a key aspect of property consisting of possession, use, and disposition. It is not straightforward to argue that any of us ‘possess’ the climate or a subset thereof. Moreover, we are unable to exclude others from it on the basis that we own it—likewise usage and disposition. The latter approach poses similar challenges. There is thus a need for law to create property rights, to deliver us from the climatic ‘state of nature’, in which government is absent and claim rights are unenforceable.25 As Coase demonstrated in 1959, the non-existence of binding property rights proves to be an insuperable impediment to the operation of a market in the product concerned, and therefore to the efficient allocation of resources.26 In his view, and the central proposition of ‘The Problem of Social Cost’, the initial distribution of legal entitlements does not matter from an efficiency perspective so long as these entitlements can be freely exchanged. Therefore in the absence of legally binding property rights over the environment, we are unable to ensure that ‘the environment’ is efficiently traded at the present time, or over the future. Of course one of the key goals of emission trading schemes is precisely to change this situation and to assign property rights with regard to consumption of the environment in a specifically defined and limited manner.

C. Public Goods In terms of economic analysis, the economics of climate change constitutes an example of a ‘public good’.27 A public good is defined as a good that is non-rivaled and non-excludable, meaning respectively that the consumption of the good by one individual does not reduce availability of the good for consumption by others, and that no one can be effectively excluded from using the good. If we consider the ­prevention of climate change as an economic product, delivering that product to 25   See generally, Gregory S Alexander and Eduardo Peñalver, An Introduction to Property Theory (Cambridge University Press 2012). 26   RH Coase, ‘The Federal Communications Commission’ (1959) 2 Journal of Law and Economics 1, 1. 27   For a classic account see Garrett Hardin, ‘The Tragedy of the Commons’ (1968) 162 Science 1243; see also Scott Barrett, Environment and Statecraft: The Strategy of Environmental Treaty-Making (Oxford University Press 2005).

80   part i. introduction one individual makes it equally available to all other individuals without impacting on the quantity or quality of the product available to the first individual. Similarly, if we deliver the prevention-of-climate-change product, there is no mechanism whereby the person purchasing that product can exclude everyone else from consuming that product. Accordingly, and this is the essence of the public good problem, nobody will express a demand or willingness to pay for this product, because as long as someone else expresses a demand, they will be able to consume it freely. Clearly we are unlikely to see a market for such products—public goods—emerging. Or, public goods represent an instance of market failure. By conceptualizing the prevention of climate change as an economic product, we can readily see why the market will fail to supply this product spontaneously. Economists working in the area of climate change policy therefore face a large number of problems that need to be resolved if this product—the prevention of climate change—is to be supplied. We have identified a number of linked features of the product that demonstrate this—allocation of climate change over time; how to derive a value (or price) of postponing consumption of the environment; how to create a functioning market for the prevention-of-climate-change product that will ensure the efficient allocation of the resource of ‘the environment’ over time.

2.2 How to Act on Climate Change? A. Externalities and the Problem of Social Cost 28 . . . human-induced climate change is at its most basic level an externality. Those who produce greenhouse-gas emissions are bringing about climate change, thereby imposing costs on the world and on future generations, but they do not face directly, neither via markets nor in other ways, the full consequences of the costs of their actions.29

An externality may be the uncompensated noise, dust, or odour, etc. suffered by residents adjacent to a dirty industrial operator (a ‘negative externality’) or the pleasure one receives from viewing the herbaceous border of one’s neighbour (a ‘positive externality’). In both cases, the social cost or benefit is greater than the private one. Consider the case of a coal-fired steel mill that emits great volumes of soot which then fall on a neighbouring laundry. Such negative externalities impose a cost on society (the laundry and its customers) that is not borne by the mill operator who views this cost as external to—hence ‘externalities’—its own profit calculations,   This section draws on Ghaleigh (n 5).   Stern (n 1) 27. See also Coase, ‘The Problem of Social Cost’ (n 4) 3 and Michael J Trebilcock, The Limits of Freedom of Contract (1st edn, Harvard University Press 1994), Ch. 3. 28

29

4.  economics and int’l climate change law    81 resulting in too much steel being produced and too few clothes being laundered. But how to redress this imbalance, this problem of social costs? At this point in law and economic discussions, the famous interventions of Ronald Coase enter,30 challenging prior orthodoxy of the Cambridge economist, Arthur Pigou.31 The latter advances ‘a clear prescription: markets for private goods, government for public goods, taxes for externalities. Coase challenged this tradition by arguing that externalities can be cured in the market, provided that transaction costs do not obstruct private bargains’.32 When faced with a negative externality, Pigouvianism engaged the state and require direct governmental intervention in the form of the imposition of a tax on each unit of pollution equal to the marginal social damages at the efficient level of pollution. In its absence, argued Pigou, the social cost of a market activity would not be covered by the private cost of the activity—an inefficient outcome that would likely lead to overproduction, as operators are incentivized to produce beyond the optimum level. By burdening the activity in question, the market would be brought back into balance. The appeal of ‘internalizing externalities’ in this fashion is considerable, responding to a lawyerly instinct that wrongdoers should desist from and make reparations for their actions either through liability rules (by means of tort law, or in Public International Law, state responsibility, or the ‘polluter pays’ principle) or penalties (i.e., taxes or fines). Further it seems unarguable that the polluting steel mill should compensate those who ‘innocently’ bear costs arising from its activities or that a tort liability rule requires those causing damage to the property of others to compensate them for their losses. This would correspond to our intuitions regarding causation and responsibility.33 Coase’s response to Pigou’s internalization strategy, cast in the form of a series of simplified industrial scenarios based on the English common law, has at its very heart the matter of transaction costs. Assuming zero transaction costs—‘a very unrealistic assumption’34—Coase provocatively posits that the right to pollute or to prevent pollution (what he called ‘the distribution of legal rights’) would not matter because the higher valuing party could always purchase the right from the lower valuing user, if the latter was initially allocated that right (say, by tort law).35 If the legal regime in place allows the burning of highly polluting coal and does not grant the laundry a right to clean air, the laundry owner is incentivized 30   Principally Coase, ‘The Problem of Social Cost’ (n 4) but also of direct relevance is Coase, ‘The Federal Communications Commission’ (n 26). 31   AC Pigou, The Economics of Welfare (Macmillan 1920). 32   Robert D Cooter, ‘Law from Order: Economic Development and the Jurisprudence of Social Norms’ in Mancur Olson and Satu Kähköhnen (eds), A Not-So-Dismal Science (Oxford University Press 2000). Emphasis added. 33   See though, Neil Duxbury, Patterns of American Jurisprudence (new edn, Clarendon Press 1997) 961: ‘the guiding impulse behind law and economics is counter-intuitiveness’. 34   Coase (n 4) at 15.    35  See generally Demsetz (n 4) 268.

82   part i. introduction to pay the steel mill to reduce its output (or take other steps) to reduce soot output. That source of potential revenue thus becomes an implicit cost to the steel mill if it declines to reduce production, and in this way the private costs, explicit and implicit, are equal to the social cost of steelmaking. Thus ‘if transaction cost is zero, no special government action is needed. Negotiations between the interacting parties will result in an efficient mix of outputs’.36 Pigou’s solution of the ‘internalization of externalities’ merely imposes a cost on the parties that cannot ‘ensure optimal outcomes (even in principle) within the constraints imposed by transaction costs’.37 Rather than requiring the intervention of the state to determine legal entitlements, Coase argued that individuals will come to an agreement with an efficient result in the absence of transaction costs. This is sometimes known as the independence property, as the final allocation of property rights will, in the stipulated circumstances, be independent from the initial allocation. Provided that property rights are properly defined, participating firms will exploit all the potential gains from trades.38 To the obvious retort that transaction costs are rarely if ever zero, Coase anticipates the challenge: In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal and on what terms, to conduct negotiations leading up to a bargain, to draw up a contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on. These operations are extremely costly, sufficiently costly at any rate to prevent many transactions that would be carried out in a world in which the pricing system worked without cost.39

If, then, transaction costs are so ubiqutous, and can be ‘extremely costly’, what are the implications for the role of private ordering itself? There are, according to Deakin, three possible interpretations.40 First, that law should aim to achieve a ‘no transaction cost’ market so as to ensure effective allocation of resources. In the alternative, if the allocation of legal entitlements are only relevant when transaction costs are low, law should seek to ‘lubricate’ free exchange or allocate initial entitlements so as to minimize the need for transactions. Finally, law should not be concerned with the efficiency implications of assignment of legal entitlements but bringing competitive markets into existence. Accordingly, the main point of ‘The Problem of Social Cost’ is to highlight the prevalence of transaction costs and as such guide institutional choice.41 In a similar vein, Bix notes that more current

  Coase (n 4) at 269.   Matthew H Kramer, ‘A Coda to Coase’, In the Realm of Legal and Moral Philosophy: Critical Encounters (St Martin’s Press 1999) 101. 38  Simon Deakin, ‘Law and Economics’ in Philip A Thomas (ed), Legal Frontiers (Dartmouth Publishing Co Ltd 1996). 39   Coase, ‘The Problem of Social Cost’ (n 4), 15. 40   Deakin (n 38).    41  Ibid, 78–9. 36 37

4.  economics and int’l climate change law    83 interpretations of Coase conclude ‘that in the real world, where there are pervasive transaction costs, the initial distribution of legal rights does matter . . . many of the important later works of law and economics focused their study of (alternative) legal rules on a consideration of the effect that they have had or would have on transaction costs’.42 It should be clear then that to characterize the Coasean world as one in which transaction costs are unimportant suggests at the very least an unfamiliarity with his work. As he has pointed out: [in ‘The Problem of Social Cost’] I examined what would happen in a world in which transaction costs were assumed to be zero. My aim in so doing was not to describe what life would be like in such a world but . . . to make clear the fundamental role which transaction costs do, and should, play in the fashioning of the economic system.43

B. From ‘The Problem of Social Cost’ to Emissions Trading Tietenberg summarizes the pre-Coasean position as a series of standoffs between economists (favouring Pigouvian taxes) and policymakers (who doubted that the bureaucracy could design efficient taxes owing to the information burden).44 By thinking about the issue as one of property rights,45 and arguing for such rights to be explicit and transferable, market actors can allocate the use of this property in a cost-effective way, that is, one that achieves the overall emissions objective at the lowest cost. Moreover, so the argument goes, by putting a price on carbon, emissions trading schemes generate interrelated incentives, namely to discourage the use of carbon-intensive activities and encourage (or ‘drive’, in the vernacular) investment into the low-carbon economy. As actors are faced with bearing the full social cost of their actions, they will switch from high-carbon goods and services to low-carbon alternatives.46 The application of this basic Coasean logic to the problem of pollution is now relatively straightforward and commonly associated with the proposals of TD Crocker and JH Dales.47 They elaborated schemes in which environmental resources such   Brian Bix, ‘Coase Theorem’, A Dictionary of Legal Theory (Oxford University Press 2004) 33.   RH Coase, The Firm, the Market and the Law (new edn. University of Chicago Press 1990) 13. 44   TH Tietenberg, Emissions Trading: Principles and Practice (2nd edn, RFF Press 2006) 2. 45   See also Coase, ‘The Problem of Social Cost’ (n 4), 44: 42 43

If factors of production are thought of as rights, it becomes easier to understand that the right to do something which has a harmful effect [ . . . ] is also a factor of production . . . The cost of exercising a right (of using a factor of production) is always the loss that is suffered elsewhere in consequence of the exercise of that right.   Stern (n 1) Ch. 15.   Respectively, TD Crocker, ‘The Structuring of Atmospheric Pollution Control Systems’ in Harold Wolozin (ed), Economics of Air Pollution (WW Norton & Co 1966). and JH Dales, ‘Land, Water, and Ownership’ (1968) 1 Canadian Journal of Economics 791; JH Dales, Pollution Property and Prices: An Essay in Policy-Making and Economics (University of Toronto Press 1970) 92–4. 46 47

84   part i. introduction as air and water are recognized as tradable property in the form of transferable discharge permits, a regulator determines the total quantity of allowed emissions (the ‘cap’), distributes rights in line with the cap, and a well-functioning market allows for permit holders (individual sources of emissions) to trade their permits until a cost-effective allocation has been reached. The great virtue of such a scheme, according to Dales, is that ‘no person, or agency, has to set the price—it is set by the competition among buyers and sellers of rights’.48 As is well known, emissions trading experimentation originated in the United States of the 1970s and 1980s.49 MacKenzie highlights the ability of activist liberal economists, environmental non-governmental organization (ENGOs), and polit­ icians to make ‘possible coalitions of “left-wing” environmentalism and “right-wing” pro-market sentiment’.50 The perceived success of SO2 trading eased the transition of market logic from sulfur to carbon externalities, having ‘moved emissions trading firmly into the political mainstream in the USA’.51 The Clinton Administration arrived at the Kyoto Conference of the Parties (COP) armed with this experience and detailed economic modelling, which suggested that emissions trading at the international level could significantly reduce the costs of emissions reduction, not least to the United States. Facing down European desires for mandatory measures and non-Annex I country concerns over carbon colonialism, the US negotiators’ professionalism and clout combined with their ideological conviction to deliver the ‘flexibility mechanisms’ with which the Kyoto Protocol is associated.52 Just prior to the COP, they realized that the Brazilian proposal for a Clean Development Fund with fines for non-complying Annex I parties53 could, ‘by turning the payment from a fine into a contribution towards meeting one’s obligations’, operate as a ‘route to international emissions trading’.54 What followed—the US Senate’s Byrd–Hagel resolution, George W Bush’s rejection of Kyoto, and the EU’s desperate embrace of it—is familiar history.55

  Tietenberg (n 44) 2. See also Tietenberg (n 44) 4: ‘[T]‌ransferability, at least in principle, allows the market to handle the task of ensuring that the assignment of control responsibility ultimately ends up being placed on those who can accomplish the previously stipulated reductions at the lowest cost’ (Tietenberg, 2006). 49   Robert Stavins, ‘Experience with Market-Based Environmental Policy Instruments’ in Karl-Göran Mäler and Jeffrey R Vincent (eds), Handbook of Environmental Economics (Elsevier 2003); A Denny Ellerman, Markets for Clean Air: The U.S. Acid Rain Program (Cambridge University Press 2005). 50   MacKenzie (n 11) 176. 51   Ibid, 148–9. Note however that the serendipitous deregulation of rail-freight considerably reduced the cost of clean coal, facilitating low-cost emission reductions independently of the trading scheme. 52   Ibid. Prominent in the US delegation was William Nordhaus, see supra (n 24). 53   Michael Grubb and Duncan Brack, The Kyoto Protocol: A Guide and Assessment (Earthscan Ltd 1999) 101ff. 54   MacKenzie (n 11) 150. 55   Navraj Singh Ghaleigh, ‘Anti-Americanism and the Environment’ in Brendon O’Connor (ed), Anti-Americanism: History, Causes, Themes, vol 1 (Greenwood World Publishing 2007). 48

4.  economics and int’l climate change law    85

2.3 Why Engage with Coase? The Scholarly Imperative The case for environmental lawyers to take mainstream economics seriously has recently been argued in an important manifesto for the discipline. Fisher et al. stress the importance of engaging with: Novel legal concepts [which] are potentially relevant for understanding environmental governance regimes . . . particularly [those which] mobilise different aspects of law, economics and social ordering. Thus, for example, to understand adequately emissions trading schemes, there is a need to understand property law, regulatory theory, Coase’s theory and other economic ideas about the market.56

To what extent has this call been taken up? The above passage references an article57 that attempts to do just that, which although often unobjectionable in its account of Coasean basics,58 does contain missteps. It is claimed that ‘the acceptable limit of air pollution in this model is seen to be defined not by the regulator but by the market’.59 However, as the literature and practice make clear, the level or limit of pollution is a quintessentially political/technocratic matter in emissions trading schemes: how firms respond to that constraint is a matter for the marketplace (rather than the state). In a similar fashion the attribution to Coase of internalizing externalities60 is precisely what he does not argue.61 In a trading or negotiating scenario, many externality-creating firms will internalize nothing whilst other firms will abate. Finally, to assert that ‘whether the role of the state in emissions trading is laissez-faire or profoundly interventionist, are irrelevant as long as the emissions trading scheme constructed produces cost-effective results’62 is to ignore the key role of transaction costs and the state’s role in intervening when they obstruct voluntary exchanges.63 Another approach to Coase, which is not always clear, comes from the editor of the Journal of Environmental Law from 2007 to 2012, as such, a particularly important interlocutor.64 Hilson claims that ‘the Coase theorem suggests that a Pigouvian tax is not necessary to achieve the economists’ ideal of efficiency—all that is required is a bargained solution between polluter and polluted’.65 This misstates a central impulse of ‘The Problem of Social Cost’—that whilst frictionless bargaining may result in optimal outcomes from an efficiency perspective, it is deeply improbable given the ubiquity of transaction costs. Hilson goes on to claim in the attendant footnote that ‘it has long been pointed out that the theorem falls down where large numbers are involved and where bargaining cannot therefore

  Fisher and others (n 5) 237.   Sanja Bogojević, ‘Ending the Honeymoon: Deconstructing Emissions Trading Discourses’ (2009) 21 Journal of Environmental Law443. 58 59 60 61   Ibid 446–7, 452.   Ibid 454.   Ibid 459.   Supra Kramer (n 37). 62  Ibid.   63  Coase, ‘The Problem of Social Cost’ (n 4), 18. 64   Hilson (n 7).    65  Ibid 7. 56 57

86   part i. introduction take place without considerable transaction costs’.66 Again, this is not quite the case. In Coase’s own words cited above,67 transaction costs will have the whip hand in determining which bargains are struck and which are not. If they are present in the circumstances of simplistic scenarios of launderers and elementary arithmetic, they will certainly be present in the real world. Finally, Hilson claims that ‘Coase . . . is a true free marketeer, who believes that an efficient solution can be found without the need for government intervention of any kind’.68 Again, there is no direct reference for this statement, it ignores the implications of Coase’s treatment of transaction costs, and downplays Coase’s own recognition that governmental regulation may ‘lead to an improvement in economic efficiency. This would seem particularly likely when . . . a large number of people are involved and in which therefore the costs of handling the problem through the market or the firm may be high’.69 Given the clarity of Coase’s original article—unlike so much of contemporary economics, it is written in simple prose and requires only finger-and-toe numeracy— and its subsequent restatements, it is unfortunate that its basic message has been so poorly understood, so often, by environmental lawyers.70

3.  Immanent Critiques No challenge is made in this discussion to the assumptions or the methodology of mainstream economics—whether pertaining to rationality, information, or other characteristics of economic actors (though see Section 3.3 infra). Rather, they are provisionally accepted, not because they are invulnerable but because of the conviction that immanent critiques are more persuasive than external ones. By testing the postulates of mainstream economics by its own standards, we can locate its shortcomings, as developed according to its own logic. If the claims of mainstream economics in the climate arena, that climate lawyers find so objectionable, are vulnerable on their own terms, why do so few lawyers take this approach? Indeed, it may be worth restating emissions trading’s central claim, that a carbon price will reveal to economic actors the social cost of their activities, incentivizing the transformation to a low-carbon future. This argument depends on a sufficiently high carbon price. Generally reckoned to be in the region 67   Ibid 7.   Supra n 39. [Coase, ‘The Problem of Social Cost’ (n 4), 15.]   Coase, ‘The Problem of Social Cost’ (n 4), 18. 70   See also Kramer (n 37), citing numerous misreadings of the argument. 66 69

 Ibid.

68

4.  economics and int’l climate change law    87 of €50/t in the near term, and rising over time,71 neither the CDM, JI, nor European Union Emissions Trading Scheme carbon markets have come close to such levels for a sustained period. Rather they bump along at one or even two72 orders of magnitude lower. But inveighing against emissions trading schemes on this basis relies substantially on non-legal arguments, relating to the level of caps (too high), the impact of the global financial crisis (draining demand from the system), and the travails of Kyoto’s second commitment period (unratified). How can internal, legal, arguments be made to count against the logic of emissions trading?

3.1 Transaction Costs ‘The Problem of Social Cost’ demands an attentiveness to transaction costs, in particular, their potential to impede optimal exchanges and the implications for law’s role in underpinning and regulating economic activity.73 Transaction costs are ubiquitous in market economies and arise from the transfer of property rights when parties must find one another, communicate, or exchange information.74 In the literature, there are three major sources of transaction costs: search and information costs, bargaining and decision-making costs, and monitoring and enforcement costs.75 The first of these is the cost of determining whether a particular good is available on the market, at the right quality and at the best price. This is ordinarily where brokers, lawyers included, step in to provide pertinent information to market participants, thereby reducing their transaction costs, albeit for a fee. Similarly bargaining costs, those required to come to an acceptable agreement with counterparties. Finally, there is a cost attached to ensuring that all parties hold to the terms of contracts. These may be borne by firms or governmental authorities, but in any event remain costs which may impede optimal exchanges. A further category of costs would be ‘policy-related’ transaction costs—those incurred by government in designing, monitoring, and amending policy. According to Crals and Vereeck, political transaction costs, those of ‘running and adjusting a political system’, form a distinct and critical category of costs.76 In the content   House of Commons, Energy and Climate Change Committee, ‘Report on the EU Emissions Trading System’ HC 1476, published on 26 January 2012 at 63, Professor Michael Grubb and Professor Samuel Fankhauser. 72   At the time of writing, the market price for an EUA and secondary Certified Emission Reductions (sCERs) were respectively, €4.67 and €0.51. (accessed 25 October 2013). 73   Deakin (n 38) 73. Coase first highlighted the importance of transaction costs in ‘The Nature of the Firm’ (1937) 4 Economica 386. 74   Robert N Stavins, ‘Transaction Costs and Tradeable Permits’ (1995) 29 Journal of Environmental Economics and Management 133, 134. 75   CJ Dahlman, ‘The Problem of Externality’ (1979) 22 Journal of Law and Economics 141. 76   Evy Crals and Lode Vereeck, ‘Taxes, Tradable Rights and Transaction Costs’ (2005) 20 European Journal of Law and Economics 199. 71

88   part i. introduction of emissions trading, will such costs violate the independence property and result in outcomes which are in fact dependent on initial allocation? Will they serve to reduce trading levels and increase abatement costs? In a well-known article,77 Streck and Lin raise doubts as to whether the governance of the Clean Development Mechanism is sufficiently robust to regulate an international market mechanism. They focus their criticisms on the CDM Executive Board (EB)’s unpredictable decision-making, the fact that EB members often have conflicting interests which impair or appear to impair their decision-making and that adversely affected private participants in the CDM have very constrained due process rights. The absence of procedural fairness, in particular the ability to appeal against EB determinations undermines the transparency and accountability of CDM decision-making processes. Each of these failings can be seen as transaction costs which make for improperly defined property rights, a prerequisite for effective trading. Although some of the authors’ proposals for reform—the professionalization of the EB and panels, better and more consistent funding, the elimination of political interference, and the introduction of administrative law-like processes— have been subsequently implemented, most have not. Transaction costs of this sort, those that arise from legal uncertainty and contestation, are sometimes overlooked but operate as barriers to the construction and operation of what might otherwise be an effective market. Seen most prominently in the case of the European Union Emissions Trading Scheme, which accounts for the largest part of the global carbon market, these cases have thrown keys aspects of the scheme into doubt. Examples abound: the EU’s putative extension of its Scheme to international aviation,78 challenges to the methods of national allocation of allowance and the scope of the scheme,79 and those in response to fraudulent activity in the EU Emissions Trading System (ETS) spot market which have temporarily shut down the Scheme and called into question the legal nature of EU emissions allowances (EUAs) themselves.80 Other legal challenges take the form not of court cases but the legislative difficulty of ensuring that the scheme creates sufficient scarcity to actually generate a meaningful carbon price. What MacKenzie calls ‘the politics of allocation’ has been a running sore for European legislators, desperate on the one hand to revive their flagship carbon policy, constrained on the other by corporate and national interests   Charlotte Streck and Jolene Lin, ‘Making Markets Work: A Review of CDM Performance and the Need for Reform’ (2008) 19 European Journal of International Law 409. 78   Case C-366/10, Air Transport Association of America, American Airlines, Inc, Continental Airlines, Inc, United Airlines, Inc v The Secretary of State for Energy and Climate Change [2010] OJ C260/9. 79   Navraj Singh Ghaleigh, ‘Six Honest Serving-men: Climate Change Litigation as Legal Mobilization and the Utility of Typologies’ (2010) 1 Climate Law 31. 80   Armstrong DLW GmbH v Winnington Network Ltd [2012] EWHC 10 (Ch). See more generally, Katherine Nield and Ricardo Pereira, ‘Fraud on the European Union Emissions Trading Scheme: Effects, Vulnerabilities and Regulatory Reform’ (2011) 20 European Energy and Environmental Law Review 255. 77

4.  economics and int’l climate change law    89 which resist a system-wide cap that would actually serve to push up the carbon price to a meaningful level.81 As noted above, a key tenet of PSC is that when property rights are well defined and enforceable at a low enough cost, freely bargaining parties will arrive at a mutually advantageous outcome, that is, an efficient one. However, and as Coase and subsequent commentators have been very much aware, that outcome would not necessarily be achieved in the face of significant impediments to private bargaining: ‘If, for any number of reasons, the transaction costs of private bargaining swamp available gains to trade then private bargaining will not maximise social welfare’.82

3.2 What Counts in the Climate Regime—Path Dependency A separate sort of economic argument relating to the climate regime draws on the notion of path dependency and ask, ‘what counts?’ As we know, the climate regime seeks to count, and then ratchet down, emissions measured on a territor­ ial production basis,83 that is, quantities of greenhouse gases emitted by parties.84 Subsequent debates have then sought to settle the matter of how and whose territorial emissions should be reduced in order to meet the requirements now very clearly laid down in the science,85 leading to debates over the principle of common but differentiated responsibilities (CBDR), per capita emissions, emissions per unit of GDP, and other permutations (IPCC, 2013). The demerits of this approach, upon which the entire treaty and scientific structure of the UNFCCC sits, are exposed when we consider how states have managed to reduce their emissions. In the twenty years from 1991, the United Kingdom reduced its territorial emissions86 by twenty-two per cent, as against the eight per cent target enshrined 81   MacKenzie (n 11). In January 2014, the European Parliament’s Climate Change Committee finally approved a proposal for ‘backloading’, or holding back from the market, 900m carbon permits between 2014 and 2016, so as to prop up the carbon price. Agreement on structural reforms—see European Commission, ‘The State of the European Carbon Market in 2012’ (European Commission 2012) COM(2012) 652 Final—is still pending. 82   Richard RW Brooks, Nathaniel O Keohane, and Douglas A Kysar (eds), Economics of Environmental Law (Edward Elgar Publishing 2009) xii. 83   2006 IPCC Guidelines for National Greenhouse Gas Inventories Volume 1, General Guidance and Reporting, 1.4: ‘National inventories include greenhouse gas emissions and removals taking place within national territory and offshore areas over which the country has jurisdiction’. 84   See UNFCCC, Articles 1(4) and (9), 4(1) and 4(2). 85   ‘Climate Change 2013: The Physical Science Basis’, Working Group I Contribution to the IPCC 5th Assessment Report—Changes to the Underlying Scientific/Technical Assessment. 86  584MtCO2 in 1991 and 457MtCO2 in 2011; UK emissions peaked in 1973 at 660 MtCO2. See TA Boden, G Marland, and RJ Andres, ‘Global, Regional, and National Fossil-Fuel CO2 Emissions: Carbon Dioxide Information Analysis Center (CDIAC), Oak Ridge National Laboratory’, accessed via the Tyndall Centre’s ‘Global Carbon Atlas’, (accessed 14 July 2015). In

90   part i. introduction in Annex B of the Kyoto Protocol. How has this been achieved? The answer is twofold and well-known.87 During the 1980s and 1990s the United Kingdom pursued a ‘dash-for-gas’, a long-term shift in its primary energy production from coal-based to natural gas-based, with predictable emission consequences. Yet more significantly, the United Kingdom continued its long-term trajectory as a net importer rather than exporter of manufactured goods. By offshoring its production, principally to emerging economies, the United Kingdom simultaneously appears carbon-virtuous (goods previously manufactured domestically now disappear from its greenhouse gas (GHG) inventory) whilst countries that it imports from suffer from a degradation of their GHG balance sheet. Clearly, the United Kingdom is far from unique in this respect.88 If the UNFCCC accounting method instead captured consumption, not territorial production, the position would be altered. The party that produces a good would find the associated carbon credited to its own national inventory. Although a full argument in favour of such an approach cannot be made here, it is submitted that this is a considerably more equitable approach than the present arrangements. Not only does it attribute emissions on a more just basis, it would drive down on the fundamental problem of affluent societies’—which have such ruinous climate consequences—over-consumption. The task of measuring and attributing consumption is not a simple one, but neither is that of territorial production. Sophisticated schemes for consumption-based GHG accounting—multi-regional input-out methods—have been advanced89 and debated.90 They divide the world into broad categories of CO2 consumers and producers, with the former being developed countries (including EU-27, especially EU-15, and OECD countries in which CO2 emissions from production are lower than CO2 emissions embodied in goods) and the latter being developing countries in which CO2 emissions embodied in exports are higher than CO2 emissions the same period, US emissions rose from 4823MtCO2 to 5313MtCO2 (a ten per cent increase); Chinese emissions increased from 2582MtCO2 to 9087MtCO2 (a 352 per cent increase). 87  Dieter Helm, ‘Climate-change Policy: Why Has so Little Been Achieved?’ (2008) 24 Oxford Review of Economic Policy 211 and Dieter Helm, The Carbon Crunch: How We’re Getting Climate Change Wrong—and How to Fix It (Yale University Press 2012). 88   From 1991 to 2011, UK consumption emissions fell from 650MtCO2 to 630MtCO2 (a three per cent reduction). In the same period, US consumption emissions increased from 4715MtCO2 to 5724MtCO2 (a twenty-one per cent increase); Chinese emissions increased from 2350MtCO2 to 7478MtCO2 (a 318 per cent increase). See Boden et al (n 86). 89  Glen P Peters and Edgar G Hertwich, ‘Post-Kyoto Greenhouse Gas Inventories: Production Versus Consumption’ (2008) 86 Climatic Change 51. 90   House of Commons, Energy and Climate Change Committee, ‘Consumption-based Emissions Reporting’, HC 1646, published on 27 March 2012: ‘[T]‌he fall in the United Kingdom’s territorial emissions was not entirely or even mostly a consequence of the Government’s climate policy. Rather, it was mainly a result of the switch from coal to gas-fired electricity generation that began in the early 1990s, and the shift in manufacturing industries away from the United Kingdom in response to the pressures of globalised markets’ ¶22.

4.  economics and int’l climate change law    91 embodied in imports). Moreover, the gap between CO2 embodied in consumption and CO2 emissions taking place within the territory is accelerating.91 Why then has the territorial-based approach persisted? Why has the more equitable consumption-based approach not superseded it, which would amongst other things address the persistent problem of carbon leakage? The answer is to be found in the notion of path dependency, the idea that prior decisions constrain (or expand) the subsequent range of possible or feasible choices.92 For present purposes, initial conditions, even of technical matters (such as the method of accounting for carbon emissions taken in 1992), can wield considerable determination effects for the future of the regime, even blocking future, more productive or equitable methods. The very term path dependence chimes with the idea that choosing the road ‘less travelled by . . . has made all the difference’.93 It could be that taking the right hand fork at a junction takes a traveller to the same destination (say, arriving at a low-carbon economy) as the left. But it might also be the case that it does not, that the prior decision (turning right) closes off the option of reaching a low-carbon economy. That ‘closing off ’ may be total or practical—a low-carbon economy may now be impossible because the path has collapsed in the intervening period or merely impracticable, because the effort of retracing one’s steps is too burdensome. But why and how is path dependence significant? As we know from heads-or-tails, the history of a series of coin tosses does not influence the probabilities on the next toss, but if we restructure the example, its role becomes clearer. Consider Pólya’s Urn, an exercise in probability theory based on George Pólya’s exploration of contagion:94 Here’s how it works: Start with an urn containing two balls, one red and one black. Draw out one ball. Return that ball to the urn, together with another ball of the same colour. Continue the process until the urn fills up. Then tip out the balls and count how many there are of each colour. Obviously, the outcome of this process depends crucially on what colour call you draw first. If out of the two-ball urn you draw the red ball, and you rerun that ball and another red one to the urn, your chances of randomly drawing a red ball in the second round are two-to-one . . . and so on, until the urn is almost completely full of red balls.95

91   Ibid ¶15 and B Boitier, ‘CO2 emissions production-based accounting vs consumption: Insights from the WIOD databases’. WIOD Final Conference—Causes and Consequences of Globalization, Groningen, 24–26 April 2012. 92   See generally Stephen E Margolis and SJ Liebowitz, ‘Path Dependence’ in Peter Newman (ed), The New Palgrave Dictionary of Economics and the Law (Palgrave Macmillan 1998); Oona A Hathaway, ‘Path Dependence in the Law: The Course and Pattern of Legal Change in a Common Law System’ (2001) 86 Iowa Law Review 601. 93   ‘The Road Not Taken’, Robert Frost, Mountain Interval (Henry Holt 1916). 94   RP Boas, ‘George Pólya 1887–1985’, National Academy of Sciences of the United States of Amercia: Bibliographical Memoirs, vol 59 (National Academy of Sciences 1990). 95   R.E. Goodin, Innovating Democracy: Democratic Theory and Practice After the Deliberative Turn (Oxford University Press 2008)112–13.

92   part i. introduction Simply put, the serendipitous act of drawing out a ball of a particular colour in round one skews draws in subsequent rounds meaning that the eventual outcome is substantially determined by what happens at the early stages. In the case of territorial emissions accounting, the decision taken at the climate regime’s formative period owes much to technical rather than principled reasons. Methods of analysing lifecycle analysis, and the technologies of remote sensing (the key elements of consumption-based accounting), were too underdeveloped in the early 1990s to be sufficiently robust. That is now considerably less true but that initial decision, of an apparently technical and discrete nature, serves to wield considerable determination effects such that the departure from territorial emissions is regarded as fanciful, owing to the embedded nature of the accounting method.96 Conceptual entropy of this sort might be characterized as ‘second degree path dependence’, that which occurs when ‘the inferiority of a chosen path is unknowable at the time a choice is made, but we later recognize that some alternative path would have yielded greater wealth . . . dependence on past conditions leads to outcomes that are regrettable and costly to change’.97

3.3 Rationality and Information In his laconic account of the development of carbon markets, MacKenzie notes that economic actors in the EU ETS, which accounts for the largest part of the global carbon market, consistently act in ways which are not conventionally rational. For example, companies issued with free allowances which were not needed for compliance purposes declined to sell when a significant profit was realisable, or to abate when this costs less than the allowance price. Rather than treating the ETS as a profit opportunity (as economic theory anticipates), most industry actors instead viewed it merely as a compliance matter.98 How are we to account for such conduct within an economic frame? Behavioural law and economics provides something of an answer, modifying as it does conventional economic assumptions about rationality in the light of what we know about actual decision-making. Drawing on the work of figures such as Herbert A Simon and Daniel Kahneman99 (respectively, 1978 and 2002 Nobel Prize for Economics), the   House of Commons, Energy and Climate Change Committee, ‘Consumption-based Emissions Reporting’, HC 1646, ¶80–3. 97   Margolis and Liebowitz (n 92), ‘Path Dependence’, 18. See also Guido Calabresi, ‘Transaction Costs, Resource Allocation and Liability Rules: A Comment’ (1968) 11 Journal of Law and Economics 67. 98   MacKenzie (n 11). 99   See generally, Herbert Alexander Simon, Models of Bounded Rationality: Empirically Grounded Economic Reason (MIT Press 1982) and Amos Tversky and Daniel Kahneman, ‘Rational Choice and the Framing of Decisions’ (1986) 59 The Journal of Business S251. 96

4.  economics and int’l climate change law    93 behavioural approach recognizes the fragility of neoclassical economics’ assumption of rationality. At its heart is ‘bounded rationality’, the notion that individual or organizational analysis is characterized by ‘act[ing] on limited information, after truncated reflection, and in ways that may not be entirely consistent with earlier decisions’.100

4. Conclusion The imperial ambitions of economics have long attracted hostility. The empire of reason’s foundational task of commensurability was attacked by Swift over three centuries ago101 and the confidence of economics to see the world with new accuracy through its lens caused Weber to remark in his inaugural lecture that ‘When a way of looking at things breaks new ground so confidently, it is in danger of falling prey to certain illusions and of overestimating the significance of its own point of view’.102 In the environmental context this has led to suspicion of commodification and suggestion that ‘[t]‌o presume that markets and market signals can best determine all allocative decisions is to presume that everything can in principle be treated as a commodity’.103 Rather than reject all economic argument, however, this chapter has sought to work within its own logic, limited though that is. The immanent approach of course recognizes that there are other sets of values but, following a critical approach, if they are to prevail, they must first demonstrate the shortcomings of the incumbent reality. That reality is undoubtedly a culture of the market,104 in which markets govern states. There are resemblances between the primacy of market-based mechanisms in the climate regime and Foucault’s remark that ‘ordo liberals say we should . . . adopt the free market as the organizing and

100   Brian Bix, ‘Bounded Rationality’, A Dictionary of Legal Theory (Oxford University Press 2004) pp. 26–7. ‘Under the broader usage, the term [emphasizes] the habits and tendencies of thought that lead us systematically to overestimate or underestimate certain kinds of risks.’ 101   Jonathan Swift, ‘A Digression on Madness’, A Tale of a Tub (London 1704): ‘For what man in the natural state or course of thinking, did ever conceive it in his power to reduce notions of all mankind exactly to the same length, and breadth, and height as his own?’ 102   Peter Lassman and Ronald Speirs, Weber: Political Writings (Cambridge University Press 1994). 103   David Harvey, A Brief History of Neoliberalism (Oxford University Press 2009) 165. 104   ‘[T]‌o regard the Community as a technological instrument is, in the first place, to under-estimate the profound choice and cultural impact which the single market involves—a politics of efficiency, a culture of market.’ Joseph HH Weiler, ‘Fin-de-Siècle Europe’ in Renaud Dehousse (ed), Europe after Maastricht: An Ever Closer Union? (Beck 1994) 215.

94   part i. introduction regulating principle of the state . . . In other words: a state under the supervision of the market rather than a market supervised by the state?’105 The truth of Foucault’s observation can be seen in the apparently unending proliferation of market mechanisms in the climate realm. Whether at international or national or sub-national level, emissions trading schemes are springing up with ever-greater frequency. The likelihood is that these schemes will be no more successful than those in the EU or under the Kyoto Protocol. Nonetheless, whether lawyers like it or not, an understanding of economics is necessary for a full, critical, understanding of the climate regime.

105  Michel Foucault, The Birth of Biopolitics: Lectures at the Collège de France, 1978–79 (Michel Senellart (ed), Palgrave Macmillan 2008) 116.

Part II

INSTITUTIONAL

Chapter 5

THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE—THE BASIS FOR THE CLIMATE CHANGE REGIME David Freestone

1. Origins of the UNFCCC

98

2. Text of the 1992 UNFCCC

100

3. 1997 Kyoto Protocol

104

4. The Kyoto Mechanisms

106

5. The Rise of Carbon Trading

108

6. The Road from Kyoto: Implementation of the Protocol

109

7. The Special Climate Change Fund and the Least Developed Countries Fund

110

8. Kyoto Protocol Adaptation Fund

111

9. The Post-Kyoto Regime

112

10. The Bali Action Plan

112

98   part ii. institutional 11. Copenhagen Accord

113

12. Cancun Adaptation Framework

114

13. The Durban Platform

115

14. Doha and Second Commitment Period for the Kyoto Protocol

115

15. The Way Forward

117

1.  Origins of the UNFCCC United Nations (UN) Secretary-General Ban Ki-moon has called climate change the defining issue of our era.1 It is significant, however, that it is only in the last 25 years that the full enormity of human impact on the climate system has become clearer, and that it is only in the last five years that scientists have suggested that the earth is leaving the stable conditions of the Holocene and entering the unpredictable age of the Anthropocene—an era dominated by the impacts of one species— homo sapiens.2 Although the greenhouse effect was first identified by the Swedish scientist, Svante Arrhenius, in the nineteenth century,3 it was in the 1970s that scientists concerned about the depletion of the ozone layer as a result of human chemical emissions noticed wider impacts in the atmosphere from emissions of greenhouse gases. The initial concerns were taken seriously, with the first scientific World Climate Conference convened in 1979 by the World Meteorological Organization (WMO) to assess the state of knowledge of climate and to consider the effects of climate variability and change on human society.4 This led in 1988 to the endorsement by the UN General Assembly (UNGA) of the initiative of the United Nations Environment Programme (UNEP) and WMO to establish the Intergovernmental 1   7 June 2007, (accessed 15 July 2015). 2   The term was coined in 2000, but in 2008 a proposal was presented to the Stratigraphy Commission of the Geological Society of London to make the Anthropocene a formal unit of geological epoch divisions. There is now an Anthropocene Working Group of the International Commission on Stratigraphy looking at whether the Anthropocene should be formally accepted into the Geological Time Scale. (accessed 15 July 2015). 3  Svante Arrhenius, 1896, Ueber den Einfluss des Atmosphärischen Kohlensäurengehalts auf die Temperatur der Erdoberfläche, in the Proceedings of the Royal Swedish Academy of Science, Stockholm 1896, volume 22, I N. 1, pages 1–101. 4   (accessed 15 July 2015).

5.  unfccc—basis for climate change regime    99 Panel on Climate Change (IPCC).5 The IPCC produced its first Science Assessment Report in 1990. Although in retrospect rather tentative, it did suggest important changes were taking place in the earth’s atmosphere. It attributed these to increased emissions of greenhouse gases (GHGs), the most likely reasons for which were industrial emissions and deforestation. It cautiously predicted these changes were likely to result in increased severity of storms and other extreme weather events, negative impacts on ecosystems and on biodiversity, and sea level rise. It was not until the Third Assessment Report in 2001 that the IPCC felt it could state definitely that these changes were happening and not until the Fourth Assessment Report in 2007 that they could state that they were caused by human activity.6 Nevertheless there was sufficient momentum for the UNGA to agree to incorporate the idea of an international climate convention into the preparations for the forthcoming UN Conference on Environment and Development (UNCED),7 and in December 1990 to decide to establish a process for ‘the preparation by an Intergovernmental Negotiating Committee (INC) of an effective framework convention on climate change, containing appropriate commitments’8 and to recommend that the first session of the INC be held in Washington, DC.9 After just under two years’ work by the INC, the final text was agreed in New York on 9 May 1992. It was then sent to the UNCED Conference in Rio de Janeiro in June 1992 for signature, where together with the Rio Declaration, Agenda 21, and the Convention on Biological Diversity (CBD), it was one of the key outcomes of the Earth Summit. Joined by the Convention to Combat Desertification (CCD) in 1995, the three conventions, UN Framework Convention on Climate Change (UNFCCC), CBD, and CCD, are typically known as the Rio Conventions. The

5   UNGA Resolution 43/53 on protection of global climate for present and future generations of mankind (UN Doc A/43/905 (6 Dec. 1988), reproduced in Robin Churchill and David Freestone, International Law and Global Climate Change, 1991, 240–2. 6   For full texts of all IPCC reports see (accessed 15 July 2015). The AR5 is still being completed, but the 2014 Science WG1 Report says: ‘Human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, in global mean sea level rise, and in changes in some climate extremes . . . This evidence for human influence has grown since the AR4). It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century.’ (accessed 15 July 2015). 7   UNGA Res 44/206 (UN Doc. A/44/25) of 22 Dec. 1989 on possible adverse effects of sea level rise on islands and coastal areas, particularly low-lying coastal areas; UNGA Res 44/207 (UN Doc. A/44/25) of 22 Dec. 1989 on protection of global climate for present and future generations of mankind. Both reproduced in Robin Churchill and David Freestone, International Law and Global Climate Change, 1991, 243–4 and 245–8 respectively. 8   UNGA Resolution 45/212 on protection of global climate for present and future generations of mankind (UN Doc A/45/851 (21 Dec. 1990)); reproduced in Robin Churchill and David Freestone, International Law and Global Climate Change, 1991, 249–52, at 250. 9   Ibid, para 11.

100   part ii. institutional UNFCCC entered into force on 21 March 1994. Today, it has near-universal membership, with 195 parties.

2.  Text of the 1992 UNFCCC With the benefit of hindsight, and the experience of more than 20 years of difficult climate negotiations behind us, the UNFCCC—even though it is a framework—does look like a remarkably progressive instrument. Like the 1985 Vienna Convention for the Protection of the Ozone Layer, it is essentially based on a precautionary approach. In 1992 the science was considerably less certain than it has become today, yet the Convention urges action to preserve human safety where risks are high even in the face of scientific uncertainty. Its over­ arching aim, however, is not to reverse the greenhouse effect but rather, as it provides in Article 2 for ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system’. The significance of ‘dangerous anthropogenic interference’ became more relevant later, when in 2007 in the Fourth Assessment Report (AR4) the IPCC warned that a rise of concentrations of carbon dioxide in the atmosphere of more than 450 parts per million (ppm) and consequential temperature rises of more than 2°C since pre-industrial times would be likely to cause ‘dangerous climate change’.10 The Convention itself, however, sets no time frame for action, requiring simply that stabilization at ‘such a level should be achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner’.11 Significantly, the phrase ‘to adapt naturally’ in Article 2 is one of the few references to adaptation in the UNFCCC text. The main concern of the Convention is clearly mitigation; adaptation has been widely seen as the ‘poor relation’.12 In fact only Article 4 refers to adaptation in any detail. Nevertheless, it has been suggested that the numerous references to the ‘effects’ and ‘adverse effects’ of 10   See the Forth Assessment Report (AR4), ‘The long-term perspective’, at (accessed 15 July 2015). 11   Article 2. 12  David Freestone, ‘The International Legal Framework for Adaptation’ Chapter 17 in Michael Gerard and Katrina F. Kuh (eds), Law of Adaptation to Climate Change: US and International Aspects, American Bar Association Press, 2012, pp 601–19, 601.

5.  unfccc—basis for climate change regime    101 climate change do demonstrate an implicit agenda to address such effects, through adaptation.13 In addition to precaution, the Convention is also based on other important principles such as sustainable development14 and inter-generational equity,15 as well as innovative ones like the principle of ‘common but differentiated responsibility’.16 The message is clear from the preamble that ‘the largest share of historical and current global emissions of greenhouse gases has originated in developed countries’, so further to the principle of common but differentiated responsibility, the developed country Parties should, says Article 3(1), ‘take the lead in combating climate change and the adverse effects thereof ’.17 Precaution is adumbrated in detail in Article 3(3), where the reported influence of the US is to be seen in the requirement that when precautionary action is taken it should ‘be cost-effective so as to ensure global benefits at the lowest possible cost’.18 The Convention establishes a number of institutions to further its work: a Conference of the Parties (COP) that ‘shall, within its mandate, make the decisions necessary to promote the effective implementation of the Convention’,19 a Permanent Secretariat,20 and two subsidiary bodies: the Subsidiary Body for Scientific and Technological Advice (SBSTA)21 and the Subsidiary Body for Implementation (SBI).22 These institutions are characteristic of the ‘new model’ of multilateral environmental agreements.23 The other key innovation of the Rio Conventions, which again followed the model of the Montreal Protocol that in 1990 had set up the Montreal Protocol Multilateral Fund,24 is the establishment of financing mechanisms to assist developing countries in meeting their obligations. This is taken so far by the   Philippe Sands, Principles of International Environmental Law, 261 (2nd edn, 2003).   Article 3(4). 15   Article 3(1): ‘The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity.’ 16 17   Article 3(1).  Ibid. 18   Article 3(3) in full reads: ‘The Parties should take precautionary measures to anticipate, prevent or minimize the causes of climate change and mitigate its adverse effects. Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing such measures, taking into account that policies and measures to deal with climate change should be cost-effective so as to ensure global benefits at the lowest possible cost. To achieve this, such policies and measures should take into account different socio-economic contexts, be comprehensive, cover all relevant sources, sinks and reservoirs of greenhouse gases and adaptation, and comprise all economic sectors. Efforts to address climate change may be carried out cooperatively by interested Parties.’ 19 20 21 22   Article 7.   Article 8.   Article 9.   Article 10. 23   The so-called ‘Rio model’ treaties have fairly sophisticated institutional frameworks including permanent secretariats, regular conferences of parties and subsidiary bodies, and often financial mechanisms. Churchill and Ulfstein posit them as important new actors in international law: R.R. Churchill and G. Ulfstein, ‘Autonomous institutional arrangements in multilateral environmental agreements: a little-noticed phenomenon in international law’ (2000) 94 American Journal of International Law 623–59. 24   (accessed 15 July 2015). 13

14

102   part ii. institutional UNFCCC that Article 4(7) contains what I have previously called a ‘blanket conditionality’,25 insofar as it provides that the ‘extent to which developing country Parties will effectively implement their commitments under the Convention will depend on the effective implementation by developed country Parties of their commitments under the Convention related to financial resources and transfer of technology’.26 The idea that developing countries do not need to fulfill their obligations unless financial and technical assistance is provided is radical indeed. The World Bank had gone some considerable way to facilitate the development of a financing mechanism for this process. In early 1991, in advance of the 1992 UN Conference on Environment and Development, the French and German governments led an initiative proposing that the Bank establish a trust fund to address global environment concerns in developing countries. The objective was in part designed to acquire ‘experience which could provide a useful input into the deliberations of [UNCED]’.27 The direct result was the Global Environment Facility, financed by a Trust Fund with donor contributions of some US$1.2 billion. The Fund was established in 1991 for a three-year pilot period with the World Bank as Trustee and with UNEP and the UN Development Programme (UNDP) acting with the Bank as Implementing Agencies. Although welcoming the idea of a global fund of this kind, developing countries (the G77) were unhappy with the fact that decisions on allocations from the fund (like all its other trust funds) were to be made by the World Bank Board of Executive Directors.28 Hence at the UNCED Rio Summit itself, a great deal of attention was focused on the governance of the Global Environment Facility (GEF). Agenda 21—the key Rio policy outcome document—recommended that it be ‘restructured’29 and this same approach is specifically included in the UNFCCC text. Article 11 of the UNFCCC provides for a Financial Mechanism for the Convention. However, Article 11(2) requires that the ‘financial mechanism shall have an equitable and balanced representation of all Parties within a transparent system of governance’. Article 21 does entrust the operation of the   See David Freestone, ‘The Establishment, Role and Evolution of the Global Environment Facility: Operationalising Common but Differentiated Responsibility?’ Liber Amicorum for Thomas A. Mensah: Law of the Sea, Protection of the Marine Environment and Settlement of Disputes in T.M. Ndlaye and R. Wolfrum (eds), 2007, 1077–1107, 1084; reproduced in David Freestone, The World Bank and Sustainable Development: Legal Essays, 2012, 113–42, 120. 26 27  Ibid.   Ibid at 1079 and 115 respectively. 28   Unlike the UN ‘one country, one vote’ system, the World Bank Board decisions are taken using a weighted voting system, based on the shareholdings of the Bank’s member countries; it is therefore heavily influenced by wealthy countries. 29   Chapter 33.16(a)(iii) ‘ . . . to ensure a governance that is transparent and democratic in nature, including in terms of decision making and operations, by guaranteeing a balanced and equitable representation of the interests of developing countries, as well as giving due weight to the funding efforts of donor countries.’ 25

5.  unfccc—basis for climate change regime    103 financial mechanism to the GEF ‘on an interim basis’ until it has been ‘appropriately restructured and its membership made universal to enable it to fulfil the requirements of Article 11’.30 The result was a painful three-year restructuring process which resulted in the finalization of the text of the 1994 ‘Instrument for the Establishment of the Restructured Global Environment Facility’, with a new replenishment of US$1 billion for the forthcoming four years.31 This Restructured GEF would have a Secretariat, led by a Chief Executive Officer (CEO), which although housed in the World Bank would be ‘functionally separate’ from the Bank, and a representative Council, to meet twice a year as its main decision-making process, overseen by an Assembly of all the parties to the Instrument.32 The novel principle of Common but Differentiated Responsibility (CBDR) is also central to the organization of the Convention itself. Differentiation is explicit in the listing in Annex I of all the developed states and states with economies in transition (i.e. the members of the former Soviet Union) and in Annex II of all the developed states which would be expected to make good on undertakings to provide financial support. Developing countries are termed non-Annex I. Differentiation is reflected also in the key commitments of a number of the requirements of the Convention including Article 4, where there is a key distinction between the commitments of Article 4(1), which apply to all parties, and those of Article 4(2), which only apply to ‘developed country Parties and other parties listed in Annex I’. Looking in more detail at the text, the chapeau of Article 4(1) does contain the word ‘shall’—a generally accepted word of obligation—however, most of the ‘commitments’ listed in Article 4 are hortatory. Nevertheless, all Parties do have the obligation to develop, update, and publish ‘national inventories of anthropogenic emissions by sources and removal by sinks of all greenhouse gases not controlled by the Montreal Protocol’,33 as well as to formulate, implement, publish, and regularly update ‘national and where appropriate regional programs containing measures to mitigate climate change . . . as well as measures to facilitate adequate adaptation to climate change’.34 In addition the Parties at the ­sessions of the Conference of the Parties will review national communications with the aim of returning GHG emissions individually or jointly to their 1990 levels.35 These differentiated obligations are also reflected in Article 12 on ‘Com­ muni­cation of Information related to Implementation’, which requires Annex I   Article 21(3).   Text, updated with subsequent amendments is reproduced in David Freestone, Legal Essays, 2012 (n 25), 191–228 and at (accessed 15 July 2015). 32   For full details see Freestone (n 25).    33  Article 4(1)(a). 34  Article 4(1)(b).   35  Article 4(2)(b). 30 31

104   part ii. institutional Parties to make their first national communication within six months of the coming into force of the Convention for them.36 In contrast, non-Annex I Parties have three years, and ‘least developed countries’ may do this ‘at their discretion’.37 Finally, the UNFCCC does make provision for dispute settlement in Article 14, but it is not very sophisticated, nor is it compulsory. Parties may, on becoming a party, opt for settlement of disputes through the International Court of Justice or Arbitration in accordance with procedures to be agreed by the COP ‘as soon as practicable’ in an annex on arbitration.38 The COP is also mandated to agree an annex on conciliation.39 Neither annex has been agreed to date.

3.  1997 Kyoto Protocol As noted above, the Convention came into force on 21 March 1994. Pursuant to Article 7(4) the first session of the Conference of the Parties was held one year later in March/April of 1995 in Berlin. At that meeting, chaired by Angela Merkel, the items mandated by the Convention for that first session were reviewed, in particular the adequacy of the requirements of Article 4 UNFCCC to return anthropogenic GHG emissions to 1990 levels. The Conference decided to begin a process to allow it to strengthen the commitment in Article 4 for Annex I countries through the adoption of a protocol or other legal instrument. This process was named the Berlin   Article 12(1) requires that all National Communications shall include:

36

(a) A national inventory of anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, to the extent its capacities permit, using comparable methodologies to be promoted and agreed upon by the Conference of the Parties; (b) A general description of steps taken or envisaged by the Party to implement the Convention; and (c) Any other information that the Party considers relevant to the achievement of the objective of the Convention and suitable for inclusion in its communication, including, if feasible, material relevant for calculations of global emission trends. Article 12(2) requires that Annex I Parties must in addition incorporate: (a) A detailed description of the policies and measures that it has adopted to implement its commitment under Article 4, paragraphs 2(a) and 2(b); and (b) A specific estimate of the effects that the policies and measures referred to in subparagraph (a) immediately above will have on anthropogenic emissions by its sources and removals by its sinks of greenhouse gases during the period referred to in Article 4, paragraph 2(a).   Article 12(5). The COP determines the frequency of subsequent communications. 39   Article 14(2).   Article 14(7).

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5.  unfccc—basis for climate change regime    105 Mandate,40 and the open-ended ad hoc group of parties established to conduct this was termed the Ad Hoc Group on the Berlin Mandate (AGBM); it was told to complete its work as early as possible in 1997 with a view to adopting the results at COP 3.41 The COP designated Ambassador Raúl Estrada-Oyuela of Argentina as Chair of the AGBM. COP 3 in December 1997 in Kyoto, Japan was a difficult meeting. Despite the relative clarity of the mandate—to return emissions of Annex I countries to 1990 levels—a number of other issues had to be agreed for a functioning Protocol: relative shares of reductions, the dates of the commitment periods, compliance procedures, the inclusion of emissions trading for which the US pressed very hard, and the role of non-Annex I countries. The final text of the Kyoto Protocol was gaveled down by Estrada, after some 48 hours of continuous negotiation, in the early hours of 11 December, the day after the planned end of the Conference. The results, however, were significant. Annex I Parties agreed, under Article 3, individually or jointly, to reduce their GHG emissions by an average of 5.2 percent below 1990 levels, for the five-year commitment period 2008–2012,42 the exact commitment levels for each Annex I Party being listed in Annex B to the Protocol. It is important to stress that these reductions of GHGs were never intended by themselves to attain the objective of stabilization of GHG emissions at the level to achieve the objective of Article 2 of the UNFCCC—it was, by analogy with the Montreal Protocol, rather seen as the first step in the development of a process by which obligations could be ratcheted up in the way that the parties to the Montreal Protocol had progressively reduced emissions of ozone depleting substances over the years. The Kyoto Protocol also introduced, for the first time in an international treaty regime, trading mechanisms to help parties achieve these emissions reductions objectives. Initially called flexibility mechanisms or flex-mechs, the more politically correct term for them is the Kyoto Mechanisms.43 There are three, plus the provision for burden-sharing among the members of a regional economic integration organization (UNFCCC-speak for the European Union). Such burden-sharing is permissible under Article 4 of the Protocol provided that the members enter into an agreement to fulfill their emission reduction obligations jointly, notify the secretariat of this agreement at time of joining the Protocol,44 and appreciate that if the members as a whole do not meet their joint target then the residual state obligations remain.45  FCCC/CP/1995/7/Add.1.1/CP 1 The Berlin Mandate: Review of the adequacy of Article 4, paragraph 2(a) and (b), of the Convention, including proposals related to a protocol and decisions on follow-up. 41   Ibid, section III, para 6. 42   The precise reduction obligations of each party are set out in Annex B. 43   G77 members criticized the use of the concept of ‘flexibility’ in describing the CDM—which has sustainable development objectives. 44 45   Article 4(2).   Article 4(6). 40

106   part ii. institutional The three market mechanisms envisaged by the Protocol are Joint Implementation under Article 6, the Clean Development Mechanism under Article 12, and emissions trading—actually more accurately, Assigned Amount trading—under Article 17. The first two are project-based; the last is a true trading arrangement. The next section deals with each in turn.46

4.  The Kyoto Mechanisms Article 6: Joint Implementation The UNFCCC envisaged Annex I Parties taking action individually or jointly,47 and at COP 1 a pilot program called Activities Implemented Jointly (AIJ) was set up, where countries collaborated voluntarily to reduce GHG emissions without expectations of future credit.48 Article 6 is largely derived from this program.49 The basic concept of Joint Implementation (JI) is that an Annex I country, whose emissions may be under its cap, hosts a project financed in whole or part by one or more Annex I countries which reduces emissions of GHGs in the host country. In return the host country agrees that the GHG emission reductions generated by that project will be transferred as Emission Reduction Units (ERUs) to the financing country or countries. This arrangement between two or more Annex I countries, all of whom have emission reduction obligations under Kyoto, is a classic ‘cap and trade’ arrangement. Reductions of GHGs in one country are financed by another which can then claim the credit against its cap. It is worth noting that with a cap and trade system, where both parties to a trade have reduction commitments, the system is, to an extent, self-policing, for both the host and the financing country need clarity of how many ERUs have moved from one to another. It is for this reason that Article 6 envisages that this can be done by the country itself or by other entities, but only under the authority and responsibility of the country, and that the 46   For more detail see Chapter 7. See also David Freestone and Charlotte Streck (eds), Legal Aspects of Carbon Trading: Kyoto, Copenhagen and Beyond (Oxford University Press 2009), passim. 47   Article 4(2)(b) talks of the aims of ‘returning [GHG emissions] individually, or jointly, to their 1990 levels’. 48   See David Freestone, ‘World Bank Initiatives towards AIJ and its potential Role in the Global Carbon Investment Business’, Proceedings of the International Workshop on Joint Implementation and Activities Implemented Jointly, International Energy Agency, 1997. 49  Although most AIJ projects—like those implemented by the World Bank (above)—were in non-Annex I countries.

5.  unfccc—basis for climate change regime    107 administrative apparatus for JI is much lighter than for the Clean Development Mechanism (CDM).50

Article 12: Clean Development Mechanism This has been called the Kyoto Surprise.51 Never part of the draft negotiating texts developed by the Berlin Mandate group, it derived from a Brazilian proposal for a clean development fund, financed from penalties paid by Annex I countries for noncompliance with emission reduction targets that would in turn finance low-carbon ‘clean’ development projects in developing countries.52 During the Kyoto negotiations themselves, it morphed into a ‘baseline and credit’ trading mechanism. The principle is relatively simple. Annex I countries with Kyoto emission reduction (ER) commitments finance projects in developing countries (non-Annex I countries, which have no Kyoto ER commitments) that promote sustainable development and also reduce GHG emissions. The Annex I countries can then claim credit against their own Kyoto targets for the emissions reductions that an independent party can certify would not have taken place in the host country without their financing. Hence these projects generate what are called Certified Emission Reductions (CERs). Unlike cap and trade, which is largely self-policing, a baseline and credit system depends entirely on the integrity of the baseline and the verification and certification procedures. Hence much of the detail of the CDM depends on ensuring this integrity. Article 12(4) makes the functioning of the CDM subject to the authority and guidance of the COP serving as the Meeting of the Parties to the Protocol, but sets up a CDM Executive Board (EB) to supervise it. Participation in the CDM must be voluntary and the emission reductions that CDM projects generate must be ‘real, measurable and long-term benefits’ and ‘additional to any that would occur in the absence of the certified project activity’.53 Importantly, like JI, participation in the CDM is open to public and private entities.54 The Protocol also envisages that CERs obtained during the period from   Although for Track 2 projects for those that do not meet initial JI eligibility criteria there is a JI Supervisory Committee (JISC), see further Chapter 7 and Anthony Hobley and Carly Roberts, ‘Joint Implementation Transactions: An Overview’, in David Freestone and Charlotte Streck (eds), Legal Aspects of Carbon Trading: Kyoto, Copenhagen and Beyond, 2009, 194–212. 51   Jacob Werksman attributes the term to Estrada himself; see ‘The Clean Development Mechanism: Unwrapping the “Kyoto Surprise”’ (1998) 7 Review of European Community & International Environmental Law, 147–58, 147. 52  FCCC/TP/2000/2 (25 November 2000). Joanna Depledge, Tracing the Origins of the Kyoto Protocol: An Article by Article Textual History, para 349. 53   Article 12(5)(b) and (c) respectively. 54   Article 12(9), on the history of these provisions and the role of Prototype Carbon Fund participant governments see David Freestone, ‘The World Bank’s Prototype Carbon Fund: Mobilising New Resources for Sustainable Development’ in Sabine Schemmer-Schulte and Ko-Yung Tung (eds), Liber 50

108   part ii. institutional 2000 up to the beginning of the first commitment period could be used for compliance during that period—the so-called ‘early start’ provision.55 Hence, after the conclusion of the Marrakech Accords in 2001, the CDM EB started work almost immediately. According to Article 12(8), the administrative expenses of the EB are to be covered by ‘a share of the proceeds from certified project activities’, which shall also be used to ‘assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation’. So was born the idea of the Adaptation Fund.56

Article 17 Emissions Trading The US had pressed hard for emission trading to be included within the Kyoto regime. Indeed it had submitted legal text in support, but after a deal of controversy in the negotiations, in the end the Kyoto text is remarkably bland—providing simply that ‘The parties included in Annex B may participate in emission trading for the purposes of fulfilling their commitments’ so long as it is ‘supplemental to domestic actions’.57 However, the COP ‘shall define the relevant principles, modalities, rules and guidelines, in particular for verification, reporting and accountability for emissions trading’.58 These ‘principles, modalities, rules and guidelines’ had to wait until the Marrakech COP 7 in 2001 to be settled.

5.  The Rise of Carbon Trading As mentioned above, it was the United States which had pressed hard for the inclusion of market mechanisms in the Kyoto Protocol, and the EU which, interestingly in retrospect, had initially opposed them. Within ten years of the finalization of the Protocol, however, the carbon market was already a huge undertaking, with the EU Emissions Trading Scheme (ETS) rapidly becoming the world’s largest carbon trading mechanism. Amicorum for Ibrahim S.I. Shihata, Kluwer Law International, The Hague, 2001, 265–341, 286–7; reproduced in David Freestone, The World Bank and Sustainable Development: Legal Essays, 2012, 73–96, 86–7.   Article 12(10).   Although its final form was not agreed until COP 16 in Cancún, see below Section 12 at p. 118. 57   A term not defined in the UNFCCC. 58   Article 17 puts the role of the COP first, a change made by chair Estrada himself, reversing the text of the final drafts. Depledge (n 52), para 394. 55

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5.  unfccc—basis for climate change regime    109 The World Bank played a key facilitating role in the early market, mobilizing in 2000 the first carbon fund (called the Prototype) with contributions from the public and private sector of some US$180 million, which it invested in a range of projects under the CDM and JI.59 The CDM began its prompt start in 2001 and in 2005 the European Union mobilized the first phase of its Emissions Trading Scheme.60 By 2007 the value of the global carbon market had grown to be worth more than US$63 billion, with the CDM accounting for some US$13 billion. By 2009, as the global financial crisis began to make itself felt, trading in the EU ETS alone was still worth US$118.5 billion and the global market reached US$143.7 billion.61 However, the sort of project-based investments that generate CERs and ERUs require long lead times and as the end of the first Kyoto Protocol commitment period in 2012 began to loom, the level of investment in primary CDM projects began to decline. Fuelled by, amongst other things, uncertainty as to how, or indeed if, these trading mechanisms would continue after 2012, by 2013 the trading price of CO2 had fallen from an all-time high of some $30 per tonne to less than $1.

6.  The Road from Kyoto: Implementation of the Protocol Despite its considerable achievements, UNFCCC COP 3 had deferred a large number of administrative issues, such as emissions trading modalities and rules, for agreement at forthcoming COP meetings. This was a difficult and protracted process. The following year at COP 4, the UNFCCC Parties agreed to a ‘Buenos Aires Plan of Action’, which inter alia agreed that the deadline for reaching decisions on all three market mechanisms would be COP 6 in 2000.62 However, the controversial and protracted negotiations stretched beyond COP 6 in The Hague, and necessitated an extra COP 6bis (or COP 6.5) in Bonn in July 2001. Agreement was finally reached later that year in December at COP 7 in Marrakech, where the package of 262 pages and 39 decisions became known as the Marrakech Accords.63 59   See David Freestone, ‘The World Bank’s Prototype Carbon Fund: Mobilising New Resources for Sustainable Development’ (n 54). 60   Markus Pohlmann, ‘The European Union Emissions Trading Scheme’ in David Freestone and Charlotte Streck, Legal Aspects of Carbon Trading: Kyoto, Copenhagen and Beyond, (Oxford University Press 2009) 337–65. 61  See State and Trends of the Carbon Market 2012, The World Bank, Washington DC, 2012 (An Annual Review). 62   Decision 7/CP 4. 63   FCCC Decisions 15–19/CP 7. Reproduced in David Freestone and Charlotte Streck, Legal Aspects of Implementing the Kyoto Protocol: making Kyoto work, 2005, 567–622.

110   part ii. institutional Indeed the much-needed stimulus to finalize the Accords may have been external, for in the meantime the Kyoto Protocol was under a different threat. The US, under President Clinton, had signed the Protocol in November 1998, but after the Republican victory in the election a year later, the incoming Bush Administration announced that it would withdraw from the Protocol. Not only did this mean the loss of support from what was then the world’s largest GHG emitter, but it also cast doubt as to the ongoing viability of the Protocol, which required ratification by 55 Parties to the Convention including ratification by Annex I Parties ‘which accounted in total for at least 55 percent of the total carbon dioxide emissions for 1990 of the Parties included in Annex I’.64 The result of the US decision was therefore that virtually all the other Annex I Parties—including the Russian Federation—would have to ratify the Protocol in order to bring it into force. After a lot of behind the scenes diplomacy, this seemingly insuperable hurdle was overcome on 18 November 2004, when the Russian Federation ratified the Protocol, which then came into force on 16 February 2005. In addition to the massive agreement on the Accords, COP 7 also agreed to the establishment of three new funds to finance a range of activities, programs, and measures relating to climate change in developing countries including, for the first time, recognition of the need to provide finance for adaptation. By Decision 7/CP 7 it decided to establish a Special Climate Change Fund and a Least Developed Countries Fund that it invited the GEF, as financial mechanism of the Convention to operate. By Decision 10/CP 7 it also established a Kyoto Protocol-specific Adaptation Fund to manage the ‘share of the proceeds’ of CDM projects as envisaged in principle by Article 12(8), and to be open to receive other donations from Annex I countries. There appears to be some overlap in the mandates of these funds, but the general activities that might be financed were set out in the relevant decisions.

7.  The Special Climate Change Fund and the Least Developed Countries Fund The main practical issues with these Funds did not relate to their mandates but to their governance. COP 7 asked the Trustee and the Secretariat to propose arrangements for their establishment and operation, envisaging that the World Bank would act as Trustee but that they would each be managed separately from the GEF Trust Fund. Mobilization of resources for these funds would also not be through the   Kyoto Protocol, Article 25(1).

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5.  unfccc—basis for climate change regime    111 four-yearly GEF replenishment process but through a separate process managed by the GEF Secretariat.65 The GEF Council now meets as the Least Developed Country Fund (LDCF)/ Special Climate Change Fund (SCCF) Councils with slightly different voting rules.66 Currently, 51 least developed countries (LDCs) have accessed $12.20 million in support of the preparation of their National Adaptation Programmes of Action (NAPA) through the LDCF67 and 66 countries have accessed a total of $242.26 million for 58 projects under the SCCF.68

8.  Kyoto Protocol Adaptation Fund The remit of the Adaptation Fund is a little more obvious that the two previous funds, namely to finance concrete adaptation projects and programs,69 as well as activities identified in paragraph 8 of Decision 5/CP 7. These include starting to implement adaptation activities promptly where sufficient information is available to warrant such activities, inter alia, in the areas of water resources management, land management, agriculture, health, infrastructure development, and fragile ecosystems, including mountainous ecosystems and integrated coastal zone management. Other items are more of a shopping list of possible adaptation actions.70   It was also agreed that the operational policies and procedures and governance structure of the GEF would apply to these voluntary funds. 66   Formal voting is by consensus but in the event of the vote the normal GEF rule will be amended to require both 60 per cent majority of GEF Participants represented at the LDCF/SCCF Council and 60 per cent majority of the total contribution to such fund. See further David Freestone, ‘The International Climate Change Legal and Institutional Framework: An Overview’ in David Freestone and Charlotte Streck (eds), Legal Aspects of Carbon Trading: Kyoto, Copenhagen and Beyond, 2009, 27–28. 67   (accessed 15 July 2015). 68   (accessed 15 July 2015). 69   Paragraph 1 of Decision 10/CP 7. 70   Ibid: (b) improving the monitoring of diseases and vectors affected by climate change, and related forecasting and early-warning systems, and in this context improving disease control and prevention; (c) supporting capacity building, including institutional capacity, for preventive measures, planning, preparedness and management of disasters relating to climate change, including contingency planning, in particular, for droughts and floods in areas prone to extreme weather events; (d) strengthening existing and, where needed, establishing national and regional centres and information networks for rapid response to extreme weather events, utilizing information technology as much as possible. For a wider discussion, see David Freestone, ‘The International Legal Framework for Adaptation’ in Michael Gerard and Katrina F. Kuh (eds) Law of Adaptation to Climate Change: US and International Aspects, 2012, 601–19. 65

112   part ii. institutional

9.  The Post-Kyoto Regime The Kyoto Protocol set the first commitment period to run from 2008 to 2012. The Protocol itself envisaged a procedure for establishing commitments for subsequent periods and required that the Parties shall ‘initiate the consideration of such commitments at least seven years before the end of the commitment period’.71 To meet this requirement meant in practice that the negotiations would need to start in 2005—the year that the Protocol eventually came into force. So at the first Conference of the Meeting of the Parties (or CMP as it is termed) in Montreal in December 2005 (at COP 6/CMP 1), the clock was already ticking, but an orderly approach to the negotiations was not agreed until 2007 at Bali (COP 13/CMP 3).

10.  The Bali Action Plan The Bali Action Plan sought to set up a comprehensive process to ‘enable the full, effective and sustained implementation of the Convention through long-term cooperative action, now, up to and beyond 2012’.72 The Plan included developing a ‘shared vision for long-term cooperative action, including a long-term global goal for emission reductions’.73 To achieve this, it established two Ad Hoc Working Groups: the first (AWG-KP) would look at the Kyoto Protocol and its future after 2012—including the provisions for subsequent commitments.74 The second (AWG-LCA) reflected the view that longer-term action needed to include developing countries, possibly with commitments.75 Both were to report by COP 15/CMP 5, planned for Copenhagen in December 2009.

  Article 3(9).  Bali Action Plan, Decision 1/CP 13, available at (accessed 21 September 2015). 73   See (accessed 15 July 2015). 74   Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP). 75  Ad Hoc Working Group on Long-Term Cooperative Action (AWG-LCA). The Action Plan included five elements: shared vision, mitigation, adaptation, technology and financing. The AWG-LCA subsequently split the work streams into components under those five parts. 71

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11.  Copenhagen Accord The December 2009 Copenhagen Climate Change Conference is generally regarded as a disaster;76 one that moreover had a chilling effect on the whole UNFCCC process. For a variety of reasons, most of which can be laid at the feet of the host government including poor preparations, inadequate facilities, and inexperienced chairing, the meeting was unable to make any substantive progress on its core agenda—the development of a global treaty. As tensions rose at the end of the meeting with the arrival of heads of state, including US President Obama, it was clear that there was nothing prepared for them to agree. In a hastily organized process the heads of state themselves—including the largest unregulated emitters of greenhouse gases—the US, China, and India—drafted a political statement— the Copenhagen Accord. The Accord does have important political significance. It explicitly recognizes climate change as ‘one of the greatest challenges of our time’ and the scientific view that global increases in temperature should be kept below 2°C to ‘prevent dangerous anthropogenic interference with the climate system’. It accepts that deep cuts in global emissions are necessary but that on the basis of equity the time frame for peaking emissions by developing countries will be longer than for developed countries. It recognizes the need for urgent action on adaptation and agrees that developed countries need to ‘provide adequate predictable and sustainable financial resources, technology and capacity building to support implementation of adaptation action in developing countries’. In a ‘bottom-up’ approach, Annex I countries listed unilateral non-binding mitigation targets in the Appendix I, and in an important ‘first’, non-Annex I countries also agreed to implement voluntary mitigation actions in Appendix II. The US itself was only able to list a reduction ‘in the range of 17%’ from 2005 levels by 2020,77 but some of the other proposals are very significant. Norway’s commitment to a 30–40 percent reduction from 1990 levels by 2020,78 and the really important undertakings by Brazil amounting to between 36.1 and 38.9 percent by 2020, including major avoided deforestation reductions.79 76  David Freestone, ‘From Copenhagen to Cancun: Train Wreck or Paradigm Shift?’ (2010) 12 Environmental Law Review, 87–93. 77   (accessed 14 September 2015). 78   (accessed 14 September 2015). 79   (accessed 14 September 2015).

114   part ii. institutional The Accord also recognized more generally the crucial role of reducing emissions from deforestation and forest degradation—the REDD agenda. It recognized the need for ‘scaled up, new and additional predictable and adequate funding’ for enhanced implementation of the UNFCCC—US$30 billion a year for 2010–2012 and sets a goal of US$100 billion a year by 2020 to address the needs of developing countries. It proposed a High Level Panel be established to study potential alternative sources of revenue80 and that a Copenhagen Green Climate Fund be established as ‘an operating entity of the financial mechanism’,81 as well as a Technology Mechanism.82 The downside, however, is that although 114 countries are listed in its chapeau as agreeing to it, the Accord is not a legal instrument and was not a part of the UNFCCC COP process.83 The final COP Plenary Meeting which had not been involved in any way with the process of negotiation refused to adopt the Accord as a UNFCCC decision—simply ‘noting’ it at the closing ceremony. It therefore exists outside the framework of the UNFCCC and has no formal legal status.

12.  Cancun Adaptation Framework After such a high-profile debacle in Copenhagen, the Mexican hosts of COP 16 in Cancún were anxious to see the UNFCCC process back on track. Controversy in the final days of the Copenhagen Meeting had prevented a few important but largely non-contentious issues being settled, notably agreement on the REDD agenda,84 but also on adaptation. The key achievement of COP 16 was probably the Cancun Adaptation Framework85 and the establishment of the Adaptation Committee to oversee this work.86 It was also decided that a transitional committee be established to draw up details of a Green Climate Fund (stripped of its negative ‘Copenhagen’ sobriquet) to be considered at

80   UN Secretary-General’s High-Level Advisory Group on Climate Change Financing, set up in response to the Accord, reported in November 2010 that US$100 billion per annum was ‘challenging but feasible’, see (accessed 14 September 2015). 81   The existing financial mechanism for the UNFCCC is of course the GEF. 82   The Mechanism mandate was agreed in Cancún (Decision 1/CP 16) and the decision to implement by 2012 was made in Durban (2/CP 17). The Technology Executive Committee reported in Doha (13/CP 18). The Climate Technology Centre and Network (CTCN) to be run by UNEP was agreed in Warsaw (25/CP 19). 83   (accessed 15 July 2015). 84   Reduction of Emissions through Deforestation and Forest Degradation. 85   (accessed 14 September 2015). 86   See further Freestone, op.cit (n 12).

5.  unfccc—basis for climate change regime    115 COP 17/CMP 7 in December 2011 in Durban.87 The Cancún Package was approved by ‘consensus’, notwithstanding the active opposition of Bolivia, a procedural innovation which has sent further ripples through the UNFCCC decision-making system.

13.  The Durban Platform By COP 17/CMP 7 in Durban in December 2011, it was clear that the two ad hoc working groups that had been talking for nearly five years about amendments to the Kyoto Protocol (AWG-KP) and longer-term cooperative action (AWG-LCA) were coming to the end of their useful life. Proposals were on the table for a new commitment period for the Kyoto Protocol and there was general recognition of the need to work now on a text which would include obligations for all countries—not simply those listed in Annex I. In what is regarded as a significant turning point in the negotiations, governments recognized the need to work now on a blueprint for a fresh universal, legal agreement to deal with climate change beyond 2020. This became the so-called Durban platform for negotiations and with the agreement of all parties, a new Ad Hoc Working Group with a much more sweeping agenda was set up. The Ad Hoc Working Group on the Durban Platform for Enhanced Action was set up ‘to develop a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC applicable to all Parties’.88 The target date for the completion of the negotiation of this new instrument is COP 21/CMP 11 in 2015, which we now know will be in Paris, with a commitment period to start by 2020.

14.  Doha and Second Commitment Period for the Kyoto Protocol As discussed above, the first commitment period of the Kyoto Protocol was agreed to run from 2008 to 2012. Hence, at the Doha COP 18/CMP 8 in December 2012, there was some urgency to finalize the negotiation of the details of the second   The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention. Decision 1/CP 16, available at (accessed 14 September 2015). 88   Emphasis added. 87

116   part ii. institutional commitment period (CP 2) that would run from 2013 to 2020. On 8 December 2012, by decision 1/CMP 8,89 the Kyoto Parties adopted an amendment to the Kyoto Protocol. Annex I Parties committed themselves to reduce GHG emissions by at least 18 percent below 1990 levels in the eight-year period from 2013 to 2020.90 Existing provisions relating to the market mechanisms under Articles 6, 12, and 17 remain unchanged in CP 2, except that international emissions trading and joint implementation would also provide the Adaptation Fund with a 2 percent share of proceeds. The Doha Amendment requires 144 instruments of acceptance to enter into force.91 The composition of Parties in the second commitment period is different from the first. Canada had already withdrawn from the Protocol in 2011 and Japan, Russia, and New Zealand had signaled that they would not take part in the second period, leaving the 27 EU countries and Australia as the main players.92 To hasten its impact, Parties were encouraged to apply the amendment provisionally pending its entry into force.93 Parties also agreed to review their emission reduction commitments by the end of 2014, with a view to ‘increasing their respective levels of ambition’. There is also strong political will to see the Doha Amendment enter into force before COP 21/CMP 11 in Paris at the end of 2015. At a technical level, the Doha Amendment continues the accounting and carbon trading regimes of the first commitment period (CP 1): the Clean Development Mechanism, Joint Implementation, and International Emissions Trading (IET) will continue. Access to these mechanisms remains uninterrupted for all Annex I countries with targets for CP 2. However, the transparency and the accountability regime of carbon trading was increased by the agreed adoption of a common tabular format for the biennial reports of parties on measurement, reporting, and verification (MRV).94 If Kyoto Parties with ER commitments had surplus assigned amount units (AAUs) at the end of 2012, these can be carried over without limit, but with some restrictions, to CP 2.95   In accordance with Articles 20 and 21 of the Kyoto Protocol.   A number of parties, including the EU and Norway, accepted the Quantified Emission Limitation and Reduction Commitments (QELRCs) set out in the amended Annex B to the Protocol, on the basis that they may be made more rigorous in the light of a global treaty. 91   I.e. at least three-quarters of the Parties to the Protocol. 92   Other Annex I Second Commitment Period states include Belarus, Croatia, Iceland, Kazakhstan, Liechtenstein, Monaco, Norway, Switzerland, and Ukraine. 93   Paragraph 5, Decision 1/CMP 8. Parties so intending may notify the Depositary. 94   A key element was added to the measurement, reporting, and verification (MRV) framework for developed countries with the adoption of the tables for the biennial reports known as common tabular format, thereby strengthening transparency and the accountability regime. 95  Surplus assigned amount units can be carried over without limit from the first to the second commitment period of the Kyoto Protocol by Parties included in Annex I that have a target for the second commitment period, but with restrictions on the use of these carried-over AAUs for the second commitment period and quantitative limits on how many of these units may be acquired from other Parties. This is not entirely free from interpretative 89

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5.  unfccc—basis for climate change regime    117

15.  The Way Forward At COP 19/CMP 9 in Warsaw in December 2013 it was formally agreed that within two years at COP 21 in Paris in December 2015, the new legal agreement which will include obligations for all UNFCCC parties, not simply Annex I countries, will be finalized and, hopefully, approved. The aspiration is that it then receives sufficient ratifications to enter into force by 2020. The future of the UNFCCC system now depends on the work and the recommendations coming from the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP). That working group has agreed on two ‘workstreams’ for approaching its task. Both face very substantial hurdles. The first ‘workstream’ focuses on the steps necessary to negotiate a global climate change agreement that will be adopted by 2015 and enter into force from 2020. A series of extra meetings, mainly additional negotiating sessions, were arranged— including a high-level Summit in New York in September 2014 hosted by the UN Secretary-General that was attended by more than one hundred Heads of State and Government, including President Obama of the United States, and leaders from the private sector and civil society. The original timetable envisaged an initial draft text by December 2014 to be considered at COP 20/CMP 10 in Lima, with a formal draft text ready by May 2015. Despite the very positive atmosphere of the Lima meeting, it was not able to agree a draft; however, a negotiating text was released after the Geneva Session of the ADP in February 2015—a development widely regarded as very promising, even though all the text was still in square brackets.96 An innovative part of this new process is that governments agreed to begin or to intensify their own national work to identify what contributions towards the agreement they each can make at a domestic level. These so-called Intended Nationally Determined Contributions (INDCs) provide a ‘bottom-up’ approach to the negotiations and are an important new element in the process.97 These plans were requested to be ready by the first quarter of 2015 and in any event well before December 2015. Developed countries were urged to support developing countries in this important domestic planning process. The Lima COP 20/MCP 10 in December 2014 had agreed that these INDCs be communicated by each Party difficulty; however, see Anja Kollmuss, ‘Doha Decisions On The Kyoto Surplus Explained’, Carbon Market Watch Policy Brief, March 2013 at (accessed 15 July 2015). 96  FCCC/ADP/2015/1. Available at (accessed 14 September 2015). 97   See the INDCs at (accessed 14 September 2015).

118   part ii. institutional to the UNFCCC secretariat through the INDC Submission Portal, in a clear and transparent manner.98 At the same time, in the second workstream, the ADP was also charged with agreeing how to further accelerate global ambition to address climate change before the proposed agreement might come into force in 2020. In particular, it would seek to close the ‘ambition gap’—that is, the gap between what countries have already agreed to in terms of mitigation actions and the actions that will be necessary to keep the atmospheric temperature rise to below 2°C, as recommended by the IPCC. The sorts of measures that have been put on the table to date include technical innovative opportunities with high potential to curb greenhouse gas emissions, implementation of environmentally sound polices and technologies, and the voluntary cancellation of CERs earned under the CDM once they have been paid for. The sorts of suggestions that have been mooted include addressing specifically the causes of black carbon, and concentrating on measures to reduce high-impact GHGs such as HFCs99 and methane.100 This is an ambitious agenda, reminiscent of the momentum leading up to Copenhagen, but with the benefit of hindsight the preparations are not purely topdown but designed also to assist developing countries to develop national strategies to fit within a global compact. The huge economies of China, India, and Brazil, with burgeoning GHG emissions, are a particular concern—but so also is the United States which has seemed incapable of making realistic commitments for national action because of the political strangle-hold of its Senate.101 While there are signs of appreciation of the need to implement GHG reduction strategies in China and Brazil,102 the United States has been a continual obstacle in the UNFCCC negotiations. It seems, however, that the Obama Administration may have found a way forward. The US administration has already used the national Clean Air Act103 to declare CO2 a pollutant and to initiate executive action by the Environmental Protection Agency (EPA) to reduce emissions from power stations.104 Its INDC released in February 2015 indicated that the ‘United States intends to achieve an economy-wide 99   1/CP 20, paras 9 and 13.   See n 105 below.   The World Bank is developing a $100m facility to purchase cheap methane emissions in bulk; (accessed 15 July 2015). 101   The US Constitution requires international treaties receive the advice and consent of two-thirds of the Senate for ratification. 102   See the proposed voluntary reduction targets flagged under the Copenhagen Accord. 103   The Act dates originally from 1963, well before climate change was mooted. P.L. 88-207 see (accessed 15 July 2015). 104  See generally David A. Wirth, ‘The International and Domestic Law of Climate Change: A Binding International Agreement without the Senate or Congress?’(2015) 39 Harvard Environmental Law Review 515–66. 98

100

5.  unfccc—basis for climate change regime    119 target of reducing its greenhouse gas emissions by 26–28 per cent below its 2005 level in 2025 and to make best efforts to reduce its emissions by 28%’. In addition, in the run-up to the UN Secretary-General’s Summit in September of 2014, the United States announced that it had reached a voluntary agreement with some of the largest US companies to phase out their use of HFCs. It claims by 2015 this would be equivalent to 700 million tonnes of CO2 which would be itself the equivalent of 1.5 percent of 2010 global GHG emissions.105 Meanwhile, the Green Climate Fund has been established, based in Incheon, South Korea.106 Its Board has already met a number of times and its first capitalization in late 2014 resulted in pledges of more than US$10 billion.107 The New Climate Report by the Global Commission on the Economy and Climate suggests that the investments needed for effective climate mitigation and adaptation will actually be a major stimulus to economic growth.108 It argues that: countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change. This is made possible by structural and technological changes unfolding in the global economy and opportunities for greater economic efficiency. The capital for the necessary investments is available, and the potential for innovation is vast. What is needed is strong political leadership and credible, consistent policies. The next 15 years will be critical, as the global economy undergoes a deep structural transformation.109

So looking forward the situation for COP 21 in Paris is much more positive than it was for Copenhagen. The ground is better prepared. Developing countries have been engaged by the process of developing realistic national GHG reduction strategies. Although the important demands for equity in a future global treaty remain,110 a number of key negotiating objectives of the G77 have been met, such as the establishment of the Adaptation Framework and the Warsaw International Mechanism for Loss or Damage.111 There are some positive signs of movement by the big economies. If politics is the art of the possible, the new global agreement may be possible—but only time will tell. 105   HFCs are 10,000 times more powerful than CO2 as a GHG, hence it is also equivalent to taking 15 million cars off the road by 2020. See (accessed 15 July 2015). 106   See . 107  See (accessed 14 September 2015). 108   Better Growth Better Climate: the New Climate Economy Synthesis Report, 2014. (accessed 15 July 2015). 109   Ibid, 8. 110   For a useful examination, see Christina Voigt, ‘Equity in the 2015 Climate Agreement’ in David Freestone and Alexander Zahar (eds), The State of Climate Law 2014 (Special issue 2014) 4 Climate Law 50–69. 111   By Decision 2/CP 19. See further Maxine Burkett, ‘Loss and Damage’, ibid, 119–30.

Chapter 6

COMPLIANCE UNDER THE EVOLVING CLIMATE CHANGE REGIME Sebastian Oberthür

1. Introduction and Background

121

2. Lessons from the Kyoto Protocol Compliance System

122

3. Developments under the Convention: International Assessment and Review and International Consultation and Analysis

128

4. Conclusion: Possible Trajectories for the Future

133

6.  compliance under a post-2020 regime    121

1.  Introduction and Background Specific mechanisms for facilitating and promoting compliance have become a common feature of modern multilateral environmental agreements (MEAs). Since the early 1990s when such procedures were first introduced under the Convention on Long-Range Transboundary Air Pollution of the United Nations (UN) Economic Commission for Europe and the Montreal Protocol to the Vienna Convention for the Protection of the Ozone Layer, they have spread to more than a dozen global and regional MEAs (United Nations Environment Programme (UNEP), 2007; Treves et al., 2009; Bulmer, 2012). Accordingly, a specific compliance mechanism has also been established under the Kyoto Protocol (see infra). In the 2000s, possibly due to their success, the diffusion of compliance mechanisms to new MEAs has slowed down due to disagreement over their application to both developing and developed countries. Thus, parties to the 2001 Stockholm Convention on Persistent Organic Pollutants and the 1998 Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade have failed to reach agreement on compliance mechanisms for several years (Bulmer, 2012: 58). In 2013, a compliance mechanism was agreed to form part of the Minamata Convention on Mercury in its Article 15. This contribution assesses the ways in which compliance has been addressed under the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol (KP) in order to identify likely options/scenarios for a future new international climate agreement. It starts from the assumption that there is merit in assessing and promoting compliance with international commitments on climate change beyond the measuring, reporting, and verification (MRV) of relevant data. In particular, compliance mechanisms stabilize cooperation and enhance effective implementation by helping to build and maintain trust, address capacity problems, clarify rule ambiguities, and protect against free-riding. The politics of compliance mechanisms involves balancing two considerations. On the one side, any compliance mechanism implies some level of multilateral supervision of national implementation and thus limits national choices (‘sovereignty costs’; Abbott and Snidal, 2000: 436–40). As such, there may be a tradeoff between (the stringency of) any compliance mechanism and the willingness of countries to participate in an international agreement and especially to commit to ambitious action that will be monitored. On the other side, as mentioned above, compliance mechanisms can build trust and confidence and ensure effective implementation of commitments, while non-compliance, if not properly addressed, may undermine the agreement as a whole (Abbott and Snidal, 2000: 424–34). Given the high economic stakes involved in climate policy, a lack of assurances that others will be held accountable may thus also reduce the willingness of countries to commit to and implement ambitious action.

122   part ii. institutional This chapter proceeds in three broad steps. First, it briefly reviews the experience with the KP compliance mechanism by presenting its main features and functions and providing an overall assessment of its functioning. Second, the still-evolving relevant mechanisms under the Convention of ‘international consultation and ana­ lysis’ (ICA) applicable to developing countries and ‘international assessment and review’ (IAR) applicable to developed countries are introduced and assessed briefly. Finally, the last section identifies three principal options for elaborating compliance procedures under a future climate agreement.

2.  Lessons from the Kyoto Protocol Compliance System 2.1 Main Features and Functions of the Kyoto Protocol Compliance System The core of the KP compliance system is the ‘procedures and mechanisms relating to compliance under the Kyoto Protocol’ adopted in accordance with Article 18 of the Protocol at the first Conference of the Parties serving as the Meeting of the Parties (CMP) to the KP in 2005 in Decision 27/CMP.1 (‘Procedures and Mechanisms’). These Procedures and Mechanisms were subsequently further elaborated in rules of procedure of the KP Compliance Committee (Lefeber and Oberthür, 2012; Lefeber, 2009a). On the one side, these Procedures and Mechanisms possess features that are similar to those of compliance mechanisms of other MEAs referred to above (Bulmer, 2012). First of all, they establish a compliance committee with a limited number of twenty members and twenty alternate members acting in their individual capacities. They also determine how cases can be triggered, the procedure for addressing these cases and the applicable ‘consequences’ (for detailed analyses, see Oberthür and Lefeber, 2010; Lefeber and Oberthür, 2012; Holtwisch, 2006; see there also for the following). On the other side, the KP compliance system possesses some rather particular features that distinguish it from compliance mechanisms of other MEAs. Most notably, the Procedures and Mechanisms not only aim to promote and facilitate but also to enforce compliance. Accordingly, the KP Compliance Committee is divided into two sub-committees, the facilitative branch and the enforcement branch, contrasting other MEAs’ compliance mechanisms that are usually served by one unitary committee. Whereas such other compliance mechanisms usually

6.  compliance under a post-2020 regime    123 tend towards the rather soft ‘management’ end of the spectrum ranging from facilitation to enforcement (for the protagonists of the ‘management’ and ‘enforcement schools’ regarding compliance, see Chayes and Chayes, 1995 and Downs et al., 1996), the KP Procedures and Mechanisms include a strong enforcement component (Brunnée, 2003). The enforcement branch of the KP Compliance Committee hence also has relatively strong consequences at its disposal, which it has to apply quasi-automatically in the case of a finding of non-compliance (i.e. with little discretion to tailor the consequences to the case at hand). These consequences in particular include the suspension from the participation in the KP international carbon-market mechanisms (Joint Implementation under Article 6, the Clean Development Mechanism under Article 12, and international emissions trading under Article 17) and, in the case of non-compliance with the emission reduction targets, the deduction of 1.3 times the excess emissions from the amount of emissions allocated for the next commitment period (for more detail, see Oberthür and Lefeber, 2010: 148–52). Some other features of the KP compliance system are consequential of its particular enforcement component. To start with, especially the procedures of the enforcement branch follow relatively strict and well-defined timelines and procedural steps, including a hearing, a preliminary finding, and a final decision. Furthermore, the party concerned enjoys broad due-process rights/safeguards, including the right to make two written submissions, to request a hearing and to be represented during the proceedings (except for the elaboration and the adoption of the decisions). Overall, the KP can be considered to possess the most ‘judicial’ compliance mechanism among MEAs, as is further evidenced by its far-reaching independence from political interference, including by the CMP. Thus, decisions taken by the branches—usually by consensus but, as a last resort, by majority—are final and cannot usually be overturned by the CMP. The triggering provisions of compliance mechanisms deserve particular attention because they determine the mechanisms’ capacity to address cases of potential non-compliance. Since states have been found to be reluctant to point fingers at each other (‘there’s honour among thieves’), it is important that other actors than governments can trigger proceedings (Keohane et al., 2000). One particular alternative channel has been employed under the KP Procedures and Mechanisms: socalled expert review teams (ERTs), tasked to review national reports under the KP (annual inventory submissions and less frequent periodic national communications), are mandated to indicate any ‘question of implementation’ in their review reports, which triggers the proceedings of the Compliance Committee. Confirming the experience in other compliance mechanisms and similar proceedings, no cases have been triggered so far by parties. Rather, all the questions of implementation concerning the eight countries that the committee (i.e. its enforcement branch) has addressed in substance since 2008 have been raised in ERT reports (as of mid-2014) (Manguiat and Bondi Ogolla, 2013).

124   part ii. institutional This points to an important link between the Procedures and Mechanisms as such and the KP reporting and review system, nowadays frequently known as measuring, reporting, and verifying (MRV). The MRV system of the KP heavily builds on and expands the one under the UNFCCC itself, which also employs ERTs. It is itself a rather special feature of the governance architecture of the UNFCCC and its Kyoto Protocol not found in other MEAs. ERTs assess the information submitted by developed country parties in-depth through desk reviews or even during in-country visits. As ERTs identify problems and address them in cooperation with the developed country party reviewed during the review process, they in fact perform an important facilitative function especially as regards the fulfillment of methodological and reporting obligations, significantly limiting the need for additional facilitation by the KP Compliance Committee (facilitative branch) in this respect (Herold, 2012: 137; Oberthür and Lefeber, 2010: esp. 152–5). This may be one of the reasons why the facilitative branch has had no specific cases to address so far and has thus had little substantive work overall (see below). The Kyoto Compliance Committee’s two branches fulfill different functions, as defined in sections IV and V of the Procedures and Mechanisms. The enforcement branch is responsible for addressing cases of potential non-compliance by developed countries with (a) their emission limitation or reduction commitments under Article 3.1 of the Protocol (their emission targets); (b) the key methodological and reporting requirements under Articles 5.1/5.2 and 7.1/7.4; and (c) the eligibility requirements for participation in the carbon-market mechanisms Joint Implementation, the Clean Development Mechanism, and international emissions trading. In case of a finding of non-compliance, it has to apply pre-defined ‘consequences’, as mentioned above. The enforcement branch is also mandated to decide on the application of adjustments to inventories (for example, where emission estimates are found to be lacking or incorrect) and corrections to the database for the accounting of assigned amounts (for example, where transfers of emission units are found to be recorded inappropriately). Such a decision is warranted in situations where a related disagreement between an ERT and a party could not be resolved during the review of national greenhouse gas (GHG) emission inventories. The power to decide on adjustments of emission inventories (and consequently to resolve related disagreements) is crucial for ensuring correct and comparable data (Herold, 2012: 140–1). The facilitative branch is essentially responsible for addressing any question of implementation that does not fall under the authority of the enforcement branch. This specifically includes an early-warning function regarding (a) emission targets prior to the end of the relevant commitment period and (b) methodological and reporting requirements prior to the first commitment period. With respect to any question of implementation addressed by it, the facilitative branch, rather than determining non-compliance, is to provide advice and facilitation and promote compliance by applying a mix of consequences that can be characterized as ‘soft’.

6.  compliance under a post-2020 regime    125 As of mid-2014, the facilitative branch has not received any question of implementation and has thus had little substantive work. A submission by South Africa as Chair of the Group of 77 and China in May 2006 relating to the alleged failure of fifteen developed countries to submit reports demonstrating progress in achieving their commitments under the KP in accordance with Article 3.2 did not proceed to the merits. The branch did not proceed with this question because members could not agree on whether the submission had been properly filed by a party (see Doelle, 2012: 102–5; Lefeber and Oberthür, 2012: 82–3). Other attempts to make use of the facilitative branch’s capabilities have had little result. A request for clarification of the action the Committee could take in relation to its facilitative function, made in 2009, has remained unanswered by the CMP. Furthermore, in 2010, the facilitative branch decided to take proactive action with respect to parties that had not submitted their national communication on time. The branch wrote to Monaco and offered its services in order to facilitate the completion of the delayed fifth national communication. Without having made use of the offered services, Monaco eventually submitted its national communication in March 2011. In 2012, the branch agreed on ‘indicative working arrangements’ to execute its early-warning function. Canada declined the facilitative branch’s offer to provide its services. The consideration of the situation of other parties has not resulted in concrete action by the branch. Overall the facilitative branch has thus, despite the aforementioned attempts, made a very limited contribution to the functioning of the Kyoto Protocol.

2.2 A Brief Assessment In assessing the functioning of the KP compliance system, it is useful to distinguish compliance with methodological and reporting requirements and the resolution of disagreements over adjustments, on the one side, from compliance with the substantive mitigation targets (emission limitations and reductions), on the other. While experience exists with the former, the assessment of the latter is more speculative since it is largely based on the design of the related procedures.

A. Methodological and Reporting Requirements and Disagreements over Adjustments The enforcement branch of the KP Compliance Committee has made a significant contribution to compliance with the methodological and reporting requirements as well as to the resolution of disagreements over adjustments of inventory estimates. As of mid-2014, the enforcement branch had addressed ‘questions of implementation’ concerning eight countries. All of these cases were related to the methodological and reporting requirements and led to findings of non-compliance and the accompanying application of the foreseen consequences. As of mid-2013, all these

126   part ii. institutional cases of non-compliance had been successfully resolved and the parties concerned had returned to compliance. The enforcement branch had also addressed and successfully resolved disagreements over adjustments with respect to one country in 2012 (Slovakia). There is also evidence supporting the conclusion that the sheer existence of the compliance mechanism has acted as an incentive for parties to avoid compliance problems regarding methodological and reporting requirements, to try to resolve related issues during the ERT process and to accept adjustments calculated by the ERTs (see Lefeber and Oberthür, 2012: 94, 98–9). Overall, in these cases the committee’s enforcement branch has proved its ability to effectively address and resolve compliance issues within the framework of the applicable rules. It has delivered authoritative, quasi-judicial findings and has generally lived up to a high standard (Doelle, 2012; see also Manguiat and Bondi Ogolla, 2013). Further potential may exist for facilitating compliance with methodological and reporting requirements by addressing implementation problems early on. While the ERT process itself fulfills an important facilitative function (see above), in several cases this has not resulted in the sustained efforts required to address and resolve problems beyond the review process—as is evident from the cases brought to the enforcement branch as well as from the long list of problems indicated in other review reports (available at ). A facilitative early warning might hold potential for preventing compliance problems regarding methodological and reporting requirements from escalating all the way towards non-compliance (see also Lefeber and Oberthür, 2012; Doelle, 2012).

B. Mitigation Targets A similar potential for further enhanced facilitation may also exist regarding compliance with emission limitation and reduction commitments, that is mitigation targets. Since self-submission by a party or submissions by a party with respect to another party can be expected to remain a rare exemption, cases of potential noncompliance will primarily reach the compliance system through ERT reports. As a result, questions of implementation regarding the mitigation commitments will only reach the KP Compliance Committee after the final compliance assessment, that is in 2015/2016 at the earliest. By then, any non-compliance could not be effectively addressed/remedied anymore through measures addressing GHG emissions because the commitment period itself would long have come to a close in 2012. Although the applicability of ex-post consequences can be assumed to have a deterring effect on countries (with the question of consequences playing a role in public and political debates), it is this inability to address potential non-compliance with mitigation targets timely, built into the KP Procedures and Mechanisms, that has contributed to criticism of the KP compliance system. The case of Canada is illustrative in this respect (e.g. Murtha, 2009). As early as 2007, the Canadian government had publicly declared that it did not plan to (try to) meet its emission target, calling it ‘unrealistic’ and ‘unachievable’ (see also Lefeber, 2009b: 10–11). Despite

6.  compliance under a post-2020 regime    127 emission figures subsequently underlining and reinforcing Canada’s potential noncompliance (which could, however, in theory have been offset even after the end of the commitment period by international emission credits), the KP Compliance Committee was unable to address the issue in a proactive manner. In any event, Canada eventually withdrew from the KP in December 2011, which became effective in December 2012, just prior to the end of the commitment period. Different triggering provisions (e.g. mandating ERTs to indicate potential non-compliance to the KP Compliance Committee) would have the potential to enhance the facilitative functions of the KP compliance system as regards mitigation targets. While this would itself not allow enforcement of mitigation commitments, it would enable the Compliance Committee to clearly display potential problems and apply soft consequences (e.g. issuing recommendations). A further question concerns the effectiveness of the consequences or sanctions available in the case of (potential) non-compliance with the mitigation targets. These consequences include a declaration of non-compliance, the request for the elaboration and submission of a compliance action plan, the suspension of the party’s eligibility to sell emission units, and the deduction of 1.3 times the excess emissions from the amount of emissions allocated for the next commitment period (see above). These consequences are not negligible and are exceptionally strong when compared to compliance mechanisms of other MEAs (with some even calling them ‘penalties’; e.g. Brunnée, 2003: 274). Arguably, they exploit the potential for incentives and disincentives provided by the KP itself, even though their effectiveness remains in doubt (Oberthür and Lefeber, 2010: 148–52). More importantly, the facilitative consequences that would be available in the case of early warning of potential non-compliance are rather soft, focusing mainly on advice and facilitation (but could in general be strengthened, e.g. by allowing the issuance of warnings).

C. Overall Considerations Based on the experience with the operation of the KP Compliance Committee, one may also question the rationale for separating facilitation and enforcement. Both are frequently closely related and it is unclear why one branch may not be able to discharge both facilitative and enforcement functions (that could even be separated within one branch if parties so wished). What lessons exactly should be drawn for the future climate regime will also depend on the overall design of this future regime, which is as yet uncertain. For example, if a stringent MRV system were part of the regime, the important function fulfilled by the KP compliance system in addressing the most serious cases of noncompliance with methodological and reporting requirements may be important to consider. Also, deciding on the most appropriate data to use (where the party and the ERT disagree) could be an important function. In any event, however, there is a strong rationale for any future compliance system to be able to address any lack of action early on, that is before non-compliance has become manifest.

128   part ii. institutional

3.  Developments under the Convention: International Assessment and Review and International Consultation and Analysis Compliance has not been addressed very prominently under the UNFCCC itself, probably due to the lack of precise binding obligations. Article 13 of the Convention tasked the first Conference of the Parties (COP-1) ‘to consider the establishment of a multilateral consultative process . . . for the resolution of questions regarding the implementation of the Convention’. The ensuing negotiations on the multilateral consultative process produced a draft text on related procedures that foresaw the establishment of a related committee. However, this draft text was never adopted in particular due to lack of agreement on the representation of parties on the committee (Yamin and Depledge, 2004: 384–5). While the MCP has formally remained on the table, parties have not attempted to activate it. Instead, the Cancun Agreements of 2010 initiated two new relevant developments: they launched a process for the International Assessment and Review (IAR) related to the emission reduction targets of developed countries and a process for International Consultation and Analysis (ICA) to increase the transparency of developing countries’ mitigation actions and their effects (Decision 1/CP.16). The IAR and the ICA were subsequently to some extent further developed at COP-17 in 2011 (Decision 2/CP.17) and COP-19 in 2013 (Decision 20/CP.19 on the ICA). They attempt to collectively appraise information on the implementation of mitigation pledges while implementation is still ongoing—with a clear separation between developing and developed countries. In the following, the IAR and ICA are briefly introduced and an overall ex-ante assessment is provided (which, due to the early stage of their development, is based on their design rather than any experience with their operation).

3.1 International Assessment and Review The IAR process is composed of two components, namely (1) ‘a technical review of information’ and (2) ‘a multilateral assessment of the implementation of quantified economy-wide emission reduction targets’ of developed countries (Decision 2/CP.17, para. 23). It addresses the ‘biennial reports’ of developed countries (while the review of annual national GHG inventories is to continue on an annual basis). In addition to the mitigation targets, the assessment also ‘aims at assessing the implementation of methodological and reporting requirements’ (Decision 2/CP.17, Annex II, para. 2). The technical review builds on the expert review system established under the UNFCCC (and also used under the KP; see above). Essentially,

6.  compliance under a post-2020 regime    129 ERTs are to review the information submitted in the biennial reports and to prepare related review reports. The multilateral assessment, however, is a new element. It is to take place during a session of the Subsidiary Body for Implementation (SBI) on the basis of the biennial report and related supplementary information as well as the ERT’s review report. Prior to the actual assessment, other parties can electronically submit questions and the party in question ‘should endeavor to respond to those questions’ (Decision 2/CP.17, Annex II, para. 10(b)). All parties can subsequently participate in the actual assessment during the SBI session and pose questions to the party under review. The major output of the process is a record of relevant documents and proceedings prepared by the secretariat, which forms the basis of SBI conclusions to be forwarded ‘to relevant bodies under the Convention as appropriate’ (Decision 2/CP.17, Annex II, para. 12). Importantly, the agreed guidelines do not foresee any findings, recommendations or other consequences for the party under review. The first IAR cycle started in 2014 when the first biennial reports became due, and the multilateral assessment phase started in late 2014, after the finalization of the ERT reports. A revision of the existing IAR arrangements is foreseen no later than 2016 and ‘should take into account any future agreement on a compliance regime for mitigation targets under the Convention’ (Decision 2/CP.17, para. 31).

3.2 International Consultation and Analysis Like the IAR, the ICA consists of two steps, namely (1) a ‘technical analysis’ of biennial update reports of developing countries and, on this basis, (2) a ‘facilitative sharing of views’ (Decision 2/CP.17, Annex IV, para. 1). The ICA addresses the ‘biennial update reports’ of developing countries, including national greenhouse gas inventories and other relevant information (regarding, inter alia, the mitigation actions, their implementation and relevant methodologies and assumptions), that were agreed as part of the 2010 Cancun Agreements in order to increase the transparency of developing countries’ mitigation actions. While developing countries generally have to submit these reports every other year (starting in late 2014), Least Developed Countries (LDCs) and Small Island Developing States (SIDS) may submit them at their discretion (Decision 2/CP.17, para. 41). While a parallelism between IAR and ICA seems obvious, political discussions under the COP have led to a clear separation, with the ICA remaining the softer of the two. A ‘team of technical experts’ (TTE) is to conduct the technical analysis. The composition and terms of reference of TTEs are similar to those of ERTs in charge of reviewing developed countries’ reports, with some significant differences. Thus, the agreed guidelines aim to ensure that a majority of the TTE members are from developing countries and that each TTE is geographically balanced. Also, experts serving

130   part ii. institutional on a TTE are supposed to have followed a specific training program organized by the Consultative Group of Experts on National Communications from Parties not included in Annex I to the Convention. At least one member of this Consultative Group should also, to the extent possible, form part of each TTE. The process is meant to be ‘non-intrusive, non-punitive and respectful of national sovereignty’, and does not include discussion about the appropriateness of domestic policies and measures. It may identify capacity-building needs for reporting. The TTEs are expected to provide a ‘summary report’ to be ‘noted’ by the SBI in its conclusions (Decision 2/CP.17, Annex IV, paras. 4-5; Decision 20/CP.19). The facilitative exchange of views is to be conducted by the SBI at workshops to be convened ‘at regular intervals’ on the basis of the biennial update reports and the technical summary reports. Other parties can submit written questions in advance and at the workshop. Sessions for each party (or group of up to five parties, as requested by the parties involved) are to last one to three hours. The outcome will be a ‘record of the facilitative sharing of views’. As in the case of the IAR, no findings or concrete results directed at the party in question or at others (e.g. institutions providing financial assistance) are foreseen. A first round of the facilitative sharing of views can be expected for 2015/2016. A revision of the existing ICA arrangements is foreseen no later than 2017 (Decision 2/CP.17, para 58(c); see also Annex IV).

3.3 Overall Assessment As neither the IAR nor the ICA had yet started operating at the time of writing—let alone completed a full cycle—any assessment can only be based on its core design features. The following assessment focuses on the multilateral phases, that is ‘multilateral assessment’ under the IAR and the ‘facilitative exchange of views’ under the ICA (rather than the preceding review/technical assessment phases), because these appear closest to an actual compliance mechanism. In this respect, a certain potential and several accompanying limitations can be identified. On the positive side, the multilateral phases of both the IAR and the ICA kick in before the actual target date(s) of the mitigation pledges under the Cancun Agreements, generally 2020. This is an important difference and additional potential when comparing these mechanisms to the KP Compliance Committee (see above), since both the IAR and the ICA in principle provide the opportunity to discuss and address shortcomings (as well as highlight possible success stories) relatively early on. The timing of this public scrutiny may still be too late to lead to concrete and timely correcting action by the parties reviewed towards their 2020 targets. Since it frequently takes several years from the initiation to the adoption and effective implementation of additional measures, measures initiated in 2017/2018 may unfold their main effects only after 2020. However, the prospect of public scrutiny

6.  compliance under a post-2020 regime    131 of their own implementation efforts (lacking under the KP) could act as a significant incentive for effective implementation and pressure for additional action may still arise much earlier than in the case of the KP. Assuming a regular reporting and review cycle of about two years (‘biennial’), feedback and peer pressure could already kick in earlier as regards future target dates, if the system is kept (e.g. early in the 2020s for 2030 targets). On the other side, this additional potential contrasts with—and may be canceled out by—five significant shortcomings and limitations. First, since only other parties can ask questions and raise issues during the multilateral phases, not all relevant implementation difficulties and deficits may—judging from past experience and since ‘there’s honour among thieves’—be raised. In this respect, it may be important to take into account that also the ability of ERTs and TTEs to raise issues in their respective reports are (judging from past experience as well as their mandates) very much limited. Second, it is also uncertain whether and how a problem-oriented factual debate can be ensured and politicization be avoided or at least reduced in the current setup of the assessment/consultation. Parties are the main participants within a largely political organ of the UNFCCC, the SBI, forming part of a much bigger political process. There are no safeguards built into the process that would ensure that the debate is targeted at an independent assessment following agreed criteria (e.g. through the mandates of the IAR and ICA and/or those undertaking the assessment acting in their personal capacity and thus not under political instruction). A politicization of the discussion provides particularly broad grounds for parties concerned to fend off criticism as politically motivated (rather than substantially founded). In addition, a fruitful substantive debate would require individual parties to assess very carefully the situation of a great number of other parties as reflected in the respective review reports. Third, the (institutional) capacity of the SBI or a workshop convened under it to address implementation issues in a structured, focused, and productive way can be considered sharply limited and most probably insufficient. This may be further aggravated by the lack of guidance to the processes as to the focus of the discussions. Assuming that the ‘multilateral assessment’ under the IAR and the ‘facilitative exchange of views’ under the ICA (including a presentation of the party; consideration of the review and summary reports, respectively, and discussion of issues identified) would take only about one hour per party on average (or group of parties), this would lead to a time requirement of 40–50 hours for developed countries and about 100–150 hours for developing countries (depending on the submission of reports by LDCs and SIDS). An overall total of about 200 hours translates into more than thirty days of meetings per cycle. In comparison, the SBI itself has so far convened for about 15–20 days per year. While even this seems already like an overstretch for the SBI, it is more than likely that one or several hours per party will be insufficient to address any issues

132   part ii. institutional in any detail. Any useful exploration and discussion of mitigation actions and commitments (including their effects) will involve a number of aspects, including methodologies and assumptions. The KP experience suggests the importance of such methodologies and assumptions as well as that understanding them involves intricate technical issues, which are essential for being able to assess the implementation of mitigation commitments/actions. The practice of the World Trade Organization’s (WTO) Trade Policy Review Mechanism—that has been referred to as a useful point of reference (e.g. Ellis et al., 2011; Cecys, 2010)—may provide an indication of the time required: the WTO Trade Policy Review Body takes two days of meetings per country (or group of smaller countries) to explore their situations (see ). This leads directly to the fourth limitation, namely the lack of any follow-up for cases where serious problems exist. It is the standard in compliance mechanisms of MEAs, including the one under the KP, that countries for which serious compliance issues have been identified remain on the agenda of the body responsible until the issues have been resolved. Other relevant international processes, including under the WTO and the International Monetary Fund, vary with respect to such followup (e.g. Ellis et al., 2011; Cecys, 2010)—which can be seen as an important ingredient of their effectiveness as well. No such follow-up is foreseen under the IAR and the ICA. Hence, parties will be ‘off the hook’ after their slot in the multilateral assessment/facilitative exchange of views until the next biennial (update) reports will be reviewed and assessed/analyzed. Finally, both the IAR and the ICA lag as regards actual measures. The prospect of being subject to scrutiny by peers may create some pressure and incentive for action, but the questioning ends after an hour or so without any concrete consequence. Even without thinking about ‘enforcement’ as enshrined in the KP compliance mechanism, the IAR and ICA fail to activate the potential of the compliance mechanisms of other MEAs that employ facilitative consequences such as findings (of non-compliance), expressions of concern, issuing of warnings, advice, recommendations, linking with financial institutions, etc. (e.g., Bulmer, 2012: 71–2). Applied by an international body/authority, such measures can fulfill important facilitative functions by empowering actors at the domestic scene to push for remedial action and activating international support. In this context, the example of relevant other international processes confirms the added value of consequences in general. Thus, policy change in response to the WTO Trade Policy Review Mechanism has been found to benefit from subsequent follow-up and decisions under the WTO dispute settlement procedure (Chaisse and Chakraborty, 2007). The ‘record’ resulting from the IAR and the ICA may at best provide ammunition in related bilateral and multilateral debates. It is difficult to imagine that it and the reference to other countries having asked questions can fulfill this function. Overall, the multilateral phases under the IAR and the ICA thus remain seriously lacking in supporting an effective implementation of both methodological/

6.  compliance under a post-2020 regime    133 reporting requirements and mitigation commitments/actions. They do open up an interesting potential to address implementation issues per party relatively early on, comprehensively, and on a regular and systematic basis. However, their design raises serious concerns and questions regarding the ability to contribute to effective implementation because of the lack of institutional capacity, the exclusive entitlement of parties to trigger and participate in the debate, the political nature of the debate, the lack of follow-up of problems identified, and the absence of authoritative outcomes of the process incentivizing action by individual parties.

4.  Conclusion: Possible Trajectories for the Future Thinking about the future of compliance procedures in the international cooperation on climate change may easily be speculative. How parties will address compliance in the future is a political decision that is difficult to anticipate, even if past discussions may give an indication of what is feasible politically. In any event, the experience with the existing arrangements under the KP and the UNFCCC do provide a useful reference point for addressing compliance in the future and their assessment holds important lessons for thinking about suitable design arrangements that exploit the potential of any compliance mechanism to the fullest extent possible. Before identifying three generally possible trajectories (see also in more detail Oberthür, 2014), several key design features derived from this past experience towards an effective compliance regime deserve highlighting: (a) The capacity of actors beyond governments in identifying implementation problems (i.e. triggering proceedings) and contributing to/participating in the compliance assessment should be drawn upon. (b) In order to ensure sufficient institutional capacity and authority, the compliance mechanism should rely on a dedicated body (or two bodies) with limited membership of individuals serving in their personal capacity mandated to undertake the compliance assessment independently and impartially. (c) In addition to any ad hoc triggering of compliance proceedings, the body should be mandated to regularly undertake assessments of the implementation of the agreement by each party so that issues are identified and addressed not only ex post but also early on. (d) Where implementation problems have been identified, the body should be mandated to keep these under review until they have been resolved.

134   part ii. institutional (e) The body should be mandated to take measures addressing and promoting the effective implementation in individual countries (e.g. to empower domestic actors to take further action and/or to activate international support). The current state of international discussions would suggest that any such measures would need to be facilitative. (f) Depending on the overall design of the future regime and given the central importance of data, the powers of the body should include deciding on the accuracy of reported emission data. One option to realize these design elements would consist of transferring a reformed/ adjusted KP compliance mechanism to any future climate protection arrangement. However, the political appetite for pursuing this option at present seems low. To be sure, the KP compliance mechanism has proven its capacity to address compliance issues effectively on an ex post basis (Lefeber and Oberthür, 2012; Manguiat and Bondi Ogolla, 2013). However, several important developed countries do not support the concept of enforcement enshrined in this mechanism. At the same time, many developing countries (including emerging economies) currently consider subjecting themselves to such a mechanism as an unacceptable loss of sovereignty. Under these circumstances, the prospects of building on the existing Kyoto compliance mechanism, even if reformed, seem poor. The major reform issue arising from the above list of design features would concern the ability of the mechanism to address implementation problems regularly early on. However, enforcement may be too enshrined in the KP compliance mechanism for a world in which facilitation may be the most that could be acceptable. As a second option, it may be possible to more fully exploit and enhance the potential of the evolving facilitative IAR and ICA system. It follows from the analysis above that this might be achieved by addressing the limitations and significantly strengthening the multilateral phases of the IAR and the ICA. Both currently forego a major part of their potential to effectively support and promote implementation. Simply incorporating them into a future climate agreement would thus leave a large part of the potential of compliance mechanisms untapped. At a minimum, there would need to be a clear mandate for the COP to work to improve them in the future. The above list of design features could then be employed as guidance for strengthening the IAR and ICA system so as to more effectively support implementation. Third, the governing body of the future international climate agreement may elaborate its own compliance mechanism. Given the political realities, it should be fair to assume that such a new compliance mechanism would have to focus on facilitation. In accordance with the assessment above, this new mechanism should incorporate the lessons learned from both the KP compliance system and the evolving IAR and ICA system. In essence, a new mechanism should thus reflect much the same points addressed above. Again, the above list of design features could provide useful

6.  compliance under a post-2020 regime    135 guidance. One way of elaborating such a facilitative compliance mechanism may be to start from the existing draft of the MCP under Article 13 of the Convention referred to above and to adapt it to the needs of the new future agreement (on this option, see Oberthür, 2014: 38–9 and 46–7). Overall, we may expect that a compliance mechanism—whatever its eventual form, name, and trajectory—may well have to be elaborated after the future climate agreement is adopted. For one, the issue has come to be among the most politicized areas in international climate governance as it touches upon issues of national sovereignty and is interwoven with the broader issue of equity and differentiation. Furthermore, and partially as a result, there is an important rationale for elaborating a compliance mechanism only after clarity exists to a significant degree on the cornerstones of the overall regime as this allows tailoring of the mechanism appropriately (Bulmer, 2012: 58–9). If the design of a compliance mechanism for a future climate agreement takes into account the lessons of the past, the available experience suggests that such a mechanism can make a significant contribution to bolstering and advancing international climate governance. Given the urgency of the climate change challenge, it may be wasteful not to make use of this potential.

References Abbott, K.W. and Snidal, D. (2000). ‘Hard and Soft Law in International Governance’, International Organization 54: 3, 421–56. Brunnée, J. (2003). ‘The Kyoto Protocol: Testing Ground for Compliance Theories?’, ZaöRV 63: 2, 255–80. Bulmer, J. (2012). ‘Compliance Regimes in Multilateral Environmental Agreements’, in J. Brunnée, M. Doelle, and L. Rajamani (eds), Promoting Compliance in an Evolving Climate Regime, Cambridge University Press, 55–73. Cecys, K. (2010). MRV: A Survey of Reporting and Review in Multilateral Regimes, Post2012 Policy Brief, December 2010, Arlington, VA: Pew Center on Global Climate Change. Chaisse, J. and Chakraborty, D. (2007). ‘Implementing WTO Rules through Negotiations and Sanction: The Role of Trade Policy Review Mechanism and Dispute Settlement System’, Pennsylvania Journal of International Economic Law 28: 1, 153–85. Chayes, A. and Chayes, A.H. (1995). The New Sovereignty: Compliance with International Regulatory Agreements, Harvard University Press. Doelle, M. (2012). ‘Experience with the Facilitative and Enforcement Branches of the Kyoto Compliance System’, in J. Brunnée, M. Doelle, and L. Rajamani (eds), Promoting Compliance in an Evolving Climate Regime, Cambridge University Press, 102–21. Downs, G.W., Rocke, D.M., and Barsoom, P.N. (1996). ‘Is the Good News about Compliance Good News about Cooperation?’, International Organization 50: 3, 379–406. Ellis, J., Briner, G., Dagnet, Y., and Campbell, N. (2011). Design Options for International Assessment and Review (IAR) and International Consultation and Analysis (ICA), Paris: OECD/IEA.

136   part ii. institutional Herold, A. (2012). ‘Experiences with Articles 5, 7, and 8 Defining the Monitoring, Reporting and Verification System under the Kyoto Protocol’, in J. Brunnée, M. Doelle, and L. Rajamani (eds), Promoting Compliance in an Evolving Climate Regime, Cambridge University Press, 122–46. Holtwisch, Ch. (2006). Das Nichteinhaltungsverfahren des Kyoto-Protokolls, Entstehung— Gestalt—Wirkung, Berlin: Duncker und Humblot. Keohane, R.O., Moravcsik, A., and Slaughter, A.-M. (2000). ‘Legalized Dispute Resolution: Interstate and Transnational’, International Organization 54: 3, 457–88. Lefeber, R. (2009a). ‘The Practice of the Compliance Committee under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (2006–2007)’, in T. Treves, L. Pineschi, A. Tanzi, C. Pitea, C. Ragni, and F. Romanin Jacur (eds), Non-Compliance Procedures and Mechanisms and the Effectiveness of International Environmental Agreements, The Hague: T.M.C. Asser Press, 303–17. Lefeber, R. (2009b). An Inconvenient Responsibility, Utrecht: Eleven. Lefeber, R. and Oberthür, S. (2012). ‘Key Features of the Kyoto Protocol’s Compliance System’, in J. Brunnée, M. Doelle, and L. Rajamani (eds), Promoting Compliance in an Evolving Climate Regime, Cambridge University Press, 77–101. Manguiat, M.S. and Bondi Ogolla, D. (2013). ‘The Compliance Committee of the Kyoto Protocol: Towards a Robust Assessment of Compliance with Targets for the First Commitment Period’, in J. Gerardu, M. Koparova, K. Markowitz, E. Stull, and D. Zaelke (eds), Compliance Strategies to Deliver Climate Benefits, Washington, DC: Institute for Governance & Sustainable Development, 36–9. Murtha, P.J. (2009) ‘Effective International Compliance Is Needed to Avoid “Dangerous Anthropogenic Interference” with the Climate System’, INECE Special Report on Climate Compliance 8 (December 2009) 8–9. Oberthür, S. (2014). ‘Options for a Compliance Mechanism in a 2015 Climate Agreement’, Climate Law 4: 1–2, 30–49. Oberthür, S. and Lefeber, R. (2010). ‘Holding Countries to Account: The Kyoto Protocol’s Compliance System Revisited after Four Years of Experience’, Climate Law 1: 1, 133–58. Treves, T., Pineschi, L., Tanzi, A., Pitea, C., Ragni, C., and Romanin Jacur, F. (eds) (2009). Non-Compliance Procedures and Mechanisms and the Effectiveness of International Environmental Agreements, The Hague: T.M.C. Asser Press. United Nations Environment Programme (UNEP) (2007). Compliance Mechanisms under Selected Multilateral Environmental Agreements, Nairobi: UNEP. Yamin, F. and Depledge, J. (2004). The International Climate Change Regime: A Guide to Rules, Institutions and Procedures, Cambridge University Press.

Chapter 7

THE GLOBAL REGIME FOR CLIMATE FINANCE POLITICAL AND LEGAL CHALLENGES

Alexander Thompson

1. Introduction

138

2. The Evolution of Agreements for Climate Finance

139

3. The Landscape of Institutions for Climate Finance

144

4. Improving the Governance of Climate Finance

150

5. Mobilizing Climate Finance: Political and Legal Challenges

153

6. Conclusion: Obstacle and Opportunity

159

138   part ii. institutional

1. Introduction From the earliest days of the global climate change regime, the question of how to finance efforts to address the problem has featured prominently in policy debates and international negotiations. Much of the emphasis has been on promoting the transfer of resources—in the form of aid, loans, and investments—from wealthier countries to the developing world for the purpose of reducing emissions of greenhouse gases (mitigation) and enhancing resilience to the impacts of climate instability (adaptation). These transfers are an important manifestation of the principle of ‘common but differentiated responsibilities’, which places a greater burden on industrialized countries to address climate change and other global environmental problems. Participation by developing countries in the climate regime is critical. As a group, they have surpassed developed countries as the largest emitters of greenhouse gases and will account for a growing proportion of emissions over time, due mostly to a handful of large emerging economies and their growing need for energy. Any successful effort to mitigate will therefore depend on actions in the developing world. Indeed, even if rich countries were to completely eliminate their emissions in the near future, strong action by developing countries would be needed to prevent dangerously high levels of greenhouse gas concentrations in the atmosphere.1 At the same time, the most severe impacts of climate change will be felt in lower-income countries, especially those that are least developed. These populations are heavily dependent on agriculture and other vulnerable sectors, and their weaker infrastructure and high rates of poverty make them less capable of adapting.2 Thus while discussions of climate policy and international legal agreements have traditionally focused on the efforts and responsibilities of industrialized countries, the front lines in the battle against climate change are shifting to the developing world by necessity. Put simply, the climate problem cannot be addressed effectively without robust participation by high- and low-income countries alike. As a political reality, however, developing countries are reluctant to pay a high price or undermine their economic growth in order to combat climate change; they expect any actions they take to be heavily subsidized or compensated. For many, this is a question of fairness: The industrialized countries are historically responsible for 1   Mattia Romani, James Rydge, and Nicholas Stern, ‘Recklessly Slow or a Rapid Transition to a Low-Carbon Economy: Time to Decide,’ Centre for Climate Change Economics and Policy, Policy Paper (December 2012), 4. On the necessity of reducing emissions in developing countries, see also Eric A. Posner and David Weisbach, Climate Change Justice (Princeton, NJ: Princeton University Press, 2010); and WBGU, Solving the Climate Dilemma: The Budget Approach (Berlin: German Advisory Council on Global Change, 2009). 2  Nicholas Stern, The Economics of Climate Change: The Stern Review (New York: Cambridge University Press, 2007), Chapters 3–4; Intergovernmental Panel on Climate Change, Climate Change 2007: Impacts, Adaptation and Vulnerability (New York: Cambridge University Press, 2007).

7.  the regime for climate finance    139 a large majority of greenhouse gas emissions and have much higher emissions per capita on average, and yet it is less developed nations that will be harmed most by climate change.3 It is in this context that North–South finance has emerged as such a critical issue. Any grand bargain on climate change will hinge on agreement over specific obligations and mechanisms to promote resource flows from more to less developed countries. This chapter explores the interplay between politics and international law in the realm of climate finance, with an emphasis on its North–South dimensions.4 The chapter begins with an overview of international climate agreements and their provisions on the transfer of resources from the developed to the developing world. I then address two critical issues in the governance and future of the climate finance regime. First, the wide variety of institutions and mechanisms involved expands the scope for attracting and supplying resources but they remain fragmented and require greater coordination to be effective. Second, the mobilization of North–South finance is insufficient relative to mitigation and adaptation needs, a challenge that requires greater political will but also a stronger legal regime. I conclude by arguing that, despite significant obstacles, progress on climate finance has the potential to bridge the clash of interests that so often divides the developed and developing worlds in climate politics.

2.  The Evolution of Agreements for Climate Finance International rules related to climate finance have proliferated over the years, providing guidance to states and establishing a variety of mechanisms to channel resources from developed to developing countries. An early emphasis on mitigation has been complemented by more urgent calls to supply resources for adaptation. Although the provisions in international agreements related to climate finance generally lack   On issues of equity and justice in climate change, see Stephen M. Gardiner, ‘Ethics and Global Climate Change’ (2004) 114 Ethics 555; J. Timmons Roberts and Bradley C. Parks, A Climate of Injustice (Cambridge, Mass.: MIT Press, 2007); and Steve Vanderheiden, Atmospheric Justice: A Political Theory of Climate Change (New York: Oxford University Press, 2009). 4  I do not address in detail other important dimensions of climate finance, including domestic financing and carbon markets, which are covered thoroughly in the literature and elsewhere in this volume. For an overview, see J. Meckling and C. Hepburn, ‘Economic Instruments for Climate Change,’ in R. Falkner, ed., The Handbook of Global Climate and Environment Policy (Malden, Mass.: Wiley-Blackwell, 2013) 468; and Chapters 12 and 16 in this volume by Shi-Ling Hsu and Harro van Asselt, respectively. 3

140   part ii. institutional precision and legal force, they have succeeded in establishing an important set of principles and institutions to guide the regime’s evolution. This section provides an overview of the relevant agreements as a background for understanding current challenges, both political and legal.

2.1 Foundational Treaties: The Framework Convention and Kyoto Protocol An important product of the 1992 UN Conference on Environment and Development, held in Rio de Janeiro, was the Framework Convention on Climate Change (FCCC),5 the first global treaty to focus on the emerging threat of global warming. The Preamble calls on all governments to address the problem but only ‘in accordance with their common but differentiated responsibilities and respective capabilities and their social and economic conditions’. In other words, the burden should fall primarily on the most economically developed countries. The treaty goes further by recognizing the ‘specific needs and special circumstances’ of developing countries when it comes to the impacts of climate change and the costs of mitigation (Article 2.3). Building on these principles, under Article 4.3 the FCCC requires its developed country parties to supply various types of assistance. They ‘shall provide new and additional financial resources’ to meet the ‘agreed full costs’ for developing countries to formulate and implement climate-related policies. Article 4.4 further requires developed countries to ‘assist the developing country Parties that are particularly vulnerable’ in meeting the costs of adapting to the adverse effects of climate change. To facilitate these transfers, the FCCC calls for the creation of a ‘mechanism for the provision of financial resources on a grant or concessional basis’ (Article 11.1) and designates the Global Environmental Facility (GEF) as the interim operating entity of the financial mechanism (Article 21.3). The Conference of the Parties (COP) to the FCCC subsequently agreed to extend the GEF’s role indefinitely, subject to periodic review.6 The GEF’s appeal came partly from its unusual structure. Lacking its own operational capacity, it relied on three ‘implementing agencies’, the World Bank, the UN Development Programme (UNDP), and the UN Environment Programme (UNEP), to develop and implement projects. Each was supposed to engage in project activities according to its comparative advantages, thereby promoting efficiency and satisfying the needs of a variety of stakeholders.7 The FCCC   United Nations Framework Convention on Climate Change (FCCC) (Rio, 29 May 1992, 1771 UNTS 107). 6   Decision 3/CP.4, contained in FCCC/CP/1998/16/Add.1, 25 January 1999. 7   The GEF subsequently added seven new project agencies (the Food and Agricultural Organization, the International Fund for Agricultural Development, the UN Industrial Development Organization, the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank) and is in the process of expanding the set even further, to include non-governmental organizations and national agencies. 5

7.  the regime for climate finance    141 also allows developed countries to supply financing outside of its own mechanism, including through bilateral channels (Article 11.5). Some of the FCCC’s financing provisions were clarified and strengthened at the first COP, in 1995.8 Delegates agreed that the choice of projects should be ‘country driven’ and in conformity with the ‘national development priorities’ of each recipient, and that funds allocated to least developed countries would be in the form of grants rather than loans. The COP also entrusted the GEF with meeting the ‘agreed full costs’ of initial adaptation efforts, including studies on the impacts of climate change, identification of adaptation policy options, and relevant capacity building. However, no decision was made on how actual adaptation measures and projects might be financed, reflecting a lack of attention and urgency regarding adaptation in international negotiations at the time.9 Overall, while North–South financing is a major theme of the FCCC, the language is quite general. There is no timeframe and the obligations lack the precision needed to tie industrialized countries to specific amounts of financing, making any sort of accountability difficult. Moreover, stipulations such as ‘agreed costs’ and ‘new and additional’ were left undefined, to be determined by the parties themselves pending future negotiations. Nevertheless, the FCCC established the basic principles and institutional architecture to guide international climate finance and spurred a significant increase in climate-related aid.10 The 1997 Kyoto Protocol reaffirms the need for adequate and predictable financing from developed countries.11 With it, North–South transfers were also tied for the first time to binding commitments, though only indirectly. The centerpiece of the Protocol is a set of emissions reduction targets imposed on thirty-eight industrialized and transition economies (countries listed in Annex I of the FCCC). One path to reaching these targets is the Clean Development Mechanism (CDM), outlined in Article 12, which allows certified emission reduction (CER) credits generated from projects in non-Annex I countries to be applied toward Kyoto targets. The CDM was appealing to developed countries because it made it possible for them to reduce emissions—and achieve their targets—with greater flexibility and at a lower cost   See Decision 11/CP.1, contained in FCCC/CP/1995/7/Add.1, 6 June 1995, 34–38.  On the relative neglect of adaptation in international agreements during this period and in general, see Richard J.T. Klein, ‘Adaptation to Climate Variability and Change: What is Optimal and Appropriate?’ in Climate Change in the Mediterranean: Socio-Economic Perspectives of Impacts, Vulnerability and Adaptation, edited by C. Giupponi and M. Schechter (Cheltenham, UK: Edward Elgar, 2003), 32–50; and David Ciplet, J. Timmons Roberts, and Mizan Khan, ‘The Politics of International Climate Adaptation Funding: Injustice and Divisions in the Greenhouse’ (2013) 13 Global Environmental Politics 49. 10   On trends in climate-related development assistance during the 1990s, see World Bank, Beyond Bonn: World Bank Group Progress on Renewable Energy and Energy Efficiency in Fiscal 2005–2009 (Washington: World Bank Group, 2009), xi; and Axel Michaelowa and Katharina Michaelowa, ‘Climate or Development: Is ODA Diverted from Its Original Purpose?’ (2007) 84 Climatic Change 5. 11  Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto Protocol) (Kyoto, 11 December 1997, 2303 UNTS 148). See, especially, Article 11. 8

9

142   part ii. institutional (since mitigation generally is more cost-effective in the developing world). It was appealing to developing countries because it allowed them to attract investments and technology; indeed, it grew out of a series of proposals by Brazil and the Group of 77 to create a ‘clean development fund’.12 In addition to these CDM-related investments aimed at mitigation, the Kyoto Protocol envisioned an additional stream of resources devoted to adaptation. According to Article 12.8, a share of the proceeds from CDM projects should be used ‘to assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation’. This launched a negotiation process that would eventually produce the Adaptation Fund (AF). A series of decisions at COP 6 (2000) and COP 7 (2001) formally established the AF and specified that a 2 percent share of the proceeds from CER sales (and any additional, voluntary contributions from Annex I parties) should be used to finance its activities. Even then, it was several years before the AF would become operational, mainly because the Protocol did not enter into force until 2005. Overall, COPs 6 and 7 were quite innovative in the area of adaptation financing and produced a number of important decisions to operationalize the provisions of the FCCC and Protocol.13 In addition to fleshing out the AF, which applied only to Kyoto parties, they established two new funds under the FCCC to be managed by the GEF: the Special Climate Change Fund (SCCF), to be used for technology transfer and infrastructure projects related to adaptation and for economic diversification, and the Least Developed Countries Fund (LDCF), designed to assist the poorest countries in developing and implementing a National Adaptation Programme of Action. These two meetings thus signaled a shift from earlier climate negotiations, with their heavy emphasis on mitigation concerns. They also resulted in agreements that were quite concrete in terms of producing institutional results, in the form of new funding mechanisms, rather than merely calling on developed countries to supply more resources.

2.2 Toward Implementation: Copenhagen, Durban and Beyond A new phase of climate negotiations was launched with the 2007 Bali Action Plan, in which finance issues feature prominently. To support action on both mitigation and adaptation, it calls for ‘Improved access to adequate, predictable and sustainable 12   J. DePledge, Tracing the Origins of the Kyoto Protocol: An Article-by-Article Textual History, Technical Paper, FCCC/TP/2000/2, 25 November 2000, 75–6. 13   See Report of the Conference of the Parties on Its Seventh Session, Held at Marrakesh From 29 October to 10 November 2001, Part Two: Action Taken by the Conference of the Parties. FCCC/ CP/2001/13/Add.1, 21 January 2002. For an overview of the decisions reached at COP 6 and 7 with respect to adaptation financing, see Saleemul Huq, ‘The Bonn-Marrakech Agreements on Funding’ (2002) 2 Climate Policy 243.

7.  the regime for climate finance    143 financial resources and financial and technical support, and the provision of new and additional resources, including official and concessional funding for developing country Parties’.14 The discussions launched at Bali culminated at COP 15 in Copenhagen, a milestone in the history of North–South finance. Although the 2009 Copenhagen Accord received most attention for what it did not achieve, significant new commitments to reduce emissions, developed countries agreed to supply ‘new and additional resources’ totaling $30 billion for the period 2010–2012, balanced between mitigation and adaptation.15 They also pledged to mobilize long-term financing of $100 billion a year by 2020 from a variety of sources, both public and private and through both bilateral and multilateral channels. On the institutional front, the parties agreed that a ‘significant portion of such funding’ should flow through a newly envisioned Copenhagen Green Climate Fund. The Copenhagen Accord was ambitious in its aspirations but was not legally binding and left many details to be worked out (the document was only three pages long).16 The two subsequent COPs, in Cancun in 2010 and Durban in 2011, were quite productive in this regard. Building on progress at Cancun, the Durban COP adopted the governing instrument for the re-labeled Green Climate Fund (GCF), designating it as an operating entity of the financial mechanism of the FCCC (alongside the GEF) and calling on its Board to balance the allocation of resources between mitigation and adaptation. They also reaffirmed the Copenhagen goal of mobilizing $100 billion a year by 2020, with financial inputs from developed country governments but also from ‘a variety of other sources, public and private’.17 The GCF began receiving funds in 2014 and faces the twin challenges of attracting sufficient capital and defining its relationship to other channels of North–South finance (issues addressed at more length below). Cancun and Durban were also notable for producing new momentum in the area of forestry. The Cancun Agreements call for ‘adequate and predictable support to developing country Parties’ to slow and reverse deforestation.18 At COP 19 in Warsaw (2013), delegates agreed on a more specific framework whereby the developed world would supply ‘results-based’ financing contingent on verification of emissions reductions and safeguards for biodiversity and the rights of indigenous peoples.19 Given that deforestation accounts for 15 to 20 percent of global carbon emissions, preservation is a key path to mitigation that also has the benefit of   Decision 1/CP.13, contained in FCCC/CP/2007/6/Add.1, 14 March 2008.   The Copenhagen Accord is Decision 2/CP.15, contained in FCCC/CP/2009/11/Add.1, 30 March 2010. 16   In the end, the COP could not agree to adopt the Copenhagen Accord because a handful of developing countries blocked it. They merely agreed to ‘take note’ of it. On the legal status of COP decisions more generally, see Jutta Brunnée, ‘COPing with Consent: Law-Making under Multilateral Environmental Agreements’ (2002) 15 Leiden Journal of International Law 1. 17  Decision 3/CP.17, contained in FCCC/CP/2011/9/Add.1, 15 March 2012 (hereinafter ‘GCF Governing Instrument’). 18   Decision 1/CP.16, contained in FCCC/CP/2010/7/Add.1. 19  The various decisions that comprise the Warsaw Framework for REDD-plus are available at (accessed 16 July 2015). 14 15

144   part ii. institutional promoting resilience to climate impacts. Through a combination of aid and offset credits, the UN estimates that financial flows to the developing world to promote Reducing Emissions from Deforestation and Forest Degradation (known as REDD) could reach $30 billion a year once the mechanisms are in place,20 and a broad set of constituencies across the North and South emphasize the benefits of increasing financial flows, both private and public, in the area of forests.21 This will be a key component of any comprehensive climate treaty that attracts global participation. Climate finance is central to current international negotiations and a key challenge for the Ad Hoc Working Group on the Durban Platform, established to produce a new, comprehensive climate treaty to go into effect by 2020. Much of the discussion concerns the implementation of the funding pledges made in Copenhagen and embraced in Durban, which will require a combination of more precise rules governing climate finance and more effective institutions to mobilize and manage financial flows. The GCF will feature prominently in this regard, though its precise role will take years to define.

3.  The Landscape of Institutions for Climate Finance Only one organization, the GEF, was originally designated in the FCCC to operate its financial mechanism. The GEF has since been joined by the GCF and they compete with several additional multilateral organizations and funds involved in channeling North–South finance. The result is a complicated tapestry of governance institutions. The expansion of climate funds and new governing bodies owes partly to the limitations of the GEF. Dating back to the Rio conference in 1992, the choice of the GEF to manage climate financing was controversial because it was tied institutionally to the World Bank and was viewed by the developing world as excessively controlled by donor countries.22 This suspicion was partly offset by an agreement at Rio to restructure the GEF toward more democratic governance, a process completed in 1994,23 and by the GEF’s reliance   (accessed 16 July 2015).   Arild Angelsen, Maria Brockhaus, William D. Sunderlin, and Louis V. Verchot, eds., Analysing REDD+: Challenges and Choices (Bogor, Indonesia: Center for International Forestry Research, 2012). 22  Joyeeta Gupta ‘The Global Environmental Facility in its North–South Context’ (1995) 4 Environmental Politics 19. 23   Nicholas Van Praag, ‘The Global Environmental Facility: Instrument Established’ (1994) 33 I.L.M. 1273. 20 21

7.  the regime for climate finance    145 on the World Bank, UNDP, and UNEP to develop projects in collaboration with host governments. The bottom-up nature of the process and the involvement of two UN agencies were appealing to the developing world, as was the GEF’s reliance on grant aid. Nevertheless, by the late 1990s there was growing discontent among developing countries with the state of climate finance and they began pushing for alternatives that served their priorities and offered them more control. From their perspective, too much funding was going toward mitigation. Developed countries preferred to invest in mitigation and its global benefit of reduced greenhouse gas emissions, rather than the more localized benefits of adaptation projects. The GEF emphasized mitigation because it is explicitly mandated to fund environmental projects with ‘global environmental benefits’.24 Although the establishment in 2001 of the SCCF and LDCF helped address adaptation, these funds are based on voluntary contributions and their resources are modest. The CDM succeeded in generating a substantial amount of investment in the developing world,25 but it had limitations as well. It focused exclusively on mitigation and emphasized private financing over public aid, and in practice the high transaction costs and strict requirements produced a relatively narrow range of projects that benefitted mostly high-capacity countries like China, India, and Brazil.26 As a reaction to this status quo, the Adaptation Fund satisfied developing country preferences by emphasizing adaptation and by offering a more reliable stream of funding based on the monetization of CDM credits. Recipients can receive AF funding through a multilateral organization like the World Bank or UNDP but can also receive it directly through an accredited ‘national implementing agency’. In contrast to the GEF model, which required that recipients work through a multilateral organization, the option of direct access satisfied developing country demands for more control and ‘country ownership’ of projects.27 Ultimately, however, the AF’s link to the Kyoto Protocol and CDM raises questions about its future. The Protocol is set to expire in 2020 and some important developed countries do not have emissions targets under it or are not parties   The GEF has since expanded its purview and recognized that local projects related to sustainable development are often linked to the production of global benefits. GEF Evaluation Office, The Role of Local Benefits in Global Environmental Programs, Evaluation Report No. 30, June 2006. 25   More than 7800 projects have been registered in the CDM, spurring over $300 billion in investments. Clean Development, Executive Board Annual Report (New York: United Nations, 2013), p. 13. 26   Axel Michaelowa and Frank Jotzo, ‘Transaction Costs, Institutional Rigidities and the Size of the Clean Development Mechanism’ (2005) 33 Energy Policy 511; Andrew Keeler and Alexander Thompson, ‘Mitigation through Resource Transfers to Developing Countries: Expanding Greenhouse Gas Offsets’ In Climate Change Policy Beyond Kyoto, edited by Robert N. Stavins and Joseph E. Aldy (New York: Cambridge University Press, 2010), 439–68. 27   Partly in response to this competition from the AF, in 2011 the GEF began a process to accredit national agencies to implement projects. GEF, Broadening the GEF Partnership under paragraph 28 of the GEF Instrument, GEF/C.40/09, 26 April 2011. 24

146   part ii. institutional (including the United States, Russia, Canada, and Japan). In the absence of ambitious targets among many of the world’s largest emitters, demand for carbon credits has plummeted in recent years, reducing the value of CERs and producing a dramatic decline in the number of new CDM projects.28 Current demand comes mainly from the EU’s Emissions Trading System (ETS) and may grow as more regional and national cap-and-trade schemes are established. For now, however, the CDM is not a predictable source of investment and adaptation funds (through the AF) for most developing countries. The Green Climate Fund embodies many of the design features favored by developing countries, at least on paper: It is established under the FCCC, their preferred venue; it has a new, independent secretariat based in Songdo, South Korea; it is mandated to balance its funding between mitigation and adaptation; and it is required to base its activities on a ‘country-driven approach’, including the option of direct access to funding.29 On the other hand, the GCF Board—comprising twenty-four members, divided equally between developed and developing countries—is unusually powerful, an arrangement favored by donor countries. Although the GCF, as an operating entity of the FCCC’s financial mechanism, is ‘accountable to’ and ‘under the guidance’ of the COP, the Board is designed with considerable independence. For example, while the AF Board operates ‘under the authority and guidance’ of the COP30 and the GEF Council is instructed that it ‘shall act in conformity’ with COP decisions,31 the GCF Board is required only to consider guidance from the COP and is granted ‘full responsibility for funding decisions’.32 The GCF’s independence from the COP has fueled complaints among developing countries that it will not be sufficiently responsive to their interests. While the COP intends for the GCF to become the ‘main’ global fund for climate finance, many questions about its procedures and business model were left to the Board to decide in a series of meetings between 2012 and 2014. The Board established criteria for the accreditation of agencies, national and international, to receive funds and implement projects, and also established an initial ‘results management framework’ to assess the effectiveness of its projects, including a set of goals and indicators for both mitigation and adaptation.33 The Board’s investment and allocation strategy reiterates the need to balance funding geographically and between mitigation and adaptation, with at least 50 percent of adaptation funding going toward 28   ‘Carbon Markets: Complete Disaster in the Making’, The Economist, September 15, 2012; CDM Executive Board, Annual Report 2013 (Bonn, Germany: UNFCCC, 2013), p. 7. 29   GCF Governing Instrument. 30   Decision 1/CMP.3, contained in FCCC/KP/CMP/2007/9/Add.1, Article 4. 31   Instrument for the Establishment of the Restructured Global Environment Facility, paragraph 5. Available at (accessed 16 July 2015). 32   GCF Instrument, Articles 5 and 6. 33  Green Climate Fund, ‘Initial Results Management Framework of the Fund’, GCF/B.07/04, 7 May 2014.

7.  the regime for climate finance    147 ‘particularly vulnerable countries’.34 A key premise of the business model is that the GCF should aim to catalyze as much co-financing as possible, from both public and private sources, in order to promote large-scale, transformational change. The investment framework thus emphasizes the need to ‘maximize engagement with the private sector’35 so that relatively small amounts of public funding can be used to leverage greater sums of private investment, including through a dedicated Private Sector Facility that will seed climate-friendly activities by defraying investor costs and risk.36 The emerging business model and institutional framework of the GCF draw reasonable lessons from existing multilateral funds for development and the environment. Donor governments and investors will find appealing its emphasis on ensuring financial and environmental integrity (through accreditation and monitoring and evaluation procedures) and its relatively open approach to the sources and instruments of financing. Only by embracing a wide range of finance options can the GCF hope to achieve its goal of promoting a fundamental shift toward lowemission, climate resilient development. However, many developing countries are unhappy with the independence of the GCF from the COP and the prominent role played by the private sector in its business model.37 Thus a key challenge for the GCF will be to maintain credibility and legitimacy in the eyes of governments and stakeholders in the South. This requires an approach that is sensitive to development priorities and that accords sufficient country ownership to recipients, concerns emphasized repeatedly by developing country delegates during negotiations.38 In principle, these concerns can be reconciled: strengthening the role and capacity of recipients also builds trust among donors interested in accountability.39 Ultimately, the credibility of the GCF will depend on its ability to mobilize the financing necessary to play a transformative role and on the willingness of donor governments to follow through on their public pledges—now totaling more than $10 billion—to fund the GCF. The UN hosts two additional multilateral funds outside the FCCC umbrella. UN-REDD allows donors to pool resources to address deforestation and forest   Green Climate Fund, ‘Investment Framework’, GCF/B.07/06, 9 May 2014, p. 4.  Ibid. 36  Green Climate Fund, ‘Business Model Framework: Private Sector Facility’, GCF/B.04/07, 12 June 2013. 37   ‘UNFCCC’s Finance Committee Tussles over Green Climate Fund Arrangements’, TWN Info Service on Climate Change, 10 June 2013. (accessed 14 September 2015). 38   Climate & Development Knowledge Network, ‘The Green Climate Fund—Ready for Take Off ’, 27 June 2014. (accessed 16 July 2015). 39  Louise Brown, Clifford Polycarp, and Margaret Spearman, ‘Within Reach: Strengthening Country Ownership and Accountability’, WRI Working Paper. Washington, DC: World Resources Institute, 2013. 34 35

148   part ii. institutional degradation in the developing world. Implemented through UNDP, UNEP, and the Food and Agricultural Organization, it emphasizes capacity building for governments to engage a wide range of relevant stakeholders to develop and implement REDD strategies. The Millennium Development Goals (MDG) Achievement Fund contributes to climate adaptation (and mitigation, to a much lesser extent) as part of its broader focus on sustainable development. Through its Environment and Climate Change window, in particular, the MDG Achievement Fund has partnered with more than a dozen UN agencies to help governments build climate resilience into their development strategies and improve their access to climate-related finance. Parallel to these efforts under the UN, in 2008 the World Bank established its own Climate Investment Funds. The Bank funds are substantial and have supported projects—mostly through concessional loans—worth over $4 billion. The Clean Technology Fund (CTF) provides developing countries with financing to promote the scaling-up and deployment of low-carbon technology in sectors such as power generation, transportation, industry, and agriculture. The Special Climate Change Fund operates through three programs: The Forest Investment Program, which supports activities that reduce emissions and promote sustainable forestry management; the Pilot Program for Climate Resilience, which promotes the integration of climate adaptation measures into a country’s broader development strategy; and the Scaling-Up Renewable Energy Program, which aims to scale up and demonstrate the viability of renewable energy in low income countries. Because the Bank funds have less transparent governance and tend to serve the interests of donors and relatively high-income recipients, and because their larger-scale projects typically combine climate-specific support with more general development financing, their relationship to the FCCC regime is controversial.40 Nevertheless, the Bank is and will remain an important conduit for North–South climate finance. The various multilateral climate funding mechanisms are listed in Table 7.1. A full accounting of the architecture for climate finance would be much more complex, including regional development banks, direct assistance by donor countries, international funds established by individual governments, and the mainstreaming of climate components into traditional development projects. Thus the finance regime, like the broader climate change regime of which it is a part, has evolved in a rather fragmented manner, with several overlapping treaties, organizations, and mechanisms—at global, regional, and national levels—supplying relevant resources and governance functions.41 40   Smita Nakhooda, ‘The Clean Technology Fund: Insights for Development and Climate Finance’, WRI Working Paper. Washington, DC: World Resources Institute, 2010; Addie Haughey, ‘The World Bank Clean Technology Fund: Friend or Foe to the UNFCCC?’ (2009) 9 Sustainable Dev. L. & Pol’y 57. 41   On the complexity of the climate regime generally, see Cinnamon Piñon Carlarne, ‘Good Climate Governance: Only a Fragmented System of International Law Away?’ (2008) 30 Law & Policy 450; and Robert O. Keohane and David G. Victor, ‘The Regime Complex for Climate Change’ (2009) 9 Perspectives on Politics 7.

7.  the regime for climate finance    149 Table 7.1  Multilateral Funds for Climate Finance

Year Operational

Main Focus

Deposits ($)

Approved Projects ($)

GEF Trust Funda

1994

Mitigation

775 million

777 million

GEF–LDCF

2002

Adaptation

929 million

963 million

GEF–SCCF

2002

Adaptation

349 million

278 million

Green Climate Fund

2014

General

109 million

none

Adaptation Fund

2009

Adaptation

592 million

226 million

Clean Development Mechanism

2001

Mitigation

10 billion in revenueb 315 billion in investmentsc

UN-REDD

2008

Mitigation

235 million

241 million

MDG Achievement Fund–Environment and Climate Change Windowd

2007

Adaptation

90 million

90 million

Clean Technology Fund

2008

Mitigation

5.1 billion

4.2 billion

Scaling-Up Renewable Energy Program

2009

Mitigation

520 million

165 million

Pilot Program for Climate Resilience

2008

Adaptation

1.1 billion

841 million

Forest Investment Program

2009

General

517 million

292 million

Framework Convention

Kyoto Protocol

United Nations

World Bank

Sources: ; UNFCCC, Benefits of the Clean Development Mechanism 2012 (New York, United Nations, 2012), pp. 50, 54; Clean Development Mechanism, Executive Board Annual Report (New York: United Nations, 2013), p. 13. a  These figures refer to the GEF’s Fifth Replenishment Period, or GEF 5 (2010–2014). GEF 6 (2014-18) has about $1 billion in deposits and $90 million in approved projects as of August 2015. b  These are the approximate revenues to host countries from CER sales through 2012. c  This represents the total capital investments leveraged by the CDM through 2013. Approximately $40 billion of this total represents foreign investments in non-Annex I countries. d  Most but not all of these resources went toward climate change. The Achievement Fund is no longer funding new projects.

150   part ii. institutional

4.  Improving the Governance of Climate Finance As the need for financing becomes more urgent, there remains a gap—driven by political obstacles in donor countries, capacity constraints in developing countries, and North–South divisions over the design of financing mechanisms—between the actions called for in international agreements and their effective implementation, which is fragmented across a range of institutions. More effective governance of climate finance will require improvements to individual institutions—to make them more efficient but also more legitimate to a wide range of stakeholders. A particular problem is the pervasive disagreements between donor countries and the developing world over issues of institutional design and priorities for climate finance. Effective institutions must be perceived as legitimate by, and serve the interests of, both groups, even if they define institutional goals somewhat differently.42 The presence of multiple institutions for channeling climate finance has virtues in this regard, insofar as it helps alleviate concerns that any given institution is biased or narrow in its activities. The most profound needs for improvement are at the systemic level. The existing ‘spaghetti bowl’ of funding mechanisms complicates the smooth governance of climate finance when efforts are not harmonized and when there is no clear division of labor among the various institutions involved. Ironically, perhaps, while dissatisfaction from developing countries has often motivated the creation of new institutions to manage climate-related aid, one lesson from other issue-areas is that small and lower-capacity countries are often disadvantaged when international issues are characterized by institutional complexity and overlap.43 In particular, excessive fragmentation makes it difficult to track financing and to hold developed countries accountable for meeting their finance obligations. It also imposes a burden on lowincome countries with less capacity to seek aid and implement projects.44   Athena Ballesteros, Smita Nakhooda, Jacob Werksman, and Kaija Hurlburt, Power, Responsibility, and Accountability: Re-Thinking Institutions for Climate Finance (Washington: World Resources Institute, 2010). International organizations often face the problem that different constituents define success with different goals and metrics in mind. See Tamar Gutner and Alexander Thompson, ‘The Politics of IO Performance: A Framework’ (2010) 5 Review of International Organizations 227. 43   For an argument in the area of international trade, see Luis Abugattas Majluf, Swimming in the Spaghetti Bowl: Challenges for Developing Countries under the ‘New Regionalism’ (Geneva: UN Conference on Trade and Development, 2004). For a general argument that institutional complexity and overlap benefits powerful countries, see Daniel W. Drezner, ‘The Power and Peril of International Regime Complexity’ (2009) 7 Perspectives on Politics 65. 44   See GEF, Progress Toward Impact: Fourth Overall Performance Study of the GEF (Washington, DC: GEF Evaluation Office, 2010), 37 (concluding that ‘multiple and fragmented aid channels impose an additional strain on already weak implementation capacities in low-income countries’). 42

7.  the regime for climate finance    151 To improve the collective effectiveness of climate finance institutions, there is an urgent need to rationalize and harmonize their functions and relationships. As one analysis of existing climate funds concludes, ‘delivery is fragmented’ and their ‘respective roles are not clearly defined’.45 Even within the relatively wellorchestrated GEF system, what began as a fairly clear division of labor among three implementing agencies (World Bank, UNDP, and UNEP) has begun to fray. We see competition among the current agencies and erosion of the principle that they should be matched to projects according to their comparative advantages.46 This undermines the efficiency of the GEF ‘partnership’ and casts doubt on whether scarce funding is being channeled appropriately. These problems are even worse outside the framework of the GEF. A key challenge in climate finance is to find ways to pull together multiple sources of financing and to strategically match them to climate-related actions that are currently under-funded.47 A clearer division of labor and a better working relationship among the various funds is necessary to achieve this. In addition to clarifying the respective roles of the various funds, there is a need for greater coordination when it comes to setting standards and sharing information. As it stands, there are no agreed definitions for what exactly distinguishes climate financing from other types of assistance, what counts as ‘new and additional’ financing, or how ‘mobilized’ climate finance can be demonstrated. Clear standards are especially challenging for adaptation, which is closely linked to traditional sustainable development programs.48 It is therefore impossible to quantify the share of aid and investments that contributes to climate change and that meet developed countries’ commitments under international agreements.49 Greater harmonization of procedures for receiving funds and tracking projects would also help by reducing transaction costs and making it easier for developing countries to navigate the  OECD, Development Perspectives for a Post-2012 Climate Financing Architecture (Paris: OECD, 2010), 6–7. 46  GEF, Progress Toward Impact, 188; Erin R. Graham and Alexander Thompson, ‘Efficient Orchestration? The Global Environment Facility in the Governance of Climate Adaptation’, in Kenneth Abbott, Philipp Genschel, Duncan Snidal, and Bernhard Zangl, eds., International Organizations as Orchestrators (New York: Cambridge University Press, 2015). 47   Joy Aeree Kim, Jane Ellis, and Sara Moarif, ‘Matching Mitigation Action with Support: Key Issues for Channeling International Public Finance’, OECD and IEA, December 2009. COM/EVN/EPOC/ IEA/SLT(2009)8. 48  J.B. Smith et al., ‘Development and Climate Change Adaptation Funding: Coordination and Integration’, 11 Climate Policy 987 (noting that it is difficult to distinguish climate adaptation funding from sustainable development funding, and arguing that better coordination of the two funding streams could result in more effective support for both goals). 49   Two important efforts to define and measure climate-specific finance are Christa Clapp, Jane Ellis, Julia Benn, and Jan Corfee-Morlot, ‘Tracking Climate Finance: What and How?’ OECD and IEA, 4 May 2012, COM/ENV/EPOC/IEA/SLT(2012)1; and Angela Falconer and Martin Stadelmann, ‘What Is Climate Finance? Definitions to Improve Tracking and Scale Up Climate Finance’, Climate Policy Initiative Brief, July 2014. 45

152   part ii. institutional system.50 Only with greater and more specific standardization can financing efforts be compared and their results monitored across countries and across funding mechanisms. In the context of institutional fragmentation, information-sharing is also critical. There is considerable reporting and information gathering under the FCCC but this does not include systematic or standardized information on climate finance. Several other international organizations track aid and other financial flows related to climate change, including the Organisation for Economic Co-operation and Development (OECD), the World Bank, various regional development banks, and the UN Conference on Trade and Development. Better coordination of reporting and monitoring systems across these institutions would improve the information environment substantially and provide more comprehensive coverage of all North–South transfers and how they are being used.51 This would enhance scrutiny of donor country efforts and promote a fairer distribution of resources, and could also facilitate the sharing of best practices among donors and recipients, information that is currently insufficient in the climate regime.52 Improved standards and information-sharing would also strengthen the regime by promoting the integration of regional and national policies. In the area of carbon markets, for example, linkage across systems at various levels, both public and private, would expand the global market and the potential for investments in the developing world. It would certainly benefit the CDM and the EU ETS to be linked to as many regional and national trading schemes as possible in order to maintain demand for carbon.53 More generally, to the extent that national and regional schemes can be linked, this will tend to reduce differences in abatement costs and the potential for ‘leakage’, when emission reductions in one jurisdiction are counter-balanced by increases in jurisdictions that have less regulation or a lower price for carbon.54 50   The need for harmonization in these areas has been stressed in recent climate conferences by delegates from the developing world. At the Bonn conference in June of 2014, for example, they stressed the need for ‘greater harmonization and rationalization of approval criteria’ across climate finance channels and ‘common definitions and guidelines for effectiveness’. IISD, Earth Negotiations Bulletin, Vol. 12, No. 598 (2014), p. 24. 51   Jan Corfee-Morlot, Bruno Guay, and Kate M. Larsen, ‘Financing Climate Change Mitigation: Towards a Framework for Measurement, Reporting and Verification’, OECD and IEA, October 2009. COM/ENV/EPOC/IEA/SLT(2009)6. 52  Alexander Thompson, ‘Management under Anarchy: The International Politics of Climate Change’ (2006) 78 Climatic Change 7, 20–4; Joseph Aldy, ‘Designing a Bretton Woods Institution to Address Climate Change,’ HKS Faculty Research Working Paper Series RWP12-017 (May 2012). 53   Steven Bernstein, Michele Betsill, Matthew Hoffman, and Matthew Paterson, ‘A Tale of Two Copenhagens: Carbon Markets and Climate Governance’ (2010) 39 Millennium 161; Judson Jaffe and Robert N. Stavins, ‘Linkage of Tradable Permit Systems in International Climate Policy Architecture’, Discussion Paper 08–07, Harvard Project on International Climate Agreements (September 2008). 54   Gilbert E. Metcalf and David Weisbach, ‘Linking Policies When Tastes Differ: Global Climate Policy in a Heterogeneous World’ (2012) 6 Review of Environmental Economics and Policy 110.

7.  the regime for climate finance    153 Given the heterogeneity of interests, capacity, and political circumstances across regions and countries, the climate finance regime will continue to be quite decentralized and multi-faceted. The GCF has the potential to increase the system’s coherence by providing a more centralized conduit and promoting, through its Board and secretariat, harmonized standards. Indeed, reflecting the COP’s recognition of the need for greater coordination, Articles 33 and 34 of the GCF Governing Instrument address the issue of ‘complementarity and coherence’: 33. The Fund shall operate in the context of appropriate arrangements between itself and other existing funds under the Convention, and between itself and other funds, entities, and channels of climate change financing outside the Fund. 34. The Board will develop methods to enhance complementarity between the activities of the Fund and the activities of other relevant bilateral, regional and global funding mechanisms and institutions, to better mobilize the full range of financial and technical capacities. The Fund will promote coherence in programming at the national level through appropriate mechanisms. The Fund will also initiate discussions on coherence in climate finance delivery with other relevant multilateral entities.

A reasonable starting point is to clarify the relationship between the GCF and the GEF, as the two operating entities of the FCCC’s financial mechanism. Where they are successful and widely accepted, the GCF should build as much as possible on existing policies and standards established by the GEF, which have been widely adopted among the implementing agencies that work with it. Although the GCF will play a useful role in streamlining North–South finance, it is only one component of the regime and cannot accomplish the goal alone. An important task for the COP, and for forums such as the Group of 20, the OECD, development banks, and UN agencies, is to cooperate among themselves to rationalize the landscape of finance institutions by clarifying the division of labor, setting common standards, and establishing mechanisms for information sharing.

5.  Mobilizing Climate Finance: Political and Legal Challenges Since the Copenhagen Accord, developed countries have committed themselves to mobilizing $100 billion in financing per year by 2020, a goal that is enshrined in the GCF Governing Instrument. Perhaps the most comprehensive attempt to calculate flows of climate finance concludes that about $165 billion was invested in developing countries in 2013 to support mitigation and adaptation activities, mostly from domestic sources. About $34 billion of the total originated in developed countries,

154   part ii. institutional giving us a rough estimate of North–South flows.55 However, much of this total is not ‘new and additional’ and, absent a precise definition of what ‘counts’ as climate finance under the FCCC, it is not a clear indicator of progress toward the goal of $100 billion. In any case, the actual resources required to address mitigation and adaptation needs in the developing world are likely much higher than current levels. According to the International Energy Agency, between now and 2050 developing countries will need about $531 billion per year of investments in green energy technology to limit global temperature increases to two degrees Celsius above pre-industrial levels (the threshold recommended by the Intergovernmental Panel on Climate Change to avoid the worst impacts).56 As for adaptation, funding is unpredictable and inadequate by all accounts, even as the estimated costs of adaptation and developing country demand for adaptation projects have grown rapidly.57 From the funds established under the FCCC, for example, mitigation receives about ten times the financing of adaptation.58 Overall, according to an analysis by the Climate Policy Initiative, ‘climate finance investments have plateaued at levels well below what is needed’.59

5.1 Sources of Climate Finance The High Level Advisory Group on Climate Change Financing (AGF), established by the UN Secretary General in 2010, determined that it should be possible to g­ enerate the resources necessary to reach the Copenhagen goal provided that a variety of options are considered. As the AGF Report concludes, ‘Funding will need to come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance, the scaling up of existing sources and increased private flows’.60 Governments in the North have shown some willingness to supply new aid to address climate change and there are sources of domestic ­revenue could be tapped by them, such as carbon taxes, the auctioning of carbon allowances, and the diversion of budget resources away from fossil fuel 55   Barbara Buchner et al., ‘The Global Landscape of Climate Finance 2014, Climate Policy Initiative Report’ (November 2014), p. iv. 56  IEA, Energy Technology Perspectives 2012: Pathways to a Clean Energy System (Paris: International Energy Agency, 2012). 57  GEF, ‘Revising Programming Strategy on Adaptation to Climate Change for the Least Developed Country Fund (LDCF) and the Special Climate Change Fund’, GEF/LDCF.SCCF.9/4/ Rev. 1 (19 October 2010). 58  OECD, Development Perspectives, 11. 59   Buchner et al., ‘The Global Landscape of Climate Finance 2013, Climate Policy Initiative Report’ (October 2013), 34. 60   Report of the Secretary-General’s High-Level Advisory Group on Climate Change Financing (New York: United Nations, 2011), 5 (hereinafter AGF Report).

7.  the regime for climate finance    155 subsidies. In the end, however, public sector funding to the developing world is likely to be limited and uneven, subject to the vicissitudes of economic circumstances and domestic politics. The expectation, therefore, is that substantial private financing will be needed, in the form of foreign direct investment, private sector loans, and carbon market activity. This is especially true for mitigation, where private funding already dominates. For example, about 90 percent of international investments in clean energy come from the private sector rather than public funds.61 Overall, the share of private sector contributions to climate finance in developing countries is estimated at 57 percent and is growing.62 In contrast, the GEF Trust Fund, replenished with official development assistance (ODA) from donor governments, has actually decreased in real terms since its first replenishment period, even as the demand for financing has increased. Recent analyses conclude the most fruitful approaches will combine instruments and institutions in creative ways.63 For example, the main value of public sector financing—through bilateral ODA, GEF funds, or multilateral development banks (MDBs)—may be to leverage additional private sector investment, especially if public money is used to guarantee or limit the risk of new investments.64 Public and private money complement each other in this way. UN agencies and MDBs can also work together to identify areas where climate action strengthens broader development strategies. The former can work with developing country governments to identify needs and build capacity for effective implementation, while the latter focus on their specialty: generating financial resources.65 Although a prominent role for MDBs is controversial in some developing countries, they are very attractive participants from the perspective of mobilizing resources and combining instruments. Every dollar paid into the World Banks’ CTF, for example, leverages an additional eight dollars of support from a combination of private and public sources.66 Similarly, GEF projects that are channeled through regional development banks (such as the Inter-American Development Bank and the Asian Development Bank) benefit from total co-financing packages that are many times the size of the original grant, an attractive feature for both donors and recipients.67   Green Climate Fund, ‘Business Model Framework: Private Sector Facility’, GCF/B.04/07, 12 June 2013, 2 (citing data from Bloomberg New Energy Finance). 62   Barbara Buchner et al., ‘The Landscape of Climate Finance 2012, Climate Policy Initiative Report’ (December 2012), p. 58. 63  This is a major theme of the AGF Report and of World Bank, Mobilizing Climate Finance: A Paper Prepared at the Request of G20 Finance Minister, 6 October 2011 (available at: (accessed 16 July 2015)). 64   Corfee-Morlot, Guay, and Larsen, ‘Financing Climate Change Mitigation’, 34. 65   AGF Report, 11. 66   Climate Investment Funds, 2011 Annual Report: CIF From the Ground Up: Investing in Our Green Future (Washington: World Bank, 2011), 14. 67   In contrast, projects channeled through the UNDP or UNEP generate financing packages that are only two or three times the original grant. Bok-Keun Yu and Sebastian Miller, Climate Change Funds 61

156   part ii. institutional These realities have shaped GCF policies in important ways. Embracing the Governing Instrument’s call for a variety of financial inputs, both public and private, the Board has emphasized the need to rely on a range of sources and instruments for climate finance and the importance of combining them to increase the scale of interventions. Indeed, the GCF’s performance measurement framework for mitigation includes an indicator for ‘volume of public and private funds catalyzed by the Fund’.68 The focus on large-scale projects and private sector financing has virtues but also presents challenges. First, the path to scaled-up funding in the area of adaptation is less clear. There are fewer opportunities for private investment in adaptation and the needs of the most vulnerable countries are not likely to be met with public financing alone. The GCF Board will need to consider how scarce public money can be targeted and leveraged to have the greatest impact and to explore ways to promote private sector adaptation activities, perhaps by making a ‘business case’ for investing in adaptation.69 Second, the problem of inadequate financing is exacerbated by the uneven distribution of funds, with most aid and private investments going to a relatively small number of middle-income countries. Of particular concern are least developed countries, which have trouble attracting private investment and prefer to rely on scarcer grant aid rather than loans. The Board is currently debating how to meet its mandate to ensure geographical balance and meet the needs of particularly vulnerable countries.70

5.2 Legalization of Finance Commitments Given the importance of public funds as a source of aid and as a catalyst for private sector participation, the successful mobilization of climate finance depends on political conditions in wealthier countries. However, it also depends on the state of the international legal regime itself. As it stands, developed countries face no specific legal obligations for which they can be held accountable. The language in the relevant treaties—phrases such as ‘new and additional’ and ‘adequate and predictable’—is general in nature and the only concrete target, Copenhagen’s promise of $100 billion per year to be mobilized from a variety of sources, is collective in nature. This state of affairs makes it more difficult for advocates to and Implications for LAC Countries and the IDB (Washington: Inter-American Development Bank, 2011), 22. 68   Green Climate Fund, ‘Initial Results Management Framework of the Fund’, GCF/B.07/04, 7 May 2014, p. 13. 69   This is a recommendation of the Private Sector Advisory Group. See Green Climate Fund, ‘Report of the Private Sector Advisory Group (PSAG) to the Board of the Green Climate Fund’, GCF/B.07/10, 19 May 2014, p. 7. 70   Governing Instrument, Article 52.

7.  the regime for climate finance    157 rally support behind particular policies and to hold governments accountable in the case of inaction. The future of climate finance may therefore hinge on the ability of negotiators to further legalize the regime, so that it is based on commitments that are more precise and combined with more robust monitoring.71 More precise rules are needed to clarify how certain sources of financing should count (e.g., the role of private investments and loans) and how financing should be distributed across functions (e.g., defined shares for adaptation or forestry) and across recipients (e.g., a minimum share for least developed countries). Developing countries have called for the establishment of specific targets and timetables for tracking progress toward climate finance goals, including the capitalization of the GCF, and the African Group goes even further, advocating for specific obligations that would apply to each developed country.72 A more politically viable alternative might be to agree on a formula or set of criteria to establish each country’s ‘fair share’ of financing, as a nonbinding metric against which its pledges and efforts could be compared.73 Well-defined commitments are most useful when they are combined with better monitoring. While industrialized countries are required to report on their financing activities through their FCCC-mandated national communications, the information has been too inconsistent to allow for evaluation and comparison across countries.74 The Copenhagen Accord (paragraph 4) calls for financing by developed countries to be ‘measured, reported and verified’, and the COP took some measures to implement this at the 2012 Doha meeting. They produced a ‘common tabular format’ for developed countries to report on their actions related to both emissions and financing, with different categories for different types and channels of funding.75 This should help promote higher quality monitoring of financing efforts, though, as noted above, many definitional issues must be resolved before real measurement can take place. In return for strengthening the finance obligations of developed countries, the recipients of climate assistance should be prepared to accept greater scrutiny of how these funds are spent, especially when public money is involved. As a condition for supplying aid, donor countries increasingly seek ‘mutual accountability and transparency’ to track aid effectiveness.76 The EU, which represents the greatest source 71   On the concept of ‘legalization’, see Judith L. Goldstein et al., Legalization and World Politics (Cambridge, Mass.: MIT Press, 2001). 72   Third World Network, ‘ADP: Call for $15 Billion Capitalization of Green Climate Fund’, TWN Bonn News Update No. 14, 12 June 2014, pp. 2–6. 73   For a discussion of alternatives to calculate ‘fair shares’, see Clarisse Kehler Siebert, ‘Footing the Bill: What is Sweden’s “Fair Share” of Global Climate Finance?’ (Stockholm: Stockholm Environment Institute, 2013). 74   Clare Breidenich and Daniel Bodansky, ‘Measurement, Reporting and Verification in a Post-2012 Climate Agreement’ (2009) Pew Center on Global Change Report, 15. 75   Decision 19/CP.18, contained in FCCC/CP/2012/8/Add.3, 28 February 2013. 76   This phrase is from OECD, Paris Declaration on Aid Effectiveness (2005), 46.

158   part ii. institutional of North–South financing, has made its pledges contingent on greater transparency in how resources are used,77 and the GEF increasingly emphasizes monitoring and evaluation of project implementation as a way to track effectiveness and as a criterion for allocating future funds.78 The GCF is continuing this trend with its Results Management Framework. By accepting enhanced scrutiny of their own climate projects and programs, something they have consistently resisted in international negotiations, developing countries can increase the confidence of donors. Mobilizing climate finance therefore requires some sacrifice and compromise on the part of developing countries as well. The broader context is considerable—and often acrimonious—debate over the legal form of future climate agreements, an issue that has pre-occupied negotiators during the last several COPs. The Durban Platform text glosses over this problem with some creative ambiguity. While most governments preferred language that called for the process to produce a legally binding outcome, in the end the negotiators decided to launch ‘a process to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties’.79 While a protocol presumably would be a legally binding expansion of the FCCC (as in the Kyoto Protocol), the terms ‘legal instrument’ and ‘agreed outcome with legal force’ could be interpreted to include a variety of possibilities.80 In general, governments have been reluctant to tie their hands with climate agreements that are too rigid, given the political sensitivity of climate policy and the uncertainty surrounding the costs and benefits of different policy approaches.81 This has been most visible in debates over emissions reduction targets but similar dynamics are emerging in the context of climate finance obligations. To date, they have been rather ‘soft’, inviting disagreement between North and South over precise requirements and their legal status.82 In the process of improving this state of affairs, the narrow and politically sensitive question of whether obligations are legally binding need not prevent progress on developing more specific standards, more precise commitments and more robust monitoring, which together can produce the   (accessed 16 July 2015).   Miriam Chaum et al., ‘Improving the Effectiveness of Climate Finance: Key Lessons’, Climate Policy Initiative (November 2011). The GEF’s System for Transparent Allocation of Resources bases part of its allocation formula on how successfully recipients are able to implement GEF projects and programs. 79   Paragraph 2 of Decision 1/CP.17, contained in FCCC/CP/2011/9/Add.1, 15 March 2012. 80   For a discussion of the legal debates leading to, and implications of, the Durban Platform language, see Lavanya Rajamani, ‘The Durban Platform for Enhanced Action and the Future of the Climate Regime’ (2012) 61 ICLQ 501, 506–7. 81  Alexander Thompson, ‘Uncertainty and Flexibility in the Global Climate Regime’ (2010) 16 European Journal of International Relations 269. 82  The interaction between hard and soft law can lead to confusion and disagreement among states, undermining the advantages of each and exacerbating distributive conflict. On this dynamic, see Gregory C. Shaffer and Mark A. Pollack, ‘Hard Law vs. Soft Law: Alternatives, Complements and Antagonists in International Governance’ (2010) 94 Minnesota Law Review 706. 77

78

7.  the regime for climate finance    159 practical effect of enhancing accountability and increasing the amount and effectiveness of climate finance.

6.  Conclusion: Obstacle and Opportunity From the earliest days of the climate change regime, negotiators recognized the importance of North–South finance as a key element of ‘common but differentiated responsibilities and respective capabilities’, which places a greater burden on industrialized countries to address the problem. Developing countries bear less historical responsibility for climate change and face the greatest threats, yet many of them lack the resources or capacity to respond meaningfully to the problem on their own. A robust regime for climate finance is now more critical than ever. Developing country emissions account for a majority of the total and are increasing rapidly. At the same time, the impacts of climate instability are already being felt and pose a growing risk to food security and human development, especially in least developed countries.83 Providing resources to the global South is both necessary and just. Beginning with the UN Framework Convention on Climate Change in 1992, successive international climate agreements have included obligations for developed countries to supply resources to their less developed counterparts. The implementation of these obligations, however, remains fragmented and incomplete. Several multilateral funds co-exist alongside bilateral flows and a variety of market-based mechanisms at the national, regional, and global levels. While this diversity has virtues, the regime as a whole requires more coherent governance, including a clearer division of labor and greater coordination among its institutions. In their effort to mobilize sufficient resources, political and civil society leaders face political obstacles in donor countries but also confront weaknesses in the legal fabric of the finance regime. More precise obligations and higher-quality monitoring—of both developed and developing country activities—can incentivize action by promoting accountability, while also improving the effectiveness of existing institutions and programs. Negotiations over climate finance are recurrently obstructed by disputes between North and South over the extent of financing commitments, what sources should count toward these commitments, and what mechanisms and institutions should   This is a major them of UNDP, Africa Human Development Report 2012: Towards a Food Secure Future (New York: UN Development Program, 2012). 83

160   part ii. institutional be used to channel them. In this respect, the climate finance issue reflects many of the political obstacles that have plagued climate cooperation more generally. However, the situation is complicated today by the rapid growth of certain developing countries, which has called into the question the North–South basis for differentiation that has guided the climate regime since the Framework Convention. In recent climate negotiations, some developed countries (including the United States and UK) and even some developing countries (including Mexico, South Korea, and Brazil) have argued that non-Annex I parties like China, India, and Brazil should contribute to international climate finance. In response, China warned against ‘blurring the lines’ between developed and developing countries and India opposed the effort as an ‘unfair’ attempt to renegotiate previous agreements on finance.84 However, just as the sharp distinction between developed and developing countries has been softened when it comes to emissions reductions (reflected in the concept of ‘intended nationally determined contributions’ that applies to both groups), the same blurring of lines appears inevitable when it comes to finance commitments. Political and legal progress on North–South finance is key to forging an effective regime for climate change. Most developing countries are only willing or able to undertake significant action on mitigation and adaptation if they receive adequate financing from the industrialized North. At the same time, industrialized countries increasingly link their acceptance of binding emission reduction commitments to meaningful participation by the developing world. Thus if the two sides can agree on a mutually acceptable set of rules and institutions for climate finance, this could facilitate the grand bargain needed to produce a robust and truly global climate change regime.

 IISD, Earth Negotiations Bulletin, Vol. 12, No. 598 (2014), p. 24.

84

Part III

CLIMATE CHANGE— PRINCIPLES AND EMERGING NORMS CONCEPTS IN INTERNATIONAL LAW

Chapter 8

PRECAUTION AND CLIMATE CHANGE Jonathan B. Wiener*

1. Introduction

164

2. Precautionary Principles

165

3. Precaution and Climate Change

169

4. Beyond Precaution: Politics, Provisionality, and Post-Cautionary Policies

175

*  I am grateful to Cinnamon Carlarne for her invitation and graciousness, and to Christa Owens for helpful research assistance.

164    part iii.  principles, emerging norms, and concepts

1. Introduction ‘Precaution’ is surely a central topic of climate change law and policy. The flagship international climate treaty, the 1992 United Nations Framework Convention on Climate Change (FCCC), expressly called for ‘precautionary measures’ in Article 3. Because climate change poses uncertain but serious and even catastrophic risks, and because greenhouse gas emissions have latent and longlasting effects (over decades or centuries), precautionary action is widely urged as essential to preventing future climate change—rather than waiting to act after the damage is done and it is too late to address the cause. The ‘Precautionary Principle’ is sharply controversial, but if there is any sensible form of precaution to apply to any problem, then climate change seems an especially apt and urgent case. So far, though, precautionary measures on climate change have been elusive. For another global atmospheric problem, stratospheric ozone depletion, the 1987 Montreal Protocol (and related national policies) took early action and have achieved substantial success (WMO 2014). Has there been comparable early action to prevent climate change? Not so much. What accounts for this, and what can be done? This chapter examines the role of precaution as applied to climate change. Section 2 identifies the key features of precaution, reviewing differing formal versions of ‘The Precautionary Principle’ and attempting to distill the core elements of a ‘precautionary posture’ for policy-making. Section 3 assesses the normative pros and cons of applying precaution to the problem of climate change. Then it compares that normative case to the positive record of the application of precaution to climate change in actual practice—a record of only partial precaution in action. Section 4 explores options beyond exhortations to precaution against climate change. First, it addresses the problem that espousing precaution is not enough to motivate policy action. It considers what could be done to make precautionary policy more successful in the future—such as reducing its costs and countervailing risks, enhancing the incentives for participation in global cooperation, and using the ‘provisional’ character of precaution as a call for continuous learning and policy updating. Second, it addresses the possibility that, with growing global emissions and rising greenhouse gas concentrations (now passing 400 parts per million (ppm)), climate change may already have passed beyond the time for precaution. It therefore explores ‘post-cautionary’ policy options that remain to address climate change—such as adaptation, liability for loss and damage, and geoengineering.

8. precaution and climate change   165

2.  Precautionary Principles It is common to refer to the ‘Precautionary Principle’ (PP) as a formal doctrine. But there is no one authoritative statement of the PP. Instead there are several different Precautionary Principles (for reviews, see Bodansky 2004; Wiener 2007). To understand the meaning of the PP and its role in climate change law, it is useful to review several versions of the PP, and then attempt to distill from them the core elements of what might be called a precautionary posture for climate change policy-making. Versions of the PP have now been adopted in more than fifty international agreements (Trouwborst 2002: 63). Early versions of the PP emerged by the early 1970s, notably the German Vorsorgeprinzip, and related concepts in Swiss and Swedish law. In the United States, the federal Court of Appeals held in Ethyl Corp. v EPA, 541 F.2d 1 (D.C. Cir. 1976) that the US Clean Air Act is a ‘precautionary’ law, authorizing US EPA to take regulatory decisions to prevent anticipated but uncertain future harms. Some versions of the PP appear not just to authorize regulation despite uncertainty, but to require regulation or even to forbid risky activities. According to the 1998 Wingspread Statement on the PP (drafted by non-governmental organizations): ‘When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established.’ Going even further, the UN World Charter on Nature (UNGA Resolution 37/7 (1982)) declared that ‘where potential adverse effects are not fully understood, the activities should not proceed’—but as risks are never ‘fully understood,’ this would amount to forbidding those activities. The Intergovernmental Panel on Climate Change (IPCC) (2014b) has recently commented that ‘[t]‌he PP allows policymakers to ban products or substances in situations where there is the possibility of their causing harm and/or where extensive scientific knowledge on their risks is lacking. These actions can be relaxed only if further scientific findings emerge that provide sound evidence that no harm will result’. But because providing evidence that ‘no harm will result’ is effectively impossible (everything poses some risk, particularly energy systems whether fossil or renewable), this formulation is tantamount to a prohibition. By the late 1980s, the PP began to gain adherence in global atmospheric and climate change law. The Montreal Protocol on Substances that Deplete the Stratospheric Ozone Layer (1987) (by now universally adopted) spoke of ‘precautionary measures’ in its Preamble, stating that it was ‘[d]‌etermined to protect the ozone layer by taking precautionary measures to control equitably total global emissions of substances that deplete it, with the ultimate objective of their elimination on the basis of developments in scientific knowledge, taking into account technical and

166    part iii.  principles, emerging norms, and concepts economic considerations and bearing in mind the developmental needs of developing countries,’ and also ‘[n]oting the precautionary measures for controlling emissions of certain chlorofluorocarbons that have already been taken at national and regional levels’. As climate change became the subject of international negotiations, the Bergen Declaration (1990) provided: In order to achieve sustainable development, policies must be based on the precautionary principle. Environmental measures must anticipate, prevent and attack the causes of environmental degradation. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing measures to prevent environmental degradation.

A widely cited formulation is the version in the 1992 Rio Declaration, paragraph 15, which provides: In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.

The Rio Declaration was adopted by country governments at the 1992 Earth Summit (UN Conference on Environment and Development). Compared to the earlier Bergen Declaration, the Rio Declaration maintained the core message that where there are ‘threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing . . . measures to prevent’ harm, while also introducing several modifications, including the term ‘approach’ in place of ‘principle,’ the qualifier ‘by States according to their capabilities’, and the qualifier ‘cost-effective’. Similarly, the FCCC, signed and ratified by virtually all countries, provides in its Article 3(3): The Parties should take precautionary measures to anticipate, prevent or minimize the causes of climate change and mitigate its adverse effects. Where there are threats of serious or irreversible damage, lack of full scientific certainty should not be used as a reason for postponing such measures, taking into account that policies and measures to deal with climate change should be cost-effective so as to ensure global benefits at the lowest possible cost. To achieve this, such policies and measures should take into account different socio-economic contexts, be comprehensive, cover all relevant sources, sinks and reservoirs of greenhouse gases and adaptation, and comprise all economic sectors. Efforts to address climate change may be carried out cooperatively by interested Parties.1 1   Disclosure: while serving in the US Government in 1989–93, I helped negotiate the 1992 FCCC, including Article 3(3) on precaution. I also contributed to the IPCC First Assessment Report (1990) in Working Group (WG) III on Response Strategies. I joined the faculty at Duke in 1994. I was also a co-author of the IPCC Fifth Assessment Report (AR5) (2014), WG III, c­ hapter 13 on ‘International Cooperation: Agreements and Institutions,’ which critically assessed the climate treaties and their performance.

8. precaution and climate change   167 Also in 1992, the European Union adopted the Maastricht Treaty, which provided in Article 130r (now Lisbon TFEU (2009), Article 191) that EU policy on the environment ‘shall be based on the precautionary principle’—though without defining what that meant. Eight years later, the European Commission (2000) issued its explanation of the PP in an important statement, providing that precaution must be based on risk assessment, must consider costs and benefits, ‘must not aim at zero risk,’ and must be ‘provisional’ to be revised over time as understanding improves. Several national and local governments have also formally adopted versions of the PP. In 1999, Canada incorporated the precautionary principle in its revised Canadian Environmental Protection Act. In 2005, France adopted the PP as part of its Constitution (including the qualification that precautionary measures must be ‘provisoires et proportionnées’—provisional and proportionate). The City of San Francisco’s version of the PP emphasizes thorough evaluation of alternative policy options, which of course is general advice on good decision-making, rather than distinctive of precaution. Some observers imbue the PP with a role in fostering public participation or stakeholder input in the regulatory process, but the texts of the PP (such as those quoted above) do not seem to address this issue (and there can also be public participation in non-precautionary regulatory processes, such as public comment on policies adopted after a problem has arisen, as well as public protests and government hearings held after a disaster). This brief review illustrates the advance of the PP across the terrain of national and international law, and also the variation among its proliferating versions (for more details, see Bodansky 2004; Wiener 2007). The result is that there is no one formulation of the PP. Each of these versions was negotiated by a different set of parties for a different time and topic. Several of the official versions quoted above refer not to a ‘Precautionary Principle’ but rather to the desirability of taking ‘precautionary measures’ subject to several qualifications. Sandin (1999) found 19 versions, with significant differences regarding threat, uncertainty, action, and command. VanderZwaag (1999) identified 14 formulations. Stone (2001) found no coherent statement, and only ‘disarray’. Wiener and Rogers (2002) and Wiener (2007) grouped the many versions into three basic approaches: (i) authorization to take policy measures despite uncertain risk, (ii) obligation to take policy measures to address uncertain risk, and (iii) shifting the burden of proof (of safety or of acceptable risk) to the proponent of the activity. Bodansky (2004) found that versions of the PP differ on multiple dimensions, including the permission to act versus duty to act, the trigger of application, and what action should be taken; he concluded that the PP has ‘not moved . . . towards consensus’ and ‘the only point of overlap is a truism’. In addition to the sources cited above, further details on the PP’s many versions are offered in Wiener (2007) and Wiener et al. (2011). Among these numerous differing versions of the PP, there is still much left unspecified. These versions of the PP typically do not say what level of risk triggers its invocation (beyond vague terms like ‘serious’), nor which risks deserve priority

168    part iii.  principles, emerging norms, and concepts for precautionary measures among the vast array of the multiple serious and uncertain risks a society may face. They do not say how early or how anticipatorily measures must be taken. They sometimes say that action need not wait for ‘proof ’, but as there is never conclusive proof of risks—the essence of risk is that there is always uncertainty about the future—any version calling for action before proof is actually addressing all decision-making about risks in the face of uncertainty, which is to say all decision-making about risks. And they often do not say which measure(s) should be taken to anticipate or prevent the risk. Words like ‘prevent or minimize’ lean toward more stringent measures, and some of the burden-shifting versions go further toward prohibiting risky activities. Some versions of the PP, notably Rio 15 and FCCC 3(3), qualify the choice of measures by calling for ‘cost-effective’ measures (achieving climate protection benefits at least cost); the European Commission version calls for assessing costs and benefits, and the French version calls for proportionality. But many other versions of the PP do not speak to cost, proportion, reasonableness, optimization, or other criteria for choosing which measures to take. In some cases, these gaps in official formulations of the PP may be intentional. Specifying risk priorities, or regulatory stringency, or cost–benefit balancing, would oblige the drafter to confront the difficult tradeoffs in policy-making and might dilute enthusiasts’ support for precaution. Two advocates of the PP have remarked: Paradoxically, we conclude that the application of precaution will remain politically potent so long as it continues to be tantalizingly ill-defined and imperfectly translatable into codes of conduct, while capturing the emotions of misgiving and guilt . . . [I]‌t is neither a welldefined nor a stable concept. Rather, it is has become the repository for a jumble of adventurous beliefs that challenge the status quo of political power, ideology, and environmental rights (Jordan and O’Riordan 1999: 15).

In order to evaluate the application of precaution to climate change policy, it may be useful to try to characterize precaution as a general posture for policy-making, rather than as a legal principle, and to distill its main features from the several versions noted above (especially from the 1992 FCCC Article 3(3), which speaks most directly to climate change, as well as from the European Commission (2000) and the French charter (2005), cited above). The core elements of such a precautionary posture appear to include: (i) a threat of serious or irreversible or catastrophic risk or damage; (ii) a stance on knowledge, providing that scientific uncertainty about such risks does not preclude policy measures; (iii) a stance on timing, favoring earlier measures to anticipate and prevent the risk; (iv) a stance on stringency, favoring greater protection (on a spectrum from preventive measures to burden-shifting that prohibits risky activities at least until they are shown to be safe or acceptable); and (v) a qualifying stance on the impacts of the precautionary measures themselves, calling for assessment of their cost-effectiveness or costs and benefits, their coverage of multiple countries and gases and sectors, and their provisional character and hence their need for reassessment and improvement over time as knowledge

8. precaution and climate change   169 is gained. In short: such a precautionary posture favors earlier measures to prevent important risks, despite uncertainty, rather than waiting, while also recognizing that such early actions should be well designed to avoid their own drawbacks, and are provisional and should be updated over time in light of learning. Framing the general precautionary posture in this way enables precaution to be translated into a spectrum or continuous variable (rather than a binary classification of precautionaryor-not), which measures the degree of precaution (e.g. in terms of (iii) timing and (iv) stringency), so that different policies can be scored and compared for their relative precaution (Hammitt et al. 2005; Wiener et al. 2011). And rather than rigidly dictating precaution irrespective of other considerations, this posture leans in favor of precaution, while taking at least some account of costs, complexities, and continued learning over time.

3.  Precaution and Climate Change 3.1 Pros and Cons The Precautionary Principle remains controversial. One appraisal summed up the debate: ‘The precautionary principle may well be the most innovative, pervasive, and significant new concept in environmental policy over the past quarter century. It may also be the most reckless, arbitrary, and ill-advised’ (Marchant and Mossman 2004: 1). Some of this debate is about the specific language in strong versions of the PP. More generally, seeing precaution as a posture, or as a spectrum of the degree of precaution, illustrates its pros and cons as applied to climate change. Precautionary measures (early and anticipatory) can be essential to address risks of latent impacts—impacts that do not occur until long after their causes. In these cases, waiting for proof of the causal relationship or the magnitude of harms can mean waiting until it is too late to address the cause. Greenhouse gases (GHGs) accumulate in the atmosphere and affect the climate with time lags of months to years to decades or more. It has long been understood that in the case of GHGs and climate change, ‘a wait-and-see policy may mean waiting until it is too late’ (National Research Council 1979: viii). The latent impacts of GHGs on climate may last a long time and be very hard to reverse. Once emitted, GHGs have long-term latent impacts on the order of 1,000 years (Solomon et al. 2009). Further, the possibility of catastrophic climate risks favors precaution (Posner 2004; Weitzman 2009; Nordhaus 2011). Consider the possibility of a ‘tipping

170    part iii.  principles, emerging norms, and concepts point’, where the damages from rising GHG concentrations suddenly turn sharply disastrous (e.g. due to rapid melting of land-based ice sheets in Greenland and Antarctica, or positive feedbacks such as release of frozen methane which then accelerates warming). If we are uncertain about just where the tipping point lies, we may need to take added precautions to avoid getting too close to it. A recent report by White House economists summarized the literature on this issue: ‘the prospect of a potential tipping point with unknown location enhances the precautionary motive for climate policy. . . . [T]‌he uncertainty about the tipping point generally leads to a policy that is more stringent today than it would be absent uncertainty. To the extent that delayed implementation means higher long-run CO2 concentrations, then the risks of hitting a tipping point increase with delay’ (CEA 2014: 24–5).2 Thus, whereas some argue that uncertainty about the cause or magnitude of climate change warrants waiting longer to study the problem before adopting policies, here uncertainty about a catastrophic threshold warrants greater precaution (IPCC 2001, section TS 10.4.2.2—noting, however, that ‘the question of timing and extent of mitigation and/or adaptation policies remains unquantified by the precautionary principle’). On the other hand, precaution may pose problems. First, precautionary measures may be costly. Critics of precaution worry that anticipatory measures to restrict new technologies may inhibit innovation. Debates over precaution versus innovation often involve new technologies with nascent risks, such as genetic modification or nanotechnology. But in the case of climate policy, precaution would largely be applied to restrict old technologies, such as fossil fuels and deforestation. Still, strong versions of the PP could be very costly: applying the PP version under which risky activities may not proceed until their proponents demonstrate that they are ‘safe’ or pose ‘no risk of harm’ would seem to prohibit not just all burning of coal or oil, but all energy sources of any kind, including natural gas, nuclear, hydro, wind, and solar, because there is no energy system that does not pose some risk of some kind of environmental harm. More moderate versions of the PP would consider cost, such as the FCCC 3(3) qualification to be ‘cost-effective’, the European Commission’s attention to assessing costs and benefits, and perhaps the French use of ‘proportionate’. Second, precautionary measures do not affect just one risk at a time. We live in a multi-risk world (Wiener 2002). Precautionary measures must select which risks to make top priority, and must confront their potential to affect multiple risks at the same time. Precautionary measures to prevent one risk may induce ‘side-effects’   Cf. the IPCC’s 2014 report, observing in Chapter 13 that ‘the principle of precaution emphasizes anticipation and prevention of future risks, even in the absence of full scientific certainty about the impacts of climate change . . . [a]‌key ongoing debate concerns whether or not this principle implies the need for stringent climate change policies as an insurance against potentially catastrophic outcomes, even if they may have very low probability’ (IPCC 2014d, section 13.2.1.2, p. 10) (citations omitted). 2

8. precaution and climate change   171 or ‘risk–risk tradeoffs,’ including increases in other countervailing risks (ancillary harms), and decreases in other accompanying risks (ancillary co-benefits) (Graham and Wiener 1995; Wiener 2002; Revesz and Livermore 2008). Yet many versions, or applications in practice, of the PP in regulatory policy tend to focus on only one salient risk at a time (Graham and Wiener 1995; Heyvaert 2011). Sound policymaking has to assess the full portfolio of policy impacts, including these ancillary impacts (both harms and benefits), rather than focusing narrowly on just a single target risk. Indeed, if precautionary measures themselves increase some risks, then very stringent versions of the PP (forbidding risky activities) would ironically block the PP itself (Wiener 2002; Wiener 2007). Sunstein (2005) argues that in a world of risks on all sides, the PP points nowhere. Graham and Wiener (1995) and Wiener (2002) argue that the solution is to take a broader, more holistic approach that confronts the multi-risk reality, assesses the full portfolio of multiple impacts, and seeks ‘risk-superior moves’ that reduce multiple risks in concert. Examples of such risk–risk complexities are rife in climate change policy. Consider shifting energy sources from coal to natural gas, which would reduce CO2 emissions but could increase methane (CH4) emissions, potentially with even larger climate impacts. Or shifting from fossil fuels to some types of biofuels, which could again reduce CO2 emissions from vehicles, but could also increase emissions of N2O (a more potent GHG) if nitrogen fertilizers are heavily used to grow corn ethanol; and demand for land to grow crops for biofuels might also increase deforestation (thus reducing a key sink for CO2), as well as raise food prices. Or, shifting from fossil fuels to nuclear energy would reduce climate risks but could add risks from nuclear waste, reactor accidents, and weapons proliferation. Or shifting from fossil fuels to wind and solar energy might pose risks to migratory birds. One further example: the highly successful precautionary measures to phase out chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) to protect the stratospheric ozone layer, under the Montreal Protocol and national laws, have also had the unintended consequence of potentially adding to climate change risk by increasing the use of non-ozone-depleting substitutes that are potent GHGs, such as HFCs (WMO 2014; this tradeoff was foreseen in Graham and Wiener 1995: 198–202). In all of these examples, the PP typically offers little guidance, but a full portfolio multi-risk approach counsels confronting and weighing the tradeoff to reduce overall risk, and seeking new risk-superior options that reduce multiple risks in concert (Graham and Wiener 1995; Wiener 2002). At the same time, there may be important co-benefits in climate policy. For example, reducing methane and black carbon may both reduce climate change risks and protect public health from the heavy toll of conventional air pollution (Shindell et al. 2012; Shindell 2015). These opportunities for ancillary benefits further illustrate the key point that every climate or energy policy choice affects multiple risks, and we must confront the full portfolio of impacts while searching for multi-risksuperior moves.

172    part iii.  principles, emerging norms, and concepts Advocates of precaution often invoke commonsense adages such as ‘better safe than sorry’. Yet because in reality we face multiple interconnected risks, simple adages are insufficient. Of course one prefers ‘safe’ to ‘sorry’—almost by definition. The real questions are ‘better safe against this, or against that?’, and ‘how safe—what are the pros and cons of seeking this much safety or in this way?’ In a world of multiple risks, which risks should we address more than others, and which actions will reduce overall risk rather than create new risks? ‘Better safe than sorry’ is an old adage, but ‘the cure may be worse than the disease’ has at least as old a pedigree. Precaution need not be opposed to full portfolio analysis of multiple policy impacts. First, in formal law, although some versions of the PP appear insensitive to costs and risk–risk tradeoffs, other versions expressly combine them. As noted above, both FCCC Article 3(3) and the European Commission (2000) included cost-effectiveness or cost–benefit in precaution. In fact, the EU’s 1992 Maastricht Treaty adopted not only the PP, but also cost–benefit analysis, in the very same Article 130r (now Lisbon TFEU Article 191). And the FCCC called for regulatory impact assessment (RIA) addressing both cost–benefit and risk–risk analyses, in its Article 4(1)(f) which required parties to ‘employ appropriate methods, for example impact assessments, formulated and determined nationally, with a view to minimizing adverse effects on the economy, on public health and on the quality of the environment, of projects or measures undertaken by them to mitigate or adapt to climate change’. Second, the general idea of precaution as a posture for policy-making is not at odds with cost–benefit analysis or risk–risk tradeoff analysis. As noted above, quantitative economic analyses of optimal climate change policy that incorporate tipping points and uncertainty can favor greater precaution. There is a growing literature showing how precaution and cost–benefit or decision analysis can be combined to favor optimal or robust policies that account for uncertainty, catastrophe, option value, and related precautionary factors (Graham 2001; DeKay et al. 2002; Stewart 2002; Wiener 2002; Gollier and Treich 2003; Lempert and Collins 2007; Weitzman 2009; Nordhaus 2011; Driesen 2013).

3.2 Positive Politics in Practice Given the case in favor of precautionary measures to address the latent, uncertain and potentially catastrophic risks of climate change, what have governments actually done? To combat stratospheric ozone depletion, national laws and the Montreal Protocol took early action and succeeded in phasing out CFCs and related substances (WMO 2014). To combat climate change: not so much. In the case of stratospheric ozone depletion, the uncertainty of the risk, and the earliness and stringency of the policy measures taken, were greater than for climate change. (For a comparison of the relative precaution on these two issues, see

8. precaution and climate change   173 Hammitt 2011). Chlorofluorocarbons (CFCs) were invented in the 1920s; the theory that they could break apart and deplete stratospheric ozone was published fifty years later by Molina and Rowland (1974). Just four years after the publication of that theory, before observational evidence of such depletion occurring had been collected, the United States banned CFCs in aerosol spray cans in 1978—about a decade before Europe took comparable measures. After discovery of the Antarctic ozone hole in 1985–86, countries agreed to the Montreal Protocol in 1987, which eventually phased out CFCs and HCFCs, and the ozone level has begun to recover (WMO 2014). By contrast, the risks of climate change were less uncertain, and yet policy measures were adopted later and less stringently. The burning of fossil fuels began in the 1800s, and the theory of greenhouse warming was well known by 1896 (when Svante Arrhenius began his famous article ‘A great deal has been written on the influence of the absorption of the atmosphere upon the climate’ (Arrhenius 1896: 237)). By the 1980s, observational evidence of rising CO2 concentrations was being collected, and computer models were forecasting damages to come. Policy measures to limit GHG emissions came mainly after the 1992 FCCC and its 1997 Kyoto Protocol (KP), including the European Union climate package and emissions trading system (EU ETS) since 2001, and several US regional programs (chiefly the Regional Greenhouse Gas Initiative (RGGI), and California’s AB32). Major US federal policies were adopted after a key US Supreme Court decision in 2007 (Massachusetts v EPA), including EPA’s GHG Reporting Rule in 2008, its vehicle emissions rule in 2010, and its ‘Clean Power Plan’ final rule for electric power sources in 2015. Thus, both the United States and EU were faster to act to phase out CFCs despite less evidentiary basis on stratospheric ozone depletion, and slower to act to limit GHG emissions despite greater evidence on climate change. And while the United States was more precautionary than Europe on CFCs and stratospheric ozone, Europe was more precautionary than the United States on GHGs and climate change (Hammitt 2011).3 Several hypotheses may explain why both American and European policy on CFCs has been more precautionary than on GHGs (see Sunstein 2007; Wiener and Richman 2010). Both problems pose short-term costs and long-term global benefits, discouraging action by politicians focused on short-term local re-election. But the two problems also differ in other ways. The perceived threat from CFCs may have been higher, especially after the discovery of the ozone hole, whereas climate change may have been seen as more gradual and lacking a focusing crisis event (so far, notwithstanding heatwaves in Europe and hurricanes Katrina and   It is not the case, though, that Europe has become generally more precautionary than the United States across the board—despite conventional wisdom to this effect, the reality is more complex. The United States and EU are both highly precautionary, but sometimes diverge on specific risks, with each more precautionary than the other in selected cases. See Sand (2000) on variation in precaution among member states within Europe, and Wiener et al. (2011) and Wiener et al. (2013) on variation in precaution across numerous risks in both the United States and EU. 3

174    part iii.  principles, emerging norms, and concepts Sandy in the United States). The perceived cost of abatement for CFCs was much lower (than for GHGs); CFCs were a far smaller share of the economy and substitutes were more readily available than for GHG-emitting activities. Fewer countries were major sources of CFCs (than of GHGs), facilitating international cooperation. Moreover, when climate did arrive on the policy agenda in the 1990s, the EU initially resisted US proposals for cost-effective flexibility mechanisms such as emissions trading (which the United States was then enacting for acid rain domestically, and was advocating for GHGs internationally) (Wiener 2001), and the EU also resisted inclusion of any quantitative targets for China and other major developing country emitters, both of which raised the perceived cost to the United States (Stewart and Wiener 2003). The EU later changed course and adopted its ETS after 2001. But by then the United States was withdrawing from Kyoto because of the rise of China (marked by the United States Senate’s Byrd–Hagel Resolution in 1997; President Clinton then declined to submit the Kyoto Protocol to the Senate for ratification; and President Bush-43 withdrew the United States from the Kyoto Protocol in 2001). Later, Canada and Australia also withdrew from Kyoto, and Russia, Japan, and New Zealand withdrew from the second commitment period (2013–2020). (For further analyses of the political economy of CFCs and GHGs in the United States and EU, see Sunstein 2007; Wiener and Richman 2010; and Hammitt 2011.) A tension between precaution and distributional equity persists in climate policy. Major developing countries such as China, India, Brazil, and Indonesia were not bound by quantitative commitments in the Kyoto Protocol. In 1990, China emitted only about half as much GHGs each year as the United States. But by 2006, China had rapidly surpassed the United States, and by 2014, China emitted almost twice as much GHGs each year as the United States. Moreover, cumulative global greenhouse gas emissions since 1850 from the developing countries have matched, and will soon exceed, the cumulative emissions of industrialized countries over that period. (On these emissions trends, see IPCC 2014d: section 13.13.1.1, at 60–1.) At the same time, climate initiatives have proliferated beyond the FCCC and KP, growing into a multifaceted and fragmented ‘regime complex’ (Keohane and Victor 2011; IPCC 2014d: 13.2, 13.13). ‘A major challenge is assessing whether highly decentralized policy action is consistent with and can lead to global mitigation efforts that are effective, equitable, and efficient.’ (IPCC 2014a: TS 4.4, p. 92.) The fragmentation of legal regimes addressing stratospheric ozone, climate change, long-range transboundary air pollution, and other atmospheric issues, poses problems of omissions, disregard, and risk–risk tradeoffs, but efforts to integrate these issues into a more coherent approach—or even to study such a coherent approach under the auspices of the International Law Commission—face persistent obstacles (Sand and Wiener 2015). So far, the most successful precaution on climate change has not been the FCCC or other climate treaties, nor national climate policies in the EU or United States, but, it turns out, has been a co-benefit of the Montreal Protocol to protect the stratospheric ozone layer. The Montreal Protocol’s phase out of CFCs and HCFCs—which

8. precaution and climate change   175 happen to be potent GHGs as well as ozone-depleting gases—has (so far) delivered five times more GHG abatement than the Kyoto Protocol (see WMO 2014—which notes, however, that the increasing use of HFCs as a substitute poses a countervailing climate risk). The Conference of the Parties (COP 21) meeting Paris in December 2015 aims to mobilize greater action by all countries to reduce GHG emissions, but faces challenges in motivating sufficient collective action and in linking national policies for cost-effective abatement and financing.

4.  Beyond Precaution: Politics, Provisionality, and Post-Cautionary Policies If some sensible precautionary measures would be warranted to address the latent, uncertain and potentially catastrophic risks of climate change, but governments have not done enough, what can still be done? This section offers three kinds of answers: politics, provisionality, and post-cautionary policies. First, the politics: as should by now be evident even to earnest advocates of strong versions of the Precautionary Principle, simply espousing the PP is not enough to move actual policy-making (and extreme versions of the PP could be too strong, only hindering political acceptance). Political governments tend not to follow aspirational principles when the costs are high and short term and local, while the benefits are uncertain and long term and distant (i.e. to people in the future and elsewhere, who do not vote for the government policy-makers being asked to adopt precaution) (Sunstein 2007; Wiener and Richman 2010). The flip-side of this reality is the inequity that the impacts of climate change may be hardest on people in countries and future generations who were not the major sources of GHGs. Still, motivating action by political leaders of major GHG emitters requires more than exhortations to precaution as a principle. Climate and precaution present a cognitive puzzle. Precaution is predicated on acting in the face of uncertainty—so it confronts uncertain benefits, which may be less persuasive to politicians (even if uncertainty and tipping points favor precaution in economic models, as noted above). ‘[T]‌he precautionary principle as applied to climate change . . . inadvertently played into the hands of critics of swift and aggressive action on climate change, feeding the industry-funded view that the science of climate change was too uncertain to justify such action’ (Heinzerling 2008: 458). The PP may be intended to solve cognitive biases that neglect future risks (Dana 2009), but the PP itself may succumb to heuristics that distort its application to focus on recent events that grab public attention (Sunstein 2005). Unlike

176    part iii.  principles, emerging norms, and concepts many other risks in debates over the PP, climate change does not seem to exhibit the heuristics and biases that spur public outcry and demand for greater precaution than experts would recommend; rather, climate change exhibits experts (including sober economists) recommending greater precaution than the public, or at least than politicians in some places, seem willing to adopt. In this sense, fully optimal precautionary policies need to account not only for their risks, costs, and benefits once adopted (as discussed above), but also for their ability to get adopted. Put another way, if a problem warrants precaution—early anticipatory measures—then its timing of adoption matters, and delay in adoption is costly. Drawing on positive political economy, psychology, and policy instrument design, researchers can and should assess the probability and timing of adoption in evaluations of optimal climate change policy design (Wiener 1999a; Wiener 1999b; Gilligan and Vandenbergh 2014). This is especially true at the international level, where adoption depends on consent rather than majority rule or fiat (Wiener 1999a).4 Precaution in climate policy may therefore be more successful in actual politics if it is designed to attract adoption and implementation. Key strategies include: increasing its climate benefits; increasing its co-benefits in public health or other areas; decreasing its costs, through more cost-effective policy design; decreasing its ancillary harms (countervailing risks) through risk-superior policy design; and better informing the public and political leaders about all of these improvements in net benefits. Opposition to precautionary climate policies appears to derive in part from implicit fears of the cost of mitigation measures (Campbell and Kay 2014). It is also important to appeal to citizens’ public and prospective aspirations, and to their core values as well as their scientific literacy (Kahan et al. 2012).5 Thus, to achieve sensible precaution, one must solve the governance challenge: overcoming the obstacles to collective action by designing climate law to attract the participation of key actors (e.g. the United States, the EU, China, India, Brazil, Japan, Canada, Australia, Korea, Russia, Indonesia, South Africa, and others). Designing climate policy to be cost-effective, to promote co-benefits, and to avoid adverse side-effects, can both improve outcomes and help attract participation, which explains why the climate treaty already calls for these features as part of or alongside precaution in FCCC 3(3) and 4(1)(f), as noted above.6   Gilligan and Vandenbergh (2014) argue that ‘comprehensive’ policies may take too long to be adopted, while ‘incremental’ policies are faster. But comprehensive policies may offer lower abatement costs and deliver more benefits (e.g. avoiding leakage due to the partial coverage of incremental policies), thus fostering faster and wider adoption. See Stewart and Wiener (2003). 5   Exhortations to a moral obligation to prevent climate change, see e.g. Heinzerling (2008), may be counterproductive if the relevant public (such as in the United States, Europe, China, India, or elsewhere) views such exhortations as in conflict with their deeply held views, such as on the right to develop or the right to be free of government overreaching or foreign eco-imperialism; in many cases, economic incentives in policy design may be more effective than such exhortations, see Wiener (2008b). 6   Still, governments evidently find these issues so contentious that they could not agree on the text of the Summary for Policymakers (SPM) section summarizing the IPCC chapter on ‘International Cooperation’ (IPCC 2014d), so they deleted most of that SPM section (Stavins 2014). 4

8. precaution and climate change   177 Second, as to provisionality: Some versions of the PP provide that precautionary measures are ‘provisional,’ adopted under uncertainty and to be revised in light of new information and learning (e.g. European Commission 2000). The rounds of negotiations on the FCCC, KP, and subsequent commitments also exhibit a rough sequence of learning and updating. The choice is not between acting now, versus waiting to learn; the choice is between acting and learning versus waiting and learning. That is, there can be learning while acting—so long as the actions are monitored to evaluate their impacts, and they avoid ‘lock-in’ so that they can be revised over time (McCray et al. 2010; IPCC 2014b: section 2.8 at 56).7 Provisionality offers a bridge from precaution to adaptive learning and policy revision. In a section immediately following its discussion of precaution, the IPCC offers: ‘adaptive management represents structured processes for improving decision-making and policy over time, by incorporating lessons learned’ IPCC 2014b: section 2.5.6 at 31–2). The IPCC distinguishes ‘passive adaptive management’ which ‘involves carefully designing monitoring systems, at the relevant spatial scales, so as to be able to track the performance of policy interventions and improve them over time in response to what has been learned’, from ‘active adaptive management’ which ‘design[s]‌the interventions themselves as controlled experiments, so as to generate new knowledge’ (id.). In the former, observations can track the diffusion of varying policy approaches and compare results. In the latter, experiments can be conducted in the ‘lab’, that is with volunteers in a university research setting (Ludwig et al. 2011), or in the ‘field’, that is with real policies applied by accountable governments (Greenstone 2009; McCray et al. 2010; van Gestel and van Dijck 2011). In both passive and active adaptive regulation, welldesigned monitoring and performance evaluation are essential (Wiener 2015). Indeed, because precaution is predicated on uncertainty, that premise implies that there are opportunities for learning, by testing different policy approaches— subject to the costs of errors and of revising those policies over time (Greenstone 2009; Listokin 2008). For climate change, there are many different policy designs that could serve as precautionary measures to limit emissions, with different costs   Lazarus (2009: 1157–8) worries that interest groups will seek to unravel and relax climate policies because these policies impose short-term costs and redistributive impacts for long-term benefits, so he advocates that climate policies be ‘simultaneously . . . flexible in certain respects and steadfast in others. Flexibility is necessary to allow for the modification of legal requirements over time in light of new information. Steadfastness or “stickiness” is important to maintain the stability of a law’s requirements over time.’ He proposes entrenching ‘precommitment strategies that deliberately make it hard (but never impossible) to change the law in response to some kinds of concerns [i.e., relaxing emissions limits]. At the same time, the legislation should also include contrasting precommitment strategies that deliberately make it easier to change the law in response to other longer-term concerns that are in harmony with the law’s central purpose, which is to achieve and maintain greenhouse gas emissions reductions over time.’ Yet initial policies—not only in their stringency, but in their instrument choice—may be more ‘sticky’ than intended, as implementation efforts and vested interests grow up around them (as the history of environmental law often shows). They may be worth revising over time as we learn more about effectiveness, costs, and ancillary side-effects. 7

178    part iii.  principles, emerging norms, and concepts and ancillary impacts in different settings, so there could be value in careful experiment designs. Governments conduct such variation and policy experiments all the time—but they often do so haphazardly or unintentionally, and they neglect to structure the experiment carefully to compare treatment options, monitor performance, and evaluate outcomes. Successful provisionality and adaptive management require careful data monitoring and analysis, in order to evaluate policy performance over time, both compared to alternative policy designs and compared to the counterfactual scenario of what would have occurred without the policy (McCray et al. 2010; Wiener 2015). In addition to precaution informing climate change policy, climate change policy can also inform precaution. The complexities of climate change offer lessons for improving the broader regime of risk regulation (of all types of risks), favoring greater comprehensiveness in scope (to address systems more holistically and thereby avoid risk–risk tradeoffs), and greater adaptability over time (through learning and updating) (Wiener 2008a; Heyvaert 2011; Sand and Wiener 2015). Third, as to post-cautionary policies: The difficulty in adopting sensible precautions against future climate change may have shifted the timing for climate policy. If some observers are correct, we may now be (part way) past the time for precaution. We may have moved from ex ante regulation toward ex post remedies, or at least to somewhere in the middle along this spectrum. Some climate modelers have forecast that, given accumulating GHG concentrations now passing 400 parts per million (ppm), it is already (or almost, and with varying levels of confidence) too late to limit future temperature increases to the political long-term goal of 2°C. (Even if that is true, further temperature increases might still be prevented.) Some observers infer that the window of opportunity for precaution to prevent ‘dangerous anthropogenic interference with the climate system’ has closed (e.g. Harvey 2007; Shaw 2009). Heinzerling (2008: 452) argues: We should cease discussing responses to climate change in terms of the ‘precautionary principle’ and should begin to think instead in terms of a ‘post-cautionary’ approach. For a long time, climate change has been the exemplar for application of the precautionary principle. This principle has taken many forms over the years, but in its simplest and perhaps most common formulation, it stands for the idea that we should not wait for scientific certainty before acting on a threat. The underlying principle is that we are better off being safe than being sorry. At this moment in history, discussing climate change in terms of the precautionary principle is a serious mistake. . . . [w]‌e probably blew past our precautionary opportunity sometime in the 1980s. We are now, and have been for some time, in a post-cautionary world.

This point of view is not necessarily saying that nothing can be done now, just that we are no longer taking precautions early in anticipation of the risk. Nor is it to say that countries violated their international agreements on GHG emissions. The IPCC reports that Annex I countries, as a group, actually met their aggregate targets in both the FCCC (reducing their aggregate emissions below 1990 levels by

8. precaution and climate change   179 2000—partly due to the economic downturn in former Soviet countries), and in the Kyoto Protocol (reducing their aggregate emissions more than 5.2 percent below 1990 levels by 2012) (IPCC 2014d: section 13.13.1.1, at 59–60). But these emissions reductions by Annex I countries under the FCCC and KP, plus their additional pledges of new policy measures, are apparently not sufficient to achieve the long-term goal of limiting temperature rise to 2°C, largely because rapid increases in emissions from non-Annex I countries (i.e. major developing countries) are driving overall growth in global emissions and thus in global GHG concentrations (IPCC 2014d: Executive Summary, at 6–7; IPCC 2014d: section 13.13.1.1, at 60). A forecast of plausible pledges to be made at the 21st Conference of the Parties (COP 21) in Paris in 2015 shows that they could significantly bend down future emissions, but that the likely agreement will still not produce global emissions within the window of paths to 2050 that are consistent with frequently proposed climate goals (such as 2°C) (Jacoby and Chen 2014). New studies suggest that major melting of Antarctic ice may already be underway (Joughin et al. 2014; Rignot et al. 2014). If so, policy will shift toward an array of in-progress or ex post or ‘post-cautionary’ policies. In several areas, this is already occurring. For example, there has been an important shift in attention in the international climate negotiations from mitigation (prevention, emissions abatement) to adaptation. For many years, adaptation was downplayed or treated as taboo by climate activists, lest it invite moral hazard—a sense that precaution was not so urgently needed because adaptation would be available as a backup or insurance strategy. That seems to be changing, and adaptation is now widely discussed and sometimes mobilized. Adaptation assistance is sought by vulnerable countries, for whom it offers defenses against ongoing weather extremes and sea level rise (due to climate change or other causes). Bangladesh, for example, has developed improved strategies to cope with periodic flooding displacing millions of people. It remains unclear if adaptation can succeed for small island states, whose entire territory may be submerged. After hurricanes Katrina and Sandy, the United States (or some key cities) have tried to adopt adaptation plans, though reform of the national flood insurance system has been halting. Heinzerling (2008: 459) advocates adaptation, arguing that the moral hazard problem is now moot because climate change is occurring. Hartzell-Nichols (2014) suggests that adaptation can still be considered precautionary, in the sense that it reduces expected damages. Another type of post-cautionary policy is ‘loss and damage’, a form of ex post civil liability. Advocates seek not funding for prospective adaptation projects, but compensation for retrospective losses. The issue of loss and damage was raised at the Durban COP in 2011 and debated at the Warsaw COP in 2013. So far, there is no functioning legal mechanism for litigation over transboundary liability for climate harms, though a variety of international and national law tort claims have been attempted—not yet successfully, though conceivably that could change.

180    part iii.  principles, emerging norms, and concepts Plaintiffs face major challenges, including in establishing the jurisdiction of a tribunal over the case and the defendant(s), avoiding preemption by regulatory law (as in Connecticut v AEP, US S.Ct. 2011), proving causation, assessing damages, and enforcing any judgment (IPCC 2014c: section 3.3.6, at 16–17). Thus loss and damage remains a political negotiation, in which major emitting countries are not offering compensation (Myers and Kulish 2013). As major developing countries’ share of cumulative emissions rises to exceed the cumulative share of industrialized countries, the set of possible defendants may be expanding, but the political opposition to compensation is likely to remain high. If precautionary emissions limits and adaptation do not limit climate damages, a different post-cautionary strategy may be geoengineering. Countries may attempt to manage the Earth’s temperature directly through Solar Radiation Management (SRM)—methods of changing the Earth’s albedo, screening out some of the sun’s incoming energy—such as by adding sulfate aerosol particles to the upper atmosphere. SRM could be deployed very quickly, and some methods are extremely inexpensive (Barrett 2008), so if a climate emergency seems imminent, SRM might be the last resort to cool the planet (Moreno-Cruz and Keith 2013). In a match of odd bedfellows, SRM appeals both to those who see climate change as so imminent and catastrophic that it is too late for emissions limits, and to those who see climate change as not so serious, hence emissions limits are too costly, and SRM is attractive for its very low cost. SRM poses its own serious countervailing risks, such as cooling the planet too much, or adversely affecting stratospheric ozone, or causing adverse regional impacts, or changing the color of the sky, or unexpectedly failing and allowing a rapid temperature rebound (see IPCC 2014c: section 3.3.7 at 17–18). Some experts advocate greater research now to learn and clarify those impacts (thus enabling well-designed SRM if needed, and avoiding hasty resort to poorly designed or dangerous SRM) (see NRC 2015); others fear that research will encourage premature deployment. The very low cost of SRM and its ancillary impacts raise the opportunity—and concern—that it might be deployed by a single country or even a wealthy individual. The governance challenge of SRM is thus, in part, to restrain ‘rogue’ unwise deployment. The IPCC comments: ‘Whereas emissions abatement poses challenges of engaging multilateral action to cooperate, SRM may pose challenges of coordinating research and restraining unilateral deployment of measures with potentially adverse side-effects’ (IPCC 2014d: Executive Summary at 7). If precaution is understood not as a formal binary classification, but as a general posture—a continuum of degrees of precaution in terms of earliness and stringency—then the lack of early precautionary measures to combat climate change does not mean that precaution is irrevocably unavailable. There may still be opportunities to take mid-course precautionary measures that reduce future damages. And, in the meantime, we may have learned better ways to design climate policies, to yield more benefits at lower costs. Still, we can learn more while we undertake provisional (adaptive regulation) climate policies now and study their performance

8. precaution and climate change   181 over time. And the prospect of post-cautionary geoengineering (SRM) poses an appropriate coda for precaution and climate change: if we have not been sufficiently precautionary against emissions, then we may need to be precautionary regarding the measures that could be taken to remedy those emissions.

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182    part iii.  principles, emerging norms, and concepts Hammitt, James K., Jonathan B. Wiener, Brendon Swedlow, Denise Kall, and Zheng Zhou (2005). ‘Precautionary Regulation in Europe and the United States: A Quantitative Comparison,’ Risk Analysis 25: 1215–28. Hartzell-Nichols, Lauren (2014). ‘Adaptation as Precaution,’ Environmental Values 23: 149–64. Harvey, L. Danny (2007). ‘Dangerous anthropogenic interference, dangerous climatic change, and harmful climatic change: non-trivial distinctions with significant policy implications,’ Climatic Change 82: 1–25. Heinzerling, Lisa (2008). ‘Climate Change, Human Health, and the Post-Cautionary Principle,’ Georgetown Law Journal 96: 445–60. Heyvaert, Veerle (2011). ‘Governing Climate Change: Towards a New Paradigm for Risk Regulation,’ The Modern Law Review, 74: 818–44. IPCC (2001). ‘Technical Summary,’ Intergovernmental Panel on Climate Change (IPCC), 3rd Assessment Report (AR3). IPCC (2014a). ‘Technical Summary,’ Intergovernmental Panel on Climate Change (IPCC), 5th Assessment Report (AR5). IPCC (2014b). Chapter 2, ‘Integrated Risk and Uncertainty Assessment of Climate Change Response Policies,’ Intergovernmental Panel on Climate Change (IPCC), 5th Assessment Report (AR5), Working Group III: Mitigation. IPCC (2014c). Chapter 3, ‘Social, Economic and Ethical Concepts and Methods,’ Intergovernmental Panel on Climate Change (IPCC), 5th Assessment Report (AR5), Working Group III: Mitigation. IPCC (2014d). Chapter 13, ‘International Cooperation: Agreements and Institutions,’ Intergovernmental Panel on Climate Change (IPCC), 5th Assessment Report (AR5), Working Group III: Mitigation. Jacoby, Henry D. and Y.-H. Henry Chen (2014). ‘Expectations for a New Climate Agreement,’ MIT Joint Program on the Science and Economics of Global Change, August. Jordan, Andrew and Timothy O’Riordan (1999). ‘The Precautionary Principle in Contemporary Environmental Policy and Politics,’ in Carol Raffensperger and Joel Tickner (eds.), Protecting Public Health and the Environment: Implementing the Precautionary Principle, Washington, DC: Island Press. Joughin, Ian, Benjamin E. Smith, and Brooke Medley (2014). ‘Marine Ice Sheet Collapse Potentially Underway for the Thwaites Glacier Basin, West Antarctica,’ Science 344: 735–8. Kahan, Dan M., Ellen Peters, Maggie Wittlin, Paul Slovic, Lisa Larrimore Ouellette, Donald Braman, and Gregory Mandel (2012). ‘The polarizing impact of science literacy and numeracy on perceived climate change risks,’ Nature Climate Change 2: 732–5. Keohane, Robert O. and David G. Victor (2011). ‘The Regime Complex for Climate Change,’ 9 Perspectives on Politics 9(1): 7–23. Lazarus, Richard J. (2009). ‘Super Wicked Problems and Climate Change: Restraining The Present to Liberate The Future,’ Cornell Law Review 94: 1153–233. Lempert, Robert J. and M.T. Collins (2007). ‘Managing the risk of uncertain thresholds responses: comparison of robust, optimum, and precautionary approaches,’ Risk Analysis 27: 1009–26. Listokin, Yair (2008). ‘Learning Through Policy Variation,’ Yale Law Journal 118: 480–553. Ludwig, Jens, Jeffrey R. Kling, and Sendhil Mullainathan (2011). ‘Mechanism Experiments and Policy Evaluations,’ J. Econ. Perspectives 25: 17–38. Marchant, Gary E. and Kenneth L. Mossman (2004). Arbitrary and Capricious: The Precautionary Principle in the EU Courts, Washington, DC: AEI Press.

8. precaution and climate change   183 McCray, Lawrence E., Kenneth A. Oye, and Arthur C. Petersen (2010). ‘Planned adaptation in risk regulation’, Technological Forecasting & Social Change 77: 951–9. Molina, Mario J. and F. S. Rowland (1974). ‘Stratospheric sink for chlorofluoromethanes: chlorine atom-catalysed destruction of ozone,’ Nature 249: 810–12 (28 June). Moreno-Cruz, Juan B. and David W. Keith (2013). ‘Climate policy under uncertainty: a case for solar geoengineering,’ Climatic Change 121: 431. Myers, Steven Lee and Nicholas Kulish (2013). ‘Growing Clamor About Inequities of Climate Crisis,’ NY Times, November 17, p. A1, at (accessed 16 July 2015). NRC (National Research Council) (1979). Carbon Dioxide and Climate: A Scientific Assessment (Washington DC: National Academy of Sciences). NRC (National Research Council) (2015). Climate Intervention: Reflecting Sunlight to Cool Earth (Washington DC: National Academy of Sciences). Nordhaus William D. (2011). ‘The economics of tail events with an application to climate change,’ Review of Environmental Economics and Policy 5: 240–57. Posner, Richard (2004). Catastrophe: Risk and Response, Oxford: Oxford University Press. Revesz, Richard L. and Michael A. Livermore (2008). Retaking Rationality: How Cost–Benefit Analysis Can Better Protect the Environment and Our Health, Oxford: Oxford University Press. Rignot, Eric, Jeremie Mouginot, Mathieu Morlighem, Helene Seroussi, and Bernd Scheuchl (2014). ‘Widespread, Rapid Grounding Line Retreat of Pine Island, Thwaites, Smith, and Kohler Glaciers, West Antarctica, from 1992 to 2011,’ Geophysical Research Letters 41: 3502–9. Sand, Peter H. (2000). ‘The Precautionary Principle: A European Perspective,’ Human and Ecological Risk Assessment 6: 445–58. Sand, Peter H. and Jonathan B. Wiener (2015). ‘Towards a New International Law of the Atmosphere?’ Göttingen Journal of International Law 7: 1–15 [prepublication online version]. Sandin, Per (1999). ‘Dimensions of the Precautionary Principle,’ Human & Ecological Risk Assessment 5: 889–907. Shaw, Chris (2009). ‘The dangerous limits of dangerous limits: climate change and the precautionary principle,’ The Sociological Review 57 (S2): 103–23. Shindell, Drew (2015), ‘The social cost of atmospheric release’, Climatic Change 130: 313–26. Shindell, Drew, et al. (2012). ‘Simultaneously Mitigating Near-Term Climate Change and Improving Human Health and Food Security,’ Science 335: 183–9. Solomon, Susan, Gian-Kasper Plattnerb, Reto Knuttic, and Pierre Friedlingsteind (2009). ‘Irreversible climate change due to carbon dioxide emissions,’ PNAS 106: 1704–9 (28 January) at doi: 10.1073/pnas.0812721106. Stavins, Robert N. (2014). ‘Is the IPCC Government Approval Process Broken?’ An Economic View of the Environment blog, April 25, at: (accessed 16 July 2015). Stewart, Richard B. (2002). ‘Environmental Regulatory Decisionmaking under Uncertainty,’ Research in Law & Economics 20: 71–152. Stewart, Richard B. and Jonathan B. Wiener (2003). Reconstructing Climate Policy: Beyond Kyoto, Washington DC: AEI Press. Stone, Christopher D. (2001). ‘Is There a Precautionary Principle?’ Envtl. Law Reporter 31: 10790–9.

184    part iii.  principles, emerging norms, and concepts Sunstein, Cass R. (2005). The Laws of Fear: Beyond the Precautionary Principle, Cambridge: Cambridge University Press. Sunstein, Cass R. (2007). ‘Of Montreal and Kyoto: A Tale of Two Protocols,’ Harvard Environmental Law Review 31: 1–66. Trouwborst, Arie (2002). Evolution and Status of the Precautionary Principle in International Law, The Hague: Kluwer Law International. VanderZwaag, David (1999). ‘The Precautionary Principle in Environmental Law and Policy: Elusive Rhetoric and First Embraces,’ Journal of Environmental Law & Practice 8: 355–75. van Gestel, Rob and Gijs van Dijck (2011). ‘Better Regulation through Experimental Legislation,’ European Public Law 17: 539–53. Weitzman, Martin L. (2009). ‘On modeling and interpreting the economics of catastrophic climate change,’ The Review of Economics and Statistics 91: 1–19. Wiener, Jonathan B. (1999a). ‘Global Environmental Regulation: Instrument Choice in Legal Context,’ Yale Law Journal 108: 677–800. Wiener, Jonathan B. (1999b). ‘On the Political Economy of Global Environmental Regulation,’ Georgetown Law Journal 87: 749–95. Wiener, Jonathan B. (2001). ‘Something Borrowed for Something Blue: Legal Transplants and the Evolution of Global Environmental Law,’ Ecology Law Quarterly 27: 1295–371. Wiener, Jonathan B. (2002). ‘Precaution in a Multi-Risk World,’ in Dennis Paustenbach (ed.), Human and Ecological Risk Assessment: Theory and Practice, New York: John Wiley and Sons, 1509–31. Wiener, Jonathan B. (2007). ‘Precaution,’ in Daniel Bodansky, Jutta Brunnée, and Ellen Hey (eds.), Oxford Handbook of International Environmental Law, Oxford: Oxford University Press, 597–612. Wiener, Jonathan B. (2008a). ‘Radiative Forcing: Climate Policy to Break the Logjam in Environmental Law,’ NYU Environmental Law Journal, 17: 210–55. Wiener, Jonathan B. (2008b). ‘Climate Change Policy, and Policy Change in China,’ UCLA Law Review 55: 1805–26. Wiener, Jonathan B. (2015). ‘Towards an effective system of monitoring, reporting and verification,’ in Scott Barrett, Carlo Carraro, and Jaime de Melo (eds.), Towards a Workable and Effective Climate Regime, FERDI: 183–300. Wiener, Jonathan B. and Barak D. Richman (2010). ‘Mechanism Choice,’ in Daniel A. Farber and Anne Joseph O’Connell (eds.), Research Handbook on Public Choice and Public Law, Edward Elgar, 363–96. Wiener, Jonathan B. and Michael D. Rogers (2002). ‘Comparing Precaution in the United States and Europe,’ Journal of Risk Research 5: 317–49. Wiener, Jonathan B., Michael D. Rogers, James K. Hammitt, and Peter H. Sand (eds.) (2011). The Reality of Precaution: Comparing Risk Regulation in the United States and Europe, Washington DC and London: RFF Press/Earthscan/Routledge. Wiener, Jonathan B., Brendon Swedlow, Michael D. Rogers, James K. Hammitt and Peter H. Sand (2013). ‘Better Ways to Study Regulatory Elephants,’ European Journal of Risk Regulation 2/2013: 311–19. WMO (World Meteorological Organization) (2014). Assessment for Decision-Makers: Scientific Assessment of Ozone Depletion: 2014, World Meteorological Organization, Global Ozone Research and Monitoring Project—Report No. 56, Geneva, Switzerland, preprint 10 September 2014, available at (accessed 16 July 2015).

Chapter 9

PRINCIPLES AND EMERGING NORMS IN INTERNATIONAL LAW INTRA- AND INTER-GENERATIONAL EQUITY

Catherine Redgwell*

1. Introduction

186

2. The Principles of Inter- and Intra-generational Equity

188

3. Legal Status of the Principles of Intra-and Inter-generational Equity

195

4. Conclusion: The Future of an ‘Equitable’ Climate Regime

199

*  I am grateful for comments from the editors and from Professor Lavanya Rajamani, though any errors and omissions remain my own.

186    part iii.  principles, emerging norms, and concepts

1. Introduction The United Nations Framework Convention on Climate Change (FCCC)1 is rare in its acknowledgement of future generations in the body of the treaty text when, more typically, such recognition is confined to non-binding preambular provisions which may inform and guide the interpretation of the treaty text.2 It is also an oft-quoted example of a treaty-based articulation of intra-generational equity, one expression of which is the principle of common but differentiated responsibilities and respective capabilities (CBDRRC). As discussed in Chapter 1, CBDR is one of the core principles of the climate regime,3 to which the FCCC adds the concept of ‘respective capabilities’ as a complement to differentiated responsibility for historical/ current contributions to climate change.4 It ‘constitutes a means of translating the concept of intra-generational equity to the inter-State level, and the South–North context in particular, with a view to attaining sustainable development’.5 Despite some allision of the concepts of intra-generational equity and CBDR,6 the former is a broader concept addressing disparities between States and taking various forms such as financial assistance, capacity-building, and the principle of CBDR.7 1   1771 UNTS 107. The general principles contained in the FCCC apply to its 1997 Kyoto Protocol, 37 ILM (1998) 22. 2   See further R. Gardiner, Treaty Interpretation (Oxford University Press, 2nd edn, 2015), at p. 205; and section 3 below. 3   ‘Regime’ is used here to refer to the FCCC and Kyoto Protocol and associated instruments and decisions. 4   P. Cullet, ‘Principle 7: Common but Differentiated Responsibilities’ in J.E. Viñuales (ed) The Rio Declaration on Environment and Development: A Commentary (Oxford University Press, 2015), at p. 238. See further L Rajamani, ‘The principle of common but differentiated responsibility and the balance of commitments under the climate regime’ (2000) 9 RECIEL 120–131; , and, more generally, L. Rajamani, Differential Treatment in International Environmental Law (Oxford University Press, 2006) and C.D. Stone, ‘Common but differentiated responsibilities in international law’ (2004) 98 AJIL 276–301. 5   E. Hey, ‘Common but Differentiated Responsibilities’ in R. Wolfrum (ed) Max Planck Encyclopedia of Public International Law (February 2011). 6  E.g. P.-M. Dupuy and J.E. Viñuales, International Environmental Law (Cambridge University Press, 2015), at p.71. Yamin and Depledge, on the other hand, refer to CBDR as ‘a mixture of different concepts, including “common concern” and acting for the benefit of present and future generations on the basis of equity’: F. Yamin and J. Depledge, The International Climate Regime: A Guide to Rules, Institutions and Procedures (Cambridge University Press, 2004), at p. 69; while Rajamani identifies intra-generational equity, ‘which would entail prioritizing the development needs of the developing countries, providing adequate environmental space for their development, and helping them secure the necessary resources, technology, and access to markets’, as one of the three ‘inter-related notions’ on which CBDR is based: Differential Treatment, n 4, at p. 252. 7   P. Birnie, A. Boyle, and C. Redgwell, International Law and the Environment (Oxford University Press, 3rd edn, 2009) (‘BBR’), at p. 122. In turn, financial assistance or transfer of technology may be viewed as implementation of the principle of CBDRRC: see Article 12 (CBDR) in the IUCN’s International Covenant on Environment and Development, Environmental Law & Policy Paper No. 31 Rev. 3 (4th edn, 2010), at p. 55.

9. intra- and inter-generational equity   187 While differentiation with respect to central obligations such as that found in the climate regime (e.g. Article 3 of the Kyoto Protocol) is rare, facilitation of financial and technical assistance are amongst the most frequent differential treatment provisions found in environmental treaties.8 Though touched on here, these various forms of intra-generational equity are explored further in other contributions in this volume. These principles are reflected in Article 3(1) FCCC, which states that: The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities.9

The intra- and inter-generational linkage found in the first clause of Article 3(1) is also present in United Nations General Assembly Resolutions on climate change,10 which recognize that climate change is ‘the common concern of humankind’11 and that the global climate must be protected for present and future generations of humankind.12 Whatever doubts may exist over the legal status of inter-generational equity (see section 3 below), ‘the essential point of the theory, that [hu]mankind has a responsibility for the future, and that this is an inherent component of sustainable development, is incontrovertible, however expressed. The question then becomes one of implementation’.13 The climate regime is an example of such implementation in an international regime which already accommodates the interests of future generations in a balancing of interests.14 It is thus particularly apt to consider the climate change regime in the context of these two principles, and what contribution it has made to their recognition and development through   Cullet, n 4, at p. 239. See further C. Redgwell, ‘Facilitation of Compliance’ in J. Brunnee, M. Doelle, and L. Rajamani (eds) Promoting Compliance in an Evolving Climate Regime (Cambridge University Press, 2012), 177–93; L.B. de Chazournes, ‘Technical and Financial Assistance’ in D. Bodansky, J. Brunnee, and E. Hey (eds), The Oxford Handbook of International Environmental Law (Oxford University Press, 2006) 947–73, at p. 963; and Ch. 7 infra. 9   For detailed drafting commentary, see D. Bodansky, ‘The United Nations Framework Convention on Climate Change: A Commentary’ (1993) 18 Yale Journal of International Law 451, at pp. 501–5; and generally Yamin and Depledge, n 6, ch. 4 section 2 ‘Principles’. As noted above, the FCCC principles apply to the Kyoto Protocol (preamble, paragraph 4). Citing the hortatory language of Article 3, BBR conclude that the principles contained within it are ‘not without legal effect’ in so far as they may be relied upon in the interpretation and implementation of the FCCC (and the Kyoto Protocol) and in conditioning the expectations of the Parties in the fulfilment of their obligations: n 7, at p. 359. For analysis of the principle of CBDR, reaching a similar conclusion, see Rajamani, n 4, at pp. 158–62. 10   See e.g. ‘Protection of the global climate for present and future generations of mankind’, UNGA Res. 43/53 of 6 December 1988. 11   UNGA Res. 43/53 of 6 December 1988. 12 13   See e.g. UNGA Res. 44/207 of 22 December 1989.   BBR, n 7, at p. 121. 14   Ibid. Also cited as examples are the London Dumping Convention and the International Whaling Convention. The phasing out of dumping at sea, particularly of radioactive waste, and the adoption of further controls over whaling, respectively, ‘demonstrate a real concern for future generations’: ibid, at p. 120. 8

188    part iii.  principles, emerging norms, and concepts implementation.15 While there is a clear linkage between them, there is no clear consensus as to the nature of that linkage, that is, whether intra-generational equity is a component part of inter-generational equity, both are linked under the broad umbrella concept of equity; or each is a separate principle.16 The International Law Association’s recent Draft Articles on Legal Principles Relating to Climate Change view them as complementary, but also ‘limit each other’ with potential tension between them as limits are placed on present utilization of resources.17 ‘Separate but related’ is the approach taken to these principles below in considering their scope, legal status, and role in the climate regime.

2.  The Principles of Interand Intra-generational Equity The principle of inter-generational equity (IE)18 defines the rights and obligations of present and future generations with respect to the use and enjoyment of natural and cultural resources, inherited by the present generation and to be passed on to future generations in no worse condition than received.19 This applies both to the diversity of the resources, and to the general quality of the environment that is passed on.20 The principle is often linked with notions of fairness, and of distributive justice.21 15   For early analysis on the eve of the conclusion of the FCCC, see C. Redgwell, ‘Inter-generational Equity and Global Warming’ in R. Churchill and D. Freestone (eds), International Law and Global Climate Change (Graham & Trotman/Martinus Nijhoff Publishers, 1991), pp. 41–56. 16   See E.B. Weiss, ‘Inter-generational Equity’, Max Planck Encyclopedia of Public International Law (February 2013), para 11 (who considers that there may be general agreement on the basic elements of inter-generational equity, but not upon intra-generational equity). Shelton addresses them as two principles: ‘Equity’ in D. Bodansky, J. Brunnee, and E. Hey (eds), The Oxford Handbook of International Environmental Law (Oxford University Press, 2006) 639–62, at p. 642, as do BBR, n 8, at pp. 119–23. See also Rajamani, Differential Treatment (n 4), at p. 86. 17   ILA Draft Articles with Commentary (adopted in Washington, 2014), Article 4, para 3 available at SSRN (accessed 4 August 2015). 18   See, generally, E. Brown Weiss, In Fairness to Future Generations: International Law, Common Patrimony, and Inter-generational Equity (Transnational Publishers, 1989); C. Redgwell, Inter-generational Trusts and Environmental Protection (Manchester University Press, 1999); E. Agius et al., Future generations and international law (Earthscan Publications, 1998); ‘Agora: What Obligations Does Our Generation Owe to the Next?’ with contributions by Weiss, A. D’Amato, and L. Gundling, in (1990) 84 AJIL 190–212; G. Supanich, ‘The Legal Basis of Intergenerational Responsibility: An Alternative View— The Sense of Intergenerational Identity’, (1992) 3 Yearbook of International Environmental Law 94. 19   Given current climate change predictions, this seems unlikely for the present generation. 20   Weiss, n 16 and n 18. 21   See further discussion by T. Ahmed and D. French, ‘Situating Climate Change in (International) Law: A Triptych of Competing Narratives’ in French et al. (eds), Criminological Consequences of

9. intra- and inter-generational equity   189 It ‘articulates a principle of fairness among generations in the use and conservation of the environment and its natural resources’.22 Distributive justice is also one of the two key elements of CBDR as ‘a manifestation of equity’.23 Inter- and intra-generational equity have been identified by many authors—and by the Intergovernmental Panel on Climate Change (IPCC)—as an integral ele­ ment in the broader principle of sustainable development,24 which can be ‘seen as encompassing an international understanding of intra-generational (as well as intergenerational) equity in its effort to strike a fair balance between the often conflicting goals of economic development and environmental protection’.25 The centrality of inter-and intra-generational equity is evident in the Brundtland Commission’s definition of sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.26 Sands identifies categories of principles inherent in the concept of sustainable development (including equity and consideration of the needs of future generations) and those drawn from other areas of international law providing assistance in achieving it (including CBDR).27 A strong sustainability approach is arguably the more consistent with inter-generational equity given the emphasis upon maintaining certain ‘critical natural stock—such as the climate system and biodiversity—[that] cannot be replaced by human-made capital and must be maintained’.28 This is a task transcending the climate regime alone. As the recent report by IPCC Working Group 3 (WGIII) addressing ‘Sustainable Development and Equity’ concludes, ‘designing a successful climate policy may require going beyond a narrow focus on mitigation and adaptation, beyond the analysis of a few co-benefits of climate policy, and may Climate Change (2013), at pp. 37–41, and J. Brunnee, ‘Climate change, global environmental justice and international environmental law’ in J. Ebbesson and P. Okowa, Environmental Law and Justice in Context (Cambridge University Press, 2009), 316–32. 22   Weiss, n 16; Shelton, n 16, at p. 642 (‘two principles that have been developed that seek to infuse a greater degree of fairness among individuals and states, both present and future’); G.F. Maggio, ‘Inter/ intragenerational Equity: Current Applications under International Law for Promoting the Sustainable Development of Natural Resources’, (1997) 4 Buffalo Envt’l L. J. 161, at p. 163. 23   Cullet, n 4, at p. 231. 24   E.g P. Sands, ‘International Law in the Field of Sustainable Development’ (1994) LXV British Yearbook of International Law 303. E. Brown Weiss, ‘In Fairness to Future Generations and Sustainable Development’ (1992) 8 Am U Intl L Rev 19; Redgwell, n 18, at p. 42. IPCC WG III states the ‘Equity between generations underlies the very notion of [sustainable development]’: IPCC WG III contribution to the AR5, ‘Climate Change 2014: Mitigation of Climate Change’ Chapter 4 ‘Sustainable Development’, section 4.2.2, p. 14. See also Article 3(4) FCCC, which lays out the general right and duty (expressed in hortatory terms) to promote sustainable development. 25   Shelton, n 16, at p. 642. 26  WCED, Our Common Future (Oxford University Press, 1987), at p. 43; however, BBR, n 7, at p. 120 note that this definition ‘begs elaboration’. 27   Sands, n 24. 28   IPCC WG III, n 17, section 4.2.1.1, relying on Neumayer’s distinction: E. Neumayer, Weak versus Strong Sustainability: Exploring the Limits of Two Opposing Paradigms (Edward Elgar Publishers, 2010). This resonates strongly with Weiss’s ‘conservation of options’ element of IE considered below.

190    part iii.  principles, emerging norms, and concepts instead require “mainstreaming” climate issues into the design of comprehensive [sustainable development] strategies, including at local and regional levels’.29

2.1 Developing IE Doctrine In contrast with intra-generational equity, IE has been extensively addressed in legal doctrine and pioneered within it by Edith Brown Weiss since her seminal 1989 work In Fairness to Future Generations.30 In her more recent analyses she articulates the three elements of the principle of IE as: (i) ‘non-discriminatory access to the Earth and its resources’; (ii) ‘comparable options (reflected in the diversity of resources’); and (iii) ‘comparable quality in the environment’.31 This 2013 articulation of the principles demonstrates a subtle shift from her articulation in In Fairness to Future Generations which used ‘conservation’ in place of ‘comparable’. This recent phrasing seems more accurately to convey the sense of an equitable balancing of the needs of present and future generations.32 From these three basic principles are derived five ‘duties of use’: (i) the duty to conserve resources; (ii) the duty to ensure equitable use; (iii) the duty to avoid adverse impacts; (iv) the duty to prevent disasters, minimize damage, and provide emergency assistance; and (v) the duty to compensate for environmental harm.33 Climate change evidences all three types of inter-generational problem which may arise in the use of planetary resources: (i) reduced or barred access to the use and benefit of resources passed on from previous generations; (ii) depletion of resources for future generations; and (iii) degradation in the quality of resources available for future generations.34 Implementation of these principles in the climate change context requires measures to prevent rapid changes in climate and to prevent or mitigate damage, and measures to assist countries in adapting to climate   IPCC ibid, section 4.2.1.2.   Weiss, n 18. In contrast, intra-generational equity is only lightly explored in the doctrine with greater attention paid, as noted above, to supporting concepts such as CBDR. 31   Weiss, n 16, para 7. 32   Dupuy and Viñuales categorize principles of international environmental law according to their function as ‘prevention’ or as ‘balance’, with CBDR and inter-generational equity discussed under the latter: n 6, ch. 3. 33   Weiss, n 18, pp. 51–60; for analysis see Redgwell, n 18, ch. 4. The commentary to the IUCN’S Draft Covenant is more specific, drawing on Part I of the World Charter for Nature (UNGA Res. 37/7, 37 UNGAOR Suppl. (No. 51) at 17, UN Doc. A/37/51 (1982)) to flesh out the meaning of inter-generational equity to include, inter alia, ‘maintaining populations of all life forms at least at levels sufficient for their survival’ and ‘applying conservation principles to all areas on Earth, with special protection for unique and representative areas and endangered species’: IUCN, International Covenant on Environment and Development, Environmental Law & Policy Paper No. 31 Rev. 3 (4th edn, 2010), at p. 44. 34   Redgwell, n 18, at p. 54 and, generally, Weiss, ‘Conservation and Equity Between Generations’ in T. Buergenthal (ed), Contemporary Issues in International Law: Essays in Honour of Louis B. Sohn (Engel, 1984), pp. 245–89. 29

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9. intra- and inter-generational equity   191 change.35 These last, strongly intra-generational in flavour, developing States have sought to elevate to the same level of considerability as mitigation in the climate change negotiations, until recently with limited success.36 However, the ‘intended nationally determined contributions’ which Parties were invited at the nineteenth Conference of the Parties (COP19) in Warsaw in 2013 to submit before Paris 2015 are a form of ‘self-differentiation’, which is not conditioned by a priority for mitigation over adaptation.37 In the subsequent Lima Call for Climate Action at COP20, Parties are invited to ‘consider communicating their undertakings in adaptation planning or consider including an adaptation component in their INDCs [Intended Nationally Determined Contributions]’.38 There are also strong links between the principle of IE and public trust doctrine. Particularly in Weiss’s early work, notions from US domestic law of public trust were drawn upon39 and this has recently enjoyed a limited renaissance in academic writing stimulated in part by domestic atmospheric trust litigation.40 Thus, for example, in Angela Bonser-Lain et al. v Texas Commission on Environ­mental Quality41 the District Court of Travis County held that ‘the public trust doctrine includes all natural resources of the State including the air and atmosphere’ and in proceedings before the High Court in Kampala plaintiffs have invoked the Ugandan Constitution to argue that the State has a fiduciary duty to protect Ugandan atmospheric resources for the benefit of present and future generations.42  E. Brown Weiss, ‘Climate Change, Inter-generational Equity and International Law: An Introduction’ (1989) 15 Climatic Change 327–35, at p. 330. 36  Rajamani, n 4; see also D. French and L. Rajamani, ‘Climate Change and International Environmental Law: Musings on a Journey to Somewhere’ (2013) 25 Journal of Environmental Law 437. 37   See further L. Rajamani, ‘The Warsaw Climate Negotiations: Emerging Understandings and Battle Lines on the Road to the 2015 Agreement’ (2014) 63 ICLQ 721. See further analysis of adaptation below, chs. 23–26. 38   Decision 1/CP.20, ‘Lima Call for Climate Action’, para 12, available at (accessed 4 August 2015). 39   E. Brown Weiss, ‘The Planetary Trust: Conservation and Inter-generational Equity’ (1984) 11 Ecology Law Quarterly 495. The public trust doctrine was resurrected in modern US environmental law by J.L. Sax, ‘The Public Trust Doctrine in Natural Resources Law: Effective Judicial Intervention’ (1970) 68 Michigan Law Review 471. For recent reflections on the contribution of the doctrine, see ibid, ‘The Public Trust Doctrine: 30 Years Later’ (2012) 45 University of California Davis Law Review 665–1176. 40   See, for example, M.C. Wood, ‘Atmospheric Trust Litigation’ in W.D.G. Burns and H.M. Osofsky (eds), Adjudicating Climate Change: State, National and International Approaches (Cambridge University Press, 2009), 99–128 and id, ‘Atmospheric Trust Litigation Around the World’ in K. Coghill et al. (eds), Fiduciary Duty and the Atmospheric Trust (Ashgate Publishing, 2012), 99–164. 41   Case No. D-1-GN-11-002194 (2 August 2012), available at (accessed 4 August 2015). 42   Nisi Mbabazi et al. v Attorney-General (20 September 2012), invoking inter alia Article 237 of the 1995 Constitution of Uganda, available at ; see also Wood in Coghill n 40; and P.H. Sand, ‘The Practice of Shared Responsibility for Transboundary Air Pollution’ in P.A. Nollkaemper and I. Plakokefalos (eds), The Practice of Shared Responsibility in International Law (Cambridge University Press, forthcoming 2016), available as SHARES Research Paper 69 (2015) at (accessed 4 August 2015). 35

192    part iii.  principles, emerging norms, and concepts However, suggestions that the public trust doctrine could be utilized to protect the global atmosphere43 have gained limited traction. In the domestic cases there is a direct link between the air and atmosphere of the particular State and its domestic constitutional provisions, with the explicit invocation of ‘atmospheric resources’ language. While it may be possible to argue that national atmosphere constitutes a resource based on statutory or constitutional provision or even, recalling for example the World Trade Organization (WTO) Appellate Body’s recognition of clean air as an ‘exhaustible natural resource’,44 in treaty texts, such scant recognition has been limited to ‘national’ atmosphere and to legal characterization as a ‘resource’. Thus far, attempts to apply international trusteeship doctrine to the global atmosphere exist purely on the theoretical level.45 The doctrine46 is fundamentally grounded in notions of public trusteeship over resources within the State with the concept of public trust providing an accountability mechanism for the present gene­ration to hold the State, as trustee, to account for ‘the diligent management and conservation of common environmental assets’.47 Though a number of examples may be cited, they are neither so widespread nor consistent in recognition of a public trust doctrine to constitute a basis for emergence as a general principle of international law.48 At best, such examples of national recognition of trusteeship over natural resources ‘are empirical evidence of a growing amount of transnational/ trans-cultural convergence of environmental rules’.49 43   N. Myers, The Sinking Ark (Pergamon Press, 1979); P. Barnes, Who Owns the Sky: Our Common Assets and the Future of Capitalism (Island Press, 2006) and P. Barnes et al., ‘Creating an Earth Atmospheric Trust’ (2008) 319:5864 Science 724; P. Taylor, An Ecological Approach to International Law: Responding to the Challenges of Climate Change (Routledge, 1998) at 283. For recent discussion of an ‘internationalized’ concept of public trusteeship to ‘atmospheric resources’ see Sand, ibid. 44   Standards for Reformulated and Conventional Gasoline, WTO Appellate Body (1996) WT/DS2/ AB/R; 35 ILM (1996) 274. 45   Particularly prolific in this regard is Wood, n 40 and id., ‘Advancing the Sovereign Trust of Government to Safeguard the Environment for Present and Future Generations (Part II): Instilling a Fiduciary Obligation in Governance’ (2009) 39 Environmental Law 91–139; see also Sand n 42. 46  Or doctrines since interpretation of the concept varies from state to state within the United States, and from State to State internationally where the concept of public trust has been adopted: within the United States, see R. Kundis Craid, ‘A Comparative Guide to the Western States’ Public Trust Doctrine: Public Values, Private Rights, and the Evolution Toward an Ecological Public Trust’ (2010) 37 Ecology Law Quarterly 53–197; and M. Blumm et al. (eds), The Public Trust Doctrine in Forty-Five States, Lewis & Clark Law School Legal Studies Paper, 18 March 2014, available at SSRN: (accessed 4 August 2015). For constitutional provisions in Uganda and South Africa, and statutory provisions and decrees in the Philippines and Eritrea, and judicial pronouncements in India, see: P.H. Sand, ‘The Rise of Public Trusteeship in International Environmental Law’, Global Trust Working Paper Series 03/2013, available at (accessed 4 August 2015). 47   Sand, ibid. See also critique by Lowe at n 67 below. 48   Contra, M.C. Blumm and R.D. Guthrie, ‘Internationalizing the Public Trust Doctrine: Natural Law and Constitutional and Statutory Approaches to Fulfilling the Saxon Vision’ (2012) 45 University of California Davis Law Review 741, at 750. 49   Sand, n 46, at 8. He speaks later of a ‘vertical transplant’ metamorphosis of the concept, from the national to the international level (id, at p. 22), drawing on J. Wiener’s ‘Something Borrowed for

9. intra- and inter-generational equity   193

2.2 Intra- and Inter-generational Equity and the Climate Regime Notions of environmental trusteeship at the international level, expressed in terms of IE, do not rest exclusively on recognition of public trust doctrine as a general principle of international law. They also build on the use of equity50 ‘as a basis upon which to provide standards for allocating and sharing resources and for distributing the burdens of caring for the resources and the environment in which they are found’.51 The climate regime is imbued with equitable considerations, flowing inter alia from the recognition in Article 3(1) FCCC, noted above, of the obligation to protect the climate system for the benefit of present and future generations ‘on the basis of equity’.52 Here is recognition, albeit couched in hortatory language, of the need to act for the benefit of present and future generations. Article 3 may be viewed as supporting the legitimate expectation of future generations of equitable access to planetary resources, and the concomitant obligation of the present generation as trustee of these resources to ensure that future options are not unduly constrained. Moreover, intra-generational equity is clearly recognized in the incorporation of CBDR and in the reference to ‘respective capabilities’, not to mention the explicit acknowledgement that it is for developed States to shoulder the greater burden in restoring the global patrimony.53 Article 3(1) thus clearly incorporates notions of both intra- and inter-generational equity, and the principle of CBDRRC as an expression of intra-generational concerns. However, there is a chapeau to Article 3, included at the insistence of the United States,54 which states that ‘[i]‌n their actions to achieve the objectives of the Convention and to implement its provisions, the Parties shall be guided, inter alia, by [a number of enunciated principles]’. This wording limits the scope, legal Something Blue: Legal Transplants and the Evolution of Global Environmental law’ (2001) 27 Ecology Law Quarterly 1295, at 1305.   See Shelton, n 16. Brunnee notes that when equity is used in conjunction with justice, it is correctly limited to matters of distributive justice, the broader notion of justice also embracing corrective justice and procedural justice: n 21, at p. 319. 51   Weiss, n 16. Accordingly, she asserts that ‘[t]‌his use of equity provides a foundation for the principle of inter-generational equity’. 52  This was recently reiterated in Article 4 of the 2014 Draft Articles of the International Law Association’s Committee on the Legal Principles Relating to Climate Change, above n 17, which declares that ‘States shall protect the climate system on the basis of equity of which the principle of common but differentiated responsibilities and respective capabilities . . . is a major expression’. 53   See generally Rajamani (Differential Treatment), n 4. On shifting patterns of differentiation under the climate regime see Cullet, n 4, at p. 232; L. Rajamani, ‘Differentiation in a 2015 Climate Agreement’, Centre for Climate and Energy Solutions Briefing Paper, available at (accessed 4 August 2015); and, more generally, L. Rajamani, ‘The Changing Fortunes of Differential Treatment in the Evolution of International Environmental Law’ (2012) 88(3) International Affairs 605. 54   Bodansky, n 9, at p. 502. 50

194    part iii.  principles, emerging norms, and concepts implications and precedential value of Article 3: Parties (vs States as a whole)55 are only to be ‘guided’ (rather than ‘bound’) by principles which by this wording (‘inter alia’) is necessarily wider than Article 3 (e.g. also the preamble, and even principles outside the FCCC).56 While the clear intention of this wording is to confine the legal consequences of the principles articulated in Article 3 to the Framework Convention on Climate Change,57 it is doubtful whether the content of Article 3 may be ‘ring-fenced’ in this manner.58 Beyond the treaty text, equity is frequently invoked by Parties59 to the FCCC and it is found in several key COP decisions, including in the 1995 Berlin Mandate60 launching the process for the conclusion of the Kyoto Protocol and in the 2009 Copenhagen Accord.61 The latter, for example, refers to agreement on long-term cooperative action to combat climate change by those associating with the Accord as being ‘on the basis of equity’. Yet equity is rarely defined and the mechanics of its application seldom articulated.62 For example, the Cancun Agreements63 refer to ‘equitable access to sustainable development’ without articulating how that access is equitably to be achieved. Moreover, there is recent evidence of the erosion of differential treatment in relation to the application of central obligations under the 55   Yamin and Depledge, n 6, at p. 67, note that ‘reference to ‘Parties’, rather than ‘states’ is intended to limit the application of the principles to the Convention context, thus avoiding any implications that the principles are of broader relevance to the field of international environmental law generally’. See also S. Schiele, Evolution of International Environmental Law Regimes: The Case of Climate Change (Cambridge University Press, 2014), at p. 224. 56   Bodansky, n 9, at p. 502; Yamin and Depledge, n 6, at pp. 66–7. Writing with the benefit of some lapse of time, the latter note that state practice has a role in determining the nature, legal implications and status of the principles: ibid, at p. 67. 57   Sands, n 24, at p. 337. He notes that there is a footnote to the Convention specifically indicating that the titles to Articles are included solely to assist the reader. Thus the fact that Article 3 is titled ‘Principles’ has no determinative legal effect: ibid, at n 140. 58   A similarly worded chapeau precedes the acknowledgement in Article 5(c) of the 1992 Convention on the Protection and Use of Transboundary Watercourse and Lakes that ‘[w]‌ater resources shall be managed so that the needs of the present generation are met without compromising the ability of future generations to meet their own needs’. In contrast, no chapeau guards the duty recognized in Article 4 of the World Heritage Convention to transmit world heritage to future generations: see further n 75 below. 59   And by non-Parties: as Shelton’s opening paragraph to her chapter on ‘Equity’ relates, perceptions of fairness and equity implicitly underscored the US Senate’s rejection of the Kyoto Protocol on the basis that the United States would not join any agreement on climate change which required industrialized countries to reduce their GHG emissions without similar obligations imposed on developing countries parties: n 16, at p. 640. 60  Decision 1/CP.1, ‘The Berlin Mandate: Review of Adequacy of Articles 4, Paragraph 2, Sub-Paragraph (a) and (b), of the Convention, including Proposals Related to a Protocol and Decisions on Follow-Up’, in FCCC/CP/1995/7/Add.1 (6 June 1995). 61   Decision 2/CP.15, ‘Copenhagen Accord’, in FCCC/CP/2009/11/Add.1 (30 March 2010). 62   Commentary to ILA Draft Article 4, para 1 (n 17). 63   Decision 1/CP.16, ‘The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention’, in FCCC/CP/2010/Add.1 (15 March 2011), para 6.

9. intra- and inter-generational equity   195 climate regime. For example, the 2011 Durban Platform on Enhanced Action on a future climate regime ‘applicable to all’ omits reference to equity and CBDRRC in marked contrast with these earlier COP decisions launching negotiations of future agreements.64 To stem this erosion in the negotiations for a 2015 agreement, the Africa Group, for example, is advocating an ‘Equity Reference Framework’ in order ‘to assess the adequacy and fairness of mitigation targets and actions that States select and commit to’.65 This contextualization is also evident under the Clean Development Mechanism (CDM) where equitable geographic distribution, particularly to Least Developed Countries (LDCs), has been sought, but proved difficult to achieve.66 While in specific contexts, equity is operationalized such as this example of seeking more equitably geographic distribution in the CDM, equity may be seen largely to act as an overarching general or guiding principle in the climate regime.

3.  Legal Status of the Principles of Intra- and Inter-generational Equity There is no general international law instrument which defines the core elements of IE. Indeed, the legal status and contours of the principles of intra- and intergenerational equity are controversial.67 Internationally, the interests of future generations have been recognized in non-binding ‘soft law’ declarations (e.g. the 1972 Stockholm Declaration on the Human Environment;68 1992 Rio Declaration on Environment and Development;69 the 1997 United Nations Educational, Scientific 65   Rajamani (2012), n 53, at p. 618.   Commentary to ILA Draft Article 4, para 4 (n 17).   There is a linkage here with the Millennium Development Goals: see further T.A. Eni-Ibukun, International Environmental Law and Distributive Justice: The Equitable Distribution of CDM Projects under the Kyoto Protocol (Routledge, 2014). 67   A.V. Lowe, ‘Sustainable Development and Unsustainable Arguments’ in A. Boyle and D. Freestone (eds) International Law and Sustainable Development: Past Achievements and Future Challenges (Oxford University Press, 1999) 19, at pp. 27–9; Redgwell, n 18; BBR, n 7. Some others assert inter-generational equity as ‘a binding principle of international law with broad application’: W.C.G. Burns, ‘Solar Radiation Management and Its Implications for Inter-generational Equity’ in W.C.G. Burns and A.L. Strauss (eds) Climate Change Geoengineering: Philosophical Perspectives, Legal Issues and Governance Frameworks (Cambridge University Press, 2013), 200–20, at p. 207; Maggio, n 22, at p. 161. 68   Principle 2, Declaration of the UN Conference on the Human Environment, Stockholm, 5–16 June 1972; for commentary see L.B. Sohn, `The Stockholm Declaration on the Human Environment’, (1973) 14 Harvard International Law Journal 423. 69   Principle 3 (‘the right to development must be fulfilled so as to equitably meet the development and environmental needs of present and future generations’), UN Doc. A/CONF.151/26/Rev.1, 28 September 1992. For in-depth analysis, see C. Molinari, ‘Principle 3: From a Right to Development to 64

66

196    part iii.  principles, emerging norms, and concepts and Cultural Organization (UNESCO) Declaration on the Responsibilities of the Present Generation Towards Future Generations;70 and the Rio+20 Final Report71),72 in the preamble to a number of environmental treaties (e.g. the 1946 International Convention on the Regulation of Whaling73 and the 1992 Biodiversity Convention74) and, in a few instances, in the text of the treaty itself (e.g. the FCCC already cited above and the 1972 World Heritage Convention75). However, no rights of future generations which are recognized as justiciable in international law arise under these treaty texts,76 nor is there evidence that it has passed into customary international law through the practice of States.77 While States have yet to accept the principle as a binding international obligation, there is some evidence of the application of the principle, in terms of recognition of interests of future Inter-generational Equity’ in J.E. Viñuales (ed) The Rio Declaration on Environment and Development: A Commentary (Oxford University Press, 2015), 139. 70   Resolution 44 adopted by the General Conference at its 29th session, 12 November 1997, available at (with the preamble citing inter alia the FCCC as an example of an instrument which already ‘refers to’ such a responsibility). For critique of the language employed, see R. O’Keefe, ‘World Cultural Heritage: Obligations to the International Community as a Whole?’ (2004) 53 ICLQ 189, at p. 205. Indeed, as its preamble suggests the obligation (upon States) is a moral one, ‘to formulate behavioural guidelines for the present generations within a broad, future-oriented perspective’. 71   ‘The future we want’ A/66/L.56, in Report of the United Nations Conference on Sustainable Development, Rio de Janeiro, 20–22 June 2012, A/CONF.216/16, where the rights of future generations and the co-related obligations of the present are significantly developed, with ten different references (at points 1, 13, 39, 50, 86, 108, 158, and 191 (which draws on the wording of FCCC Article 3(1)), 197 and 230): see A. Boyle and B. Boer, Human Rights and the Environment: A Background Paper (2013), at p. 65 (‘Climate Change and Future Generations’), available at (accessed 4 August 2015). 72   See also the 1988 Goa Guidelines on Inter-generational Equity adopted by Advisory Committee to the UNU Project on International Law, Common Patrimony and Inter-generational Equity, 15 February 1988, and the IUCN’s International Covenant on Environment and Development, n 33. With respect to the latter, the original 1995 formulation read: ‘Article 5 Inter-generational equity: The freedom of action of each generation in regard to the environment is qualified by the needs of future generations’. The 2010 formulation now reads ‘Equity and Justice: Equity and justice shall guide all decisions affecting the environment and shall oblige each generation to qualify its environmental conduct by anticipating the needs of future generations.’ CBDRRC is addressed in Article 12. 73   161 UNTS 72. 74   31 ILM (1992) 818. Other examples are contained e.g. in an appendix in E. Agius and S. Busuttil, Future Generations and International Law (Earthscan, 1998). 75   UKTS 2 (1985) Cmnd 9424. See, generally, C. Redgwell, ‘Protecting Natural Heritage and its Transmission to Future Generations’ in A.A. Yusuf (ed), Standard-setting in UNESCO Vol I: Normative Action in Education, Science and Culture Essays in Commemoration of the Sixtieth Anniversary of UNESCO (UNESCO publishing/Martinus Nijhoff, 2007) 267–88. 76   BBR, n 7, at p. 121. In contrast, rights-based arguments may gain some traction in domestic law, and is cited as one of the rights claimants might seek to rely on in climate change litigation: J. Brunnee, S. Goldberg, R. Lord QC, and L. Rajamani, ‘Overview of legal issues relevant to climate change’ in R. Lord, S. Goldberg, L. Rajamani, and J. Brunnee (eds) Climate Change Liability: Transnational Law and Practice (Cambridge University Press, 2012) 23–49, at p. 28. 77   Contra, Burns n 67.

9. intra- and inter-generational equity   197 generations in domestic environmental law and policy.78 However, in concrete terms its influence on domestic law remains slight:79 though the Philippines case of In re Minors Oposa80 is often used as an illustration of standing of the present generation to sue for the recognition of the environmental rights of future generations, their victory was Pyrrhic81 and has not been followed by other judicial recognition in comparable cases.82 At the international level there has been some limited judicial recognition of the principle of inter-generational equity by international tribunals.83 The Behring Fur Seals Arbitration is usually cited as the first occasion where the concept of future generations was pleaded before an international tribunal.84 In the Case concerning the Gabčíkovo-Nagymaros Project (Hungary v Slovakia),85 78   See, for example, Article 6 of the New South Wales’ Protection of the Environment Administration Act 1991, which links certain principles and programmes to the achievement of ecologically sustainable development including in paragraph (b): ‘inter-generational equity—namely, that the present generation should ensure that the health, diversity and productivity of the environment are maintained or enhanced for the benefit of future generations’; and J.V. DeMarco, ‘Law for Future Generations: The Theory of Inter-generational Equity in Canadian Environmental Law’ (2004) 15 Journal of Environmental Law and Practice 1–46 (stressing in particular the impact in areas of statutory interpretation, as well as noting the overlap with the related concept of sustainable development). See also the invocation of inter-generational equity by the Indian Supreme Court in State of Himachal Pradesh v Ganesh Wood Products (1995) 6 SCC 363 (conserving natural resources for future generations) and Indian Council for Enviro-legal Action v Union of India (1996) 5 SCC 281 (pollution by chemical plant waste water). For discussion of a number of judicial decisions invoking inter-generational equity see Molinari, n 69, at p. 139. 79   For example, while noting that ‘there is increasing interest in the principle in policy and legal terms in various jurisdictions’, Fisher et al. conclude that ‘it has no identifiable role in EU or UK law to date’: E Fisher, B Lange, and E Scotford, Environmental Law Text, Cases and Materials (Oxford University Press, 2013), at p. 411. Intra-generational equity is addressed only in passing as a concept relevant to the ethical dimension of combating transfrontier air pollution: ibid, at p. 606. 80   Minors Oposa v Secretary of the Department of Environment and Natural Resources, Supreme Court of the Philippines, 30 July 1993, reproduced in 33 ILM (1994), at p. 173. 81   See D.B. Gatmaytan, ‘The Illusion of Inter-generational Equity: Oposa v Factoran as Pyrrhic Victory’ (2003) Georgetown International Environmental Law Review 457. Lowe is also critical of an interpretation of the case as acknowledging the rights of future generations, and sees it rather as an instance of the duty of some members of the present generation being enforced at the instance of other members of that generation: n 67, at p. 27. 82   See e.g. Farooque v Government of Bangladesh (1997) 49 DLR (AD) 1. And, as DeMarco points out, it is far from clear that in invoking inter-generational equity the domestic courts are applying it as a rule of international law: J.V. DeMarco, ‘Case Note: Imperial Oil Ltd v Quebec (Minister of Environment)’ (2004) 13 RECIEL 108. See also J.V. DeMarco and M.L. Campbell, ‘The Supreme Court of Canada’s Progressive Use of International Environmental Law and Policy in Interpreting Domestic Legislation’ (2004) 13 RECIEL 320 and, more generally, M. Anderson and P. Galizzi (eds.), International Environmental Law in National Courts (BIICL, 2002). 83   Examples may also be drawn from the human rights context, including the Inter-American Court of Human Rights judgment in Mayagna (Sumo) Awas Tingni Community v Nicaragua, Judgment of 31 August 2001, Inter-Am. Ct. H.R., (Ser. C) No. 79 (2001), where a joint Separate Opinion by Judges Cançado Trindade, Pacheco-Gómez, and Abreu-Burelli noted their obligations to ‘other generations (past and future)’ (para 10, citing inter alia Weiss’s In Fairness to Future Generations (n 18)). 84 85   Behring Sea Fur Seals case (1893) 1 Moore 755.   [1997] ICJ reports 1–27.

198    part iii.  principles, emerging norms, and concepts Hungary invoked the concept of preserving species for future generations as a ‘moral obligation’86 and in his Separate Opinion Judge Weeramantry recognized the concept of trusteeship over the Earth’s resources.87 In his Dissenting Opinion in the 1995 Nuclear Tests Case88 he referred to four emerging principles of particular relevance in the environmental field, including ‘the principle of intergenerational equity’ which he viewed as ‘an important and rapidly developing principle of contemporary international law’ while acknowledging that it has not yet crystallized as a generally recognized, binding norm of international law.89 Perhaps the clearest recognition is found in the Advisory Opinion of the ICJ in Legality of the Threat or Use of Nuclear Weapons where the Court noted that ‘it is imperative . . . to take account of the unique characteristics of nuclear weapons, and in particular their ability to cause damage to generations to come’.90 Judge Weeramantry, once again in a Dissenting Opinion, was even more forceful in his recognition that ‘the Court . . . must, in its jurisprudence, pay due recognition to the rights of future generations . . . [which] have passed the stage when they are merely an embryonic right struggling for recognition. They have woven themselves into international law . . . ’.91 However, in no case has the principle of inter-generational equity formed the legal basis for resolution of the dispute before the court92 nor has any case before an international tribunal expressly recognized the rights of future generations.93 Intergenerational responsibility ‘has yet to attract the international community’s imprimatur as [an] operational legal concept’; rather, transboundary impact has served as the principal conceptual vehicle for ascertaining rights and responsibilities regarding the environment,94 with the cases all involving ‘the present generation suing 87   Declaration by Hungary (1993) 32 ILM 1247.   n 85, at para 110.   Request for an Examination of the Situation in Accordance with Paragraph 63 of the Court’s Judgment of 20 December 1974 in the Nuclear Tests Case (New Zealand v France) (1995) ICJ Rep. 288. 89   Ibid, at para 98. 90   (1996) ICJ Rep 226, at 244. See also two separate opinions by Judge Cancado Trindade where he notes the influence of inter-generational equity, albeit in cautious language (‘forms part of conventional wisdom’; ‘marks presence’): Pulp Mills on the River Uruguay (Argentina v Uruguay), Judgment, ICJ Reports 2010, at para 122, and Whaling in the Antarctic (Australia v Japan; New Zealand intervening), Judgment, ICJ Reports 2014, at para 47. 91   Ibid, at 455. For general comment, see T. Stephens, ‘Sustainability Discourses in International Courts: What Place for Global Justice?’ in D. French (ed), Global Justice and Sustainable Develop­ ment (Martinus Nijhoff Publishers, 2010) 39, at pp. 51–6; on Judge Weeramantry, see D. French, ‘The Heroic Undertaking? The Separate and Dissenting Opinions of Judge Weeramantry during his time on the Bench of the International Court of Justice’ (2006) 11 Asian Yearbook of International Law 35–68. 92   Stephens, ibid; see also Weiss n 16. 93  BBR, n 7, at p. 121; E. Brown Weiss, ‘Opening the Door to the Environment and to Future Generations’ in L.B. de Chazournes and P. Sands (eds), International Law, the International Court of Justice and Nuclear Weapons (Cambridge University Press, 1999), 338–53; and Lowe, n 67. 94   G. Handl, ‘Transboundary Impacts’ in Bodansky et al., n 8, 531–49, at p. 532. 86 88

9. intra- and inter-generational equity   199 in respect of the misdeeds of the past, rather than a future generation challenging those of the present’.95 In sum, at best inter-generational equity may be said to constitute a ‘guiding principle’96 in the application of substantive norms, including existing treaty obligations, under international law.97 Whether this guiding principle has assumed more concrete form in addressing the ‘inherently inter-generational issues’ raised by climate change, and whether ‘the components of the principle will be further refined and the principle more widely referenced, implemented and applied at the a variety of levels in the international community’98 will depend, inter alia, on the crucial next steps in the evolution of the climate regime.

4.  Conclusion: The Future of an ‘Equitable’ Climate Regime The FCCC envisages further detailed rule-making to flesh out obligations balancing the interests of present and future generations and, until recently, the mandates for negotiation of the post-2012 climate change regime have routinely referenced the principles of the FCCC set out in Article 3.99 The possibility of a legally binding outcome remains on the table owing to careful drafting of the Durban outcome, the ‘Durban Platform’, which launched ‘a process to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention’ by 95   BBR, n 7, at p. 121. As such, to the extent that this results in distributing the burden of environmental protection efforts between members of the present generation, this may be seen as an expression of intra-generational equity. 96   Bodansky, n 9, at p. 501 notes that the open-ended character of principles, and the uncertainty as to where they might lead, was one of the United States’ objections to the inclusion of an article on general principles in the FCCC (as opposed to inclusion in the preamble as context for the interpretation of commitments, or as binding commitments per se). 97   Redgwell, n 18, at p. 123. Rajamani, citing a number of the binding and non-binding instruments noted above, concludes that the ‘notion of inter-generational equity, to the extent that it entails a responsibility to (and a consideration of) future generations for the care and use of the planet, is now well established in international environmental dialogue’: n 4 (Differential Treatment), at p. 84 (emphasis added). Given this qualifying language then, she unsurprisingly concludes that whether it is a legal obligation is less clear: ibid, at p. 85. Weiss acknowledges that the translation of expressed moral concern for future generations into legal rights and obligations is a task which still needs to be done: Weiss (1990) 84 AJIL at p. 202, and n 24, at p. 30. 98  This is the challenge—or the opportunity—raised by Weiss in her concluding observations: Weiss, n 16, para 35. 99  See, for example, the Bali Road map (accessed 4 August 2015) at 17 September 2009 para 1(a), and n 66 et seq above.

200    part iii.  principles, emerging norms, and concepts 2015.100 However, as noted above, the Durban Platform references neither equity nor CBDRRC, which at least in the latter instance is a reflection of the divergences which exist over its interpretation.101 The ‘battlelines’ for the 2015 negotiations in Paris were drawn at Warsaw in 2013, with agreement emerging on a hybrid architecture of top-down and bottom-up: nationally determined contributions with top-down elements on transparency and accounting, and some form of assessment or consultative process.102 Here again, however, explicit referencing of equity and CBDRRC is absent, though preambular reference is made to the ‘principles of the Convention’.103 In the current (June 2015) ‘non-paper’ illustrating possible elements of the Paris ‘package’ what little reference there is to general principles is located primarily in section III, headed ‘Provisions whose placement requires further clarity among Parties in relation to the draft agreement or draft decision’.104 The non-paper contains only one reference to future generations (in draft language on the applicable guiding principles in a draft agreement, cross-referring to Article 3 FCCC), fourteen references to ‘equity’ (e.g. in the context of the equity/fairness of commitments, especially regarding mitigation), and frequently in conjunction with reference to CBDRRC, but in the overwhelming majority of cases found in section III. Only one of these references to equity is explicitly inter-generational but it is extremely unlikely in its current form to escape unscathed at Paris.105 In keeping with its character as an umbrella concept incorporating other principles such as CBDRRC, intra-generational equity receives no explicit mention in the non-paper. Thus, under the climate regime to date there has been no general reinforcement of inter-generational equity and arguably a weakening—or ‘development towards’—reduced differentiation. This last may be interpreted either as a further weakening of the principle of CBDRRC or, the better interpretation, a shift in how it is to be applied. Thus one consequence of evolution in the climate change regime has been an apparent shift from differential treatment in favour of developing countries towards symmetry in legal requirements placed on (all) countries, 100  Decision 1/CP.17, ‘Establishment of an Ad Hoc Working Group on a Durban Platform for Enhanced Action, 2011’, available at (accessed 4 August 2015). For analysis see L. Rajamani, ‘The Durban Platform on Enhanced Action and the Future of the Climate Regime’ (2012) 61 ICLQ 501. 101   Rajamani, ‘Differentiation in a 2015 Climate Agreement’, n 53, at p. 1. 102   Rajamani, n 37. 103   Decision 1/CP.19, ‘Further Advancing the Durban Platform’, preambular recital 9, available at (accessed 4 August 2015). 104   ‘Co-Chairs’ Tool: A Non-Paper Illustrating Possible Elements of the Paris Package’, prepared in response to the request of Parties at the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP), 1–11 June 2015, Bonn (ADP 2.9), and expressly ‘without prejudice to the structure of the Paris agreement or to the placement of any provision within that structure’: Annex II, ADP 2015 available at (accessed 4 August 2015). 105   Ibid, p. 50.

9. intra- and inter-generational equity   201 a levelling-down of mitigation commitments, and an increased focus on bottomup processes with national determination of mitigation targets and monitoring of their fulfilment.106 In other words, the nature of differentiation is changing in the climate regime.107 Indeed, it has even been rather extravagantly suggested that the FCCC provisions on CBDRRC ‘seem rather outdated now’.108 Certainly there is a detectable trend away from ‘blanket differentiation’ towards issue-based differentiation,109 and, as Rajamani observes, the difficulty in crafting a single approach to differentiation to cater for all areas of the agreement—mitigation, adaptation, finance, technology, and transparency—means a hybrid approach to differentiation is the most likely outcome at Paris, with differentiation tailored to specific elements of the agreement.110 Differentiation is also becoming increasingly individualized with the explicit linkage between CBDRRC and ‘in accordance with different national circumstances’ found in recent documents,111 including in COP20’s encouragement to self-assessment of the fairness and ambition of submitted INDCs in the light of such circumstances.112 It remains to be seen just how far this ‘national c­ ircumstances’ language will dictate outcomes markedly different from the ‘individualization’ inherent in the ‘respective capabilities’ language which Article 3 FCCC first added to the principle of CBDR in 1992.113 106   D. French and L. Rajamani, ‘Climate Change and International Environmental Law: Musings on a Journey to Somewhere’ (2013) 25 Journal of Environmental Law 437; van Asselt et al. identify institutional fragmentation, the softening of commitments, the changing nature of differentiation, the rise of innovative policy instruments, and increased climate litigation: H. van Asselt, M. Mehling, and C.K. Siebert, ‘The Changing Architecture of International Climate Change Law’ in G. van Calster, W. Vandenberghe, and L. Reins (eds), Research Handbook on Climate Change Mitigation Law (Edward Elgar, 2015). However, and as the Lima Call for Climate Action underscores, there remains recognition of the special circumstances of particular categories of States (e.g. least developed and small island developing States): n 38, para 11. 107   Van Asselt et al., ibid; see also n 53 above. 108   B.J. Condon and T. Sinha, Climate Change in Global Economic Governance (Oxford University Press, 2013), at p. 35. However, this fails to take account of the evolution in the application of CBDRRC under the climate regime noted ibid; see more generally S. Schiele, Evolution of International Environmental Regimes: The Case of Climate Change (Cambridge University Press, 2014). 109   E.g. with capacity building initiatives in sub-Saharan Africa to promote ‘equitable distribution’ of CDM projects: van Asselt et al., n 106, p. 12. 110   Rajamani, ‘Differentiation in a 2015 Climate Agreement’, n 53, at p. 5. 111   See the Lima Call for Climate Action, n 38, para 3 (principle of CBDRRC, in the light of different national circumstances), and the US–China Joint Announcement on Climate Change of 14 November 2014, para 2 (committed to reaching an ambitious agreement in 2015 that reflects the principle of CBDRRC, in light of different national circumstances), available at: . 112   Lima Call for Climate Action, n 38, para 14. Many INDCs accordingly address this point: see, for example, the submissions by Kenya, Mexico, and the Marshall Islands, available at (accessed 4 August 2015). 113   Rajamani, for example, suggests that this phrase adds little to the existing requirement to take ‘respective capabilities’ into account: ‘Differentiation in a 2015 Climate Agreement’ n 53, p. 2.

Chapter 10

COMMON CONCERN OF HUMANKIND Friedrich Soltau*

1. Introduction

203

2. The Common Concern of Humankind: Unpacking the Concept

205

3. Common Concerns and Climate Change

208

4. Conclusion

211

*  The views expressed in this article are the author’s and do not represent the views of the United Nations.

10. common concern of humankind   203

1. Introduction At the beginning of the twenty-first century, humankind’s dependence on the lifesustaining commons of the planet, in the first instance the climate, has become more obvious than ever before. Humanity’s collective impact on the planet’s natural systems has led some to herald that we are seeing a shift from one geological age, the Holocene, to a new geological age, the Anthropocene, distinguished by the planetaryscale influence of humankind.1 The influence of human behaviour on the atmosphere and other natural systems is so significant, it is argued, as to have ushered in a new geological epoch. A prominent mapping of nine so-called ‘planetary boundaries’ estimates that three of these—climate change, biodiversity loss, and the biogeochemical flow boundary—may already been crossed.2 As a result, the global commons—the oceans, Antarctica, the atmosphere, and their inter-related natural systems—are under unprecedented pressure. This comes despite vastly improved scientific understanding of global environmental change, in particular climate change. The international community has also developed in the latter half of the twentieth century a dense network of institutions, international agreements, treaties, and governance frameworks addressing regional and international environmental concerns.3 While the management and protection of the global commons is one of humanity’s most pressing concerns, the international community has also recognized that: ‘Poverty eradication is the greatest global challenge facing the world today and an indispensable requirement for sustainable development.’4 This reflects the reality that despite progress in overcoming poverty under the banner of the Millennium Development Goals, the material living conditions for vast numbers of persons remain highly unequal, with hundreds of millions lacking access to the rudiments of a decent life, such as clean water, sanitation, and clean energy for cooking and heating.5 Ultimately, hard-won social and economic gains—including the moral imperative of poverty eradication—will be eroded without meaningful action on climate change. In this regard, the scientific basis for aggressive action to cut greenhouse gas (GHG) emissions has become ever more compelling. Limiting the global average temperature increase to below 2°C—a level of warming associated with avoiding most, if not all, 1   The term has grown tremendously in currency. It was popularized by the chemist Paul Crutzen. See P. J. Crutzen and E. F. Stoermer (2000). ‘The “Anthropocene”’. Global Change Newsletter 41: 17–18. 2   Johan Rockström et al., ‘Planetary Boundaries: Exploring the Safe Operating Space for Humanity’, Ecology and Society 14(2): 32. 3   James Gustave Speth, Red Sky at Morning: America and the Crisis of the Global Environment (2005). 4  ‘The future we want’, outcome document of the United Nations Conference on Sustainable Development, para. 2. See A/RES/288, annex, GA resolution 288 of 27 July 2012. 5  United Nations, Millennium Development Goals Report (2012). United Nations Department of Economic and Social Affairs. See for the post-2015 period General Assembly resolution 70/1 of 25  September 2015, adopting the outcome document entitled Transforming our World: the 2030 Agenda for Sustainable Development.

204    part iii.  principles, emerging norms, and concepts dangerous climate impacts—will require a peak in global emissions within five years. Global emissions will need to be cut by 60–80 per cent by 2050. Staying within the safe boundary will require that developed countries, responsible for the largest share of cumulative emissions, begin immediately to reduce GHG emissions, with very deep reductions by the mid-century. In addition, the available (and finite) ‘global carbon budget’—consistent with holding the global temperature increase to below 2°C above pre-industrial levels—is rapidly being depleted.6 As a consequence, developing countries are also called upon to begin to constrain their emissions, that is, deviate from the business-as-usual scenario. Thus, developing countries are being asked to shoulder some of the mitigation burden, while at the same time pursuing poverty eradication and economic development strategies that depend on reliable and affordable access to energy. Yet the International Energy Agency estimates that globally 1.4 billion people lack access to electricity and 2.7 billion rely on traditional biomass for cooking and heating.7 Meeting developing countries’ rising energy demand in a climate-friendly manner will require the rapid deployment of low-carbon technologies, especially energy efficiency and renewable energy technologies. Against this backdrop, where poverty eradication, economic development, energy availability and use, and climate change are intricately interlinked, this entry examines the common concern of humankind. Common concern of humankind has found its most explicit reference in relation to climate change, in the UNFCCC, and the conservation of biological diversity in the Convention on Biological Diversity. It encompasses aspects of the global environment that, by virtue of their significance and the need for collective action to protect them, have been designated as common concern of humanity, either in treaties or through decisions of the United Nations General Assembly. The concept has over the years been the subject of considerable scholarship.8 Without delving into a discussion of customary law, this entry proceeds on the basis that the common concern of humankind can reasonably be described as a principle of international environmental law.9   Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. 7   International Energy Agency, World Energy Outlook (2010) at 237. 8   See Alan E. Boyle, ‘International Law and the Protection of the Global Atmosphere: Concepts, Categories and Principles’, in Robin Churchill and David Freestone (eds), International Law and Global Climate Change (1991), 7–19; Frank Biermann, ‘Common Concern of Humankind: The Emergence of a New Concept of Environmental Law’, Archiv des Völkerrechts, 34 (4)(December 1996), pp. 426–81; Alexandre Kiss, ‘The Common Concern of Mankind’, Environmental Policy and Law, 27(4) 1997, pp. 244–6; Jutta Brunnée, ‘Common Areas, Common Heritage, and Common Concern’, in Daniel Bodansky, Jutta Brunnée, and Ellen Hey (eds), The Oxford Handbook of International Environmental Law (2008), 550–73; Dinah Shelton, ‘Common Concern of Humanity’, Iustum Aequum Salutare 1 (2009) 33–40; Thomas Cottier and Sofya Matteoti-Berkutva, ‘International Environmental Law and the Evolving Concept of “Common Concern of Mankind”’, in Thomas Cottier, Olga Nartova, and Sadeq Z. Bigdeli (eds), International Trade Regulation and the Mitigation of Climate Change, 21–47 (2009). 9   See Jutta Brunnée, supra note 8. She refers to the report of the CSD Expert Group on the Principles of International Law for Sustainable Development, UN. Doc. E/CN.17./1996/Add.1 and the Report of 6

10. common concern of humankind   205

2.  The Common Concern of Humankind: Unpacking the Concept In broad terms, defining features of common concern are the special significance of the issue, and that its very nature means that it cannot be addressed by a single state on its own, but rather requires international cooperation and a collective response. Common concerns include issues within the jurisdiction of states (biodiversity) and those beyond state jurisdiction (atmosphere/climate). Common concern of humankind must be distinguished from related principles under international law, especially common areas and common heritage. In differentiating these concepts, Shelton states that: Common concern is related to, but different from the concepts of commons areas and the common heritage of mankind. International law has long recognized that there are common areas, like the high seas, Antarctica and outer space, which lie outside national boundaries, are not reducible to national or private appropriation, and where coherent and comprehensive regulation must be international.10

The principle of common areas, thus, has a spatial dimension that is not a necessary condition for common concerns, which may occur within the national borders, for example in the case of biodiversity, or outside areas of national jurisdiction, for example the atmosphere.11 When first introduced in the 1960s, common heritage was a controversial concept. This controversy includes issues of scope, content, and status, as well as questions concerning its relationship to other legal concepts.12 The concept of common heritage of humankind relates centrally to the status of a resource.13 Thus, in 1970, the United Nations General Assembly declared the sea-bed and its resources the ‘common heritage of mankind’.14 Although the common heritage concept was taken up in the United Nations Convention on the Law of the Sea (UNCLOS), it was not accepted by industrialized countries, who did not support the framework the expert group meeting on Identification of principles of international environmental law aiming at sustainable development, UN Doc. UNEP/IEL/WS/3/2.   Dinah Shelton, ‘Common Concern of Humanity’, Iustum Aequum Salutare 1 2009, 34.   Shelton, supra note 10. 12  Prue Taylor, ‘Common Heritage of Mankind Principle’, in Klaus Bosselmann, Daniel Fogel, and J. B. Ruhl, (eds), The Encyclopedia of Sustainability, Vol. 3: The Law and Politics of Sustainability 64–9; Kemal Baslar, ‘The Concept of the Common Heritage of Mankind in International Law’ (1997). (accessed 17 July 2015). 13   Brunnée, supra note 8 at 552. 14   General Assembly Resolution 2749 (XXV) of 12 December 1970 (A/RES/25/2749), Declaration of Principles Governing the Sea-Bed and the Ocean Floor, and the Subsoil Thereof, beyond the Limits of National Jurisdiction. 10 11

206    part iii.  principles, emerging norms, and concepts established for the exploitation of deep sea-bed minerals. In an effort to garner ratification of UNCLOS by developed countries, the implementation of the relevant part of the Convention was amended.15 Similarly, the application under the Moon Agreement of the common heritage concept to the moon also did not win universal agreement, in particular being rejected by the leading space powers.16 A distinguishing feature is that common heritage addresses allocation and exploitation of a given resource, such as deep sea-bed minerals under UNCLOS. The common heritage concept carries with it attempts to ensure that the industrialized countries leadership in technology did not disadvantage developing countries in sharing in the benefits of any areas newly opened to exploitation. By contrast, protection, not the establishment of international regimes for allocation or shared exploitation, is the animating purpose of common concern.17 The very notion of common concern, addressing issues of singular importance, whose resolution exceeds the reach of individual states, is emblematic of international environmental law itself. In positing issues of transcending global concern, it stands in some tension to the conception of states’ interests. In fact, one might argue that it goes ‘against the grain of foundational structures of international law’ in favouring common interests over individual state interests.18 If the point of departure in analysing common concern is tilted towards the state-centric, then its principal feature is the idea that all states benefit from actions taken in common.19 On this view, what counts are concerns and interests common to states, and concerns and interests that can be advanced and articulated by states. Common concern is then, in this sense, best understood as a product of the overlapping interests of states, defined by state actors. A slightly different understanding of common concern is not derived in the first place from the overlapping interests of states but, instead, from the ‘global concerns of humanity as a whole’.20 The words themselves—‘common concern of humankind’—invite a broader perspective that transcends the conception of an international community narrowly conceived of states pursuing their respective self-interests. From this perspective, the yardstick for assessing states’ actions is not their self-interest or even collectively agreed goals, but rather the protection and safeguarding of the interests of humanity and the planet as a whole.21  Frank Biermann, ‘Common Concern of Humankind: The Emergence of a New Concept of Environmental Law’, Archiv des Völkerrechts, 34 (4) (December 1996) at 429. See Agreement Relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea of 10 December 1982, contained in General Assembly Resolution 48/263 of 28 July 1994 (A/RES/48/263). 16  Agreement Governing the Activities of States on the Moon and Other Celestial Bodies of 5 December 1979, UNTS 1363 (1984) 3. 17  Frank Biermann, ‘Common Concern of Humankind: The Emergence of a New Concept of Environmental Law’, Archiv des Völkerrechts, 34 (4) (December 1996) at 430. 18 19   Brunnée, supra note 8 at 553.   Brunnée, supra note 8 at 553. 20   Case concerning the Gabčíkovo-Nagymaros Project (Hungary v Slovakia) 1997 ICJ Rep 7 (25 September), separate opinion of Vice-President Weeramantry, at 115. 21   Brunnée, supra note 8 at 554. 15

10. common concern of humankind   207 It has been suggested that issues of common concern are related to erga omnes obligations; that is, obligations owed to the international community as a whole and in the enforcement of which all states have an interest.22 Common concern and erga omnes obligations cover issues that involve interests of persons around the world. Erga omnes obligations are those which are ‘by their very nature the concern of all States’,23 and while there is no agreement on a list of such norms, the protection of the global environment may well come within this ambit. One practical effect of the erga omnes status of a norm is to confer enhanced standing, since all states have an interest in its enforcement. The core norms of the climate regime arguably concern all states. The concept of international obligations owed to the international community as a whole (erga omnes) was taken up in the Draft Articles on State Responsibility adopted by the International Law Commission (ILC) in 2001.24 Article 48(1) sets out the categories of obligations, which if breached, entitle a state other than the injured state to invoke state responsibility. Here a distinction is drawn between, first, obligations owed to a group of states and established to protect a collective interest of the group, and second, obligations owed to the international community as a whole.25 While the articles and commentary do not list obligations which under existing international law are owed to the international community, it is noted that the International Court of Justice (ICJ) has provided guidance covering genocide, protection from slavery and racial discrimination, and the right of self-determination of peoples.26 Whether or not a principle such as common concern ought properly to be classified as an obligation owed to the international community as a whole (erga omnes) is not a question that can be answered here. Moreover, in the climate context the issue of enhanced standing conferred by erga omnes status is essentially moot, given the (current) absence of climate litigation before international tribunals or unilateral enforcement of international law through counter-measures. Rather, the notion of obligations erga omnes can be regarded as having found expression in institutionalized forms of cooperation, including sharing of information, monitoring systems, and the development of compliance mechanisms. Drawing on the above, it is submitted that the fundamental characteristics of common concerns of humankind include the following: (a) the interests concerned extend beyond those of individual states and touch on values or ethics of global significance; 22   Shelton, supra note 10 at 34, 39. See the classic obiter dictum in Barcelona Traction, Light and Power Company Limited Case (Belgium v Spain) (Second Phase), International Court of Justice, 1970 ICJ Rep 3. 23   Bierman, supra note 8 at 451. 24   Draft Articles on Responsibility of States for Internationally Wrongful Acts with commentaries, 2001. International Law Commission (2008). See Edith Brown Weiss, ‘Invoking State Responsibility in the Twenty-First Century’, 96 Am. J. Int’l L. 798–816 (2002). 25   International Law Commission, supra n 24, at 127. See also Erika de Wet, ‘The International Constitutional Order’, 51 ICLQ 51–76 (2006). 26   International Law Commission, supra n 24, at 127.

208    part iii.  principles, emerging norms, and concepts (b) threats to the interests concerned are marked by their gravity and potential irreversibility of impacts; and (c) safeguarding the interests involved requires collective action and entails collective responsibility. What then is the legal import of the principle of common concern of humankind? Brunnée maintains that while the principle does not entail any direct rules or duties of conduct for states, it may narrow the freedom of action of states even in cases where their conduct has not affected the sovereign rights of other states.27 That is, it might constrain conduct, even where that conduct otherwise falls short of triggering the transboundary harm principle. This principle provides that no state has the right to use or permit the use of its territory in such a manner as to cause injury in another state, and is triggered where the harm is serious or appreciable and causation is clearly established.28 In short, in practice common concern is thus of less direct relevance to state responsibility for breaches of international law; rather, it is more properly regarded as encapsulating a requirement that all states address the concern through international cooperation.29 Under common concern regimes, the emphasis is on an equitable approach to cooperation and burden-sharing.

3.  Common Concerns and Climate Change Left unmitigated, climate change may pose an existential threat. A number of climate impacts could be irreversible, certainly on human timescales. The common concern to be addressed is thus significant and weighty. And, as scientific research on climate change has accumulated, this has further underlined the gravity of the problem and the challenges involved in achieving the ultimate objective of the Convention—that is, the ‘stabilization of the greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system’. In this respect, the climate system is defined in the Conven­ tion as ‘the totality of the atmosphere, hydrosphere, biosphere and geosphere and 27   ‘International Environmental Law: Rising to the Challenge of Common Concern?’ Jutta Brunnée, Proceedings of the Annual Meeting (American Society of International Law) vol. 100, (29 March– 1 April 2006), pp. 307–10; Brunnée, supra note 8 at 566. 28   Trail Smelter Case (United States v Canada), 16 April 1938 and 11 March 1941, Reports of International Arbitral Awards, vol. 3, 1905–1982. See Xue Hanqin, Transboundary Damage in International Law (2003). 29   Brunnée, supra note 8 at 566.

10. common concern of humankind   209 their interactions’.30 This comprehensive definition admirably captures the broad interests of humanity with respect to the climate system, albeit subject to the condition of ‘dangerous’ interference. References to ‘common interest’ are found in a number of treaties, particularly earlier treaties such as the 1946 International Convention for the Regulation of Whaling.31 Later environmental agreements more often made reference to the common concern of mankind.32 Then, in 1988, General Assembly resolution 43/53 stated that ‘climate change is the common concern of mankind, since climate is an essential condition which sustains life on Earth’.33 Two years later, the General Assembly established the Intergovernmental Negotiating Committee to prepare what became the United Nations Framework Convention on Climate Change (UNFCCC).34 The UNFCCC affirms in its preamble that ‘change in the Earth’s climate and its adverse effects are a common concern of humankind’. It is worth noting that while the concept of common concern is broad and open-ended, the manner in which it is reflected in the Convention is cautious and mindful of sovereignty concerns.35 Accordingly it is not the climate, as such, that is designated the common concern, but rather the change in climate and the adverse effects of this change that are addressed. Similarly, the Convention on Biodiversity affirms ‘that the conservation of biological diversity is a common concern of humankind’ [emphasis added]. Since common concern is open-ended, it may be deemed prudent from a legal perspective to confine its application as clearly as possible, in the process also minimizing interference with sovereignty. The responsibility for GHG emissions is common, given that such emissions are generally completely mixed in the atmosphere within two weeks, regardless of the location where they were emitted. Once in the atmosphere well-mixed GHGs cannot be directly attributed to the individual countries from which they were emitted. Crucially, the adverse impacts of climate change can be considered as a common concern of humankind because an effective response demands collective action if the problem is to be addressed. Effective mitigation requires the participation of all leading emitters of GHGs, in line with relevant principles under the UNFCCC, including the principle of common but differentiated responsibilities and respective capabilities. However, as with many problems depending on a collective response, there is the risk of free-riding, especially if the response imposes costs.   Article 1(3).   International Convention for the Regulation of Whaling of 2 December 1946, 161 UNTS 72. 32   See Bonn Convention on Conservation of Migratory Species of Wild Animals of 23 June 1979. 33   GA Resolution 43/53 of 6 December 1988 (A/RES/43/53). The same resolution welcomed the establishment of the Intergovernmental Panel on Climate Change (IPCC) and outlined issues to be addressed by the Panel. 34   GA Resolution 45/212 of 21 December 1990 (A/RES/45/212). 35   Brunnée, supra note 8 at 564; Dinah Shelton, ‘Common Concern of Humanity’, Iustum Aequum Salutare 1 2009 at 37. 30 31

210    part iii.  principles, emerging norms, and concepts Designating climate change as the common concern of humankind recognizes both the vital importance of maintaining a stable climate for development and human welfare, and the necessity of a cooperative approach involving all states. Thus, the preamble of the Convention provides that ‘climate change calls for the widest possible cooperation by all countries and their participation in an effective and appropriate international response’, while reaffirming ‘the principle of sovereignty of States in international cooperation to address climate change’. Article 4(1), which sets out the common commitments of all Parties, contains several further references to cooperation, for instance in relation to the development and diffusion of technologies, preparation for adaptation to the impacts of climate change, and the carrying out of scientific and other research. The relationship between common concern and the common but differentiated responsibilities (CBDR) also deserves to be mentioned. Article 3(1) of the Convention states that: ‘The [P]‌arties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities’. According to Rajamani, the dimension of responsibility in the CBDR principle is anchored in the principle of cooperation, which commits states to address transboundary pollution in a spirit of cooperation.36 In turn, she maintains that ‘common responsibility’ is derived from the common concern and common heritage of mankind concepts.37 On this account, common concern is one of the sources of CBDR, a key structural principle of the climate regime. The differentiation in responsibility is based on both the differing historical responsibility of states and differences in their present economic capabilities.38 Bierman identifies the legal differentiation between developed and developing countries as ‘a pivotal aspect of the notion of common concern of humankind’.39 The ambit of the CBDR principle is contested within the climate regime, with developed and developing countries advancing differing interpretations of its reach and application. With the relative share of current GHG emissions from developing countries on the rise, the debate around the application of CBDR can be expected to intensify. In such a situation, consideration of common concern, as a foundation for CBDR, could prove useful. The climate negotiations under the UNFCCC combine highly political and complex technical aspects. Common concern, as an unchallenged background principle, is not of immediate relevance to these negotiations, save through its link with CBDR, as noted above. In 2010, at the 16th Conference of the Parties (COP-16) of the UNFCCC, Parties to the Convention committed to a global goal to reduce greenhouse gas emissions so as to hold the increase in global average temperature below 2°C, and to consider a 1.5°C limit in the near future. Through the Cancun   Lavanya Rajamani, Differential Treatment in International Environmental Law (2006) at 134. 38 39   Ibid at 134.   Ibid at 136; Bierman, supra note 8 at 433.   Ibid at 434.

36 37

10. common concern of humankind   211 Agreements adopted at COP-16, Parties to the UNFCCC also established a series of institutions for implementing this agreement. At COP-17, the Parties to the UNFCCC achieved a breakthrough in launching a new platform—the Durban Platform for Enhanced Action—of negotiations under the Convention, with the mandate to deliver a new and universal greenhouse gas reduction protocol, legal instrument or other outcome with legal force by 2015 for the period beyond 2020.40 While common concern is not cited, the preamble to the decision states that: ‘climate change represents an urgent and potentially irreversible threat to human societies and the planet . . . and acknowledging that the global nature of climate change calls for the widest possible cooperation by all countries and their participation in an effective and appropriate international response’.41

4. Conclusion It has been argued above that the common concern of humankind underpins the development of other principles of the climate change regime.42 That regime has developed into a complex web of international law, incorporating news forms of rule-making, for example the decisions of the Conferences of the Parties, or COPs,43 and implementation through regional and national legislation, for example the EU Emissions Trading Scheme (ETS). The question arises concerning the relationship between the principle of common concern and this detailed, specialized body of law. Does the principle retain any continued relevance? This question can be answered in the affirmative on at least two grounds. First, as specialized as the climate regime has become, the multilateral effort to combat and mitigate climate change will be on the international agenda for decades, if not centuries. In general, therefore, over that time, it seems quite conceivable that in addressing the evolving problem of climate change states may draw again on common concern of humankind. Second, there may already be one climate-related issue that could in the future conceivably implicate the principle of the common concern of humankind. This is the possible use of climate alteration techniques and technologies that fall under the heading of geo- or climate-engineering. This term encompasses various technologies that through large-scale, deliberate modifications, seek to reduce 40   Decision 1/CP.17, Report of the Conference of the Parties on its seventeenth session, held in Durban from 28 November to 11 December 2011, Part Two: Action taken by the Conference of the Parties at its seventeenth session, FCCC/CP/2011/9/Add.1. 41 42 43  Ibid.   Biermann, supra note 8.   Brunnée, supra note 8.

212    part iii.  principles, emerging norms, and concepts temperatures and combat climate change.44 Some technologies could be deployed domestically but with transboundary impacts, or carried out in areas beyond national jurisdiction, such as ocean fertilization on the high seas or in space. These techniques fall within the reach of individual countries, but have the potential for profound and far-reaching impacts on regional and global climate systems.45 While a number of instruments may be applicable, such as UNCLOS and the 1972 London Convention,46 geo-engineering technologies are not the subject of overall international regulation.47 Thus the invocation of common concern may serve as the basis for international initiatives to regulate the application of geo-engineering technologies. Looking forward, the principle of common concern of humanity remains a powerful reminder that, over and above political sparring, misinformation, and the welter of technicalities that at times dominate public discussion, combating climate change and adapting to its now inevitable impacts remains the shared concern of humanity. And if we are indeed witnessing a movement towards a community of nations in which international law plays a constitutive role, then common concern of humankind would justifiably be part of that firmament.

  The Royal Society, Geoengineering the climate: science, governance and uncertainty (2009).  David G. Victor, M. Granger Morgan, Jay Apt, John Steinbruner, and Katharine Ricke, ‘The Geoengineering Option: A Last Resort Against Global Warming?’ 88(2) Foreign Affairs 64–76 (2009). 46   Convention on the Prevention of Marine Pollution by Dumping of Wastes and other Matter of 1972, 1046 UNTS 138. 47   But see Decision IX/16 C of the Ninth Conference of the Parties of the Convention on Biodiversity, which requests Parties to ensure that ocean fertilization activities do not take place until there is an adequate scientific basis on which to justify such activities. 44 45

Chapter 11

HUMAN RIGHTS PRINCIPLES AND CLIMATE CHANGE John H. Knox

1. Introduction

214

2. Does Climate Change Interfere with the Enjoyment of Human Rights?

215

3. How Does Human Rights Law Require States to Address Climate Change?

220

4. Conclusion

231

214    part iii.  principles, emerging norms, and concepts

1. Introduction This chapter examines the application of international human rights law to climate change. Specifically, it looks at whether climate change interferes with the enjoyment of human rights recognized in international law and, if so, whether and how human rights law requires States to protect human rights from such interference. Two points should be emphasized at the outset. First, this chapter examines principles of human rights law, not morality or ethics.1 Of course, the seminal documents in international human rights law, especially the 1948 Universal Declaration of Human Rights, can also be read as statements of shared ethical principles. But legal norms differ from ethical principles in key respects. Even if human rights law often seems to be honored more in the breach than the observance, it still has claims to bindingness: it is set forth in treaties with which States have formally agreed to comply,2 and it is overseen by compliance mechanisms. Although those mechanisms are very far from completely effective, they may have concrete effects on behavior. At the same time, human rights law includes limits that may not exist in morality or ethics. For example, human rights treaties impose obligations primarily on States, not individuals or other non-State actors such as corporations, and they often provide that a State owes duties only to individuals within its jurisdiction or control. Second, the application of human rights law to climate change is still in its infancy. Human rights treaties do not address climate change explicitly, and climate treaties do not refer to human rights. The most famous attempt to bring a climate claim to a human rights tribunal—a petition brought by the Inuit people to the Inter-American Human Rights Commission in 2005—failed to obtain a decision on the merits. Nevertheless, the contours of the relationship between human rights and climate change are becoming clearer, as this chapter explains. Although human rights courts have not addressed climate change, other human rights bodies, including the United Nations Human Rights Council (UNHRC) and the UN Office of the High Commissioner for Human Rights (OHCHR), have examined the relationship,  as 1   For a collection of ethical perspectives on climate change, see Climate Ethics: Essential Readings (Gardiner et al., 2010). 2   Treaty law is not the only source of international human rights obligations, but it is the most important source relevant to climate change. The potential relevance of customary human rights law is limited partly by the near-universality of membership of major human rights treaties, and partly by the lack of consensus on how far customary obligations extend beyond a small number of heinous crimes. See Restatement (Third) of the Foreign Relations Law of the United States § 702 (1987) (listing duties of States under customary law not to practice, encourage, or condone: genocide; slavery or the slave trade; murder or causing individuals to disappear; torture or other cruel, inhuman or degrading treatment or punishment; prolonged arbitrary detention; systematic racial discrimination; and ‘a consistent pattern of gross violations of internationally recognized human rights’).

11.  human rights principles and climate change    215 have scholars (UNHRC, 2009a; OHCHR, 2009a).3 Perhaps most importantly, human rights tribunals and other bodies have developed a large and growing body of jurisprudence on the application of human rights norms to environmental harm generally. The principles of this emerging environmental human rights law have become much clearer in recent years, and it is possible to apply them to the enormous environmental challenge of climate change.

2.  Does Climate Change Interfere with the Enjoyment of Human Rights? Whether climate change interferes with the enjoyment of human rights is a separate question from whether climate change violates human rights law. Interference may be necessary for violation, but it is not sufficient. Whether climate change violates human rights law—or, more accurately, whether States violate human rights law as a result of their action (or inaction) relating to climate change—depends on whether States breach their legal obligations by failing to take steps to prevent or respond to the effects of climate change on human rights. That issue is addressed in section 3. This section focuses on the preliminary question: whether the effects of climate change interfere with the full enjoyment of human rights. The answer seems clear: there is widespread agreement among human rights bodies, States, and scholars that climate change does interfere with the enjoyment of human rights protected by international law, and that this interference will greatly increase over time unless current climate policy dramatically changes. Human rights are often divided into civil and political rights on the one hand and economic, social, and cultural rights on the other. The former group includes rights to life, liberty, property, and freedoms of expression and religion; the latter includes rights to education, work, social security, an adequate standard of living, and the highest attainable standard of health. The Universal Declaration includes both sets of rights, but when the rights in the Declaration were written into treaties, they were separated into an International Covenant on Civil and Political Rights (ICCPR) and an International Covenant on Economic, Social and Cultural Rights (ICESCR) 3   For scholarship on climate change and human rights, see, e.g., Human Rights and Climate Change (Humphreys, ed., 2010); International Council on Human Rights Policy, Climate Change and Human Rights, A Rough Guide (2008); Introduction: Climate Change and Human Rights: Unpacking the Issues (Bodansky, 2010); Restoring the Climate by Realizing Rights: The Role of the International Human Rights System (Cameron and Limon, 2012); Climate Change and Human Rights Law (Knox, 2009); The Janus-Head of Human Rights and Climate Change: Adaptation and Mitigation (Pedersen, 2011); Applying Human Rights Norms to Climate Change: The Elusive Remedy (Stephens, 2010).

216    part iii.  principles, emerging norms, and concepts (OHCHR, 1966a; OHCHR, 1966b). This division also appears in the European and Inter-American regional human rights regimes,4 although the African and Arab human rights agreements incorporate both types of rights without distinction (Organization of African Unity, 1981; League of Arab States, 2004). Another category of rights, which cuts across the first two, includes rights held by individuals because of their status as members of certain groups, as well as rights held by groups themselves. Both the ICCPR and the ICESCR, as well as regional human rights treaties, prohibit discrimination against individuals on the basis of race, gender, and religion, among other grounds (OHCHR, 1966a; OHCHR, 1966b; Organization of African Unity, 1981; League of Arab States, 2004).5 In addition, the members of some groups enjoy additional rights aimed at enabling the groups’ continued existence (OHCHR, 1966a).6 Finally, groups that qualify as ‘peoples’ have a few separately recognized rights, notably the right to self-determination (OHCHR, 1966a; OHCHR, 1966b; Organization of African Unity, 1981). None of the UN human rights treaties explicitly includes a right to a healthy environment or any other right to an environment of a certain quality. The lack of such a right appears increasingly anomalous when compared to the growing popularity of a right to a healthy environment at the regional7 and national8 levels. However,   Compare European Convention on Human Rights, 1950 and American Convention on Human Rights, 1969 (setting out civil and political rights), with European Social Charter (Council of Europe, 1961) and Additional (San Salvador) Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights, 1988 (setting out economic, social, and cultural rights). 5   ICCPR, Articles 2(1), 26; ICESCR, Article 2(2); African Charter, Article 2 (Organization of African Unity, 1981); American Convention, supra note 4, Article 1(1); European Convention, supra note 4, Article 14. Some treaties elaborate on non-discrimination on the basis of certain statuses, such as race and gender. E.g., International Convention on the Elimination of All Forms of Racial Discrimination (CERD), 1965; Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), 1979. 6   See ICCPR Article 27 (‘persons belonging to [ethnic, religious, or linguistic] minorities shall not be denied the right, in community with other members of their group, to enjoy their own culture, to profess and practise their own religion, or to use their own language’). 7   Most of the regional human rights systems recognize some form of a right to a healthy environment. See African Charter, supra note 5, Article 24 (‘all peoples shall have the right to a general satisfactory environment favorable to their development’ (Article 24); San Salvador Protocol, supra note 4, Article 11(1) (‘everyone shall have the right to live in a healthy environment’); Arab Charter, Article 38 (including a right to a healthy environment as part of the right to an adequate standard of living that ensures well-being and a decent life) (League of Arab States, 2004); Association of Southeast Asian Nations, Human Rights Declaration, 2012 (incorporating a ‘right to a safe, clean and sustainable environment’ as an element of the right to an adequate standard of living). Although the European regional human rights regime does not incorporate an explicit right to a healthy environment, it has been recognized in a regional European environmental agreement. See (Aarhus) Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters, 1998, Article 1 (referring to ‘the right of every person of present and future generations to live in an environment adequate to his or her health and well-being’). 8   More than ninety States have adopted such a right in their national constitutions. See David Richard Boyd, The Environmental Rights Revolution: A Global Study of Constitutions, Human Rights, and the Environment (2012). 4

11.  human rights principles and climate change    217 the absence of a universally acknowledged right to a healthy environment is of less importance to the application of human rights law to the environment than it may first appear, because it is now well established that environmental harm can interfere with the enjoyment of many recognized human rights, including the rights to life and health. A few treaties make this link explicit. For example, the Convention on the Rights of the Child states that environmental pollution poses ‘dangers and risks’ to nutritious foods and clean drinking water, which Parties are required to take appropriate measures to provide in the course of pursuing full implementation of the right of the child to the highest attainable standard of health (UNGA, 1989). Similarly, the ICESCR provides that the steps Parties must take to achieve the full realization of the right to health ‘shall include those necessary for . . . the improvement of all aspects of environmental and industrial hygiene’ (OHCHR, 1966b). In other cases, the relationship between environmental harm and human rights has been clarified by international human rights bodies. The principal UN human rights organ, the Human Rights Council, appoints special rapporteurs and independent experts who issue reports addressing compliance with particular rights, and the two Human Rights Covenants, as well as other UN human rights treaties, have committees of independent experts with the authority to review reports by States on their implementation of the treaties and to hear claims by individuals against States that have accepted the committees’ jurisdiction over such claims. Statements by the Council-appointed experts and the human rights treaty bodies are not legally binding, although they may have persuasive effect. At the regional level, the African, European, and Inter-American human rights systems have established international courts whose decisions bind States subject to their jurisdiction.9 In addition, the African and Inter-American systems have human rights commissions that can issue non-binding decisions against States in their respective regions, whether or not the States are subject to the jurisdiction of the regional court. These human rights bodies have consistently stated that environmental harm can adversely affect the enjoyment of the human rights within their purview. For example, the Committee on Economic, Social and Cultural Rights, the committee of experts overseeing the ICESCR, has interpreted the right to health to include: the requirement to ensure an adequate supply of safe and potable water and basic sanitation; [and] the prevention and reduction of the population’s exposure to harmful substances such as radiation and harmful chemicals or other detrimental environmental conditions

  In the American and European systems, States that are party to the constitutive human rights agreement—the American Convention and the European Convention—are subject to the jurisdiction of the Inter-American Court of Human Rights and the European Court of Human Rights, respectively. In the African system, States become subject to the African Court on Human and Peoples’ Rights by joining a 1998 protocol to the African Charter. 9

218    part iii.  principles, emerging norms, and concepts that directly or indirectly impact upon human health. (Committee on Economic, Social and Cultural Rights, 2000)

Special rapporteurs appointed by the Human Rights Council have highlighted the adverse effects that environmental degradation can have on rights within their purview, including rights to health, adequate housing, and food (UNCHR, 2002; UNHRC, 2007; UNHRC, 2009b; UNHRC, 2012a). The special rapporteur on toxic waste has issued a series of reports identifying how illegal dumping of such waste can interfere with many rights, including rights to life and health (UNCHR, 2001).10 And the regional human rights systems have issued decisions holding that environmental harm can interfere with a broad array of rights, including rights to life, property, health, and respect for private and family life.11 In recent years, the Human Rights Council has taken note of this emerging environmental human rights law. In March 2011, it adopted a resolution stating that ‘environmental damage can have negative implications, both direct and indirect, for the effective enjoyment of human rights’ (UNGA, 2011). The following year, it appointed an independent expert on human rights and the environment to a threeyear mandate in order, inter alia, to clarify the human rights obligations relating to the environment. The present author was appointed in July 2012 to that position. In his first report, presented to the Council in March 2013, he concluded that one of the ‘firmly established’ aspects of the relationship between human rights and the environment is that ‘environmental degradation can and does adversely affect the enjoyment of a broad range of human rights, including rights to life, health, food and water’ (UNHRC, 2012b). The following year, his second report surveyed statements by treaty bodies, special rapporteurs, regional human rights tribunals, and many other sources, and concluded that ‘[v]‌irtually every source reviewed identifies rights whose enjoyment is infringed or threatened by environmental harm’ (UNHRC, 2013). There is no reason to think that climate change is qualitatively different from other types of environmental harm in this respect, and when human rights organs have examined climate change, they have not hesitated to conclude that it can interfere with human rights. The most detailed examination by a human rights body of the effect of climate change on human rights is a 2009 report prepared by the OHCHR at the request of the Human Rights Council (OHCHR, 2009). Drawing on the 2007 assessment report of the Intergovernmental Panel on Climate Change, the 10   E.g., Adverse effects of the illicit movement and dumping of toxic and dangerous products and wastes on the enjoyment of human rights (UNCHR, 2001). 11  See, e.g., Öneryildiz v Turkey at 115 (2004); Saramaka People v Suriname at para 95 (2007); Indigenous Cmty. Yakye Axa v Paraguay at para 143 (2005); Mayagna (Sumo) Awas Tingni Cmty v Nicaragua at para 148 (2001); Marangopoulos Foundation for Human Rights v Greece at para 195 (2006); Soc. & Econ. Rights Action Ctr. v Nigeria (Ogoniland case) at para 58 (2001); López Ostra v Spain at 277, 295 (1994); Fadeyeva v Russia at 255, 281 (2005); Taşkin v Turkey at 179, 205 (2004).

11.  human rights principles and climate change    219 OHCHR report describes the adverse effects of climate change on specific rights, including: the right to life, which will be threatened by several weather events such as floods, storms, and droughts, as well as by an increase in hunger and malnutrition; the right to food, which will be jeopardized by increased numbers of people facing malnutrition from decreased crop productivity; the right to water, adversely affected for the more than one billion people receiving melt water by the loss of glaciers and reductions in snow cover; the right to the highest attainable standard of health, which will be infringed not only by malnutrition and extreme weather events, but also by malaria and other diseases that thrive in warmer weather; the right to housing, which has already been compromised by the forced relocation of communities in the Arctic and low-lying island states; and the right of selfdetermination, which is threatened by the possible inundation and disappearance of small island States (UNHRC, 2009a). The OHCHR report also states that climate change will particularly affect vulnerable groups, including women, children, and indigenous peoples, whose rights are further protected by specific human rights treaties (UNHRC, 2009a). In response to the report, the Human Rights Council adopted a resolution in March 2009 agreeing that ‘climate change-related impacts have a range of implications, both direct and indirect, for the effective enjoyment of human rights’, including the rights to life, health, food, water, housing, and self-determination, and encouraging its special rapporteurs ‘to give consideration to the issue of climate change within their respective mandates’ (UNHCR, 2009a). A number of special rapporteurs have issued reports on the effects of climate change on the rights within their mandates, including on the right to housing and on the right to water (UNHRC, 2009b; OHCHR, 2010). In December 2009, before the Copenhagen Conference of the Parties (COP) to the UN Framework Convention on Climate Change, the special rapporteurs issued a joint statement drawing attention to the dangers that climate change presents to the enjoyment of human rights (OHCHR, 2009b). States generally seem to agree with these conclusions. Marc Limon has described the shift in the attitudes of government representatives to the Human Rights Council between 2008, when the Council first debated whether to request a report on the topic at all, and 2009, by which time: no delegation argued with the notion that climate change has implications for a wide-range of explicitly identified, internationally-protected human rights; that already vulnerable ‘climate frontline’ countries are most at risk (and the least able to adapt); and that the human rights impacts do not fall evenly across a given population, but rather target marginalized or vulnerable groups, such as women and children. (Limon, 2010)

Beyond the UN human rights bodies, the Conference of the Parties to the Framework Convention on Climate Change has also recognized the connection between climate change and human rights. The Cancun Agreements adopted by the COP in December 2010 quote language from the 2009 Human Rights Council

220    part iii.  principles, emerging norms, and concepts resolution recognizing that ‘the adverse effects of climate change have a range of direct and indirect implications for the effective enjoyment of human rights’ (UN Conference of the Parties, 2011). In short, there no longer appears to be any serious doubt that climate change can interfere with the enjoyment of human rights recognized and protected by international law. Indeed, some vulnerable communities are already experiencing such interference. For example, the Inuit, an indigenous people living in the Arctic region, have described to the Inter-American Human Rights Commission how rising temperatures in the Arctic have begun to infringe on their enjoyment of many human rights, including rights to life (because melting ice and permafrost make travel more dangerous), to property (melting permafrost undermines houses and forces residents to leave their traditional homes), and to health (changing temperatures cause the populations of animals on which the Inuit depend for sustenance to decline, leading to reduced nutrition) (Petition to the Inter-American Commission on Human Rights Seeking Relief from Violations Resulting from Global Warming Caused by Acts and Omissions of the United States, 2005). As changes in the climate become more severe and widespread, they will threaten the human rights of more and more people, as the OHCHR report explains.

3.  How Does Human Rights Law Require States to Address Climate Change? As noted above, interference with the enjoyment of a human right is not necessarily equivalent to violation of a legal obligation pertaining to that right. If a mudslide destroys my home, injuring or even killing me, it certainly prevents me from enjoying my human rights to life and health. But the mudslide itself was under no legal duty to respect those rights and therefore cannot violate them. To be a violation of human rights law, the interference with the enjoyment of human rights must be traced to action or inaction by an entity with legal obligations with respect to the human rights, whose action or inaction was inconsistent with those obligations. Because climate change is a type of environmental harm, albeit a particularly massive and intractable one, the human rights obligations that apply in the context of environmental harm generally should apply to climate change as well. Although the content of these obligations is still evolving, it has become much clearer in recent years. For the most part, the human rights obligations relating to environmental protection do not stem from a right to a healthy, safe, or sustainable environment, which some States might argue has not been universally

11.  human rights principles and climate change    221 recognized. Instead, the obligations have been developed and clarified on the basis of human rights, such as the rights to life and health, which are recognized in the Universal Declaration and included in human rights agreements at the UN and regional levels. Although different human rights bodies have derived environmental obligations from different agreements, and often from different rights, they have reached remarkably similar conclusions. The first section of this part of the chapter describes this emerging environmental human rights legal framework; the second applies it to climate change.

3.1 Human Rights Law and Environmental Protection As this section explains, human rights law imposes both procedural and substantive obligations upon States with respect to environmental threats to human rights (UNHRC, 2013). Procedurally, States have obligations to ensure that decisions with possible environmental effects are made through a process that provides for examination and dissemination of information about those effects, full and informed participation by those potentially affected, and effective legal remedies if the State fails to meet its obligations. Substantively, States have discretion to decide on appropriate levels of environmental protection, but their decisions cannot result in interference with the enjoyment of human rights beyond certain minimum standards. States are required to refrain from violating these obligations with respect to environmental harm they cause directly, and to protect against such harm caused by non-State actors such as corporations.

A. Procedural Obligations Some procedural duties in environmental matters are simply particular applications of more general obligations. For example, States’ general obligations to respect and protect rights to freedom of expression and association apply to environmental issues just as they do to other issues. However, human rights bodies have described more detailed procedural duties in the environmental context. They have held that when a State is deciding whether to adopt a decision that may result in environmental harm that interferes with the enjoyment of human rights, such as rights to life, health, water, and respect for private and family life, the State must incorporate certain procedural safeguards, including prior assessment of environmental impacts, full and informed participation by those affected, and effective remedies for States’ failure to comply with their obligations (UNHRC, 2013).12   See, e.g., ICESCR General Comment 15, para 56 (basing these requirements on the right to water) (UN Committee on Economic, Social and Cultural Rights, 2002); Taşkin, supra note 11, at 206–7 (right to respect for private and family life) (Taşkin v Turkey, 2004); Öneryildiz v Turkey (right to life) (Öneryildiz v Turkey, 2004); Ogoniland case para 53 (rights to health and to a satisfactory environment) 12

222    part iii.  principles, emerging norms, and concepts Some human rights bodies, including the Human Rights Committee, the body charged with overseeing compliance with the ICCPR, have not yet addressed these issues, and the decisions of the human rights bodies that have addressed them do not bind every country in the world. Nevertheless, the similarities in the approaches taken by so many different bodies is striking, as is the fact that the three core procedural obligations of assessment, participation, and remedy are set out in Principle 10 of the 1992 Rio Declaration and elaborated in the 1998 Aarhus Convention (UN Conference on Environment and Development, 1992; Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, 1998). This convergence strongly suggests that these procedural duties are likely to continue to develop along these lines in forums that address environmental threats to the enjoyment of human rights.

B. Substantive Obligations States are expected to adopt legal frameworks that protect against environmental harm that interferes with the enjoyment of human rights (UNHRC, 2013). In setting substantive standards, States have significant discretion in deciding how to strike the balance between environmental protection and other societal interests, such as economic development.13 That discretion has limits, however. Regional tribunals have decided cases in which they concluded that States failed to take reasonably necessary steps to protect against environmental harm to human rights, or failed to strike a fair balance between environmental and other considerations.14 And after a State has struck such a balance by adopting particular environmental standards in its law, the State should adhere to those standards. The European Court of Human Rights, in particular, has often found that a State has violated its human rights obligations with respect to environmental harm when the State failed to follow its own environmental standards, with resulting interference with the enjoyment of human rights.15 (Soc. & Econ. Rights Action Ctr. v Nigeria, 2006). The human rights bodies have derived these duties from civil and political rights and from economic, social, and cultural rights, despite the fact that the two sets of rights are generally understood to give rise to two different types of duties. The agreements protecting civil and political rights generally require States to immediately respect and ensure those rights. E.g., ICCPR, supra note 5, Article 2(1) (OHCHR, 1966a); American Convention, supra note 4, Article 1 (American Convention on Human Rights, 1969); European Convention, supra note 4, Article 1 (European Convention on Human Rights, 1950). In contrast, most agreements protecting economic, social, and cultural rights require the parties to work towards their progressive realization. E.g., ICESCR, supra note 5, Article 2(1) (OHCHR, 1966b); San Salvador Protocol, supra note 4, Article 1 (Additional Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights, 1988); European Social Charter, supra note 4 pt I (Council of Europe, 1961). 13   See, e.g., Fadeyeva, supra note 11 at 285 (Fadeyeva v Russia, 2005); Giacomelli v Italy at 189, 217 (2006); Hatton v United Kingdom at 217 (2003). 14   See, e.g., López Ostra, supra note 11 (López Ostra v Spain, 1994); Tătar v Romania, 2009; Ogoniland case, supra note 11 (Soc. & Econ. Rights Action Ctr. v Nigeria, 2001). 15  E.g., López Ostra, supra note 11 (López Ostra v Spain, 1994; Fadeyeva, supra note 11 (Fadeyeva v Russia, 2005). The relevant environmental commitments may also include international environmental

11.  human rights principles and climate change    223 States cannot discriminate on prohibited grounds in the application of environmental law, any more than they can in the application of other laws (Mossville Action Now v United States, 2010; OHCHR, 1966a). Human rights bodies have described additional obligations on States with respect to groups particularly vulnerable to environmental harm, including women, children, and indigenous peoples (UNHRC, 2013). For example, the Inter-American Court has issued a series of decisions on the obligations of States relating to the rights of indigenous peoples. A leading decision is Saramaka People v Suriname, in which the Court held that States must meet certain minimum procedural standards, including consulting with an affected indigenous people regarding any proposed concessions or other activities that may affect their lands and natural resources, ensuring that no concession will be issued without a prior assessment of its environmental and social impacts, and guaranteeing that the community receives a ‘reasonable benefit’ from any such plan if approved. Moreover, the State must obtain the free, prior, and informed consent of the indigenous people with respect to ‘large-scale development or investment projects that would have a major impact within [its] territory’ (Saramaka People v Suriname, 2007). Requiring the prior consent of those most affected by measures that threaten enormous harm to human rights is a heightened procedural safeguard that avoids the need to set detailed substantive standards.

C. Application to Non-State Actors A State’s obligations under human rights law with respect to environmental harm extend beyond obligations concerning its own direct contributions to environmental degradation. The State also has obligations to protect against harm from other sources, including non-State actors. Although human rights treaties do not bind private parties directly, they have consistently been construed to require states to take steps to protect these rights from private conduct that interferes with their enjoyment.16 A State may violate its obligations directly by its own actions, or indirectly through failing to protect against harm caused by others. In the absence of more specific requirements, the State obligation is one of due diligence.17 These duties apply in the context of environmental harm as well. For example, the Committee on Economic, Social and Cultural Rights has stated that a State’s norms to which the State is subject. See Tătar, supra note 14 (Tătar v Romania, 2009); Dinah L. Shelton, Tătar c Roumanie, at 247 (2010).   See Human Rights Comm., General Comment 31, The Nature of the General Legal Obligation Imposed on States Parties to the Covenant, para 6 (UNCHR, 2004); Comm. on Economic, Social and Cultural Rights, General Comment 12, The Right to Adequate Food, para 15 (UN Committee on Economic, Social and Cultural Rights, 1999). Decisions from the regional human rights bodies include Commission Nationale de Droits de l’Homme et des Libertés v Chad (1995); Velásquez Rodríguez v Honduras (1988); Z and Others v United Kingdom (2001). 17   See generally Andrew Clapham, Human Rights Obligations of Non-State Actors (2006); John H. Knox, Horizontal Human Rights Law (2008). 16

224    part iii.  principles, emerging norms, and concepts obligations regarding the right to water require it not only to refrain from interfering with the enjoyment of the right directly by ‘unlawfully diminishing or polluting water . . . through waste from State-owned facilities’, but also to restrain third parties from interfering with the enjoyment of the right, including by pollution (UN Committee on Economic, Social and Cultural Rights, 2002). More generally, the Committee has stated that to respect and protect the right to health, States must not only refrain from ‘unlawfully polluting air, water and soil, for example, through industrial waste from State-owned facilities’, but must also adopt and implement ‘national policies aimed at reducing and eliminating pollution of air, water and soil’ (UN Committee on Economic, Social and Cultural Rights, 2000). The regional human rights systems have taken similar positions.18

3.2 Human Rights and Climate Change The framework described in the previous section suggests that States must meet certain obligations in addressing the threats that climate change poses to the enjoyment of human rights. Procedurally, States must thoroughly assess the possible environmental effects of their actions relating to climate change, disseminate information about those effects to those potentially affected, allow all those affected to participate in the decision-making processes relating to climate change, and provide legal remedies to ensure that these requirements are followed. Substantively, States have some discretion to strike a balance between protecting human rights from climate change and pursuing other legitimate social interests, but the balance cannot be unreasonable, and States should take into account the additional protections they may owe members of highly vulnerable groups. States should follow these obligations both with respect to their own actions and to the actions of nonState actors within their jurisdiction. However, there are obstacles to such a straightforward application of human rights principles to climate change. One possible obstacle is the difficulty of tracing clear causal links between anthropogenic contributions to climate change and the effects of climate change on the enjoyment of human rights. The OHCHR stated in its 2009 report that it is ‘virtually impossible to disentangle the complex causal relationships’ linking emissions from a particular source to a particular effect; climate change is often only one of many contributing factors to severe weather events or desertification, for example (OHCHR, 2009a). That many of the worst effects of climate change are expected to occur in the future makes determining causation even more difficult. Concerns about the difficulty of making these causal 18   See, e.g., Hatton v United Kingdom at 216 (Hatton v United Kingdom, 2003); López Ostra, supra note 11 (López Ostra v Spain, 1994); Ogoniland case, supra note 11, paras 44–47 (Soc. & Econ. Rights Action Ctr. v Nigeria, 2001); Inter-American Commission on Human Rights, Report on the Situation of Human Rights in Ecuador at 88–92 (1997).

11.  human rights principles and climate change    225 connections may have contributed to the refusal of the Inter-American Human Rights Commission to hear the complaint by the Inuit against the United States.19 Tracing causal links is less difficult, however, when contributions to and effects of climate change are considered in the aggregate. Taken as a whole, the connections between contributions of greenhouse gases, the effects of increasing greenhouse gases on global temperature, and the effects of rising temperatures on the enjoyment of human rights are relatively clear and rapidly becoming clearer. Further, it is possible to identify, at the aggregate level, the States whose emissions contribute most to the problem: combined, China and the United States contribute more than one-third of total emissions, and together with the European Union cause more than one-half of net global emissions.20 It is also possible to identify those communities that are the most vulnerable to climate change. To take just one example, the 2007 IPCC assessment report states with ‘very high confidence’ that in the polar regions there is already ‘strong evidence of the ongoing impacts of climate change on . . . communities’, and that ‘[w]‌arming and thawing of permafrost will bring detrimental impacts on community infrastructure’21 (IPCC, 2007). It states with ‘high confidence’ that ‘[s]ubstantial investments will be necessary to adapt or relocate physical structures and communities’ (IPCC, 2007). Moreover, whether a State has ‘caused’ climate change does not determine whether the State has any legal obligations to do something about its effects. As noted above, human rights law requires each State to do more than merely refrain from interfering with human rights itself; it also requires the State to undertake due diligence to protect against such harm from other sources. Although a mudslide cannot itself violate my rights, it may be the occasion of a violation if my State fails to take reasonable steps to protect me from its effects. This is not merely a hypothetical case: after mudslides devastated the town of Tyrnauz in the central Caucasus, the European Court of Human Rights held that Russia had violated its obligation to protect against threats to the right to life by failing to maintain observation posts and dams (Budayeva v Russia, 2008). This reasoning applies to climate change as well. Even if it is not possible to connect a particular release of greenhouse gases to a particular infringement of human rights, States may well have obligations to try to protect against the harm caused by climate change. In the 19   The Commission did not issue a formal decision; instead, it stated only that it was not possible to process the complaint ‘at present’ because ‘the information provided does not enable us to determine whether the alleged facts would tend to characterize a violation of rights protected by the American Declaration’. Letter from Ariel E. Dulitzsky, Assistant Executive Sec’y, Inter-American Commission on Human Rights, to Paul Crowley, Legal Representative of the Inuit (16 November 2006). 20   Any allocation of legal responsibility would be complicated by many other factors, including historical contributions, per capita emissions, and technical capacity. The point here is simply that the difficulty of tracing causal chains is not necessarily in itself an insuperable barrier to such an allocation, at least at an aggregate level. 21   ‘Very high confidence’ indicates at least 90 per cent certainty of being correct, and ‘high confidence’ 80 per cent confidence of being correct (IPCC, 2007).

226    part iii.  principles, emerging norms, and concepts words of the 2009 OHCHR report, ‘Irrespective of whether or not climate change effects can be construed as human rights violations, human rights obligations provide important protection to the individuals whose rights are affected by climate change’ (OHCHR, 2009a).22 The more fundamental problem with applying environmental human rights principles to climate change is that the principles were developed primarily to address environmental harm that does not cross international borders. Almost all of the regional jurisprudence, in particular, arises from cases in which the benefits and the costs of the environmental harm are felt within the domestic jurisdiction of one State.23 In such cases, it makes sense for human rights bodies to allow a State wide discretion in deciding how to strike a balance between environmental harm and other interests, as long as its decisions result from well-informed, careful consideration by all those affected. But this approach does not translate easily to transboundary problems such as climate change, where the benefits and the costs are not all incurred by the same polity. More generally, whether human rights law ever requires States to protect the human rights of those outside their own territory and jurisdiction is a difficult, disputed question. Some treaties, including the ICCPR and the American and European Conventions on Human Rights, include explicit jurisdictional limits.24 In contrast, the ICESCR requires each of its parties ‘to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means’ (OHCHR, 1966b; author’s emphasis). On the basis of this language, the Committee on Economic, Social and Cultural Rights has interpreted the Covenant to give rise to extraterritorial duties.25 In particular, it has stated that   Report on the Relationship between Climate Change and Human Rights at para 71. Questions of causation may well be relevant to the particular content of a State’s duties relating to climate change, however, as the following sections explain. 23   An exception is Tătar v Romania, supra note 14, which concerned, inter alia, transboundary water pollution from Romania to Hungary and Serbia (Tătar v Romania, 2009). The transboundary harm was not the principal focus of the case, however. See also General Comment 15, supra note 12, para 33 (statement by the Committee on Economic, Social and Cultural Rights that the parties to the ICESCR should take steps ‘to prevent their own citizens and companies from violating the right to water of individuals and communities in other countries’) (UN Committee on Economic, Social and Cultural Rights, 2002). 24  ICCPR, supra note 5, Article 2(1) (requiring each of its parties to respect and ensure the rights ‘to all individuals within its territory and subject to its jurisdiction’) (OHCHR, 1966a); American Convention, supra note 4, Article 1 (requiring the parties to ensure the rights ‘to all persons subject to their jurisdiction’) (American Convention on Human Rights, 1969); European Convention, supra note 4, Article 1 (the parties shall secure the rights ‘to everyone within their jurisdiction’) (European Convention on Human Rights, 1950). 25   Since 1999, almost every one of its general comments on particular rights, including the rights to food, health, water, work, social security, and to take part in cultural life, includes a section on such obligations. 22

11.  human rights principles and climate change    227 developed countries have obligations to assist developing countries to meet their obligations.26 However, developed countries have strongly disagreed with this interpretation (Craven, 2007). Because of the lack of clarity in the extraterritorial application of human rights obligations generally, and in the environmental context in particular, the human rights principles relevant to climate change are clearest with respect to action (or inaction) by a State that relates to the effects of climate change on the enjoyment of human rights within that State’s jurisdiction. These obligations may be called internal obligations, to contrast them with possible extraterritorial obligations relating to harm from the effects of climate change outside the State’s territorial jurisdiction. As explained below, it seems clear that a State’s internal obligations include duties to help those within its jurisdiction adapt to climate change, and may also include duties of the State to mitigate its own emissions. Although extraterritorial obligations are cloudier, it is still possible to discern some emerging principles.

A. Internal Obligations Just as human rights law requires a State to try to protect individuals from mudslides and other life-threatening natural disasters that were not caused by the State, it seems logical that it requires a State to try to protect its people from climate change whether or not the State substantially contributed to the problem. Of course, questions of causation may well be relevant to the particular content of a State’s duties relating to climate change. If a State’s contribution to global greenhouse gas concentrations is so minimal that lowering its emissions would have no appreciable effect on the effects of climate change on human rights, then it may be unreasonable to expect it to take Herculean measures to reduce its emissions. Even in that case, however, the State would still be obligated to help its people to adapt to the harms threatened by climate change. Thus, for many States, their obligations to take adaptation measures will often be clearer than their obligations to mitigate harm by reducing emissions (Hall and Weiss, 2012). The environmental human rights framework described in the preceding section informs the nature of the human rights obligations relating to climate change. According to that framework, a State should adhere to both procedural and substantive duties in addressing the internal effects of climate change. Procedurally, the State should carefully assess the likely impacts of climate change within its jurisdiction, disseminate information about those effects, allow full participation of all those affected in the process of deciding how to address the problem, and provide legal remedies to ensure that these procedures are followed. Decisions that   E.g., General Comment 14, para 45 (UN Committee on Economic, Social and Cultural Rights, 2000); General Comment 31, supra note 16, para 14 (UNCHR, 2004). 26

228    part iii.  principles, emerging norms, and concepts result from a fully informed, participatory process should be entitled to deference, although they could not violate minimal levels of human rights. For example, a small island State facing threats to life, health, and other human rights as a result of rising sea levels might consider a large number of potential responses, including constructing sea walls, consolidating its population on fewer islands, developing evaluation strategies, and so forth. It could reasonably take into account the options’ relative cost and feasibility, together with their effectiveness in protecting human rights. As long as its decision resulted from an informed, fully participatory process, the State would have a great deal of discretion to choose an optimal policy. The State could not, however, choose a policy that violates basic human rights standards. It could not, for example, fail to take steps to warn its people of foreseeable threats, or adopt climate policies that discriminate on the basis of sex, race, religion, or any other protected status. While States clearly have duties to try to adapt to climate change based solely on its internal effects, it is less obvious whether human rights law obligates a State to try to mitigate its contributions to climate change based solely on the effects of climate change on its own people. Most States contribute such a small fraction of global greenhouse gas emissions that even a sizable reduction by any one of them would have no significant effect on the enjoyment of human rights of its own people. This calculus is different for the largest emitters, such as China, the European Union, and the United States, each of which emits a substantial fraction of all greenhouse gases. Arguably, human rights law requires them to reduce their contribution to climate change based solely on the potential benefit such reductions would have for their own people, without taking into account the effects on those in other countries.27 Even States that emit relatively small amounts of greenhouse gases may be required to try to work towards a general agreement to reduce global emissions, based on their general duty not only to refrain from harming human rights themselves, but also to protect against harm from others. A State has limited influence over the conduct of other States, but it should use what influence it has to try to reduce global emissions to levels that do not interfere with the human rights of those within its jurisdiction. Apart from legal rights that States may have vis-à-vis other States based on other norms of international law, they may try to influence one another through bargaining or persuasion. Because meaningful reductions in global emissions require action by more than one State, as a practical matter this obligation may require each State to seek an effective international agreement to reduce greenhouse gas emissions to levels that protect its own people from the adverse effects of climate change. In that context, its duties to its own people may obligate it to commit to reductions in its own emissions, as part of its effort to obtain   Again, per capita emissions, past contributions, and technical capacity would be complicating factors. 27

11.  human rights principles and climate change    229 such a global agreement (International Council on Human Rights Policy, Climate Change and Human Rights: A Rough Guide, 2008). Human rights standards apply not only to decisions about how much climate protection to adopt, but also to the measures through which the protection was achieved. For example, efforts to mitigate climate change through the promotion of biofuels, emissions reduction projects, and forest preservation have been accused of violating the human rights of individuals directly affected by the projects (RohtArriaza, 2010). The States in which such projects occur have duties to protect against their harmful effects on the individuals within their territory.

B. Extraterritorial Obligations The previous section explains that even if human rights law is viewed as giving rise to no extraterritorial obligations at all, each State still has duties to ameliorate the effects of climate change on the human rights of those within its own jurisdiction. But this seems to be a radically incomplete method of addressing a global problem whose effects are inherently transboundary. There are at least three arguments that human rights law also requires States to take into account the extraterritorial effects of their contributions to climate change. First, one might argue that the language in the ICCPR and the American and European Conventions that limits a State’s obligations to individuals within its jurisdiction28 is broad enough to include those in other countries who are affected by the extraterritorial consequences of the State’s contributions to climate change. To be within the jurisdiction of a State within the meaning of these agreements, an individual must be within the ‘effective control’ of the State.29 It might be possible to argue that the effects of climate change could be severe enough in some cases to place an affected community under the effective control of other, more powerful States, although the argument would require an expansive interpretation of the ‘effective control’ standard. Second, one might argue that States have an obligation not to interfere with other States in the implementation of their own human rights obligations, based on the general principle of good faith in carrying out treaty obligations.30 For example, 28   Although the ICCPR actually refers to duties extending only to individuals ‘within [the State’s] territory and subject to its jurisdiction’, the general view is that the language should be read disjunctively, to require the State to respect and ensure the rights of those within its territory and those within its jurisdiction. Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory Opinion, para 111 (2004); To Respect and to Ensure: State Obligations and Permissible Derogations at 74 (Buergenthal, 1981); Extraterritoriality of Human Rights Treaties at 79 (Meron, 1995). 29  General Comment 31, supra note 16, para 10 (UNCHR, 2004); Banković v Belgium (2001); Alejandre v Cuba, para 25 (referring to ‘authority’) (Alejandre v Cuba, 1999). ‘Effective control’ of individuals may include not only their arrest or capture, but also their presence in a territory under the military control of the State (Al-Skeini v United Kingdom, 2011). 30   Vienna Convention on the Law of Treaties, Article 26 (‘Every treaty in force is binding upon the parties to it and must be performed by them in good faith’) (Vienna Convention on the Law of Treaties,

230    part iii.  principles, emerging norms, and concepts even if a State refuses to accept the interpretation of the Committee on Economic, Social and Cultural Rights that the ICESCR imposes extraterritorial obligations of assistance, at a minimum it could be read to require each State, as Matthew Craven has written, ‘to ensure that it does not undermine the enjoyment of rights of those in foreign territory’ (Craven, 2007). Under this view, each State has an obligation to try to avoid actions that would prevent other States from carrying out their own duties to fulfill the rights to health, food, and water of those within their jurisdiction.31 Contributing to climate change obviously makes it more difficult for other States to fulfill those obligations. There are difficulties with this argument, however. Developed countries have not embraced the Committee’s expansive view of extraterritorial obligations, as noted above, and the United States—a particularly important contributor of greenhouse gas emissions—is not a party to the ICESCR. Moreover, even if these arguments for extraterritorial duties were accepted, it is unclear how well they would support the application of the environmental human rights framework to climate change. In accordance with that framework, each State may comply with its obligations to protect the human rights of individuals within its own jurisdiction by following procedural requirements and ensuring that the resulting decisions do not violate minimum standards. But this approach has its limits when applied extraterritorially. Even if a State undertakes transboundary environmental impact assessments, provides information to those potentially affected by the actions under its jurisdiction, and allows them to participate in the decision-making process, those living abroad will still not have the same rights as those within the State, including the right to vote. As a result, the source country will retain the authority to decide whether to proceed with the activities threatening transboundary harm. A third argument for extraterritorial obligations would try to avoid the objections to the first two by relying on a duty of international cooperation (Knox, 2009). The 2009 report of the OHCHR emphasizes the relevance to climate change of this obligation,32 which is based not only on the ICESCR, but also, and more fundamentally, on the Charter of the United Nations. In the Charter, all UN Member States 1969); see Mark E. Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties at 367 (Villiger, 2009). 31   See ICESCR General Comment 15, supra note 12, para 31 (UN Committee on Economic, Social and Cultural Rights, 2002); ICESCR General Comment 14, supra note 26, para 41 (UN Committee on Economic, Social and Cultural Rights, 2000); ICESCR General Comment 12, supra note 16, para 37 (UN Committee on Economic, Social and Cultural Rights, 1999). This obligation to refrain from interfering with other States’ ability to carry out their own obligations could also require a State to take steps to prevent private parties under its jurisdiction or control from harming human rights in other states. See ICESCR General Comment 14, supra note 26, para 39 (UN Committee on Economic, Social and Cultural Rights, 2000). 32   OHCHR Report, supra note 22, para 99 (‘International human rights law complements the United Nations Framework Convention on Climate Change by underlining that international cooperation is not only expedient but also a human rights obligation and that its central objective is the realization of human rights’) (OHCHR, 2009a).

11.  human rights principles and climate change    231 ‘pledge themselves to take joint and separate action in co-operation with the Organi­ zation for the achievement of [inter alia] universal respect for, and observance of, human rights and fundamental freedoms for all’ (OHCHR, 2009a; Charter of the United Nations, 1945). While this language is very general, it strongly suggests that States have committed to take joint action to address global challenges to human rights. States have often worked together to address such threats in the past,33 and climate change is inherently a global problem that requires global cooperation to solve. The duty to cooperate could require States to negotiate and implement international climate accords that meet human rights minimum standards. In particular, the accords should strive to protect against the adverse effects of climate change on human rights. To that end, the agreements must provide both for the reduction of greenhouse gases to levels that will not interfere with the human rights of those vulnerable to climate change, and for adaptation to unavoidable changes that would otherwise harm their human rights. The environmental human rights framework could inform these principles. As applied at the level of international cooperation, the procedural requirements of that framework would require, for example, that States jointly assess the effects of their actions,34 that they bring those assessments to the attention of the public, and that they provide for informed public participation in international climate decisions. Substantively, that framework acknowledges that States have to make trade-offs in deciding on levels of environmental protection, but requires that the trade-offs not violate minimum human rights standards. Although those minimum standards still require further clarification, it seems likely that they would preclude policies that would result in the destruction of entire communities through, for example, the inundation of small island States.

4. Conclusion The human rights principles that apply to environmental harm have become much clearer in recent years. In order to protect a wide range of human rights from environmental harm, human rights bodies have described obligations on States to assess the environmental impacts of proposed actions, to disseminate environmental 33   See, e.g., Reservations to the Convention on the Prevention and Punishment of the Crime of Genocide at 23 (1951) (noting ‘the universal character both of the condemnation of genocide and of the co-operation required “in order to liberate mankind from such an odious scourge”’) (quoting Genocide Convention, 1948). 34   The IPCC reports go a long way towards satisfying this requirement, although they could do much more to assess the effects of climate change on the enjoyment of human rights in particular.

232    part iii.  principles, emerging norms, and concepts information, to provide for public participation in environmental decision-making (including by safeguarding rights of freedom of expression and association), and to ensure effective remedies for environmental interference with the enjoyment of human rights. States have obligations to adopt legal protections against environmental harm that interferes with the enjoyment of human rights, including harm caused by private actors. Human rights law does not require States to prohibit all activities that may cause any environmental degradation. They have discretion to strike a balance between environmental protection and other legitimate societal interests, but the balance should be reasonable and should not result in unjustified infringements of human rights. Finally, States have a general requirement of non-discrimination in the application of environmental laws, as well as specific obligations to members of groups particularly vulnerable to environmental harm, such as indigenous peoples. Applying this environmental human rights framework to climate change is simplest with respect to internal obligations—that is, obligations of States relating to the effects of climate change within their own territory and jurisdiction. It is relatively clear that States must protect their people from the harmful effects of climate change on the enjoyment of human rights, and that such protection includes reasonable adaptation measures and, in some cases, mitigation as well. However, it is more difficult to identify clear obligations on each State relating to the extraterritorial effects of actions within its jurisdiction. There are legal arguments for such obligations, but until they are more widely accepted, the effective application of human rights law to the most urgent and grave threats of climate change will be severely limited.

References Additional (San Salvador) Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights (Nov. 1988) 28 ILM 161. Al-Skeini v United Kingdom (2011) (App. No. 55721/07) 53 Eur. H.R. Rep. 589. Alejandre v Cuba (1999) Case 11.589, Inter-Am. Ct. H.R., Report No. 86/99, OEA/Ser.L/V/ II.106, Doc. 6 rev. para 25. American Convention on Human Rights (Nov. 1969) OASTS No. 36, 1144 UNTS 143. Association of Southeast Asian Nations (Nov. 2010) Human Rights Declaration, para 28(f). Banković v Belgium (2001) (App. No. 52207/99) XII Eur. Ct. H.R. 333. Bodanksy, D. (2010) Introduction: Climate Change and Human Rights: Unpacking the Issues, 38 Ga. J. Int’l & Comp. L. 511. Boyd, D.R. (2012) The Environmental Rights Revolution: A Global Study of Constitutions, Human Rights, and the Environment. Vancouver: UBC Press. Budayeva v Russia (2008) (App. No. 15339/00) Eur. Ct. H.R. Buergenthal, T. (1981) To Respect and to Ensure: State Obligations and Permissible Derogations, in The International Bill of Rights 72, 74 (Louis Henkin ed.) New York: Columbia University Press.

11.  human rights principles and climate change    233 Cameron, E. and Limon, M. (2010) Restoring the Climate by Realizing Rights: The Role of International Human Rights System, 21 Rev. EC and Int’l Envtl. L. 204. Charter of the United Nations (1945 June 26) Articles 55, 56. Clapham, A. (2006) Human Rights Obligations of Non-State Actors. Oxford: Oxford University Press. Commission Nationale de Droits de l’Homme et des Libertés v Chad (1995) Comm. No. 74/92, 2000 Afr. H.R.L. Rep. 66, 68, para 20. Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (informally known as the Aarhus Convention) (June 1998) 2161 UNTS 450, Article 1. Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) (Dec. 1979) G.A. Res. 34/180, UN Doc. A/RES/34/180 (1979). Council of Europe (Oct. 1961) European Social Charter, Europ. T.S. No. 35. Craven, M. (2007) The Violence of Dispossession: Extra-Territoriality and Economic, Social, and Cultural Rights, in Economic, Social and Cultural Rights in Action, 71, 77 (M.A. Baderin & R. McCorquodale eds.). European Convention on Human Rights (Nov. 1950) Europ. T.S. No. 5, 213 UNTS 21. Fadeyeva v Russia (2005) (App No. 55723/00) IV ECHR 255, 281. Gardiner, S. M. et al., eds. (2010) Climate Ethics: Essential Readings. Oxford: Oxford University Press. Genocide Convention, pmbl. (1948 Dec. 9) 78 UNTS 277. Giacomelli v Italy (2006) (App. No. 59909/90) 17, Eur. Ct. H.R. Hall, M.J. and Weiss, D.C. (2012) Avoiding Adaptation Apartheid: Climate Change Adaptation and Human Rights Law, 37 Yale J. Int’l L. 309. Hatton v United Kingdom (2003) (App. No. 36022/97) VII Eur. Ct. H.R. 189, 217. Humphreys, S. ed. (2010) Human Rights and Climate Change. Indigenous Cmty Yakye Axa v Paraguay (2005) Inter-Am. Ct. H.R. Series C No. 146, para 143. Inter-American Commission on Human Rights (1997) Report on the Situation of Human Rights in Ecuador, at 88–92, OEA/Ser.L/V/II.96 doc. 10 rev. 1. International Convention on the Elimination of All Forms of Racial Discrimination (CERD) (Dec. 1965) 660 UNTS 195. International Council on Human Rights Policy, Climate Change and Human Rights: A Rough Guide (2008). International Council on Human Rights Policy. Versoix, Switzerland. IPCC (2007) Climate Change—2007: Impacts, Adaptation, and Vulnerability, 655. Knox, J.H. (2008) Horizontal Human Rights Law, 102 Am. J. Int’l L. 1. Knox, J.H. (2009) Climate Change and Human Rights Law, 50 Va. J. Int’l L. 163. League of Arab States (May 2004) Arab Charter on Human Rights, reprinted in 12 Int’l Hum. Rts. Rep. 893 (2005). Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory (Advisory Opinion) (2004) I.C.J. 136, para 111. Letter from Ariel E. Dulitzsky, Assistant Executive Sec’y, Inter-American Commission on Human Rights, to Paul Crowley, Legal Representative of the Inuit (2006 Nov. 16). Limon, M. (2010) Human Rights Obligations and Accountability in the Face of Climate Change, 38 Ga. J. Int’l & Comp. L. 543, 567–8. López Ostra v Spain (1994) (App No. 16798/90) 20 Eur. H.R. Rep. 277, 295. Marangopoulos Foundation for Human Rights v Greece (2006) Complaint No. 30/2005, para 195, Eur. Comm. of Social Rights.

234    part iii.  principles, emerging norms, and concepts Mayagna (Sumo) Awas Tingni Cmty v Nicaragua (2001) Inter-Am. Ct. H.R. Series C No. 79, para 148. Meron, T. (1995) Extraterritoriality of Human Rights Treaties, 89 Am. J. Int’l L. 78, 79. Mossville Action Now v United States (2010) No. 43/10, Inter-Am. H.R. Comm. OHCHR (1966a) International Covenant on Civil and Political Rights, (ICCPR) 999 UNTS 171. OHCHR (1966b) International Covenant on Economic, Social and Cultural Rights, (ICESCR) 999 UNTS 3. OHCHR (2009a) Report on the Relationship Between Climate Change and Human Rights, UN Doc A./HRC/10/61. OHCHR (2009b) Joint Statement of the Special Procedure Mandate Holders of the Human Rights Council on the UN Climate Change Conference, Copenhagen 7–18. OHCHR (2010) Climate Change and the Human Rights to Water and Sanitation: Position Paper, see (accessed May 2014). Öneryildiz v Turkey (2004) (App No. 48939/99) XII Eur. Ct. H.R. 1, 115. Organization of African Unity (OAU) (June 1981) African Charter on Human and Peoples’ Rights, 1520 UNTS 217. Pedersen, O.W. (2011) The Janus-Head of Human Rights and Climate Change: Adaptation and Mitigation, 80 Nordic J. Int’l L. 403. Petition to the Inter-American Commission on Human Rights Seeking Relief from Violations Resulting from Global Warming Caused by Acts and Omissions of the United States (2005 Dec. 7); see (accessed September 2015). Reservations to the Convention on the Prevention and Punishment of the Crime of Genocide (Advisory Opinion) (1951) I.C.J. 15, 23. Restatement (Third) of the Foreign Relations Law of the United States § 702 (1987). Roht-Arriaza, N. (2010) ‘First, Do No Harm’: Human Rights and Efforts to Combat Climate Change, 38 Ga. J. Int’l & Comp. L. 593. Saramaka People v Suriname (2007) Inter-Am. Ct. H.R. Series C No. 172, para 195. Shelton, D.L. (2010) Tătar c. Roumanie, 104 Am. J. Int’l L. 247. Soc. & Econ. Rights Action Ctr. v Nigeria (2006) Comm. No. 155/96, para 58, Afr. Comm’n on Human & Peoples’ Rights (Ogoniland case). Stephens, P. (2010) Applying Human Rights Norms to Climate Change: The Elusive Remedy, 21 Colo. J. Int’l Envtl. L. & Pol’y 49. Taşkin v Turkey (2004) (App No. 46117/99) X Eur. Ct. H.R. 179, 205. Tătar v Romania (2009) (App. No. 67021/01) Eur. Ct. H.R. UN Committee on Economic, Social and Cultural Rights (1999) General Comment No. 12, The Right to Adequate Food, para 15, UN Doc. E/C.12/1999/5. UN Committee on Economic, Social and Cultural Rights (2000) General Comment No. 14, The Right to the Highest Attainable Standard of Health, para 15, UN Doc. E/C.12/200/4. UN Committee on Economic, Social and Cultural Rights (2002) General Comment No. 15, International Covenant on Economic, Social and Cultural Rights, 999 UNTS 3. UN Conference of the Parties, (2011) The Cancun Agreements: Outcome of the Work of the Ad Hoc Working Group on Long-term Cooperative Action Under the Convention, in UN Doc. FCCC/CP/2010/7/Add.1, at 2.

11.  human rights principles and climate change    235 UN Conference on Environment and Development (June 1992) Rio Declaration on Environment and Development, Principle 10, UN Doc. A/CONF.151/26/Rev.1. UNCHR (2001) Report Submitted by the Special Rapporteur on Toxic Waste, para 58, Doc. E/CN.4/2001/55. UNCHR (2002) Statement by Mr. Miloon Kothari, Special Rapporteur on Adequate Housing at the World Summit on Sustainable Development, Johannesburg, South Africa. UNCHR (2004) General Comment No. 31, The Nature of the General Legal Obligations Imposed on States parties to the Covenant, para 6, UN Doc. CCPR/C/21Rev.1/Add.13. UNHRC (2007) Report of the Special Rapporteur on the Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, para 104, UN Doc A/62/214. UNHRC (2009a) Human Rights Council Resolution 10/4, UN Doc. A/HRC/10/4, para 3. UNHRC (2009b) Report of the Special Rapporteur on the Right to Food, Large-scale Land Acquisitions and Leases: A Set of Minimum Principles and Measures to Address the Human Rights Challenge, para 21, UN Doc. A/HRC/13/33/Add.2. UNHRC (2009c) Report of the Special Rapporteur on Adequate Housing as a Component of the Right to an Adequate Standard of Living, and on the Right to Non-discrimination in this Context, UN Doc. A/64/255. UNHRC (2011) H.R. Council Res. 16/11, UN Doc. A/HRC/RES/16/11. UNHRC (2012a) Interim Report of the Special Rapporteur on the Right to Food, UN Doc. A/67/268. UNHRC (2012b) Report of the Independent Expert on the Issue of Human Rights Obligations Relating to the Enjoyment of a Safe, Clean, Healthy and Sustainable Environment, preliminary report, para 34, UN Doc. A/HRC/22/43. UNHRC (2013) Report of the Independent Expert on the Issue of Human Rights Obligations Relating to the Enjoyment of Safe, Clean, Healthy and Sustainable Environment: Mapping Report, para 17, UN Doc. A/HRC/25/53. United Nations General Assembly (1989) Convention on the Rights of the Child, Article 24(2) (c) UN Doc. A/RES/44/25. Velásquez Rodríguez v Honduras (1988) Inter-Am. Ct. H.R. Series C No. 4, para 172. Vienna Convention on the Law of Treaties, Article 26 (1969 May 23) 1155 UNTS 331. Villiger, M.E. (2009) Commentary on the 1969 Vienna Convention on the Law of Treaties at 367. Z and Others v United Kingdom (2001) (App. No. 29392/95) 34 Eur. H.R. Rep. 3, para 73.

Part IV

SETTING UP THE INTERNATIONAL MITIGATION REGIME: CONTENTS AND CONSEQUENCES

Chapter 12

INTERNATIONAL MARKET MECHANISMS Shi-Ling Hsu

1. Introduction

240

2. Emissions Trading Programs

244

3. Pigouvian Taxes

251

4. Conclusion

256

240    part iv.  setting up the int'l mitigation regime

1. Introduction The publication of the book Silent Spring,1 by American biologist Rachel Carson, is widely credited with catalyzing the modern-day environmental movement.2 US Supreme Court Justice William O. Douglas pronounced Silent Spring to be ‘the most important chronicle of this century for the human race’.3 Prompted in part by Carson’s influential book and aided by growing appeals from scientists to lawmakers to change some of the most obviously harmful industrial practices, the environmental movement quickly became part of the political landscape. Virtually all of the major federal environmental statutes were enacted by Congress in the following decade,4 including the National Environmental Policy Act.5 As a result, the earliest forms of pollution regulation were, unsurprisingly, designed by environmental lawyers. It is much less celebrated (also unsurprisingly, perhaps) that economists were concurrently developing their own ideas about how to address environmental problems. In 1968, Canadian economist John H. Dales wrote Pollution, Property and Prices: An Essay in Policy-making and Economics,6 in which he propounded the idea of pollution permit-trading. Dales argued that instead of regulating pollution on a source-by-source or emitter class-by-emitter class basis (as the legal mandates of the US federal statutes of the 1970s tended to do), a regulatory agency should begin by limiting the overall amount of pollution allowed. Firms could then trade amongst themselves, effectively using the market to determine which of them should be able to pollute, how much, and when. Dales’s insight was that pollution abatement costs are heterogeneous across facilities, firms, and over time.7 What pollution permit-trading allows, through market trades, is the flow of pollution permits to their highest-valued users— those firms and those facilities for which pollution abatement is the most costly, and which will wind up as net buyers of tradable pollution permits. Conversely,

  Rachel Carson, Silent Spring (Houghton-Mifflin, 1962).   Eliza Griswold, How ‘Silent Spring’ Ignited the Environmental Movement, N.Y. Times, September 21, 2012, at MM36. 3   ‘Are we poisoning ourselves?’, September 8, 1962, pp. 36–8, Business Week. 4   For example, the Clean Air Act was passed in 1970 (84 Stat. 485, P.L. 91-604), the Clean Water Act was passed in 1972 (formally, the Federal Water Pollution Control Act Amendments of 1972) (Publ. L. 92-500, October 18, 1972), and the Endangered Species Act in 1973 (87 Stat. 884, Publ. L 93-205). 5   National Environmental Policy Act of 1969 (83 Stat. 852, Pub. L. 91-190). 6   John Harkness Dales, Pollution, Property & Prices: An Essay in Policy-making and Economics (Toronto, 1968). 7  Dales, supra note 6, at 86; Tom Tietenberg and Lynne Lewis, Environmental and Natural Resource Economics, p. 357 (Pearson, 10th edn, 2014). 1

2

12. international market mechanisms   241 those firms and facilities for which pollution abatement is cheaper than the market price of the permit will be net sellers of permits. In a well-functioning market, emissions reductions are undertaken by those for which abatement is the least expensive, thereby minimizing overall economy-wide pollution abatement costs. This fundamental tenet of emissions trading—the exploitation of cost heterogeneity to minimize overall compliance costs8—has served as the animating theme of a wide variety of environmental initiatives around the world. The centrality of the market in achieving an economic objective—cost minimization—has led to coinage of the term ‘market mechanisms’ to describe policy instruments that seek to harness market forces to either reduce pollution, reduce compliance costs, or, most commonly, both.9 This idea has become so powerful that domestic and international environmental laws are now presumed to function more efficiently if they embody some form of a market mechanism. While the environmental statutes enacted in the 1970s tended to create administratively centered, ‘command-and-control’ mandates, market mechanisms have become a favored approach to regulating at the domestic and international levels. The Montreal Protocol,10 which reduced the production and consumption of ozone-depleting substances and the Kyoto Protocol,11 which sought to reduce greenhouse gas (GHG) emissions, were both predicated on an emissions trading model. Further, the European Union Emissions Trading System (EU ETS), created to assist in meeting Kyoto Protocol emissions reduction targets in a way that minimizes costs for industry, was one of the first market mechanisms adopted jointly by a group of States. Since cost heterogeneity is the predicate condition that must exist in order for market mechanisms to be useful, it would stand to reason that its use in a larger market will yield greater efficiency benefits. If a market mechanism can be designed so that it applies to many States and creates an international market, the cost heterogeneity would be greater, and permit trading should achieve greater efficiency gains. Moreover, trading across countries is also likely to take advantage of a greater variety of heterogeneous conditions than would be the case in a domestic market, even one as large as the United States. Vastly different economic conditions, for example, might make emissions reduction efforts much cheaper in a developing country than in a developed country. Little wonder, then, that market   William J. Baumol and Wallace E. Oates, The Theory of Environmental Policy, pp. 21–3 (Cambridge University Press, 2nd edn, 1988); Tom Tietenberg and Lynne Lewis, Environmental and Natural Resource Economics, p. 357 (Pearson, 10th edn, 2014). 9   See, e.g., Shi-Ling Hsu, ‘Fairness Versus Efficiency in Environmental Law’, 31 Ecol. L. Q. 303, 377–93 (2004). 10   ‘Montreal Protocol on Substances that Deplete the Ozone Layer’, 1522 UNTS 3; 26 ILM 1550 (1987). 11   The Kyoto Protocol to the United Nations Framework Convention on Climate Change, UN Doc FCCC/CP/1997/7/Add. 1 Dec. 10, 1997; 37 ILM 22 (1998). 8

242    part iv.  setting up the int'l mitigation regime mechanisms have been at least as popular in the transnational context as they have been in domestic contexts. Market mechanisms are thus policy instruments that seek to not just reduce pollution, but to minimize the costs of doing so. Whereas a traditional regulatory regime would, in its clumsiest forms, mandate similar methods of emissions reduction for broad classes of emitters, a market mechanism would provide emitters with the flexibility to defer, accelerate, deflect, or even take on additional emissions reductions that a traditional command-and-control scheme might not require or allow. Command-and-control regulatory regimes have evolved considerably to reduce the rigidity that characterized their earlier versions, but fundamentally, these systems depend upon an administrative adjudication to determine the legality of emissions, by contrast, market mechanisms decentralize decisions about emissions reductions so that private firms are given considerable autonomy. International market mechanisms, then, are these mechanisms carried out among States. Given the difficulty of setting up a transnational administrative body that could make adjudicatory decisions at an international level, setting up a decentralized trading system would appear to be a less onerous global solution. Another policy instrument considered to be a ‘market mechanism’ is a Pigouvian tax. Named after economist A.C. Pigou, a Pigouvian tax is a tax levied per unit of pollution emitted.12 Pigouvian taxes are meant to internalize ‘externalities’, generally understood to be positive or negative side-effects from economic production that are not reflected in the price of production. A classic externality is environmental harm from polluting activities that is not properly taken into account by the polluter.13 By pricing these external costs and forcing polluters to consider them in their private calculus, Pigouvian taxes force polluters to balance the social costs and their private economic benefits of polluting. A Pigouvian tax thus recruits private polluters for the task of making a social determination of the optimal level of pollution. A Pigouvian tax is a market mechanism that shares many features with emissions trading. First, there is a devolution of abatement decisions to emitters, and away from regulatory agencies. The private emitter now determines, through market decisions based, in part, on the imposition of a tax, how much to pollute, and when. Second, 12   French economist Alfred Pigou pioneered the idea that through taxes and subsidies, governments could introduce incentives to encourage fewer activities that generated negative externalities, and more activities that generated positive externalities. In other words, through taxes and subsidies, the government could equate the private marginal cost and the social marginal cost of an activity, and the private marginal benefit and social marginal benefit of an activity. A.C. Pigou, The Economics of Welfare, pp. 131–5 (1928). Taxes that reflected the extent of negative externality thus became known as ‘Pigouvian’ taxes. William J. Baumol and Wallace E. Oates, The Theory of Environmental Policy, pp. 21–3 (2nd edn, 1988). 13  An externality is an effect of a decision, on a party other than the decision-maker, that the decision-maker does not take into account. Shi-Ling Hsu, ‘Fairness Versus Efficiency in Environmental Law’, 31 Ecol. L. Q. 303, 341, n. 157 (2004).

12. international market mechanisms   243 public control over emissions decisions is reduced to one central decision: in the case of emissions trading, the total quantity of permits allowed; in the case of Pigouvian tax rate, the tax rate for emissions. Third, both policy instruments internalize to some extent the external costs of polluting. In the case of Pigouvian taxation, the price paid is directly set by legislative or regulatory action as the tax rate. In the case of emissions trading, the price paid is set by market forces; legislative or regulatory action establishes an emissions ‘cap’ and private trading for emissions permits will determine the price paid by emitters. There is no guarantee that the Pigouvian tax rate or the emissions cap is socially optimal. Finally, because both instruments impose a marginal cost on polluting, they introduce an incentive to reduce emissions in innovative ways that might not have been the specific course mandated by agency regulators. The extent to which this has actually occurred, and to which innovation has been spurred by market mechanisms, is the subject of some debate.14 But it is widely accepted that the incentives presented by market mechanisms are generally greater than under the traditional style approach to pollution, even including the more modern flexible and enlightened versions of these systems.15 Both emissions trading and Pigouvian taxes have at times been greeted with skepticism by environmental lawyers. For one thing, the objective of these market mechanisms seems more of an economic one, not an environmental one: the point of market mechanisms is to minimize compliance costs, and achieving environmental goals is not obviously related to the trading itself. If emissions reductions can be made less expensive, polluters will be willing to undertake deeper cuts in overall reductions. In that sense, viewing economic and environmental considerations as independent of each other misses the point. Economic savings make environmental benefits more feasibly obtained. This argument has not always been satisfying to detractors of market mechanisms, some of whom have continued to emphasize, not without reason, that the persistent undervaluation of environmental amenities and the difficulty in assessing the value of different environmental amenities complicates this process. What has been most troubling for such detractors is the notion that decisions that seem public in nature have been devolved to private actors. In a traditional and administratively centered regulatory regime, an agency ultimately controls, through administrative adjudications, the vast majority of pollution abatement decisions. By contrast, under emissions trading and Pigouvian tax regimes, private actors make the vast majority of abatement decisions. This devolution of abatement decisions, many environmental lawyers worry, may have adverse environmental and equity consequences such as the development of pollution ‘hot spots’, 14   Suzi Kerr and Richard Newell, ‘Policy-Induced Technology Adoption: Evidence from the US Lead Phasedown’, 51 J. Industrial Econ. 317 (2003). 15  Hsu, supra note 13 at 381–5.

244    part iv.  setting up the int'l mitigation regime geographic areas in which a polluter can freely accumulate permits to pollute as much as they wish as long as they are willing to bear the cost of the tax.16 Finally, environmental lawyers no doubt also worry that with many administrative decisions being devolved to private actors, there could well be less of a need for environmental lawyers with expertise in handling complicated environmental legal questions.

2.  Emissions Trading Programs The most efficient emissions trading system is a ‘cap-and-trade’ system, in which an established quantity of emissions permits are allocated to emitters, and are traded amongst the emitters (or even non-emitting permit speculators) to determine where and when emissions take place. A cap-and-trade system takes as relatively fixed the overall quantity of allowed emissions in the form of a hard cap, and contemplates a well-defined set of emissions sources that would be covered under the system. In such a closed system, the one central public decision, the overall quantity of emissions, will determine the environmental effectiveness of the program. However, while the simple idea of emissions trading has spawned the phrase ‘market mechanism’, over time, the phrase has come to include several variations on this fundamental idea. The Canadian province of Alberta instituted a variation of the cap-and-trade idea by capping emissions intensity instead of establishing a fixed quantity of emissions.17 The Alberta program only requires emitters to reduce the amount of emissions per unit of output. So, for example, Alberta’s oil sands industry can increase emissions if their productive efficiency increases by a greater amount. If they can reduce GHG emissions per barrel of oil produced, they can claim some of that efficiency gain as a credit for emissions reductions. Such a program is not really a cap-and-trade program per se, but a performance standard with some added flexibility. That is, emitting industries are—as they often are under more traditional schemes—expected to achieve a certain maximum rate of emissions, and if they manage to achieve an even lower rate, they can claim tradable credits for that efficiency gain. But there is no guarantee of an absolute

16   Jonathan Remy Nash and Richard L. Revesz, ‘Market and Geography: Designing Marketable Permit Schemes to Control Local and Regional Pollutants’, 28 Ecol. L. Q. 569, 574 (2001). 17   Climate Change and Emissions Management Act, Statutes of Alberta 2003, ch. C-16.7, s 3; Alberta §§ 3–4 (2007).

12. international market mechanisms   245 emissions decrease; an entity can be more efficient with emissions but still increase emissions overall. Other variations of emissions trading emerged in the 1970s under regulatory initiatives by the US Environmental Protection Agency (EPA) to introduce some regulatory flexibility for air pollution emitters. EPA’s ‘bubbling’ rule allowed some facilities to measure facility emission rates from combined smokestacks or facilities.18 The bubbling rule was simply a cap-and-trade system applied to only one firm possessing multiple polluting facilities.19 As part of this 1970s regulatory flexibility initiative, the EPA also introduced a ‘netting’ rule that allowed firms to trade credits so that a firm could emit more as part of a change in technology.20 Credits could be generated by a project or action that supposedly decreased emissions, such as a plant shut-down, or a pollution abatement project.21 Also as part of this initiative, the EPA created an ‘offsets’ rule that allowed a new polluting source to begin operations only if it had achieved emissions reductions or obtained emissions reduction credits comparable to the emissions from the new source.22 All of these rules required the EPA to make a determination as to whether an emitter would be permitted to invoke the rule. Because these 1970’s rules only permitted bubbling, netting, or offset transactions to take place with the approval of the EPA, these rules were not truly ‘market’ mechanisms, but rather regulatory efforts by the EPA to allow polluters some flexibility over emissions. A ‘market’ mechanism is one in which transactions are voluntarily made among two or more private parties, and in which one party supplies some environmental benefit. In such a transaction, there is little or no administrative adjudication. In these 1970’s EPA rules, transactions are between a private party and the EPA. An environmental benefit is putatively supplied by the private party, but the job of determining the extent of the emissions reduction, and whether it would fully compensate for an emission increase in another time or place, was left to the EPA. The environmental ‘value’ or benefit of the trade was thus an administrative matter, not readily ascertainable in an open and free-flowing market. This value uncertainty, providing for the ad hoc nature of trading, as well as delays by EPA in approving trades, created transaction costs that inhibited the search for cheaper emissions reductions, and limited 18   US Environmental Protection Agency, Requirements for Preparation, Adoption and Submittal of Implementation Plans and Approval and Promulgation of Implementation Plans, 46 Fed. Reg. 50,766 (1981) (codified at 40 C.F.R. § 52.24 (1984). 19   Thomas J. Stukane, ‘EPA’s Bubble Concept After Chevron v. NRDC: Who is to Guard the Guards Themselves?’ 17 Nat. Res. Lawyer 647, 648 (1985). 20   US Environmental Protection Agency, Air Pollution Control; Recommendations for Alternative Emission Reduction Options Within State Implementation Plans, 44 Fed. Reg. 71,779 (1986); amended, Emissions Trading Policy Statement, 51 Fed. Reg. 43,814 (1986). 21   Robert W. Hahn and Gordon L. Hester, Marketable Permits: Lessons for Theory and Practice, 16 Ecol. L. Q. 361, 402 (1989). 22   Supra note 20.

246    part iv.  setting up the int'l mitigation regime the cost savings for firms.23 By contrast, a more decentralized trading system— one in which market transactions could be consummated with little or no clearance from an administrative authority such as the EPA—would take on more of a market character, and be more consistent with Dales’s original emissions trading idea. These EPA rules were also applied erratically, suffering from both underinclusion and overinclusion. Some projects were allowed to move forward even as they caused environmental harm, while other projects were rejected even though they would have reduced emissions and achieved cost savings. That is not to say that a pure cap-and-trade system would always avoid such errors; that would depend on the rules governing formation of emission allowances. But the administrative involvement in determining the value of emissions reduction transactions created legal and market uncertainty. The EPA was more successful in the 1980s in using a market mechanism to phase out the use of lead as a gasoline additive. The EPA introduced a tradable permit system for refineries, in which refiners were given a performance standard for lead content in the gasoline they produced.24 Absent trading, refiners were required to produce gasoline containing no more than 1.1 grams of lead per gallon.25 However, if a particular refiner was able to produce gasoline containing even less than 1.1 grams of lead per gallon, that refiner could sell to other refiners the rights to produce gasoline with lead concentrations exceeding the 1.1-gram standard. Over time, the 1.1-gram standard was ratcheted down to 0.1 grams per gallon, and lead was ultimately banned as a fuel additive in 1996.26 By most accounts, the lead trading system was very successful in phasing out the use of lead as a gasoline additive,27 and in inducing the kind of technological innovation that accelerated the phase-out.28 Market mechanisms made a critical appearance on the international stage with the Montreal Protocol29 to phase out the ozone-depleting substances (ODS). In 1989, in connection with the Montreal Protocol, the United States banned most uses of chlorofluorcarbons (CFCs) and initiated a phase-out of other ODS by 1996. But like the lead phase-down program discussed above, a tradable permit system was employed to allow producers and consumers of ODS to trade with each other to allocate production and use. The results were, like the lead phase-down, impressive. Actual production was much lower than the permitted

23  Richard A. Liroff, Reforming Air Pollution Regulation: The Toil and Trouble of EPA’s Bubble (Conservation Foundation, 1986). 24   US Environmental Protection Agency, Regulation of Fuel and Fuel Additives, 47 Fed. Reg. 49,322 (1982), expired, 50 Fed. Reg. 13,116 (1985). 25 26   47 Fed. Reg. at 49, 322.   End to Trading, 40 C.F.R. §80.20(a), (d)(4) (1988). 27 28   Hahn and Hester, supra note 21, at 389.   Kerr and Newell, supra note 14. 29   Montreal Protocol on Substances that Deplete the Ozone Layer, 1522 UNTS 3; 26 ILM 1550 (1987).

12. international market mechanisms   247 amounts in every year, and some ODS were completely phased out ahead of schedule.30 Some have lauded the lower transaction costs of the lead and ODS phase-down programs as the reason that compliance costs were kept to a minimum.31 There is certainly some truth to this, as both programs were simpler by degrees and were more akin to a pure cap-and-trade program. Trades in lead did not require preapproval by the EPA.32 Trades in ODS did require EPA approval, but the EPA committed to approving each trade within three days.33 However, the most important factor contributing to the success of both programs appeared to be the ready availability of economically feasible substitutes for the underlying substance. In the case of lead, alcohol, and other additives were already emerging as substitutes for lead as an anti-knocking ingredient, and in the case of ODS, substitutes were already available by the time that the Montreal Protocol was signed. Indeed, some accounts suggest that there was industry obstruction of scientific research and international negotiations until the substitutes appeared almost ready for deployment.34 In any case, it is clear that a variety of factors affect the economic and environmental performance of market mechanisms. These early experiences with market mechanisms greatly influenced (not always for the better) the design of subsequent programs. The apparent success of the simpler, less administratively complex programs (lead and ODS) led to the development of the sulfur dioxide cap-and-trade program under the 1990 Clean Air Act Amendments (the ‘SO2 program’). Under the SO2 program, tradable allowances to emit sulfur dioxide were allocated to 246 specifically named coal-fired power plants.35 The nationwide cap was also specified in the statute, 8.90 million tons,36 albeit subject to a number of adjustments. For example, firms could ‘opt in’ facilities not initially covered under the program, and would be allocated some additional allowances for these facilities.37 Absolutely critical to the smooth functioning and environmental performance of the program was the use of continuous emissions monitors, a technological breakthrough because it allowed constant, automated, remote measurement of sulfur dioxide emissions. Both SO2 emitters and the EPA thus had accurate and transparent information on emissions, and because allowance trades did not have to be approved in advance by EPA, the program had an administrative certainty that was absent from EPA’s 1970s rules.   Richard E. Benedick, Ozone Diplomacy 195 (Harvard University Press, 1998).   Hahn and Hester, supra note 21, at 390. 32   David Sohn and Madeline Cohen, ‘From Smokestacks to Species: Extending the Tradable Permit Approach From Air Pollution to Habitat Conservation’, 15 Stan. Envtl. L.J. 405, 431 (1996). 33   40 C.F.R. §80.12(a)(2) (1993). 34   Some accounts point to the industry obstruction of scientific research and international negotiations until the substitutes appeared almost ready for deployment. See Benedick, supra note 30, at 119. 35   Clean Air Act § 404(e); 42 USC § 7651c(e) (1990). 36   Clean Air Act § 403(a)(1); 42 USC § 7651b(a)(1) (1990). 37   Clean Air Act § 404(d); 42 USC § 7651c(d) (1990). 30 31

248    part iv.  setting up the int'l mitigation regime The flexibility of the SO2 program produced some unexpected environmental benefits that might not have occurred under a more traditional regulatory program. For example, by imposing a price for emissions of SO2, the program induced firms to utilize older, dirtier plants less intensively than they might have had they only been required to comply with the original mandates typically found in the Clean Air Act regulations. While a disappointingly small number of coal-fired power plants were actually shut down, electricity generating firms relied on them much more sparingly, opting for natural gas-fired power plants instead. Natural gas plants soon became a constant, all-day, baseload power source, as well as a source for shortterm, peak electricity demands.38 Moreover, the SO2 program generated entrepreneurial activity around the reduction of SO2 emissions so that the program yielded indirect benefits. Attention towards SO2 emissions reductions led to more innovation for emissions reductions, both technical and logistical. The costs of emissions reduction lowered to a point that firms could afford to undertake more emissions reductions. Further, cheaper allowances induced firms to establish a reserve of excess allowances, essentially inducing them to ‘overcomply’ and hold more allowances than required.39 Although that the lead program and the ODS trading program were politically salable because affordable alternatives existed, it is an important benefit for a program to create opportunities for cheaper alternatives to be discovered and exploited. When emissions reductions are cheaper, overcompliance becomes cheaper, and the leap to next generation emissions reduction becomes cheaper as well. Lowering compliance costs is thus very much connected to lowering emissions. First, to the extent that environmental performance is one of several objectives in a private firm’s decision environment, a more cost-efficient way to reduce emissions enhances environmental performance. Second, cap-and-trade programs produce more incentives for innovation for emissions reductions. Finally, cap-and-trade expands the range of opportunities for emissions reductions and engages a larger group of actors in efforts to address pollution reduction and further innovation. Early experiences with market mechanisms have profoundly influenced efforts to reduce the emissions of GHGs to address climate change. Most prominently, the Kyoto Protocol40 contemplated a global cap-and-trade system meant to apply to developed countries, and eventually all countries.41 In addition, some parties to the Kyoto Protocol created their own domestic cap-and-trade programs that could be linked with those of other parties.   A. Denny Ellerman et al., Markets for Clean Air, p.130 (Cambridge University Press, 2000).  Ellerman, supra note 38, at 148–51. 40   The Kyoto Protocol to the United Nations Framework Convention on Climate Change, UN Doc FCCC/CP/1997/7/Add. 1 Dec. 10, 1997; 37 ILM 22 (1998). 41  Tim Profeta, ‘Weaker Kyoto Protocol Extended at International Climate Negotiations’, Nat’l Geographic (Dec. 13, 2012), (accessed 5 August 2015). 38

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12. international market mechanisms   249 The Kyoto Protocol also established a form of offsets, somewhat like those envisioned in EPA’s 1970s offset rule.42 GHG emitters in a developed country could fund projects in developing countries that reduce GHG emissions and obtain offset credits. This is known as the Clean Development Mechanism (CDM).43 GHG emitters in developed countries can also fund projects in other developed countries, under the Joint Implementation (JI) program.44 These initiatives were to be overseen by the CDM Executive Board and the JI Supervisory Committee, respectively, both of which were created under the Kyoto Protocol. In the early days of implementation, the CDM and JI programs produced numerous mistakes of overinclusion—approval of projects that did not really reduce emissions—and of underinclusion—the rejection of projects that would have produced an emissions reduction. For instance, a huge number of CDM projects in China purported to reduce emissions of HFC-23, a powerful GHG and byproduct of the production process, generating credits that could be used by emitters in developed countries in lieu of actually reducing GHG emissions. The problem was that the value of the credits far exceeded the value of the captured refrigerants. The plants producing HFC-23 had no real purpose other than the generation of credits; refrigerants were a mere pretense for such generation.45 The issuance of these credits subjected the CDM Board to considerable criticism and cast doubt on the soundness of the entire offset idea.46 At the same time, the paucity of approved CDM projects in developing countries other than China and India—those countries that might have the most to offer in terms of inexpensive emissions reductions (and would benefit the most from capital inflows)—suggest that the CDM program is bureaucratically burdensome enough to exclude many meritorious projects. The underlying problem with the offset concept is that there is rarely a clear counterfactual for the project. What would the emissions have been in the absence of the offset program? If a proposed project does not achieve any real reduction from the ‘business as usual’ course of events, then any credits issued for the project are sham credits, and only serve to increase the overall cap on emissions. At the sub-global level, the European Union has instituted its own cap-andtrade program to reduce GHGs. The European Union Emissions Trading System (EU ETS)47 covers approximately 11,500 stationary sources of emissions, including 43   Kyoto Protocol, Article 12.   Kyoto Protocol, Article 12.   Kyoto Protocol, Article 6. 45   Michael W. Wara, ‘Measuring the Clean Development Mechanism’s Performance and Potential’, 55 UCLA. L. Rev. 1759, 1783–86 (2008); see also Michael W. Wara and David G. Victor, ‘A Realistic Policy on International Carbon Offsets’, Working Paper, online at (accessed 5 August 2015). 46  Wara, supra note 45; Wara and Victor, supra note 45. 47   European Commission, The EU Emission Trading Scheme, online at http://ec.europa.eu/clima/ policies/ets/index_en.htm (accessed 5 August 2015). 42

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250    part iv.  setting up the int'l mitigation regime cement, steel, glass, metal manufacturing, pulp and paper processing, and oil refining facilities, the most carbon-intensive industries. However, the EU ETS still only covers facilities that account for about forty-five percent of the EU’s CO2 emissions.48 The history of the EU ETS has also been fraught with mismanagement. In moving from an initial phase of the system to a more permanent one, the transition rules for carrying over allowances were poorly designed, and led to a collapse in allowance prices to nearly zero.49 Also, because GHG emissions are very highly correlated with economic activity, the global recession of 2008–2009 and continuing economic weakness throughout Europe led to a sharp decrease in GHG emissions, which caused EU ETS allowance prices to collapse again.50 The EU considered propping up allowance prices in 2013, but voted against it.51 Several other cap-and-trade programs exist. The Regional Greenhouse Gas Initiative (RGGI), a program among nine (originally ten) Northeastern American states, requires power plants in those states to participate in a cap-and-trade program. Also, in the United States, California pioneered a regional cap-and-trade system, the Western Climate Initiative, and garnered the participation of seven other American states as well as four Canadian provinces, only to have all except one withdraw. California, with its landmark GHG legislation AB32,52 established a capand-trade program for major industrial emitters in the state. The discouraging experiences with emissions trading for GHGs, however, are due more to the intractability of climate change politics than any fundamental flaw with emissions trading systems. Indeed, GHGs would seem to be an ideal pollutant for a cap-and-trade program, since all GHGs are globally uniformly mixed pollutants, such that emissions of GHGs have the same effect on the global climate systems no matter where in the world they were emitted. No GHG is toxic enough to form any ‘hot spots’ that could endanger local populations. Moreover, there is enormous potential for legitimate offset projects such as reforestation and low-impact agriculture, so that emissions reductions could really be achieved for a fraction of the cost of abatement technologies. However, the politics at every level are fraught. Internationally, the refusal of developing countries, led by China and India, to assume binding caps on their national emissions led to the unraveling of support for GHG pricing among 48   European Commission, The EU Emissions Trading System (EU ETS) (11 June 2014). (‘EUETS [c]‌over around 45% of the EU’s greenhouse gas emissions.’) 49  A. Denny Ellerman and Barbara K. Buchner, Over-Allocation or Abatement? A Preliminary Analysis of the EU ETS Based on the 2005–06 Emissions Data, 41 Envtl. Res. Econ. 267, 270 (2008). 50   Bruno Declerq, Erik Dalarue, and William D’haeseleer, ‘Impact of the Economic Recession on the European Power Sector’s CO2 Emissions’, 39 Energy Pol’y. 1677, 1678 (2011). 51   ‘European Parliament Votes Down Carbon Permit “Backloading” Proposal’, 17 Bridges (18 April 2013); (accessed 5 August 2015). 52   Global Warming Solutions Act of 2006, CAL. HEALTH & SAFETY CODE §§ 38500-38599, available at (accessed 16 June 2014).

12. international market mechanisms   251 developed countries. Regionally, the flagging economic fortunes of the EU made the EU ETS seem like more and more of a luxury, especially when the United States, Canada, China, Russia, and India—collectively accounting for about fifty-five percent of global emissions—were refusing to even consider GHG pricing. At the individual state level, the politics may be smaller and appear more tractable, but they often are trumped by concerns with economic competitiveness and carbon leakage. The very pervasiveness of GHG emissions that makes it such an ideal pollutant for emissions trading also makes the politics of implementation especially complicated.

3.  Pigouvian Taxes The other frequently discussed ‘market mechanism’ is the Pigouvian tax. Whereas a cap-and-trade program fixes the quantity of pollution and allows the price to be set by the market, a Pigouvian tax fixes the price and allows the overall quantity of pollution to vary. In a world with perfect information, there would be no difference in economic efficiency (including the economic value of environmental quality) between the two instruments. However, if there is uncertainty about either marginal pollution abatement costs or marginal social costs of pollution, then there can be significant welfare consequences in choosing between a cap and trade program and a tax. In his seminal paper, economist Martin Weitzman set out the conditions under which a cap-and-trade program would minimize the risk of deadweight loss—the economic loss resulting from the misallocation of resources due to excess emissions or abatement—and the converse conditions under which a Pigouvian tax would minimize waste.53 The paper remains relevant today, as economists debate whether GHGs should be subject to a cap-and-trade program or a carbon tax. As has been the case with emissions trading, the simple idea of a Pigouvian tax has morphed into variants that achieve some, but not all, of its objectives. Gasoline taxes have long been in effect in the United States, but have been considered revenue sources for road construction and maintenance rather than a Pigouvian tax aimed at reducing emissions from driving.54 At the 2015 American average of less than 50 cents per gallon of gasoline, the United States has one of the lowest gas taxes in the world.55 The only other levy in the United States that could have been considered a Pigouvian tax was a chemical feedstock tax adopted pursuant to the   Martin L. Weitzman, ‘Prices vs. Quantities’, 41 Rev. Econ. Stud. 477 (1974).   It is telling that the federal gasoline tax was instituted under the Revenue Act of 1932. Revenue Act of 1932, Ch. 209, § 617(a), 47 Stat. 169, 266. 55   Ian W.H. Parry, ‘Is Gasoline Undertaxed in the United States?’ 148 Resources 28, 28 (2002) (accessed 15 September 2015). 53

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252    part iv.  setting up the int'l mitigation regime ‘Superfund’ law, or the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),56 which imposed a tax on the production of petroleum and on forty-two chemicals.57 The feedstock tax was used to fund prosecutions for violations of CERCLA and to fund cleanups of contaminated sites, rather than create a price signifying the social cost of producing chemicals. The tax expired in 1996 and was not reauthorized.58 Beyond the United States, Europe, which faced enormous revenue needs after the Second World War, is much more accustomed to higher gasoline taxes, and is generally more tolerant than the United States of taxation. The minimum EU tax on unleaded gasoline of 359 euros per 1000 liters translates into $1.76 per gallon in the United States,59 and every EU Member State, except Romania, exceeds that rate. The rate in the Netherlands is more than double the minimum rate, at 746 euros per 1000 liters.60 Europe is also where environmental taxes are the most common and have their greatest effect. Taxes are levied on the production or consumption of a broad range of goods with negative environmental effects, such as coal and coke, natural gas, kerosene, heavy fuel oil, mineral oil, and electricity.61 For instance, the Scandinavian countries impose taxes on nitrogen oxides (NOx) and SO2.62 Sweden rebates NOx tax proceeds in proportion to energy output, offering at once carrots to firms that are able to reduce NOx emissions and punishing those that do not.63 Whereas a pure Pigouvian tax is simply the tax, the Swedish NOx tax is a variant in its recycling of revenues back to producers, presumably to blunt some of the political opposition to the tax. Most significantly, several European countries have instituted some form of a carbon tax to reduce emissions of CO2 and other GHGs. A carbon tax is a unitary tax on a fossil fuel or other carbon-containing compound that is levied on the basis of carbon content, on the assumption that all of the embedded carbon would be oxidized in combustion and released into the atmosphere as CO2.64 The complication with imposing carbon taxes in Europe is that they are layered on top of a variety of existing electricity and energy taxes. Also, some countries with carbon taxes carve out exemptions 56   ‘Comprehensive Environmental Response, Compensation, and Liability Act of 1980’, Publ. L. 95–510, 94 Stat. 2767 (1980). 57   CERCLA, Subtitle A, Publ. L. 95–510, amended Superfund Amendments and Reauthorization Act of 1986 (P.L. 99–499). 58   Omnibus Budget Reconciliation Act of 1990, P.L. 101–508, §11231 (1990). 59   Taking the exchange rate at $1 to 0.74 euros, in effect on 13 June 2014. 60   European Commission, Excise Duty Tables, Part II—Energy Products and Electricity (January 2013); (accessed 5 August 2015). 61   Ibid, at 4. 62  Jean-Phillppe Barde, ‘Implementing Green Tax Reforms in OECD Countries: Progress and Barriers’, in 2 Critical Issues in Environmental Taxation, International and comparative Perspectives 8–11 (J. Milne, K. Deketeleare, L. Kreiser, and H. Ashiabor eds, 2005). 63   Stephen Smith, ‘Environmental and Public Finance Aspects of the Taxation of Energy’, Oxford Review of Economic Policy, 14(4):64–83, 70–3 (1998). 64   Shi-Ling Hsu, The Case for a Carbon Tax: Getting Past Our Hang-ups to Effective Climate Policy 17 (Island Press, 2011).

12. international market mechanisms   253 for favored industries or industries deemed to be vulnerable to international competition from firms in countries lacking comparable GHG emissions regulation. Carbon taxes nevertheless exist in some form in Finland,65 Sweden,66 Norway,67 Denmark,68 Iceland,69 Ireland,70 Japan,71 Switzerland,72 France,73 the United Kingdom,74 Mexico,75 and Chile.76 Finland, Sweden, Denmark, and Norway all 65   Act on Excise Duty on Electricity and Certain Fuels of 30 December 1996 (1260/96) (Fin.). See Org. for Econ. Cooperation & Dev., Inventory of Estimated Budgetary Support & Tax Expenditures for Fossil Fuels 2013 at 153–64, available at (accessed 5 August 2015). See also Stefan Speck et al., ‘The Use of Economic Instruments in Nordic and Baltic Environmental Policy 2001–2005’ at 99–113 (2006), available at (accessed 5 August 2015). 66  Act (1994:1776) on the Taxation of Energy (Swe.), available at (accessed 5 August 2015). See also Int’l Energy Agency, Energy Policies of IEA Countries: Sweden 2013 Review, available at (accessed 5 August 2015). 67   See Law on Tax on Emissions of CO2 in the Petroleum Activities on the Continental Shelf, LOV1990-12-21-72 (Nor.), available at (accessed 5 August 2015). See Stefan Speck et al., ‘The Use of Economic Instruments in Nordic and Baltic Environmental Policy 2001–2005’ at 169–90 (2006), available at http://www.norden.org/da/publikationer/publikationer/2006-525/> (accessed 5 August 2015). 68  Act. No. 888 of 1991 (Den.), available at (accessed 5 August 2015); amended by Consolidation Act. No. 321 of 2011 (Den.), available at (accessed 5 August 2015). See Speck, supra note 67. 69   Government of Iceland, Legislation on Environmental and Resource Taxes (December 23, 2009), available at (accessed 5 August 2015). 70  Finance Act 2010, Chs. 1–3 (Ir.), available at (accessed 5 August 2015). 71   Government of Japan, Tax Reform Act of Mar 31, 2012, Special Provisions for Carbon Dioxide Tax of Global Warming Measures (31 March 2012), available at (accessed 5 August 2015). 72   Government of Switzerland, Federal Act on the Reduction of CO2 Emissions (23 December 2011), available at (accessed 5 August 2015). 73  Government of France, Act No. 2013-1279 of December 29, 2013 Supplementary Budget for 2013(1) (27 March 2014), available at (accessed 5 August 2015). 74   Sch. 6, Finance Act 2000, as amended by Finance Act 2013; Climate Change Levy (General) Regulations, 2001, S.I. 2001/838), as amended by the Climate Change Levy (General) (Amendment) Regulations, 2013, S.I. 2013/713), available at (accessed 5 August 2015). 75   Government of Mexico, Diario Oficial, 11 December 2013, at Second Section, p. 1–10, available at (authorized access only). 76   Government of Chile, Diario Oficial de la Republica de Chile, 29 September 2014, at I-39; Kate Galbraith, ‘Climate Change Concerns Push Chile to Forefront of Carbon Tax Movement’, N.Y. Times, 29 October 2014, (accessed 5 August 2015).

254    part iv.  setting up the int'l mitigation regime introduced their carbon taxes between 1990 and 1992. Finland instituted the world’s first carbon tax in 1990,77 while Sweden imposes the highest carbon tax, at about $150 per ton of CO2.78 Nominally, the carbon tax rates range among the four Scandinavian countries from about $15 per ton of CO2 in Denmark to $150 per ton in Sweden. However, all four countries offer significant exemptions and rate reductions for electricity, energy-intensive industries, and other industries deemed to be economically vulnerable to trade competition.79 Because electricity must cross borders within the European Union, the EU regulates the amount of taxes that can be imposed by Member States on electricity. EU Regulations thus restrict the Member State’s ability to tax electricity in a way that might be discriminatory.80 The four Scandinavian EU Member States all exempt fossil fuels used for generating electricity from their respective carbon taxes. At least in Sweden, which derives over eighty-five percent of its electricity from either nuclear power or hydropower,81 and in Norway, which derives almost all of its electricity from hydropower, these electricity exemptions are not highly distortionary. For the most part, the other Scandinavian countries rely on a variety of other policies to try to shift fossil fuel-fired electricity generation away from coal and natural gas. For example, Denmark is one of the leading wind power generating countries in the world, relying upon offshore wind energy for twenty-eight percent of its electricity needs, but has not relied upon its carbon tax to induce change.82 Thus, the high rates of renewable energy generation in Scandinavian countries are not due to market mechanisms. Among the EU Member States, the United Kingdom is the most recent country to have adopted something like a carbon tax. The 2001 Climate Change Levy (CCL), however, is a tax on energy consumption, not carbon content, and so is not really a carbon tax.83 It also excludes residential uses and transportation fuels (which, like all European countries, are subject to high rates of taxation   J. Andrew Hoerner and Benoît Bosquet, Environmental Tax Reform: The European Experience, (Washington, D.C.: Center for a Sustainable Economy, 2001), available at (accessed 5 August 2015). 78   Cite exchange rate of 0.15 USD per krona, 110 ore/kg CO2 http://www.svenskenergi.se/Elfakta/ Miljo-och-klimat/Mal-och-styrmedel/ (both accessed 5 August 2015). 79   Annegrete Bruvoll and Bodil Merethe Larsen, Statistics Nor., Research Dep’t, ‘Greenhouse Gas Emissions in Norway: Do Carbon Taxes Work?’ 16 (2002), available at (accessed 5 August 2015). 80  Philipp Genschel and Markus Jachtenfuchs, How the European Union Constrains the State: Multilevel Governance of Taxation, 50 EUR. J. POL. RES. 293 (2011). 81   Swedish Energy Agency, Energy in Sweden 2013, available at (accessed 5 August 2015). 82   Danish Energy Agency, Energy Statistics 2012 at 9 (2014), available at (accessed 5 August 2015). 83   Finance Act 2010 (Eng.) supra note 74. 77

12. international market mechanisms   255 anyway).84 Similar to what occurs in the Scandinavian countries, the UK consciously shifted electricity production away from coal and towards natural gas using other policies. However, imposing a tax on electricity consumption instead of carbon emissions misses an opportunity to use the levy to encourage renewable energy production. Beyond early developments in the EU, a second wave of carbon tax laws began in 2008, with Switzerland and the Canadian province of British Columbia (BC) enacting carbon taxes in 2008, Ireland and Iceland in 2010, Mexico and Japan in 2012, and France and Chile in 2014.85 The taxes are generally modest, ranging in cost from about US$2 per ton of CO2 to US$30. With the exception of BC, the most broadbased of the taxes all contain very significant exemptions, typically for energy usage or for entities already subject to the EU ETS. The BC tax is particularly interesting because it is the only carbon tax in North America, as well as being one of the more effective carbon taxes in the world. The BC Carbon Tax Act86 imposed a gradually increasing tax on emissions from the combustion of fossil fuels and other specified combustibles based on carbon content. As a provincial tax, it applies to emissions only within the Province, and excludes or specifically exempts fuels exported from British Columbia and fuels used for inter-jurisdictional commercial marine and aviation purposes.87 Introduced in 2008, the tax rate ramped up from an initial rate of approximately $10 per ton of CO2-equivalent emissions, to its current rate of $30 per ton.88 The tax was intended to be ‘revenue neutral’, and so was packaged with reductions in the marginal income tax rates of the lowest two tax brackets, as well as reductions in the corporate income tax rate.89 However, the BC carbon tax has turned out to be persistently revenue-negative, taking in much less in revenues than it is believed to have cost the province.90 As North America has always been much more hostile to Pigouvian taxes,91 the BC carbon tax faced several political challenges, but appears to be politically safe from repeal for the foreseeable future.   Sch. 6, Finance Act 2010 (Eng.) supra note 74.   World Bank, Putting a Price on Carbon with a Tax (no date), online: (accessed 5 August 2015). 86 87   Carbon Tax Act, SBC 2008, Ch. 40 (2008).   Carbon Tax Act, supra note 86, § 10. 88   Carbon Tax Act, supra note 86, Schedule 1. 89   Kathryn Harrison, ‘The Political Economy of British Columbia’s Carbon Tax’, OECD Environment Working Papers No. 63 9 (2013), (accessed 5 August 2015). 90  Harrison, supra note 89, at 9. 91   Henrik Hammar, Asa Lofgren, and Thomas Sterner, ‘Political Economy Obstacles to Fuel Taxation’, 25 Energy Journal 1 (2004). 84 85

256    part iv.  setting up the int'l mitigation regime

4. Conclusion The market-based ideas of Pigou and J.H. Dales have easily stood the test of time as being theoretically the most efficient means of reducing pollution. However, in order for Pigouvian taxation and emissions trading to work in practice, a number of implementation issues need to be addressed. Experience with market mechanisms domestically and internationally have demonstrated that some implementation issues prove especially thorny. For example, while the idea of using offsets as part of an emissions trading scheme may be theoretically sound, care must be taken to ensure that fraudulent projects do not form the basis of emissions reductions credits. The experience with the Clean Development Mechanism under the Kyoto Protocol serves as a stark reminder of that difficulty. Beyond implementation issues, the development of market mechanisms has often encountered stiff political resistance, as opponents have exploited populist fears of high prices and job losses to mobilize opposition to a carbon tax or emissions trading programs. Finally, it is worth noting that in addressing opposition concerns, the environmental objectives of market mechanisms have sometimes been compromised. For example, while Scandinavian countries have led the way in implementing carbon taxes, the many exemptions that are built into those taxes have reduced their effectiveness in reducing emissions. Striking a balance between environmental effectiveness and political feasibility appears to be surprisingly difficult. All that being said, the limited experience to date with domestic and international market mechanisms are cause for optimism: environmental and economic objectives can be simultaneously achieved in one program. Market mechanisms make explicit a truism about international environmental law and policy: that environmental and economic objectives are inextricably linked, and cannot be separated in the pursuit of successful emissions reductions strategies.

Chapter 13

LEGAL FRAMEWORKS FOR LINKING NATIONAL EMISSIONS TRADING SYSTEMS Michael A. Mehling

1. Introduction: Linking in Theory and Practice

258

2. Definitions and Concepts

259

3. Overview of Linking Research

261

4. The Role of Law and Institutions

266

5. Outlook: Future Perspectives for Linking

273

6. Conclusions

277

258    part iv.  setting up the int'l mitigation regime

1.  Introduction: Linking in Theory and Practice Were political rhetoric and scholarly research to serve as a benchmark, the creation of links between domestic and regional emissions trading systems might seem a necessary or at least highly desirable option for the future evolution of global climate governance. Proponents have ascribed considerable benefits to the integration of carbon markets through a trading link (Edenhofer et al., 2007: 10; Flachsland et al., 2009; House of Commons, 2015; ICAP, 2015; Jaffe et al., 2009). By its very nature, linkage results in an enlarged market, promising greater diversity of abatement costs and thus more efficient achievement of climate change mitigation objectives (Alexeeva and et al., 2015: 17-8; Green et al., 2014a: 5-9; IPCC, 2014: 1052; Lazarowicz, 2009: 42; Rehdanz and Tol, 2005: 410; Stern, 2007: 545-6; Anger, 2008: 2040-1). Linkage is also credited with promoting liquidity and reduced price volatility in the carbon market, helping reduce the likelihood of manipulation and abuse (Jaffe et al., 2009: 800). With concerns about the competitiveness impact of greenhouse gas constraints a central obstacle to ambitious policy efforts, moreover, the convergence of carbon prices resulting from a market link could help avert the specter of production and investment relocation, which in turn could limit the risk of emissions leakage (Hausotter et al., 2012: 47; Larsson, 2009; Tiche et al., 2014: 100; Tuerk, 2011). And finally, linking of emissions trading systems may prove one among a diminishing range of policy options through which the international community can engage in meaningful collective action (Burtraw et al., 2013: 2; Ranson and Stavins, 2012; Tangen and Hasselknippe, 2005: 7). Given these potential benefits, a majority of jurisdictions with operating carbon markets have announced an interest in or actively pursued linking to other trading systems, often including a formal mandate or ‘docking provision’ in their domestic legislation (see infra, Sec. 4). Occasionally, a favorable attitude towards linking has even translated into vigorous foreign policy engagement, as observed with the European Union and its carbon market outreach strategy (European Commission, 2015; Wettestad and Jevnaker, 2014). What a survey of linkages to date also reveals, however, is that the foregoing advantages have proven difficult to leverage in practice. Few markets have become integrated by way of linkage, and some recent efforts to establish trading links have seen negotiations stall or become mired in technicalities. What economic theory suggests to be an attractive and straightforward policy option is, in effect, procedurally demanding and politically complex. A number of potential risks have been discussed in connection with linking, and they may partly account for the relative scarcity of existing market links (Burtraw et al., 2013). Once linked, for instance, certain design features in one system—such as price controls and offset rules—will extend to other systems, possibly compromising the achievement

13.  linking national emissions trading systems    259 of environmental objectives and limiting sovereign control over the design and operation of the carbon market (Jaffe and Stavins, 2007: 18-20). More generally, convergence of prices across linked trading systems may have distributional impacts on market participants and other stakeholders (Baron and Philibert, 2005: 137; Bohm, 1992), potentially resulting in substantial capital flows across borders and undermining political support for continued linkage (Green et al., 2014b: 1066; Kruger et al., 2007: 119). Some degree of market alignment as well as procedures governing the conditions of linkage and of subsequent adjustments to either the linked trading systems or the link itself will thus be indispensable to allow full market integration, and that can prove politically challenging (Burtraw et al., 2013; Green et al., 2014a). Yet politics are not the only obstacle to market links. Often neglected at the conceptual stage and in initial engagement, legal and institutional considerations can ultimately determine whether an emissions trading link becomes operational. What this chapter attempts, therefore, is to trace such considerations, starting with a brief background on the concept of carbon market linkages and an overview of relevant scholarly research to date. Actual experiences with linking then help inform a discussion of the specific role of law and institutions in explaining success or failure of linking efforts. A final section explores the conditions of, and prospects for, an international carbon market based on links between domestic trading systems.

2.  Definitions and Concepts Numerous definitions of linking have been brought forward to date, and they tend to share a set of common features. Generally speaking, emissions trading systems are linked if a participant in one system can use a carbon unit issued under another system to meet compliance obligations (Haites, 2003: 5). As a result of linking, units are considered fungible, or equivalent for compliance purposes, without requiring individual review and approval prior to each transaction (Stewart and Sands, 2001: 9). In its most basic rendition, therefore, a link can consist of a simple provision stating the equivalence of foreign units. Although at the heart of any link, such recognition of foreign units does not in itself suffice to render the link operational. Additionally, a process has to be in place allowing foreign units to be actually applied towards domestic compliance. Different approaches are available to that effect (Commonwealth of Australia/ European Commission, 2013: 17-23), with the most straightforward being the creation of a joint registry or connection of registries across systems that permits the direct transfer of units from the account of a participant in one system to the account of a participant in another system (Mace et al., 2008: 3). Registry integration may

260    part iv.  setting up the int'l mitigation regime not always be desirable or politically expedient, however, as it may limit sovereign control over the link. In such cases, the flow of units can also be accomplished by creating a mechanism that accounts for cancellation of units in one system and issues a corresponding amount of units in the linked system (Roßnagel, 2008: 397), an option that is particularly viable where foreign entities are eligible to open and maintain registry accounts. Even absent such arrangements, market participants may engage in trading activities that have repercussions across two or more trading systems, for instance by engaging in arbitrage through local intermediaries (Haites and Mullins, 2001: 72).1 A link between carbon markets can assume various forms, with differences in degree, scope, and the direction of trading flows. Conceptually, a link can be either direct or indirect, with direct linking conditional on an explicit decision by at least one of the linked jurisdictions (Jaffe and Stavins, 2007: 11). Direct links allow trade both within and between different systems (Ellis and Tirpak, 2006: 8), and can be further distinguished by whether unit flows are possible in one or more directions. In theory, the greatest economic benefits will follow from a direct bilateral or multilateral link, in which two or more jurisdictions agree on the mutual recognition of units and trade can occur in all directions across systems (Mehling and Haites, 2009: 181). Direct linking does not necessarily have to allow bi- or multidirectional flow of units, however. A direct link can also be purely unilateral, meaning that a jurisdiction recognizes units from one or more foreign systems, without those systems necessarily reciprocating. While unilateral linking can be accompanied by cooperation and even entail a direct registry connection,2 its appeal largely derives from the fact that it can be implemented without prior negotiations or mutual commitments. Because of the resulting flexibility, unilateral linking has been implemented in several trading systems and is also the type of link commonly used to allow use of credits from international offset mechanisms (Mehling and Haites, 2009: 172-3). Indirect linking, by contrast, is usually an unintended consequence of links with the same third party. An indirect link occurs when one system links to a second system that, in turn, is linked to a third system. Although the first and third systems are not directly linked, their indirect connection through the second system allows developments in any one system to affect supply of and demand for units, and 1   In such cases, even where the jurisdictions have not established a link, participants with market positions and compliance obligations in both jurisdictions might enter a bilateral transaction where one participant decides to transfer units to another participant in one system in return for obtaining a commensurate amount of units from that participant in another system. Still, such cases are likely to be very limited, and would not achieve most of the benefits ascribed to a formal link. 2   A unilateral link allowing use of European Union allowances for compliance in Australia was considered for the period from 1 July 2015 to 30 June 2018, and one option under consideration was a direct registry connection to facilitate the transfer of allowances, where the net flow would have been unidirectional (Commonwealth of Australia et al., 2013: 17-25).

13.  linking national emissions trading systems    261 hence unit prices, across all systems (Mehling and Haites, 2009: 171). So far, indirect links have mostly occurred when different trading systems accepted the same offset credit, such as Certified Emission Reductions (CERs) or Emission Reduction Units (ERUs) issued pursuant to the project mechanisms of the Kyoto Protocol, the Clean Development Mechanism (CDM) and Joint Implementation (JI) (Dellink et al., 2010). A conceptual distinction—albeit with only limited practical significance—can become necessary in the case of multiple integrated jurisdictions, for instance in a federal system of government or under a regional organization of economic integration. When two or more trading systems evolve under such a common regulatory framework, it can be difficult to distinguish whether the emerging market is the result of a single trading system covering multiple jurisdictions, or whether it is formed by linkage of independent trading systems. Where affected jurisdictions have no or very limited discretion on whether and how they set up a trading system within their territory, it stands to argue that the resulting market is a uniform emissions trading system.3 Even then, however, borderline cases—such as the expansion of the European Union emissions trading system (EU ETS) to the European Free Trade Agreement (EFTA) member states Norway, Iceland, and Liechtenstein—defy straightforward categorization. Perhaps the strongest indication of a single trading system, therefore, is the existence of a common governance framework, such as a central administrator, central institutions, and central decision-making and enforcement procedures,4 and the use of a common tradable unit.

3.  Overview of Linking Research A considerable body of research studying links between emissions trading systems has accumulated over the past decade and a half. In an attempt to categorize this   Again, the EU ETS would likely be considered a single trading system because its adoption is mandatory for Member States, and the majority of design features are already specified in great detail in supranational legislation. By contrast, in the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI), the common regulatory framework is set out in non-binding policy documents, and the harmonization of design features and use of common institutional structures is therefore purely voluntary. Hence, the carbon markets emerging under RGGI and the WCI could be considered linked systems. 4   If this is to be the primary criterion, the European Union emissions trading system (EU ETS) could have been described as a complex of national linked trading systems during the early trading phases, when a majority of institutional arrangements (such as registries) and decisions (such as national allocation plans) were still taken at the Member State level; from the third trading period onward, however, important decision making powers and institutional structures have been centralized, such as the allocation process and common registry. 3

262    part iv.  setting up the int'l mitigation regime wealth of research output, one might broadly distinguish three phases of research, each with its own primary research interests and approaches: • an exploratory conceptual phase, which saw the definition of central linking concepts and modalities as well as early enquiry into its potential effects; • an instrumental phase, focused on the identification of specific conditions and mechanisms for successful linking and their evaluation in empirical case studies; • and a more emancipated critical phase, in which the focus of investigation has moved beyond primarily technical assessments to acknowledge the role of political dynamics in the linking process, partly in response to the challenges encountered in practice. While boundaries between these research categories are neither definite nor absolute, they serve a heuristic purpose and allow grouping individual research efforts along common themes and preoccupations. Each phase is described in further detail below, with reference to representative studies and research projects.

3.1 Conceptual Phase Research on linkages between emissions trading systems dates back to the early 2000s, a time when policy makers in developed countries were considering domestic strategies to achieve the quantified emission limitation and reduction objectives entered under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC). As signatory states contemplated market-based instruments among their compliance options, mirroring the flexible mechanisms included in the Kyoto Protocol, attention soon extended to the potential for future connections between domestic trading systems. Some of the earliest studies on linking already set out the concept in substantial detail, assessing the implications of different market design options and linking approaches, and weighing the prospects for future linkages between the trading systems emerging at the time, including voluntary markets and pilot trading systems within industry (Haites and Mullins, 2001; Haites, 2003; Stewart and Sands, 2001). Research during this phase also considered how international emissions trading and linked national or regional markets could exist alongside each other once the Kyoto Protocol entered into force (Baron and Bygrave, 2003; Bodansky, 2002; Bode, 2003). Expected economic and distributional impacts and actor dynamics featured in this early phase (Anger, 2008; Rehdanz and Tol, 2005), as did specific issues affecting compatibility between emissions trading systems, for instance the nature of mitigation targets (Fischer, 2003; Marschinski, 2008).

13.  linking national emissions trading systems    263 Driving actors in this early phase included the Organisation for Economic Co-operation and Development (OECD) through its Global Forum on Sustainable Development (GFSD), the Concerted Action on Tradeable Emissions Permits (CATEP) research network, and the Joint Emissions Trading as a Socio-Ecological Transformation (JET-SET) project, all of which convened a series of pertinent events and yielded numerous important insights. Over time, the research questions explored in the foregoing studies were revisited in view of changing political developments, including the emerging discussion on architecture of global climate cooperation beyond 2012, as well as initial feedback from the practical operation of trading systems such as the EU ETS (Ellis and Tirpak, 2006; Jaffe and Stavins, 2007; Jaffe et al., 2009; Sterk et al., 2006).

3.2 Instrumental Phase Building on the foregoing conceptual work, the following phase witnessed an extensive body of research on the prospects for links between specific jurisdictions. Most of this work centered around the EU ETS (Bazelmans, 2008; Blyth and Bosi, 2004; de Cendra de Larragán, 2010; Convery and Redmond, 2013; Flachsland et al., 2008; Goers and Pflüglmayer, 2012a; IETA, 2007; Schüle and Sterk, 2008; Springer et al., 2006), which by this time had not only started to yield empirical insights into the functioning of greenhouse gas emissions trading across national jurisdictions, but was also actively pursuing links with other trading systems (Wettestad and Jevnaker, 2014). Accordingly, several case studies addressed opportunities for links between the EU ETS and other existing or expected trading systems, comparing design features and assessing overall system compatibility (California: Zetterberg, 2012; Japan: Roßnagel et al., 2008; Korea: Hawkins and Jegou, 2014; Regional Greenhouse Gas Initiative: Mehling, 2007; Persson, 2009; Russia: Golub et al., 2009; Switzerland: Rutherford, 2015). Before anticipation of a U.S. federal emissions trading system was dashed with the demise of corresponding legislation in Congress, several case studies also evaluated opportunities for a broader transatlantic carbon market (Chapman, 2009; Hardy, 2007; Haug, 2005; Mehling et al., 2011; Sterk and Kruger, 2009). But despite a clear dominance of research focused on the EU ETS, the gradual evolution of policy proposals and discussion on emissions trading in other jurisdictions also gave rise to research focused beyond Europe, for instance on Australia (Jotzo and Betz, 2009), Japan (Kimura and Tuerk, 2008) and North America (IISD and WRI, 2007; Haites and Mehling, 2009; Sawyer and Fischer, 2010). More recently, progress at the subnational level has yielded surveys of the link between California and Québec (Purdon et al., 2014; Benoit and Côté, 2014). Output from a multinational research consortium convened by Climate Strategies, meanwhile,

264    part iv.  setting up the int'l mitigation regime informed a series of publications covering multiple jurisdictions and evaluating the prospects for broad linking across the globe (Carbon Trust, 2009; Mehling, 2009b; Tuerk et al., 2009a; Tuerk et al., 2009b; see also Goers et al., 2012b). Case studies in this phase were not limited to geographical comparisons, however. Several studies also addressed the implications of linking carbon markets to specific sectors, such as aviation and shipping (Haites, 2009), land-use (Tuerk et al., 2008), and forestry (Streck et al., 2009). Likewise, integration of offset credits through a carbon market link featured extensively in exploratory research (multiple contributions in OECD, 2004) as well as studies focused on offsets in particular trading systems, such as the link created between the EU ETS and the project mechanisms of the Kyoto Protocol (Bygrave and Bosi, 2004; Criqui and Kitous, 2003; de Sépibus, 2008; Jepma, 2003; Mehling, 2005). Simultaneously, a number of operational questions received attention as researchers began to consider the practical steps of implementing a link between carbon markets. Designing mechanisms to facilitate a link between emissions trading systems (Mehling, 2009a) and to help manage system changes over time (Haites et al., 2009) formed part of this research agenda, as did orderly termination of a link once one or more linking partners decide to withdraw (Pizer and Yates, 2014). With the increasing focus on practical challenges, this research also extended to the legal (Mace et al., 2008; Mace and Anderson, 2008; Betz and Stafford, 2008; Mehling, 2007; Mehling, 2009a; Roßnagel, 2008; Roßnagel et al., 2008) and economic implications of linking (Anger et al., 2009; Anger, 2008; Anger and Böhringer, 2006; Anger et al., 2006; Edenhofer et al., 2007). A recent overview document summarized much of the foregoing research agenda (Kachi et al., 2015).

3.3 Critical Phase By this point, the concept of a link between emissions trading systems had become well established in the debate on carbon markets as well as the broader climate policy discussion. Several domestic legislatures (European Parliament, 2009; House of Commons, 2015) held official proceedings on the prospects of carbon market linkages, the host of the 2015 Group of Seven (G7) summit commissioned a report on linking (Haug et al., 2015), and the Intergovernmental Panel on Climate Change dedicated a number of paragraphs to the topic in its latest assessment report (IPCC, 2014: 1052). Arguably, this surge in interest was driven by the increasingly evident barriers to traditional multilateralism as the dominant paradigm of international climate cooperation. Earlier expectations of a centralized governance framework for international carbon trading seemed less and less realistic after the watershed 15th Conference of the Parties (COP15) to the UNFCCC in Copenhagen in 2009,

13.  linking national emissions trading systems    265 focusing renewed attention on alternative pathways to a global trading architecture (Jaffe et al., 2009; Ranson and Stavins, 2012). Yet at the very moment that public interest in the concept seems to have reached a pinnacle, with disillusioned observers of the international negotiations deriving new hope from expanding domestic carbon markets, research on linking also saw the emergence of a more critical strain of scholarship, reflecting, as it were, the slow progress in actual implementation of market linkages as well as the growing complexity revealed by prior research. Increased adoption of emissions trading worldwide notwithstanding, early research of this more critical bent highlighted the heterogeneity of system designs, growing complexity of governance structures, and the diverse political preferences of implementing jurisdictions as an obstacle to overcome (Sterk and Schüle, 2009; Driesen, 2009). A cointegration assessment of price developments across different carbon markets suggested a diminishing likelihood of price convergence after a 2009 peak (Mizrach, 2012: 336), likewise underscoring the wavering confidence in the future prospects of the global carbon market. But perhaps most indicative of the evolving perception of linking was a highly critical assessment by an advocacy group, suggesting that linkage to other trading systems poses a substantial risk to the environmental integrity of the carbon market in the European Union (Carbon Market Watch, 2015). While some research seized on this opportunity to draw lessons from past linking experience (Ranson and Stavins, 2015) and discuss ways of invigorating moribund market segments (Michaelowa, 2014), other work conceded the political barriers to formal links and instead offered recommendations for incremental carbon market integration (Burtraw et al, 2013; Green et al., 2014a) or use of qualitative and quantitative restrictions (Lazarus et al., 2015). Economic analysis of the price and distributional effects of linking continued throughout (Alexeeva and Anger, 2015; Marschinski et al., 2010), although it tended to focus on more specific research questions, such as barriers to price convergence (Grüll and Taschini, 2010) and market implications of linkage (Cason and Gangadharan, 2011; Kanamura, 2015), and employed more sophisticated research methods, including recursive-dynamic general equilibrium modeling (Qi et al., 2013). Concern about the ethical (Lenz et al., 2014; Onigkeit et al., 2009) implications of linking has been another feature of recent scholarship, indicating a transition beyond the instrumentalism dominating earlier research. Interestingly, some newer work has even begun to extend the notion of linking beyond carbon markets to encompass broader climate policy coordination, acknowledging the heterogeneity of policy approaches evolving in jurisdictions around the world (Metcalf and Taschini, 2012) and exploring the role of the international climate regime beyond 2020 in facilitating or obstructing policy convergence (Bodansky et al., 2014).

266    part iv.  setting up the int'l mitigation regime

4.  The Role of Law and Institutions

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As highlighted in the preceding section, much of the past research on linking has focused on the mutual compatibility of different emissions trading systems and the potential effects of a link on their economic and environmental performance. Scholarly output to date has largely suggested that variations in the design of emissions trading systems can hamper the prospects for a market link (Green et al., 2014b: 1066), and while technical solutions may help overcome such differences, they tend to lessen the benefits of linking or affect the environmental integrity of underlying markets (Haites and Mullins, 2001: 67; Kruger et al., 2007: 122–5). Importantly, however, linking remains possible even when a number of design elements differ between trading systems (Mace et al., 2008: 51; Jaffe and Stavins, 2007: ES-5). Assessing the compatibility of carbon markets thus largely becomes a matter of politics, and requires balancing many competing priorities as well as the ability to compromise. It would be mistaken, however, to assume that linking can occur free of any legal or normative constraints. Adopted by regulatory decision, emissions trading systems operate in a multilayered framework of established rules, principles, and procedures constituting the legal order within any given jurisdiction. Carbon markets are highly regulated, and their dependence on the normative framework also extends to a link between such markets. Just as the trading systems it aspires to connect, the link will emerge within a legal framework from which derogation is not merely a matter of political expedience, with transactions subject to rules governing property, contracts, tort, accounting, taxation, and the provision of financial services (Anttonen et al., 2007: 96). Occasionally, differences in the legal context of linked systems may also have consequences as trading occurs across the link: when units afford their holders in one jurisdiction a more favorable status under contractual or property rules than their counterparts in other jurisdictions, such preferential treatment may prompt a strategic shift of units and ‘forum shopping’ (Betz and Stafford, 2008: 27). Likewise, legal remedies available in one jurisdiction may still be applicable to units after they have been transferred across a trading link, affording, for instance, compensation rights in the event of breach of contract. Strictly speaking, however, these implications are neither a condition nor consequence of the link itself, but a result of the general differences between the underlying legal systems. Within limits, a link may account for such differences; yet circumstances will differ in each individual case. Some legal and normative questions are genuinely related to the link, be it during the actual process of establishing the link, which necessitates recourse to recognized   The following section draws on Mehling (2009a).

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13.  linking national emissions trading systems    267 sources of law and legal procedures, or in the event of a conflict between the link and substantive legal norms and principles, whether these originate in international, regional, or domestic law. The first category relates to the different instruments available under the law to set up a link and govern its continued operation, including procedures required for their adoption; the second category relates to the subsequent interactions of the link—notably the mechanisms and procedures used for its operationalization—with substantive rules and principles at the level of international or domestic law, which may range from tensions and conflicts to mutual synergies.

4.1 Legal Form A link between emissions trading systems can assume varying degrees of formality, with implications for its legal nature and the procedural requirements of its adoption (Mehling, 2007: 47; Mace and Anderson, 2008: 193–4). A purely unilateral link can be established through inclusion of a simple clause in the legal framework of a trading system, specifying the conditions for recognition of foreign units and any applicable restrictions, for instance on the type or amount of units. Because a unilateral link remains within the domain of national jurisdiction, it can be altered or terminated at any point in time. Absent some form of international commitment, the implementing entity will not be bound by its decision to create a link.6 It is this flexibility which also explains why a majority of links currently in place are unilateral, and usually specify the eligibility of units from an external offset crediting mechanism.7 Unilateral links to emissions trading systems have also existed, for instance allowing use of European Union Allowances (EUAs) in the—now defunct— Chicago Climate Exchange (CCX), or allowing conditional use of foreign allowances in RGGI prior to the 2012 program review.8 Likewise, before the Australian 6   An illustration is Directive 2004/101/EC of 27 October 2004 amending Directive 2003/87/EC establishing a Scheme for Greenhouse Gas Emission Allowance Trading within the Community, in respect of the Kyoto Protocol’s Project Mechanisms, OJ 2004 L338/18, which links the EU ETS to the CDM and JI; it is a secondary act of legislation adopted by the EU, and can be repealed or amended at any time by the EU legislator. 7   Among currently operating emissions trading systems, for instance, the EU ETS and the New Zealand ETS allow for recognition of CERs and ERUs from the project mechanisms of the Kyoto Protocol, subject to specific restrictions on the type and volume of credits. Likewise, the Chicago Climate Exchange (CCX) and, prior to its 2012 program review, RGGI unilaterally allowed foreign credits, again subject to certain conditions, such as exceeding a carbon price threshold in the domestic market. For further detail, see Mehling et al., 2009a: 172-3. 8   See the original Regional Greenhouse Gas Initiative Model Rule of 15 August 2006 sec. XX-10.3(b)(1): ‘CO2 emissions credit retirements include the permanent retirement of greenhouse gas allowances or credits issued pursuant to any governmental mandatory carbon constraining program outside the United States that places a specific tonnage limit on greenhouse gas emissions, or certified greenhouse gas emissions reduction credits issued pursuant to the United Nations Framework Convention on Climate Change (UNFCCC) or protocols adopted through the UNFCCC process.’

268    part iv.  setting up the int'l mitigation regime Carbon Pricing Mechanism (CPM) was repealed in 2014, the EU and Australia had announced a plan to link their carbon markets, starting with a unilateral direct link allowing use of EUAs under the CPM from 1 July 2015 (Commonwealth of Australia and European Commission, 2013: 8). In a bilateral or multilateral link, by contrast, recognition must be mutual so as to allow trading flows in more than one direction. As a result, these links will generally necessitate some form of coordination between systems to synchronize the required adjustments, ranging from the mere decision to simultaneously accept foreign units for compliance purposes to more ambitious levels of integration, such as an agreement upon the trajectory of reduction obligations in each scheme (Jaffe and Stavins, 2007: 51). Different modalities are available to achieve this coordination. In Europe, for instance, the directive establishing the EU ETS contains an express mandate to conclude ‘[a]‌greements . . . with third countries listed in Annex B to the Kyoto Protocol which have ratified the Protocol to provide for the mutual recognition of allowances between the Community scheme and other greenhouse gas emissions trading schemes’, and refers to the procedure for negotiation of a formal international treaty set out in Article 218 of the Treaty on the Functioning of the European Union (TFEU).9 Mentioned earlier, the link between the Australian CPM and the EU ETS would have converted into a bilateral link by 1 July 2018, and both parties had already announced their intention to adhere to the formal procedure resulting in adoption of a binding international treaty.10 Due to their formal nature, treaties offer a transparent and predictable framework for transactions across linked trading systems; yet they are also subject to a number of restrictions. As one of the recognized sources of international law,11 a treaty is an expression of state sovereignty bounded by voluntary consent, and 9   See Art. 25 (1) of Directive 2003/87/EC of 13 October 2003 establishing a Scheme for Greenhouse Gas Emission Allowance Trading within the Community and amending Council Directive 96/61/EC, OJ 2003 L275/32, as amended. Additionally, Art. 25 specifies that ‘1a. Agreements may be made to provide for the recognition of allowances between the Community scheme and compatible mandatory greenhouse gas emissions trading systems with absolute emissions caps established in any other country or in sub-federal or regional entities’; and ‘1b. Non-binding arrangements may be made with third countries or with sub-federal or regional entities to provide for administrative and technical coordination in relation to allowances in the Community scheme or other mandatory greenhouse gas emissions trading systems with absolute emissions caps’. 10   In a preparatory document, both parties affirmed that ‘[i]‌t is necessary to conclude a treaty between the EU and Australia for the establishment of a full two-way link’ so as not to ‘reduce the combined environmental integrity of the EU ETS and the Australian ETS’ (Commonwealth of Australia et al., 2013: 8, 16). Adhering to the procedure set out in Art. 218 TFEU, which is referenced in Art. 25 Para. 1 of the EU ETS Directive, the Commissions submitted a recommendation to the Council on 14 January 2013 to initiate formal negotiations on linking the EU ETS to Australia’s CPM, see European Commission 2013. A mandate was not issued before the Australian CPM was repealed, obviating the need for formal negotiations. 11  See Statute of the International Court of Justice (adopted 26 June 1945, entered into force 24 October 1945) (1945) AJIL Supplement 39: 215, Art. 38(1).

13.  linking national emissions trading systems    269 is governed by international law in relation to its validity, application, interpretation, and enforceability. Failure to observe the terms set out under the treaty counts as a breach of international law, incurring consequences under customary international law and the possibility of countermeasures. Only formal subjects of international law may enter into treaties, notably sovereign states and certain international organizations, meaning that regional and local entities, such as the constituent units of a federation, will be excluded unless otherwise specified in the national constitution (Aust, 2014: 55). In a majority of cases, the adoption of international treaties also entails a cumbersome ratification process, with restrictions set out both under international law and in domestic constitutions or organizational mandates. Likewise, withdrawal from the treaty and subsequent amendments are subject to formal constraints, implying that any provision for adjustment or suspension of the link, for instance to account for changing circumstances, should already be included in the treaty from the outset (Haites and Wang, 2009: 474-5; Pizer and Yates, 2014: 34). Finally, a bilateral or multilateral link can also be created by way of a political understanding on the mutual recognition of carbon units, coupled with domestic legislation adjusting each system. In legal terms, this alternative will be similar to the unilateral link described earlier in this section, albeit with the difference that affected jurisdictions will establish unilateral links on a reciprocal basis. Such reciprocal links have the benefit of obviating lengthy ratification procedures and avoiding other restrictions imposed by international law, such as the exclusion of subnational jurisdictions; moreover, they leave each scheme with the flexibility to terminate the link or adapt it to changing circumstances as needed. Coordination between markets can then be achieved through informal negotiations, or—at a slightly more formal level—by way of a Memorandum of Understanding (Aust, 2014: 28) and technical standards. Still, while they document a common intent and desired outcome, each of these options lacks the binding power of a formal commitment, meaning that the link will likely remain operational only for as long as parties find it expedient. Sudden adjustments or even suspension by one of the participating jurisdictions without a predictable and transparent process can have a significant impact on the market for carbon units and the broader economies of participating jurisdictions (Mace et al., 2008: 75-6; Pizer and Yates, 2014). On 1 October 2013, California and Québec entered an arrangement to link their respective trading systems by 1 January 2014. Despite being designated an ‘agreement’, however, the linking arrangement is a political document comparable to a Memorandum of Understanding, given the lacking power of federate states and provinces to conclude formal treaties under public international law. California and Québec implicitly acknowledge this in the preamble when they state that ‘the present Agreement does not, will not and cannot be interpreted to restrict, limit or otherwise prevail over each

270    part iv.  setting up the int'l mitigation regime Party’s sovereign right and authority to adopt, maintain, modify or repeal any of their respective program regulations’.12

4.2 Material Provisions Aside from the question of legal form, normative considerations also arise with regard to the material provisions of the link. At the very least, it requires that foreign units be recognized for compliance, a determination that will generally be made effective through an amendment of the instruments establishing each trading system. Additionally, the link may need to adjust for differences in the type and definition of tradable units (Bodansky, 2002) and impose restrictions on eligible foreign units, such as aggregate import limits. In the case of bilateral or reciprocal unilateral linking, a treaty or informal arrangement between parties to the link may set out rules, principles, and procedures that specify the rights and duties of parties under the link. For one, it can define harmonization requirements and minimum design standards that have to be met before the link can become operational in the first place. More commonly, it will define the routine operation of the link, for instance by ensuring transparency through information and consultation requirements, or setting out a process to adopt decisions that affect the compatibility of the linked systems (Mehling and Haites, 2009). Such provisions become particularly important when it comes to managing critical changes to the link, to the linked trading systems, or to the context they operate in. Such changes could consist in suspension or termination of the link, intentional amendments to design features of a trading system, or unexpected economic or environmental circumstances affecting the integrity of the carbon market (Haites and Wang, 2009; Mace et al., 2008; Pizer and Yates, 2014). Likewise, clear procedures and penalty provisions are advisable in case a dispute arises. As emissions trading systems become more integrated, parties may also choose to create joint institutional structures, such as a common registry or auctioning platform. Valuable insights into the material provisions of a link are offered by the arrangement concluded between California and Québec. Overall, this arrangement is structured in five chapters, titled ‘General Provisions’, ‘Harmonization and Integration Process’, ‘Operation of the Agreement’, ‘Miscellaneous’, and ‘Final Provisions’. Central to the establishment of the link is the commitment to ‘provide for the equivalence and interchangeability of compliance instruments issued by the Parties for the purpose of compliance with their respective cap-and-trade programs’ and ‘permit the transfer and exchange of compliance instruments between entities registered with 12   Agreement between the California Air Resources Board and the Gouvernement du Québec concerning the harmonization and integration of cap-and-trade programs for reducing greenhouse gas emissions.

13.  linking national emissions trading systems    271 the Parties’ respective cap-and-trade programs using a common secure registry’.13 As stated in the preamble, implementation of this objective and other provisions has required domestic regulatory adjustments by each party.14 Regulatory harmonization is also defined as one of the primary objectives of the linking arrangement. In the event of differences or potential design changes, the linking arrangement mandates consultations and cooperative efforts at harmonization between both parties.15 Parties also undertake to cooperate in the application of these harmonized rules, for instance in the area of market supervision and enforcement.16 A further tenet in the linking arrangement between California and Québec is the agreement to promote ‘the sharing of information to support effective analysis, operation, enforcement and supervision of the market for compliance instruments’.17 In terms of institutional structures, the linking arrangement specifies that parties ‘shall continue coordinating administrative and technical support through the WCI, Inc.’,18 a non-profit corporation established in 2011 to provide administrative and technical support to participants in the Western Climate Initiative (WCI, 2010: 25). Among its functions is the administration of a joint registry and joint auctions carried out by California and Québec (IETA, 2014: 9). Additionally, California and Québec have formed several staff workgroups as a standing forum to assess the linking arrangement and its operation, and to discuss improvements where needed (ARB 2013: 12).19 In addition to the staff workgroups, the parties have 13   Articles 1b and c; Article 6 further clarifies that “mutual recognition of the Parties’ compliance instruments shall occur as provided for under their respective cap-and-trade program regulation.” In addition, “[e]‌ach Party recognizes and respects the authority of the other Party to take actions to recover or void compliance instruments that have been surrendered or that are held by registered entities in their respective cap-and-trade programs.” 14  Preamble: “the Parties recognize that the harmonization and integration of their mandatory greenhouse gas emissions reporting programs and their cap-and-trade programs are to be attained by means of regulations adopted by each Party”. 15   Article 4; more specific harmonization obligations are set out in the provisions on offset protocols, joint auctions, and a common program registry. Whenever consultations are called for, Article 3 specifies that these “shall build on existing working relationships and shall enable Parties’ staff to work constructively through workgroups”, albeit under observance of the “procedural requirements of each Party . . . including appropriate and effective openness and transparency of each Party’s public consultations.” 16   Article 10 requires parties to “work cooperatively to prevent fraud, abuse and market manipulation and to ensure the reliability of the joint auction and their respective program” and to “work cooperatively in applying the rules, laws and regulations governing the supervision of all transactions carried out among registered entities of each of the Parties and of any auction or reserve sale.” 17   Article 1f; Article 14 further affirms the importance of information, calling on parties to “jointly arrange to share information collected and developed under their respective programs” in order to “support and enhance the supervision and enforcement of the Parties’ respective program regulations.” More specific information duties are inter alia stipulated for developments potentially affecting market integrity, supervision and enforcement, and public announcements. Confidentiality of sensitive information is also addressed. 18   Article 11. 19   Working groups include a Tracking System Workgroup (TSWG) to discuss development and operation of the joint registry, the “Compliance Instrument Tracking System Service (CITSS)”, an Auction and Monitoring Workgroup (AMWG) to discuss the development of the joint auction

272    part iv.  setting up the int'l mitigation regime established a Consultation Committee composed of one representative from each party, a role assigned ex officio to specific offices in each jurisdiction, who meet ‘as needed to ensure timely and effective consultation in support of the objectives of this Agreement’.20

4.3 Legal Consistency Over time, the sustained viability and political acceptance of a trading link will depend on its ability to secure consistency with a number of written and unwritten norms, principles, and material provisions of international, regional, and municipal law. Otherwise, it not only risks being annulled through a judicial challenge, but also may undermine the validity of any transactions carried out under the link. Generalizations are difficult when assessing the relationship of a link to positive law, as any such assessment will, by necessity, depend on the particular legal context. Under public international law, a number of issue areas can acquire relevance for links between emissions trading. By default, any linking arrangement created and operating within the realm of international law will be bound by the stipulations of general international law and the international law of treaties, both of which set out doctrines and procedures necessary to any legal system. Where linking partners are also parties to the Kyoto Protocol and have entered quantified emission limitation and reduction obligations, parties may need to ensure consistency between their emissions and the number of units assigned under the Protocol (Bazelmans, 2008: 301). If two parties to the Kyoto Protocol link their national trading systems, they can ensure congruence between Kyoto units retired at the end of the compliance period and real emissions by either basing their domestic units on units recognized under the Kyoto Protocol or by ‘shadowing’ each trade of domestic units across schemes with a concurrent transfer of Kyoto units between jurisdictions; alternately, they may create an exchange mechanism for domestic units, with trade across jurisdictions occurring only in Kyoto units (Haites, 2003: 12). In the context of international law, attention has also been directed at the interface of emissions trading and international trade. Because carbon units as such—and hence their trade across a market link—are not currently governed by international trade law (Werksman, 1999: 1), concern is largely focused on the trade disciplines set out for trade in services, such as the provision of brokerage and exchange services (Munro, 2014). platform and the conduct of joint auctions, and a Management Workgroup (MWG) to set the overall priorities and track the progress of the staff-level work groups.   More specifically, the Consultation Committee is mandated with monitoring the implementation of all harmonization and integration efforts for the trading systems and greenhouse gas emissions reporting rules, making related recommendations, providing an annual report on the results of the linking arrangement, and—as a catch-all clause—address any other issues raised by the parties, see Article 12. 20

13.  linking national emissions trading systems    273 When linking systems established at the national and regional level, it stands to reason that municipal law—that is, the domestic law of states and constituent entities, and of organizations of regional economic integration such as the European Union—will be of relevance on a number of levels. First and foremost, municipal law will be important in that it sets out the regulatory architecture of the trading system, with all the related administrative and institutional features. But municipal law can also have a bearing on emissions trading, and hence linking, through all the other rules and principles affecting trade in allowances and associated economic activities, be it by way of fiscal and accounting requirements, supervision of financial markets, or regulation of exchanges, banking, and insurance services. Interactions may also occur with the wider body of environmental and energy legislation already in place in linked jurisdictions. And finally, the institutional powers and responsibilities set out under municipal law may determine which entities have the ability to engage in linking arrangements with foreign jurisdictions.

5.  Outlook: Future Perspectives for Linking So far, linking between emissions trading systems has been largely limited to unilateral or bilateral links. Yet with continued growth in the number of jurisdictions that have introduced, or plan to introduce, some form of emissions trading, the expected benefits of linking have prompted several major appeals to work towards multilateral integration of local, regional, and national trading systems (Carbon Pricing Leadership Coalition, 2014; ICAP, 2014: 4; House of Commons, 2015: 11–12). Conceptually, any link between three or more trading systems constitutes multilateral linkage,21 although political appeals such as the foregoing tend to envision a de facto global carbon market built on comprehensive regional or even universal participation (Jaffe et al., 2009: 806). As carbon market integration extends beyond bilateral relationships, however, it will also be accompanied by new challenges, some of which are additional and distinct to those already faced in a bilateral link. Critical design features—such as 21   At the most elementary level, a multilateral link will emerge when one or more parties to a bilateral link decide to link to a third system, with further expansion of the market occurring whenever any of the parties enters additional links. Even if only one party creates a new link, the other parties will still become indirectly linked by virtue of their shared connection to the same partner; if units are not fully fungible across all systems, units can flow across the indirect link through displacement of units from the shared linking partner, for instance through arbitrage activities to profit from a price differential.

274    part iv.  setting up the int'l mitigation regime price management provisions—can affect all linked systems, requiring that minimum conditions for linking be met by the entire group of participating jurisdictions. Parties entering a link will therefore have an incentive to specify transparent procedures and material conditions for any subsequent extension of the link. But such restrictions and conditions may narrow the range of viable linking options to a lowest common denominator; procedures that require the active involvement of each party will become more complex to manage. As a rule, thus, while the benefits of linking may increase with wider participation, so will its legal and institutional complexity (Görlach et al., 2015).22 Rising complexity in an expanding market should create pressure towards greater coordination and streamlining across linked systems. Where parties have the political will for coordination, they can leverage a variety of approaches to avoid unintended consequences and improve the efficiency of linking. One such option is the alignment of system designs and regulatory frameworks through use of harmonized standards, whose implementation becomes a condition for accession to the multilateral link. Not only can use of a common framework obviate the need for lengthy negotiations prior to each individual link,23 but the adherence to a shared design will also limit or eliminate differences between trading systems and thereby ensure a high degree of compatibility. Joint institutions—for instance a common registry or auctioning platform—can help leverage further efficiency gains from streamlining and consolidation. Such a harmonized design and institutional framework has been implemented successfully at the subnational level with the WCI, which has elaborated a common design template guiding participating states and provinces in the establishment of their emissions trading systems (‘Design for the WCI Regional Program’) and draws on a central institution—WCI, Inc.—to carry out a number of oversight, support, and management functions. As such a market expands—and especially if it affords growing evidence of the benefits of linking—it may exert a gravity pull through its sheer size and the aggregate political and economic weight of participating jurisdictions, potentially turning it into a docking point, or ‘hub’, for accelerated expansion (Haug et al., 2015: 11; for the EU ETS: Wettestad, 2014). But full legal and institutional harmonization will not always be politically viable, and 22   Because the number of direct and indirect links will rapidly grow with each additional system, the governance of such a multilateral link is likely to be heterogeneous, with institutional and regulatory functions exercised through various layers of bilateral arrangements. 23   Entry barriers could be reduced by simplifying the process of accession, for instance by rendering it automatic upon adherence to specified membership conditions and a simplified application procedure. Such a procedure could involve a vote by a central decision-making body with delegated powers, as in the case of accession to the International Monetary Fund (IMF), which requires a vote by its Board of Governors to decide on an application for membership by a third country, without case-by-case negotiations or parliamentary ratification procedures, see Art. II Sec. 2 of the Articles of Agreement of the International Monetary Fund (Bretton Woods, N.H., 22 July 1944).

13.  linking national emissions trading systems    275 will mostly be limited to instances where jurisdictions are able to align their trading systems from the outset. With trading systems already in operation, path dependencies arising from the difficult compromises between regulators and domestic constituencies will normally prevent the comprehensive design changes needed for system alignment, unless a jurisdiction has an overriding interest in linking.24 Going forward, however, heterogeneity of system design is expected to increase rather than diminish (Metcalfe and Weisbach, 2012: 110), reducing the likelihood of a global carbon market based on harmonization of domestic trading systems. Even where clusters or ‘clubs’ (Keohane et al., 2015) of carbon markets emerge through alignment of system parameters, they may become locked into their own path dependencies, resulting in harmonization within clusters unintentionally impeding harmonization between clusters. But inability to streamline rules and institutions does not necessarily preclude multilateral linking of emissions trading systems: parties interested in carbon market integration may, for instance, use quantitative or qualitative restrictions on trading to mitigate the potential impact of design differences, even though doing so will lower the efficiency gains from linking. Alternatively, the fungibility of traded units can also be based on a guiding principle other than full system compatibility and equal unit value, and instead rely on a metric of comparability. Rather than requiring the alignment of design features, thus, participation in a common market could be based on adherence to a set of minimum conditions, such as a ‘minimum list’ of design requirements; a ‘negative list’ precluding certain problematic design features; or a ‘positive list’ of acceptable or recommended design features (Keohane et al., 2015). Even trading systems with substantial differences in design and level of ambition—that is, incompatible in a conventional sense—could still be accommodated in a multilateral link by using mechanisms to account for these divergences. Such mechanisms include the use of discount factors, ratios, or exchange rates, which can be applied in a way that favors robust systems and penalizes systems with lacking environmental or regulatory integrity (Burtraw et al., 2013: 6).25 Theoretically, the ability to adjust mitigation value on the basis of a rating would even allow linkage to policies other than emissions   One such reason can be small market size with low liquidity, in which case the jurisdiction may be willing to embrace the harmonized design of one or more larger systems in order to link, becoming a ‘price taker’ in the process, that is, allowing supply and demand dynamics in the larger system to dominate price formation in the joint market. 25   Units from systems with insufficient environmental ambition, lacking credibility of enforcement, or other problematic design features would thus be subject to a discount or disadvantageous exchange rate, reducing their value for compliance in other systems without altogether sacrificing fungibility. By making such units less desirable, a ratio or exchange rate would reduce unit flows across systems, limiting distributional impacts in a way similar to quantitative or qualitative restrictions, and would also create an incentive for systems to improve their environmental integrity so that their units may be traded without a penalty. 24

276    part iv.  setting up the int'l mitigation regime trading, such as carbon taxes or even regulation through performance standards (Metcalfe and Weisbach, 2012). Although each jurisdiction could theoretically introduce its own set of ratios or exchange rates and apply these independently, a centralized administration would significantly increase transparency and lower transaction costs. Probably the most comprehensive exploration to date of a hub-based architecture for carbon trading systems employing exchange rates is the concept of ‘Networked Carbon Markets’ (NCM) advanced by the World Bank Task Force to Catalyze Climate Action. It would introduce a multi-tiered, risk-based carbon asset rating process to guide the central definition of exchange rates and provide a frame of reference for carbon value (World Bank Task Force to Catalyze Climate Action, 2013). Jurisdictions that have introduced carbon markets could voluntarily ‘opt in’ if they agree to having their traded units (or ‘carbon asset classes’) rated for their ‘Mitigation Value’ (MV) by independent private rating agencies on the basis of a standardized process and formula.26 A set of designated institutions would render the foregoing rating system operational: an ‘International Carbon Asset Reserve’ (ICAR) would convert ratings into exchange rates, serve as a market maker to improve liquidity, and help address market risks and price extremes (Füssler and Herren, 2015). Additionally, an ‘International Settlement Platform’ would track cross-border trading, increase market transparency, help manage counterparty risk, and exercise certain supervisory functions to prevent fraud. Yet while the departure from an approach premised on the compatibility of systems and equivalence of traded units to one that seeks to quantify and compare mitigation efforts offers interesting perspectives, the process of comparing efforts will also undoubtedly give rise to political controversy, raising similar challenges to those that have slowed progress in the UNFCCC negotiations. Ultimately, the path to a global carbon market will be significantly easier to navigate if multilateral cooperation under the UNFCCC can serve a facilitating role, for instance by providing common definitions, methodologies and institutions. Of particular importance are provisions to accurately account for shifts in greenhouse gas abatement between jurisdictions due to net carbon flows in a linked market when measuring achievement of international pledges or commitments, such as the ‘Intended Nationally Determined Contributions’ (INDCs) submitted by parties for the period beyond 2020 (Bodansky et al., 2014).   The proposed formula reads as follows: Rating = f {program rating, credibility rating, ambition adjustment. Specifically, the program rating (or ‘Program Level Rating’) would denote the carbon integrity risk, based on the risk that the policy or program will not achieve its stated carbon emission reduction target; the credibility rating (or ‘Jurisdiction Level Rating’) quantifies the policy and regulatory risk, based on the credibility of the stated climate change mitigation target or pledge of each jurisdiction, and the risk that it will not meet that target; and the ambition adjustment (or ‘Global Level Rating’) would adjust for relative climate mitigation contribution. 26

13.  linking national emissions trading systems    277

6. Conclusions Emissions trading has followed a remarkable trajectory as a policy instrument, starting as an academic concept only a few decades ago to becoming the central pillar of greenhouse gas mitigation efforts in a growing number of influential jurisdictions. As they have evolved to date, these trading systems are proving to be complex entities, embedded in sophisticated networks of contingent interests, traditionally diverse approaches to governance, and distinct regulatory constraints. Reconciling the inevitable differences between two or more trading systems in pursuit of greater integration is not primarily a task for lawyers or the law, but an inherently political project. For lawyers, the challenge is much rather to translate the negotiated consensus into legally viable arrangements, observing applicable rules of domestic, regional, and international law. As this chapter has shown, a link can be created with a fairly straightforward decision on the acceptance of foreign units. Legal challenges—both procedural and substantive—tend to follow as the link becomes operational, when it is expected to meet certain requirements regarding its formality and binding force, its institutional design, and its interactions with other areas of law. A formal and legally binding arrangement may offer the most reliable basis for linking between two or more jurisdictions, yet it also gives rise to a number of legal and political complications. As so often, simplicity and flexibility tend to compete with the objectives of transparency and certainty. To date, successful links between emissions trading systems have been largely unilateral or evolved within the context of a broader process of economic and political integration. An early link between the European Union and Norway as well as the more recent link between California and Québec underscore the value of an existing forum of cooperation, such as the European Economic Area (EEA) or the Western Climate Initiative (WCI). But even prior economic alignment will not always ensure expedient linking, as the lengthy negotiations between Switzerland and the European Union—both parties to the European Free Trade Agreement (EFTA)—have shown. What these examples also may highlight are the virtues of a functional, flexible arrangement—such as the political agreement between California and Québec—over a binding international treaty, where consensus on all required elements can necessitate a difficult and time-consuming process. For the foreseeable future, linking of emissions trading systems may be limited to geographically adjacent and socioeconomically attuned jurisdictions. Over time, however, the appeal of broader market integration is likely to increase as domestic abatement options are successively exhausted and the cost of meeting pledged emission reductions surges. At that point, jurisdictions may wish to explore new forms of cooperation, such as multilateral linking with a centralized institutional

278    part iv.  setting up the int'l mitigation regime architecture. But as the last section of this chapter has highlighted, growth in participation also intensifies the manifold complexities of linking, inviting consideration of flexible approaches that provide the required degree of regulatory convergence while ensuring low entry barriers and accommodating different system designs and ambition levels. Recent developments in international climate cooperation suggest a trend towards greater heterogeneity of domestic approaches and a diminishing role for traditional multilateralism. While the drive towards a global carbon market based on formal and informal cooperation between states, regions, provinces, local municipalities, and businesses (Egenhofer and Fujiwara, 2006: 8) will yield no shortage of legal challenges, overcoming the attendant obstacles will primarily be a matter of political deliberation. If past experience with carbon trading is any guide, solutions will be found for the immediate legal questions raised by linking; arguably, a more central normative concern emerging in the long term will extend beyond the rules and principles of positive law, and relate to the legitimacy of this global market as an effective means of addressing climate change while offering sufficient transparency and accountability to all of its stakeholders, that is, the entire international community (see, e.g., Bodansky, 1999).

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284    part iv.  setting up the int'l mitigation regime Schüle, R., and Sterk, W. (2006). Options and Implications of Linking the EU ETS with other Emissions Trading Schemes, Brussels: European Parliament. Springer, U. et al. (2006). Linking Domestic Emissions Trading Schemes to the EU ETS, Berne: Ecoplan. Sterk, W. et al. (2006). Ready to Link Up? Implications of Design Differences for Linking Emissions Trading Schemes, Wuppertal: Wuppertal Institute for Climate, Environment and Energy. Sterk, W., and Kruger, J. (2009). ‘Establishing a Transatlantic Carbon Market’, Climate Policy 9(4): 389–401. Sterk, W., and Schüle, R. (2009). ‘Advancing the Climate Regime through Linking Domestic Emission Trading Systems?’, Mitigation and Adaptation Strategies for Global Change 14(5): 409–431. Stern, N. (2007). The Economics of Climate Change, Cambridge: Cambridge University Press. Stewart, R.B., and Sands, P. (2001). ‘The Legal and Institutional Framework for a Plurilateral Greenhouse Gas Emissions Trading System’, in UNCTAD (ed.), Greenhouse Gas Market Perspectives: Trade and Investment Implications of the Climate Change Regime, Geneva: UNCTAD, 5–34. Streck, C., Tuerk, A. and Schlamadinger, B. (2009). ‘Foresty Offsets in Emissions Trading Systems: A Link Between Systems?’ Mitigation and Adaptation Strategies for Global Change 14(5): 455–463. Tangen, K., and Hasselknippe, H. (2005). ‘Converging Markets’, International Environmental Agreements: Policy, Law and Economics 5: 47–64. Tiche, F.G., Weishaar, S.E., and Couwenberg, O. (2014). ‘Carbon Leakage, Free Allocation and Linking Emissions Trading Schemes’, Carbon and Climate Law Review 8(2): 96–104. Tuerk, A. (2011). Implications of Linking on Leakage, Vienna: Österreichisches Institut für Wirtschaftsforschung (WIFO). Tuerk, A., Mehling, M., Flachsland, C., and Sterk, W. (2009a). ‘Linking Carbon Markets: Concepts, Case Studies and Pathways’, Climate Policy 9: 341–357. Tuerk, A., et al. (2009b). Linking Emissions Trading Schemes. Cambridge: Climate Strategies. Tuerk, A., Streck, C., Johns, T., and Pena, N. (2008). The Role of Land-based Offsets in Emissions Trading Systems: Key Design Aspects and Considerations for Linking, Cambridge: Climate Strategies. Western Climate Initiative (2010). Design for the WCI Regional Program, Sacramento, Cal.: WCI. Werksman, J. (1999). ‘Greenhouse Gas Emissions Trading and the WTO’, Review of European Community and International Environmental Law 8(3): 251–264. Wettestad, J., and Jevnaker, T. (2014). ‘The EU’s Quest for Linked Carbon Markets: Turbulence and Headwind’, in Cherry, T., Hovi, J., and McEvoy, D. (eds.), Toward a New Climate Agreement: Conflict, Resolution and Governance, London: Routledge, 266–279. World Bank Task Force to Catalyze Climate Action (2013). Globally Networked Carbon Markets, Washington, DC: International Bank for Reconstruction and Development. Zetterberg, L. (2012). Linking the Emissions Trading Systems in EU and California, Stockholm: Swedish Environmental Research Institute (IVL).

Chapter 14

CARBON LEAKAGE AND THE MIGRATION OF PRIVATE CO 2 EMITTERS TO OTHER JURISDICTIONS Andrew Shoyer, Jung-ui Sul, and Colette van der Ven*

1. The Phenomenon of Carbon Leakage

286

2. Industry Responses to Carbon Cost Increases

287

3. Climate Change Law and Carbon Leakage

289

4. Measures to Address Carbon Leakage

290

5. National Measures to Address Carbon Leakage: European Union

297

6. National Measures to Address Carbon Leakage: United States

305

7. National Measures to Address Carbon Leakage: South Africa

306

8. Conclusion

308

*  The views expressed herein are exclusively those of the authors and not those of their institution.

286    part iv.  setting up the int'l mitigation regime

1.  The Phenomenon of Carbon Leakage The United Nations Framework Convention on Climate Change (UNFCCC)1 and the Kyoto Protocol,2 based on the principle of ‘common but differentiated responsibilities and respective capabilities’,3 appear to envision asymmetrical implementation of carbon control policies to reduce carbon emissions.4 Pursuant to the differentiated commitments established by the Kyoto Protocol, some (but not all) developed countries have imposed tough, legally binding greenhouse gas (GHG) emission targets, while most developing countries have not adopted any carbon reduction measures. This imbalance has the potential to result in carbon leakage: the phenomenon whereby reductions made in carbon-regulated countries are wholly or partially offset by an increase in carbon emissions in countries without carbon reduction measures.5 Carbon leakage is typically thought to arise in two ways.6 First, if only a select number of States impose carbon control measures, energy-intensive installations could shift to regions without such controls.7 Second, carbon control measures could lead to a reduction in fossil fuel usage, which in turn would decrease the global price of fossil fuels, and as a perverse result, increase the net global demand for fossil fuels.8 Researchers disagree as to the magnitude of the phenomenon of leakage, or whether it is happening at all. While most empirical studies have found that the impact of carbon regulation, or the absence thereof, on trade flows and investment is uncertain or minor, a number of studies have found some evidence of carbon leakage taking place in carbon-intensive industries.9 Part of what explains this ambiguity is that the net effect of carbon reduction measures on competitiveness is   United Nations Framework Convention on Climate Change (UNFCCC), open for signature at Rio 4 June 1992 (No. I-30822), United Nations Treaty Series (1994), available at (accessed 14 May 2014). 2  Kyoto Protocol to the United Nations Framework Convention on Climate Change (Kyoto Protocol), open for signature at New York 16 March 1998 (No. A-30822), United Nations Treaty Series (2005), available at (accessed 14 May 2014). 3   UNFCCC, Article 3.1. 4   Parker, L. and Blodgett, J. (2008). ‘“Carbon Leakage” and Trade: Issues and Approaches’, CRS Report for Congress, 1. 5   ‘Carbon leakage is defined as the increase in CO2 emissions outside the countries taking domestic mitigation action divided by the reduction in the emissions of these countries.’ IPCC, Climate Change 2007: Working Group III: Mitigation of Climate Change, section 11.7.2, available at (accessed 25 October 2013). 6   Elliot, Joshua et al. (2012). ‘Unilateral Carbon Taxes, Border Tax Adjustment and Carbon Leakage’, Institute for Law and Economics, Working Paper 600, 2nd Series, 2. 7 8  Ibid.   Ibid at 6. 9   See, for example, Ecorys (2013). ‘Carbon Leakage Evidence Project’ (finding no evidence of carbon leakage occurring during EU ETS phase 1); Sartor, Oliver. (2012). ‘Carbon Leakage in the Primary Aluminium Sector: What evidence after 6½ years of the EU ETS?’ (finding no evidence of carbon 1

14.  carbon leakage and private emitters    287 contingent upon industry-specific characteristics, which are difficult to account for in econometric modelling.10 In addition, it is hard to isolate the impact of climate change measures given the complexity of factors involved when firms decide to relocate or reduce production.11 Despite this ambiguity, carbon leakage remains an area of great concern to States and industries seeking to reduce carbon emissions, as it has the potential to undermine the effectiveness of carbon reduction measures and hurt the competitiveness of the industries that decide to remain in those States. In fact, at times, carbon leakage concerns have galvanized industry opposition to carbon control measures. To address these concerns, States have taken various measures to limit the risk of carbon leakage, including allocating free allowances of GHG emissions to energyintensive sector producers that are likely to relocate production, providing financial support to help industries absorb the imputed cost of carbon emissions reductions as an operating expense, and investing in abatement techniques. This chapter provides an overview of these and other measures that States, regional entities, and industry have taken to combat the possibility of carbon leakage. Specifically, this chapter examines carbon leakage prevention measures under the European Union Emissions Trading Scheme (EU ETS) and under similar carbon regulation measures in South Africa and the United States. In addition, it examines, where relevant, the legal impediments to applying carbon leakage reduction measures.

2.  Industry Responses to Carbon Cost Increases Stronger carbon reduction measures may result in a direct loss of competitiveness of industry in carbon-regulated States as these measures increase production costs leakage in the EU aluminium sector); Kee et al. (2010). ‘The Effects of Domestic Climate Change Measures on International Competitiveness’, World Bank Policy Research Paper 5309 (finding no conclusive evidence in support of relocation of carbon intensive industries as a result of climate change policies); Mani, M. (2007). ‘The effects of climate change policies on international trade and competitiveness’, Bridges Trade BioRes Review, 1/1(2007) (finding minor evidence of leakage taking place in carbon intensive industries). For a detailed overview of studies measuring carbon leakage, see Varma, Adarsh et al. (2012). ‘Cumulative Impacts of Energy and Climate Change Policies on Carbon Leakage’, Department for Business Innovation and Skill, UK, 17. 10   Varma, Adarsh et al. (2012). ‘Cumulative Impacts of Energy and Climate Change Policies on Carbon Leakage’, Department for Business, Innovation and Skills, UK, 17. 11   Ibid at 35.

288    part iv.  setting up the int'l mitigation regime relative to those in States without such measures. The extent to which industry may lose competitiveness depends on multiple factors, including the direct and indirect cost increases incurred in complying with the carbon reduction measures.12 Direct costs arise when a company is forced to purchase carbon offsets for excess carbon emissions that occur during the production process itself.13 The magnitude of these direct costs depends upon: (1) the difference between the emission reduction target and the level of ‘business as usual’ emissions; (2) the price of carbon; and (3) the ability to offset these increases through abatement.14 As for indirect costs, carbon reduction measures increase production costs in energy-intensive sectors as the increase the price of energy. A good illustration of this is grid-electricity consumption in the European Union. As a result of carbon control measures under the EU ETS, the price of grid-electricity in the EU has increased significantly.15 This increase in the price of grid-electricity reflects the cost of allowances required to offset carbon emitted during the electricity-generating process, the opportunity cost incurred by refraining from selling emission allowances received free of charge,16 higher risks perceived by investors, and an increase in the price of alternative energy sources.17 Industry is responding to these direct and indirect cost increases in various ways. For example, European energy companies are largely avoiding such costs by passing on the full carbon price increase to consumers through higher electricity prices. They were able to do this due to the particular characteristics of energy: it cannot be purchased at a low cost and stored, it lacks an adequate substitute on a large scale, and it has low price-elasticity.18 Producers that are less structurally positioned to pass on a high percentage of their increased costs to consumers are looking into other ways to reduce the impact of increased carbon costs. One option is to improve the efficiency of the energy-production process through abatement techniques such as fuel switching, raw material substitu­ tion, or replacement of materials used in the upstream production processes with imports, all of which often result in changes to process management and logistics.19 Theoretically, firms or producers will invest in abatement techniques up to the point where the costs incurred exceed the market price of carbon emissions allowances, at which point it will be cheaper for a firm simply to purchase the 12   Reinaud, Julia. (2008). ‘Issues Behind Competitiveness and Carbon Leakage’, International Energy Agency and OECD, Information Paper, 19. 13 14  Ibid.   Ibid at 20. 15   Sato, Misato et al. (2013). ‘Sectors under Scrutiny—Evaluation of Indicators to Assess the Risk of Carbon Leakage in the UK and Germany’, Center for Climate Change Economics and Policy, Working Paper 134, 8–9. 16   Producers that choose to produce electricity expected it to bring additional income worth more than what they would have made had they sold the allowances on the market. Hyvarinen, E. ‘The Downside of European Union Emission Trading—A View From the Pulp and Paper Industry’, in Unasylva 222, 56/3 (2005), 39–40. 17   Reinaud, ‘Issues Behind Competitiveness’, 20. 18   Hyvarinen, ‘The Downside of European Union Emission Trading’, 41. 19   Reinaud, ‘Issues Behind Competitiveness’, 19.

14.  carbon leakage and private emitters    289 allowances.20 If the prices for the allowances raise total production costs to an unsustainably high level, however, firms may choose to scale-down, relocate to States with limited or no carbon reduction requirements, or close down their facilities rather than investing in abatement techniques. In theory, if carbon costs are high relative to the annual fixed costs of an installation, firms are expected to scale down production.21 If the carbon costs of production and fixed annual costs are both large, firms may decide to close an installation.22 Otherwise, firms may relocate to States with minimal carbon control measures and take advantage of limited emission reduction requirements. In practice, other considerations such as trade exposure, entry and exit barriers, international competition, and production costs represent an important factor that a firm looks at when deciding to close down, relocate, or scale down production.23

3.  Climate Change Law and Carbon Leakage International climate change law, as reflected in the UNFCCC, does not speak directly to carbon leakage. Yet the drafters of the UNFCCC and the Kyoto Protocol described the conditions most likely to give rise to carbon leakage and articulated standards relevant to the behaviour of national and sub-national governments. Article 3.1 of the UNFCCC provides that ‘the developed country Parties should take the lead in combatting climate change and the adverse effects thereof ’, while in the third preambular paragraph of the Convention, the drafters observed that ‘the share of global emissions originating in developing countries should grow to meet their social and development needs’. This asymmetry in the Parties’ obligations under both the UNFCCC and the Kyoto Protocol, exacerbated by the lower costs of labour in developing country States, fuels the need for carbon leakage measures. The UNFCCC creates very few specific obligations and it does not mandate conditions that would directly lead to carbon leakage. All parties to the UNFCCC and the Kyoto Protocol, however, do share some common obligations and, if fulfilled, these common obligations could help mitigate leakage concerns. Pursuant to Article 4.1, all Parties commit to share information about GHG emissions and their respective measures to address it. Moreover, the sixth preambular paragraph acknowledges the need for international cooperation:   Ibid at 19–20.   Makipaa, Arttu et al. (2008). ‘Competitive Distortions and Leakage in a World of Different Carbon Prices’, European Parliament’s Temporary Committee on Climate Change, 15. 22 23  Ibid.   Reinaud, ‘Issues Behind Competitiveness’, 54. 20 21

290    part iv.  setting up the int'l mitigation regime Acknowledging that the global nature of climate change calls for the widest possible cooperation by all countries and their participation in an effective and appropriate international response, in accordance with their common but differentiated responsibilities and respective capabilities and their social and economic conditions.

Carbon leakage could be avoided through the ‘widest possible cooperation by all countries’.24 National governments could structure their respective internal emission control measures in light of measures adopted ‘by all countries’.25 The threat of carbon leakage can undermine the effectiveness or the appropriateness of an international response to climate change. Holding all other factors equal, an international response that prevents carbon leakage should achieve greater reductions in overall GHG emissions than if the phenomenon of carbon leakage is ignored. Yet the UNFCCC does not explicitly discipline States with respect to the encouragement or prevention of carbon leakage. Rather, the State parties to the UNFCCC looked at the key provisions of the chapeau of Article XX of the General Agreement on Tariffs and Trade 1994, the core agreement on trade in goods administered by the World Trade Organization (WTO), when drafting Article 3.5, which attempts to discipline climate change measures. Thus, Article 3.5 provides that ‘measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade’.

4.  Measures to Address Carbon Leakage States have adopted a variety of measures to address carbon leakage. Classified broadly, there are three types of measures that a government can consider: (i) measures directly supporting domestic industry; (ii) measures targeting imports and exports; and (iii) bilateral or multilateral agreements to address carbon leakage. These measures are not necessarily mutually exclusive. A mix of them may be appropriate, especially where measures are tailored to different sectors.

4.1 Measures Directly Supporting Domestic Industry These measures are designed to support domestic industry in preserving its current competitive position. In essence, the objective is to compensate domestic producers for the negative economic effects of carbon reduction measures. The support   Kyoto Protocol, 6th preamble.

24

 Ibid.

25

14.  carbon leakage and private emitters    291 measure may be tailored to counter the negative economic and financial consequences from the carbon reduction measure (e.g., free allowances under a cap-andtrade scheme), or may take a more generic form (e.g., cash payments).26

A. Measures under a Cap-and-Trade Scheme: Allocation of Free Allowances Under a cap-and-trade scheme, an allowance permitting GHG emissions has a tradable value akin to a currency. Instead of requiring producers to buy allowances for all their emissions, the government could allocate a certain quantity of allowances to producers for free. This would mitigate some of the costs of complying with a cap-and-trade scheme. The government could go further and fully protect current domestic producers from incurring compliance costs by granting free allowances for their current emission levels. This would grandfather in the current emissions at no additional cost to the producer. Producers will only need to buy allowances if they increase their emissions. Conversely, if producers lower their emissions, they will be able to sell the excess allowances in the market, even though they received them initially for free. Such grandfathering would enable the current domestic producers to continue generating current levels of emissions at no extra cost. However, this would not necessarily eliminate the possibility of carbon leakage. New producers entering the market would still face the costs of buying allowances in the regulated jurisdiction, and may be incentivized to locate in another jurisdiction instead. This would constitute carbon leakage if the new producer would have located in the regulated jurisdiction in the absence of the regulation, and the regulation merely shifts emissions to a non-regulated jurisdiction. Even current producers may still consider relocating to another jurisdiction if they plan to expand their operations, as they would face the costs of buying allowances if they increase their emissions within the cap-and-trade scheme. In addition to these drawbacks, grandfathering imposes an additional drawback of rewarding the producers that have so far not invested in carbon-abating processes; it would be relatively easy for them to now adopt carbon-abating processes and sell excess allowances on the market. In order to address some of the drawbacks of grandfathering, the government could condition the allocation of free allowances on meeting emission averages or using the best available technologies. This would mean that producers are allocated free allowances according to the desired emission levels—that is, the emissions are   For a discussion of various policy options to address climate change, see: Pauwelyn, J. (2013). ‘Carbon Leakage Measures and Border Tax Adjustments under WTO Law’, in Research Handbook on Environment, Health and the WTO, edited by Geert Van Calsterand Denise Prevost. See also Parker, L. and Blodgett, J. (2008). ‘“Carbon Leakage” and Trade: Issues and Approaches’, Congressional Research Service. 26

292    part iv.  setting up the int'l mitigation regime allocated in accordance with industry averages—or the producers are required to use best available technologies. The government could also allocate a number of free allowances to new producers or existing producers that expand operations.

B. Measures under a Cap-and-Trade Scheme: Carbon Offsets To further reduce the incentive for producers to relocate, States could offer producers additional flexibility to lower the costs of compliance with the cap-andtrade scheme. For example, carbon offsets could be generated by carbon-abating investments in developing countries, similar to the existing Clean Development Mechanism under the Kyoto Protocol, and by forestry or agricultural projects or activities that reduce carbon emissions. If such offsets can be used with allowances under the cap-and-trade scheme, then domestic producers will find it easier to comply with their emission reduction requirements and, therefore, have less incentive to relocate to another jurisdiction.27

C. Measures under a Cap-and-Trade Scheme: Safety Valves The market price of allowances will fluctuate under a cap-and-trade scheme, and may potentially climb to a level at which it is difficult for domestic producers to sustain operations. To manage this risk, States could impose a maximum price (or ‘safety valve’) for trading emission permits. This safety valve could be accompanied by a periodic review of carbon reduction measures of other States, in order to track the differential between the costs faced by domestic producers and those faced by competing producers from other States.28

D. Sector Carve-Outs Another way to prevent leakage is to exclude certain sectors from emission reduction requirements.29 Eligible sectors will likely be those selected based on energy intensity and the identification of the sector’s products as being subject to a high level of international trade. Despite the decreased rate of emission reductions in those sectors, a State’s overall carbon reduction target could still be met by imposing reductions in other sectors. 27   However, such offset mechanisms must be designed to achieve emissions that are truly additional. The Clean Development Mechanism has been criticized for generating offsets for carbon abating investments that should have been made regardless of the offset mechanism. 28   See, for example, H.R.5049, Keep America Competitive Global Warming Policy Act of 2006, sec. 5 (introduced by Mr. Udall and Mr. Petri, 109th Cong., 29 March 2006). 29   For example, the first phase of the EU Emissions Trading Scheme excluded, inter alia, the waste, ­chemicals, aluminium, and transport sectors. See European Parliament and Council Dir. 2003/87/EC, establishing a scheme for greenhouse gas emission allowance trading within the Community and ­amending Council Directive 96/61/EC.

14.  carbon leakage and private emitters    293

E. Fund Transfers as Cross-Subsidization Revenues raised by auctioning allowances under a cap-and-trade system or from a carbon tax could be used to channel funds to domestic producers to lower their compliance costs. Funds could come from other sources. The money available could be directly transferred to the producers. The funds could be directed towards specific activities, such as research, development, and demonstration of carbon abatement technologies, or be made generally available to abate other production costs. In order to ensure long-range climate change benefits, funds may be made available only to producers that invest in certain climate-friendly technologies.

F. Tax Credits An alternative way to support domestic industry is through tax credits. As with fund transfers, States have a range of options in how to apply tax credits, whether for producers making specific expenditures or for all producers whose operations are subject to carbon measures. Where a carbon tax is applied, a tax credit could be made available to reduce the costs for domestic producers. This tax credit could produce a benefit for domestic carbon-emitting producers similar to the allocation of free allowances under a capand-trade scheme.

4.2 Measures Targeting Imports and Exports Instead of measures supporting domestic production writ large or benefitting one particular sector, a State could address carbon leakage by adopting measures that specifically target imports and exports. These measures could be applied to imports from and exports to countries that do not have comparable carbon measures in place.30 If such measures are applied in addition to measures that directly support domestic industry, they may discriminate against imported products by compensating domestic producers for their own compliance costs.31 This may create the risk that the measures are inconsistent with international trade obligations relating to national treatment. 30   For countries that do have comparable carbon measures, carbon leakage will likely not be a concern. Although compliance costs may differ by jurisdiction, this is also the case for other costs of production, such as labour and other regulatory compliance, and generally would not justify border adjustment measures. 31   For example, if domestic producers are allocated free allowances for a certain quantity of their current emissions, this should be taken into account when imposing a border adjustment cost on imports.

294    part iv.  setting up the int'l mitigation regime

A. Measures Targeting Imports Measures targeting imports subject the imported good to measures equivalent to what is imposed on domestic industry. Domestic producers would still face the costs of compliance with the carbon measures for products marketed domestically. Producers would not have an incentive to relocate to another jurisdiction, as imports would face the same costs of compliance with the carbon measures. In fact, these measures could induce producers to keep their operations inside the State’s territory.

i.  Ban or quantitative restriction on non-compliant imports Carbon reduction measures will rarely include an outright ban or quantitative restriction on carbon-intensive imports. However, certain product standards may have an effect that is equivalent to a ban or restriction, in practice, by adversely affecting the competitive opportunities for imported products. Product standards may be designed to address emissions emitted during a product’s use. These are intended to apply equally to domestic and imported products. For example, cars may be made subject to local emission standards, and electrical goods may be subject to energy efficiency standards. Foreign-based producers are subject to the same standards as domestic producers, after the products are imported, without the need for a specific border adjustment measure. If they do not meet the standard, the products will be banned from being sold on the market. Measures that address emissions generated during the production process may present greater difficulties for foreign producers. Regulations governing the production process may differ in the producer country. Further, some producers may use more carbon-intensive processes than others. If a measure sets standards on emissions generated during the production process, this could de facto discriminate between products based on their origin.32 Such measures will need to be designed and applied with particular attention to WTO obligations that prohibit such discrimination.

ii.  Border adjustment duties The lack of comparable carbon reduction laws and regulations in other States could provide the basis for regulators to impose additional duties on the embedded 32   For example, see the EU’s sustainability criteria for biofuels in Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/ EC, Article 17.1 (‘Irrespective of whether the raw materials were cultivated inside or outside the territory of the Community, energy from biofuels and bioliquids shall be taken into account for the purposes referred to in points (a), (b) and (c) only if they fulfill the sustainability criteria set out in paragraphs 2 to 6’).

14.  carbon leakage and private emitters    295 carbon in imported goods.33 For carbon taxes, the additional duty would be equivalent to the level of tax on the embedded carbon on the domestic product. For carbon reduction measures such as those under a cap-and-trade scheme, the additional duty would be based on an average allowance price paid by domestic producers. Alternatively, a border adjustment could take the form of an anti-dumping or countervailing duty. The lack of comparable carbon reduction measures in the importing country may be viewed as a form of subsidy. However, such offsetting duties will need to be carefully designed and applied, as they may be vulnerable to challenge under WTO law.

iii.  International Reserve Allowances International Reserve Allowances (IRAs) could be issued under a cap-and-trade scheme. For example, the International Brotherhood of Electrical Workers and American Electric Power proposed in 2009 that IRAs be included in any US climate change legislation. Under this proposal, importers would be required to submit IRAs sufficient to cover the emissions attributable to greenhouse gas intensive products they are importing into the United States. The allowance requirement would only apply to imports from States that do not take ‘comparable action’ to limit their emissions, as compared to those taken in the United States. Failure to submit such allowances would bar entry of covered goods into the United States. IRAs would be traded separately from the allowances generated under the domestic cap-and-trade scheme. This would ensure that the demand for, and use of, IRAs would not affect the availability, price or use of domestic allowances.34 IRAs have been proposed as a way to regulate the carbon emissions of imports in a manner consistent with WTO law.35 Nevertheless, they will still need to be designed and applied in a manner that is consistent with international trade obligations considering the potential for them to discriminate against imported products. 33  For example, see the discussion on a proposed border adjustment measure for the EU’s Emission Trading Scheme in ‘Europe’s Green Summit is Seeking to Bury the Carbon Past’, Financial Times, 8 March 2007. (‘Ms. Merkel has dismissed—at this stage—a French idea that Europe should impose a “Kyoto tax” on countries that undercut European producers at the expense of the environment’). 34   See the Summary of Testimony of Martin McBroom, Director Federal Environmental Affairs, American Electric Power before the House Subcommittee on Energy and Environment. Available at: (accessed 10 August 2015). 35   For example, see the proposal for IRAs from the International Brotherhood of Electrical Workers and American Electric Power, as reflected in the US Senator Barbara Boxer’s ‘Manager’s Amendment’ to s 3036 and as discussed in Bordoff, J. and Shoyer, A. (2008/2009). ‘International Trade Law and the Economics of Climate Policy: Evaluating the Legality and Effectiveness of Proposals to Address Competitiveness and Leakage Concerns’, Brookings Trade Forum, ‘Climate Change, Trade, and Competitiveness: Is a Collision Inevitable?’

296    part iv.  setting up the int'l mitigation regime

B. Measures Targeting Exports Domestically produced goods will also compete with foreign-produced goods in other markets. Measures targeting imports intend to level the playing field in the domestic markets. However, domestically produced goods may still face a competitive disadvantage in foreign markets where the carbon reduction regulations are less strict. This could encourage domestic producers to relocate to those markets in order to avoid incurring high regulatory costs in their home country. To combat this, a State may consider adopting measures to reduce the costs for producing goods destined for export. This could be effected through a border adjustment tax credit or a rebate for exports. These types of measures may produce negative consequences for the effectiveness of domestic carbon reduction measures, however. Producers now have an incentive to focus on export markets without seeking to invest in emission reduction technologies in order to meet domestic carbon reduction emission targets.

4.3 Measures in Bilateral or Multilateral Agreements A robust global agreement on climate change where all States would impose equivalent carbon reduction measures would obviate the need for unilateral measures to combat carbon leakage. In the absence of a global climate change agreement, there are still bilateral and multilateral approaches that can be taken to reduce carbon leakage in a targeted manner.

A. Sectoral Agreements An international agreement could cover a particular industrial sector. Multilateral sectoral agreements36 may be voluntary or mandatory. They may be incorporated into cap-and-trade schemes, or function outside of such schemes. Whatever the form of the agreement, or how they interact with other carbon reduction measures, they can reduce or prevent carbon leakage if a significant proportion of the sectors in various States abide by the same regulatory requirements. For example, the steel sector has proposed a carbon intensity cap on steel, which would be determined on a per-ton basis as the embedded carbon in steel divided by its weight.37 The cap could be implemented in the major steel producing States. Sectoral emission-related standards for the aviation sector have been a subject of discussion in the International Civil Aviation Organization, and have been adopted for the shipping sector by the International Maritime Organization.38 36   Sectoral approaches address emissions from individual industrial sectors. They may be confined to domestic industry. This section, however, focuses on multilateral sectoral agreements. 37  International Iron and Steel Institute (2007). ‘A Global Sector Approach to CO2 Emissions Reduction for the Steel Industry’. 38  The International Civil Aviation Organization adopted a mandate to negotiate a global market-based measure for airlines at its 38th Assembly in October 2013. The International

14.  carbon leakage and private emitters    297 Sectoral agreement proposals are generally based on three elements.39 First, there needs to be an agreement on benchmarks for performance metrics and indicators for emission-related practices. Second, best practices within the sector to increase efficiency and transfer of technology are shared. Third, producers in the sectors are encouraged to adopt those best practices. For those sectors in developing countries, this could be facilitated through providing technical assistance, technology transfer, or greenhouse gas credits for emission reductions.

B. Bilateral and Preferential Trade Agreements with Emission-related Provisions Free trade agreements and other agreements that provide developing countries with preferential duties frequently feature provisions on environmental and social standards. These agreements can be used to promote convergence on carbon reduction measures and thereby reduce the risk of carbon leakage. The EU has already been employing this strategy with regard to the Kyoto Protocol. The Kyoto Protocol is one of the international agreements listed in the EU’s Regulation for the Generalised System of Preferences for reduced-duty access to the EU market by goods from developing countries.40

5.  National Measures to Address Carbon Leakage: European Union In response to its commitments made under the Kyoto Protocol, the EU launched the Emissions Trading System in 2005, the first and largest mandatory international trading system for GHG emission allowances.41 The EU ETS is based on a ‘cap-andtrade’ approach, whereby a cap—which is reduced each year—is set on the total amount of GHGs that installations and power plants are allowed to emit.42 Within this cap, firms receive or buy emission allowances that they can trade with other Maritime Organization made the Energy Efficient Design Index mandatory for new ships and the Ship Energy Efficiency Management Plan for all ships in its Resolution MEPC.203(62), adopted on 15 July 2011.   See the discussion of sectoral approaches in Parker, L. and Blodgett, J. (2008). ‘“Carbon Leakage” and Trade: Issues and Approaches’, Congressional Research Service. 40   It has also been reported that the EU agreed to Russia’s accession to the WTO in exchange for Russia ratifying the Kyoto Protocol (see Frankel, J. (2005). ‘Climate Change and Trade, Links between the Kyoto Protocol and WTO’, Environment, 47(7): 8–19). 41   European Commission, The EU Emissions Trading Scheme, at (accessed 25 July 2013). 42  Ibid. 39

298    part iv.  setting up the int'l mitigation regime firms if so required.43 By limiting the amount of total emission allowances available, the cost of allowances increases, incentivizing firms to reduce their GHG emissions and possibly sell off unused allowances for higher prices.44 Since its launch in 2005, the EU ETS has gone through three different phases with constant revisions.45 The third phase began in 2013, when the 2009 amendments went into effect.46 During the third phase, the EU ETS: (1) introduced a single, EU-wide emissions cap, in contrast to the different caps that existed in EU Member States; (2) made auctioning, instead of trading, the default method to allocate allowances; (3) harmonized allocation rules for free allowances; and (4) included more sectors and distinct GHG compounds than did the first and second phases.47 In the third phase, the EU ETS covers forty-five per cent of the EU’s GHG emissions, including 11,000 heavy energy-using installations in power generation and manufacturing, as well as the aviation sector.48 Due to the third phase’s broader coverage, the 2009 amendments include a variety of measures Member States can take to mitigate carbon leakage risks. For example, Member States are given the option to provide free and temporarily free49 allowances to industry as well as financial measures to help industry offset indirect cost increases. The EU ETS also attempted to introduce carbon inclusion mechanisms, which would require importers of products manufactured outside the EU to comply with the EU ETS carbon reduction measures.50

5.1 Policy Responses to Address Carbon Leakage Concerns Under the third phase of the EU ETS, Member States may provide free allocation of allowances to sectors and sub-sectors that are considered ‘exposed to a  Ibid.   44 Ibid.   Phase I (2005–2007); Phase II (2008–2012); Phase III (2013–2020). Input for phase IV (post-2020) is currently being solicited. 46  European Parliament and Council Dir. 2009/29/EC, amending Dir. 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community [2009] OJ L140/63. 47   European Commission, The EU Emission Trading Scheme, at (accessed 25 July 2013). 48  Ibid. 49   For example, during Phase III, free allowances are not generally available to the power sector. Until 2019 (i.e., the ‘transitional’ period), however, ten Member States may choose to allocate a limited number of allowances for free. See, e.g., Emissions trading: rules on transitional free allocation of allowances to the power sector adopted, at (accessed 15 May 2014). 50   European Parliament and Council Dir. 2009/29/EC, amending Dir. 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community [2009] OJ L140/63; Euractiv, France details plans for ‘carbon inclusion mechanism’, at (accessed 14 May 2014). 43 45

14.  carbon leakage and private emitters    299 significantly high risk of carbon leakage’. 51 Sectors and sub-sectors that are not considered to be at ‘significant risk’ are entitled to transitional free allowances. Under the transitional scheme, companies within these sectors can receive eighty per cent of their emissions allowances for free in 2013, decreasing to less than thirty per cent of a company’s emissions allowances in 2020. No free allowances will be available by 2027.52 There are three ways that a sector or subsector can be deemed to be ‘exposed to a significantly high risk of carbon leakage’: (1) the sum of the direct and indirect costs induced in complying with the EU ETS increases production costs by at least five per cent and the trade intensity of the sector (that is, the percentage of imports from and exports to the sector or sub-sector with non-EU States) is above ten per cent; (2) the sum of direct and indirect additional costs is at least thirty per cent; or (3) trade intensity with non-EU States exceeds thirty per cent.53 Based on these criteria, every five years the Commission is required to create a list of the sectors it considers to be exposed to a significant risk of leakage. The first list (2009–2014) includes approximately sixty per cent of industrial sectors in the EU, covering over ninety-five per cent of industrial emissions under the EU ETS.54 The free allocation of allowances to industry at high risk of leakage unexpectedly led energy-intensive industries to accumulate significant surpluses in free allowances. A firm’s carbon emissions exceeded those covered under the free allowances. This phenomenon can be attributed, in part, to the economic crisis and related reductions in production, as well as a decline in the price of carbon, due to the reduced demand for carbon.55 In addition, it reflects unrealistic premises about the expected price of carbon in determining whether a sector is at significant risk of carbon leakage and, thus, eligible for free allowances. A carbon price of €30 a tonne by 2020 was the basis on which to apply the criteria used to establish which sectors were on the list.56 However, it has been predicted that the price will not exceed €12 by 2020.57 Another core, but inaccurate, assumption was that sixty per cent of emissions would be above the benchmark and thus be auctioned.58 Twenty per cent now seems more realistic.59  Ibid.   European Parliament and Council Dir. 2009/29/EC, [2009] OJ L140/63, para 21. 53   ETS Dir. Article 10(a); European Commission, Carbon Leakage, at (accessed 26 July 2013). 54   De Bruyn, S., Nelissen, D., and Koopman, M. (2013). ‘Carbon Leakage and the Future of the EU ETS market: Impact of Recent Developments in the EU ETS on the List of Sectors Deemed to be Exposed to Carbon Leakage,’ CE Delft, 37. 55   European Commission, Climate Action, at (accessed 13 May 2014). 56   De Bruyn, S., Nelissen, D., and Koopman, M. (2013). ‘Carbon Leakage and the Future of the EU ETS market: Impact of Recent Developments in the EU ETS on the List of Sectors Deemed to be Exposed to Carbon Leakage,’ CE Delft, 5-7. 57 58 59  Ibid.  Ibid.  Ibid. 51

52

300    part iv.  setting up the int'l mitigation regime Another inaccurate premise was that there would be limited participation of nonEU States in the EU ETS.60 One study predicts that if the assessment criteria were to be revised to reflect more current realities, the proportion of sectors deemed at risk of carbon leakage would be reduced from sixty per cent to thirty-three per cent, accounting for ten per cent of industrial emissions rather than ninety-five per cent.61 Notwithstanding these concerns, the second carbon leakage list covering 2015–2019, which went into effect in October 2014, has been based on the existing assessment criteria.62 The 2009 Amendments also allow Member States to compensate the most carbon-intensive sectors exposed to significant risk of carbon leakage for indirect cost increases related to GHG emissions regulations, that is, the increased costs of electricity and electricity products.63 Before any assistance may be granted, however, it has to be approved by the Commission in accordance with the Treaty for the Functioning of the European Union (TFEU).64 The EU has also allowed for carbon inclusion mechanisms to combat carbon leakage concerns by subjecting imported products to the same carbon reduction emission measures as domestic goods. For the aviation sector, in 2008, the EU issued a Directive requiring all airlines—including non-European airlines—to obtain allowances for their carbon emissions.65 By covering both intra-European flights and flights to and from the EU, the Directive aimed to shore up the competitive advantage non-European airlines held as a result of the EU ETS which only applied to European carriers. However, in response to fierce international opposition from the airline industry and from non-EU States whose airlines fly into the EU and progress made by the International Civil Aviation Organization towards developing a global market-based mechanism to reduce aviation emissions, the EU has postponed the application of the scheme to international flights outside the EU until December 2016.66 Beyond the ETS, the EU has adopted other measures to reduce carbon leakage risks. Under the 2003 Energy Taxation Directive, energy products and electricity  Ibid.   61  Ibid at 35.   European Commission, Carbon Leakage, at (accessed 23 August 2015). 63   European Parliament and Council Dir. 2009/29/EC, [2009] OJ L140/63, para 27. 64   European Commission, Carbon Leakage, at (accessed 23 August 2015). 65   European Parliament and Council Dir. 2008/101/EC, amending Dir. 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community [2008] OJ L8; European Commission, Reducing Emissions from the Aviation Sector, at (accessed 1 August 2013). 66  Cleantechnica, EU Commission postpones International Airline Tax, at (accessed 1 August 2013); European Commission, Climate Action, at (accessed 24 October 2014). 60 62

14.  carbon leakage and private emitters    301 consumed by energy-intensive businesses in the EU are entirely exempt from taxation. The tax is reduced by fifty per cent for energy products consumed by nonenergy-intensive businesses.67 The Commission submitted a proposal in 2011—which was subsequently turned down by the EU Parliament—to expand the Directive’s scope to impose ‘carbon taxes’, that is, taxes on fuels based on their carbon emissions.68 For purposes of ensuring compatibility with the EU ETS, the proposed amendments applied only to sectors not covered by the EU ETS. Sectors that were not subject to the EU ETS (such as aluminium and basic chemical production) were thought generally to be smaller and less susceptible to international competition, and thus carbon leakage concerns were minimal.69 The proposed amendments to the 2003 Energy Tax Directive also provided for transitional periods and tax credits for sectors at high risk of leakage, thereby demonstrating awareness of the need to address the potential risk of carbon leakage, notwithstanding the ultimate rejection of the proposal.70

5.2 Legal Implications of Carbon Leakage Reduction Measures As described above, the Commission provides Member States several options to mitigate the risks of carbon leakage. As with any new and broad-sweeping programme, some of the initiatives have raised interesting legal questions, a number of which have precipitated legal proceedings. The inclusion of aviation in the EU ETS has been challenged before the European Court of Justice (ECJ)71 while the benchmarking determinations for free allocation of carbon emissions allowances have come before the European General Court (EGC).72 Measures involving state aid, like financial measures to help offset indirect costs due to electricity price increases, have been given special attention by the Commission to ensure compatibility with the TFEU.73 This section provides a brief overview of some of the main legal issues that have arisen in relation to measures taken to reduce carbon leakage.   Council Dir. 2003/96/EC on restructuring the Community Framework for the Taxation of Energy Products and Electricity [2003] OJ L283. 68   International Network for Sustainable Energy. EU Energy Policy: Energy-Tax Directive, at (accessed 1 August 2013). 69   Europa. (2011). ‘Revision of the Energy Taxation Directive, Questions and Answers’, at (accessed 1 August 2013). 70  Ibid. 71   See e.g., Case C-366/10, Air Transport Association of America and Others v Secretary of State for Energy and Climate Change [2011] ECR I-0000; Case T-370/11 Poland v EC Commission [2013] OJ C114/34. 72   Case T-370/11 Poland v EC Commission [2013] OJ C114/34. 73   Council Regulation 994/98 on the application of Articles 87 (former Article 92) and 88 (former Article 93) of the Treaty establishing the European Community to certain categories of horizontal state aid, [1998] OJ L 142. 67

302    part iv.  setting up the int'l mitigation regime Some carbon leakage reduction measures can be categorized as ‘state aid’ within the meaning of TFEU Article 107(1).74 These include financial measures provided to installations to compensate for indirect emission costs, investment aid to highly efficient power plants, and optional transitional allowances in the electricity sector. While Article 107(1) prohibits state aid that distorts competition, an exception is carved out for aid used ‘to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest’.75 The Commission has provided Member States with specific guidelines76 to ensure that state aid provided in the context of the EU ETS is compatible with the TFEU.77 These guidelines incorporate a balancing test previously formulated in the 2005 State Aid Action Plan, under which a State needs to ensure that its aid measures ‘will result in a higher reduction of greenhouse gas emissions than would occur without the aid and to ensure that the positive effects of the aid outweigh its negative effects in terms of distortions of competition in the internal market’.78 In addition, the guidelines stipulate that the aid provided is necessary to achieve the objective of the EU ETS, and that it be limited to the minimum level required to achieve the objectives without creating undue market distortions.79 The guidelines also establish quantity thresholds for the maximum percentage of aid that may be granted for different types of aid. For example, aid provided to offset indirect emission costs due to electricity cost increases must not exceed eighty-five per cent, with the percentage to be gradually reduced after 2015.80 Investment aid provided to build highly efficient power plants is limited to the total costs of investment in equipment and land in the new installation to the extent that the equipment and land are strictly necessary for construction.81 State aid provided to help modernize a Member State’s electricity sector must not exceed the total costs of investments undertaken by the recipient of free allowances.

74   TFEU, Article 107(1) states that: ‘Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market’. 75   TFEU, Article 103(3). 76   Guidelines on Certain State Aid Measures in the Context of Greenhouse Gas Emission Allowance Trading Scheme Post-2012 [2012] OJ C158/04. 77   European Commission, Carbon Leakage, at (accessed 26 July 2013). 78 79   Guidelines on Certain State Aid Measures, [2012] OJ C158/04, para 5.  Ibid. 80   Ibid. Aid intensity must not exceed eighty-five per cent of the eligible costs in 2013, 2014, and 2015, eighty per cent of the eligible costs in 2016, 2017, and 2018, and seventy-five per cent of the eligible costs in 2019 and 2020. 81  Ibid.

14.  carbon leakage and private emitters    303 The inclusion of aviation in the EU ETS is another initiative that has been the subject of legal proceedings. In 2009, a number of American and Canadian airlines and airline associations brought a case against the EU before the ECJ, arguing that the inclusion of aviation emissions within the EU ETS was contrary to European and international law.82 The ECJ upheld the measure’s legality. It first determined the applicable law and found that the Chicago Convention83 does not bind the EU because it is not a Party to the Convention and has not assumed ‘the powers previously exercised by the Member States [which are party to the Convention] in the field of application of the Chicago Convention’.84 The ECJ also rejected the claims of violation of the Kyoto Protocol, noting that Parties subject to the Kyoto Protocol have discretion to implement their obligations and, more specifically, that Article 2(2) of the Protocol regarding the reduction of GHGs from aviation bunker fuels ‘cannot in any event . . . confer on individuals the right to rely on it in legal proceedings to contest the validity of Directive 2008/101’.85 As the Court found that agreements could not be relied upon to assess the validity of the Directive, the ECJ examined certain provisions of the Transport Agreement concluded between the European Union/European Communities and its Member States, and the European Union/European Communities agreement with the United States (the ‘Open Skies Agreement’)86 as well as three principles of customary international law: the sovereignty of States over their airspace, sovereignty over the high seas, and the freedom to fly over the high seas.87 Based upon these considerations, the ECJ found that the Directive did not infringe upon the principle of territoriality or sovereignty of third States regarding the high seas because ‘[I]‌t is only if the operator of . . . an aircraft has chosen to operate a commercial air route arriving at or departing from an aerodrome situated in the territory of a Member State that the operator, because its aircraft is in the territory of that Member State, will be subject to the allowance trading scheme’.88 The ECJ found that the Directive is consistent with the Open Skies Agreement’s fuel load and grant exemptions as it amounts to a market-based tax and is not ‘a form of obligatory levy in favour of the public authorities that might be regarded as constituting a customs duty, tax, fee or charge on fuel held or consumed by aircraft operators’.89 Based on all of these intermediate conclusions and findings, the ECJ 82   Case C-366/10, Air Transport Association of America and Others v Secretary of State for Energy and Climate Change [2011] ECR I-0000, para 71. 83   Convention on International Civil Aviation, 7 December 1944, (1994). 15 U.N.T.S. 295. 84   Case C-366/10, Air Transport Association of America and Others v Secretary of State for Energy and Climate Change [2011] ECR I-0000, para 71. 85   Ibid at paras 76–7. 86   Treaty on Open Skies, Helsinki, 24 March 1992 (‘Open Skies Agreement’). 87   Ibid at paras 4–5. 88   Case C-366/10, Air Transport Association of America and Others v Secretary of State for Energy and Climate Change [2011] ECR I-0000, para 127. 89   Ibid at para 145.

304    part iv.  setting up the int'l mitigation regime held that the application of the EU ETS to international aviation emissions was consistent with international law. Another element of the EU ETS that has been challenged in legal proceedings is the Commission’s benchmarking determinations for free allocation of carbon emissions allowances for the period of 2013–2020. In response to the 2003 Directive establishing GHG emission allowance trading within the EU,90 the Commission introduced benchmarking to determine the allocation of free emission allowances. Specifically, it decided to calculate free allowances for 2013 based on the average performance of the most efficient installations for the years 2007 and 2008.91 Poland brought a case against the EU, arguing that the Commission’s benchmarking decision violates the Directive’s equal treatment requirement as well as the TFEU.92 The EGC held that the Commission’s benchmarking standards, which involve treating installations that are using different fuels similarly, did not violate the principle of equal treatment which requires that ‘comparable situations must not be treated differently and that different situations must not be treated in the same way, unless such treatment is objectively justified’.93 In reaching this decision, the EGC noted that distinguishing product benchmarks based on the type of fuel used in different installations would not only fail to incentivize carbon-intensive installations to reduce their emissions, but could even result in an increase in emissions, as installations using low carbon emission fuel may be incentivized to replace it with high carbon emission fuel to optimize free emission allowances.94 The EGC also determined that the Directive provides ‘appropriate consideration to the economic and social consequences of the measures’ as it allows for gradual introduction of the measure and grants a larger number of allowances to installations with high carbon emissions. Thus, the EU’s benchmarking to determine the free allocation of carbon emissions allowances was found to be in accordance with EU law. In sum, the design of the emissions trading scheme in the EU reflects carbon leakage concerns. The scheme has provided various options to mitigate these risks. While some of these options have been the source of legal proceedings challenging their validity, they have been found by European courts to be consistent with international and European Union law.   European Parliament and Council Dir. 2009/29/EC, [2009] OJ L140/63.   European Parliament and Council Dir. 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Dir. 96/61/EC, [2003] OJ L275/32, Article 10(a)(2). 92   Case T-370/11 Poland v EC Commission [2013] OJ C114/34, para 15. The European General Court (EGC) found that the Directive establishing a GHG emission allowances trading scheme within the EU is valid under the TFEU as the measure was taken to implement the Directive, which was adopted on the basis of the TFEU. 93   Ibid at para 30. 94   Ibid at paras 35–9; GCE, Press Release No 26/13, Judgment in Case T-370/11, Poland v Commission (7 March 2013), available at (accessed 24 October 2014). 90 91

14.  carbon leakage and private emitters    305

6.  National Measures to Address Carbon Leakage: United States As of 2011, the United States remained the largest emitter of greenhouse gases among the UNFCCC Annex I (i.e., developed country) States.95 The United States has not introduced comprehensive climate change legislation at the federal level. Yet carbon leakage, and an appropriate response to it, was at the core of debate surrounding the preparation of proposed legislation between 2007 and 2010. In an editorial published in February 2007, the CEO of a major US electrical power generator and the leader of a major US trade union argued that the United States should not pass comprehensive climate change legislation without addressing carbon leakage and the loss of competitiveness.96 These ideas were later incorporated into the American Clean Energy and Security Act of 2009, also known as the Waxman-Markey Bill, which was passed by the US House of Representatives in 2009 but eventually died in the Senate.97 The proposed legislation included establishing a national cap-andtrade programme.98 It would also have addressed carbon leakage99 by granting emission allowance rebates per unit of production to eligible industrial sectors.100 In addition, if no international agreement on climate change was reached by 1 January 2018, the President would be required to impose on importers of certain goods originating in certain countries, the obligation to secure emissions allowances from an ‘international reserve’ separate from the pool of allowances available for use by domestic industries.101 While the federal government has not yet passed comprehensive climate change legislation, the state of California has done so, including provisions that address 95   UNFCCC Subsidiary Body for Implementation, National greenhouse gas inventory data for the period 1990–2011, FCCC/SBI/2013/19 (24 October 2013), 14, (accessed 14 May 2014). 96  Morris, M. and Hill, E. (2007). Trade is the Key to Climate Change, The Energy Daily 35 (20 February), 33. 97   Title IV, H.R. 2454, Congressional Digest H7584 (26 June 2009). See also Condon, M. and A. Ignaciuk (2013). ‘Border Carbon Adjustment and International Trade: A Literature Review’, OECD Trade and Environment Working Papers, 2013/06, OECD Publishing, 11. (accessed 23 August 2015). 98   Title III, H.R. 2454, Congressional Digest H7542 (26 June 2009). 99   ‘The term “carbon leakage” means any substantial increase (as determined by the Administrator [of the Environmental Protection Agency] in greenhouse gas emissions by industrial entities located in other countries if such increase is caused by an incremental cost of production increase in the United States resulting from the implementation of this [bill].’ Title IV, H.R. 2454, Congressional Digest H7585 (26 June 2009) (adding §762(1) to the Clean Air Act). 100   Title IV, H.R. 2454, Congressional Digest H7585 (26 June 2009) (adding §763 to the Clean Air Act). 101   Title IV, H.R. 2454, Congressional Digest H7588 (26 June 2009) (adding §§766(b)(1) and 768 to the Clean Air Act).

306    part iv.  setting up the int'l mitigation regime carbon leakage. California’s Low Carbon Fuel Standard (LCFS) Regulation applies to transportation fuels and regulates the total amount of carbon emitted during the entire life cycle of the fuel (including its extraction, refinement, and production process as well as transportation to California).102 This applies to non-California and Californiaproduced fuels. Therefore, it combats risks of carbon leakage by applying the LCFS’s lifecycle analysis in calculating GHG emissions to both domestic and imported fuels. The LCFS has been subject to a legal challenge before US courts, highlighting the legal complexities of a measure that intends to reduce the risks of carbon leakage. The US District Court ruled that the LCFS discriminated against out-of-state fuels as compared to California fuels and was inconsistent with the dormant Commerce Clause in the US Constitution.103 However, on appeal, a panel of the Ninth Circuit Court of Appeals reinstated the LCFS, ruling that it does not constitute extraterritorial regulation prohibited by the dormant Commerce Clause.104 The challengers to the LCFS sought rehearing by the full Ninth Circuit Court and also a review by the United States Supreme Court, but both requests were denied. The LCFS remains in force, although it may continue to face legal disputes.

7.  National Measures to Address Carbon Leakage: South Africa As the host of the 17th UNFCCC Conference of Parties in Durban in November– December 2011, South Africa’s government had particularly strong incentives for active engagement in climate change policy. But in setting its climate change agenda, South Africa was clearly concerned about the debate in the United States and elsewhere on carbon leakage and the threat of border measures. In its National Climate Change Response Green Paper, published in 2010, South Africa: recognise[d]‌that measures taken by developed countries in their efforts to respond to climate change may have detrimental effects on high carbon and energy intensive economies  Information available at (accessed 10 August 2015) in particular, the Low Carbon Fuel Standard Regulation of April 2010. Cal. Code Regs. tit. 17, §§95480–95490. 103   Rocky Mountain Farmers Union et al. v James N. Goldstene, Executive Officer of the California Air Resources Board, Order on Summary Adjudication Motion, No. CV-F-09-2234 LJO DLB, US District Court for the Eastern District of California (Judge O’Neill), 29 December 2011 (concluding that the LCFS ‘discriminates against out-of-state corn-derived ethanol while favoring in-state corn ethanol and impermissibly regulates extraterritorial conduct. In addition, Defendants have failed to establish that there are no alternative methods to advance its goals of reducing GHG emissions to combat global warming’). 104   Rocky Mountain Farmers Union v Corey, No. 12-15131, 9th Circuit, 18 September 2013. 102

14.  carbon leakage and private emitters    307 such as South Africa. These response measures may include trade measures including border tax adjustments, and could be reflected in a reluctance to trade in goods with a high carbon footprint. South Africa’s climate change strategy must recognise and address this and also create mechanisms that will give high carbon sectors the support and time to move to lower carbon forms of product.105

In the Green Paper, South Africa proposed using ‘market-based measures such as an escalating carbon tax to price carbon and internalise the external costs of climate change’.106 The South African National Treasury published a carbon tax discussion paper in December 2010, and further developed those ideas in May 2013 in a Carbon Tax Policy Paper.107 At that time, the National Treasury announced that it would implement a carbon tax as of 1 January 2015. In February 2014, the National Treasury announced that the implementation of the tax would be delayed until 1 January 2016.108 If it implements a carbon tax, South Africa would become one of the first developing countries to adopt an economically significant carbon policy. Just as was the case in the United States, carbon leakage appears to be at the heart of the National Treasury’s development of its carbon tax. In its 2013 Policy Paper, the National Treasury acknowledged the same concern that the Department of Environmental Affairs had noted in 2010 regarding the threat to South African exports represented by border measures imposed by other States to address carbon leakage.109 It then noted that: the implementation of a carbon price [in South Africa], without equivalent policies for mitigating climate change in other countries, could affect the competitiveness of certain emissions-intensive industries. It could also result in carbon leakage . . .  Under the emissions trading scheme, such as the EU ETS and others, this issue has been partially addressed by the allocation of free allowances. The carbon tax design for South Africa, with its proposed initial relatively high tax-free thresholds, mimics such allocation of free allowances and should go some way to address the concerns about competitiveness and carbon leakage.110

In its 2013 Policy Paper, the National Treasury rejects the use of border measures to address carbon leakage. Instead, it would offer comfort to energy-intensive and trade-intensive sectors by creating a graduated schedule of tax-free thresholds up to one hundred per cent.111 A basic tax-free threshold of sixty per cent will apply to all sectors. Additional allowances will be made for certain process emissions and 105   South Africa Department of Environmental Affairs, National Climate Change Response Green Paper 2000, 7, at (accessed 14 May 2014). 106   Ibid, 14. 107   Carbon Tax Policy Paper, South Africa National Treasury, 2 May 2013, at (accessed 28 October 2013). 108   Cohen, M., ‘South Africa Delays Carbon Tax, Plans Levies on Acid Mine Water’, Bloomberg (26 February 2014), at (accessed 14 May 2014). 109   Carbon Tax Policy Paper, South Africa National Treasury, 2 May 2013, para 3. 110   Ibid, para 199.    111  Ibid, Table 1.

308    part iv.  setting up the int'l mitigation regime for trade exposure. Trade-intensive sectors, such as basic iron and steel, basic nonferrous metals, mining and quarrying, and machinery and equipment, are those industries in which exports and imports combined are more than forty per cent of their domestic output.112 Of these, the sectors other than machinery and equipment would be considered both energy-intensive and trade-intensive (EITI) sectors.113 For EITI sectors, there would be an additional ten per cent tax-free threshold.114 South Africa will also use carbon offsets to lower the cost of the carbon tax for firms. The National Treasury proposed in April 2014 that firms be able to reduce their carbon tax liability by up to ten per cent of their actual emissions through carbon offsets.115 Offsets must be generated through eligible projects. Two of the criteria for eligible projects would be:116 • Only South African-based credits will be eligible for use within the carbon offsets scheme, to encourage the development of locally based projects and GHGmitigation in South Africa. • Projects that generate carbon offset credits must occur outside the scope of activities that are subject to the carbon tax. This is to prevent double counting of the carbon reduction benefit should an offset project be implemented on an activity that is subject to the carbon tax. By combining the basic tax-free threshold, additional allowance for process emissions, additional allowance for trade exposure, and carbon offsets, some sectors (including agriculture and waste) will be one hundred per cent tax-free.117 In addition, at least one commentator has suggested that South Africa will address the risk of carbon leakage by setting a ceiling on the price of the carbon tax because the probability of a company paying more than that for a carbon credit is very low.118

8. Conclusion International climate change law, at least as reflected in the UNFCCC, provides governments a rudimentary tool to address climate leakage—it commits them to exchange information on their respective mitigation measures and to cooperate   Ibid, para 203 and Table 10.    113 Ibid. 115   Ibid, para 204.   Carbon Offsets Paper, South Africa National Treasury, April 2014. 116   Ibid, para 11.    117  Ibid, Table 1. 118   Gonzalez, G. (5 September 2013), ‘South Africa Aims To Blend Carbon Tax With Offsets’, Ecosystem Marketplace, (accessed 28 October 2013). 112

114

14.  carbon leakage and private emitters    309 fully in the formulation and implementation of those measures. In the absence of an international agreement that binds substantially all States to reduce emissions, however, carbon leakage remains a real concern for many policymakers. This chapter has described a range of responses to carbon leakage. The experience in the European Union is the most instructive, given the number of years that the ETS has been in place and the extent to which officials and private stakeholders have discussed measures to address carbon leakage. Yet the experiences in the United States and South Africa of carbon leakage provides perhaps the most interesting lessons: concerns about carbon leakage and loss of competitiveness are closely linked, and these concerns animate lawmakers (as in South Africa) but also create significant limitations (as in the United States). Indeed, as long as asymmetric implementation of mitigation efforts remains a reality, States will face the threat of carbon leakage, creating legitimate concerns for those who wish to take meaningful action to address GHG emissions, and for those who see such action as a politically saleable excuse offered by others for inaction.

References American Clean Energy and Security Act of 2009, H.R. 2454, Congressional Digest H7471-H7619 (26 June 2009). Bordoff, J. and Shoyer, A. (2008/2009). ‘International Trade Law and the Economics of Climate Policy: Evaluating the Legality and Effectiveness of Proposals to Address Competitiveness and Leakage Concerns’, Brookings Trade Forum, ‘Climate Change, Trade, and Competitiveness: Is a Collision Inevitable?’ Case C-366/10, Air Transport Association of America and Others v Secretary of State for Energy and Climate Change [2011] ECR I-0000. Case T-370/11, Poland v EC Commission [2013] OJ C114/34. Cleantechnica, EU Commission postpones International Airline Tax, at (accessed 1 August 2013). Cohen, M. (2014). ‘South Africa Delays Carbon Tax, Plans Levies on Acid Mine Water’, Bloomberg (26 February 2014), at (accessed 14 May 2014). Condon, M. and A. Ignaciuk (2013). ‘Border Carbon Adjustment and International Trade: A Literature Review’, OECD Trade and Environment Working Papers, 2013/06, OECD Publishing. (accessed 23 August 2015). Council Dir. 2003/96/EC on restructuring the Community Framework for the Taxation of Energy Products and Electricity [2003] OJ L283.

310    part iv.  setting up the int'l mitigation regime Council Regulation 994/98 on the application of Articles 87 (former Article 92) and 88 (former Article 93) of the Treaty establishing the European Community to certain categories of horizontal State aid, [1998] OJ L142. De Bruyn, S., Nelissen, D., and Koopman, M. (2013). ‘Carbon Leakage and the Future of the EU ETS market: Impact of Recent Developments in the EU ETS on the List of Sectors Deemed to be Exposed to Carbon Leakage,’ CE Delft, 37. Ecorys. (2013). ‘Carbon Leakage Evidence Project’, at (accessed 13 November 2015). Elliot, Joshua et al. (2012). ‘Unilateral Carbon Taxes, Border Tax Adjustment and Carbon Leakage,’ Institute for Law and Economics, Working Paper 600, 2nd Series. Europa (2011). ‘Revision of the Energy Taxation Directive, Questions and Answers’, at (accessed 1 August 2013). European Commission, Carbon Leakage, at (accessed 23 August 2015). European Commission, Climate Action, at (accessed 24 October 2014). European Commission, Emissions Trading System: Rules on transitional free allocation of allowances to the power sector, at (accessed 15 May 2014). European Commission, Reducing Emissions from the Aviation Sector, (accessed 1 August 2013). European Commission, The EU Emission Trading Scheme, at (accessed 25 July 2013). European Parliament and Council Dir. 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Dir. 96/61/EC, [2003] OJ L275/32. European Parliament and Council Dir. 2008/101/EC, amending Dir. 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community [2008] OJ L8. European Parliament and Council Dir. 2009/28/EC, on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/ EC and 2003/30/EC, Article 17.1. European Parliament and Council Dir. 2009/29/EC, amending Dir. 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community [2009] OJ L140/63. Financial Times (8 March 2007), ‘Europe’s Green Summit is Seeking to Bury the Carbon Past’, at (accessed 28 October 2013). Frankel, J. (2005). ‘Climate Change and Trade, Links between the Kyoto Protocol and WTO’, Environment, 47(7): 8–19. Gonzalez, G. (5 September 2013), ‘South Africa Aims To Blend Carbon Tax With Offsets’, Ecosystem Marketplace, at (accessed 28 October 2013). Guidelines on Certain State Aid Measures in the Context of Greenhouse Gas Emission Allowance Trading Scheme Post-2012 [2012] OJ C158/04. H.R.5049, Keep America Competitive Global Warming Policy Act of 2006 (introduced by Mr. Udall and Mr. Petri, 109th Cong., 29 March 2006).

14.  carbon leakage and private emitters    311 Hyvarinen, E. (2005). ‘The Downside of European Union Emission Trading—A View From the Pulp and Paper Industry’, in Unasylva 222, 56/3: 39–41. International Iron and Steel Institute (December 2007). ‘A Global Sector Approach to CO2 Emissions Reduction for the Steel Industry’, at (accessed 28 October 2013). International Network for Sustainable Energy. EU Energy Policy: Energy-Tax Directive, at (accessed 1 August 2013). Kee, Hiau Looi et al. (2010). ‘The Effects of Domestic Climate Change Measures on International Competitiveness’, World Bank Policy Research Paper 5309, at (accessed 13 November 2015). Kyoto Protocol to the United Nations Framework Convention on Climate Change (‘Kyoto Protocol’), open for signature at New York 16 March 1998 (No. A-30822), United Nations Treaty Series (2005), at (accessed 14 May 2014). Low Carbon Fuel Standard Regulation of April 2010. Cal. Code Regs. tit. 17, §§95480–95490, at . Makipaa, Arttu et al. (2008). ‘Competitive Distortions and Leakage in a World of Different Carbon Prices’, European Parliament’s Temporary Committee on Climate Change, available at (accessed 23 August 2015). Mani, M. (2007). ‘The effects of climate change policies on international trade and competitiveness’, Bridges Trade BioRes Review, 1/1(2007). Morris, M. and Hill, E. (2007). Trade is the Key to Climate Change, The Energy Daily 35 (20 February), 33. Parker, L. and Blodgett, J. (2008). ‘“Carbon Leakage” and Trade: Issues and Approaches’, CRS Report for Congress. Pauwelyn, J. (2013). ‘Carbon Leakage Measures and Border Tax Adjustments under WTO Law’, in Research Handbook on Environment, Health and the WTO (ed. Geert Van Calster and Denise Prevost), Edward Elgar, Cheltenham, UK. Reinaud, Julia. (2008). ‘Issues Behind Competitiveness and Carbon Leakage’, International Energy Agency and OECD, Information Paper. Rocky Mountain Farmers Union et al. v James N. Goldstene, Executive Officer of the California Air Resources Board, Order on Summary Adjudication Motion, No. CV-F-092234 LJO DLB, US District Court for the Eastern District of California (Judge O’Neill), 29 December 2011. Rocky Mountain Farmers Union v Corey, No. 12-15131, US Court of Appeal for the 9th Circuit, 18 September 2013. Sartor, Oliver. (2012). ‘Carbon Leakage in the Primary Aluminium Sector: What evidence after 6½ years of the EU ETS?’, at (accessed 13 November 2015). Sato, Misato et al. (2013). ‘Sectors under Scrutiny—Evaluation of Indicators to Assess the Risk of Carbon Leakage in the UK and Germany’, Center for Climate Change Economics and Policy, Working Paper 134. South Africa Department of Environmental Affairs, National Climate Change Response Green Paper 2000, at (accessed 14 May 2014).

312    part iv.  setting up the int'l mitigation regime South Africa National Treasury (2013). Carbon Tax Policy Paper, at (accessed 28 October 2013). UNFCCC Subsidiary Body for Implementation, National greenhouse gas inventory data for the period 1990–2011, FCCC/SBI/2013/19 (24 October 2013), at (accessed 14 May 2014). United Nations Framework Convention on Climate Change (UNFCCC), open for signature at Rio 4 June 1992 (No. I-30822), United Nations Treaty Series (1994), at (accessed 14 May 2014). Varma, Adarsh et al. (2012). ‘Cumulative Impact of Energy and Climate Change Policies on Carbon Leakage’, Department for Business, Innovation and Skills, UK.

Chapter 15

NATIONAL MEASURES AND WTO CONSISTENCY— BORDER MEASURES AND OTHER INSTRUMENTS TO PREVENT CARBON LEAKAGE AND LEVEL THE CARBON PLAYING FIELD Francesco Sindico*

1. Introduction

314

2. Carbon Leakage, Competitiveness Concerns, and Energy Security

316

3. National Climate Measures

318

4. National Climate Measures and the WTO

322

5. Conclusion

330

*  I would like to thank Kevin Gray for his comments and editorial work on this chapter.

314    part iv.  setting up the int'l mitigation regime

1. Introduction Climate change is one of the most daunting challenges that the international community must face.1 Dealing with climate change requires a revolutionary change in the global socio-economic patterns of production and consumption.2 Furthermore, moving towards a low-carbon society, which is what States and other stakeholders need to do to properly tackle climate change,3 is rather difficult when there does not seem to be a clear definition of what a low-carbon society actually means and how to achieve it.4 Finally, leading a revolution to a low-carbon society is such a highlevel task that it cannot be done by one State alone, let alone a group of States, no matter how relevant and powerful they may be. This is a responsibility States agreed to at the multilateral level, under the auspices of the international climate change regime.5 Yet the climate regime is currently at a crucial stage.6 In fact, it is close to finalizing a new legal instrument that could provide the necessary platform leading 1   The conclusions stemming from the Fifth Assessment Report are discouraging. See IPCC, Fifth Assessment Report. Climate Change 2014: Synthesis Report, available at (accessed 5 August 2015). Current climate change trends are very likely to be anthropogenic, with serious effects being felt worldwide, such as increasing loss of biodiversity, negative effects on human health, amongst many others. One of the most concerning scenarios refers to sea level rise which, if unchecked, may lead to the disappearance of communities and, in the worst case scenario, of sovereign States. No wonder climate change has, and still is, being considered a security issue. On climate change and security see F. Sindico, ‘Climate Change: A Security (Council) Issue?’ (2007) 1 Carbon and Climate Law Review 26 and S.V. Scott, ‘The Securitization of Climate Change in World Politics: How Close Have We Come and Would Full Securitization Enhance the Efficacy of Global Climate Change Policy?’ (2012) 21.3 Review of European Community & International Environmental Law 220. 2   C. Figueres, Robert Schuman Lecture, Eco-Innovation Summit, Bruxelles, 9 November 2011, available at (accessed 5 August 2015). 3   See the reference to low-carbon society in Decision 1/CP.16, The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention, para 10: ‘Realizes that addressing climate change requires a paradigm shift towards building a low-carbon society that offers substantial opportunities and ensures continued high growth and sustainable development, based on innovative technologies and more sustainable production and consumption and lifestyles, while ensuring a just transition of the workforce that creates decent work and quality jobs.’ 4   E. Morgera, ‘A Legal and Conceptual Perspective of the Green Economy’ (2013) 22:1 Review of European, Comparative and International Environmental Law 14–29, and J. Vinuales, ‘The Rise and Fall of Sustainable Development’ (2013) 22:1 Review of European, Comparative and International Environmental Law 3–13. 5   In particular, through the United Nations Framework Convention on Climate Change (adopted 9 May 1992, entered into force 21 March 1994) (1992), 31 ILM 822 (UNFCCC) and the Kyoto Protocol to the 1992 Framework Convention on Climate Change (adopted 10 December 1997) 37 ILM 22 (1998). 6   UNFCCC Member States are currently involved in ‘a process to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties’, Decision 1/CP.17, Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action, para 2.

15.  national measures and wto consistency    315 to a low-carbon society revolution. Failing that, or in parallel with a new broadly applicable multilateral instrument, the regime may also disaggregate into particular initiatives that address climate change, focusing on multi-sectorial and fragmented instruments based on a bottom-up approach to international climate change obligations.7 Against this background, States have developed, and will continue to develop, national measures aimed at tackling climate change (mitigation measures) or at dealing with its effects (adaptation measures). In this chapter, we will focus our attention only on those measures aimed (explicitly or not) at preventing carbon leakage and levelling the playing field.8 The chapter aims to examine the consistency of these measures, referred to as national climate measures with World Trade Organization (WTO) obligations. In the second section, we will discuss the reasons for national climate measures that potentially end in conflict with WTO rules. In this context we will discuss how these measures are motivated by carbon leakage, loss of competitiveness, and energy security concerns, or a combination of all three. The third section will highlight certain national climate measures presented: border tax adjustments (BTAs), border adjustment measures linked to emission trading schemes, climate change related ‘technical regulations’ (as that term is understood in the WTO Agreement on Technical Barriers to Trade (TBT Agreement)), and green energy domestic support policies, such as feed-in tariffs (FITs). Section 4 will assess the WTO consistency of some of those national climate measures. The last section will provide some conclusions and thoughts on further research needed in the field of climate change and international trade obligations. 7   From the Copenhagen Accord (Conference of the Parties to the United Nations Framework Convention on Climate Change, Fifteenth Sess., Dec. 7–18, 2009, Copenhagen, Den., Draft Decision -/CP 15: Proposal by the President, Copenhagen Accord, U.N. Doc. FCCC/CP/2009/L.7 (Dec. 18, 2009) [hereinafter Copenhagen Accord], available at (accessed 5 August 2015) onwards, the international climate change regime has been moving away from a set of binding emission reduction targets to a more flexible system based on voluntary pledges. For a discussion about this trend see F. Sindico, ‘The Copenhagen Accord and the future of the International Climate Change Regime’ (2010) 1.1 Revista Catalana de Dret Ambiental 1; D. Bodansky, ‘The Copenhagen Climate Change Conference—A Post-Mortem’ (2010) 104 American Journal of International Law 230–40, and L. Massai, ‘The Long Way to the Copenhagen Accord: Climate Change Negotiations in 2009’ (2010) 19.1 RECIEL 104–21. For an interesting perspective of the future of the international climate change regime see R. Falkner, H. Stephan, et al., ‘International Climate Policy after Copenhagen: Towards a “Building Blocks” Approach’ (2010) 1.3 Global Policy 252. 8   The GLOBE report on national climate change legislation, M. Nachmany, S. Fankhauser, et al. (2014), The GLOBE Climate Legislation Study: A Review of Climate Change Legislation in 66 Countries (4th edn, 2014), 36 refers to the latter as ‘[L]‌egislation, or regulations, policies and decrees with a comparable status, that refer specifically to climate change or that relate to reducing energy demand, promoting low-carbon energy supply, tackling deforestation, promoting sustainable land use, sustainable transportation, or adaptation to climate impacts.’

316    part iv.  setting up the int'l mitigation regime

2.  Carbon Leakage, Competitiveness Concerns, and Energy Security Why should a government developing a national climate measure be concerned about its obligations under the WTO? These environmental measures, as argued, should not be scrutinized by a regime oriented towards the promotion of economic development through increased trade liberalization.9 However, a measure whose goal is to protect the environment (i.e. to mitigate climate change) may end up affecting the transboundary movements of goods and services by discriminating against goods whose production is more harmful to climate change or encouraging climate-friendly products over others. Measures that reflect a shift in consumption patterns towards a low-carbon society can end up raising international trade law concerns due to their potential inconsistency with WTO obligations. Despite any potential conflicts with WTO law, there are three drivers that will lead States to consider and possibly adopt national climate measures. The first two (carbon leakage and economic competitiveness) are the two sides of the same coin.10 The third, energy security, represents a distinct concern independent of the other two. Carbon leakage occurs in the absence of harmonized international climate standards where one State has lower standards than another.11 A firm in one State with 9   The first recital of the preamble to the Marrakech Agreement Establishing the WTO, 1995, can be interpreted as an effort to reconcile free trade and environmental protection. It states ‘Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development’. 10  See for example Doc. COM/2008/0030 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, 20 20 by 2020—Europe’s climate change opportunity (2008), p. 11: ‘Energy-intensive industries . . . would face a particular challenge during the transition to a climate-friendly economy . . . they would under normal circumstances take part in the auctions for ETS allowances: an additional cost not faced by their competitors in countries without low-carbon measures. This not only has implications for competitiveness and jobs, it also carries the risk that production and the consequent pollution just shifts to countries with no low-carbon policies’. 11   See IPCC, Climate Change 2007: Working Group III: Mitigation of Climate Change, section 11.7.6: ‘Carbon leakage is defined as the increase in CO2 emissions outside the countries taking domestic mitigation action divided by the reduction in the emissions of these countries. It has been demonstrated that an increase in local fossil fuel prices resulting, for example, from mitigation policies may lead to the re-allocation of production to regions with less stringent mitigation rules (or with no rules at all), leading to higher emissions in those regions and therefore to carbon leakage’.

15.  national measures and wto consistency    317 high carbon-intensive production may relocate to another State with lower regulatory standards.12 Although evidence of carbon leakage where firms move to a different jurisdiction to take advantage of lower emission reduction requirements is scattered, States have interpreted such potential as warranting responses through things such as BTAs and border adjustment measures.13 Some of these sectors from which migrating firms emerge often feature high levels of employment and are a valuable source of economic production for their home countries. Based on how important these sectors are for the economy, State governments appear to be receptive to complaints about loss of competitiveness. Whether perceived or real, tackling carbon leakage has been put forward by States as the rationale supporting climate-related trade measures. The third driver behind national climate measures is energy security.14 States seek affordable, safe, and secure supplies of energy. Most States rely on energy sources outside their borders, often from politically or economically unstable States, which potentially compromises a State’s energy security.15 Within this context, some States 12   For example Voestalpine, an Austrian steel firm, maintained that if the company did not get a clear signal from the European Commission on how it planned to deal with the competitiveness concerns arising from energy intensive sectors, it would consider investing in a new plant outside of the EU. See Voestalpine, Annual Report 2007–08, at 48, available at (accessed 5 August 2015). 13   In fact, there could be a net increase in greenhouse gas emissions if a company, which has now moved to the State with less strict greenhouse gas reduction requirements, can lawfully emit more GHGs. According to this scenario, a company would decide to relocate its production based also on the carbon content of the goods it produces because of its higher productions costs. While this may be the case, in the past there did not seem to be overwhelming empirical evidence stating that carbon-intensive sectors would relocate based solely on climate change considerations. See R. Ratnayake, ‘Do Stringent Environmental Regulations Reduce International Competitiveness? Evidence from an Inter-industry Analysis’ (1998) 5 International Journal of the Economics of Business 77. However, other studies have shown that relocation is being considered by an increasing number of carbon-intensive sectors, such as the cement and the aluminum sectors. See OECD, The competitiveness impacts of CO2 emissions reductions in the cement sector (2005), available at (accessed 5 August 2015) and European Commission, McKinsey & Company, Ecofys (2006), ‘EU ETS Review. Report on International Competitiveness’ at 37–41. Businesses will also take into account other considerations, such as labour costs, reputation on relevant markets, etc, when deciding where to locate their operations. 14   According to the International Energy Agency (IEA), (accessed 5 August 2015): ‘[E]‌nergy security refers to the uninterrupted availability of energy sources at an affordable price’ and can be framed as long-term or short-term, the former being interested in ‘timely investments to supply energy in line with economic developments and environmental needs’ and the latter (short-term energy security) mainly concerned with ‘the ability of the energy system to react promptly to sudden changes in the supply-demand balance’. 15   The Middle East has been for many countries the main source of energy. This has meant (and for some States still does) that political unrest in this region could negatively impact energy security. Another example of energy security concerns arises amidst growing tensions between Russia and Ukraine. On the geo-politics of energy security see C. Pascual, ‘The Geopolitics of Energy: From Security to Survival’ (2008) Brookings Paper, available at (accessed 5 August 2015) and F. Verrastro et al., The Geopolitics

318    part iv.  setting up the int'l mitigation regime have started to adopt policies aimed at promoting energy security by creating incentives to domestic energy suppliers to play a greater role in providing such security. While this may be politically attractive, these measures are susceptible to a conflict with WTO obligations. In sum, carbon leakage, competitiveness concerns, and energy security are three drivers that have led States to consider or adopt national climate measures. Such measures can have an effect on international trade and end up violating WTO obligations. One important point to highlight at this stage is that using carbon leakage as the rationale for a national climate measure can support characterizing the measures as an environmental measure, since the main goal is to mitigate climate change. If the national climate measure is driven by competitiveness concerns, it will more likely be an economic measure, since the main goal will be to protect jobs and ensure economic development by levelling the playing field between the State with higher climate standards and the ‘climate rogue State’. Finally, national climate measures adopted on energy security grounds can be considered both environmental and economic measures, depending on the nature of the energy source supported and the structure of the measure itself. In the following sections we will highlight which driver appears to be behind the different national climate measures that have led to trade tensions between States.

3.  National Climate Measures In this section, we will briefly assess three national climate measures: BTAs, border adjustment measures linked to the existence of an emissions trading scheme, and green energy domestic support policies, such as FITs. This list is by no means exhaustive. Many measures can be designed as national climate measures as these prescribe the concerns of policy-makers and commentators. However, I have limited the analysis in the chapter to the three aforementioned measures as these have been the focus of concerns for policy-makers and commentators.

of Energy: Emerging Trends, Changing Landscapes, Uncertain Times (2010), available at (accessed 5 August 2015). Furthermore, in the last few years, especially in the United States, debates on energy security have touched upon energy independence, which would be a situation in which a State does not have to rely in any way on energy imported from other States. Some studies suggest that due to the exploitation of shale gas reserves, the United States could become energy-independent by 2035; see IEA (2012), World Energy Outlook.

15.  national measures and wto consistency    319

3.1 Border Tax Adjustment BTAs related to national climate change measures were high on the agenda for several European Union (EU) Member States in 2006. In particular, the French government voiced several times that the EU had to consider BTAs in order not to undermine its global position on climate change.16 Both carbon leakage and competitiveness concerns were raised as grounds upon which to justify the adoption of such measures.17 BTAs are designed to apply to imports coming from States with no, or limited climate change regulatory requirements.18 The amount of the tax levied at the border would be the same as that which producers of products pay. Despite the attractiveness of climate-related BTAs, the EU finally decided not to use them.19 They are not currently on the agenda of the Commission or of any other EU Member State.

3.2 Emissions Trading and Border Adjustment Measures More and more States have adopted,20 or are considering establishing,21 emissions trading schemes as part of their efforts to tackle climate change. The proliferation   See the 2006 French proposal in J. Wiers, ‘French Ideas on Climate and Trade Policies’ (2008) 2 Carbon and Climate Law Review at 18. In a letter sent in 2010 to the President of the Commission, Jose Manuel Barroso, the French government, this time joined by the Italian government, has shied away from BTAs and moved towards more general climate-related border adjustment measures. The letter is available at (accessed 5 August 2015) and it makes clear that any measure would be adopted to tackle the ‘fuite de carbon’ (carbon leakage) and that it must be adopted in accordance with the law of the WTO. 17   A BTA would have discouraged carbon-intensive sectors from the EU to relocate to pollution havens. Greenhouse gas emissions would have not increased since the company would have stayed in the EU and had to fulfill the stricter EU regulations. Furthermore, a BTA, by avoiding relocation of carbon-intensive sectors, also would have had the effect of keeping jobs in the EU and not displacing the economic development linked to carbon-intensive sectors. 18   For further information on climate change-related BTAs and how they would work, see B. Lockwood and J. Whalley, ‘Carbon-motivated Border Tax Adjustments: Old Wine in Green Bottles?’ (2010) 33.6 The World Economy 810 and J. Elliott et al., ‘Unilateral Carbon Taxes, Border Tax Adjustments, and Carbon Leakage’ (2012) Research Paper No. 600, University of Chicago Institute for Law & Economics. 19   See ‘EU attacks carbon border tax initiative’, Financial Times, 14 October 2009. 20  The following countries or regions have already established an emissions trading scheme as part of their climate change policy: the EU in 2005; Japan operates a Tokyo metropolitan trading scheme from 2010 (voluntary scheme); New Zealand in 2008; Switzerland in 2008 (voluntary); the United Kingdom in 2010 through its CRC Energy Efficiency Scheme (formerly Carbon Reduction Commitment); California in 2012; a group of north east states in the US through the Regional Greenhouse Gas Initiative in 2008; and the Republic of Korea in 2015. For a brief overview of existing and future schemes see information on the New Zealand Emissions Trading Scheme web page available at (accessed 5 August 2015) and Factbox: Carbon trading schemes around the world, Reuters, 26 September 2012. 21   The following countries are considering establishing an emissions trading scheme in the near future: Mexico (voluntary) but no entry date has been specified; and Vietnam in 2018. 16

320    part iv.  setting up the int'l mitigation regime of such schemes can be considered as one the key characteristics of current (and possibly future) efforts of States amidst the backdrop of an international carbon market, which, even if struggling, is still alive and kicking.22 An emissions trading scheme effectively puts a price on carbon and provides a tangible economic incentive to firms (or States in the case of the international carbon market) to comply with their greenhouse gas emissions requirements.23 The success, or environmental effectiveness, of emission trading schemes is addressed elsewhere in this book.24 This chapter highlights a specific element of these schemes that has led to trade tensions with other States. Importers are often required to purchase emission allowances in order to be granted market access.25 Border adjustment measures have been proposed in the EU26 and in United States’ emission trading systems.27 22   In previous work, I had highlighted the proliferation of carbon trading schemes as one of the key trends in the international efforts to tackle climate change; see F. Sindico, ‘International Climate Change Practice and Trade’ in P. Farah ed., China’s Influence on Non Trade Concerns in International Economic Law (Ashgate Publishing: London, 2015). 23   On the economics of emission trading schemes and its alleged benefits, see D. Driesen, ‘Economic Instruments for Sustainable Development’ in S. Wood and B. J. Richardson, Environmental Law for Sustainability: A Critical Reader (Hart Publishing: United Kingdom, 2005). 24  See Chapter 16 by H. van Asselt in this book and S. Bogojević, ‘Ending the Honeymoon: Deconstructing Emissions Trading Discourses’ (2009) 21.3 Journal of Environmental Law 443. 25   In other words, carbon-intensive goods (i.e. carbon-intensive in terms of their production) are allowed in the territory of an emissions trading scheme only if the foreign manufacturer purchases the required amount of emission allowances. 26   The EU has been the frontrunner in terms of emission trading schemes. It has been the first to design and adopt a binding scheme (Commission Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC), which is now in its third commitment period. In 2008 the Commission reviewed the Directive (COM(2008) 16 final, ‘Proposal for a Directive amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading system of the Community’, 23.1.2008) laying the foundations of the EU emissions trading scheme and considered ways to deal with both carbon leakage and competiveness concerns. This review led to the adoption of a new piece of legislation in 2009 (Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community), which now regulates how the scheme works. While no direct climate-related border adjustment measure was ultimately adopted, the Directive does leave the door open, should carbon leakage and competiveness concerns be serious enough to warrant them. See recital 25: ‘[A]‌n effective carbon equalization system could be introduced with a view to putting installations from the Community which are at a significant risk of carbon leakage and those from third countries on a comparable footing.’ 27   During the first Obama administration, several climate bills were presented to the Congress and to the Senate (110th Cong., American Climate Security Act, § 2191 (2007); 110th Cong. 2nd Sess, Lieberman-Warner Climate Security Act, § 3036 (2008); 110th Congress, American Clean Energy and Security Act, H.R. 2454 (2009); and 110th Cong., American Power Act (2010)). The bills provided for a very detailed federal wide emissions trading scheme, which included addressing provisions on carbon leakage and competitiveness concerns. More clearly than in the EU ETS, the US draft bill mandated the inclusion of provisions aimed at levelling the playing field with States that have lower climate standards. In the first version of the draft bill, the section aimed at pursuing such a goal actually targeted imports based on the climate record of the State from which the product came from. See American Climate Security Act (2007), section 6006(b)(3)(A): ‘the President shall identify and publish in a list,

15.  national measures and wto consistency    321 In both scenarios, the proposed measures also provided free allowances for domestic carbon-intensive sectors.28

3.3 Green Energy Domestic Support Policies Green energy domestic support schemes, such as FITs, are another example of climate measures that can be seen as trying to tackle carbon leakage and levelling the playing field. FIT programs, which ensure a favorable price for green energy producers, are attractive to governments. This is particularly evident in the initial phase of the development of a renewable energy technology, because they provide those wishing to invest in renewables with the necessary level of certainty regarding their economic return for a determined period of time. In 2009, the Canadian province of Ontario29 introduced a tariff scheme that aimed to facilitate greater use of solar and wind energy. In order to obtain contracts with high tariffs, which would offset the high costs of solar and wind energy production, suppliers were required to use generation equipment, a portion of which had to be produced locally. The domestic content requirement generated controversy and led to a WTO dispute regarding the consistency of the FIT program with WTO obligations.30 Similar programs introduced by other WTO members have led to other WTO challenges that are currently working their way through the WTO dispute settlement process.31 to be known as the “covered list”, each foreign country the covered goods of which are subject to the requirements of this section’. In other words, the drafters endorsed an origin-based climate-related trade measure, which, as we will see later in this chapter, would have called into question its WTO consistency because of the discrimination against imports from specific States. Possibly due to the appreciation of these looming WTO legal hurdles, the section on carbon leakage and competitiveness concerns was somewhat nuanced in a later version of the US climate change bill. In the second version of the draft legislation, products were targeted based on their carbon content, rather than just their origin. See Lieberman-Warner Climate Security Act (2008), section 1306(d)(1)(A). On US climate change efforts see C. Piñon Carlarne, Climate Change Law and Policy: EU and US Approaches (Oxford University Press: Oxford; 2010), M.B. Gerrard (ed.), Global Climate Change and U.S. Law (American Bar Association: Washington, D.C.; 2007); and D. Driesen, ‘The Changing Climate for United States Law’ (2007) 1.1 Carbon and Climate Law Review 35.  The European emissions trading scheme, even in its revised version (Directive 2009/29/EC, Article 10b 1.a), provides domestic carbon-intensive sectors with some further flexibility in the implementation of the scheme by granting them a certain amount of allowances for free on competitiveness concerns grounds. A very similar approach can be found in the proposed US climate change legislation; see Lieberman-Warner Climate Security Act (2008), Title V, subtitles E, F, G, and H. 29   For a full description of all of the measures that made up the FIT program, see Appellate Body Reports, Canada—Certain Measures Affecting the Renewable Energy Generation Sector/Canada—Measures Relating to the Feed-in Tariff Program, WT/DS412/AB/R/WT/DS426/AB/R, adopted 24 May 2013, at 16. 30   Canada—Certain Measures Affecting the Renewable Energy Generation Sector/Canada—Measures Relating to the Feed-in Tariff Program. 31   India—Certain Measures Relating to Solar Cells and Solar Modules, WT/DS456. China has requested consultations with the European Union alleging that the FIT schemes in Italy and Greece 28

322    part iv.  setting up the int'l mitigation regime The inconsistency of the FIT Program with WTO obligations was successfully challenged by Japan and the European Union. Ontario’s measures were found to be inconsistent with Article III:4 of the General Agreement on Tariffs and Trade (GATT) and Article 2.1 of the Agreement on Trade-Related Investment Measures (TRIMs), although they were not inconsistent with the Subsidies and Countervailing Measures Agreement. Canada did not raise, as a defence, that its measure was justifiable on environmental protection or climate change mitigation grounds. Therefore, little can be drawn from the dispute about whether FIT regimes, introduced to develop renewable energy, even if they include discriminatory domestic content requirements, are consistent with WTO obligations because of the objectives the measures are seeking.32

4.  National Climate Measures and the WTO Despite slow progress within the current Doha Round of negotiations, the WTO is an effective organization due to the creation of a strong dispute settlement system. Many WTO disputes have addressed the consistency of environment-related measures and WTO obligations,33 although no disputes have involved measures specifically relating to climate change objectives. As noted above, some of the recent disputes concerning FIT measures have involved measures concerning the development of renewable energy markets although the parties to these disputes have not attempted to justify the violations on the basis of environmental protection relating to climate change prevention. This section provides an overview of the key legal analysis related to the WTO consistency of the national climate measures.

are inconsistent with WTO obligations due to, in part, the domestic content requirements. At the time of the writing of this chapter, China had not requested to the Dispute Settlement Body the establishment of a WTO Panel. See European Union and certain Member States—Certain Measures Affecting the Renewable Energy Generation Sector (DS 452). 32   India is claiming its measure is justifiable under Article XX of the GATT and how it relates to India’s goals to develop its renewable energy sector and obtain energy security, although India is not explicitly relying on the specific environment-related exceptions. 33  For example, see Appellate Body Reports, United States—Standards for Reformulated and Conventional Gasoline (‘US—Gasoline’), WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3; United States—Import Prohibition of Certain Shrimp and Shrimp Products (‘US—Shrimp’), WT/DS58/AB/R, adopted 6 November 1998, DSR 1998:VII, p. 2755; Brazil—Measures Affecting Imports of Retreaded Tyres (‘Brazil—Tyres’), WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527; United States—Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/ AB/R, adopted 13 June 2012, DSR 2012:IV, p. 1837.

15.  national measures and wto consistency    323 Furthermore, rather than provide a technical and detailed lengthy analysis of the WTO consistency of such measures that has been assessed at length by commentators, the goal of this chapter is to discuss whether adopting a national climate measure aims to combat carbon leakage, protect local producers at a competitive disadvantage, and/or ensure energy security. We will begin by looking at the application of the GATT 1994 and the TBT Agreement provisions to BTAs, border adjustment measures related to emission trading schemes, and climate changerelated technical regulations. We will then move on to discuss the WTO consistency of green energy domestic support policies such as FITs with domestic content requirements.

4.1 BTAs, Border Adjustment Measures related to Emission Trading Schemes and the GATT Measures of WTO members aiming to mitigate climate change must be in accordance with the principle of non-discrimination (i.e. national treatment and most favored nation (MFN)), which is one of the cornerstone obligations of the WTO agreements.34 The MFN obligation under Article I:1 of the GATT requires a WTO member to accord treatment to products from one WTO member immediately and unconditionally to like products originating from other WTO members. The national treatment provision set out, for example in GATT 1994 Article III:4, requires treatment no less favorable than that accorded to imported products. The less favorable treatment obligation has been interpreted in the WTO jurisprudence as not changing the conditions of competition to the detriment of the imported products.35 GATT Article III:2, which applies to fiscal measures, requires imported like products to not be subject to a tax or other internal charge in excess of those applied to domestic products. It further requires under the second sentence of Article III:2 that the products subject to a tax and a directly competitive or substitutable product are not similarly taxed. If taxes or charges pursuant to a BTA regime or other climate-related border adjustment measures linked to an emission trading scheme are to be compatible with Article III, then the amount of the levy imposed upon imported like products, or the amount of emissions required to be purchased in order for the imported like 34  Appellate Body Reports, Canada—Certain Measures Affecting the Automotive Industry, WT/ DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, p. 2985, para 69; United States—Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1 February 2002, DSR 2002:II, p. 589, para 297 35  Appellate Body Report, Korea—Measures Affecting Imports of Fresh, Chilled and Frozen Beef (‘Korea—Various Measures on Beef ’), WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, p. 5

324    part iv.  setting up the int'l mitigation regime product to be granted market access, becomes particularly relevant.36 On the one hand, a BTA will most likely be considered a taxation measure subject to GATT Article III.2. Border adjustment measures linked to an emissions trading scheme are more likely to be considered a law, regulation, or requirement under GATT Article III.4, which contains the no less favorable treatment obligation. The difference between the obligations governing the treatment of imported products could be a factor for WTO members in designing climate change mitigation measures that affect imported products. The WTO Agreement does not define ‘like’ products. The jurisprudence has laid out factors to determine whether domestic and imported products are ‘like’. A determination of ‘likeness’ is ‘fundamentally, a determination about the nature and extent of a competitive relationship between and among products’.37 The four criteria that are often considered relevant in assessing that relationship are; the properties, nature and quality of the products; the end-uses of the products; consumers’ tastes and habits in respect of the products; and the tariff classification of the products.38 In many instances, climate change-related measures distinguish between products based on the emissions generated during the production and processing of the products. This may not fall under the criteria assessing the properties, nature, and quality of the products since the process and production method (PPM) may not result in any tangible physical differences between the products. However, the carbon intensity involved in the production of a product may be something that consumers consider in distinguishing between products. Notwithstanding the debate on like products and PPMs, BTAs and border adjustment measures linked to emission trading schemes can also result in differential treatment between products based on origin. This will be the case if the WTO member’s measures apply to imported products in a way that differs from domestic products and the domestic products benefit from a regime that provides flexibility in its application to them or, more explicitly, compensates domestic carbon-intensive industries due to competitiveness concerns. WTO inconsistency 36   One of the difficulties in passing from the rhetoric of BTAs to the actual adoption and implementation thereof has always been how to arrive at the appropriate amount of the tax levied upon imports. Would the EU, or any other WTO member, just levy the same tax levied upon national carbon-intensive products when calculating the level of the tax imposed on the imported product? Or should the government adopting the BTA consider the carbon content of the imported products? Similar questions are relevant also for border adjustment measures linked to emission trading schemes. How many allowances should the importer purchase? Based on what criteria? Based on the carbon content of the product produced in another State and therefore not subject to the emissions trading scheme, or based on the average carbon content of the same products within the emissions trading scheme? 37  Appellate Body Report, European Communities—Measures Affecting Asbestos and AsbestosContaining Products (EC—Asbestos), WT/DS135/AB/R, adopted 5 April 2001, DSR 2001:VII, 3243, para 99. 38   EC—Asbestos, para 101.

15.  national measures and wto consistency    325 is easily found where the measures condition less favorable treatment on the ­origin of the products. The grounds upon which a national climate measure is taken will thus become the focal point in the assessment of the measure’s consistency with WTO obligations. GATT Article XX requires WTO members, whose national measures have been deemed to be inconsistent with GATT 1994 obligations, with an excption based on the objectives enumerated therein. GATT Article XX has been the key provision at the heart of the trade and environment debate. The jurisprudence under Article XX has developed the analytical framework to determine how much scope there is for WTO members to justify any violations in their pursuit of non-trade objectives. The framework involves a twofold analysis.39 First, the WTO member attempting to defend its measure must prove that it falls within the scope of one or more of the exceptions enumerated in Article XX. Recent jurisprudence has indicated that this is nominally easy for a WTO member to establish.40 However, the measures must have the requisite ‘degree of connection or relationship between the measure under appraisal and the state interest or policy sought to be promoted or realized’.41 The two exceptions that are most relevant to a climate change measure are those that are necessary to protect human, animal, plant life, or health under Article XX(b) or relating to the conservation of exhaustible natural resources under Article XX(g). Article XX(b) involves a weighing and balancing of factors including the relative importance of the common interest or values sought to be protected by the measure, the extent to which the measure contributes to the realization of the policy objective, and the degree of trade-restrictiveness of the measure.42 Article XX(g) requires that the measure ‘relate to the conservation of exhaustible natural resources’, which has been interpreted to mean that there must be a ‘substantial relationship’43 or a ‘close and genuine relationship between means and ends’.44

  Appellate Body Reports, US—Gasoline, p. 23 and US—Shrimp, paras 118–19.   See Appellate Body Reports, European Communities—Measures Prohibiting the Importation and Marketing of Seal Products (‘EC—Seal Products’), WT/DS400/AB/R/WT/DS401/AB/R, adopted 18 June 2014. 41   Appellate Body Report, US—Gasoline, p. 18. 42   Appellate Body Reports, Brazil—Tyres, para 178; Korea—Various Measures on Beef, para 164; China—Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, DSR 2010:I, p. 3, para 239. 43   Panel Report, United States—Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20 May 1996, as modified by Appellate Body Report WT/DS2/AB/R, DSR 1996:I, 29 at p. 17. 44   Appellate Body Report, US—Shrimp, para 136. 39

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326    part iv.  setting up the int'l mitigation regime A measure whose stated goal is to deal with carbon leakage (i.e. mitigating climate change through controlling CO2 emissions) will likely fall under the policy objectives in subparagraph (b) or (g)).45 Climate change has been linked to serious threats to the global environment that can be extended to adverse effects on human, animal, and plant life or health. Further, as clean air has been considered an ‘exhaustible natural resource’46 pursuant to Article XX(g), a measure that aims to reduce carbon emissions in the atmosphere would likely fall under the ­subparagraph. Further, measures designed to prevent climate leakage could be characterized as being substantially related to the policy objective of addressing climate change. What may be less certain, in the context of a measure that treats domestic and imported products less favorably, is whether the measure contains similar restrictions in order to meet the requirement under Article XX(g) of it being even-handed.47 A national climate measure whose goal is to promote energy security could be covered by Articles XX(b) and (g), if the link between the measure aimed at ­promoting energy security and climate change mitigation can be demonstrated. However, if the climate change measure is interpreted as contributing less to mitigating climate change and more to protecting domestic industry or otherwise ensuring job protection and economic development, there is a risk that it would not fall under the Article XX exceptions. This could arise under an analysis where the measure’s intentions undermine its ability to contribute to mitigating climate change or indicate that it is not the least trade-restrictive alternative for the WTO member. These findings will depend on specific facts relating to a measure. Nevertheless, WTO members that design their measures to assist domestic producers facing stringent carbon emission reduction requirements and penalize producers from other WTO members with little or no carbon regulation could weaken the link between the measures and the objective of mitigating climate change. Measures that overtly attempt to assist domestic producers also run the risk that they could be interpreted as a disguised restriction on international trade set out in the Article chapeau requirements. A WTO member whose measure is provisionally justifiable under Article XX must still prove that it is consistent with the chapeau requirements which state that the measure should not be ‘applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade’. Most of the

 See US—Gasoline, Appellate Body Report (Doc. WT/DS2/AB/R, 29 April 1996) section III.B. There is no reason why the atmosphere, threatened by the current level of greenhouse gases in it, should not be considered an exhaustible natural resource. This position is shared by authors like J. Wiers, Trade and Environment in the EC and in the WTO: A Legal Analysis (2002) at 239 and C. Voigt, ‘WTO Law and International Emissions Trading: Is there Potential for Conflict?’ (2008) 2.1 Carbon and Climate Law Review 54, at 61. 46   Panel Report, US—Gasoline, para 6.37.    47  Appellate Body Report, US—Gasoline, p. 19. 45

15.  national measures and wto consistency    327 trade-related environment measures that have been subject to the Article XX ana­ lysis in WTO dispute settlement have failed to meet the chapeau requirements.48 Nevertheless, the jurisprudence developed by the Appellate Body has provided guidance on how such measures, including those relating to climate change mitigation, could be consistent with the chapeau. The chapeau is concerned with the manner in which the measure is applied.49 This ‘can be most often discerned from the design, the architecture, and the revealing structure of a measure’.50 A number of factors need to be assessed to determine whether a measure constitutes a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail. In that regard, one of the most important factors in assessing arbitrary or unjustifiable discrimination is whether the discrimination is rationally related to, or goes against, the policy objective under Article XX.51 Other factors can include the vagueness of the measure and the incidentally broad discretion that could be applied when implementing it,52 the rigidity and inflexibility in how the measure is applied,53 due process concerns,54 and the absence of any effort by the WTO member to pursue cooperative arrangements with other WTO members for market access.55 Climate change measures that address carbon leakage and other concerns relating to the WTO member’s efforts to mitigate climate change are unilateral in nature. Although unilateral measures are not prima facie inconsistent with the chapeau requirements, measures that intend to achieve an objective that is global in nature and conditions market access upon meeting the WTO member’s regulatory standards, have generally faced more scrutiny from the WTO Appellate Body. This could include an inquiry into whether the WTO member has entered, in good faith, negotiations with other WTO members to develop a particular regulatory standard.56 The negotiations do not have to yield a specific result in order for the ­measure to be found consistent with the chapeau requirements.57 Further, a measure which

  Appellate Body Reports, US—Gasoline, US—Shrimp, Brazil—Tyres.   Appellate Body Reports, US—Gasoline, pp. 23–4, US—Shrimp, para 160, EC—Seal Products, para 5.302. 50   Japan—Taxes on Alcoholic Beverages, Reports of Appellate Body, WT/DS8/ABR, WT/DS10/ABR, WT/DS11/ABR, adopted October 4, 1996, DSR 1996. 51   Appellate Body Reports, Brazil—Tyres, para 227; US—Shrimp, para 165. 52   Appellate Body Reports, EC—Seal Products, paras 5.325–5.328; US—Shrimp, para 181. 53   Appellate Body Report, US—Shrimp, para 177. 54   Appellate Body Report, US—Shrimp, para 182. 55   See Appellate Body Report, EC—Seal Products, para 5.337. 56   Appellate Body Report, US—Shrimp, para 172. 57   United States—Import Prohibition of Certain Shrimp and Shrimp Products: Recourse to Article 21.5 of the DSU by Malaysia, Report of the Appellate Body, WT/DS58/AB/RW, adopted November 21, 2001, para 5.67. The efforts by the EU to reach an international agreement within the International Civil Aviation Organization (ICAO) on aviation emissions prior to the unilateral inclusion of aviation-related 48

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328    part iv.  setting up the int'l mitigation regime permits the importing WTO member to assess whether its exported ­products meet  the requisite standard would also be considered to be less unjustifiable ­compared to a regime that does not afford any flexibility for those members to demonstrate that its measures can achieve the same regulatory objective.58 Finally, an absence of any due process in the decision-making to determining compliance with the importing WTO member’s requirements could also lead to a ­finding that the measure is applied in an unjustifiable manner. Further, the chapeau requires that measures provisionally justified under Article XX do not constitute a disguised restriction on trade. A measure that aims to level the playing field between products due to more stringent climate change requirements can provide a reasonable basis for a WTO panel to make such a finding. For instance, if a border adjustment measure linked to an emissions trading scheme aims to lend support to the products from domestic carbonintensive sectors by giving them a certain amount of free allowances, this could likely lead to a finding of a disguised restriction on trade. A measure motivated by concerns of economic competitiveness, despite aiming to reward producers whose production complies with a climate change measure, reveals an intent to protect domestic producers. Any national climate measure that is adopted to address competitiveness concerns will be vulnerable to being found to be trade-distortive. Blatant recognition of a WTO member’s loss of competitiveness in the measure or its supporting documentation could prejudice any claim that a climate change measure is justifiable under Article XX. Even measures that aim to address climate change leakage could be viewed as veiled economic protectionism by upsetting trade flows through incentives for domestic industry not to relocate. A measure striving towards energy security could stand a better chance of being justified under Article XX. Such a claim will ultimately depend on the environmental nature of the energy security considerations in addition to the design and application of the measure.

4.2 Climate Change-related Technical Regulations and the TBT Agreement The TBT Agreement applies to ‘technical regulations and standards, including packaging, marking and labelling requirements’, requiring that they do not discriminate against imported products vis-à-vis domestic products (national treatment)

emissions within the proposed EU emissions trading scheme could have supported the EU’s claims under the chapeau, had a dispute before the WTO been triggered.   Appellate Body Report, US—Shrimp, paras 173–175.

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15.  national measures and wto consistency    329 or products originating in another country.59 In addition, technical regulations cannot be more trade-restrictive than necessary.60 Technical regulations are defined under the TBT Agreement in accordance with the first sentence of Annex 1.1 of the TBT Agreement. They must apply to an ‘identifiable group of products’,61 lay down product characteristics or their related process and production methods,62 and compliance with the product characteristics must be mandatory.63 Climate change measures may not lay down product characteristics as that requirement has been explained in the jurisprudence. Product characteristics include ‘objectively definable features, qualities, attributes, or other distinguishing mark of a product’.64 They can also relate to ‘a product’s composition, size, shape, colour, texture, hardness, tensile strength, flammability, conductivity, density, or viscosity’.65 In this case, climate change measures are more directed to the carbon intensity of the product’s production rather than physically definable features, qualities, and attributes. Alternatively, the second criteria could be met if the measure lays down a process and production method related to product characteristics. Thus, if the carbon intensity or energy consumed can be associated with the product characteristic, it could constitute a technical regulation. In most instances, however, the carbon dioxide emitted in the production is not physically evident in the product itself. Thus, the process and production method requirements, which govern CO2 emissions, would not constitute a process and production method that relates to the product characteristics. According to the Appellate Body in EC—Seal Products, a ‘related’ PPM is one that is ‘connected’ or ‘has a relation’ to the characteristics of the product.66 Thus, a measure that lays down related PPMs is one where the process and production methods prescribed by the measure ‘have a sufficient nexus’ to the characteristics of the product.67 The nexus could include PPMs whose effects are not physically evident in the final product. If so, climate change measures that regulate a product based on the carbon intensity of its production could be technical regulations under the TBT Agreement. If the climate change measure is a technical regulation, it would be subject to the national treatment and MFN obligations set out in Article 2.1 of the TBT Agreement. The same analytical test as undertaken in Articles III:4 and I:1 of the GATT would apply.68 Both the ‘like products’ and ‘less favorable treatment’ analyses

60 61   Article 2.1.   Article 2.2.   Appellate Body Report, EC—Asbestos, para 70.   Appellate Body Report, EC—Asbestos, para 67. 63   Appellate Body Report, EC—Asbestos, para 68. 64   Appellate Body Report, EC—Asbestos, para 67. 65   Appellate Body Report, EC—Asbestos, para 67. 66   Appellate Body Reports, EC—Seal Products, para 5.12. 67   Appellate Body Reports, EC—Seal Products, para 5.12. 68   Article I:1 of the GATT 1994 does not feature a less favorable treatment test although the analysis under Article I:1 is still an assessment of whether the equality of opportunities for the products from one WTO member have been adversely affected. See Appellate Body Reports, EC—Seal Products, para 5.87. 59

62

330    part iv.  setting up the int'l mitigation regime are applied. However, under Article 2.1, if a detrimental impact against the product of a WTO member can be established, it can still be justified exclusively by a legitimate regulatory distinction rather than reflect discrimination. The legitimate regulatory distinction test was developed by the Appellate Body in the TBT Trilogy cases,69 particularly to ensure the same balance between WTO rules regarding nondiscrimination and a WTO member’s right to regulate in the TBT Agreement as that in the GATT 1994 between Articles I:1 and III:4 and the Article XX exceptions. Article 2.2 requires technical regulations to be not more trade-restrictive than necessary. The analytical test to determine whether there has been a violation of Article 2.2 is similar to the necessity test under Article XX. The recent jurisprudence on the TBT Agreement lends importance to WTO members who attempt to introduce climate change measures. If the measures are technical regulations, it subjects them to a different WTO Agreement that incorporates concerns regarding the right to regulate into the Agreement rather than that right being manifest as an exception. WTO members could therefore adopt trade restrictive measures that pursue legitimate objectives explicitly recognized in the TBT Agreement such as the ‘protection of human health or safety, animal or plant life or health, or the environment’. If a technical regulation is origin-neutral and seeks to achieve a legitimate policy, the detrimental impact upon imported like products may be justifiable. Further, if the climate change-related technical regulation is based on an international standard, there is a presumption of compatibility with the TBT Agreement.70

5. Conclusion This chapter has discussed the WTO consistency of a number of national climate measures aimed at tackling carbon leakage and levelling the playing field. BTAs, border adjustment measures linked to emission trading schemes, and green energy domestic support policies have led to international trade tensions and in some cases even to formal disputes before the WTO Dispute Settlement  Appellate Body Reports, United States—Measures Affecting the Production and Sale of Clove Cigarettes (‘US—Clove’), WT/DS406/AB/R, adopted 24 April 2012; United States—Tuna II (‘Mexico’); United States—Certain Country of Origin Labelling (COOL) Requirements (‘US—COOL’), WT/DS384/ AB/R/WT/DS386/AB/R, adopted 23 July 2012. 70   TBT Agreement, Article 2.5: ‘Whenever a technical regulation is prepared, adopted or applied for one of the legitimate objectives explicitly mentioned in paragraph 2, and is in accordance with relevant international standards, it shall be rebuttably presumed not to create an unnecessary obstacle to international trade.’ 69

15.  national measures and wto consistency    331 Body (DSB). National climate measures aimed at preventing carbon leakage (i.e. mitigating climate change) have a better chance to be considered WTO consistent than measures solely targeting concerns of loss of competitiveness and trying to level the playing field. The fate of national climate measures based on energy security grounds will depend very much on whether they are genuinely environmentally motivated. In sum, the policy driver (mitigation of climate change) is obviously relevant for justifying WTO violations, but may not predetermine that result. The domestic content requirement attached to a FIT scheme, or the possibility for the domestic carbon-intensive sector to receive free allowances within an emissions trading scheme, could reveal intentions to protect domestic industry thus undermining the bona fide objectives of the measure. The recent jurisprudence interpreting various provisions of the TBT Agreement provides some room for the consistency of national climate measures. The TBT Agreement incorporates the legitimacy of objectives such as those aimed at climate change mitigation into its substantive obligations. However, the TBT Agreement still imposes similar disciplines to address trade-protectionism and arbitrary or unjustifiable discrimination that could apply to climate change measures originating from concerns of carbon leakage and competitiveness. In conclusion, national climate measures can be expected to face an uphill battle, although not insurmountable, in being found consistent with WTO obligations.

Chapter 16

THE DESIGN AND IMPLEMENTATION OF GREENHOUSE GAS EMISSIONS TRADING Harro van Asselt*

1. Introduction: The Quest for the Holy Grail

333

2. The Evolution and Diffusion of Emissions Trading

335

3. From Theory to Practice: Designing and Implementing Emissions Trading

337

4. The Future of Emissions Trading in Climate Change Law and Policy

350

*  I am indebted to Sanja Bogojević, David Driesen, Kevin Gray, and Michael Mehling for valuable comments on an earlier draft.

16.  design and implementation of emissions trading    333

1.  Introduction: The Quest for the Holy Grail At the turn of the twenty-first century, greenhouse gas emissions trading rapidly became regulators’ weapon of choice in the battle to slow global climate change. Following the launch of the world’s first supranational emissions trading system (ETS) in the European Union in 2005, emissions trading spread across the developed world. Trading schemes were initiated in the United States, where subnational systems were adopted in the absence of progress at the federal level, as well as in other industrialized countries. By the early 2010s, trading schemes were also increasingly being adopted or considered by various developing countries. With their purported advantages of cost-effectiveness, environmental effectiveness, flexibility, predictability, inducing innovation, and democratic legitimacy (Ackerman and Stewart, 1985; Hahn and Stavins, 1991), market mechanisms such as emissions trading provide policymakers with a theoretically appealing alternative to traditional regulation.1 As regulators often view emissions trading as marrying environmental effectiveness with economic efficiency, it appears to have become the holy grail of climate change law and policy. Notwithstanding these theoretical advantages and the mounting level of attention from policymakers, emissions trading has struggled to live up to expectations. Practical experiences to date show that emissions trading is not (yet) the unequivocal success story that its proponents hoped it would be. Actual evidence of emission reductions due to trading programmes is scattered at best. Further, after a promising start, prices in several greenhouse gas emissions trading schemes dropped and remained very low (e.g., Stavins, 2012). While a low price does not necessarily jeopardize the environmental outcome, it means that it is unlikely that the full social and environmental costs of greenhouse gas emissions are being internalized by polluters. Moreover, low prices do not offer a strong incentive for the large-scale investments required for the shift towards a low-carbon society. Further complicating an already imperfect picture, the inclusion of emission offsets in trading schemes has drawn criticism, particularly from observers concerned about the environmental integrity of trading systems (Schneider, 2007; Wara and Victor, 2008). From a different perspective, industries covered by trading systems have become increasingly worried about the effects of carbon pricing on their international competitiveness, notwithstanding that such effects may be more limited under a trading system than under traditional regulation. Their concern is related to the problem of carbon leakage, 1   Economic theory suggests that many of the advantages that hold for price control instruments, such as emissions trading, also hold for quantity control instruments such as taxation. Trading is, however, considered to be preferable when there is uncertainty about the costs of compliance (Weitzman, 1974).

334    part iv.  setting up the int'l mitigation regime where the implementation of emissions trading schemes in one jurisdiction may lead to an increase in emissions elsewhere (van Asselt and Biermann, 2007). Lastly, there have been instances of fraud related to carbon markets, even though such cases have been largely restricted to the EU ETS (Walters and Martin, 2012).2 While these experiences point to serious problems, they do not necessarily mean that greenhouse gas emissions trading is bound to fail. For proponents, emissions trading is a ‘learn-by-doing’ instrument, where important lessons on how to design and implement a trading scheme are learned along the way, and the instrument is adapted to new realities (Newell et al., 2013: 143). Moreover, emissions trading advocates point out that, in most cases, emissions trading functions exactly how it ought to, and that low prices do not affect the pre-determined environmental outcome. Rather than lingering on these general arguments on the promises and pitfalls of emissions trading, this chapter offers a cross-jurisdictional analysis of the ways in which mandatory emissions trading schemes have been designed and implemented. More specifically, it examines various design and implementation choices that regulators across the globe are faced with. The chapter shows, first, that these choices strongly influence the performance of emissions trading systems; and, second, that these choices themselves are dependent on contextual factors, which both explains divergence in ETS design and implementation and points to a need for caution in transferring lessons from one jurisdiction to another. The design and implementation of emissions trading is of high importance for the future direction of climate change law and policy in various jurisdictions. The EU ETS, for instance, is Europe’s flagship policy to meet its overarching climate and energy objectives. Moreover, the performance of the EU ETS will affect other trading schemes around the globe, both through direct and indirect linkages as well as through its exemplary nature. The functioning of the EU ETS thus informs the debate on instrument choice in climate law and policy in various jurisdictions (Keohane et al., 1998; Stewart, 2007). The chapter starts with a recapitulation of how emissions trading as a climate policy instrument has evolved and spread across jurisdictions. It then highlights several key choices regulators must make when designing and implementing a trading scheme. The overview of choices, drawing on illustrations from several trading schemes, sets the stage for a discussion of the future of emissions trading in climate law and policy. The underlying question here is whether problems caused by design choices can be addressed through a ‘quick fix’ redesign, or whether there are more fundamental issues at play that will continue to affect the performance of emissions trading in the long-term. 2   For instance, there were several instances of value added tax (VAT) fraud (also known as ‘carousel fraud’), with individuals involved in buying and selling allowances claiming VAT without paying this VAT to EU Member State governments.

16.  design and implementation of emissions trading    335

2.  The Evolution and Diffusion of Emissions Trading Emissions trading’s long and winding journey from economic theory to practical implementation has been well documented (Voß, 2007; Baldwin, 2008). In brief, following Coasean logic, which suggests that externalities can be dealt with efficiently if property rights are well defined and there are no or low transaction costs, economists such as Dales (1968) argued that by conferring property rights to environmental resources such as air and water, and creating markets for trading these rights, it is possible to achieve a certain level of environmental protection at the lowest possible cost. After initial experiments at a local and regional level, the domestic sulphur dioxide emissions trading scheme (‘acid rain programme’) in the United States, implemented through an amendment of the Clean Air Act in 1990,3 launched the first large-scale, countrywide trading system (Ellerman et al., 2000). This was the birthplace of large-scale emissions trading systems and from this point onwards, ETS began to spread across jurisdictions. First, through a process of ‘vertical legal borrowing’ in which US policymakers and researchers played a crucial role, emissions trading became a part of international climate change law (Wiener, 2001). Although initial attempts by the US government to incorporate market-based mechanisms in the United Nations Framework Convention on Climate Change (UNFCCC) were abandoned (Bodansky, 1993: 522), three flexibility mechanisms were included in the Kyoto Protocol: international emissions trading, the Clean Development Mechanism (CDM), and Joint Implementation. The inclusion of these mechanisms was driven by a need to enhance the cost-effectiveness of climate policies and measures, as well as to ensure broad participation in the international climate regime (van Asselt and Gupta, 2009: 331–6). Second, emissions trading systems were also adopted in several other countries. The exact path of the diffusion of the instrument is difficult to trace. In the late 1990s, states like Denmark and the United Kingdom and companies like BP began to experiment with greenhouse gas emissions trading, whereas other countries, such as Norway and Sweden, also started to consider it (Ellerman and Buchner, 2007) . While these initiatives may have been influenced by the acid rain programme in the United States, it is unclear to what extent and how. The underlying reasons for the apparent volte-face by the EU, which switched roles from initial sceptic to emissions trading’s main protagonist in just a few years (Cass, 2005), are even more difficult to uncover.4 The EU’s speedy adoption of an   Clean Air Act Amendments of 1990, Pub. L. No. 101–549, 104 Stat. 2399 (1990) (codified at 42 U.S.C. §§ 7401–7700 (1994)) 4   European countries were sceptical of emissions trading given the challenges in allocating emissions, and the possibility that it could allow developed countries to avoid reducing emissions domestically (Grubb et al., 1999: 92–4). 3

336    part iv.  setting up the int'l mitigation regime emissions trading Directive in 20035 could be seen as an instance of horizontal borrowing from the United States, spurred by the simple need to keep the costs of reducing emissions down (Wiener, 2006: 457). The reasons for the EU’s embrace of emissions trading in the early 2000s, however, are manifold and much more complex. Beyond the instrument’s inherent appeal of being a theoretically costeffective and flexible policy instrument, these reasons include: the need to put in place regulations rapidly to ensure compliance with the Kyoto Protocol targets; the drive within the EU to show international leadership in the climate arena; the failure to adopt other instruments (notably a carbon tax in the early 1990s); the entrepreneurial role played by individuals within the European Commission; and, last but not least, the fact that the instrument meshed well with the single market logic of the EU (Skjærseth and Wettestad, 2008; Braun, 2009; van Asselt, 2010). Although it may be difficult to assess the degree to which the US acid rain programme served as a template for greenhouse gas emissions trading schemes in other jurisdictions, it undoubtedly played a pioneering role from the view of regulatory design. With the launch of the EU ETS in 2005, as well as the earlier start of the CDM in 2000 (five years before the entry into force of the Kyoto Protocol; see UNFCCC, 2002: para 1), greenhouse gas emissions trading became a reality. While the ideal of a ‘global carbon market’ still remains largely confined to textbooks and policy papers, trading systems have been established, or are under development, in a wide variety of jurisdictions. Some of these are closely linked to the EU, such as the trading schemes in Iceland, Liechtenstein, and Norway (followed in 2014 by Switzerland) (European Commission, 2007).6 Others, such as the Regional Greenhouse Gas Initiative (RGGI),7 the California Cap-and-Trade Program and the Québec Cap-and-Trade System,8 have been established by subnational governments in the United States and Canada, where federal (cap-and-trade) legislation was politically unfeasible. Furthermore, carbon trading is no longer the domain of developed countries alone. Kazakhstan became the first Asian country to launch a trading scheme in 2013. The Republic of Korea’s trading scheme started in 2015. Finally, emissions trading is being considered in a diverse range of emerging economies (ICAP, 2015), and has already started at the subnational level in China, where a national scheme is also underway. Developments in these countries have been facilitated by 5   Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emissions allowance trading within the Community and amending Council Directive 96/61/EC (Official Journal of the European Union, [2003] OJ L 275/32. 6   At the time of writing, linking negotiations between Switzerland and the EU are still ongoing. 7   See (accessed 10 August 2015). 8   Both California and Québec also participate in the Western Climate Initiative, through which several Canadian provinces and US states originally sought to establish a regional trading scheme. However, following the departure of six US states in 2011 from the initiative, California is the only US state that is still participating.

16.  design and implementation of emissions trading    337 initiatives  such  as the World Bank’s Partnership for Market Readiness and the International Carbon Action Partnership,9 which have provided platforms for sharing information and policy learning. It may be too early to speak of a renaissance of emissions trading, but the persistent appeal of emissions trading to regulators worldwide is undeniable (Mehling, 2013: 287–8). Moreover, emissions trading has spawned a network of largely private actors, such as traders, brokers, and certifiers, with a strong interest in extending and expanding the use of the instrument (Bernstein et al., 2010; Betsill and Hoffmann, 2011). It should therefore be clear that the journey of emissions trading has not yet ended, although it has entered rough waters. Whether it can navigate these waters successfully depends on the choices made by regulators in the design and implementation of emissions trading.

3.  From Theory to Practice: Designing and Implementing Emissions Trading This section discusses a non-exhaustive10 range of important choices to be made by regulators in the design and implementation of emissions trading. It indicates what these choices entail, and offers insights into the tradeoffs often implicit in these choices, as illustrated by practical examples of experiences to date. These tradeoffs reflect the overall challenge in the use of emissions trading. Fundamentally, emissions trading is a scheme that is employed to simultaneously achieve a host of regulatory objectives (Bogojević, 2013), with multiple countervailing values at stake. I will return to this challenge in the concluding section.

3.1 Scope and Coverage Scope and coverage matter for the efficiency of an emissions trading regime. A broader scope implies additional options for low-cost emission reductions and thus enhanced cost-effectiveness. Furthermore, if sectors not covered by an 9   See and (both accessed 10 August 2015). 10   Space constraints do not allow for an analysis of all relevant aspects of emissions trading design and implementation, including those related to accounting standards, taxation, civil law, tort law, and administrative law. For an analysis of these issues in the context of the EU ETS, see Anttonen et al. (2007); see also Weishaar (2014).

338    part iv.  setting up the int'l mitigation regime emissions trading system would otherwise not be subjected to regulation, capping emissions from a larger number of sources would also increase the environmental effectiveness of a trading system. Yet broader coverage can also be impractical or undesirable, as the costs of implementation may rise. With respect to scope and coverage, regulators need to confront several interrelated questions. First, they have to decide which sectors, gases, and activities to include. An emissions trading scheme can focus on, for instance, the electricity sector, or include other major emitting sectors, including energy-intensive industries (e.g., cement and steel production), land use and agriculture, transport, and buildings. Sectors and activities could be directly covered by a trading scheme, or could be indirectly included within the scope through the use of offsets (see below). Related to this, the coverage can be limited to the main greenhouse gas, carbon dioxide, or also cover other greenhouse gases, such as methane and nitrous oxide. The main tradeoff is between the environmental and cost-effectiveness benefits of expanded coverage on the one hand, and administrative costs on the other. More specifically, emissions from certain sectors, gases or activities—notably, small and diffuse sources of emissions—may be difficult or costly to accurately measure and monitor (Pew Center, 2008). A second question concerns the point of regulation. Emissions can be regulated ‘downstream’, ‘upstream’, or through a combination thereof. ‘Downstream’ means that emissions allowances are distributed to those directly responsible for emissions (e.g., the operator of a power plant, but also possibly households). In an ‘upstream’ model the point of regulation is the producer or supplier of fossil energy (e.g., refineries). Hybrid systems are also conceivable. In such a system, large emitters could be regulated under a downstream system, in combination with upstream regulation creating obligations for fuel suppliers (thereby covering, for instance, household and transport fuel emissions). An upstream model can expand the coverage of a trading scheme, while reducing administrative costs (since it decreases the number of capped sources). For these reasons, this model tends to be preferred by economists (Hargrave, 1998). However, a drawback of an upstream model is that regulating at this point in the production process provides fewer incentives for innovation at the point of emissions, such as carbon capture and storage technologies for coal-fired power plants (Pew Center, 2008: 9). Within this context, various factors influence regulators’ choices on scope and coverage. These factors include: the share of emissions of a particular sector or emitter, the availability of data and the feasibility of measuring and monitoring emissions, the availability of alternative forms of regulation, and the expected costs of compliance (including administrative costs). Given that these factors are likely to vary in each jurisdiction, it is not surprising to find differences in the scope and coverage of existing trading systems. For instance, the EU ETS covers about fortyfive per cent of the EU’s greenhouse gas emissions. The Swiss ETS covers around

16.  design and implementation of emissions trading    339 eleven per cent. Korea’s trading scheme regulates about two-thirds of the country’s emissions. Sectoral coverage also varies widely. The RGGI has a rather narrow scope, focusing only on the power sector. Other trading systems, including the EU ETS, also cover energy-intensive sectors (e.g., cement, iron and steel, pulp, and paper). New Zealand’s ETS is unique in that it covers emissions from the forestry sector and may also extend to agricultural emissions. While the coverage may diverge, the emissions trading schemes share some similarities. Almost all trading systems target the power sector, a large emitting sector for which monitoring is relatively straightforward (Betsill and Hoffmann, 2011: 95), and for which risks of carbon leakage (see below) are relatively low. Furthermore, regulators in many jurisdictions have refrained from including emissions from road transport, buildings, or households. The main reasons are practical: setting emission limits on individual households or car owners could entail large administrative costs. Downstream regulation prevails in most trading systems—notwithstanding the economists’ recommendation for upstream regulation—with a focus on large, stationary sources such as power plants. In the case of the EU ETS, downstream regulation was chosen in part because the EU expected that the effects of higher fuel prices as a consequence of imposing a carbon price on upstream production would have only modest effects on behaviour and emissions downstream (Ellerman et al., 2010: 22). However, other reasons likely played a role as well. Weisbach (2012: 201–3) argues that the EU ETS was designed to follow the UNFCCC, Kyoto Protocol, and earlier EU legislation, which measure emissions at the point of combustion. Moreover, he suggests that the European Commission sought to avoid too much resemblance to a tax, which would have triggered a unanimity requirement under EU law. These plausible explanations show that design choices are not solely influenced by rational economic considerations that lead to an upstream point of regulation. Nevertheless, not all countries and regions follow a purely downstream model; New Zealand regulates emissions upstream by targeting fossil fuel suppliers, and California follows a hybrid system. The presence or absence of alternative regulation can influence sector coverage. Aviation emissions are a case in point. For years, discussions about how to regulate emissions from aviation have failed to produce a global agreement. The Kyoto Protocol delegated decisions on bunker fuel emissions (i.e., aviation and shipping emissions) to the International Civil Aviation Organization (ICAO) and the International Maritime Organization. Yet negotiations in these fora did not result in any substantive outcome. Frustrated with this lack of progress, and concerned about rapidly increasing levels of aviation emissions, the EU opted to include aviation in its trading system in 2008 (Kulovesi, 2011). While the absence of an international agreement may have influenced the EU’s decision, the decision to include aviation can equally be seen as an expression of the EU’s desire to exert leadership in the climate arena (Bogojević, 2012). Choices relating to coverage may thus be

340    part iv.  setting up the int'l mitigation regime influenced by (political) factors that are not directly related to the ‘optimal’ design of a trading scheme. The aviation example further shows how design choices may be sensitive to the reactions of other states. Following heavy criticism from China, India, and the United States, among others, the EU delayed the enforcement of the EU Directive to international flights to and from non-European countries, and ultimately excluded them altogether from the scope, with a view to creating a more constructive negotiating atmosphere within the ICAO to develop a global market-based solution for aviation emissions. The fact that the EU expressly indicated that it can reverse its decision if insufficient progress is made confirms that the inclusion of aviation emissions was more than just a regulatory design choice; it was a political tool to influence an outcome at the international level.

3.2 Timing With regard to timing, regulators need to make tradeoffs between predictability and flexibility (Fankhauser and Hepburn, 2010). A trading scheme that allows for ‘when’ flexibility (i.e., reducing emissions at the point in time when abatement costs are lowest) is generally viewed as more cost-effective, meaning that the longer the trading period (i.e., the larger the temporal coverage), the better. Extended trading periods also provide a long-term signal to emitters that investments in emission reduction technologies are worthwhile. Although longer trading periods thus enhance investment certainty, they may insufficiently account for changes in the science (e.g., new insights demanding a more or less ambitious cap), politics (e.g., international negotiations), or abatement options (e.g., the emergence of new lowcarbon technologies). In other words, shorter trading periods allow for interim adjustments and reflection, which may well be necessary in an area as dynamic as the law and regulation of climate change. An alternative to longer trading periods that could still facilitate ‘when’ flexibility is the inclusion of banking (i.e., transferring unused allowances into future years) and borrowing (i.e., using future allowances now) provisions. While economists generally view banking as advantageous, borrowing poses risks, including the possible delay of emission reductions. Most regulators have sought to limit the length of trading periods. Nevertheless, following initial three-year (2005–2007) and five-year (2008–2012) trading periods, the third phase of the EU ETS spans eight years (2013–2020), as do the periods for the Norwegian and the Swiss emissions trading systems. Beyond considerations of predictability and flexibility, it is clear that there are also political and practical reasons underlying decisions regarding the length of the trading period. For example, with the EU ETS, the second trading period coincided with the Kyoto Protocol’s first commitment period, and the third trading period is synchronized with the EU’s climate and energy targets, which are set for 2020. Other trading schemes

16.  design and implementation of emissions trading    341 have generally started with shorter trading periods (e.g., three years under RGGI), although their length may well increase in the future. In line with economic theory, most schemes permit banking, but tend to limit borrowing, especially between trading periods. In the EU ETS, banking between the first and second phases was subject to restrictions. These restrictions can be explained relatively easily as, without restrictions, Member States might not have met the individual emission reduction targets as specified in the EU’s burdensharing agreement (Schleich et al., 2006). However, because there was no opportunity to bank allowances for future use even though there was a surplus of allowances on the market, the carbon price was reduced to practically zero at the end of the first phase. The challenges encountered during the first phase of the EU ETS were to be expected. Because initial efforts to construct trading regimes encounter inevitable information deficiencies and implementation challenges, most trading schemes include a first ‘learning’ or ‘pilot’ phase, with an opportunity to review the scheme afterwards. By doing so, regulators acknowledge that the initial design of an ETS is a work in progress, and build in a mechanism to learn lessons after an initial period and revise the design. Viewed more critically, however, the ‘learning-bydoing’ argument offers a convenient excuse for regulators to discard design flaws as teething problems, and allows them to postpone difficult long-term choices for the sake of political expediency. Moving from one phase to another, regulators generally seek to gradually expand the scope of the trading scheme, as demonstrated by the expansion of the trading regimes in California and the EU. Moreover, regulators have sought to change the ways in which emissions allowances have been allocated (see below). The case of Japan illustrates how a pilot phase does not provide a guarantee that a trading scheme will actually be put in place. Following the introduction of a voluntary trading system in Japan in 2005, an experimental ETS was started in 2008, which was supposed to lead to a nationwide system in 2013. However, in 2012 the Japanese government abandoned its plans, even though emissions trading schemes were developed at the subnational level (Sopher and Mansell, 2013).

3.3 Setting the Cap The level at which the caps are set (i.e., the total amount of allocated allowances) is the main determinant of an emissions trading system’s environmental effectiveness. If the cap is stringent (i.e., requiring emission reductions going well beyond the ‘business as usual’ scenario), prices for allowances will be higher. If the cap is set generously (i.e., requiring only limited emission reductions), demand for allowances, and thereby the allowance price, will go down. Furthermore, within a specific jurisdiction, the cap determines how costs to achieve overall targets are distributed between the trading and non-trading sectors. However, while a stringent cap is

342    part iv.  setting up the int'l mitigation regime desirable from the perspective of achieving better environmental outcomes, it may reduce the buy-in from participants. In practice, determining whether a trading scheme has led to emission reductions or whether the cap was set too generously has proven difficult. This question came to the forefront during the price crash in the EU ETS in April 2006, when the carbon price dropped from around €30 to below €10 after the verified emissions data for the previous year were published. The data showed that actual emissions were much lower than the allocations handed out to all the installations, thus lowering the demand for allowances. While some commentators have suggested that the EU ETS led to emission reductions (Ellerman et al., 2010), there is ample evidence that the price decline was not due to emission reductions but rather was caused by the over-allocation of allowances by EU Member States. Facilitated by the devolution of the cap-setting process to the Member States, large emitters sought to avoid the anticipated costs of the EU ETS by successfully lobbying for generous allocations (Skjærseth and Wettestad, 2008: 176). Over-allocation has similarly plagued other trading systems, such as RGGI, and can be considered a general risk for emerging trading systems (McAllister, 2009).

3.4 Allowance Allocation The chosen allocation method plays a key role in the distribution of costs and benefits of a scheme. Economists have long argued that, absent transaction costs, the specific allocation should not affect the cost-effectiveness of an ETS, but in light of first experiences with emissions trading it has become clear that the allocation method does affect a scheme’s cost-effectiveness vis-à-vis other regulatory options (Goulder, 2013). The main design choice regarding allocation methods is whether allowances are distributed by the regulator for free (‘free allocation’) or paid for by participants in an ETS (e.g., through ‘auctioning’). The decision of whether a participant receives allowances for free (as well as how many) can be based on a variety of factors, including historical emissions (‘grandfathering’), benchmarks (e.g., fuel input, production output), or another standard, applied to either an entire sector or differentiated according to the product made, fuel used, activity carried out, etc. These factors raise a new set of questions related to, among others: the time frame to be used (e.g., should they be calculated on the basis of one or several years?); the treatment of installations that close down or enter into the trading system; the need for updating the baselines following changes in the market; and the scope of a benchmark. Similarly, auctioning emissions allowances triggers a number of different questions regarding the auctioning format, the frequency and timing of auctions, conditions for participation and, crucially, the use and distribution of the revenues of the auctioning process. Free allocation and auctioning are not mutually

16.  design and implementation of emissions trading    343 exclusive, and most trading systems have used them in combination—often with complex results. Conventional economic wisdom suggests that auctioning is the preferable allocation method as it improves efficiency and avoids creating ‘windfall profits’ (Hepburn et al., 2006).11 In addition, auctioning is attractive since it generates significant revenues for regulators, which can be redistributed to mitigate the costs absorbed by affected industries, or to implement other climate-related measures. Auctioning also holds administrative advantages, especially in legal cultures such as the United States, where litigation could otherwise challenge the factors upon which free allocation is based (Driesen, 2010). From a legal perspective, free allocation raises further issues. Grandfathering in particular could be seen as a violation of the ‘polluter pays’ principle (Nash, 2000), and could be in breach of state aid rules (Weishaar, 2007). At the same time, the mere prospect of free allocation can lower political opposition to a trading scheme that would cover important sectors of the economy. Notwithstanding the advantages of auctioning, the EU initially opted, for the most part, for free allocation. Auctioning was limited to five per cent of the allowances in the first phase, and to ten per cent in the second trading phase, and was used sparingly in both phases. While industry lobbying and Member State opposition offer a partial explanation for this choice (Skjærseth and Wettestad, 2008: 123), a more nuanced explanation suggests that EU regulators made a conscious decision to lower the barrier for participation, paving the way for the adoption of the ETS and its subsequent embrace by market participants. Still, following the first two phases, the European Commission successfully pushed for a significant increase in the use of auctioning, backed by emerging insights into the considerable problems posed by free allocation (Grubb and Neuhoff, 2006). A major problem was the fact that participants in the EU ETS were able to reap substantial windfall profits, as they were able to pass on the costs of allowances to consumers even though Member States had handed these allowances out for free. While this problem was most pronounced in the case of the power sector (Sijm et al., 2006), subsequent analyses showed that other participants also benefited financially as a result of free allocation (de Bruyn et al., 2010). The ability of a regulator to start a trading scheme distributing allowances for free and gradually introduce auctioning is one of emissions trading’s key advantages. Like the EU ETS, other trading systems also opted for free allocation from the beginning (e.g., New Zealand; see Hood, 2010). But why, then, have other trading schemes like the RGGI introduced auctioning from the very beginning? For RGGI, this choice has been partly attributed to proactive bureaucrats learning their lessons from the EU ETS. However, the restructuring of electricity markets in the US states participating in the RGGI also altered the positions of state policymakers in such a 11   Windfall profits generally refer to unforeseen gains. In the context of emissions trading, they refer to profits resulting from the allocation of allowances.

344    part iv.  setting up the int'l mitigation regime way that auctioning actually became an attractive option (Huber, 2013). That RGGI succeeded where the EU ETS initially failed further underlines that design choices vary across time and space. Variation in national circumstances also played an important role in the first phases of the EU ETS. Directive 2003/87 initially specified that allowances would be allocated at the Member State level, subject to the provisions of the Directive. The European Commission played an important role scrutinizing the Member States’ National Allocation Plans to ensure that: the plans were consistent with the Member States’ Kyoto Protocol targets; the allocation would not result in competitive distortions between Member States; and the allocation would not amount to illegal state aid.12 Notwithstanding these common rules and subsequent guidelines provided at the EU level, Member States diverged in the ways allowances were allocated to their industries, particularly with respect to the treatment of new entrants to the system and closures of plants (Del Río González, 2006). The revision of the EU ETS in 2008 addressed these issues by moving many allocation decisions from the Member State to the EU level, securing a greater level of harmonization. However, even after the adoption of the revised Directive,13 Member States continued to resist the centralization of allocation-related decisions, and demanded some degree of autonomy in organizing auctions and spending the revenues from auctioning (van Asselt, 2010). Determining how to use auctioning revenues similarly became a battleground in RGGI: while states initially agreed to use the revenues for renewable energy, energy efficiency, and other climate-related policies—resulting in important economic and environmental benefits—several states later backtracked, and sought to use the revenues for addressing budget deficits (Klinsky et al., 2013: 298).

3.5 Competitiveness and Leakage The introduction of carbon pricing through emissions trading (or a carbon tax) is likely to lead to concerns about the impacts on the international competitiveness of trade-exposed energy-intensive industries with competitors operating in countries that do not have binding emission reduction targets in place or that have otherwise less stringent climate policies (van Asselt and Biermann, 2007: 498). A related concern is that of carbon leakage. This phenomenon occurs when there is an increase of emissions due to a shift in production to countries with less stringent 12   State aid rules for the EU are laid down in Articles 107–109 of the Treaty on the Functioning of the European Union and generally prohibit competition-distorting state aid. See consolidated version of the Treaty on the Functioning of the European Union, [2012] OJ C 326/47. In 2012, the European Commission issued guidelines for state aid in the context of the EU ETS (European Commission, 2012a). 13  Directive 2009/29/EC of the European Parliament and of the Council amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community, [2009] OJ L 140/63.

16.  design and implementation of emissions trading    345 regulations following the adoption of climate measures in another country. Carbon leakage can thus occur through a shift of consumption of carbon-intensive goods towards cheaper import substitutes, resulting in more carbon-intensive production in other jurisdictions, or through the relocation of industrial production to regions without stringent climate measures. Such leakage can be transboundary but it may also occur within a country. For instance, leakage has been a major concern for the RGGI, where competitive and well-integrated electricity markets mean that greenhouse gas-intensive power production may move to states outside of the regulated area (Bluemel, 2007: 237). Yet despite competitiveness and leakage being frequently mentioned as concerns for regulators, and provisions addressing these concerns finding their way into different pieces of legislation, the evidence of leakage in the first phases of major trading systems such as the EU ETS and RGGI has been minimal to non-existent (Kindle et al., 2011; Bolscher et al., 2013). Regulators can take various measures to address competitiveness and leakage concerns arising from the implementation of emissions trading. These measures can be divided into three categories: (i) measures compensating the costs for participants, such as the free allocation of allowances or state aid; (ii) measures at the border that level the international playing field in either the exporting country with a lower carbon price or in the importing country with a higher price; and (iii) measures establishing an equivalent carbon price through the conclusion of international (sectoral) agreements or the linking of trading systems (Neuhoff, 2011: 286). While option (iii) would most effectively address any competitiveness or leakage concerns, government-led, binding sectoral agreements to reduce emissions have not yet been adopted and the linking of trading schemes is fraught with legal, political, and practical challenges. Border measures—option (ii)—are highly contentious. Although considered by the EU (in the context of the 2008 revision of the EU ETS) and the United States (as part of several federal legislative proposals in 2007–2009), politicians have been wary to resort to them (van Asselt and Brewer, 2010). This is in part due to concerns about their compatibility with international trade law (Pauwelyn, 2007). However, concerns about the political ramifications (e.g., trade-related countermeasures) have been at least equally important. Given the drawbacks of free allocation compared to auctioning noted above, a tradeoff emerges between tackling competitiveness and leakage concerns (which may or may not materialize) on the one hand, and improving allocation methods on the other. To address competitiveness and leakage, regulators have so far mainly chosen to (continue to) allocate allowances for free to sectors that may be affected, even if they have expressly stated a preference for auctioning. This choice for free allocation to address competitiveness and leakage has led to a new question: how to identify which sectors should be eligible to receive free allowances? Due to concerns about competitiveness and leakage, the EU considered which sectors were ‘at risk’ of carbon leakage. The EU Directive provides that sectors are at risk of leakage if the production costs increase by five per cent or more and their

346    part iv.  setting up the int'l mitigation regime non-EU trade intensity—a measure of the extent to which sectors face competition from outside the EU—is above ten per cent. It further suggests that sectors are also at risk if either their production costs increase by thirty per cent or more, or their non-EU trade intensity is at least thirty per cent. In other words, even those sectors that are not exposed to trade or do not face any increase in production costs could still be considered to be at risk of leakage. When the European Commission published a list of sectors at risk, this included nearly eighty per cent of the energy-intensive sectors, leading to criticism that the net was cast much too wide (Sandbag, 2010).

3.6 Access to Offsets Under most emissions trading systems, it is possible to use credits earned by reducing emissions against a certain baseline of what would have happened otherwise (e.g., ‘business as usual’). Such credits—or offsets—can be generated through undertaking emission reduction activities abroad (international offsets) or at home (domestic offsets). Since offsets involve sources that are outside of the scope of a trading system, the extent to which offsetting is allowed may influence the extent to which participants in an ETS will reduce their emissions (Driesen et al., 2011: 310–13). There are arguments in favour and against using offsets in a mandatory trading scheme. Economists argue that offsets expand the scope for low-cost options to reduce emissions, thereby enhancing a scheme’s cost-effectiveness (Klepper and Peterson, 2006). However, offsets raise several concerns. Key among them is uncertainty about whether the offset projects actually reduce greenhouse gas emissions, given that the counterfactual—the baseline—will never materialize. This criticism has been raised in particular in the context of the CDM, where observers have noted the questionable ‘additionality’ of CDM projects (Schneider, 2007).14 Moreover, using international offsets in a trading system reduces the incentives for domestic action, which could result in less—rather than more—technological innovation (Driesen, 1998). Lastly, the contribution of CDM projects to sustainable development in the host countries in the developing world has been variable (Holm Olsen, 2007). While all trading schemes allow offsets, concerns about their use have generally led to quantitative and qualitative restrictions, mostly used in combination. Quantitative restrictions mean that participants can use offsets only up to a certain limit. Parties to the Kyoto Protocol have agreed that the use of credits from international mechanisms such as the CDM should be ‘supplemental’ to 14   The additionality requirement aims to ensure that developed countries do not comply with their obligations under the Kyoto Protocol through the purchase of credits from projects that would have also been realized if this purchase had not taken place.

16.  design and implementation of emissions trading    347 domestic action, but without defining what that term means. In the absence of international agreement, different quantitative restrictions prevail across trading systems. For example, following its 2008 revision, the EU ETS Directive indicates that the use of offsets in the 2008–2020 period should not be more than half of the EU-wide reductions below 2005 levels. Other schemes have more specific restrictions in place. California, for instance, only permits the use of offsets for up to eight per cent of a participant’s obligation. In the Korean ETS, international offsets were completely excluded from the start (although they are allowed at a later stage). Qualitative restrictions mean that not all types of credits will be accepted or that conditions are attached to the use of offsets. There are some similarities between the various jurisdictions, with the EU and New Zealand limiting access to international offsets generated by large industrial gas projects (involving hydrofluorocarbons and nitrous oxide).15 Still, some interesting variations can be observed. For instance, whereas the EU ETS has limited the use of offsets from land use, land-use change, and forestry since its inception, California’s Cap-andTrade Program allows credits from US forest projects, and is considering allowing offsets from sector-based initiatives such as REDD+ (Reducing Emissions from Deforestation and Forest Degradation) in developing countries. The New Zealand trading scheme also allows for the use of offsets generated by land use projects. Given some of the controversies surrounding international offsets, regulators have increasingly examined the possibilities for including domestic offsets. The EU ETS introduced the possibility in the 2008 revision, whereas others (e.g., California, New Zealand, RGGI) allowed domestic offsets from the start. Quantitative and qualitative restrictions mostly apply to domestic offsets as well.

3.7 Price Management Prices in a trading system are not expected to be stable, as market forces (i.e., supply and demand for allowances) are intended to influence the carbon price. Still, too much fluctuation or volatility is generally seen as a sign of a market that is not yet able to achieve its environmental and economic goals (Grubb and Neuhoff, 2006: 14). It is evident that volatility and price extremes (i.e., very high or low prices) cause significant anxiety among regulators (e.g., European Commission, 2012b) and market participants alike. The reasons for price volatility and extremes are not always crystal clear, however. More specifically, it is uncertain to which extent fluctuations are caused by internal (design- or implementation-related) factors or 15   See Commission Regulation (EU) No 550/2011 of 7 June 2011 on determining, pursuant to Directive 2003/87/EC of the European Parliament and of the Council, certain restrictions applicable to the use of international credits from projects involving industrial gases, [2011] L 149/1; and Reuters (2011).

348    part iv.  setting up the int'l mitigation regime external factors not directly controlled by regulators (Christiansen et al., 2005). The economic recession is an external factor generally cited as the cause for low prices (e.g., European Commission, 2012b: 4), as falling productivity results in lower emissions than expected. Other external factors that can influence the level of emissions include the weather and fuel prices. However, internal factors, such as the provisions on the access to offsets as well as banking and borrowing equally play a role. The distinction is important, as the sole focus on external factors may ignore flaws in regulatory design. In addition to altering design elements of an emissions trading system, as discussed above (e.g., restricting access to offsets or allowing for unlimited banking of allowances), there are direct ways for regulators to intervene in the carbon price. The two most well-known options are to introduce a price ceiling (or ‘safety valve’) and to establish a price floor. Under a price ceiling, the regulator can make additional allowances available once the price reaches a certain level (Jacoby and Ellerman, 2004). A price ceiling can mitigate concerns that the carbon price will be too high, and hence reduce resistance from participants against a more stringent cap. A price floor means that a regulator removes allowances from the market. Alternative options are to introduce a ‘reserve price’ for auctioned allowances (meaning that it establishes a minimum price at allowance auctions, which can be higher or lower than the market price), or demanding an additional fee for each allowance. Price floors can help tackle the undesirable effects of over-allocation by guaranteeing a minimum price. Price ceilings and floors can also be combined, resulting in a ‘price collar’ (Wood and Jotzo, 2011). This would mean that if prices go beyond a certain range (e.g., $10–50), regulators would either remove allowances from the market or make them available. While price management can help address price volatility and extremes, its inclusion or exclusion in the design of an ETS displays the clearest example of the inherent tensions between the different regulatory objectives of emissions trading. Clearly, price floors and ceilings would offer market participants and regulators a greater degree of certainty and predictability about future carbon prices. A price floor in periods of low demand (e.g., because of a recession) would also offer industries greater incentives to undertake long-term mitigation through technological innovation. Yet such a direct interference may also undermine the efficiency of the system, as it would prevent market forces from determining the least-cost abatement option. Price control mechanisms feature in several jurisdictions. For example, the Canadian province Alberta has introduced a de facto price cap, by allowing participants to comply with their commitments by paying a fee of CA$15 per tonne of carbon dioxide as a contribution to a technology fund (Sopher et al., 2013). Likewise, the first phase of Australia’s Carbon Pricing Mechanism (which was operational for only a short period of time) was founded on a controlled price, although the intention was that the price would become more flexible over time by adopting a price

16.  design and implementation of emissions trading    349 ceiling in the second phase, and removing the ceiling again in the third phase. New Zealand also introduced a price ceiling in its first phase. Price floors are also used. For instance, deviating from the general EU response to low carbon prices, the United Kingdom enacted a carbon price floor of £16 in 2013. In the United States, both the RGGI and the ETS in California introduced an auction reserve price, effectively acting as price floors. In the case of RGGI, the price floor helped to mitigate the consequences of over-allocation, which could have driven down prices even further than the reserve price. Price management continues to be controversial in other jurisdictions, however. Following the price collapse in the EU ETS, EU regulators staunchly resisted the calls for price floors, arguing that it would constitute an undesirable interference with the market (e.g., European Commission, 2012b).16

3.8 Compliance and Enforcement A compliance and enforcement mechanism is a crucial element for emissions trading schemes. Compliance in an ETS is not directly related to environmental performance, but rather boils down to the question of whether a participant holds sufficient allowances for its emissions (McAllister, 2007: 301). Without enforcement, participants in a trading scheme may decide not to comply with their obligations. Compliance and enforcement can be ensured by putting in place systems for monitoring and reporting emissions, verification of emission reductions, and through the introduction of credible sanctions for non-compliance. The key tradeoff in this area is between the accuracy of monitoring and reporting—and, subsequently the environmental integrity of a trading scheme—and the administrative costs of doing so (Peeters, 2006: 174–5). Accurate monitoring and reporting, as well as the verification of emissions, can entail significant costs for both participants and regulators, and poses regulatory challenges the more diverse the facilities are that are covered by a trading scheme. By putting in place registries—databases keeping track of allowances, trades, emissions, and so on—most trading schemes have sought to introduce a system allowing for the monitoring of trade in allowances. Furthermore, most schemes require participants to report on their emissions, and provide for third-party verification. Sanctions are usually introduced for participants that do not hold sufficient allowances at the end of a trading period, including financial penalties (e.g., €100 in the second phase of the EU ETS) and the ‘naming and shaming’ of   Instead of adopting a price control mechanism, the EU adopted a ‘market stability reserve’ to address the imbalance between supply and demand of allowances. The mechanism does not directly determine the price, but may still affect it indirectly, by automatically taking allowances off the market in case of a significant surplus, and releasing allowances in case of significant scarcity. The market stability reserve will be implemented from 2019 onwards. 16

350    part iv.  setting up the int'l mitigation regime non-complying participants. These are generally accompanied by further obligations, such as the requirement to compensate for the missing allowances in a subsequent trading period. Data availability to ensure compliance is of paramount importance. Without accurate emissions data, it is hard—if not impossible—to establish whether a participant complies with its obligations. It is hence not surprising that observers attribute the problems in the first phases of the EU ETS to a large extent to the incongruence between emissions forecasts and the verified emissions. Within the EU, the dilemma between accuracy and costs is compounded by the fact that the Member States generally have better access to data than the European Commission. Therefore, Member States still play a key role in enforcing the EU laws. Similar challenges may also emerge in other jurisdictions. In the United States, the Environmental Protection Agency played an important role in the acid rain programme and can still play its part by setting standards for monitoring and reporting, but given the challenges federal agencies face in trying to collect data, individual states likely need to play an important supplementary role in implementing and enforcing cap-and-trade regulation (McAllister, 2010).

4.  The Future of Emissions Trading in Climate Change Law and Policy Regulators seeking to establish an emissions trading system are faced with a range of tough choices regarding design and implementation. Each choice has important consequences in itself for the performance of an emissions trading system in terms of its environmental outcomes, cost-effectiveness, economic efficiency, and the distribution of costs. What is more, this chapter shows that there are also important tradeoffs between these objectives. Environmental outcomes are best guaranteed through setting the cap combined with strong market oversight by the state. But as a quantity-based instrument, emissions trading cannot guarantee a strong carbon price that would stimulate low-carbon investments in the long term. This could be remedied through price management, but only at the cost of the system’s efficiency. Furthermore, the various design elements are intrinsically connected: addressing the consequences of one design choice (e.g., setting an ambitious cap) could influence regulators to make another choice (e.g., allocating allowances for free, increasing the access to offsets, or imposing a price ceiling). While design choices thus undoubtedly influence the performance of a trading system, the question rather becomes: how do we judge the performance of emissions

16.  design and implementation of emissions trading    351 trading in the first place? The answer to this question will primarily depend on the regulatory context in which the instrument is adopted. Or, as Bogojević (2013: 113) puts it, ‘emissions trading, as a regulatory concept, derives its meaning from the particular regulatory lens through which law- and policy-makers observe it and, as such, the legal culture in which it operates’. In each legal culture, emissions trading may serve a plethora of different regulatory purposes, including achieving environmental outcomes, protecting domestic industries, offering legal certainty, etc., which will need to be identified before the real success or failure of emissions trading can be determined. In this light, it may seem premature to speculate on the future of emissions trading. Nevertheless, I will conclude this chapter with some remarks to this end. At first glance, the developments to date seem paradoxical: despite ongoing problems with the various trading systems launched in the 2000s (notably the EU ETS), emissions trading schemes are increasingly being adopted by governments worldwide. Upon further reflection, it can be questioned whether the problems encountered so far have actually reduced the appeal of the policy instrument. As Voß (2007: 339–40) argues: [e]‌ven if, over the coming years, some of the great promises of efficiency and effectiveness were to become deconstructed in scientific and political debate . . . there is still a good chance, [sic] that the instrument will be retained, be expanded and branch out into other governance domains.

A certain path dependency regarding instrument choice thus seems to exist: no matter how well emissions trading meets its objectives, it is likely to be retained. On the other hand, if another instrument is clearly more attractive in terms of environmental or cost-effectiveness, this path dependency may be broken. Indeed, the fact that emissions trading systems were rapidly introduced in jurisdictions as diverse as the EU and China suggests that the instruments that regulators prefer can change within a very short time span. The ultimate question about the long-term effectiveness of emissions trading concerns ‘the extent to which observed difficulties are inherent in the trading device or can be explained as teething troubles (as with the EU ETS) or as implementation failures (that might or might not afflict other regulatory instruments)’ (Baldwin, 2008: 210). This statement suggests that it needs to be determined whether learning lessons (within one jurisdiction or across jurisdictions) and acting upon them through (re-)design is sufficient. More importantly, other instruments may face similar problems. While emissions trading may thus never live up to its textbook potential, this does not necessarily mean it should be discarded as such. Considering emissions trading from the viewpoint of instrument choice, Mehling (2013) reinforces this argument by positing that emissions trading can better reduce entry barriers to more ambitious climate policy than any other policy instrument.

352    part iv.  setting up the int'l mitigation regime It is clear that the practical experiences have offered lessons for the further development of emissions trading systems. There is indeed evidence that such policy learning is already taking place for specific design elements of emissions trading. For instance, the EU’s mixed experience with free allocation helped to inform decisions in Australia and RGGI to start with a higher share of auctioning (Betsill and Hoffmann, 2011; Klinsky et al., 2013: 298, 300). Yet transplanting an idea from one jurisdiction to another requires a solid understanding of the prevailing context— geographical, social, economic, cultural, political, and legal—in both jurisdictions (cf. Kahn-Freud, 1974: 7). The diffusion of emissions trading systems requires a careful process of learning and adapting to local conditions rather than simple mimicry. An appropriate angle for future enquiry would therefore be to examine the mechanisms of learning and adaptation, as well as the governmental and nongovernmental actors involved in the diffusion and transfer of policy instruments like emissions trading (cf. Scott, 2009).

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16.  design and implementation of emissions trading    355 Peeters, M. (2006). ‘Enforcement of the EU Greenhouse Gas Emissions Trading Scheme’, in M. Peeters and K. Deketelaere, EU Climate Change Policy: The Challenge of New Regulatory Initiatives, Cheltenham: Edward Elgar, 169–87. Pew Center (2008). Scope of a Greenhouse Gas Cap-and-Trade Program, Washington, DC: Pew Center on Global Climate Change. Reuters (2011). ‘NZ Bans Industrial Gas Offsets from CO2 Trade Scheme’ (21 December 2011). Sandbag (2010). Cap or Trap? How the EU ETS Risks Locking-in Carbon Emissions, London: Sandbag. Schleich, J., Ehrhart, K.-M., Hoppe, C., and Seifert, S. (2006). ‘Banning Banking in EU Emissions Trading?’, Energy Policy 34(1): 112–20. Schneider, L. (2007). Is the CDM Fulfilling its Environmental and Sustainable Development Objectives? An Evaluation of the CDM and Options for Improvement, Berlin: Öko-Institut. Scott, J. (2009). ‘From Brussels with Love: The Transatlantic Travels of European Law and the Chemistry of Regulatory Attraction’, American Journal of Comparative Law 57(4): 897–942. Sijm, J., Neuhoff, K., and Chen, Y. (2006). ‘CO2 Cost Pass-through and Windfall Profits in the Power Sector’, Climate Policy 6(1): 49–72. Skjærseth, J.B. and Wettestad, J. (2008). EU Emissions Trading: Initiation, Decision-making and Implementation, Aldershot: Ashgate. Sopher, P. and Mansell, A. (2013). Japan, Washington, D.C.: Environmental Defense Fund and International Emissions Trading Association. Sopher, P., Mansell, A., and Munnings, C. (2013). Alberta, Washington, D.C.: Environmental Defense Fund and International Emissions Trading Association. Stavins, R.N. (2012). ‘Low Prices a Problem? Making Sense of Misleading Talk about Capand-Trade in Europe and the USA’. See (accessed 10 August 2015). Stewart, R.B. (2007). ‘Instrument Choice’, in D. Bodansky, J. Brunnée, and E. Hey, The Oxford Handbook of International Environmental Law, Oxford: Oxford University Press, 147–81. UNFCCC (2002). Decision 17/CP.7, Modalities and Procedures for a Clean Development Mechanism, as Defined in Article 12 of the Kyoto Protocol. U.N. Doc. FCCC/CP/2001/13/ Add.2, 21 January 2002. van Asselt, H. (2010). ‘Emissions Trading: The Enthusiastic Adoption of an Alien Instrument?’, in A. Jordan, D. Huitema, H. van Asselt, T. Rayner, and F. Berkhout (eds), Climate Change Policy in the European Union: Confronting the Dilemmas of Mitigation and Adaptation?, Cambridge: Cambridge University Press, 125–44. van Asselt, H. and Biermann, F. (2007). ‘European Emissions Trading and the International Competitiveness of Energy-intensive Industries: A Legal and Political Evaluation of Possible Supporting Measures’, Energy Policy 35(1): 497–506. van Asselt, H., and Brewer, T. (2010). ‘Addressing Competitiveness and Leakage Concerns in Climate Policy: An Analysis of Border Adjustment Measures in the US and the EU’, Energy Policy 38(1): 42–51. van Asselt, H. and Gupta, J. (2009). ‘Stretching too Far: Developing Countries and the Role of Flexibility Mechanisms beyond Kyoto’, Stanford Environmental Law Journal 28(2): 311–78.

356    part iv.  setting up the int'l mitigation regime Voß, J.P. (2007). ‘Innovation Processes in Governance: The Development of “Emissions Trading” as a New Policy Instrument’, Science and Public Policy 34(5): 329–43. Walters, R. and Martin, P. (2012). Risks of Carbon Fraud, Brisbane: Centre for Crime and Justice, Queensland University of Technology. Wara, M. and Victor, D. (2008). A Realistic Policy on International Carbon Offsets, PESD Working Paper 74, Stanford: Stanford University. Weisbach, D. (2012). ‘Carbon Taxation in the EU: Expanding the EU Carbon Price’, Journal of Environmental Law 24(2): 183–206. Weishaar, S. (2007). ‘The European Emissions Trading System and State Aid: An Assessment of the Grandfathering Allocation Method and Performance Standard Rate System’, European Competition Law Review 28(6): 371–81. Weishaar, S. (2014). Emissions Trading Design, Cheltenham: Edward Elgar. Weitzman, M. (1974). ‘Prices vs. Quantities’, Review of Economic Studies 41(4): 477–91. Wiener, J.B. (2001). ‘Something Borrowed for Something Blue: Legal Transplants and the Evolution of Global Environmental Law’, Ecology Law Quarterly 27(4): 1295–373. Wiener, J.B. (2006). ‘Better Regulation in Europe’, Current Legal Problems 59(1): 447–518. Wood, P.J. and Jotzo, F. (2011). ‘Price Floors for Emissions Trading’, Energy Policy 39: 1746–53.

Chapter 17

INTERNATIONAL LAW AND THE RENEWABLE ENERGY SECTOR Martijn Wilder AM and Lauren Drake*

1. Introduction

358

2. What is Renewable Energy?

361

3. The Existing International Law Regime

362

4. International Organizations

376

5. Domestic Action

379

6. Conclusion

387

*  The authors are grateful to James Tyson for his assistance in writing this chapter. The authors also acknowledge Leslie Parker and the Renewable Energy and International Law (REIL) Project and Network, whose ongoing work in this area forms the basis for much of this chapter and in that regard it is to be viewed as part of REIL’s ongoing contribution to the field.

358    part iv.  setting up the int'l mitigation regime

1. Introduction International law defines the legal rights and responsibilities of States. It guides State interactions and provides important tools for addressing complex issues that require global collaboration, including questions of natural resource management. International law, however, does not provide a comprehensive set of rules, guidance, or even norms for the development of energy systems and energy supply. These questions largely fall within the ambit of domestic economic regulation and, at the domestic level, they continue to rely upon national financial subsidies for their success. That is, while States enter into commercial agreements with the private sector regarding the transportation or sale of energy, policies and measures to promote energy systems and supply are driven by national governments. Thus, the role that international law plays in regulating energy, and the renewable energy sector in particular, remains in flux. More specifically, energy and renewable energy production and supply is traditionally viewed by States as a domestic issue. In some cases, renewable energy projects are State-controlled and dominated by State-owned energy companies, while in other cases they are privatized with local and multi-national companies operating as the main suppliers and distributors of energy. Globally, investment in renewable energy has been driven by national directives, policy measures, and subsidies, coupled with increasing private sector involvement due to growing recognition of the important role renewable energy is likely to play in future energy scenarios. In recent years, national government support for renewables has underpinned the establishment of the renewable energy sector and facilitated efforts to achieve greater economies of scale. As a result of this support, the renewable energy sector has seen greater success in attracting institutional investors, meaning that the cost of renewable energy has begun to decline. Declining costs coupled with growing concerns over energy security and climate change are prompting more focused shifts towards renewable energy in many contexts. In fact, global demand for renewable energy has increased significantly in the last decade. Renewable energy supplied an estimated nineteen per cent of global final energy (energy that reaches the consumer after some primary energy is lost in conversion, transmission and distribution) consumption,1 and twenty-six per cent of global electricity-generating capacity in 2012.2 As the sector grows, policy-makers are increasingly recognizing the potential impacts investment in the renewable energy sector can have on national economic development by driving social, political, and economic growth and providing co-benefits such as job creation. As a result, the renewable energy sector is now seen as a fundamental component of global efforts to promote energy   REN21 (Renewable Energy Policy Network), 2014: 13.   

1

  REN21, 2013: 4.

2

17.  international law & renewable energy sector    359 security and access, and to climate policy scenarios for achieving the 2°C global climate policy target under the United Nations Framework Convention on Climate Change (UNFCCC). As the renewable energy sector grows, it becomes increasingly clear that renewable energy has an international dimension. Investigating the development of renewable energy is important from an international law perspective for a number of reasons. First, renewable energy has a key role to play in reducing greenhouse gas emissions and thus mitigating the effects of climate change. The mitigation scenarios envisioned by the Intergovernmental Panel on Climate Change (IPCC) consider the development of the renewable energy sector to be key to climate change mitigation.3 Second, international law plays an important role in governing unified action and enhanced collaboration and information sharing on effective policies and investment frameworks so as to reduce barriers and risks of investment in renewable energy. The variability of domestic policies can affect the market and the levels of investment in the renewable energy sector, as illustrated by the twelve per cent decline in global investment in renewable power and fuels from 2011 to 2012. The decline stemmed from uncertainty about policies in support of renewable energy in major developed economies (including policy reversals and retroactive changes), particularly in Europe (thirty-six per cent decrease in investment) and the United States (thirty-five per cent decrease in investment).4 International law therefore has the potential to have an important normative effect on State behaviour, for example through the creation of a binding global renewable energy target, which would embolden State action in favour of enacting long-term supportive policies. Third, the renewable energy sector provides key areas of growth for developing countries: outlays for renewable energy projects in developing countries reached US$112bn in 2012, representing forty-six per cent of the world total.5 The evident shift in the balance of worldwide renewable energy investment from developed countries to developing countries reflects three important recent trends: (1) changes to domestic policy settings (specifically, a reduction in subsidies for wind and solar project development in Europe and the United States), (2) increased investor interest in emerging markets with rising power demands and abundant renewable energy resources, and (3) reducing costs of renewable energy technologies, particularly wind and solar photovoltaic (PV) technologies.6 Developing countries, however, generally lack the required institutional and individual skills, knowledge base, and experience required to implement renewable energy policies, thus international cooperation on knowledge and technology-sharing and capacity-building is necessary to harness the potential for attracting investment in developing countries.7  IPCC, 2011.   4  REN21, 2013: 15.    5  REN21, 2013: 15.   REN21, 2013: 57.    7  IRENA (International Renewable Energy Agency), 2012: 6.

3

6

360    part iv.  setting up the int'l mitigation regime International law has the potential to provide a platform for such cooperation, such as through treaties. International organizations such as the International Renewable Energy Agency (IRENA), the International Energy Agency (IEA), and development banks are important forums for providing support to developing countries and facilitating such cooperation and collaboration. Fourth, problems of technology transfer, including disagreement over which mechanisms are appropriate and difficulties in measuring effectiveness, require tools of international law to solve. Technology transfer enhances developing countries’ technology capabilities by enabling them to acquire, adapt, deploy, and diffuse renewable energy technologies. It must be distinguished from the mere trade of equipment.8 Article 4(5) of the UNFCCC creates an obligation for developed countries to take practicable steps to promote, facilitate, and finance technology transfer to assist developing countries in reducing emissions. This stems from the principle of common but differentiated responsibilities that underpins the Convention (Article 3(1)). Intellectual property rights in relation to technology patents can act as a barrier to the transfer of renewable energy technologies as well as global collaborative research efforts. Thus, there is a need to develop provisions to ensure existing rights can be respected while still fulfilling technology transfer commitments. Fifth, renewable energy projects often involve the use of technology components from many States. This can put pressure on certain World Trade Organization (WTO) members to protect goods that might be subject to competition from imported products. It also contributes to the tension between the need for domestic policy initiatives to promote the renewable energy sector, and the need to eliminate trade barriers to develop international cooperation. Further, there are a number of WTO and investor–State disputes where renewable energy and climate policies are being challenged. There is arguably a need for an expansion of the international trade regime to deal with such issues, either within the WTO framework or outside it. Sixth and finally, the increasingly cross-border locations of renewable energy projects (for example, projects where energy is collected in one State and transmitted to another) indicates the growing need for bilateral and multilateral agreements to regulate arrangements between the States involved. While States have voluntarily entered into over 500 multilateral environmental agreements,9 there are only a limited number of energy-related agreements. There is also arguably a strong role for bilateral and multi-lateral investment treaties to govern cross-border renewable energy projects so as to ensure fairness between foreign investors and host countries, including by providing dispute resolution structures, thereby reducing the risk of investments.10 Customary international law generally determines the   Pueyo and Linares, 2012: 7.

8

  Bruce, 2013: 24.

9

  Gentry and Ronk, 2006.

10

17.  international law & renewable energy sector    361 standards of treatment under investment treaties to be based on the principles of ‘fair and equitable treatment’, ‘non-discrimination’, and ‘national treatment’.11 Such treaties are also useful to define the rights of the investor and host country in relation to expropriation. For all of these reasons, despite the fact that most renewable energy projects are established by the private sector and governed by domestic laws and policies, renewable energy is an increasingly important area from an international governance perspective. Against this backdrop, Bruce argues the state of current international law in relation to renewable energy is underdeveloped, and the absence of hard regulation for international renewable energy generation is ‘striking and unsustainable’.12 He notes the constitutive convention, regulatory protocol, and subsequent international negotiations of the international climate change regime have given insufficient attention to the need for direct regulation of the renewable energy sector.13 To the extent that an international legal framework for renewable energy exists, it is fragmented, with global trends in the development of the renewable energy sector continuing to be heavily influenced by domestic government action. As renewable energy becomes a growing topic of attention at the international and domestic level, emerging laws revolve around four key themes: the ability of renewable energy to act as a tool to reduce greenhouse gas emissions, the transfer of renewable energy technologies, the need to remove trade barriers, and the need to facilitate investment in renewable energy.

2.  What is Renewable Energy? Having established the increasingly important international dimensions of renewable energy, it becomes necessary to explore what constitutes renewable energy. Renewable energy includes all forms of energy produced from renewable sources in a sustainable manner, including bioenergy, geothermal energy, hydropower, ocean energy (including tidal, wave, and ocean thermal energy), solar energy, and wind energy.14 The finance structures, regulatory issues, and types of investors involved in renewable energy projects vary immensely according to scale (usually measured by installed capacity), type of energy generated (such as electricity, thermal heating, or fuel for transportation), and whether the project is connected to an integrated 12   Gentry and Ronk, 2006.   Bruce, 2013: 28.   Bruce, 2013: 34.    14  IRENA, 2009.

11

13

362    part iv.  setting up the int'l mitigation regime transmission and distribution system. Thus the legal issues that arise at the domestic and international level are diverse. The potential for the application of more than one State’s laws as well as international cooperation and regulation arises at different stages of the renewable energy life cycle—technology research and development, system and product development, and the expansion of markets to support investments in renewable energy projects.15 The definition of renewable energy itself can raise certain legal issues, particularly in relation to WTO trade obligations. For example, biofuels are classified inconsistently under WTO tariff lines due to their non-uniform makeup: while ethanol is considered an ‘agricultural good’, biodiesel is classified as an ‘industrial good’. Some biofuels may be deemed as ‘environmental goods’ and therefore subject to the special negotiations currently underway to reduce or eliminate tariffs and trade barriers for ‘environmental goods and services’.16 The different ways biofuels are classified is partially attributable to State regulations that mandate requirements for the percentage and types of biofuel in the fuel blend, as well as labelling, health and safety regulations, and environmental standards.

3.  The Existing International Law Regime There is no specific treaty governing renewable energy per se. Rather, the international legal framework in relation to renewable energy remains fragmented, consisting of a mixture of legally binding obligations with both direct and indirect effects, as well as instruments that have contributed to the development of global energy policy.

3.1 Direct Legal Mechanisms The key instruments and mechanisms relevant to international renewable energy regulation include: the International Renewable Energy Agency Statute; the UNFCCC; the Kyoto Protocol, the Green Climate Fund, and related international climate change negotiations and declarations; the Energy Charter Treaty (ECT); and various sector-specific treaties. In the section that follows, this chapter analyses each of these key instruments, programmes, and principles in turn.

  Gentry and Ronk, 2006.

15

  Haverkamp and Nicholls, 2007.

16

17.  international law & renewable energy sector    363

A. The International Renewable Energy Agency The IRENA Statute is effectively the only international mechanism designed specifically to advise, assist, and increase cooperation between States to further the global uptake of renewable energy. The IRENA Statute reflects Member States’ expressions of their desire to foster the widespread and increased use of renewable energy with a view to promoting sustainable development and a low-carbon, energy-secure economy. The Statute also represents an acknowledgment of the major role that renewable energy can have in reducing greenhouse gases, meeting global energy needs, stimulating sustainable economic growth, and creating employment. The key tasks of IRENA, as set out in Article IV of the Statute, are to assist Member States in developing the political framework conditions necessary to promote renewable energy, promote the transfer of knowledge and technology in the field of renewable energy, and support capacity-building in the renewable energy industry. The Statute creates a related international organization—simply known as IRENA—with a membership of 173 States (including states in accession) as at November 2015. The three main organs that form the structure of IRENA are the assembly, council, and secretariat. The supreme organ is the assembly, which is composed of all Member States as well as the EU, and has authority to make final decisions including on the adoption of the budget and work programme, amendment of the statute, and appointment of the director-general. Voting is equal, with each member attributed one vote, and a decision can only be made if no more than two members object (Article IX). Member representatives are elected by the assembly to hold a two-year term on the council, which prepares the draft agenda for the assembly and can make substantial decisions with a two-thirds majority. The director-general is elected by the assembly for a four-year term, and heads the secretariat, which implements IRENA’s work programme.17 The competence and powers of IRENA are set out through the express language in its constitutive treaty, implied authority as necessary to effectively fulfil its function, and subsequent State practice.18 Bruce notes that IRENA ‘marks a significant advancement in intergovernmental discussion and cooperation on renewable energy finance, technology and knowledge’ by partially filling the gap in international and intergovernmental process to promote dialogue on energy issues. He adds that ‘its programmatic activities engage countries, international organizations and, crucially, the private sector, all of which must cooperate to deliver scalable renewable energy systems’.19 However, as with many international organizations, as specified in Article II(a) of the Statute, IRENA’s mandate is constrained by the requirement that any activities take into account States’ national and domestic priorities. It also has no express   Van de Graaf, 2013: 23.

17

  Bruce, 2013: 46.

18

  Bruce, 2013: 46.

19

364    part iv.  setting up the int'l mitigation regime competence or implied power to establish international legal obligations with respect to renewable energy targets, nor does it facilitate Member States’ negotiations of such obligations. Similarly, such targets are not found in any international climate change instruments, although many States have implemented their own binding targets. Since its formation, IRENA has facilitated numerous activities advancing the renewable energy sector. For example it has signed a memorandum of understanding with the Dubai Electricity and Water Authority to develop projects, strengthen institutions, and build the necessary skills to deliver electricity and water services based on renewable energy resources and technologies in the Emirate of Dubai.20 IRENA also selects innovative, replicable renewable energy projects in developing countries to receive funding from the Abu Dhabi Fund for Development (ADFD), in an effort to address the global challenge of mobilizing finance for such projects, particularly in developing countries.

B. The United Nations Framework Convention on Climate Change The UNFCCC entered into force on 21 March 1994. It is the first multilateral treaty to recognize that human activities have substantially increased the atmospheric concentration of greenhouse gases, which will result in an additional warming of the Earth’s surface and atmosphere.21 It sets a goal of stabilizing greenhouse gas concentrations22 and acknowledges the need for developed countries to lead the way in both mitigating climate change and providing assistance to developing countries in their efforts to limit and adapt to climate change.23 The UNFCCC, however, does not mandate energy-related obligations for States, and it does not expressly mention renewable energy.24 The most that the UNFCCC does in the context of renewable energy is promote global cooperation on efforts to promote new technologies. Article 4(c) instructs parties to the treaty to ‘[P]‌romote and cooperate in the development, application and diffusion, including transfer, of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases not controlled by the Montreal Protocol25 in all relevant sectors, including the energy, transport, industry, agriculture, forestry and waste management sectors’. Article 2(1)(a)(iv) of the Kyoto Protocol adds specificity, committing parties to the Protocol to implementation and/or furthering policies and measures for the research on, promotion, development, and increased use of renewable forms of energy. Yet, even taken together, these two instruments do little to promote renewable energy or structure and international governance regime. 21 22   IRENA, 2012.   UNFCCC, Preamble.   UNFCCC, Article 2. 24   UNFCCC, Article 3(1).   UNFCCC, Article 4. 25   Montreal Protocol on Substances that Deplete the Ozone Layer (adopted 16 September 1987, entered into force 1 January 1989). 1522 UNTS 3. 20 23

17.  international law & renewable energy sector    365 The Eighteenth Session of the Conference of the Parties to the UNFCCC (COP18) in Doha set out a timetable to adopt a universal climate agreement by 2015, which will come into effect in 2020. In preparation for the adoption of this agreement at the Twenty-first Conference of the Parties (COP21), Parties were invited to submit their Intended Nationally Determined Contributions (INDCs), as public declarations of actions Parties intended to take under a new global climate agreement. Renewable energy formed a key part of many INDCs, for example Ethiopia’s INDC included an ambitious goal to reduce greenhouse gas emissions by sixty-four per cent below its projected business-as-usual emissions scenario by 2030, and expanding electric power generation from renewable energy through its Climate Resilient Green Economy Strategy formed a crucial component of Ethiopia’s action plan. However, the success of Ethiopia’s and other developing countries’ mitigation strategies are contingent on the existence of and their ability to access and utilize, ­climate finance mechanisms.

C. The Kyoto Protocol and the Clean Development Mechanism In contrast to the relative sparsity of language in the texts of the international climate change agreements, efforts to implement the Kyoto Protocol have more directly touched upon renewable energy. The Kyoto Protocol created specific emission reduction obligations for developed States during the first compliance period (2008 to 2012). A second commitment period negotiated through the Doha Amendment to the Kyoto Protocol includes new commitments for Annex I Parties (industrialized countries that are members of the Organisation for Economic Cooperation and Development (OECD)), who agreed to take on commitments in a second commitment period (2013 to 2020). The Doha Amendment has not yet entered into force as it has only been ratified by fifty parties (as at October 2015), however, it is currently binding on parties that have accepted it. The Kyoto Protocol establishes three market-based mechanisms to assist Parties in their efforts to meet their emissions reductions targets. These include: International Emissions Trading (ET), the Clean Development Mechanism (CDM), and Joint Implementation (JI). Both the CDM and JI are mechanisms for reducing greenhouse gas emissions through investing in projects that reduce emissions below a business-as-usual baseline. The reduced emissions are measured and quantified as certified emission reductions (CERs) for CDM projects, and as emission reduction units (ERUs) for JI projects. These credits are counted towards developed countries’ total emissions reductions and, thus, help them comply with their international legal obligations. Renewable energy projects have been a key focus for Parties under the Kyoto Protocol that have emissions reductions commitments. It has resulted in widespread investment in domestic renewable energy projects in both developing and developed countries. This has especially been evident in relation to wind and solar

366    part iv.  setting up the int'l mitigation regime projects. Under the CDM, such projects have reduced approximately twenty million tonnes of carbon dioxide emissions per year.26 However, the ability to develop renewable energy projects through the CDM has its limitations. Eligible projects under the CDM depend upon satisfying the criterion of ‘additionality’—that is, the greenhouse gas emissions after implementation of a CDM project activity must be lower than those that would have occurred under the most plausible alternative scenario to the CDM project. This requirement has served as an obstacle to the registration of renewable energy CDM projects. More than seventy per cent of the CDM projects denied registration were rejected because they failed to meet the additionality requirement.27 More generally, the CDM has primarily facilitated ‘end of pipe’ projects that mitigate the emissions of pre-existing assets or planned assets rather than diverting investment away from conventional energy to renewable energy technologies.28 Finally, financial support through the CDM is only given to operational projects, thus investors and sponsors cannot rely on it for the initial funding of the project.29 In addition, the market price of CERs is volatile and is no longer sufficient to provide the additional financing required for renewable energy projects. Thus, while the CDM has been important to facilitating growth in the renewable energy sector, it has also revealed many of the challenges and limitations to doing so.

D. The Green Climate Fund At the Sixteenth Session of the Conference of the Parties to the UNFCCC (COP16) in December 2010 in Cancún, the Parties established the Green Climate Fund as an operating entity of the Financial Mechanism of Article 11 of the UNFCCC. The Green Climate Fund is governed by a Board consisting of twenty-four members of developing and developed country Parties, and is accountable to and functions under the Conference of the Parties, to support adaptation and mitigation projects, programmes, policies, and other activities in developing country Parties.30 Subsequent Conferences of the Parties have refined and designed practical elements of the Green Climate Fund, including the interim trustee (the World Bank) and the secretariat. The Fund has secured more than US$10 billion equivalent in pledges from thirty-three countries so far, however, only twenty-two of these countries have signed contribution agreements, for a total of US$5.47 billion. The Fund began making accreditation processes and working towards committing finance to activities in the second half of 2015, and renewable energy projects will form a significant portion of the mitigation activities the Fund will finance. Thus the Fund, and the 27   World Bank, 2013.   World Bank, 2013: 5.   World Bank, 2013.    29  World Bank, 2013. 30   Decision 1/CP.16, Report of the Conference of the Parties on its sixteenth session, held in Cancún from 29 November to 10 December 2010, FCCC/CP/2010/7/Add.1. 26 28

17.  international law & renewable energy sector    367 pledges from developed countries that it consists of, will be crucial to the effective flow of climate finance to support and enable developing countries to implement their INDCs.

E. The Energy Charter Treaty The ECT entered into force on 16 April 1998. It represents the first multilateral treaty directly related to the energy sector. The ECT seeks to establish a non-discriminatory, open international energy market by facilitating multilateral cooperation for transit, trade, investments, environmental protection, and energy efficiency. There are fifty-three members of the ECT, in addition to thirty-seven observer countries and eleven observer international organizations including, the Association of Southeast Asian Nations (ASEAN), the OECD, and the World Bank. The ECT aims to promote foreign direct investment in the energy sector by protecting foreign investors against discrimination,31 expropriation,32 losses resulting from strife, transfer restrictions, and the breach of individual investment contracts.33 The ECT also contains a strong dispute resolution mechanism, including a forum for arbitration between investors and ECT parties, as well as among the parties themselves. Further, Article 19 of the ECT creates an obligation for members to act in accordance with the principle of sustainable development, the precautionary principle, and the polluter pays principle, and ‘have particular regard’ to the development of renewable energy sources. The ECT was amended in 2010 by the Trade Amendment, as a result of which the ECT aligned its provisions with WTO rules. The Trade Amendment denotes that the ECT and WTO share the principles of non-discrimination, transparency, and a commitment to the progressive liberalization of international trade. The Trade Amendment also expands the ECT’s scope to cover trade in energy-related equipment. It also sets out a mechanism for the future introduction of a legally binding stand-still on customs duties and charges for energy-related imports and exports, the details of which are not yet known. The adoption of the ECT was a watershed moment in international energy governance. It is merely a beginning, however. Bruce highlights the limits of the ECT noting, first, that it is devoid of meaningful renewable energy obligations and instead favours traditional production and consumption of conventional nonrenewable energies.34 While the ECT’s Protocol on Energy Efficiency and Related Environmental Aspects outlines specific international law obligations in relation to energy efficiency, there is no protocol to the treaty on renewable energy. Second, Bruce notes, the ability of the ECT to provide a framework for trade-related concessions on sustainable-energy goods and services is impeded by the absence of China, 32   Energy Charter Treaty, Article 10.   Energy Charter Treaty, Article 13. 34   Energy Charter Treaty, Article 12; Gentry and Ronk, 2006: 31–2.   Bruce, 2013: 40.

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368    part iv.  setting up the int'l mitigation regime India, and the United States as members to the treaty since these three countries are key players in the renewable energy sector due to their high supply of, and demand for, renewable energy.

F. Sector-specific Treaties Particular types of renewable energy technologies such as ocean energy technologies and wind energy may be subject to particular regimes and treaties. For example, international legal instruments on biodiversity such as the Convention on Biological Diversity, the Convention on the Conservation of Migratory Species of Wild Animals, and the Ramsar Convention on Wetlands of International Importance, are relevant to the development and regulation of wind energy projects because many of the objectives associated with international and regional nature protection laws have to be weighed by relevant authorities with their own renewable energy development plans and procedures.35 Inconsistencies with international biodiversity instruments (and also with pieces of relevant national legislation) have generated a small but growing number of legal challenges in recent years, particularly in the United States and Europe.36 However, the international legal instruments on biodiversity generally require action at a national level to become operative, thus conflicts will only arise in States that have executed national laws to implement the treaty.37 Ocean energy technologies are used to convert energy from either the surface wind-generated waves or the ocean currents and tides, to energy in a form fit for human use. Due to the off-shore nature of ocean energy projects, the 1982 United Nations Convention on the Law of the Sea (UNCLOS) applies to govern some legal issues. UNCLOS sets out the jurisdiction of coastal States and provides the rights and obligations, many of which have become customary international law, of States regarding their internal waters, territorial seas, and exclusive economic zones (EEZs). Existing and proposed ocean energy projects may potentially be located in any of these areas of jurisdiction. While there are no international law restrictions on how States regulate the ocean energy installation within their internal waters, coastal States’ sovereignty over the territorial sea (confirmed in Article 2, UNCLOS) is subject to the right of innocent passage of foreign-flagged vessels in accordance with Articles 18 and 19. This raises legal issues for a State when it permits the installation of ocean energy that would interfere with the right of innocent passage, including the navigation rights of other State parties.38 Similarly, legal issues may arise regarding the installation of projects in the EEZ because, pursuant to Article 56(2), the rights of the coastal State in the EEZ must be exercised with due regard to the rights and duties of other States under the UNCLOS and in a manner compatible with   Kelly, 2005: 7.   Kelly, 2005: 7.   

  Kelly, 2005: 7.   Leary and Esteban, 2009.

35

36

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17.  international law & renewable energy sector    369 the provisions of the UNCLOS, including freedoms of navigation, overflight, laying of submarine cables and pipelines, and other internationally lawful uses of the sea related to those freedoms.39 The UNCLOS also enshrines the sovereign rights coastal States have to explore and exploit the living and non-living resources of the water column, seabed, and subsoil. Ocean energy is specifically noted in Article 56(1) as one of these resources, subject to the restriction under Article 56(2). Some individual States have asserted jurisdiction concerning ocean energy projects located beyond their territorial seas so as to resolve jurisdictional uncertainty and give developers the legal basis for regulating issues such as environmental impact and hazards to navigation of ocean energy projects, as well as security of tenure.40 For example, under the Energy Act 2004, the United Kingdom declared a renewable energy zone that extends 200 nautical miles beyond its territorial sea.41 Pursuant to this Act, the United Kingdom claimed exclusive rights to the production of energy from water or winds in this area. While individual renewable energy projects are generally based on contractual agreements between States and the private sector, some ocean energy projects may include a need for bilateral agreements to govern the use of a particular renewable energy resource, because they are more bespoke, can allow one-to-one investment, and supply energy across borders. Some regional treaties already exist in the conventional energy sector. For example, the Timor Sea Treaty between the Government of East Timor and the Government of Australia42 provides for the sharing of the proceeds of petroleum found in an agreed area of seabed, called the Joint Petroleum Development Area.

3.2 Indirect Legal Mechanisms Some international law regimes, while not specifically directed towards the renewable energy sector, have a significant indirect impact on its regulation and development, including the WTO, Agenda 21, the Sustainable Energy for All (SE4ALL) Initiative, the Rio Declaration, the Johannesburg Plan of Implementation, and general principles of international environmental law.

A. World Trade Organization The WTO is the primary international organization that governs the international trading system. It provides a forum for governments to negotiate agreements that further liberalize trade and settle trade disputes. Although it does not have express   Leary and Esteban, 2009: 636.   Leary and Esteban, 2009: 647.    41  Energy Act 2004 (UK). 42   Timor Sea Treaty (East Timor—Australia) (adopted 20 May 2002, entered into force 2 April 2003). ATS 13. 39

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370    part iv.  setting up the int'l mitigation regime environmental objectives, the Preamble to the WTO Agreement recognizes that the WTO must allow ‘for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment’.43 The global renewable energy market can be affected when governments attempt to develop their renewable energy industries in a way that discriminates against imported goods, services, and foreign service suppliers. Thus, the relationship between international climate change law and WTO law is being tested through clashes between domestic measures to encourage renewable energy uptake on the one hand, and WTO rules on unfair trade practices on the other. The General Agreement on Tariffs and Trade (GATT) 1994, the WTO Agreement on Trade-Related Investment Measures (TRIMs), and general WTO principles governing international trade, are fully applicable to trade in the renewable energy sector. It is commonly understood that under the WTO rules production of energy goods from oil, gas, and coal comes within the scope of the GATT, while energyrelated services, including transmission and distribution of energy produced from oil, gas, and coal, fall under the scope of the General Agreement on Trade in Services (GATS).44 However, electrical energy qualifies as a good under WTO law and is, as such, subject to the rules of the GATT.45 Different forms of energy are therefore subject to strongly divergent international rules, depending on whether they qualify as a good or a service, and it is not clear where different types of renewable energy fall. Certain government programmes that encourage the development and use of renewable energy, such as feed-in tariffs (FITs) and tax breaks, which backstop the economic viability of renewable energy projects, have proved to be vulnerable to WTO challenges. In 2012, Japan and the EU brought a claim regarding the Canadian province of Ontario’s FITs for renewable energy (the Canada—Renewable Energy dispute).46 The WTO Panel as well as the Appellate Body found that the FIT programme was inconsistent with the GATT and TRIMs national treatment obligations because the programme contained provisions that favoured the use of domestic products in the construction and use of facilities to produce renewable energy. However, the Appellate Body did not classify the FIT scheme as a subsidy under the Agreement on Subsidies and Countervailing Measures (SCM Agreement), based on its interpretation of the definition of 'subsidy' in the SCM Agreement. While this decision is welcome from a climate change perspective, the reasoning of the Appellate Body has been criticized for failing to provide certainty to the   Preamble, Agreement Establishing the World Trade Organization. 45   Cottier et al, 2010: 3.   Cottier et al, 2010: 3. 46  WTO DS 19 December 2012, Canada—Certain Measures Affecting the Renewable Energy Generation Sector, and Canada—Measures Relation the Feed-in Tariff Program, WT/DS412/R; WT/ DS426/R (‘Canada—Renewable Energy, Panel’); WTO AB 6 May 2013, Canada—Certain Measures Affecting the Renewable Energy Generation Sector, and Canada—Measures Relation the Feed-in Tariff Program, WT/DS412/AB/R; WT/DS426/AB/R (‘Canada—Renewable Energy, AB’). 43

44

17.  international law & renewable energy sector    371 compatibility of future FIT schemes with WTO law, for example FIT schemes that do not contain local content requirements.47 This dispute is among many other international trade and investment disputes that challenge government measures aimed at promoting the use of renewable energy. For example, China brought a complaint against the EU, Greece, and Italy in 2012, claiming their FITs were inconsistent with the GATT, the SCM Agreement, and the TRIMs Agreement.48 Disputes over anti-dumping measures also call into question the compatibility of climate change mitigation objectives with legal mechanisms under the WTO that are designed to remedy the effects of cheap imports damaging local markets.49 For example, while the engagement of developing countries in climate change mitigation has been a strong focus of the global climate change negotiations in recent years, in the AD590—Solar Panels case,50 the EU sought to unilaterally impose anti-dumping measures on China’s subsidized export of solar panels, to offset the effect of China’s subsidies. With the value of the Chinese solar panel exports to the EU amounting to €21 billion in 2011, the dispute had significant global economic ­ramifications.51 Anti-dumping measures are covered by Article VI of the GATT and the Agreement on Implementation of Article VI of the GATT (the Anti-Dumping Agreement). The Anti-Dumping Agreement permits WTO members to implement anti-dumping measures if imported products have been ‘dumped’ onto its market, causing material injury, or the threat thereof, to the domestic industry that produces like products. In the AD590—Solar Panels case, the EU imposed such anti-dumping duties, which are valid to the end of 2015, in order to increase the price of imported Chinese solar cells and imports to a level where European manufacturers could compete on price. To date, numerous trade and environment disputes have involved WTO members’ attempts to justify their measures under the right to adopt measures for non-trade purposes under the general exceptions clauses in Article XX of the   Kulovesi, 2014: 347.  WTO, European Union and certain Member States—Certain Measures Affecting the Renewable Energy Generation Sector, in consultations on 5 November 2012, Dispute DS452, (accessed 14 August 2015). 49   Kulovesi, 2014: 349. 50   Regulation 513/2013/EU of 4 June 2013 Imposing a Provisional Anti-dumping Duty on Imports of Crystalline Silicon Photovoltaic Modules and Key Components (i.e., Cells and Wafers) Originating in or Consigned from the People’s Republic of China and Amending Regulation (EU) No. 182/2013 Making These Imports Originating in or Consigned from the People’s Republic of China Subject to Registration, [2013] OJ L152/5; Regulation 1238/2013/EU of 2 December 2013 Imposing a Definitive Anti-dumping Duty and Collecting Definitely the Provisional Duty Imposed on Imports of Crystalline Silicon Photovoltaic Modules and Key Components (i.e., Cells) Originating in or Consigned from the People’s Republic of China, [2013] OJ L325/1; Regulation 471/2014/EU of 13 May 2014 Imposing Definitive Countervailing Duties on Import of Solar Glass Originating from the People’s Republic of China, [2014] OJ L142/23. European Commission (December 2013). Case AD590—Solar panels (Crystalline silicon photovoltaic modules and key components). See (retrieved 1 August 2014). 51   Kulovesi, 2014: 349. 47

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372    part iv.  setting up the int'l mitigation regime GATT and Article XIV of the GATS. These clauses permit States to adopt measures inconsistent with GATT or GATS rules but necessary to achieve certain objectives including the protection of public morals, human, animal, or plant life or health (paragraph (b)) or the enforcement of certain domestic laws (paragraph (c)). The conservation of exhaustible natural resources (paragraph (g)) is a further exception under the GATT but not the GATS; however, such measures must also be ‘made effective in conjunction with restrictions on domestic production or consumption’. For a measure to come under an Article XX exception, it also must not be ‘applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services’.52 The potential scope for measures promoting renewable energy to come under the GATT or GATS exception was highlighted by the Appellate Body when it ruled in the Brazil—Tyres case that measures adopted in order to attenuate global warming and climate change could potentially fall within the realm of Article XX GATT.53 However, the applicable treaty law governing disputes over domestic renewable energy subsidies is the SCM Agreement rather than the GATT or GATS, which does not contain environmental exceptions, and to date the WTO Appellate Body has been reluctant to read the GATT and GATS exceptions into the SCM Agreement.54 Since 2001, discussions about lowering or eliminating tariffs on environmental goods and services, including renewable energy technologies, have been a matter being negotiated in the Special Sessions of the Committee on Trade and Environment in the Doha Development Round of trade negotiations. The Doha mandate calls for a reduction, or as appropriate, elimination of tariffs and non-tariff barriers on environmental goods and services.55 However, the lack of a universally accepted definition on environmental goods and services has meant that trade delegates at the WTO have struggled over the scope of goods and services that could be taken up for liberalization.56 In the negotiations, divisions have emerged between developed and developing countries on a number of issues, including on the issues of whether renewable energy products and services are considered ‘environmental goods’ and whether and how ‘eco-labelling’ (labelling of products according to environmental criteria) can be incorporated into the WTO regime. Outside of the WTO regime, the Asia-Pacific Economic Cooperation (APEC) economies moved ahead in 2012 by agreeing to voluntarily liberalize tariffs on fiftyfour environmental goods by cutting tariffs to five per cent by the end of 2015. The relative success of the APEC negotiations is arguably attributable both to the fact   Article XX GATT; Article XIV GATS.   WTO Appellate Body Report, Brazil—Tyres, WT/DS332/AB/R, adopted 17 December 2007. 54   Wu and Salzman, 2013: 37–8. 55  Declaration of the Fourth Ministerial Conference, Doha, Qatar, WT/MIN(01)/DEC/1, (20 November 2001), Paragraph 31(iii). 56   Vossenaar, 2013: vi. 52 53

17.  international law & renewable energy sector    373 that the APEC economies did not attempt to define ‘environmental good’, rather they agreed on a set of fifty-four broad product categories acceptable to all economies (fifteen of which include types of renewable energy), and to the fact the outcome is legally non-binding and implementation is voluntary, although the agreement is bolstered by political commitment at the highest level.57 What effect, if any, reductions of tariffs for specific ‘environmental goods’ may have on the larger deployment of renewable energy technologies is difficult to assess, as several factors may play a role—for example, tariff reductions alone may have little impact on the deployment of renewable energy technologies if they are not implemented as part of broader policies and strategies that include targets, incentives, and regulations.58 In 2012, the International Centre for Trade and Sustainable Development conducted a study on the regime of sustainable-energy goods and services within the existing WTO framework, and found that, while in theory certain types of barriers to trade in sustainable-energy goods and services can be addressed through existing WTO rules or as part of the Doha Round, the WTO rules do not currently address the energy sector in a systematic way.59 The study also notes that outside the WTO, the UNFCCC negotiating framework is not the appropriate place to negotiate trade rules or introduce operational provisions for addressing trade and market barriers to sustainable energy goods and services. Similarly, the study concludes the ECT fails to offer a framework for trade-related concessions on sustainable-energy goods and services.60 Therefore, there is a pressing need for an improved framework to deal with barriers to trade in sustainable-energy goods and services.

B. The Rio Declaration The Rio Declaration does not expressly refer to energy or renewable energy. However, it may have an indirect impact on the development of the international law on renewable energy through its promotion of the principle of sustainable development,61 as well as through its calls for States to reduce and eliminate unsustainable patterns of production and consumption,62 and to exchange scientific and technological knowledge, including new and innovative technologies.63 Agenda 21, another instrument developed at the 1992 Rio Conference, calls on States to encourage the environmentally sound use of new and renewable sources of energy by promoting research, development, and transfer of renewable energy systems,64 overcoming barriers to their development and use,65 coordinating energy plans 58   Vossenaar, 2013: vi.   Vossenaar, 2013: 6. 60   Kennedy, 2012: 1.      Kennedy, 2012: 1. 61   Rio Declaration on Environment and Development (adopted 14 June 1992, UN Doc. A/CONF.151/26 (vol. I)) (‘Rio Declaration’), Principles 1, 4, 5, 7, 8, 9, 12, 20, 21, 22, 24, and 27. 62 63   Rio Declaration, Principle 8.   Rio Declaration, Principle 9. 64   Agenda 21: Programme of Action for Sustainable Development (adopted 14 June 1992, U.N. GAOR, 46th Sess., Agenda Item 21, UN Doc A/Conf.151/26 (1992)) (‘Agenda 21’), Article 9.12.d. 65   Agenda 21, Article 9.12.f. 57

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374    part iv.  setting up the int'l mitigation regime regionally and sub-regionally,66 and building capacity for the development, introduction, and promotion of new and renewable sources of energy.67 Bolstering these original calls, in 1997, the UN General Assembly adopted the Programme for the Further Implementation of Agenda 21, calling on countries to systematically increase the use of renewable energy sources according to their specific social, economic, natural, geographical, and climatic conditions.

C. The Johannesburg Declaration A decade after the Rio Declaration and Agenda 21, at the World Summit on Sustainable Development in Johannesburg in 2002, States agreed to the Johannesburg Declaration. The Declaration marks a significant advancement of global energy cooperation among States as it links the issues of energy security, climate change, economic growth, and sustainable development for the first time. It is also the international instrument containing the most extensive provisions supporting technology transfer and the development, implementation, and commercialization of renewable energy.68 The Johannesburg Plan of Implementation, which was also agreed to at the Summit, complements the Declaration by creating non-binding goals for States to develop and disseminate renewable energy technologies so as to increase the global share of renewable energy sources ‘with a sense of urgency’.69 Although the Johannesburg Declaration and Johannesburg Plan are non-binding instruments lacking specific targets, they arguably have had a normative effect on international cooperation over renewable energy technology transfer, trade, and investment, as they are the most extensive soft law instruments both in terms of supporting renewable energy development, implementation, technology transfer, and commercialization, and in terms of working to elevate domestic energy policy to the international arena.70 The follow-up meeting to the Johannesburg Summit, the 2012 Rio+20 Conference,  built on the Rio Declaration, by recognizing the critical role that energy plays in economic development, and highlighting the fact that renewables are an essential part of the solution to the sustainability of energy systems and to the broader context of sustainable development and climate change.71 Articles 127 and 128 of the Rio+20 Outcome Document provide specific strategies for States to use in developing their renewable energy sectors by implementing national and subnational policies, particularly in relation to electrification and dissemination of sustainable cooking and heating solutions, as well as in regard to creating an 67 68   Agenda 21, Article 9.12.e.   Agenda 21, Article 9.12.i.   Bruce, 2013: 32.   Plan of Implementation of the World Summit on Sustainable Development (adopted 4 September 2002, A/CONF.199/20) Article 20(e). 70   Bruce, 2013: 15. 71   Report of the United Nations Conference on Sustainable Development (adopted 22 June 2012, A/CONF.216/16), Articles 127 and 128. 66 69

17.  international law & renewable energy sector    375 enabling environment that facilitates public and private sector investment in renewable energy technologies, including by promoting incentives in favour of renewable energy while reducing disincentives.

D. Sustainable Energy for All The UN Secretary-General’s SE4ALL initiative is focused on the cooperation and collaboration of States, international organizations, the private sector, and civil society on the goals of enabling access to modern energy services, doubling the rate of energy efficiency, and doubling the share of renewable energy in the global energy mix to thirty-three per cent by 2030. The initiative is focused on developing countries. Eighty-one developing countries have voluntarily joined and undergone assessments to determine the main challenges for, and opportunities to achieving the goals. However, action is dependent on State governments to design and implement reforms to attract new investments and financial support. As such, SE4ALL ‘envisages bottom-up domestic action to achieve top-down overarching international goals’.72 In January 2013, 160 countries endorsed the Declaration of the Abu Dhabi International Renewable Energy Conference, which called for a doubling of the world’s share of renewable energy by 2030 under the leadership of IRENA, welcomed the SE4ALL goals and declared that countries will continue to pursue them.73 While it is too early yet to assess the impact of this programme, it represents an important step towards global integration and collaboration on enhancing the uptake of renewable energy.

E. Principles of International Environmental Law Principles of international environmental law, including the principles of precaution, no harm, polluter pays, sustainable development, and common but differentiated responsibilities, have directly and indirectly influenced States’ energy policies. Some of these principles have crystallized into customary international law, such as the ‘no harm rule’ laid down in the Trail Smelter case and embodied in Principle 21 of the Stockholm Declaration and Principle 2 of the Rio Declaration.74 However, whether the emissions of greenhouse gases from fossil fuel generation activities fall within the scope of the transboundary environmental damage required to trigger international responsibility under the ‘no harm’ principle remains an open question. The status of other principles, such as ‘polluter pays’ and ‘common but differentiated responsibilities’, are less certain, although they have been adopted in numerous treaties.   Bruce, 2013: 34.   Declaration of the Abu Dhabi International Renewable Energy Conference (17 January 2013). 74   UNEP, 2006: 27; Legality of the Threat or Use of Nuclear Weapons, Advisory Opinion (1996). ICJ Rep, 241, para 29. 72 73

376    part iv.  setting up the int'l mitigation regime The strongest influence on States’ renewable energy policies arguably is the concept of sustainable development, which has achieved significant international importance since the Brundtland Commission’s Report was released in 1987, defining it as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.75 Its status as a legal principle, however, remains uncertain. While it has been invoked by various international courts and tribunals, its legal status probably is more aptly described as a concept rather than as a principle.76 Sustainable development involves promoting the integration of social, economic, and environmental considerations for the benefit of future generations, all three of which are facilitated by a shift away from energy policies based on finite fossil fuel resources to renewable energy. Sustainable development is linked with the concept of ‘green growth’, which involves a model of economic growth that aims to simultaneously achieve poverty reduction, job creation, environmental sustainability, and resource security. Use of renewable energy forms a key part of States’ shift to this economic model, for example the National Strategy for Green Growth (2009–2050) and the Five-Year Plan (2009–2013) of the Republic of Korea provide a comprehensive policy framework for green growth in both the short and long term, which establishes a target of increasing the share of renewable sources from 2.4 per cent to six per cent in 2020, eleven per cent in 2030, and thirty per cent by 2050.77 Together all of these instruments, agreements, and principles reveal both how efforts are growing to develop international mechanisms and norms relevant to renewable energy and how fragmented these efforts remain. In the section that follows, this chapter turns its attention to the primary international organizations that influence present and future directions in international renewable energy policy.

4.  International Organizations 4.1 United Nations Bodies The first intergovernmental action specifically addressing renewable energy was the UN Conference on New and Renewable Sources of Energy in Nairobi in August 1981,

 WCED, Our Common Future (Oxford University Press, 1987), at p. 43.  ILA New Delhi Declaration of Principles of International Law Relating to Sustainable Development (2002). 77   Jones and Yoo, 2011: 22. 75

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17.  international law & renewable energy sector    377 where the Nairobi Programme of Action for the Development and Utilization of New and Renewable Sources of Energy was adopted. The Programme of Action constituted a strategy for national and international action. The Programme focused on energy assessment and planning; research, development, and demonstration; transfer, adaptation, and application of mature technologies; information flows; and education and training. Later, in 1992, the UN General Assembly established the Committee on the Development and Utilization of New and Renewable Sources of Energy, which was then merged into the Committee on Energy and Natural Resources for Development in 1998. Other bodies of the UN, including the Commission on Sustainable Development, the UN General Assembly, the UN Economic and Social Council, the UN Secretary General, the UN Environment Programme (UNEP), and the UN Development Programme (UNDP), have repeatedly emphasized the need for the increased use of renewable energy sources. Further, UN-Energy was established in 2004 to promote collaboration in relation to energy development with a focus on access to energy, renewable energy, and energy efficiency. UN-Energy is not a separate UN agency in itself, rather it is an ‘inter-agency mechanism’ working to coordinate other UN bodies and international organizations, including the Food and Agriculture Organisation (FAO), UNEP, and UN Educational, Scientific and Cultural Organization (UNESCO). UN-Energy seeks to facilitate the sharing of information between these institutions and to encourage and promote joint programming and develop action-oriented approaches to coordination.

4.2 International Energy Agency Beyond the UN, the International Energy Agency (IEA) is a key international organization in the energy context. The IEA is an organization made up of twentynine developed country members. It was formed in response to the 1973–74 oil crisis in order to assist countries in efforts to coordinate a collective response to oil security issues. The four main areas of focus of the IEA are energy security, economic development, environmental awareness, and engagement with nonmember countries. It is a prerequisite for IEA membership that they be net oil importers, with legislation and institutions in place to reduce oil consumption, and ensure oil companies operating in their territory report on data such as supply, demand, price, and refining trends. While the focus of IEA is not on renewable energy, it facilitates a dialogue for members to share their experiences of different renewable energy policies through its Policies and Measures Database. It also promotes discussions with developing, oil-producing countries, as well as with the Organization of the Petroleum Exporting Countries (OPEC) at the International Energy Forum.

378    part iv.  setting up the int'l mitigation regime

4.3 Development Banks Development banks are a crucial source of long-term funding for renewable energy projects, particularly given the growing markets for renewable energy in developing countries. The World Bank, the Asian Development Bank, the International Finance Corporation, the European Bank for Reconstruction and Development, and the Inter-American Development Bank provide debt, equity, grants, insurance, and other financing support for renewable energy projects. Development banks are better equipped than private investors to overcome the relatively small scale of renewable energy projects, as they are able to aggregate multiple projects into a consolidated portfolio thereby making them more cost-effective. For example, the Asian Development Bank’s Provincial Energy Efficiency Power Plant Investment Program has been implemented in China to coordinate a number of renewable energy projects. As evidence of the importance of these institutions in future growth in the renewable energy sector, the World Bank invested US$4.9 billion in 2010–11, and US$3.6 billion in 2012 to advance the use and development of renewable energy. It has established climate investment funds including the Clean Technology Fund (CTF), which aims to finance action by providing positive incentives for accelerating and scaling-up of the deployment, diffusion, and transfer of low-carbon technologies, with a particular focus on energy efficiency, transport, concentrated solar power, integrated gasification combined cycle power plants, large-scale wind power, and residential lighting. For example, the CTF has identified a number of market barriers preventing the development of a global concentrated solar energy industry. It seeks to overcome such barriers by creating an investment financing facility to administer subsidies and a partial risk mitigation facility to insure utilities that will contract to buy power from concentrating solar energy plants in case marginal electricity supply costs drop, as well as by providing technical assistance with efforts to prepare international cooperation agreements, contractual arrangements, and regulatory frameworks. The Carbon Initiative for Development (Ci-Dev) is another initiative managed by the World Bank, with the mandate of building capacity and developing tools and methodologies to help the poorest countries access carbon finance, particularly in relation to energy access. It will use emission reduction-based performance payments to support projects that use renewable energy and energy efficient technologies in low-income countries.

4.4 Renewable Energy and Energy Efficiency Partnership The Renewable Energy and Energy Efficiency Partnership (REEEP) was established at the Johannesburg World Summit on Sustainable Development in 2002. It has

17.  international law & renewable energy sector    379 since become an active non-governmental organization that works to promote the market for clean energy in developing countries and emerging markets by funding projects, providing information, and upscaling clean energy business models. As at August 2015, it has supported nearly two hundred clean energy projects in seventy-nine countries, and finances and operates clean energy information sharing between policy-makers.

4.5 Other International Organizations There are a number of other notable international organizations that do not have a direct energy focus but remain influential in fostering global cooperation for the domestic promotion of renewable energy. These include the OECD, which has encouraged the uptake of renewable energy by allowing funding of the Global Energy Efficiency and the Renewable Energy Fund to qualify as States’ Official Development Assistance (ODA). The Group of Eight (G8) and Group of Twenty (G20) have arguably contributed to the global movement of renewable energy by sending policy signals to the market through repeatedly emphasizing the need for global energy security cooperation, diversification of the energy mix, substitution of fossil fuels, and reduction of greenhouse gas emissions, through the expansion of the renewable energy sector. Beyond the efforts of these international organizations, steps that States take at the domestic level have and will continue to influence the framing of the international approach to renewable energy.

5.  Domestic Action The development of renewable energy has been rapid at the domestic level particularly for countries that have prioritized it. This involves the establishment of various policies and measures such as those set out below to support the initial high cost of the energy source, which has at times been opposed by existing electricity generating interests.78 Continued development of domestic policy measures is necessary to overcome many of the barriers to investment in renewable energy. This section   Cass and Walker, 2009.

78

380    part iv.  setting up the int'l mitigation regime begins by exploring the barriers to investment in renewable energy before examining some of the key tools States have used at the domestic level to promote growth in the renewable energy sector.

5.1 Barriers to Investment in Renewable Energy At the domestic level, reluctance to invest in renewable energy results from a number of factors, including: market barriers, government regulation, and capital risks. Each of these is considered in turn.

A. Market Barriers There are numerous market barriers that challenging growth and development of the renewable energy sector. A few of these barriers are considered here. • The inertia of the existing electricity system is impeding investment because renewable energy is a threat to the dominance and profit of traditional utilities, infrastructure has been created around conventional energy systems and conventional energy has established customers and a supply and demand structure. Furthermore, the existence of monopoly or monopsony powers in energy markets limits competition among suppliers or demanders and reduces opportunities for free market entry and exit.79 • There is a lack of publicly available information on renewable energy options due to deficiencies in transparency, unavailability of information on prospective resource availability, and potential customers knowing less about renewable energy options.80 • Renewable energy generally has relatively high transaction costs on the basis of per-kilowatt capacity compared with conventional energy plants. This is partly due to there being under-developed research and development in the sector, fewer skilled personnel, and minimal funds available for lobbying organizations, resulting in a high initial investment cost.81 • There is a limited access to and development of renewable energy technology due to lack of technology transfer, policies or taxes limiting technology imports, a need for further research and development in developed and developing countries, limited warranties to support technologies, and inability for initiators to benefit from exclusive property rights for their efforts.82

80   Gentry and Ronk, 2006; IPCC, 2011:194.   Gentry and Ronk, 2006. 82   Gentry and Ronk, 2006.   Gentry and Ronk, 2006; IPCC, 2011: 194.

79 81

17.  international law & renewable energy sector    381 • Existing renewable energy infrastructure is inadequate due to under-developed supply chains, integration issues with renewable technology to the mainstream energy grid system due to intermittency and distributed generation as well as safety issues, and capacity limitation of the existing infrastructure.83 • The negative externalities (including the costs of pollution and greenhouse gas emissions) of traditional energy sources are not considered in their price. This is because the risks of conventional power projects are often underestimated and there is no obligation of conventional energy use providers to internalize the full costs of their actions.84 • Renewable energy projects are based on evolving technologies which are expensive to develop and inherently involve high risk as they lack ‘track records’, although there are different perceptions of the risk involved between entrepreneurs and project financers. Private capital markets require higher returns for risky investments than for established technologies, which again raises the cost of renewable energy projects. There are also concerns about premature technological obsolescence in terms of financing.85 • Renewable energy technologies’ inherent dependence on natural resource availability often results in intermittent energy availability. This adds to the risk of projects and produces a challenge for utility interconnections.86 • Power pricing rules apply unfavourably to renewable energy production because there is limited infrastructure for distributed generation, lower prices are given to intermittent renewable sources, and it is difficult to transmit energy from renewable sources due to their distance from population centres.87 • Some renewable energy projects face a lack of access to credit, particularly in rural areas of developing countries where microcredit lending may not be available. Further, loans may not be long-term enough for long-term return on investment from renewable energy projects.88 • There is a lack of skilled human resources to manage renewable energy projects as the skill sets differ in detail from conventional energy technologies, and training people to operate technology and provide technical support to users is costly and may require new infrastructure, which again adds to the cost of the project.89

84   Gentry and Ronk, 2006.   Gentry and Ronk, 2006; IPCC, 2011: 194. 86   Gentry and Ronk, 2006; IPCC, 2011: 194.   Gentry and Ronk, 2006. 87 88   Gentry and Ronk, 2006.   Gentry and Ronk, 2006. 89   Gentry and Ronk, 2006. 83

85

382    part iv.  setting up the int'l mitigation regime

B. Government Regulation Government regulation both directly and indirectly plays a fundamentally important role in shaping the development of the renewable energy sectors. In particular: • Energy producers often have a monopoly on the sale of electricity because entry into the market is restricted by government regulation and restrictions on the ability to sell electricity to utilities or directly to users.90 • Uncertainty of government incentives and policies results in a lack of investor confidence in the long-term value of the renewables market, as profits are often dependent on government incentives and regulation—the result is a ‘boom–bust’ pattern of investment in renewable energy in accordance with changes in government policies.91 • Lack of uniform utility interconnection requirements set by governments may increase transaction costs for renewable energy providers because utilities are not restricted from creating burdensome interconnection requirements due to their safety and quality concerns, or setting additional charges such as for intermittent energy generation or the difficulty of scheduling energy inputs.92 • Some government subsidies that benefit conventional energy sources actually put renewable energy projects to a greater disadvantage. Such subsidies include direct budgetary transfers, tax incentives, research and development (R&D) contribution, liability insurance, leases, rights of way on land, guarantees to mitigate project financing and fuel price risks, and local building codes.93 • Finally, much of the basic renewable energy technology is not protected by intellectual property rights, which can lead to under-investment in the industry.94 However, where patents do exist, they can restrict developing countries from accessing new technologies at a low cost.95

C. Capital Risks One of the main impediments to the growth of the renewable energy sector remains the capital risk associated with these projects. This risk manifests in a number of ways, including: • Renewable energy projects often have a higher initial capital cost for the equivalent kilowatt hour of conventional energy. As a result, lending rates are often higher and there is a lack of seed capital for off-grid projects.96 • Local banks lack support for off-grid projects, which results in financing gaps for these projects. 91   Gentry and Ronk, 2006.   Gentry and Ronk, 2006. 93   Gentry and Ronk, 2006.   Gentry and Ronk, 2006. 95 96   IPCC, 2011: 196.   Gentry and Ronk, 2006. 90 92

  IPCC, 2011: 196.

94

17.  international law & renewable energy sector    383 • There is a high perception of risk in relation to renewable energy projects, in part due to a lack of consideration for future fossil fuel price risks as well as a lack of actuarial data to assess risk. As most lending institutions and project financiers are averse to investments in higher risk technologies, the result is a reduced availability of funds for project financing and higher discount rates. Further, the high perception of risk makes it difficult to secure a long-term power purchase agreement (PPA). • Again due to the high risk of renewable energy projects (whether they are real or perceived), they are difficult to insure as underwriters have fewer strategies to deal with risk. • Renewable energy projects typically involve an initial high investment followed by long-term benefits from lower fuel and operating costs, which is incongruous to most investors’ preference for short payback periods.

5.2 Domestic Laws and Policies The successful global uptake of renewable energy depends on a supportive, facilitating environment, that is created through development of a skilled workforce, affordable and effective technology, access to affordable finance, favourable markets, and transparent administrative procedures.97 The types of policies employed at the domestic level to drive the renewable energy sector facilitative regulation, include taxation, targeted spending, and improving information. Regulation measures are targeted at market diversification as well as internalizing the environmental costs and benefits into the market. Taxation measures include tax reductions and benefits for renewable energy projects as well as carbon taxes, which create a financial incentive for low carbon emission energy sources. Targeted spending to boost the renewable sector may comprise of grants, concessional finance, public–private partnerships, and procurement. Policies to enhance information availability and access involve educational programmes, funding for R&D, and disclosure requirements.

A. Feed-in Tariffs Preferential FITs are the regulatory measure most commonly used to encourage investment in renewable energy. They work by making renewable energy projects economically viable. Nearly one hundred jurisdictions having adopted some type of FIT programme.98 Germany first adopted a FIT programme in 2000 for wind, hydropower, solar, geothermal, and biomass, and the programme has been highly successful in increasing Germany’s use of renewable electricity and helping its renewable

  IRENA, 2012: 5.

97

  REN21, 2013.

98

384    part iv.  setting up the int'l mitigation regime energy industry reach a commercial scale. A FIT programme typically involves fixing the price paid for electricity produced from renewable energy at a level higher than the price for fossil fuel-fired electricity. A government regulatory authority unilaterally fixes the price, or prospective generators bid on the price, which encourages competition. There are numerous benefits of preferential feed-in tariffs. First, they provide certainty for renewable energy products, which encourages investment and enables policy-makers to understand the costs required for renewable energy objectives and whether this can be economically viable. Second, FITs are the most effective means of providing direct financial support for renewable energy projects. Third, FITs guarantee a high sale price for renewable energy under a PPA and a correspondingly increased revenue stream, which enables producers to secure a greater level of debt financing for the project. Fourth, FITs can be used for a range of types of renewable energy: China has adopted FITs for wind power, India for solar power, Spain for solar, wind, biomass, and geothermal power, and Ireland for ocean energy generation. However, FITs have limitations as well. Early efforts to use FITs indicate it is essential to have other mechanisms in place to counterbalance the weaknesses. First, there is uncertainty of the actual level of renewable energy projects that will be deployed as a result of the FIT. Second, any adjustment of the tariff, once set, may lead to uncertainty as to the level of support that can be expected for renewable energy projects, which increases the perceived risk and potentially deters investment and project development. Third, it is difficult to correct the price of the tariff: if the price is set too high, the costs incurred by government are likely to exceed the level required to achieve the relevant policy objectives, such as the costs ultimately being borne by electricity consumers or taxpayers. If, however, the price is set too low, then the financial incentive created by the FIT programme may be insufficient to encourage the desired level of investment and deployment.

B. Subsidies Subsidies are another increasingly common measure adopted domestically to correct market failures and build the capacity of local renewable energy industries. Subsidies are used to ‘bridge the gap’ between the development of renewable energy and conventional energy sources by lowering the costs of equipment and services used to produce renewable energy. Subsidies can take numerous different forms, including direct financial transfers, preferential tax treatment, incentives, infrastructure funding, and foreign trade restrictions.99 The advantages of subsidies include enabling economies of scale and cost optimization for renewable energy projects.100 They also reduce technical barriers and market impediments and address administrative, social, and environmental constraints on the renewable energy sector.101   Ghosh and Gangania, 2012: 3.   Ghosh and Gangania, 2012: ix.   

99 100

  Oniemola, 2011.

101

17.  international law & renewable energy sector    385 However, the use of subsidies as a policy tool must be done with caution as there is a risk they will breach international trade rules, which are in place to prevent market distortions and discrimination in international trade. Further, subsidies during a recession may be perceived as being protectionist, particularly if domestic industrial development, manufacturing capacity, and employment generation are the intended consequences.102 Global subsidies for renewable energy (excluding large hydropower plants) totalled US$88bn in 2011.103 The European Union accounts for fifty-seven per cent of these subsidies, while the United States accounts for twenty-four per cent.104 Other States have adopted a range of subsidy measures. For example, Argentina and China offer rebates for electricity bills, Bangladesh covers capital costs for offgrid installations of solar home systems, and, at the sub-national level, California offers subsidies for low-income households in new housing construction to access solar PV technology.105 China and Brazil have imposed local content requirements, which require a minimum share of the content of any final renewable energy product to be derived from local content, such as from the manufacturing sector or employees.106

C. Renewable Energy Certificates Various jurisdictions, at both a national and sub-national level, have adopted some form of renewable energy certificate (REC) trading scheme, whereby a target of renewable energy generation is set for a defined period, and renewable energy generators are entitled to RECs in respect of electricity generated from renewable sources. The rules of the particular scheme determine the eligibility of the energy source, the volume of RECs issued for compliance with the scheme, and the trading scheme rules. In order to create a stable market and create demand for RECs, such schemes are often complemented by a legal obligation being imposed on certain entities (usually specific segments of energy users or electricity retailers) to purchase a set amount of RECs every year. The advantage of this combined mechanism is that it provides a stronger incentive to develop renewable energy sources and a higher degree of certainty that a specific renewable energy target will be met. This is because, until the target is reached, the obligation on the liable entities to meet the target will continue to drive demand for RECs and enable generators to sell RECs at a price that reflects the demand for RECs. The effectiveness of such schemes largely depends on whether the obligation imposed on liable entities is enforced and ensuring that the penalties for non-compliance exceed the current and likely future REC prices. The sale of RECs by renewable energy generators to liable entities also provides a revenue stream in addition to the sale   Ghosh and Gangania, 2012: 1.   Ghosh and Gangania, 2012: 3.

104   REN21, 2013: 67.   REN21, 2013: 67.   Kuntze and Moerenhout, 2013.

102

103

105

106

386    part iv.  setting up the int'l mitigation regime of electricity under the PPA, which helps make the renewable energy project economically viable. However, there is a risk that the REC trading scheme does not encourage long-term and innovative renewable energy technologies. Rather, it supports the most cost-competitive technologies that yield the most RECs with minimum cost to the developer, such as wind and solar thermal energy technologies. Therefore less mature renewable energy technologies such as geothermal, wave, and tidal energy technologies are unlikely to be developed as a mechanism for generating RECs. Promoting these newer, less mature industries thus requires additional policy measures to support their deployment. Some States have addressed this issue by creating a separate REC market or separate category of RECs for renewable energy generated by less mature technologies. It has also been suggested REC schemes do not encourage investment in renewable energy projects themselves; rather, they provide a useful mechanism for market flexibility by aiding the implementation of other policy instruments such as renewable portfolio requirements.107 An increasing number of jurisdictions have adopted renewable energy targets and quotas, either on a sector-wide basis to all renewable technologies or divided into sub-targets for different technologies. Such measures do not provide a mechanism for the achievement of the targets, however, they indicate political will to enact price-based or market-based measures that support the renewable energy sector. For example, India has a target to have 53 GW of renewable energy capacity by 2017, consisting of 5 GW of wind, 10 GW of solar, 2.1 GW of small-scale hydro, 2.7 GW of bioenergy, and 5.6 GW of solar water heating.108

D. Other Mechanisms Other mechanisms that have been adopted in various States as part of the renewable energy policy mix include: measures to facilitate grid access (such as grid connection guarantees, reduced connection fees, or measures to alleviate the cost for generators of extending the grid to connect to a grid-remote project); fiscal concessions (such as accelerated depreciation on capital expenditure, tax holidays, and reduction of or exemptions from applicable excises and duties); planning and land use concessions (such as simplified and streamlined development application and approval processes, preferential zoning of land and land acquisition for clean energy projects); voluntary measures (such as green pricing and net metering) and; funding for R&D (including support given to academic research institutions and direct grants for testing and pre-commercial development of technologies). These measures do not typically involve international law, except insofar as States can be guided by principles and developments of inter­ national law, can benefit from international legal mechanisms such as technology   Gentry and Ronk, 2006.

107

  REN21, 2013: 109.

108

17.  international law & renewable energy sector    387 transfer to developing countries and information exchange facilitated by IRENA, and are required not to breach any binding international legal obligations in their implementation. As this section demonstrates, at the domestic level, States are engaged in a very active period of development wherein they are experimenting with a number of different measures to promote the growth of the renewable energy sectors. The level of experimentation simultaneously reveals the depth of interest in developing renewable energy and the degree to which these efforts remain in their infancy.

6. Conclusion International law and, in particular, international environmental law provides a substantial framework to manage global issues. At first glance, however, it does not provide an obvious choice or easily available mechanisms for promoting and governing renewable energy. To date, there is no dedicated body of international law that governs renewable energy. However, international law does have an increasingly important role to play in the future of renewable energy. The patchwork of international law regulating (often indirectly) certain aspects of renewable energy alongside the growing body of international organizations that promote its development are crucial to supporting the future of renewable energy. Such support can be advanced through facilitation, cooperation, the removal of barriers that impede the development of the global renewable energy sector, and enhancement of climate finance mechanisms. Efficient and effective climate finance flows are of everincreasing importance in light of developing countries' intentions to reduce the carbon intensity of their economies and the crucial role renewable energy plays in reducing emissions. In order for developing countries to deliver on these plans, climate finance is needed to support the uptake of renewable energy technologies. The international law instruments examined in this chapter contain provisions that offer the potential for such advancement.

References ‘Agenda 21: Programme of Action for Sustainable Development’ (14 June 1992). U.N. GAOR, 46th Sess., Agenda Item 21, UN Doc A/Conf.151/26. Bruce, S. (2013). ‘International Law and Renewable Energy: Facilitating Sustainable Energy for All?’, Melbourne Journal of International Law, 14: 18–53.

388    part iv.  setting up the int'l mitigation regime Cass, N. and Walker, G. (2009). ‘Emotion and rationality: The characterisation and evaluation of opposition to renewable energy projects’, Emotion, Space and Society 2(1), 62–9. Convention on Biological Diversity (adopted 5 June 1992, entered into force 29 December 1993). 1760 UNTS 79. Convention on the Conservation of Migratory Species of Wild Animals (adopted 23 June 1979, entered into force 1 November 1983). 1651 UNTS 333. Cottier, T., Malumfashi, G., Matteotti-Berkutova, S., Nartova, O., de Sepibus, J., and Z. Bigdeli, S. (2010). ‘Energy in WTO Law and Policy’ (accessed 3 December 2014). Energy Charter Treaty (adopted 17 December 1994, entered into force on 16 April 1998). 2080 UNTS 95. General Agreement on Tariffs and Trade (adopted 15 April 1994, entered into force 1 January 1995). 1867 UNTS 187. Gentry, B. and Ronk, J. (2006). ‘International Investment Agreements and Investments in renewable energy’, from Barriers to Opportunities: Renewable Energy Issues in Law and Policy: A Report on the Work of the renewable energy and International Law Project, at (accessed 17 December 2013). Ghosh, A. and Gangania, H. (2012). ‘Governing Clean Energy Subsidies: What, Why and How Legal?’, International Centre for Trade and Sustainable Development Global Platform on Climate Change, Trade and Sustainable Energy, (accessed 17 December 2013). Haverkamp, J. and Nicholls, M. (2007). ‘WTO Disciplines and Biofuels: Opportunities and Constraints in the Creation of a Global Marketplace’, Renewable Energy and International Law, (accessed 23 December 2013). Intergovernmental Panel on Climate Change (IPCC). (2011). ‘IPCC Special Report on renewable energy Sources and Climate Change Mitigation’ Prepared by Working Group III of the Intergovernmental Panel on Climate Change (O. Edenhofer, R. Pichs-Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G. Hansen, S. Schlömer, C. von Stechow (eds)), Cambridge University Press. International Renewable Energy Agency (IRENA), ‘Capacity Building Strategic Framework for IRENA (2012–2015)’, (accessed 23 December 2013). International Renewable Energy Agency (IRENA) (2009). ‘Statute of the International renewable energy Agency’ Bonn, World Conference Centre. International Renewable Energy Agency (IRENA) (2012). ‘IRENA and DEWA sign memorandum to accelerate Dubai’s renewable energy uptake’ (accessed 10 October 2014). Johannesburg Declaration on Sustainable Development (adopted 4 September 2002). UN Doc A/CONF.199/20. Jones, R. S. and Yoo, B. (2011). ‘Korea’s Green Growth Strategy: Mitigating Climate Change and Developing New Growth Engines’, OECD Economics Department Working Papers, No. 798, OECD Publishing. (accessed 4 December 2014). Kelly, C. (2005). ‘Barriers in International Law to the Development of renewable energy: Wind Farms and Biodiversity’, Oil, Gas & Energy Law Intelligence, 3(3) 1–38.

17.  international law & renewable energy sector    389 Kennedy, M. (2012). ‘Legal Options for a Sustainable Energy Trade Agreement’, International Centre for Trade and Sustainable Development Global Platform on Climate Change, Trade and Sustainable Energy, (accessed 17 December 2013). Kulovesi, K. (2014). ‘International Trade Disputes on Renewable Energy: Testing Geround for the Mutual Supportiveness of WTO Law and Climate Change Law’, Review of European Community & International Environmental Law 23 (3). Kuntze, J. and Moerenhout, T. (2013). ‘Local Content Requirements And The Renewable Energy Industry—A Good Match?’ International Centre for Trade and Sustainable Development, (accessed 21 October 2014). Kyoto Protocol on the United Nations Framework Convention on Climate Change (adopted 11 December 1997, entered into force 16 February 2005). 2303 UNTS 148. Leary, D. and Esteban, M. (2009). ‘Climate Change and renewable energy from the Ocean and Tides: Calming the Sea of Regulatory Uncertainty’, The International Journal of Marine and Coastal Law 24: 617–51. Montreal Protocol on Substances that Deplete the Ozone Layer (adopted 16 September 1987, entered into force 1 January 1989). 1522 UNTS 3. Nairobi Programme of Action for the Development and Utilization of New and Renewable Sources of Energy, UNGA Res 36/193 (17 December 1981) UN Doc A/renewable energyS/36/193. Pueyo, A. and Linares, P. (2012). ‘Renewable Technology Transfer to Developing Countries: One Size Does Not Fit All’ Institute of Development Studies, IDS Working Paper Volume 2012, No 412, . Pershing, J. and Mackenzie, J. (2006). ‘Removing Subsidies: Levelling the Playing Field for Renewable Energy Technologies’ in D. Assmann, U. Laumanns and D. Uh (eds) Renewable Energy: A Global Review of Technologies, Policies and Markets, Earthscan, UK. Ramsar Convention on Wetlands of International Importance (adopted 2 February 1971, entered into force 21 December 1975). 996 UNTS 245. Renewable Energy Policy Network for the 21st Century (REN21). ‘Renewables 2013: Global Status Report’, (accessed 17 December 2013). Renewable Energy Policy Network for the 21st Century (REN21). ‘Renewables 2014: Global Status Report’, (accessed 21 August 2015). Rio Declaration on Environment and Development (adopted 13 June 1992). UN Doc. A/CONF.151/26 (vol. I); 31 ILM 874. Rio+20 Outcome Document, ‘The Future We Want’, UNGA Res 66/288 (27 July 2012) 66th Session, UN Doc A/renewable energyS/66/288. Timor Sea Treaty between the Government of East Timor and the Government of Australia (East Timor–Australia) (adopted 20 May 2002, entered into force 2 April 2003). [2003] Australian Treaty Series 13. United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994). 1833 UNTS 3. United Nations Framework Convention on Climate Change (adopted 9 May 1992, entered into force 21 March 1994). 1771 UNTS 107.

390    part iv.  setting up the int'l mitigation regime United Nations Environment Programme (UNEP) (2006). ‘Training Manual on Inter­ national Environmental Law’, (accessed 14 August 2015). Van de Graaf, T. (2013). ‘Fragmentation in Global Energy Governance: Explaining the Creation of IRENA’, Global Environmental Politics, 13: 14–33. Vossenaar, R. (2013). ‘The APEC List of Environmental Goods: An Analysis of the Outcome & Expected Impact’, International Centre for Trade and Sustainable Development Global Platform on Trade and Environment, (accessed 4 December 2014). WCED, World Commission on Environment and Development. (1987). Our Common Future, Oxford University Press, 1987. World Bank, ‘Illustrative Investment Programs for the Clean Technology Fund’ (2008). (accessed 17 December 2013). World Bank (2013). ‘A Public–Private Partnership Approach to Climate Finance’, (accessed 18 December 2013). Wu, M. and Salzman, J. (2013). ‘The Next Generation of Trade and Environment Conflicts: the Rise of Green Industrial Policy’, (accessed 17 December 2013).

Chapter 18

INTELLECTUAL PROPERTY AND CLIMATE CHANGE, WITH AN EMPHASIS ON PATENTS AND TECHNOLOGY TRANSFER Joshua D. Sarnoff*

1. Introduction

392

2. The Cancún Solution and Subsequent Actions (and Issues that they Raise)

395

3. National Measures to Promote Sequential Innovation and to Enhance Access to and Reduce the Costs of Patented Technologies

402

4. Conclusion

407

*  Portions of this chapter were originally published in Sarnoff, J. D. (2011), ‘The Patent System and Climate Change’, 16 Va. J.L. & Tech., 301 and will also appear in Sarnoff, J. D. (2016). ‘Patents and climate change’ in J. D. Sarnoff (ed), Research Handbook on Intellectual Property and Climate Change, Edward Elgar Press (forthcoming).

392    part iv.  setting up the int'l mitigation regime

1. Introduction The amount of greenhouse gas emissions and the extent of climate change, as well as the problems that climate change will cause and how well society responds, will depend substantially upon the rapid development and widespread dissemination of a wide variety of new climate change technologies and on their adoption in economic markets. Intellectual property (IP), and laws regulating it, will play a substantial role in this development. Most people would immediately recognize that patent laws will be intimately involved in these developments, as patent laws are expressly designed to provide incentives for the funding, development, and transfer of new technologies. But many other intellectual property doctrines are highly relevant to climate change mitigation and adaptation efforts. These include: trade secrets to protect proprietary processes and products that may lower carbon emissions, reduce energy consumption, or otherwise provide competitive climate-related advantages; trademarks and certification marks that help to identify, promote, and assure the quality of eco-friendly goods and services in the marketplace; copyrights and digital rights that regulate the costs, distribution, reuse, and interoperability of software and some industrial and commercial processes; sharing of public and private data about climatic, geological, and other conditions; and protection of consumer and business privacy in regard to the ever-increasing ability to monitor and modulate energy consumption and emissions behaviours. Although the rest of this chapter concentrates on patent laws and technology transfer, these other areas of intellectual property law should remain in focus within international and domestic climate change discussions (Sarnoff, 2016). In Cancún at the end of 2010, the United Nations Framework Convention on Climate Change (UNFCCC) adopted an agreement that places substantial emphasis on developing and disseminating technology through private markets, although many other government alternatives exist (Sarnoff, 2013). The agreement also contemplates transferring both public and private funds from developed countries (in the context of their mitigation measures) to developing countries of at least US$100 billion per year by 2020 (UNFCCC, 2010). Vast amounts of money, mobilized in part by the prospect of large commercial markets and prompted in part by governmental development funding, thus will be spent in the energy, transport, agriculture, forestry, and other industrial and social sectors to develop and disseminate climate-friendly and climate-responsive technologies. The amount of money could increase after a new agreement is reached in Paris in December 2015. The availability of substantial private and some public funds for climate change mitigation and adaptation products and services, and the correspondingly large potential private markets, will attract new technological development and will encourage patenting (to differing degrees in various industries) in the hopes of appropriating

18.  intellectual property and climate change    393 returns. In turn, the costs of climate change mitigation and adaptation measures will depend in part on whether these climate change technologies are patented, on how and at what cost they are licensed, and on what technological substitutes are affordably available (Barton, 2007; Barton, 2008; Copenhagen Economics and The IPR Company, 2009; Hall and Helmers, 2010). Although widely cited assessments have assumed there will be price constraints on patented climate change technologies because of the availability of ready substitutes for existing technologies, or because of the development of incremental rather than breakthrough technologies, these assumptions may not always hold (Maskus and Okediji, 2010; Oliva et al., 2008). The magnitude and social importance of these climate change developments will place significant stress on the patent system and its use for scientific and technical innovation, and technology development, transfer, and public dissemination. It will also focus attention on the patent system’s theoretical justifications and alternatives to the patent system (Machlup and Penrose, 1950; Dutfield and Suthersanen, 2007). As with other serious global problems, such as access to medicines and sharing the benefits of biodiversity and of the genomes of pathogenic organisms, climate change raises important human rights concerns (WTO, 2001; SCBD, 2010; WHO, 2009; ICHRP, 2009). Thus, these issues are likely to bounce among international treaty regimes (through so-called regime shifting) as they arise at different times in different environmental, trade, and intellectual property treaty fora (Helfer, 2004; Medaglia, 2010). At the domestic level, governments and private institutions (including universities that take title to and patent government-funded research) will be forced to decide whether and what patent rights to grant or seek for climate change-related inventions, how broadly to license them, and what prices and conditions to place on such licenses (Siepmann, 2004; 35 USC § 201 et seq; Maskus and Okediji, 2010). Governments also will need to decide what kinds of creative discoveries to treat as patent-eligible inventions, what parameters to adopt for various patentability doctrines, what exceptions to create to patent rights, and whether and how to regulate competition and prices in markets for patented climate change technologies. Most patented mitigation and adaptation technologies are being invented in a small group of developed countries (collectively referred to as the ‘North’) and a few emerging economy countries, including China and India, rather than in the developing world (collectively referred to along with emerging economy countries as the ‘South’) (Dechezleprêtre et al., 2008; UNEP et al., 2010; Lee et al., 2009). Thus, the focus on private markets and patents will generate substantial North–South trade tensions and will result in significant wealth transfers that will run against the flow of ‘common but differentiated responsibilities and respective capabilities’ that the UNFCCC adopted in 1992 as a basic predicate for addressing climate change (UNFCCC, 1992). The reliance (principally by the North) on the patent system, and the varying benefits of the patent system for the wide range of technologies and markets (particularly in the South), may pose additional barriers to technology transfer and new political confrontations over the patent system, similar to conflicts that have occurred in the

394    part iv.  setting up the int'l mitigation regime access to essential medicines context (Cavazos-Cepeda and Lippoldt, 2010; Brewer, 2008). It is generally believed that the patent system has failed to develop medicines needed principally for developing country markets (i.e., for so-called ‘neglected diseases’) given the insufficient potential market returns to compensate for investigation, development, and clinical trial costs, and that financial and technological aid to the South remains inadequate in light of continuing high prices of some essential medicines developed for Northern markets (Maurer, 2005; MDG Gap Task Force, 2010). Unlike in the access to medicines context, however, many more industries and more heterogeneous market structures will be involved in the development and dissemination of the needed climate change technologies, and many more patents may apply to such technologies (Burk and Lemley, 2002; Cohen and Lemley, 2001). Additional concerns (particularly regarding potential anti-commons effects) thus will arise in the climate change context, as they have in other contexts involving products and processes that are subject to a multiplicity of patents and patent rights (Bessen and Hunt, 2004; David, 2010; Heller and Eisenberg, 1998). Concerns over the patent system and climate change have already caused political tensions (Latif et al., 2011). At an earlier stage of international negotiations, the UNFCCC Ad Hoc Working Group on Long-term Cooperative Action (WG-LCA) considered various proposals that had been suggested by some countries in the South. These measures would have placed significant restrictions on the traditional operation of the patent system, ranging from requiring patent pooling and royaltyfree compulsory licensing to excluding green technologies entirely from patenting and even retroactively revoking existing patent rights (Hall and Helmers, 2010; UNFCCC, 2009a; UNFCCC, 2009b). Efforts to impose these and other measures are likely to recur at the national level within the existing regime of international intellectual property treaties, particularly the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (WTO, 1994a). Such national efforts, moreover, may expand as the mitigation and adaptation needs become more pressing and as the needed technologies are developed, in light of widely (if not uniformly) shared perceptions that stronger intellectual property rights are not in the interests of the developing South (Branstetter et al., 2010). This chapter addresses some of the tensions at the intersection of the patent system and climate change. Substantial theoretical and empirical uncertainties remain regarding whether the patent system is the best method of promoting investment, innovation, and dissemination of technologies (Machlup, 1958; Peritz, 2008a; Peritz, 2010; Scherer, 1977; Scherer, 2010). Given the world’s debatable choice in Cancún to rely substantially on the patent system and private markets to develop the needed climate change technologies, the chapter describes a few of the alternatives to relying on the patent system as well as some of the political tensions doing so will likely engender (Maskus, 2009). It also briefly traces a few doctrinal measures that are available to both the North and the South, are consistent with existing intellectual property law treaties, and can be readily and legally employed as a hedge against risks

18.  intellectual property and climate change    395 to innovation and access. These doctrinal measures may avoid resort to more controversial measures to regulate access and prices, such as broad, categorical exclusions of environmentally sound or climate-friendly technologies from the patent system, or ex post regulation of market behaviours, including compulsory licensing, antitrust scrutiny, and price controls (Derclaye, 2010; Devlin, 2010; Srinivas, 2009; Lee, 2009b; Reichman, 2009a). Nevertheless, the more direct means of regulating prices and competition will remain legally available to governments that hope to induce— but may be forced to compel—more favourable licensing and pricing practices.

2.  The Cancún Solution and Subsequent Actions (and Issues that they Raise) In Cancún at the end of 2010, the Sixteenth Conference of the Parties of the UNFCCC reached a non-legally binding agreement on an ambitious (many would say unrealistic) goal of limiting climate emissions so as to restrict temperature increases to no more than two per cent (2%) above preindustrial levels (UNFCCC, 2010). The premise for achieving this ambitious target is ‘a paradigm shift towards building a low-carbon society that offers substantial opportunities and ensures continued high growth and sustainable development, based on innovative technologies and more sustainable production and consumption and lifestyles, while ensuring a just transition of the workforce that creates decent work and quality jobs’ (UNFCCC, 2010). The methods of achieving this paradigm shift are debatable, relying primarily on private markets and the patent system to generate the needed technology development and dissemination. Since Cancún, the UNFCCC has focused its technology development and transfer efforts through two new subsidiary institutions, the Technology Mechanism, consisting of the Technology Executive Committee (TEC) and the Climate Technology Centre and Network (CTCN), and the Green Climate Fund (GCF). The TEC has adopted six principal ‘modalities’ for technology development and transfer: (a) analysis and synthesis, (b) policy recommendations, (c) facilitation and catalyzing, (d) linkage with other institutional arrangements, (e) engagement of stakeholders, and (f) information and knowledge sharing (UNFCCC, 2011).

396    part iv.  setting up the int'l mitigation regime The TEC has prioritized efforts to perform ‘technology needs assessments’ and to understand better the barriers to technology transfer (UNFCCC, 2012a). Similarly, the CTCN, which is currently being hosted by the United Nations Environment Programme, is in the process of adopting modalities and procedures in six areas: (1) identifying currently available climate-friendly technologies for mitigation and adaptation that meet development needs; (2) facilitating the preparation of project proposals for existing technologies for mitigation and adaptation; (3) facilitating adaptation and deployment of currently available technologies to meet local needs and circumstances; (4) facilitating research, development, and demonstration of new climate-friendly technologies for mitigation and adaptation; (5) enhancing human and institutional capacity to manage the technology cycle; (6) facilitating the financing of the activities (UNFCCC, 2012a; UNFCCC, 2011). The GCF has so far focused on developing the mechanisms for funding for mitigation and adaptation, including technology transfers, establishing its Secretariat with the UNFCCC and the Global Environment Facility, creating a Financial Intermediary Fund established with the World Bank as interim trustee, authorizing the Republic of Korea to be the permanent host for the GCF, and encouraging a balance of funding for mitigation and adaptation needs (UNFCCC, 2012b). The UNFCCC as a whole has called for developed countries to expedite their shortterm (‘fast-track’) funding and to scale up their commitments to long-term funding to developing countries (to $100 billion by 2020), for a ‘significant share’ of the new multilateral funding for adaptation activities to ‘flow through’ the GCF, and for developed countries to ‘channel a substantial share of public funds’ to such activities (UNFCCC, 2012b; UNFCCC, 2013). As noted by the TEC in its 2012 Report, ‘[i]‌ntellectual property rights were identified as an area for which more clarity would be needed on their role in the development and transfer of climate technologies based upon evidence on a case by case basis’ (UNFCCC, 2012c). The rest of this section discusses the reliance of the UNFCCC principally on private funding and alternatives to it, technology transfer, political concerns, and the difficulties of transferring patented technologies through markets.

2.1 Reliance on Private Funding and Markets To develop and disseminate the needed technologies, the Cancún Agreement contemplates substantial public and private funding and wealth transfers

18.  intellectual property and climate change    397 (US$30 billion in the short term; US $100 billion per year beginning by 2020) to the developing South for mitigation and adaptation measures, which will result in some technology development and transfer and in the creation of some intellectual property rights in new technologies (UNFCCC, 2010). Although governments can play an important role in stimulating innovation and technology diffusion through mechanisms such as public provision of necessary infrastructure, subsidized research, and prioritized public procurement, there are limits to government resources (particularly at local levels), and the public sector ‘does not always have the resources required to push through new projects independent of the IP-related costs involved’ (Chatham House, 2007). Given the political difficulties of committing to massive expenditures as public obligations, the choice to rely on private markets and consequent intellectual property rights hardly comes as a surprise.

2.2 Government-funded Alternatives Following the failure of the UNFCCC in Copenhagen to obtain consensus on binding carbon-reduction commitments, various scholars offered a different international approach to addressing climate change (UNFCCC, 2009c). Specifically, the ‘Hartwell Paper’ proposed a more indirect approach to mitigating climate change by harnessing coextensive social motivations to adopt carbon free energy technologies, which will require ‘very substantially increased investment in innovation in noncarbon energy sources to diversify energy supply technologies’ (Prins et al., 2010). Unlike the predominantly market-driven approach to technology of the Cancún Agreement, the Hartwell Paper recognized that ‘radical acceleration of decarbonization of economic activity . . . will not be quickly or easily deployed [and thus] the primary RDD&D [research, development, demonstration and deployment] will have to be funded from the public purse’ (Prins et al., 2010). The belief in the need for public funding was premised on a conclusion that ‘it is wrong to assume that a price on carbon can induce the generality of firms to undertake the requisite R&D’, given incentives for ‘leakage’ to lower cost or unrestricted carbon emission markets and ‘offset games’, and because ‘basic research, development, and demonstration cannot be easily patented . . . [and thus] the market has no incentive to fund it’ (Prins et al., 2010).

2.3 Constraints on Effective Technology Transfer and UNFCC Obligations The development of effective climate mitigation or adaptation technologies may not necessarily lead to successful transfer of those technologies to developing countries.

398    part iv.  setting up the int'l mitigation regime This is true even if the validity of the traditional rationales for the patent system is assumed—that is, that it induces greater investment, invention, disclosure, or coordinated development of new technologies—and notwithstanding recent studies that cast doubt on the idea that businesses rely substantially on patent incentives for technology development decisions (Devlin, 2010; Duffy, 2004; Kieff, 2006; Cohen et al., 2002; Graham et al., 2009). As noted by Daniel Johnson and Kristina Lybecker (Johnson and Lybecker, 2009): Fundamentally, for technology transfer to take place in developing nations a number of obstacles must be overcome: uncertainty surrounding the costs and benefits of adoption, asymmetric information on the value of innovation, financial and skill requirements, externalities, and regulatory barriers . . .  The diffusion of new technologies is a difficult process, filled with uncertainty and hampered by both market and cultural factors . . .  [The literature] describes five characteristic[s]‌that affect technology diffusion: relative advantage, compatibility [with user values], complexity, triability [to overcome user uncertainty], and observability [of benefits . . .  and] a number of [diffusion and adoption] factors [for example,] cost-effectiveness . . .  [and] access to investment capital [for capital intensive technologies having size and scale economies and] salvage values for the displaced technology across firms, as well as distinct abilities to assess the risks and rewards associated with the innovation . . .  Uncertainty and informational problems are exacerbated [in international policymaking contexts] and contracting solutions are more difficult to accomplish.

The UNFCCC obligates countries to cooperate in the ‘development, application and diffusion, including transfer, of technologies, practices, and processes’, and more specifically notes the implementation by developing countries ‘will depend on the effective implementation’ of developed countries to meet their commitments regarding financing and technology transfer (UNFCCC, 1992; UNFCCC, 1997; UNFCCC, 2007). Nevertheless, so far, even in competitive markets, climate change technologies overwhelmingly are not licensed to developing countries, whether as the result of intellectual property or of other factors such as scientific capability, market conditions, and investment climate (Gueye, 2009; Mara, 2010). It is also possible that high greenhouse gas-emitting or energy-intensive technologies may disproportionately relocate to developing countries that lack strong climate control legal commitments (so-called carbon ‘leakage’), due to substitution effects or choices to offshore production resulting from increased prices (Babiker, 2005). As noted recently in a study that surveyed existing empirical data on patented climate change inventions, ‘the origins of applicants with the most patents are in OECD countries’ and the surveyed studies ‘all suggest that companies from developing countries are facing some difficulties in obtaining technologies, whether it is the high cost of licensing or having to obtain technologies from second-tier technology holders’ (UNEP et al., 2010). The data also suggest that the concentration of new technologies in developed countries is likely to perpetuate itself,

18.  intellectual property and climate change    399 as ‘[s]‌pecialization gains are seemingly important in climate change innovation’ (Dechezleprêtre et al., 2008).

2.4 Political and Trade Tensions caused by Reliance on the Patent System The geographic imbalances in patenting behaviours and problems with and costs of technology acquisition for developing countries are likely to further exacerbate existing intellectual property, trade, and scientific differences and to generate political tensions along the North–South divide. Needed mitigation and adaptation technologies will have to be purchased by developing countries in the South primarily from developed countries in the North (and from emerging economies), which are historically responsible for or are currently making substantial contributions to carbon emissions (Hall and Helmers, 2010). Developing countries therefore may seek—and potentially, international agencies funding technology deployment and dissemination may request developed and developing countries—to challenge patent rights that prevent lower cost production and acquisition of such technologies. Further, more direct measures to lower climate change technology production and acquisition costs or to address comparative advantages generated by less stringent carbon regulation may generate additional international trade disputes (Brack et al., 2000; Brewer, 2003; UNEP and WTO, 2009; WTO, 1994b). In contrast to the comparative advantages that would lead to further extending the developed North’s innovation and patenting head start, international action on climate change may help to narrow the gap, either through cooperative trade measures like trade tariff exemptions, or through cooperative technology development efforts, such as multinational joint ventures or joint manufacturing for particular climate change technologies (UNEP et al., 2010; Lee et al., 2009). Similarly, inter­national efforts may transfer technology directly to developing countries, through foreign funded in-country R&D, joint ventures, and foreign direct investment in R&D (Burleson, 2009; Lee et al., 2009). However, many obstacles exist to such foreign funded or participatory R&D that relies principally on market-based approaches, including significant fears of loss of control over technologies protected by patents given the perceived lack of adequate enforcement of patent rights in developing countries (Johnson and Lybecker, 2009; Lee et al., 2009; Yu, 2010). Global imbalances in patenting behaviours also are reflected in global imbalances in licensing and technology transfers from the developed North to the developing South. The climate change mitigation expenditures of developed countries adopted in Cancún are intended to benefit developing countries, and thus may lead to significant subsidized deployment of advanced technologies in developing countries. But given the problems noted above, the Cancún Agreement may not necessarily lead to the required deployment of needed technologies, to development of technological

400    part iv.  setting up the int'l mitigation regime capabilities, or to local invention and innovation in developing countries. Technology transfer typically occurs through trade, foreign direct investment (FDI), joint venturing, or licensing (Hall and Helmers, 2010). Although some historical and recent studies suggest that licensing and FDI, and consequently technology transfers, are positively correlated with stronger intellectual property rights, recent studies of climate change technologies demonstrate that so far these technologies have not been widely licensed to developing countries (even to those having competitive markets) (Branstetter et al., 2010; Hall and Helmers, 2010). This may be the result of intellectual property ownership over those technologies in the developed North or of other factors, such as the lack of scientific capability, adverse market conditions, and poor investment climates in the developing South (UNEP et al., 2010). One recent study concluded that the low rates of licensing of climate change technologies to developing countries were in general no lower than for other technologies, although the desire to license climate-friendly technologies may be higher. Nevertheless, the magnitude of such licensing remained very low as a result of difficulties of identifying licensing partners, pricing, and geographic and exclusive scope provisions (UNEP et al., 2010). In contrast, a different study concluded that climate change mitigation technologies not only ‘are less likely to cross country borders than the average technology’ (as measured by patenting in at least two countries), they also are principally transferred among developed countries (although transfers are increasing to developing countries). When such transfers do occur, they ‘seem to crowd out local innovations’ (as imports for usage seem to substitute for domestic technology development) (Dechezleprêtre et al., 2008). Since we do not know whether local innovation would be more or less beneficial for climate change mitigation and adaptation, we also do not know if climate change technology transfer efforts would be preferable to alternative measures to promote local climate change technology innovations. In sum, technology transfer flows are principally among developed countries (about seventy five per cent of exported inventions) and are ‘almost non-existent’ between emerging economy countries (Dechezleprêtre et al., 2008). The general pattern of low levels of technology transfer from the developed to the developing world is likely to remain stable for climate change technologies, or to skew even more strongly against flows to and among developing countries, even if funding from international agreements may potentially change these patterns.

2.5 Problems with Effective Transfer of Patented Technologies through Markets Even without regard to the dramatic geographical imbalances in patenting and licensing behaviours, patented climate change technologies so far have taken very

18.  intellectual property and climate change    401 long times to reach the mass market and to achieve widespread diffusion (Lee et al., 2009; World Bank, 2009). As the recent effort to achieve a worldwide cell phone standard has demonstrated, patent rights may delay or interfere with coordinated approaches to achieve worldwide technology development and deployment (Hazucha, 2010). Even when technology has been developed through R&D subsidies and transferred at low cost to developing countries, use of the technology may require additional subsidies to overcome the sunk costs of existing infrastructure or equipment. Local adaptation (or invention) may be needed to provide sufficient comparative benefits to actual users, given that the technology needs of users in developing countries may differ from those of users in developed countries (Hall and Helmers, 2010). Thus, relying on private markets and patents to distribute the needed technologies to the developing South may prove both costly and ineffective; but we do not yet know if that is the case. Reliance on the technology transfer obligations of the TRIPS Agreement also may be insufficient to assure effective transfer of patented technologies. Article 7 of the TRIPS Agreement states that protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. (WTO, 1994a)

Article 8.2 authorizes member countries to take ‘[a]‌ppropriate measures’ consistent with other provisions of the Agreement, where they are needed to address practices that ‘unreasonably restrain trade or adversely affect the international transfer of technology’ (WTO, 1994a). Article 66.2 requires developed countries to adopt domestic incentives to promote and encourage ‘technology transfer to leastdeveloped country Members in order to enable them to create a sound and viable technology base’, and has not been well implemented by adoption of measures that specifically target transfer to least-developed countries (WTO, 1994a; Moon, 2008). The scope of these provisions and the meaning of consistency with the Agreement are unclear, but to date there have been few identified measures taken specifically to implement these provisions or to address recognized adverse effects of intellectual property rights on international technology transfers (Oliva et al., 2008). The one significant exception was the Doha Declaration, and the related, subsequent amendment to the TRIPS Agreement, which was adopted in order to facilitate compulsory licensing of medicines for export to developing countries that lacked the capacity to produce them (as a compulsory license for imports to those countries would be insufficient to assure low-cost supplies) (WTO, 2001; WTO, 2003; WTO, 2005).

402    part iv.  setting up the int'l mitigation regime

3.  National Measures to Promote Sequential Innovation and to Enhance Access to and Reduce the Costs of Patented Technologies Given concerns over the need to develop and transfer the needed climate change technologies, developed countries that will be obligated under the UNFCCC to finance such efforts may seek to impose unilateral domestic measures to assure access and reduce the costs of the patent system. Although further amendment of the WTO TRIPS Agreement—as has been discussed by the United Nations— is a theoretical possibility, consensus for adopting such amendments in the short term is highly unlikely (UNDESA, 2009). Without such treaty amendments, countries (particularly those in the developing South) may seek to make greater use of existing TRIPS flexibilities to tailor their patent doctrines. They may seek to adopt exclusions from patent eligibility, exceptions to patent rights, and alternatives to the patent system (such as a global technology pool), and to seek expanded access to publicly funded technologies that may better promote technology development, transfer, and use (UNDESA, 2010). These options may provide greater ex ante predictability ‘in accessing technologies and [may] further enable much-needed research and development for local adaptation and diffusion, which would further reduce the cost of the technologies’ (UNDESA, 2010). The obvious alternatives for governments addressing refusals to license technologies for further research and development or confronting high prices for access to those technologies are to regulate the activities directly by adopting compulsory licenses or by imposing direct price regulations (Maskus, 2010). The indirect alternatives are to regulate such conduct by treating restrictive or costly licensing as a competition violation (for example, as an abuse of dominant position) or by treating the patents themselves as essential facilities (i.e., products or services that are considered competitive necessities and thus for which access can be required by compulsory licenses) (Choi, 2010; European Commission, 2009; Verizon v Trinko, 2004). These approaches will be highly controversial and may threaten substantial trade retaliation from the countries that have promised to transfer funds and facilitate the transfer of technology to the developing South, or may prompt technology and investment withholding by businesses in the developed North. Such direct or indirect regulation, moreover, may be largely ineffective in regard to assuring transfers of tacit knowledge (Reichman, 2009b). Compulsory licensing, price regulation, and antitrust treatment have been repeatedly resisted by the United States and (somewhat less so) by other developed countries, particularly in foreign markets where they do not bear the costs but reap the benefits of exports (Reichman,

18.  intellectual property and climate change    403 2009b). The developing South may be unwilling to resist such trade pressures, even if the threats and trade sanctions would be found illegal under WTO rules (Reichman, 2009b). Various measures that have been canvassed extensively elsewhere and are briefly described below could help to avoid resort to these more controversial domestic regulatory approaches (Sarnoff, 2011). These alternatives focus on achieving the greatest benefits for climate change innovation in both the developed and developing world, in a manner that is generally recognized as consistent with existing international intellectual property law. They thus promise a greater likelihood of being employed to develop the needed technologies while controlling the costs of supplying access and of transferring them to the developing South (Foray, 2009; Maskus and Okediji, 2010; Oliva et al., 2008).

3.1 Exclusions from Eligibility, and Experimental Use and Interoperability Exceptions The first set of proposed measures focuses on protecting basic research and sequential innovation and use, by assuring that significant additional creativity beyond basic scientific discovery is needed for patent eligibility and by assuring robust experimental use, reverse engineering, and interoperability exceptions to permit basic science to proceed unfettered by patent rights. These measures do so in order to allow scientific knowledge to flow to the developing South, and to permit downstream development and use of the creative patented technologies that result (Reichman, 2009a). The TRIPS Agreement specifically authorizes exclusions from patent eligible subject matter ‘to avoid serious prejudice to the environment’ under Article 27.2 (WTO, 1994a). However, exclusions based on technology for responding to environmental concerns, or on the lack of ‘technical’ character, may engender significant disputes regarding TRIPS compliance. In contrast, exclusions from patent eligibility for discoveries of scientific principles, natural products and phenomena, and abstract ideas are widely accepted, and the TRIPS Agreement does not regulate the minimal threshold of creativity for patents (Ass’n for Molecular Pathology v Myriad Genetics, 2013; Bilski v Kappos, 2010; Contracting States of the European Patent Convention, 1973; National Congress of Brazil, 1996; NPC (China) Standing Committee, 1984; Parliament of India, 1970). Accordingly, expansive exceptions for such discoveries and for minimally creative applications of them may ultimately be found TRIPS compliant, either as a matter of patent eligibility (defining ‘invention’) or as a matter of non-obviousness (inventive step). Eligibility is the approach that India adopted in section 3(d) of the Indian Patent Act; however, the exclusions could also be justified on non-obviousness grounds (Basheer and Reddy, 2008; Thambisetty, 2013).

404    part iv.  setting up the int'l mitigation regime Countries around the world typically adopt broad exclusions either for noncommercial and university-based research, or for research that will allow reverse engineering or the development of information for pre-marketing regulatory approval of pioneering and generic (typically medical and agricultural) products (Contracting States of the Community Patents Agreement 1989; EU Council Directive, 2004; Holzapfel and Sarnoff, 2008; Merck KGAA v Integra LifeSciences I Ltd, 2005; 35 USC 271(e)). To the extent that countries do not already have laws providing such exceptions to patent rights, they may be well advised to adopt them (Peritz, 2008b; Reichman, 2009a; Correa, 2008). Broad experimental use and regulatory approval exceptions are well established, and have already survived scrutiny under Articles 28 and 30 of the TRIPS Agreement (Maskus and Okediji, 2010; Panel Report, 2000). In contrast, interoperability exceptions may not be well established in patent law. But given the importance of interoperability, many commentators have suggested resort to the ‘essential facilities’ doctrine in antitrust law, which can supply compulsory licenses to assure the ability to use or interact with infrastructural technologies (Aspen Skiing Co. v Aspen Highlands Skiing Corp., 1985; Reichman et al., 2008; Reichman, 2009a). Reverse engineering has long been permitted under trade secret law, and is expressly permitted in regard to digital copyright laws (Bonito Boats, Inc. v Thunder Craft Boats, Inc., 1989; Kewanee Oil v Bicron, 1974; Samuelson, 2002; 17 USC § 1201(f)). Such measures should be less controversial than the common statutory requirement in many countries for ‘dependent patent’ compulsory licenses, which allow the making, use, and sale of patented sequential inventions that incorporate the dominant patented technology (Reichman et al., 2008; Reichman, 2009a). Similarly, they should be less controversial than governmental exercises of the power to supply markets directly (including research markets) with the patented technology under a so-called ‘government use compulsory license’ (Reichman et al., 2008; 28 USC § 1498(a)).

3.2 Retained Research and Humanitarian Licensing Powers The next set of proposed measures seeks to assure that owners of patented climate change technologies retain various rights or adopt various approaches when licensing their commercial development, so as to assure continued R&D and low-cost access. These measures include retaining power to authorize experimental and ‘humanitarian’ uses for climate mitigation and adaptation needs, to change the default resort from exclusive to non-exclusive licensing unless the former has been demonstrated to be needed, and to clarify ‘march in’ criteria to facilitate access when patent owners or their licensees fail to make government-funded technology accessible at affordable costs. In contrast to the previous measures, which focus on changing legal doctrines to protect basic research, sequential innovation, and interoperability, retained public

18.  intellectual property and climate change    405 and private ownership powers and their exercise can largely accomplish the same goals. Contractual arrangements ‘govern the majority of inter-firm and intra-firm transfers of knowledge and technology in both domestic and international markets’ (Maskus & Okediji, 2010). Even without broad statutory experimental use and interoperability exceptions from patent infringement rights, research tool and platform technology owners need not restrictively and expensively license or price their patented technologies. Private patent owners, or government agencies that permit private entities to take title to government-funded inventions, could condition the grant or licensing of those ownership rights on contractual commitments not to enforce patents against experimental uses or uses for interoperability purposes (National Research Council, 2010; Lee, 2009a; CalTech et al., 2007). Retained rights of owners could also preserve authority to engage in so-called ‘humanitarian licensing’ to assure access and to control prices when necessary to override sub-licensing, supply, and pricing decisions made by the owners’ licensees (Bennett, 2007). Humanitarian licensing terms could be as broad as reserving rights for ‘meeting the needs of developing countries’, or could be more specific triggers (which better avoid subsequent disputes) such as defining income levels, specifying subsistence uses, specifying geographic markets, identifying and segmenting markets by specific commercial and humanitarian activities, and even preventing the filing of patent applications in particular jurisdictions (Bennett, 2007; Stevens and Effort, 2008; Lee, 2009b; Mimura, 2007; Nelson, 2003). Because the goals are typically non-commercial, they do not normally impair licensees’ abilities ‘to commercialize the technology’ while meeting other goals (Bennett, 2007; Lee, 2009b). Non-exclusive licensing has proven much less problematic than exclusive licensing, in that it permits widespread use of the patented technology and the technology is more likely to be competitively priced (Reichman et al., 2008; So et al., 2008). Accordingly, patent owners (including government funding agencies) could require that patents not be exclusively licensed unless it is clear in particular cases that doing so is necessary for commercialization (So et al., 2008). Further, even when exclusive licensing has been demonstrated to be needed, exclusive licensing may be limited to the specific needs, time frames, and anticipated markets, retaining non-exclusive licensing powers for different, later, or unanticipated uses of patented technologies (CalTech et al., 2007). Exclusive licenses also may be made conditional on adequate working of the invention, and adequate supply and pricing in regard to the patented technologies (CalTech et al., 2007). Presumptions of non-exclusive licensing may be particularly important to better assure technology transfer to the developing South, as a worldwide presumption of exclusive licensing may not be needed given existing impediments to serving such markets. Presumptions of non-exclusive licensing for government-funded inventions are particularly important, given that government expenditures as a share of R&D tend to be larger in the developing South (David et al., 2000; Nelson, 1993; OECD, 2009).

406    part iv.  setting up the int'l mitigation regime Such measures should also pose less concerns for the private sector than competing proposals to prevent the patenting of government funded inventions by placing funded discoveries in the public domain, creating scientific commons, enabling collective management (such as through pooling arrangements), and fostering opensource innovation (Reichman, 2009a). Further, governments often retain rights to require the working of patents on or to assure accessibility of inventions created with government funding (35 USC § 203(a)). This power to ‘march in’ and establish conditions of third-party licensing, however, is highly controversial and is typically subject to burdensome administrative and judicial appeals procedures (Rai and Eisenberg, 2003; 35 USC § 203(b). But unlike ex post compulsory licensing, march-in rights are agreed to ex ante by government funding recipients and in theory should be less objectionable when exercised. The problem arises because of the lack of clarity and foreseeability regarding the criteria on which and circumstances in which the march-in power will actually be exercised. Government funding agencies thus could develop such criteria up front, just as private owners can and are adopting such criteria contractually as retained rights.

3.3 Expansive Exhaustion (Parallel Importation) Criteria The final recommendation is to make greater use of exhaustion (parallel importation) of patented technologies when patent owners or their licensees voluntarily supply certain markets at low costs, to achieve wider diffusion of the climate change technologies. Given the global nature of the technologies and problems to be addressed, disputes over patent exhaustion are very likely to arise in the climate change context (Nurton, 2008). Article 6 of the TRIPS Agreement precludes international regulation by the WTO of national policies to address the exhaustion of patent rights (and other intellectual property rights, such as copyright) by the placing of goods on (first) sale or in use, so long as national treatment and most-favoured-nation treatment principles are respected (Kirtsaeng v John Wiley & Sons, 2013; WTO, 1994a). Accordingly, nations will remain free to provide either or both international and domestic exhaustion effect to patented goods sold in foreign and domestic markets, permitting low-cost resale and transfers from markets or market segments where patent holders have voluntarily placed goods on sale (Maskus, 2010). To be fully effective, however, such domestic laws may also need to supersede contractual restrictions that would seek to avoid the exhaustion principles that would otherwise take effect under domestic laws, such as by limiting authority of licensees to make certain kinds of sales or by treating commercial contracts providing technology as licenses rather than sales (Conley, 2007; Basheer and Kochupillai, 2009; Maskus, 2010; Quanta Computer, Inc. v LG Electronics, Inc., 2008).

18.  intellectual property and climate change    407 Nevertheless, adopting such broad international exhaustion approaches may not be good policy, either for the developed North or for the developing South. First, as with ex post compulsory licensing, adopting such exhaustion selectively for particular technologies would likely invite trade retaliation. Further, aggressive international exhaustion doctrines may ultimately impose greater costs than benefits, not only based on their potential to diminish ex ante innovation incentives but also for the potential to acquire patented technologies at lower costs. The empirical literature on international exhaustion suggests that its economic effects are highly complex and heterogeneous across technologies. Specifically, the evidence suggests that there are costs to research, development, and deployment of technologies to prevent price arbitrage across jurisdictions through international exhaustion, but that there may be gains to research, development, and deployment if prices for the goods are regulated in the relevant markets (Maskus, 2010). Price regulation, however, also is highly controversial and is much less likely to be adopted for the broad range of climate change mitigation and adaptation technologies than it has been for pharmaceuticals and other medical products. Further, although parallel imports may help countries to obtain specific technologies at affordable prices, it may also exert a more general upward pressure on prices for the same and other needed technologies, precisely because suppliers can no longer rely on price arbitrage in different markets (Reichman, 2009a). For this reason, permissive regional exhaustion approaches should be found preferable to full international exhaustion. Such regional exhaustion permits arbitrage but only across relatively similar markets having comparable market structures and abilities to pay. It thereby permits price discrimination globally in ways that should better avoid diminishing both ex ante innovation incentives and willingness to supply markets in the first instance (Barton, 2001).

4. Conclusion The world chose in Cancún to rely on the existing international patent system to generate the needed climate change adaptation and mitigation technologies. The tensions that such reliance will cause have already been demonstrated during the course of the international climate change negotiations within the UNFCCC. These tensions will continue to be played out at the national level through domestic patent policies, which in turn will likely generate international disputes and could lead to further international regulation of the patent system. Given the magnitude of the climate problems to be addressed, continuous supervision by adversely affected governments or civil society will be needed to determine whether supplemental

408    part iv.  setting up the int'l mitigation regime international approaches should be adopted to further stimulate the innovation and technology transfer pipelines. In particular, additional public funding may be needed for research, development, and dissemination and commons approaches to sharing research and transferring technology may need to be compelled. We should expect the relationship of the patent system (or more generally, the intellectual property system) and climate change to remain controversial in a wide variety of international negotiating fora.

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Part V

CLIMATE CHANGE LITIGATION

Chapter 19

INTERNATIONAL DISPUTE SETTLEMENT Roda Verheyen and Cathrin Zengerling

1. Introduction

418

2. International Climate Regime

418

3. International Case Law Relating to Climate Change

421

4. Potentials for Future International Dispute Settlement

426

5. Cross-cutting Issues

438

6. Conclusions and Outlook

440

418   part v. climate change litigation

1. Introduction This chapter sets itself the rather difficult task of discussing international dispute settlement in the context of climate change—even though there appear to be no or few such ‘disputes’ as of yet.1 Given the damage that climate change is expected to cause, it is useful to consider the potential of international bodies to resolve, under international law, what may well be inevitable disputes involving State responsibility. Considering the slow, uneven, pace of the climate change negotiations in developing clear rules, case law could have the added advantage of contributing to clarifying international legal principles and obligations, both under treaty and customary international law, as recently codified by the International Law Association (ILA).2 This chapter will look at fora where international disputes that relate to climate change have been heard and those, such as the International Court of Justice and the International Tribunal for the Law of the Sea, that have the potential to hear such disputes. We have included non-judicial review bodies in our consideration, since such bodies can also contribute to clarifying principles and obligations. Cross-cutting issues, such as access to courts and tribunals, burden of proof, and causation, which would arise in any legal proceedings are looked at in this chapter. In a concluding section we discuss options with a view to increasing compliance with ‘objective’ international law on the protection of the climate system. In this context we also touch on the new International Law Commission (ILC) initiative to codify the law on the ‘Protection of the Atmosphere’,3 since this could help clarify substantive climate law—another precondition for any disputes to be settled.

2.  International Climate Regime We start our analysis by briefly looking at the dispute settlement mechanisms that could be constituted under the United Nations Framework Convention on Climate 1   Naturally, there have been climate-related disputes regarding the implementation of the Kyoto Protocol, which are dealt with in the framework of the Kyoto Protocol’s compliance system, which is discussed in Chapter 6 of this volume. 2   ILA, Resolution 2/2014, Declaration of Legal Principles Relating to Climate Change, Washington 2014, (accessed 16 September 2015). 3  International Law Commission, Doc. A/68/10, (accessed 14 August 2015).

19. international dispute settlement   419 Change (UNFCCC). The UNFCCC is the framework treaty for international climate change law and has gathered almost universal membership. We will briefly analyse its provisions on the resolution of questions regarding implementation and on settlement of disputes.

2.1 Multilateral Consultative Process Article 13 of the UNFCCC4 sets the framework for the establishment of a multilateral compliance mechanism, which was inspired by the mechanism under the ozone regime.5 UNFCCC Parties approved rules for the most part of such a process in 19986 but the mechanism has never been set into action. The compliance mechanism established under the Kyoto Protocol is much more detailed and effective. However, the draft rules of the consultative process contain some interesting elements. For example, the Committee ‘shall be composed of persons nominated by Parties who are experts in relevant fields, such as those of science, socio-economics and the environment, and the Committee may draw upon such outside expertise as it deems necessary’.7 The consultative process could potentially be an input to help Parties negotiate criteria for implementation, such as an objective target under Article 2 UNFCCC (such as the 2°C threshold), together with criteria for the allocation of reduction commitments. This consultative process can also serve to prevent disputes. Nonetheless, in the current context, there is little reason to expect that Parties, who have let the development of this process become dormant, will agree to revive these negotiations in order to agree to an effective outcome. This could change, however, for example with respect to upholding the planned bottom-up mitigation commitments in a new climate treaty—if compliance control is not transferred to a new compliance body.

2.2 Dispute Settlement Article 14 of the UNFCCC8 provides Parties with a step-wise approach to be followed, as in most multilateral environmental agreements. A precondition is that a 4   Article 13 UNFCCC reads: ‘The Conference of the Parties shall, at its first session, consider the establishment of a multilateral consultative process, available to Parties on their request, for the resolution of questions regarding the implementation of the Convention’. 5   Farhana Yamin/Joanna Depledge, The International Climate Change Regime, Cambridge, Cambridge University Press, 2004, 384 et seq who also describe the process of negotiations to arrive at the draft rules in Decision 10/CP.4. 6 7   Decision 10/CP.4   Decision 10/CP. 4, para 8. 8   Article 14 UNFCCC on the settlement of disputes promulgates:

1. In the event of a dispute between any two or more Parties concerning the interpretation or application of the Convention, the Parties concerned shall seek a settlement of the dispute through negotiation or any other peaceful means of their own choice.

420   part v. climate change litigation dispute exists between two or more Parties ‘concerning the interpretation or application’ of the UNFCCC or any legal instrument related to the UNFCCC, unless that instrument specifically provides otherwise. As with Article 13 UNFCCC, this provision has never been used in practice in the history of the Convention, even though some Parties have made declarations of jurisdiction upon ratification as provided for in UNFCCC Article 14.2. It has been suggested that Parties consider using Article 14 UNFCCC, and in particular the conciliation mechanism as foreseen by para 6. This provides that a conciliation commission is to be established if one Party requests this, so long as settlement through negotiations or any other peaceful means is unsuccessful within a period of twelve months.9 This is in contrast to the judicial means of dispute settlement provided for in Article 14, which essentially requires the consent of all disputants to use that route. UNFCCC Article 14.6 has some rudimentary rules on the conciliation commission to be formed (equal members from both parties to the dispute, and a jointly chosen chair). Any award flowing from the commission’s work 2. When ratifying, accepting, approving or acceding to the Convention, or at any time thereafter, a Party which is not a regional economic integration organization may declare in a written instrument submitted to the Depositary that, in respect of any dispute concerning the interpretation or application of the Convention, it recognizes as compulsory ipso facto and without special agreement, in relation to any Party accepting the same obligation: (a) Submission of the dispute to the International Court of Justice, and/or (b) Arbitration in accordance with procedures to be adopted by the Conference of the Parties as soon as practicable, in an annex on arbitration. A Party which is a regional economic integration organization may make a declaration with like effect in relation to arbitration in accordance with the procedures referred to in subparagraph (b) above. 3. A declaration made under paragraph 2 above shall remain in force until it expires in accordance with its terms or until three months after written notice of its revocation has been deposited with the Depositary. 4. A new declaration, a notice of revocation or the expiry of a declaration shall not in any way affect proceedings pending before the International Court of Justice or the arbitral tribunal, unless the parties to the dispute otherwise agree. 5. Subject to the operation of paragraph 2 above, if after twelve months following notification by one Party to another that a dispute exists between them, the Parties concerned have not been able to settle their dispute through the means mentioned in paragraph 1 above, the dispute shall be submitted, at the request of any of the parties to the dispute, to conciliation. 6. A conciliation commission shall be created upon the request of one of the parties to the dispute. The commission shall be composed of an equal number of members appointed by each party concerned and a chairman chosen jointly by the members appointed by each party. The commission shall render a recommendatory award, which the parties shall consider in good faith. 7. Additional procedures relating to conciliation shall be adopted by the Conference of the Parties, as soon as practicable, in an annex on conciliation. 8. The provisions of this Article shall apply to any related legal instrument which the Conference of the Parties may adopt, unless the instrument provides otherwise.  Foundation for International Environmental Law and Development (FIELD), ‘An option for advancing UNFCCC negotiations: settling disputes through a conciliation commission’, July 2012. 9

19. international dispute settlement   421 will be a recommendation, and not legally binding. Nonetheless, it will likely be an authoritative source of guidance for the parties.

3.  International Case Law Relating to Climate Change As yet, no climate-related procedure has been instituted before an international judicial dispute settlement body, as far as is known to the authors. Only two arbitral fora dealt with issues relating to climate change: the International Centre for the Settlement of Investment Disputes (ICSID) and the Permanent Court of Arbitration (PCA). Both procedures were initiated by private investors against States (Germany and the Ukraine). The Inter-American Commission on Human Rights (IACHR) heard the only direct climate change case based on human rights (Inuit case). In addition, the World Heritage Committee established by the United Nations Educational, Scientific and Cultural Organization (UNESCO) and a forum applying regional rules, that is, the German National Contact Points, established under the regional Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises, heard cases that were initiated with a view to enforcing ‘climate-protective’ rules. These latter fora do not settle disputes but, rather, they control State compliance with the law or rules of the respective regime. All the compliance proceedings, discussed below, have been initiated by non-governmental organizations (NGOs).

3.1. International Centre for Settlement of Investment Disputes In April 2009, the Swedish energy corporation Vattenfall instituted proceedings against Germany regarding the construction of a coal-fired power plant in Hamburg.10 The award issued by the Tribunal in March 2011 embodies the parties’ settlement agreement. According to media information,11 Greenpeace12 and   Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v Federal Republic of Germany; ICSID Case No. ARB/09/6; award of 11 March 2011, embodying the parties’ settlement agreement. 11   Sebastian Knauer, ‘Vattenfall vs. Deutschland, Machtkampf um Moorburg’, Spiegel-online article of 11 July 2009, available at (accessed 14 August 2015). 12   Greenpeace website (accessed 16 September 2015). 10

422   part v. climate change litigation two minor interpellations in the German federal parliament,13 Vattenfall claimed €1.4bn of damages based on an alleged breach of the 1994 Energy Charter Treaty, a multilateral investment protection treaty. Hamburg authorities issued a permit that required Vattenfall to undertake certain expensive environmental protection measures in order to comply with German Water Law. Vattenfall argued that the permit violates the Energy Charter Treaty, especially the clauses on expropriation and fair and equitable treatment. Under ICSID rules, content of the proceedings and award are generally confidential and, originally, there was no public information available as to the content of the proceedings and the award. In the meantime, the award has been published by the Energy Charter Secretariat on its website.14 The case was not directly argued on climate issues, but it clearly had a link to climate policies since the CO2 intense permit had (in Vattenfall’s view) been unlawfully withheld by the Hamburg authority due to climate protection aims. The case was settled before ICSID and the permit issued, as well as a new water permit for the cooling water. Since then, in a parallel court case challenging the issuing of a water permit by the German branch of Friends of the Earth, Bund für Umwelt und Naturschutz Deutschland (BUND), the Court ruled that the content of that water permit was actually not in line with applicable water law.15 The BUND had also submitted a request for leave to be admitted as a third party to the dispute,16 which was not granted. While much of the climate relevance of this case is in the politics and not in the court documents, this case shows that climate protection aims can be challenged by industry before ICSID. It is generally conceivable that energy industry would use investor–State litigation to challenge subsidies or other schemes designed to support climate protection aims. For example, the energy company Vattenfall is currently challenging the German Government decision to phase out nuclear power before ICSID, a decision which is closely linked to the Energiewende, which is the policy to transition Germany’s energy supply to sustainable sources. The case is ongoing. Confidential arbitration proceedings and arbitration awards are in our opinion not suitable to deal with public interests such as climate change. Within such procedural settings, ICSID tribunals will not be in a position to contribute to the climate regime in a positive sense, or develop ‘objective standards or interpretations’. The Vattenfall Moorburg case has already shown that there is an   Minor interpellations (Kleine Anfragen), Bundestagsdrucksachen 17/510 and 17/971.   See (accessed 14 August 2015). 15   OVG (Higher Administrative Court) Hamburg, Judgment of 13 January 2013, 5 E 11/8, available at (accessed 14 August 2015). The case is still pending at the Federal High Administrative Court (Bundesverwaltungsgericht). 16  Martin Kopp, ‘Weltbank-Tribunal berät in Paris über Kraftwerk Moorburg’, welt-online of 25 September 2009, available at (accessed 14 August 2015). 13

14

19. international dispute settlement   423 acute danger that the tribunal will interpret national environmental laws, bypassing the judiciary in participating countries.

3.2 Permanent Court of Arbitration The second climate-related case dealt with by an international dispute settlement body is the investor–State arbitration Naftrac v Ukraine.17 There is no official information available of this case on the PCA’s website. Naftrac, the investor of a Joint Implementation Project under the Kyoto Protocol, claimed a compensation payment of $185 million and definition of greenhouse gas (GHG) emission reduction units on its behalf under a Collateral Custody Agreement.18 Both parties alleged violations of certain obligations under this agreement. The arbitral tribunal dismissed the monetary claim and partly granted the claim regarding the transfer of emission reduction units.19 Again, if the proceedings and awards in an arbitration before the PCA are confidential, the arbitral tribunal is not in a position to develop and interpret climate change law. Any awards will stay solely between the parties to the dispute. Nontransparent proceedings and decisions cannot contribute to the interpretation and further development of international climate change law.

3.3 Inter-American Commission on Human Rights The first and so far only climate case heard under an international human rights regime was initiated by the Inuit Circumpolar Conference (ICC) before the IACHR in December 2005. The petition sought relief from violations of the human rights of Inuits resulting from climate change (or global warming) caused by GHG emissions from the United States.20 The IACHR rejected the petition on 16 November 2006, without reasons on the merits.21 Since the IACHR has discussed the linkages between human rights and environmental issues several times it remains to be seen 17   Naftrac Limited (Cyprus) v State Environmental Investment Agency of Ukraine, award of 4 December 2012 according to a publication of the Ukrainian Bar Association for Foreign Affairs, available at (accessed 14 August 2015). Full article only available in Ukrainian. 18   Olena Perepelynska, Arbitrations against Ukraine: Overview of 2012, available at (accessed 14 August 2015). 19  Ibid. 20   The petition is available at (accessed 14 August 2015). 21   See Andrew C. Revkin, ‘Americas: Inuit Climate Change Petition Rejected’, NY Times, Dec. 16, 2006. No official record of the dismissal could be found.

424   part v. climate change litigation if and how further petitions will be brought. We discuss the potential of human rights fora further below in section 4.3.

3.4 UNESCO World Heritage Committee Several NGOs and individuals petitioned the Intergovernmental Committee for the Protection of the Cultural and Natural Heritage of Outstanding Universal Value (World Heritage Committee) established under UNESCO.22 They requested the Committee to inscribe the world heritage sites Blue Mountains (Australia), Great Barrier Reef (Australia), Barrier Reef (Belize), Sagarmatha National Park (Nepal), Huascaran National Park (Peru), and Waterton-Glacier Peace Park (United States), all threatened by climate change, on the List of World Heritage in Danger and issue corrective measures.23 As part of the corrective measures, petitioners also claimed the reduction of GHG emissions.24 This latter claim, while not brought in a dispute settlement body, would have set the Committee in a position to interpret and develop climate change law. The World Heritage Committee did not decide to add the respective sites to the List of World Heritage in Danger. Instead it noted ‘that the impacts of climate change are affecting many and are likely to affect many more World Heritage properties, both natural and cultural in the years to come’ and encouraged ‘all States Parties to seriously consider the potential impacts of climate change within their management planning . . . and to take early action’. It further requested an expert group, including the petitioners, to ‘jointly develop a strategy to assist States Parties to implement appropriate management responses’ and prepare a joint report on ‘Predicting and managing the effects of climate change on World Heritage’.25 The strategy describes general mitigation and adaptation measures but does not require specific action.26  See Articles 8 et seq. UNESCO World Heritage Convention. Convention Concerning the Protection of the World Cultural and Natural Heritage 15 UNTS 511, Article 4 (opened for signature 16 November 1972, entered into force 17 December 1975). 23   For a detailed documentation of such cases, see (accessed 14 August 2015). For an overview on world heritage sites affected by climate change see Augustin Colette, ‘Case Studies on Climate Change and World Heritage’, UNESCO World Heritage Centre, available at (accessed 16 September 2015). 24   See, for example, Blue Mountains Petition, paras 62 et seq., available at . The claim was based on Article 4 of the World Heritage Convention where States Parties agreed to do all they can, to the utmost of their own resources, to ensure, among others, the protection and conservation of their cultural and natural heritage sites. 25   World Heritage Commission, Decision 29COM 7B.a (Threats to World Heritage Properties), paras 5, 6, 7, and 9, available at (accessed 14 August 2015). 26  Strategy and report are available at (accessed 14 August 2015). 22

19. international dispute settlement   425 Given the severe current and projected impacts of climate change, and despite having a mandate and a legal basis in the World Heritage Convention to engage, the Committee has thus indicated that it is not ready to contribute to the interpretation of what ‘dangerous’ might mean with respect to ecosystems in Article 2 of the UNFCCC.

3.5 OECD Guidelines for Multinational Enterprises Two climate cases have been dealt with by the German National Contact Points (NCPs) established under the 1976 OECD Guidelines for Multinational Enterprises (OECD Guidelines) as revised in 2011.27 The OECD Guidelines comprise a set of principles and standards for responsible business conduct. Chapter V specifies such principles and standards with a view to environmental and public health protection. Since a reform of the Guidelines in 2000 they are not only applicable to companies operating within the OECD countries but also to OECD companies operating in non-OECD Member States. As a control mechanism, the OECD Guidelines establish NCPs, national government offices, to handle enquiries that may be initiated by concerned parties, including civil society organizations.28 It is important to note, however, that the whole procedure is voluntary. The OECD Guidelines are not binding on States and may not compel companies to respond to enquiries instituted against them.29 Proceedings are generally confidential. In the first climate-related complaint, the German NCP rejected a complaint instituted by the NGO Germanwatch against Volkswagen.30 Germanwatch argued that the company’s product range and business strategy are climate damaging and therefore incompatible with the OECD Guidelines.31 In the Vattenfall case, Greenpeace Germany filed a complaint against Vattenfall alleging that the high level of CO2 emissions from Vattenfall’s coal-fired power plant under construction in Hamburg-Moorburg is incompatible with the OECD Guidelines.32 Greenpeace also argued that Vattenfall’s request for arbitration against Germany before ICSID is not in accordance with the Guidelines.33 The German NCP rejected the complaint.

  See for a current text and commentary (accessed 14 August 2015).   Ibid, at I.B.3. See also OECD Guidelines for Multinational Enterprises, Part III, Commentary on the Implementation Procedure, at 8. 29   Freeman/Heydenreich et al, Guide to the OECD Guidelines for Multinational Enterprises’ Complaint Procedure, OECD Watch (ed) (November 2006), 17. 30   Germanwatch v Volkswagen, Statement of NCP Germany of 20 November 2007. 31   For the details of the complaint, see Germanwatch v Volkswagen, Complaint of 7 May 2007. 32   Greenpeace Germany v Vattenfall, Statement of NCP Germany of 15 March 2010. Complaint of 29 October 2009, at 5–9. 33   Ibid at 9–12. 27

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426   part v. climate change litigation In the brief reasoning of its decisions, the German NCP basically argued that it did not accept the complaints because neither Vattenfall nor Volkswagen violated any national or international laws. If this narrow approach was the rationale behind the OECD Guidelines, they would be meaningless. However, the practice of national NCPs varies greatly and there are other examples were NCPs dealt more robustly with environmental cases brought to their attention.34 Thus, the NCPs established under the OECD Guidelines can still be in a good position to develop objective standards and interpretations of obligations of companies to protect the global climate, including by engaging economic and finance ministries in dealing with issues normally reserved to environmental departments. At the same time, such complaints and decisions tend to be confidential, thus limiting the applicability of the decisions to other contexts.

4.  Potentials for Future International Dispute Settlement None of the existing international judicial dispute settlement bodies has dealt with a climate change case as yet. Moreover, in none of the climate-related arbitral or compliance control procedures mentioned above did the respective body develop or interpret climate protection obligations. Therefore, in the following, we strive to carve out the potential the judicial dispute settlement bodies have to contribute to objective standards and interpretations of climate law. Referring to jurisdiction, access, environmental case law, and transparency of the respective dispute settlement forum, we highlight opportunities and constraints.35

4.1 International Court of Justice The jurisdiction of the International Court of Justice (ICJ) comprises contentious as well as advisory proceedings. It is the only international court with a general 34  See, for example, Survival International v Vedanta Resources plc, Statement of NCP UK of 25 September 2009, case file available at (accessed 14 August 2015). 35   For an in-depth study on jurisdiction, access, and environmental case law of international dispute settlement and compliance control bodies with a special focus on the role of environmental NGOs see Cathrin Zengerling, Greening International Jurisprudence—Environmental NGOs before International Courts, Tribunals, and Compliance Committees, Bosten/Leiden, Brill/Martinus Nijhoff Publishers, 2013.

19. international dispute settlement   427 subject-matter jurisdiction.36 Article 14 para 2(a) UNFCCC, as well as Article 14 Kyoto Protocol, provide for dispute settlement before the ICJ. Advisory opinions on legal questions may be requested by the General Assembly, the Security Council, or other organs of the United Nations and specialized agencies,37 if the legal questions arising lie within the scope of their activity.38 Generally, advisory opinions have a consultative character and are not binding on the requesting bodies. However, certain regulations can stipulate in advance that the advisory opinion shall have binding effect. In advisory proceedings, the ICJ accepted amici curiae submissions of NGOs on a few occasions. Historically, the ICJ has not ruled on many international environmental law cases. Despite a recent increase in such cases before the Court, it has also not had to decide on any specific legal question regarding climate change. The option of tasking the ICJ with an advisory opinion on a climate change matter has, however, been contemplated many times. At a recent round table, the Government of Palau proposed specific questions in the UN General Assembly on 11 September 2011,39 one of which was: What are the obligations of States under international law in relation to preventing the causes of climate change, minimizing its adverse effects and providing compensation for climate change damage?40

This move was supported by the Leaders of Pacific Islands Forum in October 2012.41 Yet, it now seems as if the initiative has been abandoned. There has also been a broader discussion of the role of the ICJ with respect to climate change in the context of this initiative.42 Assuming jurisdiction has been conferred by States,43 the ICJ could deal with climate cases regarding mitigation, adaptation, and reparation for any injuries due to anthropogenic climate change, for example on the basis of State responsibility rules. It could, for example, interpret and adjudicate UNFCCC terms   Articles 36.1, 38 ICJ Statute.   Such as the World Health Organization or the Food and Agriculture Organization. Note that there is no UN agency explicitly tasked with environmental protection, UNEP still only having the status of a programme. 38   Article 96 UN Charter, Article 65 ICJ Statute. 39   (accessed 14 August 2015). See also the comment by the Climate Justice Programme: . 40  See for this and other options FIELD, Legal Advisory Opinion, Summary of Round Table, 28 October 2011. 41   (accessed 14 August 2015). 42   Yale Centre for Environmental Law and Policy, Climate Change and the International Court of Justice, . 43   The ICJ can only deal with a dispute when the States concerned have recognized its jurisdiction. Only a few States have accepted compulsory jurisdiction (see (accessed 14 August 2015) for a list of States). 36 37

428   part v. climate change litigation like ‘common but differentiated responsibilities’ or ‘dangerous climate change’ (Article 2) which have not been fully defined.44 Furthermore, by providing interpretive guidance, the ICJ could contribute to how States further establish treaty provisions and coordinate State practice to formulate customary international law. As discussed elsewhere, it also seems possible to contemplate concrete cases based on the no-harm rule.45 Given the abundance of cases before the ICJ dealing with territorial conflicts, this is even more possible considering the projections of loss of land, or at least loss of habitable land, contemplated under future climate change scenarios. In terms of assessing opportunities of such an approach, it is useful to look at the ICJ cases related to environmental protection, which has advanced international environmental norms and principles that can be applied in climate change litigation. In 1929, the Permanent Court of International Justice, predecessor of the ICJ, supported the ‘community of interest’ rule for shared access to international rivers in the Territorial Jurisdiction of the International Commission of the River Oder case.46 This rule is still the basis for sustainable and equitable management of watercourses.47 As the atmosphere is—in some sense—a common and shared resource, it might be possible to use some of the principles established here for an objective criterion for determining carbon budgets, which have been so difficult to negotiate. As other shared resources, in our view,48 the atmosphere has a ‘user limit’, which is legally and universally defined by Article 2 UNFCCC. In the Corfu Channel case of 1947 the ICJ held that every State has an obligation ‘not to allow knowingly its territory to be used for acts contrary to the rights of other States’,49 which has to some extent the same basis as the no-harm rule. In the Barcelona Traction case the ICJ recognized the principle of erga omnes obligations.50 The protection of the global climate system—in particular prevention of the so-called tipping points—is in the interest of all humankind. It could well be argued 44   See also Lakshman Guruswamy, ‘Commentary on Speech of Fitzmaurice’, in Connie Peck and Roy Lee (eds.), Increasing the Effectiveness of the International Court of Justice, Leiden, Martinus Nijhoff Publisher, 1997, 418, 423. 45   See Roda Verheyen, Climate Change Damage in International Law (Brill, 2005), 225 et seq. 46   Territorial Jurisdiction of the International Commission of the River Oder (Czechoslovakia, Denmark, France, Germany; Great Britain, Sweden v Poland) [1929] PCIJ (ser. A) no. 23, 5. 47   Ulrich Beyerlin and Thilo Marauhn, International Environmental Law, Hart, 2011, 92. 48   This discussion cannot be deepened here. See for a general approach and further references to public international law perspectives: German Advisory Council on Global Change, Solving the climate dilemma: The budget approach, Special Report 2009, Berlin 2009, accessible on . 49   Corfu Channel (United Kingdom of Great Britain and Northern Ireland v Albania), Judgment of 9 April 1949, ICJ Reports 1949, p. 22. 50   Barcelona Traction, Light and Power Company, Limited (Belgium v Spain), Judgment, ICJ Reports 1970, p. 32.

19. international dispute settlement   429 that limiting GHGs in the atmosphere is an erga omnes obligation, also given the universal acceptance of the UNFCCC. In Pulp Mills on the River Uruguay the ICJ for the first time stated that it considers an environmental impact assessment a requirement under general international law in cases of transboundary industrial activities.51 The ICJ did not define a minimum content of an environmental impact assessment.52 The judges considered several technical and scientific issues, for example the production technology used in the pulp mill, the impact of discharges on the water quality, as well as effects on biodiversity and air pollution in a rather detailed manner.53 However, they did not seek independent expert advice on these highly complex technical and scientific issues and decided the case applying burden of proof rules.54 In Pulp Mills on the River Uruguay the ICJ considered for the first time several environmental issues in a comparably detailed manner. The decision shows a tendency in ICJ case law towards more openness for environmental arguments. However, with a view to a potential climate case the judgment, in parts, could even be said to obstruct given the reluctance of the court, for example, to use the precautionary principle as an argument to reverse the burden of proof. Also, the case is an example of how the ICJ refrains from seeking expert advice. Procedures before and decisions of the ICJ are transparent. Hearings are generally public55 and since 2009 also webcasted. Procedural documents including applications, orders, and judgments are published on the ICJ’s website. Further strengths of the ICJ with a view to a future climate case are its option to seek expert advice and wide range of applicable remedies. The main constraints for climate change litigation before the ICJ are the narrow access provisions—only States may be parties in contentious proceedings56—and the limited willingness of States to accept the ICJ’s jurisdiction or bring cases before the ICJ on a case-by-case basis.

4.2 International Tribunal for the Law of the Sea Climate change has crucial impacts on the world’s seas. Increasing levels of GHGs entail acidification of the ocean, temperature increase, or an increase of rough sea events. Although the International Tribunal for the Law of the Sea (ITLOS) has not dealt with a climate case since taking up its work in 1996, more than half of its twenty-one cases related in some way to the protection of the marine environment.   Pulp Mills on the River Uruguay (Argentina v Uruguay), Judgment of 20 April 2010 at para 204. 53   Ibid, at para 205.   Ibid, at e.g. paras 228, 265. 54   See also criticism in the joint dissenting opinion of Judges Al-Khasawneh and Simma at paras 2, 3, 6, 14, and 28 available on the ICJ’s website as part of the case file. 55 56   Article 46 ICJ Statute.   Article 34(1) ICJ Statute. 51

52

430   part v. climate change litigation In addition to the United Nations Convention on the Law of the Sea (UNCLOS) and customary law, the United Nations Fish Stocks Agreement (UNFSA)57 might become relevant as a legal basis for cases regarding the effects of climate change on straddling and highly migratory fish stocks.58 Affected States might initiate contentious proceedings before ITLOS or request an advisory opinion. Furthermore, as recently happened with regard to IUU fishing,59 a duly authorized authority such as a Sub-Regional Fisheries Commission could ask the ITLOS to provide legal guidance on rights and obligations of States concerning the effects of climate change on fisheries. Among the main potentials of ITLOS as a forum for future climate change litigation are its jurisdiction on substantive international law with comparatively strong rules on use and protection of marine resources and the marine environment, its accessibility via contentious and advisory proceedings, institutional settings such as specialized chambers, some environmental case law, and its transparent procedures and decisions. The ITLOS has jurisdiction on disputes arising out of the interpretation and application of UNCLOS and its subsequent agreements.60 Rules on the protection and preservation of the marine environment are especially provided for in Part XII of the UNCLOS. In addition to UNCLOS and its subsequent agreements, about ten further multilateral agreements—such as, for example, the UNFSA61— currently confer jurisdiction on the ITLOS.62 If parties agree, a dispute may be submitted to special ITLOS chambers such as the Chamber for Marine Environment Disputes and the Chamber for Fisheries Disputes. So far these chambers have not been activated but their special competence might become relevant in a climate case. 57  United Nations Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks. 58   See for an overview of the material law parallels and perspectives: Alan Boyle, ‘Law of the Sea Perspectives on Climate Change’, Marine and Coastal Law 27 (2012) 831; for a case study with the provisions of UNCLOS on marine environmental protection in mind see: Richard Tol and Roda Verheyen, ‘State responsibility and compensation for climate change damages—a legal and economic assessment’, Energy Policy 32 (2004), 1109; focusing on UNFSA; Brian J. Preston, ‘Climate Change Litigation’, paper delivered to Climate Change Governance after Copenhagen Conference organized by Faculty of Law, The University of Hong Kong and Faculty of Laws, University College London, 4 November 2010, Hong Kong. 59   Case No. 21, Request for an advisory opinion submitted by the Sub-Regional Fisheries Commission (SRFC), submitted 28 March 2013, pending. All ITLOS proceedings are documented at (accessed 14 August 2015). 60   Article 288(1) UNCLOS; see also Articles 21 and 22 of the ITLOS Statute. Currently, there are ten further multilateral agreements conferring jurisdiction on the ITLOS, for example the UNFSA. 61   According to Article 30 UNFSA the provisions of Part XV of UNCLOS regarding the settlement of disputes apply mutatis mutandis. 62   Article 288(2) UNCLOS. A list of such provisions is available at (accessed 14 August 2015).

19. international dispute settlement   431 The jurisdiction of the ITLOS comprises contentious and advisory proceedings. Generally, only States may be parties in proceedings before the ITLOS.63 Law of the sea disputes arising under UNCLOS may be settled before the ITLOS, ICJ, or an arbitral tribunal.64 So far 32 out of 162 parties to the UNCLOS have chosen the ITLOS as a possible forum for the settlement of disputes,65 demonstrating that in this context, States are generally reluctant to initiate proceedings against other States.66 The law of the sea regime provides some possibility for non-State entities to engage the ITLOS. For example, only the Assembly or the Council of the International Seabed Authority, not States Parties, may request advisory opinions before the Seabed Disputes Chamber.67 However, we note that the jurisdiction of the Seabed Disputes Chamber is limited to ‘disputes arising from activities in the Area’. In addition, the ITLOS Statute and Rules contain one interesting access path that has recently been invoked for the first time and might become relevant for future climate cases initiated by non-State entities. Article 21 of the ITLOS Statute stipulates that ‘(t)he jurisdiction of the Tribunal comprises all disputes and all applications submitted to it in accordance with this Convention and all matters specifically provided for in any other agreement which confers jurisdiction on the Tribunal’. According to Article 138(1) of the Rules of the Tribunal, it ‘may give an advisory opinion on a legal question if an international agreement related to the purpose of the Convention specifically provides for the submission to the Tribunal of a request for such an opinion’. In March 2013, the Permanent Secretary of the Sub-Regional Fisheries Commission (SRFC) referred several questions regarding rights and obligations of flag and coastal States regarding IUU fishing to the Tribunal for an advisory opinion.68 The Permanent Secretary of the SRFC had been authorized to make such submission by resolution of the Conference of Ministers of the SRFC according to   Article 291(1) UNCLOS and Article 20(1) ITLOS Statute. Exceptions are provided for in Article 291(2) UNCLOS, Articles 20, 37 ITLOS Statute, and Article 187 UNCLOS. 64   Article 287 UNCLOS. Articles 279–299 UNCLOS regulate the settlement of disputes, Articles 286–296 UNCLOS refer to compulsory procedures with binding decisions. For advisory opinions see Article 138(1) ITLOS Rules. 65   See table on choice of procedure under Article 287 UNCLOS at (accessed 14 August 2015). 66   The majority of contentious cases before the ITLOS have been initiated by flag States against coastal States to reach the fast release of vessels against the payment of a bond under the prompt release procedure. Usually, in such cases, coastal States had detained the vessels because of (alleged) IUU fishing. 67   Articles 186–91 UNCLOS. 68  Request for Advisory Opinion, Case No. 21, available at (accessed 14 August 2015). For more details see Michael A. Becker, Sustainable Fisheries and the Obligations of Flag and Coastal States: The Request by the Sub-Regional Fisheries Commission for an ITLOS Advisory Opinion, ASIL Insights, 23 August 2013, Volume 17 Issue 19, available at (accessed 14 August 2015). 63

432   part v. climate change litigation Article 33 of the 2012 Convention on the Determination of the Minimal Conditions for Access and Exploitation of Marine Resources within the Maritime Areas under Jurisdiction of the Member States of the SRFC (Maritime and Coastguard Agency (MCA) Convention).69 Member States of the SRFC are Guinea, Cap Verde, The Gambia, Guinea Bissau, Mauritania, Senegal, and Sierra Leone. Article 33 of the MCA Convention States that ‘[t]‌he Conference of Ministers of the SRFC may authorize the Permanent Secretary of the SRFC to bring a given legal matter before the International Tribunal for the Law of the Sea for advisory opinion’. In the MCA Convention for the first time several States entered into a new international agreement which, inter alia, authorizes a convention body to request an advisory opinion at the ITLOS. The West African Member States of the SRFC are severely affected by IUU fishing and have a common interest in clarifying the legal conditions for effectively combating IUU fishing. In a similar vein, States severely affected by changes of the marine ecosystems due to climate change—such as, for example, the small island States—might enter into an international agreement which authorizes a certain entity to request an advisory opinion at the ITLOS. So far, the Tribunal has not decided on any issues relating to climate change. However, in several decisions it has applied international environmental law and principles and has proven willing to shape and interpreting law at its j­urisdiction. Among the most significant decisions of the ITLOS, which may impact on future climate change litigation, is the first advisory opinion issued by the Seabed Disputes Chamber—this opinion strengthened the environmental impact assessment requirement, as well as the precautionary principle as part of international environmental law.70 In this case, the Council of the International Seabed Authority had requested an advisory opinion regarding legal responsibilities and obligations and possible liability of States sponsoring exploration and exploitation activities in the Area.71 The Seabed Disputes Chamber held that among the obligations of sponsoring States are the obligation to apply a precautionary approach, the obligation to apply best environmental practices, the obligation to ensure the availability of recourse for compensation in respect of damage caused by pollution, and the obligation to conduct environmental impact assessments.72 Regarding the precautionary approach, the Chamber stated that there is a ‘trend towards making this approach 69   Resolution annexed to Request for Advisory Opinion, Case No. 21, available at (accessed 14 August 2015). 70   Case No. 17, Responsibilities and obligations of States sponsoring persons and entities with respect to activities in the International Seabed Area (Request for Advisory Opinion submitted to the Seabed Disputes Chamber), Advisory Opinion of 1 February 2011, available at (accessed 14 August 2015). 71   Decision ISBA/16/C/13 of 6 May 2010 of the Council of the International Seabed Authority, 16th session. 72   Case No. 17, Advisory Opinion of 1 February 2011, at 122, 131, 242 no. 3 lit B.

19. international dispute settlement   433 part of customary international law’.73 Referring to the Pulp Mills decision of the ICJ, the Chamber considers the obligation to conduct an environmental impact assessment a general obligation under customary international law.74 This interpretation of customary environmental law by the Chamber is interesting in the climate context as there is a certain parallel between the sea bed as a common heritage of mankind (Article 136 UNCLOS) and the UNFCCC referring to a similar concept as a first item of its preamble (acknowledging that change in the earth’s climate and its adverse effects are a ‘common concern of humankind’). Although the two concepts are not identical, there are parallels, which could lead to applications of the pollution prevention duties under UNCLOS to also address GHG emission reductions. Further strengths of ITLOS are that proceedings are open for expert advice75 and transparent. Hearings are generally webcast and open to the public.76 Documents of the proceedings are also made available for the public.77 According to ITLOS rules, only intergovernmental organizations, but not NGOs, may submit amici curiae statements in proceedings before ITLOS.78 In the advisory proceedings on Case No. 17, Greenpeace and the WWF requested permission to participate in the advisory proceedings as amici curiae. Although the Seabed Disputes Chamber did not grant the request, the joint statement of the NGOs was published on the ITLOS website with the explicit note that it is not part of the case file, and transmitted to States parties, the ISA, and intergovernmental organizations (IGOs) that had submitted written statements.79

4.3 Regional Human Rights Courts None of the three courts that adjudicate the regional human rights conventions, including the Inter-American Court of Human Rights (IACtHR), the African Court on Human and Peoples’ Rights (AfCtHPR), and the European Court of Human Rights (ECtHR), has decided a climate case. As noted above, the Inter-American Commission on Human Rights rejected a petition filed by indigenous peoples of the Arctic region against the United States based on the US’s failure to limit its GHG emissions (Inuit case). Considering the severe impact climate change has and will have on individuals’ lives and the courts’ case law related to environmental issues, it is likely that the human rights courts will hear climate cases in the future.80 74 75   Ibid, at 135.   Ibid, at 145.   Article 289 UNCLOS, Article 82 ITLOS Rules.   Article 26(2) ITLOS Statute, Article 74 ITLOS Rules. 77   See Article 67(2) ITLOS Rules (contentious proceedings), Article 134 ITLOS Rules as regards written statements and annexes (advisory proceedings). 78   Article 84(1)(2) and (4), 107, 115, 133 ITLOS Rules. 79   Case No. 17, Advisory Opinion of 1 February 2011, at 13 and 14. 80   Due to the limited space available here we do not introduce the various courts here in detail but refer to Chapter 11 of this volume. 73

76

434   part v. climate change litigation Generally, from a procedural perspective, human rights courts hold open hearings and accept amici curiae submissions, which enhances the legitimacy and influence of such proceedings. Substantively, it is worth noting that all environmental cases decided by the InterAmerican Court of Human Rights and the Inter-American Commission on Human Rights were initiated by indigenous communities who were significantly affected as a result of industrial activities on their land.81 The Court and Commission usually found, inter alia, violations of Article 4 (right to life) and Article 21 (right to property) of the ACHR. Beyond the Inter-American system, in 2001, the African Commission on Human and Peoples’ Rights (AfCHPR) issued the Ogoniland decision, a landmark decision in human and environmental rights law.82 The communicants, two human rights NGOs, argued that the Nigerian government participated in oil production operations that contaminated the environment of the Ogoni People and led to serious health problems. The AfCHPR found violations of, inter alia, Article 4 (respect for life and integrity), 14 (right to property), 16 (right to health), and 24 (right to a general satisfactory environment) of the African Charter. The ECtHR has also been active in this area. It has heard around fourteen environmental cases so far and, in almost all industrial pollution cases, the Court found a violation of Article 8 of the ECHR (right to respect for private and family life).83 Air pollution was an issue in almost all of these cases. For example, in López-Ostra v Spain (1994) the ECtHR found a violation of Article 8 ECHR and held that: severe environmental pollution may affect individuals’ well-being and prevent them from enjoying their homes in such a way as to affect their private and family life adversely, without, however, seriously endangering their health.84

In that case, the plaintiff and her family suffered serious health problems due to emissions from a tannery waste-treatment plant. Tatar v Romania (2009), another key case involving transboundary environmental effects, concerned the January 81   See, for example, Mayagna (Sumo) Awas Tingni Community v Nicaragua, IACtHR, judgment of 31 August 2001; The Kichwa Indigenous People of the Sarayaku and its members v Ecuador, IAComHR, Case No. 167/03, Merits Report No. 138/09, of 18 December 2009; Maya indigenous community of the Toledo District v Belize, IAComHR, Case No. 12.053, decision of 12 October 2004. 82   The Social and Economic Rights Action Center and the Center for Economic and Social Rights v Nigeria (2001), AfComHPR, Case No. 155/96, decision of 27 May 2002 (Ogoniland case). See further Beyserlin/Marauhn, International Environmental Law, 395 et seq. 83  The industrial pollution cases were Lopez Ostra v Spain, App. No. 16798/90, judgment of 9 December 1994; Guerra and Others v Italy, App. No. 14967/89, judgment of 19 February 1998; Taskin and Others v Turkey, App. No. 46117/99, judgment of 10 November 2004; Öneryildiz v Turkey, App. No. 48939/99, judgment of 30 November 2004 (here, the ECtHR only found a violation of Articles 2 and 13 ECHR); Fadeyeva v Russia, App. No. 55723/00, judgment of 9 June 2005; Giacomelli v Italy, App. No. 59909/00, judgment of 2 November 2006. In Tatar v Romania, App. No. 67021/01, judgment of 27 January 2009 the ECtHR dismissed the claim for just satisfaction. 84   Lopez Ostra v Spain, App. No. 16798/90, judgment of 9 December 1994 at 51.

19. international dispute settlement   435 2000 accident at the Baia Mare gold mine that affected Hungary, Serbia, and Montenegro. In its decision in this case, the ECtHR explicitly referred to Principle 21 of the Stockholm Declaration and Principle 14 of the Rio Declaration, which both stipulate duties of States to prevent significant transboundary harm and the transfer of harmful substances to other States.85 Among the core strengths of the regional human rights courts and commissions is that claims can be brought by individuals and partly by indigenous communities and NGOs. Nevertheless, it is important to note that plaintiffs only have standing if they have already suffered significant harm. Prevention and mitigation claims therefore cannot come before human rights courts. Another barrier for successful climate change litigation before human rights courts is the limited regional scope of their jurisdiction. People and States more severely affected by climate change often may not belong to the same region as the States mainly responsible for GHG emissions. Beyond the regional courts, the international human rights judiciary has not yet tackled a complex environmental phenomenon such as climate change. Given the fact that any single party to one of the human rights treaties will always ‘only’ contribute to climate change and not be solely responsible for an infringement of rights, it is difficult to imagine how and where these instruments can successfully be invoked in the context of climate change. Still, given the linkages between human rights law and refugee law and the fact that climate change will most probably contribute to forced migration,86 these fora might well see more cases, especially in the African System—while other affected regions such as South-East Asia lack applicable international human rights system.

4.4 WTO Dispute Settlement WTO panels have not dealt directly with a dispute involving a climate change measure, although climate change has been raised as a related issue concerning disputes involving recycled materials87 and renewable energy.88 The limited number of such disputes is surprising considering the lively discussion about whether the climate and the trade regimes were compatible, and whether trade-related measures were justified to reach Kyoto targets.89 The European Union’s aviation   Tatar v Romania, App. No. 67021/01, judgment of 27 January 2009 at 111.   See Jane McAdam, Climate Change, Forced Migration and International Law, Oxford, Oxford University Press, 2012, 52 et seq. 87   Brazil—Measures Affecting Imports of Retreaded Tyres. WT/DS332/AB/R, adopted 17 December 2007. 88   Canada—Certain Measures Affecting the Renewable Energy Generation Sector, WT/DS412/AB/R, adopted 24 May 2013. 89   See in lieu of many: World Bank, Economic, Legal, and Institutional Perspectives—International Trade and Climate Change, 2007. 85

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436   part v. climate change litigation emissions directive90 which includes emissions in the aviation sector in its trading scheme might have precipitated the first WTO climate dispute. However, the EU decided to temporarily defer enforcement against aircraft operators in respect of flights into and out of the European Economic Area perhaps staving off a WTO complaint. The WTO dispute settlement system serves to preserve the rights and obligations of Members under the covered agreements such as, for example, the WTO Agreement itself, the 1947 General Agreement on Tariffs and Trade (GATT),91 the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),92 but also special agreements such as the Agreement Subsidies and Countervailing Measures (SCM). WTO law does not contain provisions concerning measures aimed at climate change mitigation or adaptation. However, WTO members can raise climate change-related arguments to justify a WTO violation under Article XX of the GATT such as measures necessary to protect human, animal, and plant life, or health or related to the conservation of exhaustible natural resources.93 WTO dispute settlement panels and the Appellate Body are mandated to clarify the legal obligations under WTO law. They do not have the jurisdiction to apply international law beyond that which exists under the WTO regime. However, very early in the WTO jurisprudence, the Appellate Body declared that the ‘[G]‌eneral Agreement [was] not to be read in clinical isolation from public international law’.94 WTO panels and the Appellate Body have consistently looked to non-WTO Agreement international law sources, be that treaties, customary international law or even general principles of law,95 for the purposes of interpreting WTO provisions. In the first Shrimp-Turtle dispute96 the Appellate Body referred to international environmental law such as UNCLOS and the Convention on Biological Diversity and soft law such as Agenda 21 for the purposes of interpreting specific terms of Article XX(g) of the GATT.97 WTO disputes may only be initiated by WTO members and thus mainly States.98 Although the Appellate Body has held that panels and the Appellate Body have the   Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008. 92   1994 Marrakesh Agreement, Annex 1A.   Ibid, Annex 1C. 93   Articles XX(b), (g) of the GATT. 94   United States—Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, at III.B. See also Gabrielle Marceau, ‘A Call for Coherence in International Law-Praises for the Prohibition Against “Clinical Isolation” in WTO Dispute Settlement’, 33 J World Trade (1999), 87. 95   Article 38, Statute of the International Court of Justice. 96   United States—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998. 97   Ibid, at 130, 131. 98   WTO members who are not States include the European Union, Chinese Taipei and Hong Kong which are recognized in the WTO Agreement as customs unions. 90 91

19. international dispute settlement   437 authority to consider submissions of amici curiae99 the Appellate Body has never actually considered any unsolicited submission. According to the rules of procedure, WTO proceedings are confidential.100 However, most dispute settlement hearings are now open to observers via close circuit television broadcasted in Geneva. Some parties even post their submissions online. Finally, panel and Appellate Body reports are published on the WTO website. There have been many cases that directly concern measures that have an environmental protection objective. In many of the disputes, the WTO member has attempted to justify the measure, which has been found to violate the WTO Agreement, pursuant to the exceptions found in Article XX of the GATT.101 The exceptions allow members to maintain trade-restrictive measures if they meet the requirements of Article XX. The Appellate Body in some of these disputes has even addressed submissions regarding the importance of policy objectives relating to preventing climate change.102 Some of the more recent disputes have involved feed-in tariff measures designed to incent the development of renewable energy, motivated in part by the need to mitigate GHG emissions.103 Given these developments, we consider the WTO dispute settlement to be a forum which can well contribute to the strengthening of international climate change law. In the future, there may be challenges for measures designed to reduce energy consumption or impose border taxes on products originating in States with limited climate change regulation. Arguments by WTO members that these measures are justified pursuant to the exceptions found in Article XX of the GATT, or comparable provisions in other WTO Agreements, are likely to be advanced by WTO members, bolstered by evolving WTO jurisprudence recognizing the importance of environmental protection and preventing climate change. Another pertinent constellation could be a State violating TRIPS standards to improve adaptation or mitigation technologies, arguing the need to achieve the overall goal of the UNFCCC as codified in Article 2.104 99   United States—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, at 105–8. 100   Articles 14(1), 17(10), and 18(2) Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). 101   For a concise environment-related overview of the WTO dispute settlement body see Cathrin Zengerling, Greening International Jurisprudence—Environmental NGOs before International Courts, Tribunals, and Compliance Committees, Bosten/Leiden, Brill/Martinus Nijhoff Publishers, 2013, p. 194 et seq. 102   Brazil—Measures Affecting Imports of Retreaded Tyres. WT/DS332/AB/R, adopted 17 December 2007. 103   Canada—Certain Measures Affecting the Renewable Energy Generation Sector, WT/DS412/AB/R, adopted 24 May 2013, India—Certain Measures Relating to Solar Cells and Solar Modules, DS456, pending. 104   See on this issue in depth: Matthew Rimmer, Intellectual Property Rights and Climate Change: Investing Clean Technologies, Cheltenham, Edward Elgar, 2011.

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5.  Cross-cutting Issues Supplementing this fora-focused view on international climate change litigation, we want to address two cross-cutting issues crucial for any future international climate case.

5.1 Causation and Burden of Proof Depending on the kind of dispute or question before a forum such as the ICJ or ITLOS, issues of science and burden of proof will be at the core of any dispute settlement proceedings. Establishing causation105 (anthropogenic climate change has caused or contributed to a certain injury) will be at the core of a case on the basis of State responsibility. Science often cannot determine cause–effect relationships with one hundred per cent certainty, but rather is very useful in ruling out certain relationships between events, that is, falsifying rather than verifying. This is certainly the case for the climate system, which is highly non-linear. There is no objective, model-free observation of climate—neither of changes in global parameters such as surface temperature, nor of extreme weather events. All scientific interferences about climate involve a combination of models and observations.106 Just as the IPCC does today, statements of fact on climate change will therefore always be expressed in probability statements. The question therefore arises if ‘proving’ climate change will be possible in an international court of law especially with regard to specific events or damage. This is complex, yet in general, in our view this question is answerable in the affirmative, for example on the basis of the famous Trail Smelter arbitration of 1941. This case has provided the basis for both prevention duties and the law on State responsibility for environmental damage.107 The Trail Smelter case evolved around pollution of US territory traceable to a Canadian smelter. However, to attribute harm in terms of causality, the tribunal

105  See further Roda Verheyen, ‘Loss and Damage due to Climate Change: Attribution and Causation—Where Science and Law Meet’, International Journal of Global Warming, forthcoming (2015). 106   See Myles Allen, ‘The Scientific Basis for Climate Change Liability’, in Richard Lord et al, Climate Change Liability, Cambridge University Press, 2012, pp. 8ff. 107   Trail Smelter (USA v Canada), Award of 1941, III RIAA 1911 at 1965. In this dispute, a smelter located in Canada caused substantial pollution to US territory with black carbon and other aerosols. See Kuhn, ‘The Trail Smelter Arbitration’, 32 AJIL (1938) 785 and 35 AJIL (1941), 665; Read, ‘The Trail Smelter Dispute’, 1 CYIL (1963) 213.

19. international dispute settlement   439 did not ask for full proof, but used a ‘more probable than not’ test. This is important because there were other contributing factors for the damage claimed by US farmers. These were considered by the tribunal on the basis of ‘reasonable inference’ in the context of attributing damage to the smelter’s fumes.108 However, that case involved one polluter, whereas climate change is multi-dimensional, which presents a much more complex interaction between cause and effect.109 Therefore, the outcomes of cases involving climate change will not only depend on the substantive law argued in an international court or tribunal but also on the willingness of the judges to engage in complicated scientific issues surrounding climate change.

5.2 Access and Incentive In general, only States may institute proceedings before the ‘classic’ international dispute settlement bodies such as the ICJ, ITLOS, and the WTO dispute settlement bodies. There is relatively little incentive for States to take claims to an international court or tribunal. One constraint is that while there is a substantive gap between the current substantive content of the climate regime to regulate matters of climate protection comprehensively and the practice of treaty-making, the ongoing negotiation of the climate regime essentially prevents cases. We note, however, that the newly emerging concept of loss and damage in the UNFCCC context might actually lead to a recognition of permanent losses as a consequence of insufficient mitigation activity. Second, there are few awards or judgments that present themselves as adequate precedents. The ILC’s work on the ‘Law on the Atmosphere’ might provide greater clarity. Third, international law generally lacks effective enforcement and implementation mechanisms for judicial judgment. Thus, if the classic international dispute settlement venues have yet to be activated, it may be time to consider extending access to these fora to certain non-State actors. For example, UN bodies or a ‘hybrid’ State/NGO such as the International Union for Conservation of Nature (IUCN) could be granted the right to request an advisory opinion before the ICJ or ITLOS. A more radical step would be to confer standing to sue against States on citizens and NGOs in the same vein as, for ­example, the US Clean Air Act establishes citizen suits to complement administrative enforcement of its provisions.110 108   See further (not in the context of climate change) Rebecca M. Bratspies and Russel A. Miller (eds), Transboundary Harm in International Law—Lessons from the Trail Smelter Arbitration, Cambridge University Press, 2006. 109   This is discussed in depth recently by Erik Pöttker, Klimahaftungsrecht, Berlin, Mohr, 2014. 110   For a study on the current and potential future role of environmental NGOs before international courts, tribunals, and compliance committees see Zengerling, note 35.

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6.  Conclusions and Outlook Given that States are very reluctant to institute proceedings before international courts and tribunals and that any broadening of access provisions to non-State actors is politically unlikely to happen in the near future we consider a case before ITLOS the most likely and promising short-term scenario to shape current obligations and interpret such as how Article 2 FCCC might translate into obligations, inter alia through Article 4.2 FCCC. For example, based on the precedent of ITLOS Case No. 21, the Group of Small Island States could authorize a certain international entity to request an advisory opinion at the ITLOS concerning the responsibility of States for the impact of climate change on the marine environment. In addition, the compliance and dispute settlement mechanisms established in Article 13 and 14 of the UNFCCC remain attractive, although their modalities will likely remain difficult to negotiate. In August 2013, the ILC decided to include the topic ‘Protection of the Atmosphere’ in its programme of work. As noted above, the ILA has already provided a set of principles of climate law. According to the ILC mandate, the outcome of the work on the topic ‘will be draft guidelines that do not seek to impose on current treaty regimes legal rules or legal principles not already contained therein’.111 Such draft guidelines will be a valuable source for the substance of any future international climate change litigation.

  Lit. (d) of mandate, available at .

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Chapter 20

INSTITUTIONS AND EXPERTISE: THE ROLE OF SCIENCE IN CLIMATE CHANGE LAWMAKING Timothy Meyer

1. Introduction

442

2. The Intergovernmental Panel on Climate Change

444

3. International Scientific Cooperation

446

4. The Theory of Epistemic Institutions in Lawmaking

450

5. Fragmentation versus Integration in International Climate Change Institutions

457

6. Conclusion

461

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1. Introduction Climate change is one of the most important problems to face the international community in the twenty-first century. It is also one of the most puzzling because it is bedeviled by uncertainty. Uncertainty is, of course, a pervasive problem in international cooperation. In areas ranging from trade to investment to security, states often have private information or are unsure about how future events may affect the viability of particular legal rules (Morrow, 1994; Koremenos, 2001). International agreements and institutions are thus frequently designed to address problems of uncertainty, to ensure that states can cooperate despite the lack of complete information (Koremenos, 2005; Meyer, 2010). Climate change, like many international environmental problems, presents states with a particular kind of uncertainty. States are unsure not only about what private information other states possess or what the future might hold, but also about causal relationships in the physical world and how changes to the physical environment affect human activity. The information and skills necessary to reduce uncertainty in the policy process are often highly specialized and thus the domain of technical experts. These experts, however, may not have entrée to the policy or lawmaking process. They may also be concentrated in a small number of nations, raising concerns among developing nations that putatively objective science could be a vehicle for making value-laden policy decisions. Addressing scientific uncertainty in international environmental cooperation thus requires new solutions (Perez and Snir, 2013). Yet international legal scholarship has been slow to consider how, as a matter of institutional design, international agreements and institutions deal with problems of scientific uncertainty (Perez and Snir, 2013; Keohane and Victor, 2011; Wagner, 2011). This chapter seeks to expand our understanding of how international legal institutions foster cooperation in the presence of scientific uncertainty, especially in the area of climate change law. It does so by explaining the theory of epistemic institutions and applying it to the primary international scientific organization working on climate change issues, the Intergovernmental Panel on Climate Change (IPCC). The IPCC is the primary international scientific body compiling policy-relevant research on climate change. An intergovernmental organization presiding over a network of scientists and social scientists, the IPCC has 195 member states and a mission to ‘provide the world with a clear scientific view on the current state of knowledge in climate change and its potential environmental and socio-economic impacts’ (IPCC, 2014b). The IPCC’s assessment reports play a major role in setting the terms of the public debate about climate change negotiations. More concretely, the IPCC’s assessment reports provide a factual basis for climate change negotiations taking place within the Conference of the Parties (COP) to the United Nations

20.  the role of scientific expertise    443 Framework Convention on Climate Change (UNFCCC), the primary international institution dealing with climate change. Although independent of the UNFCCC, the IPCC’s work product is thus a key input into the UNFCCC’s efforts to negotiate international climate change rules. Despite its importance to climate change negotiations, or perhaps because of it, the IPCC’s credibility has been called into question. In part, this credibility gap reflects a relative lack of participation by scientists from developing countries in the IPCC’s assessment process (Haas and Stevens, 2011). In part, it stems from errors discovered in the IPCC’s Fourth Assessment Report.1 The recent ‘Climategate’ episode also damaged the IPCC in the eyes of the public and prompted soul-searching within the IPCC as to the integrity of its procedures. Climategate involved the release of a series of emails from IPCC-affiliated climate scientists at the University of East Anglia. Opponents of climate change regulation claimed that the emails showed scientists deliberately seeking to prevent the publication of scientific studies that might undermine the case for climate regulation. Although subsequent reports have noted that the Climategate episode does not undermine the scientific case for climate change, polling data nevertheless shows a negative effect on the IPCC’s credibility—an effect that might hamper the IPCC’s effectiveness within the UNFCCC (InterAcademy Council, 2010).2 This chapter argues that greater integration between the IPCC and the UNFCCC might alleviate some of the IPCC’s credibility issues. The IPCC is an epistemic institution—an intergovernmental organization that assimilates basic scientific and/or technical research and applies it to specific legal or policy problems (Meyer, 2013). States create epistemic institutions when epistemic communities—networks of experts with recognized authority in a particular domain of knowledge—that are not institutionalized fail to produce a scientific or technical record that can be a basis for successful international negotiations. In effect, epistemic institutions exist to reduce the adverse effects of scientific uncertainty in international negotiations. One of the key questions in designing epistemic institutions is whether they should be integrated into institutions that negotiate legal rules using the scientific record prepared by the epistemic institution, or whether they should be independent. On the one hand, the validity of the scientific process hinges on its independence from political pressure. On the other hand, scientific research can only be used to facilitate international cooperation if it is done in a way that is accessible, relevant, and credible to the policy problems states are trying to solve. 1  Harold Wilson, the former President of Princeton University and the chairman of the InterAcademy Council’s 2010 review of the IPCC, was quoted as saying, ‘Those errors did dent the credibility of the process, no question about it’ (Borenstein, 2010). 2   ‘Although many scientists noted that neither the leaked e-mails nor the IPCC errors undermined the principal scientific findings regarding human contributions to climate change, public opinion polls in the United States and United Kingdom showed that public confidence in climate science has waned’ (InterAcademy Council, 2010).

444   part v. climate change litigation Using the theory of the firm, this chapter argues that epistemic institutions should be integrated into legal institutions when states face a collective action problem, as they do in the climate change context (Dunoff and Trachtman, 1999). In these situations, coordinating environmental policies across countries cannot proceed unless a critical mass of states agree. Yet developing states frequently lack the capacity to evaluate the scientific record supporting proposed regulations. They may therefore fear opportunism by developed states in the form of a biased scientific record aimed at encouraging particular outcomes. Developing states may block the adoption of legal rules in part because they do not view the scientific record as credible. Hierarchical control of epistemic institutions can overcome this problem by allowing developing states a role in overseeing the scientific assessment process. By contrast, where a collective decision by a legal institution is not necessary to coordinate state behavior, the decentralized adoption of policy-relevant scientific recommendations signals to developing states that the scientific record is credible, thereby eliminating the need for hierarchical controls to perform the same function. Applying this theory to the IPCC suggests that the IPCC might more effectively influence international climate negotiations if it were integrated into the UNFCCC. Such integration might make it more difficult for climate opponents to attack the credibility of the IPCC. To be sure, such integration would likely entail costs in terms of the independence of the IPCC and its ability to remain above the political dynamics that have frustrated climate negotiations within the UNFCCC. But because a collective decision on climate change is necessary, bringing science closer to politics may counter-intuitively improve the ability of science to influence politics.

2.  The Intergovernmental Panel on Climate Change The IPCC was created in 1988 through a Memorandum of Understanding between the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) (IPCC, 1989). Currently, the IPCC has 195 members and is open to all members of the United Nations and the WMO. It is tasked with providing ‘the world with a clear scientific view on the current state of knowledge in climate change and its potential environmental and socio-economic impacts’ (IPCC, 2014b). The IPCC receives its funding and support from a number of different sources. Both the WMO and UNEP make regular contributions to the IPCC Trust Fund. IPCC member nations and the UNFCCC also make voluntary contributions to the

20.  the role of scientific expertise    445 fund (IPCC, 2012). The IPCC receives additional aid from the WMO, which hosts the IPCC Secretariat, and different member nations, which host different Technical Support Units and support various experts involved in IPCC activities. The IPCC’s major work product is a series of Assessment Reports. The first came out in 1990 and the fifth was released in full in 2014 (IPCC, 2014a). The Assessment reports are three volumes, accompanied by a summary for policy-makers and various technical papers and ad hoc special reports. All reports other than the summaries rely on extensive peer review through the network of scientists that contribute to the IPCC (Haas and Stevens, 2011). The material presented in those reports must come from or be set to appear in peer-reviewed journals (Haas and Stevens, 2011). This network of scientists form the base of the IPCC, an epistemic community of sorts. The Assessment Reports are, however, mediated by the IPCC’s internal rules. For example, the report summaries are written by working group leaders along with lead authors and invited experts. A bureau in charge of a working group initially prepares a plan for each chapter of a report (Haas and Stevens, 2011). The IPCC plenary approves the agenda and the drafting process then moves to scientific committees before ultimately returning to the IPCC plenary for approval (Haas and Stevens, 2011). Of interest here, the IPCC, while formed by two other international organizations, operates largely autonomously from them, as well as from the COP to the UNFCCC (Ayal et al, 2013). The IPCC’s scientific reports are adopted by the IPCC plenary without any formal ability for other international organizations that are information-consumers to intervene. This does not mean, however, that the IPCC is free from political influence. Member states nominate officials who serve in the IPCC’s plenary body.3 The IPCC has norms that aim to limit the degree of political influence, such as norms that the executive summaries of the report chapters may not be changed without the consent of the lead author (Ayal et al, 2013). Nevertheless, for reasons discussed below, doubts remain about the political influence of the IPCC (Haas and Stevens, 2011).4 The credibility of its process and reports has been a particular challenge for the IPCC. First, the IPCC has not been successful in getting significant cooperation from developing countries—countries whose support is necessary if climate change mitigation measures are to be adopted. According to Haas and Stevens, developing   Although consensus is not formally the decision rule in all situations, the IPCC’s Governing Principles state that it shall ‘use all best endeavors to reach consensus’, subject to some exceptions (IPCC, 1998). Moreover, consensus has been central to the institutional culture of the IPCC (Ayal et al, 2013). 4   Perhaps the clearest incidence of political influence at the IPCC occurred in 2002 when the United States vetoed the appointment of Robert Watson, an American climate scientist, as chair of the IPCC, allegedly on the grounds that he was too independent of the US administration (Haas and Stevens, 2011). Ayal, Hareuveny, and Perez, argue that the IPCC’s reports are relatively insulated from political influence (Ayal et al, 2013). 3

446   part v. climate change litigation country participants made up only 12, 25, and 32 percent of the three working groups on the Fourth Assessment Report (Haas and Stevens, 2011). Second, popular perceptions of the IPCC’s credibility have suffered as a result of ‘Climategate’. That episode began when opponents of climate change regulation obtained over 1,000 emails from climate scientists at the University of East Anglia (Carrington, 2011). Some of these emails, skeptics argued, suggested that the researchers acted to prevent the publication or dissemination of scientific research that did not support the case for climate change regulation (Carrington, 2011; Heffernan, 2010). They argued that the scientists involved pressured the IPCC not to include these adverse studies in the Fourth Assessment Report, a charge that gained some traction after several inaccuracies were discovered in the Fourth Assessment Report. The combination of these events prompted the United Nations to order an independent review of the IPCC scientific review process (Leiserowitz et al, 2013). Survey research has demonstrated that the Climategate incident measurably affected public perceptions of the legitimacy of climate science and climate scientists (Leiserowitz et al, 2013).5 Notably, this effect on the IPCC’s credibility in the public eye occurred notwithstanding subsequent, more detailed investigations that revealed no malfeasance on the part of the researchers involved (InterAcademy Council, 2010).

3.  International Scientific Cooperation Before analyzing the role of the IPCC in bringing science to international climate law, it is useful to consider the role of science in international lawmaking more generally. A key feature of modern international environmental governance is the role scientific information plays in the creation of legal rules. Although crucial for environmental governance (included related economic issues), raw scientific research is not a direct input into legal processes. Before legal decisions can be made on the basis of scientific knowledge, that knowledge has to undergo a process through which it becomes ‘usable’ to legal institutions (Haas and Stevens, 2011). A legal institution is one that is empowered to negotiate legal rules.6 For example, 5   ‘The results reported above strongly suggest that the “[C]‌limategate” scandal . . . deepened and perhaps solidified the observed declines in public beliefs that global warming is happening, human-caused, and of serious concern. It also helps to explain the erosion of public trust in scientists as sources of information on global warming’ (Leiserowitz et al, 2013). Also see Gordon Gauchat’s ‘Politicization of Science in the Public Sphere: A Study of Public Trust in the United States’, which used survey data to study the decline in trust in science among political conservatives and the related difficulties for science in the political sphere (Gauchat, 2012). 6   I focus on the bodies that are authorized to negotiate legal rules, and put to one side the question of actually enacting the rules, which in international law often requires ratification by states.

20.  the role of scientific expertise    447 the COP to the UNFCCC, which serves as the body charged with negotiating subsequent protocols defining a climate change regime, is a legal institution. So too is the International Whaling Commission, which is charged with setting quotas for whale catches. Raw scientific research is of little use to legal institutions in part because it may never reach decision-makers and in part because it may not be in a form that is relevant to, or easily understood by, non-experts. Scholars have used a variety of names to refer to the body of scientific knowledge upon which decision-makers rely, but the basic idea is the same (Selin and Eckley, 2003; Haas and Stevens, 2011). Scientific knowledge is not developed in a vacuum and then injected into legal institutions for use. Rather, following Haas and Stevens, what I shall call ‘usable scientific knowledge’ is the result of a process of translation in which raw scientific research is translated into a form relevant and accessible to decisionmakers (Haas and Stevens, 2011). Legal institutions’ use of scientific knowledge is thus the result of a three-step process: (1) basic scientific research, (2) the creation of usable scientific knowledge through the application of rules and procedures resulting in a scientific record, and (3) reliance on the usable scientific record by lawmakers. There are at least four reasons that possession of usable scientific information is valuable to legal institutions. First, making legal rules based on scientific facts may produce better outcomes, in the sense that the legal rules may more effectively respond to the underlying problem. The UNFCCC COP, for example, may be more likely to produce rules that mitigate the harm from climate change if it has information about the rate at which the climate is changing and scientifically informed recommendations about effective policy responses. Usable scientific information does not dictate policy outcomes or legal rules, however. Even when usable science is available, parties may define the problem to be solved differently. Or, even if they agree on the problem, they may have different views on what constitutes an effective or desirable response. For example, some states, such as Russia, or specific constituencies within states, may stand to benefit from climate change because of longer growing seasons or the ability to access mineral resources currently under permafrost.7 Thus, the justification for ensuring the availability of usable scientific information requires more than a simple notion that scientifically informed lawmaking is more effective. The second way in which usable scientific information can be valuable is that it may allow negotiators to proceed from a common starting point in terms of their understanding of the problem. Ideally, this starting point is created by fostering agreement about the relevant state of the world to which legal rules need to respond. In effect, scientific knowledge can narrow the scope of negotiations and   For an analysis of how the benefits of climate change affect negotiations over a climate change regime, see J.B. Ruhl’s ‘The Political Economy of Climate Change Winners’ (Ruhl, 2012). 7

448   part v. climate change litigation create a focal point around which talks can pivot. If all negotiators agree that the average global temperature should not rise above 2 degrees Celsius, negotiators at least have a common target. Third, even if usable scientific knowledge fails to generate consensus about facts, it can still give negotiators a starting point by channeling disagreements into arguments about facts, rather than arguments about values. At least in principle, factual disputes may be easier to resolve than value-driven disputes. Scientists, for example, may be able to answer the question of whether whale populations are declining, whereas getting agreement on the ultimate question of whether whaling should be allowed at all might be considerably more difficult (Bodansky, 2010). Notably, neither of these arguments—creating an agreed basis from which to negotiate or channeling disputes into disputes about facts—depends on whether the usable scientific information is correct in any objective sense. Rather, the usefulness of science turns on its ability to create a shared language and a shared space over which policy results can be contested.8 By clarifying the terms of the debate, a focus on science may facilitate states reaching an agreement on how to regulate a particular problem, where the problem itself is defined partly by political discourse. Finally, scientific discourse may be able to play a facilitating role in part because scientific discourse may be seen as legitimate by important constituencies. Policymakers themselves might view scientifically produced information as legitimate, of course. Even if they do not, however, the public might, making science a better justification for particular policy outcomes. Similarly, using science as a reference point might allow policy-makers to disclaim responsibility for unpopular policy decisions. Policy-makers may claim that science demonstrates that a particular policy result, which imposes costs on a sector of the population, is necessary. To illustrate, policy-makers may use scientific data on the long-term costs of climate change as a justification for imposing costs on sectors of the economy that pollute. For these reasons international environmental governance in general, and climate change governance specifically, require a process through which raw scientific information can be converted into usable scientific information. The question that follows is: What does this process look like? Perhaps more importantly, what are the factors that affect where legal institutions look for usable scientific information? In some areas of the law, epistemic communities undertake the translation function required to produce usable scientific information. An epistemic community is ‘a network of professionals with recognized expertise and competence in a domain and an authoritative claim to policy relevant knowledge within that domain or issue-area’ (Haas, 1992). Epistemic communities are characterized by, among other   In a similar vein, Cohen argues that different international law communities have developed fundamentally different methods of legal reasoning and validation of legal rules (Cohen, 2012). 8

20.  the role of scientific expertise    449 things, ‘shared causal beliefs, which are derived from their analysis of practices leading or contributing to a central set of problems in their domain’ (Haas, 1992). Based on these shared beliefs, communities attempt to shape state action by alleviating uncertainty about the physical or social processes underlying a particular policy problem (Haas, 1992). Significantly, networks can be organized in a variety of different ways. At one extreme, networks may be communities of individuals bound by social relationships or shared beliefs that lack any legal or institutional connection to each other. Members of the community interact with each other but without the benefit (or costs) imposed by any overarching organizational form. In particular, the epistemic community may lack any formal institutional or legal relationship to the legal bodies they are trying to influence. At the opposite end of the spectrum, network governance might be completely subsumed under an institutional umbrella. The influence of the epistemic community is thus mediated through the institution’s rules that dictate how members of the network interact with each other and, perhaps more importantly, with the policy process that they are trying to influence. In practice, most epistemic communities will fall somewhere between these two poles. Much of the literature on epistemic communities minimizes the role of institutionalization in internal network governance. Rather, members of the network are assumed to be joined by shared beliefs and a common purpose, and to vary in terms of their access to policymaking processes.9 But epistemic communities that are relatively unorganized suffer from a number of potential drawbacks. First, as the definition suggests, an epistemic community’s authority is limited to those that recognize the community’s expertise. Scientific experts’ expertise— and therefore authority—may not be recognized because the particular nation or region of the world from which the experts hail is distrusted.10 Alternatively, science may not be recognized as a legitimate source of information when pitted against traditional sources of knowledge (i.e., religious beliefs), or it may be attacked for ideological reasons. For example, three Nigerian states boycotted efforts by the World Health Organization (WTO) to inoculate their populations against polio out of distrust for public health officials from developed countries (Jegende, 2007).11 Second, unorganized epistemic communities may not effectively engage with legal institutions. Lacking a strong organizational dimension, they may fail to address problems in a way relevant to how policy-makers are framing the issue. 9   Haas summarizes the basic insights of scholarship on epistemic communities and discussing studies of different epistemic communities (Haas, 1992). 10   Biermann, for example, discusses developed countries’ distrust of international scientific institutions in general, and the IPCC in particular (Biermann, 2002). 11   Jegende quotes Nigerian activists as saying the polio vaccines were ‘corrupted and tainted by evildoers from America and their Western allies’ (Jegende, 2007).

450   part v. climate change litigation They may also fail to gain access to the policymaking process, perhaps because they lack connections to, or legitimacy in the eyes of, the policy-makers in the absence of an organization to lobby for them. These difficulties with unorganized epistemic communities may lead states to create epistemic institutions. An epistemic institution is a public institution that assimilates basic scientific and technical research and applies it to specific legal or policy problems (Meyer, 2013). It thus differs from unorganized epistemic communities in two respects. First, it imposes some hierarchy on the network. Second, because epistemic institutions are public, they often provide some built-in access to the policymaking process, either formally through an institutional connection to a legal institution or informally through connections with policy-makers and government officials. Examples of epistemic institutions include the IPCC, the Codex Alimentarius Commission, and the International Renewable Energy Agency. Epistemic institutions shift the way usable scientific information is produced in several ways. First, epistemic institutions often create formal rules that determine what kinds of information are admissible, and in what form such information must be. For example, the International Commission for the Conservation of Atlantic Tuna’s (ICCAT’s) Standing Committee on Research and Statistics noted that in 2011, thirty-four out of 182 scientific papers presented to the committee were not in the proper format (ICCAT, 2011). Second, governments participate in the epistemic institutions in the same way they participate in other kinds of inter-governmental organizations. For example, the Codex Alimentarius Commission is comprised of delegations appointed by member states (Pollack and Shaffer, 2009). Similarly, member states ultimately govern the IPCC, voting to adopt its reports and to fund it (Ayal et al, 2013). With government control, of course, comes the possibility of some government influence of an epistemic institution’s agenda. Finally and relatedly, institutionalizing the production of usable scientific information can influence the kinds of tasks that the epistemic community performs as well as the kind of research that makes it into the assessment. Political considerations may be more prevalent within epistemic institutions than in unorganized epistemic communities.

4.  The Theory of Epistemic Institutions in Lawmaking This last possibility—that epistemic institutions are subject to greater political influence—raises one of the key questions about epistemic institutions: How

20.  the role of scientific expertise    451 should their relationship to legal institutions be defined? Epistemic institutions vary widely in their relationships to the legal institutions they supply with usable scientific knowledge. The International Renewable Energy Agency supplies information, research, and best practices to governments but is not subordinate to an international lawmaking institution like the COP of the UNFCCC (Meyer, 2013). Similarly, the Codex Alimentarius Commission creates standards that are given presumptive weight by the WTO under the Sanitary and Phytosanitary Agreement. The Codex Commission, however, is formally unaffiliated with the WTO. By contrast, the scientific committees of many fisheries-management institutions, such as ICCAT’s Standing Committee on Research and Statistics, are formally integrated with and subordinate to the legal institutions that draw on their work. How can this variation in organization be explained? What are the factors that determine how the role of science is institutionalized in international lawmaking? In this section of the chapter, I briefly set forth the theory of epistemic institutions. In section 5, I apply the theory to the relationship between the UNFCCC and the IPCC, arguing that the experience with the IPCC may counsel in favor of integrating the IPCC more completely into the UNFCCC. Usable scientific knowledge can be analogized to an asset produced by epistemic institutions and used by legal institutions in the production of legal rules (Meyer, 2013). Legal institutions thus face a type of ‘make-or-buy’ decision. The legal institutions (or the states that create them) have to decide whether the scientific record on which they work comes from an epistemic institution affiliated with the legal institution or from an independent institution. Transaction cost economics can help us understand when it will be preferable to ‘make’ the asset—that is, to have an epistemic institution affiliated with the legal institution that uses its knowledge—or when it makes sense to ‘buy’ the asset from an independent institution. Usually, of course, international institutions do not literally purchase information from each other. By ‘buy’, I merely mean that the information is passed from one institution to another institution without any institutional control of the epistemic institution by the legal institution. In international law, the ‘make’ decision is equivalent to integrating epistemic and legal institutions, as is commonly done in the fisheries context. The ‘buy’ decision is equivalent to fragmentation.12

12   The kind of fragmentation at issue here differs from the fragmentation usually discussed in the international law literature. Normally, scholars write about the ‘horizontal’ fragmentation of regulatory authority among institutions operating at the same level of authority. For example, trade laws and environmental laws may provide conflicting rules for the same conduct. This kind of fragmentation is ‘vertical’ fragmentation, or fragmentation among institutions at different levels of legal process (Meyer, 2013).

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4.1 To ‘Make or Buy’ Policy-relevant Scientific Research? Transaction cost economics predicts that institutions choose whether to ‘makeor-buy’ in order to minimize the transaction costs of governing the relationship between the consumer (the legal institution) and the producer (the epistemic institution). The chief variable affecting these transaction costs, and thus the decision to fragment or integrate legal and epistemic institutions (the make-or-buy decision), is asset specificity—the idea that an asset’s value may depend on who is using it (Williamson, 1985). Many assets are generic in the sense that they have the same value to a wide number of possible consumers. A standard four-door car, for example, is worth roughly the same amount no matter who is using it. In such a case, we say that asset specificity is low. By contrast, a car that has had costly modifications made in order to fit the needs of a specific driver—for example, by allowing the gas and brakes to be worked by the driver’s hands—has very different values to different consumers. The car is worth much more to the small number of drivers who cannot use their feet to work the pedals, and much less to the majority of drivers who can. In this situation, in which an asset is especially valuable to a particular consumer, we say that asset specificity is high (Williamson, 1985). In any transaction, the consumer needs a mechanism to monitor its relationship with the supplier to ensure that the product meets the consumer’s needs. Broadly speaking, the consumer can monitor the supplier through an institutional relationship in which the supplier is hierarchically subordinate to the consumer, or the consumer can trust the market to provide the supplier with the correct incentives. Asset specificity determines which of these arrangements is most cost-effective. Generally speaking, transaction costs economics predicts that when asset specificity is high, institutions should integrate; when it is low, they should fragment (Williamson, 1985). Integration—in which the epistemic institution is subordinate to the legal institution—gives the legal institution a set of supervisory tools it can use to ensure the epistemic institution delivers usable scientific information. For example, the legal institution may choose the epistemic institution’s management or may be able to control and direct financial resources to the epistemic institution. At the same time, creating this kind of hierarchical control can cause administrative costs to rise. Now the legal institution must manage and monitor the internal workings of the epistemic institution, a task for which the legal institution may not be well designed.13 As a manager, the legal institution must ensure that the epistemic institution operates efficiently and does not shirk its assigned tasks. Integration also

13   To be sure, in some instances integration can also save on certain administrative costs. For example, a single institution may not require separate secretariats. Even when economies of scale exist, however, they can be overcome by the additional administrative costs associated with the legal institution’s need to actively manage and monitor subordinate institutions.

20.  the role of scientific expertise    453 creates the possibility of exploitation of the epistemic institution by the legal institution. In effect, the legal institution may use the tools of control—for example, the ability to hire and fire staff or control of financial resources—to distort the epistemic institution’s ability to do its job effectively. These costs decline with fragmentation. Because there is no institutional relationship, there are no internal monitoring and management costs. Nor can the legal institution direct the epistemic institution as to how to behave, reducing the possibility that the legal institution’s politics will bias the epistemic institution’s work. Moreover, where there are many consumers that wish to acquire an asset—when asset specificity is low—the market demand creates sufficient incentives for the producer to supply the asset. Thus, when asset specificity is low fragmentation saves on internal governance costs without diminishing producers’ incentives to produce usable scientific information. A different set of costs, low in an integrated institution, increase with fragmentation, however. These might be termed ‘agency costs’—the costs that arise if the epistemic institution is not properly incentivized to produce usable scientific information responsive to the legal institution’s needs (Meyer, 2013). These agency costs are in part a function of the risk of opportunism by consumers. The legal institution may promise to support information producers’ efforts to prepare scientific research, and then subsequently withdraw such support, leaving the epistemic institution with scientific research and a scientific mission that cannot be funded. As a result, the epistemic institution may choose not to invest in providing the legal institution with the kind of usable scientific information it requires. In such situations—when asset specificity is high—the internal governance costs associated with integration may be less than the agency costs associated with fragmentation, making integration the better institutional form. To illustrate, consider the following stylized example. Imagine that the asset in question is a report assessing the effect of rising global temperatures on coastal erosion. If the institution that ordered the report, for example a local government, refuses to pay for it after the work has been done, the producer faces a dilemma. It has already invested time and resources in researching and writing the report and now needs to recover those investments. If it is unable to do so, the producer will take a loss and may be unable to continue performing research in the future. When asset specificity is low, this kind of opportunistic behavior by an informationconsumer—refusing to pay for the report—is not too costly for the producer. By definition, when asset specificity is low there are other information-consumers willing to pay the costs associated with producing the report. Regional or national governments, or private parties that own significant land on the coast, might step in to fund the research. The producer’s incentives to produce the scientific report thus do not depend on a particular information-consumer’s willingness to pay. The information producer can thus invest in producing the scientific research confident in future financial support for its work. Information-consumers, in turn, do

454   part v. climate change litigation not need to incur the internal governance costs of starting up and running their own internal scientific research divisions because independent scientific research institutes have an incentive to provide high-quality and relevant scientific research. Where asset specificity is high, however, so too are the costs of opportunism. High asset specificity means that the producer will not be able to simply ‘sell’ the report to— that is, seek alternative funding from—a different consumer. No other informationconsumers are willing to fund the cost of the research, at least at the level of the original consumer. Our scientific researcher might well be unwilling to invest its time and resources in writing a report if it fears the user backing out of the deal to pay for the report, seeking to renegotiate the terms under which it provides funding for the research or, perhaps more likely in the research context, refusing to provide future grants to support similar research. A scientific report responsive to the particular needs of the information-consumer thus might never be produced (or be done on the cheap) because the producer fears opportunism by the only significant consumer for the product. Moreover, our scientific researcher’s concerns should be shared by our consumer as well, who will be unable to get the scientific report she wants unless she can solve the scientific researcher’s incentive problem. In light of these high costs of opportunism, which may result in no scientific report, our consumer would do well to bring the production of the scientific report in-house. The scientific researcher is now compensated as, for example, an employee rather than on the basis of what he can sell his work for on the market; the consumer, now the employer, can direct the researcher as to what to produce. This arrangement does, of course, introduce the aforementioned internal governance costs associated with management and oversight. Where asset specificity is high, however, these internal management costs may be justified.

4.2 Collective Action Problems and Scientific Cooperation Asset specificity can help us understand the optimal relationship between scientific and legal institutions. To understand how, we have to understand what it means for usable scientific information to have high (or low) asset specificity in relation to legal institutions like the COP of the UNFCCC. What makes scientific information especially valuable to one legal institution, and when is scientific information valuable to a wide range of legal institutions? Asset specificity is high when only a single legal institution is capable of solving a policy problem towards which scientific research is directed. Asset specificity is low when many legal institutions can act on the basis of the scientific research. In practice, this means that asset specificity is high when states face a collective action problem. In these situations, scientific institutions should be integrated into and subordinated to legal institutions. Integration addresses costs that can arise from the perception, correct or not, that an epistemic institution is not responding to

20.  the role of scientific expertise    455 the needs of the legal institution. Specifically, integration and the hierarchy and oversight that comes with it may give usable scientific information greater credibility in the eyes of governments whose support is critical to solve a collective action problem. By contrast, where states have an incentive to regulate unilaterally based on scientific evidence, scientific bodies should remain independent. Where an environmental problem is not also a collective action problem, credibility can be created without hierarchy. Moreover, fragmentation reduces some of the costs associated with hierarchy, including possible political distortions in how the epistemic institution operates. The logic of this prescription flows from the way possession of usable scientific information affects states’ incentives to coordinate their environmental policies. In some situations, resolving scientific uncertainty alone will give states an incentive to regulate. Each state will individually act on the basis of the scientific record. This individual incentive to act creates the right incentives for the existence of independent scientific bodies doing policy-relevant research. If one particular state or legal institution doesn’t make use of the research, others still might. Asset specificity in this situation would be low. The fact that many regulators might draw on scientific research in crafting environmental policies is particularly important given that scientific expertise is not evenly distributed around the globe. In a variety of different contexts ranging from climate change skeptics in the United States to vaccine skeptics in Nigeria, people have feared that scientific research may be disingenuous or forged in the service of a policy objective. One of the major objectives of institutionalized science is to boost the credibility of the scientific record by demonstrating that it is sound. Widespread use of the scientific record by regulators and lawmaking bodies can attest to the integrity of the scientific research. The relationship between expert bodies and lawmaking bodies working on global health issues illustrates this proposition. The WHO is an epistemic institution charged with, among other things, using scientific research on health to make recommendations to governments and international organizations responsible for crafting global health policy. The WHO is independent of its client legal institutions, such as the COP to the Framework Convention on Tobacco Control (FCTC). Individual governments have an incentive to act based on the WHO’s recommendations because they capture most of the benefit from regulating. The WHO has adequate incentives to produce research and recommendations on tobacco control without being subordinated to the COP of the FCTC. Moreover, the WHO’s recommendations gain credibility in the field when individual states adopt the bodies’ recommendations domestically. In other situations, however, resolving scientific uncertainty alone will not give states an incentive to regulate. These are the classic collective action problems, in which states’ incentives to regulate depend on getting a critical mass of other states to commit to regulating a problem as well. Many of the difficulties in solving

456   part v. climate change litigation collective action problems have been well-documented in the literature. The relationship between science and solving collective action problems has not. When a collective action problem involves some measure of scientific uncertainty, the number of possible regulators that can draw on a usable scientific record shrinks. It may include only large nations such as the United States or the European Union that internalize a great deal of the benefits from regulating public goods; in some circumstances, it might include only an international organization comprised of most, if not all, affected governments. Asset specificity is high. Fragmentation imposes at least two kinds of costs when states face a collective action problem. First, demonstrating the credibility of scientific information through adoption is difficult if not impossible. Because no single/individual regulator has an incentive to act on the basis of the scientific information—even if the scientific information is entirely correct—regulators that distrust the scientific record have no way to ‘field test’ the integrity of the scientific recommendations. In turn, states looking to manipulate policy through science may be able to do so more easily due to the absence of such field-testing. Moreover, concerns about the manipulation of the scientific process may be exacerbated merely by the existence of multiple institutions working on the same problem. Research suggests that developing countries, whose support is often necessary to solve collective action problems, are not able to easily monitor multiple institutions working on related issues due to capacity and personnel constraints (Benvenisti and Downs, 2007; Baradei and Gavin, 1981). As a consequence, developing countries in particular may benefit from combining legal and epistemic institutions. Where credibility is an issue, developing states may feel themselves more easily able to monitor the scientific process when it is integrated into the relevant legal institution. In short, even if an epistemic and a legal institution have identical memberships and decision rules, the mere existence of multiple institutions may increase transaction costs for states that face capacity constraints in terms of their ability to participate in international organizations. Second, when epistemic and legal institutions are fragmented, the scientific record may not be produced with the political realities facing legal institutions in mind. Usable scientific information, by definition, is only usable if it engages with the specific problems policy-makers are grappling with. Where there are many possible regulators, the individual politics of one regulator may not be that important to the scientific process. Where there is only one regulator, though, the scientific assessment process must be responsive to the political dynamics affecting that regulator if science is to be taken into account. Where collective action problems are concerned, this counsels in favor of integration. Fisheries regimes are a good example of when epistemic institutions should be, and in most cases are, integrated into legal institutions. States have little incentive to unilaterally restrain overfishing in international waters. One fish less caught by an American ship is one more to be caught by a Canadian ship. Usable scientific information about what constitutes a sustainable catch of whales or

20.  the role of scientific expertise    457 Atlantic tuna thus may be most valuable to international institutions that coordinate policies among member states. Precisely for this reason, states wishing for a particular result may try to manipulate the scientific process in order to produce particular policy outcomes. Subordinating the scientific process to the legal institution can solve this problem by giving states without scientific capacity the ability to oversee the scientific assessment process. The International Whaling Commission (IWC) illustrates the point. In the early years of the IWC most research on whaling was conducted by a few governments outside the confines of the IWC. This data was not always impartial, however, and many governments distrusted it. To counteract this problem, the IWC strengthened its internal scientific process by bringing independent scientists into the IWC scientific assessment process, where all members could more easily monitor the scientific assessment process (Andresen, 2000).

5.  Fragmentation versus Integration in International Climate Change Institutions In this section, I analyze the production of climate change science, and in particular the organization of the IPCC, in light of the theory of epistemic institutions. The IPCC has been criticized for its ineffectiveness (Haas and Stevens, 2011; Hasselman and Barker, 2008). These claims focus on both the legitimacy of the process through which the IPCC operates, as well as the IPCC’s inability to prepare reports that are salient to, and therefore influence, climate change negotiations at the UNFCCC (Hasselman and Barker, 2008; Haas and Stevens, 2011).14 The implicit suggestion is often that if the IPCC were more independent and reflected greater participation from the developing world and civil society, it would be more effective at influencing climate negotiations. To the contrary, from a prescriptive standpoint the theory of epistemic institutions suggests that the problem with the IPCC is not that governments may influence the IPCC’s work. Rather, the problem may well be that the IPCC is insufficiently connected to the UNFCCC and the political process of negotiating legal rules governing climate change. Counterintuitively, less institutional independence for the IPCC, accompanied by greater participation by developing countries in the scientific assessment process in the form of oversight of the IPCC   ‘The IPCC’s saliency is particularly poor’ (Haas and Stevens, 2011).

14

458   part v. climate change litigation by the UNFCCC, might well boost the ability of science to influence international climate negotiations. Climate change mitigation is perhaps the classic example of a collective action problem. Absent overarching regulatory structures designed to reallocate costs among countries, nations bear the entire cost of shifting their economies to reduce the output of greenhouse gases, while capturing only a portion of the benefit (Barrett, 2003). Effective regulatory responses have to be coordinated across countries prior to being implemented in order for states to benefit from regulation. Usable scientific information about climate change therefore has a limited number of legal institutions that are information-consumers. In practice, the UNFCCC is the primary lawmaking body that uses the IPCC’s information to attempt to coordinate nations’ climate policies. Individual nations do, of course, regulate climate change, most notably the European Union. However, developed nations like the United States and the EU most often have access to climate science without needing to resort to the IPCC.15 The role of the IPCC is thus not to provide these nations with information they have or can get; it is to try to create a scientific consensus upon which global negotiations can occur. The theory of epistemic institutions suggests that the IPCC should therefore be integrated into the UNFCCC, with its scientific process more directly subordinate to the UNFCCC’s political process, including control of its funding and its agenda.16 At the moment, the IPCC is not integrated into the UNFCCC, although the two entities are both inter-governmental organizations with nearly identical memberships. As a descriptive matter, this institutional arrangement likely reflects path dependence—the IPCC predated the UNFCCC by five years. The IPCC has multiple sources of funding and its own set of norms, procedural rules, and personnel that can produce different outcomes in the IPCC process than those that would   Moreover, unilateral efforts to regulate climate change have met with limited success, in part because institutions like the EU that are prepared to act on less than a global basis have declining shares of global emissions, making them less relevant to a long-term climate change solution. 16  Notably, not all scientific information related to climate change is best subordinated to the UNFCCC’s political process. Climate change is a complicated problem with many different facets that often have different structures. The production of usable scientific information related to some of these aspects may be better produced by independent epistemic institutions. Renewable energy illustrates the point. The International Renewable Energy Agency is a standalone epistemic institution that coordinates, assembles, and provides to member states a variety of different kinds of information about renewable energy technologies and their economic viability. Renewable energy technologies that are commercially viable do not require formal legal coordination through an international agency in order to spread. States can adopt those technologies that have proven effective elsewhere, and may have an incentive to do so to the extent that the technologies are competitive with existing energy sources. In this way, thinking about climate science as a series of smaller problems, rather than a single large one, may be beneficial. Delinking the development of usable scientific information for some aspects of climate change may make sense; for others, integration may be the correct approach. The key inquiry is whether the particular piece of information can be effectively used by a large number of legal institutions (Meyer, 2013; Meyer, 2012; Urpelainen and Graaf, 2013). 15

20.  the role of scientific expertise    459 emerge from a hypothetical UNFCCC-directed process. The IPCC’s decisionmaking structure is also relatively slow and unresponsive, with major decisions only taken at annual plenary meetings (IPCC, 1998). The IPCC is thus designed in a way that magnifies the risk that, at least in relation to climate change mitigation, its work will not be responsive to the political dynamics at work in the primary legal institution capable of relying on its work. The IPCC’s ‘particularly poor’ salience seems evidence of this possible design flaw (Haas and Stevens, 2011).17 The Climategate scandal and the associated perception of credibility issues might also be addressed by greater integration between the IPCC and the UNFCCC. The core of the claims about Climategate reflects a classic agency problem: rogue scientists charged with making a dispassionate assessment of the science instead manipulated the results to their own benefit. Moreover, as Climategate itself illustrates, the perception of bias can be as damaging as actual bias. Even where little real scientific dispute continues, policy-makers and advocates with other objectives can use the public perception of a lack of credibility to attack science-based law- and policymaking. Greater hierarchical control of the IPCC’s scientific process by the legal institution charged with climate negotiations could minimize the facial plausibility of these claims, however. If those negotiating climate rules are also supervising the scientific assessment process, it may become more difficult to claim that scientists are acting in an unsupervised way. In this way, integrating the IPCC and the UNFCCC could solve a credibility problem in the eyes of the public (even if it has no effect on the scientific assessment process), thus removing another obstacle to scientifically based negotiations. Moreover, subordinating the IPCC more directly to the UNFCCC might facilitate investment in greater administrative personnel and a more efficient decisionmaking process. The InterAcademy Council’s review of the IPCC, commissioned by the UN and the IPCC following the Climategate scandal and the revelation of errors in the Fourth Assessment Report, recommended that the IPCC create both an Executive Committee empowered to make important decisions on the Panel’s behalf, as well as an Executive Director to handle day-to-day operations (InterAcademy Council, 2010). Empowering a relatively independent organization to act more efficiently may, however, raise even greater concerns that the IPCC will depart from its mission. Indeed, a tendency to stray beyond their original 17   Haas and Stevens do not consider the IPCC’s poor salience a design flaw from the standpoint of the states who founded it. Rather, they suggest it is a deliberate attempt to render the IPCC impotent. It is no doubt correct that governments recognize the significance of climate science for the public’s perception of what constitutes good policy-making, and therefore attempt to interfere in the results to further their policy interests. This observation does not explain, however, why the IPCC was not more fully integrated into the UNFCCC after the latter was created. Controlling the IPCC arguably would have been easier if it was within the UNFCCC, an institution in which nations opposed to climate change have been very effective in blocking the widespread adoption of significant climate change measures (Haas and Stevens, 2011).

460   part v. climate change litigation mandates is a common concern with international organizations (Guzman, 2013). Subordinating the IPCC to the UNFCCC might address these agency concerns and thus facilitate the administrative reforms necessary to allow the IPCC to make decisions in a more efficient and responsive way. Credibility issues raised by developing countries’ relatively low rates of participation in the IPCC’s scientific assessment process might also be addressed through integration (Haas and Stevens, 2011). While the IPCC has provided some financial support to encourage greater participation from the developing world, a direct institutional link between climate negotiators and the scientific assessment process might bolster developing world confidence in the scientific assessment process. As Mohamed El Baradei and Chloe Gavin write in describing the negotiation of the UN Convention of the Law of the Sea, more complicated negotiations favor developed countries due to developing countries’ capacity constraints (Baradei and Gavin, 1981). Reducing the number of different institutions involved in producing the scientific record reduces the demand on developing countries’ efforts to monitor the scientific process, thereby potentially increasing the credibility of the results in their eyes. Parties that are otherwise unable to participate in the scientific process can be given an oversight role through the legal institution. They are able to use their influence over the legal process to ensure that the scientific process engages with their concerns. Indeed, the mere willingness to facilitate oversight may serve as a costly signal to developing states that the scientific assessment process is credible. Integrating legal and epistemic institutions worked in this fashion during the development of the regime governing persistent organic pollutants (POPs). Initially, governments regulated POPs through the development of a protocol to the Convention on Long-Range Transboundary Air Pollution (CLRTAP). Prior to negotiations, the United States had identified the need to make POPs-related science credible to newly independent Eastern European states, in part because the underlying scientific research had been performed predominantly in Western states (Selin and Eckley, 2003). To address these concerns, an internal CLRTAP Task Force and Working Group prepared the scientific record used by the CLRTAP COP—the relevant legal institution—when negotiating the protocol (Selin and Eckley, 2003). This internal assessment process provided Eastern European negotiators the opportunity to oversee the scientific assessment process. This participation included both financial support to attend the negotiations and a direct institutional linkage between the scientific assessment, the negotiations, and the ultimate adoption of the protocol. This approach was successful, as Eastern European states ultimately ended up accepting the results of the Western-driven scientific process (Selin and Eckley, 2003). This is not to deny that integration presents its own costs. Greater political oversight may undermine the credibility of the scientific assessment process in the view of many. However, the sticking point in reaching a comprehensive multilateral climate accord, to a large extent, has been resistance from countries and constituencies that are climate skeptics or for whom public skepticism is a reason or opportunity

20.  the role of scientific expertise    461 for delay. Insofar as independence creates credibility issues among these veto players, integrating science and legal institutions offers at least some hope of greater dialogue between epistemic institutions, the communities they organize, and international lawmaking bodies.

6. Conclusion Climate change is perhaps the single greatest environmental challenge facing nations in the twenty-first century. It also highlights one of the thorniest governance challenges facing environmental institutions today: how to best make use of the scientific knowledge possessed by experts. While it is tempting to fall back on arguments about the need for the independence of the scientific process, such claims risk neglecting the inherently political and social nature of incorporating science into policymaking. Moreover, environmental problems are not all alike and so a ‘one-size-fits-all’ approach is unlikely to produce optimal results across all environmental areas. The IPCC highlights the double-edged nature of scientific independence. On the one hand, the IPCC has institutional norms in place aimed at minimizing the political interference that comes with being part of an intergovernmental organization. On the other hand, however, the institutional separation between the UNFCCC and the IPCC may contribute to developing countries’ inability or unwillingness to participate in the IPCC process—a lack of participation that may undermine the credibility of the IPCC among governments whose support is necessary to reach agreement on climate change mitigation. Moreover, independence can create agency problems, both real and perceived, that further damage the credibility of an epistemic institution. Integrating the scientific assessment process into the UNFCCC may therefore improve the relationship between science and climate change negotiations. The theory of epistemic institutions suggests that the IPCC should be integrated to a much greater extent into the UNFCCC.

References Andresen S. (2000). ‘The Whaling Regime’, in Science and Politics in International Environmental Regimes, pp.42–4 (Andresen S., et al, eds). Manchester University Press. Ayal A., Hareuveny R., and Perez O. (2013). ‘Science, Politics and Transnational Regulation: Regulatory Scientific Institutions and the Dilemmas of Hybrid Authority’, 2 Trans. Envt’l L. 45.

462   part v. climate change litigation Baradei M.E., and Gavin C. (1981). Crowded Agendas, Crowded Rooms: Institutional Arrangements at Unclos III, 11. United Nations Institute for Training and Research. Barrett S. (2003). Environment and Statecraft: The Strategy of Environmental Treaty-Making, 16. Oxford University Press. Benvenisti E., and Downs G.W. (2007). ‘The Empire’s New Clothes: Political Economy and the Fragmentation of International Law’, 60 Stan. L. Rev. 595. Biermann F. (2002). ‘Institutions for Scientific Advice’, 8 Glob. Gov. 195. Bodansky D. (2010). The Art and Craft of International Environmental Law 1–4. Harvard University Press. Borenstein S. (Aug. 2010) InterAcademy Council Says IPCC Needs Major Overhaul, Pressures Chairman Rajendra Pachauri For Conflicts Of Interest, Huffington Post, see (accessed 14 August 2015). Carrington D. (Nov. 2011). ‘Q&A: “Climategate”’, The Guardian, see (accessed 14 August 2015). Cohen H.G. (2012). ‘Finding International Law, Part II: Our Fragmenting Legal Community’, 44 N.Y.U. J. Int’l L. & Pol. 1049. Dunoff J.L., and Trachtman J.P. (1999). ‘Economic Analysis of International Law’, 24 Yale J. Int’l L. 1. Gauchat G. (2012). ‘Politicization of Science in the Public Sphere: A Study of Public Trust in the United States, 1974 to 2010’, 77 Am. Soc. Rev. 167. Guzman A.T. (2013). ‘International Organizations and the Frankenstein Problem’, 24 Euro. J. Int’l L. 999. Haas P.M. (1992). ‘Introduction: Epistemic Communities and International Policy Coordination’, 46 Int’l Org. 1. Haas P.M., and Stevens C. (2011). ‘Organized Science, Usable Knowledge, and Environmental Governance’, at 145 in Governing the Air: The Dynamics of Science, Policy, and Citizen Interaction (Lidskog R. and Sundqvist G., eds.). Hasselman K., and Barker T. (2008). ‘The Stern Review and the IPCC Fourth MIT Press. Assessment Report: Implications for Interaction between Policymakers and Climate Experts: An Editorial Essay’, 89 Climatic Change 219. Heffernan O. (2010). ‘“Climategate” Scientist Speaks Out’, Nature, see (accessed 14 August 2015). InterAcademy Council. (2010). Climate Change Assessments: Review of the Processes and Procedures of the IPCC, at 2, see http://reviewipcc.interacademycouncil.net (accessed 14 August 2015). International Commission for the Conservation of Atlantic Tuna, (2011). Biennial Report of the Standing Committee on Research and Statistics for the Period 2010–2011, Part II, para 5, see http://www.iccat.es/Documents/Meetings/Docs/SCRC2011-Report-ENG.pdf (accessed 14 August 2015). IPCC. (1989). Memorandum of Understanding between the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) on the Intergovernmental Panel on Climate Change (IPCC). See (accessed 14 August 2015). IPCC. (1998). Principles Governing IPCC Work, see (accessed 14 August 2015).

20.  the role of scientific expertise    463 IPCC. (2012). IPCC Trust Fund Programme and Budget, Thirty-Fifth Session of the IPCC, IPCC-XXXV/Doc. 2, see (accessed 14 August 2015). IPCC. (2014a). Catalogue of IPCC Publications, see (accessed 14 August 2015). IPCC. (2014b). Organization, see (accessed 14 August 2015). Jegende A.S. (2007). ‘What Led to the Nigerian Boycott of the Polio Vaccination Campaign?’, 4 PLOS Medicine 417. Keohane R.O., and Victor D.G. (2011). ‘The Regime Complex for Climate Change’, 9 Perp. On Pol. 7. Koremenos B. (2001). ‘Loosening the Ties that Bind: A Learning Model of Agreement Flexibility’, 55 Int’l Org. 289. Koremenos B. (2005). ‘Contracting Around International Uncertainty’, 99 Am. Pol. Sci. Rev. 549. Leiserowitz A, Maibach E.W., Roser-Renouf C., Smith N., and Dawson E. (2013). ‘Climategate, Public Opinion, and the Loss of Trust’, 57 American Behavioral Scientist 818. Meyer T. (2010). ‘Power, Exit Costs, and Renegotiation in International Law’, 51 Harv. Int’l. L.J. 379. Meyer T. (2012). ‘Global Public Goods, Governance Risk, and International Energy’, 22 Duke J. Comp. & Int’l L. 319. Meyer T. (2013). ‘Epistemic Institutions and Epistemic Cooperation in International Environmental Governance’, 2 Trans. Envt’l. L. 15. Morrow J.D. (1994). ‘Modeling the Forms of International Cooperation: Distribution versus Information’, 49 Int’l Org. 387. Perez O., and Snir R. (2013). ‘Global Environmental Risk Governance under Conditions of Scientific Uncertainty: Legal, Political and Social Transformations’, 2 Trans. Envt’l L. 7. Pollack M.A., and Shaffer G.C. (2009). When Cooperation Fails: The International Law and Politics of Genetically Modified Foods, 164–5. Oxford University Press. Ruhl J.B. (2012). ‘The Political Economy of Climate Change Winners’, 97 Minn. L. Rev. 206. Selin H., and Eckley N. (2003). ‘Science, Politics, and Persistent Organic Pollutants: The Role of Scientific Assessments in International Environmental Co-operation’, 3 Int’l Envt’l Agreements: Politics, Law and Economics 17. Urpelainen J., and Graaf T.V. (2013). ‘The International Renewable Energy Agency: a Success Story in Institutional Innovation?’, 15 Int’l Envt’l Agreements: Pol., L. & Econ 159. Wagner M. (2011). ‘Law Talk v. Science Talk: The Languages of Law and Science in WTO Proceedings’, 35 Fordham Int’l L.J. 151. Williamson O. (1985). The Economic Institutions of Capitalism, 78. The Free Press.

Chapter 21

CLIMATE CHANGE AND DAMAGES Christina Voigt

1. Introduction

465

2. ‘Damages’ in International Law

467

3. Climate Damages

475

4. Causation and Contribution

483

5. Summary and Conclusions

489

21. climate change and damages   465

1. Introduction While negotiations on a global deal to curb greenhouse gas emissions continue in slow motion, the pace of climatic change gains momentum. Higher than ever atmospheric greenhouse gas concentrations increase the likelihood and frequency of extreme weather events, as well as the probability of slow onset changes (Walsh, 2013). These events can have adverse effects for, and impose associated damages on, countries, communities, and individuals, due to the uncertainty and volatility associated with the rising pace of climate change. In the future, impacts from combinations of extreme weather and slow onset events are expected to induce even more severe damages. In the context of the UN-climate regime, climate-related damages are currently understood as ‘the actual and/or potential manifestation of impacts associated with climate change (in developing countries) that negatively affect human and natural system’.1 However, an effective response to such damages is not yet in place. Recognizing the need to strengthen international cooperation and expertise in order to understand and reduce loss and damage associated with the adverse effects of climate change, in 2010, as part of the Cancún Adaptation Framework, the 16th Conference of the Parties (COP16) established a work programme to consider approaches to address loss and damage associated with climate change impacts in developing countries that are particularly vulnerable to the adverse effects of climate change (UNFCCC, 2011). The agenda item of ‘loss and damages’ has been highly contentious. The COP at the Doha Climate Change Conference (COP18, 2012) decided to establish, at COP19, institutional arrangements, such as an international mechanism to address loss and damage (UNFCCC, 2012a). Yet, the nature and scope of such a mechanism remains controversial. In November 2013, COP19 established the Warsaw international mechanism for loss and damage to address loss and damage associated with impacts of climate change, including extreme events and slow onset events, in developing countries that are particularly vulnerable to the adverse effects of climate change, under the Cancún Adaptation Framework (UNFCCC, 2013). Importantly, the Warsaw international mechanism shall fulfil the role under the Convention of promoting the implementation of approaches to address loss and damage associated with the adverse effects of climate change, pursuant to decision 3/CP.18. The words ‘under the Convention’ are important to note. The Convention only addresses climate change mitigation and adaptation measures. The mechanism

1   Background paper to the expert meeting on a range of approaches to address loss and damage associated with the adverse effects of climate change, including impacts related to extreme weather events and slow onset processes (UNFCCC, Oct. 2012).

466   part v. climate change litigation therefore operates in the context of adaptation (including adaptation action and adaptation finance) and does not create a third, separate ‘loss and damage’ track.2 Outside the UN negotiations, which focus on means and ways to reduce loss and damages, the concept of damages is also relevant in a different context. States suffering from negative climate impacts and resulting damages may wish to seek a remedy from other states for their losses. To this date, there is no compensation claim pending in any international court or tribunal, but initiatives by states and affected groups to cover their losses grow in number. Several examples exemplify this trend. These include the 2005 Inuit Petition to the Inter-American Commission on Human Rights (Watt-Cloutier, 2005). Here, the petitioners requested the Commission, inter alia, to prepare a report setting forth all the facts and applicable law and recommending that the United States mitigate any harm to natural resources caused by US greenhouse gas emissions and provide any other relief that the Commission considers appropriate and just. The Petition led to a hearing by the Commission but no decisive action.3 A more recent attempt includes the request by a group of small island nations, headed by Palau in the western Pacific, to the United Nations General Assembly to seek an advisory opinion from the International Court of Justice on the legal responsibility of nations whose corporations cause international harm through contributing to climate change (UN News Center, 2011; Al Jazeera, 2012; Siders, 2002).4 How this initiative develops is yet to be seen. However, a successful claim based on the responsibility of a state for a wrongful act gives rise to an obligation to make full reparation, which can take the form of restitution, compensation, and/or satisfaction (ILC, 2001a). While damage is, arguably, not a condition for the existence of a wrongful act and the invocation of state responsibility, it remains a requirement in the context of reparation and, in particular, compensation (Tanzi, 1987; Graefrath, 1984; Xue, 2003). The secondary law on state responsibility carries with it the obligation of full reparation, ‘including any damage, whether material or moral’ (Article 31 ILC Draft Articles on Responsibility of States for Internationally Wrongful Acts). Against this background, the purpose of this chapter is to explore the legal understanding of climate change damages in public international law. In order to pursue this quest, section 2 begins by exploring how we define and deal with damages, in particular environmental damages, in international law, before inquiring more closely into the question of the legal consequences of damages in international law. 2   The mechanism is mandated to promote the implementation of approaches to address loss and damage associated with the adverse effects of climate change by enhancing knowledge and undertaking comprehensive risk management approaches to address loss and damage, strengthening dialogue, coordination among relevant stakeholders, enhancing action, and support that include finance, technology, and capacity building to address loss and damage. 3   For more detail, see chapter 22 in this book. 4   Already in 2002, Tuvalu Prime Minister Falcam had declared that his country was seeking to sue the USA and/or Australia for climate damages, but, due to political changes, proceedings were never initiated (World Environment News, 2002a; World Environment News, 2002b).

21. climate change and damages   467 Based upon this foundation, section 3 examines the more specific question of what are ‘climate damages’? Having explored the concept of climate damages, section 4 then delves more deeply into complex questions of causation and contribution. Finally, section 5 concludes.

2.  ‘Damages’ in International Law 2.1 Types of Damages The concept of damages in international law is perhaps as old as this legal discipline, as is its controversiality.5 ‘Damage’ denotes loss, damnum, whether this is a financially assessable quantification of physical injury or damage, or of other non-­material consequences of an internationally wrongful act. The notion of ‘injury’ includes any damages caused by that act. It embraces any material or moral damages caused thereby. This formulation is intended both as inclusive, covering both types of damages broadly, and as limitative, excluding merely abstract concerns and the general interests of a state which is individually unaffected by the breach of duty by another state (Crawford, 2002). ‘Material damage’ refers to damage to property, or to other interests of the state that are assessable in financial terms. ‘Financially assessable’ is a damage which is capable of being evaluated in financial terms. Financially assessable damages encompass both damages suffered by the state itself (to its property or personnel or in respect of expenditures reasonably incurred to remedy or mitigate damage flowing from the internationally wrongful act), as well as damage suffered by its nationals, whether persons or companies (Crawford, 2002). In order to determine the appropriate amount of compensation for damages, the assessment needs to be quantifiable. Such quantification will vary, depending on the content of the primary obligation, an evaluation of the respective behaviour of the parties, and, more generally, a concern to reach an equitable and acceptable outcome (Crawford, 2002). In a number of cases, payments have thus been negotiated between the injured and the injuring states as the full and final settlement.6   See for an indication of the actuality of this issue, the research project at the British Institute for International and Comparative Law (BIICL) (BIICL, 2014). 6   Examples include the compensation payment by Israel for an attack on the USS Liberty with loss of life and injury (RGDIP, vol. 85 (1981) 562) or the payment by Cuba to the Bahamas for the sinking of a Bahamian vessel with loss of life (RGDIP, vol. 85 (1981) 540). See also the General Agreement between Iran and the United States on the Settlement of Certain ICJ and Tribunal cases of 9 February 1996, Award on Agreed Terms by order of the Iran-US Claims Tribunals, 20 February 1996, (1996) 32 Iran-USCTR 207, 213. 5

468   part v. climate change litigation Damages, however, can also be of an intangible, immaterial nature, usually referred to as ‘moral damages’. Moral damages have enjoyed a long history in public international law as a recognized form of ‘injury inflicted resulting in mental suffering, injury to feelings, humiliation, shame, degradation, loss of social position or injury to credit or to reputation’ (Wong, 2013). Moral damages include such things as individual pain and suffering, loss of loved ones, or personal affront associated with an intrusion in one’s home or private life (Crawford, 2002). Significantly, moral damages ‘are very real’ despite their intangible nature, which ‘affords no reason why the injured person should not be compensated’ (ILC, 1923). The International Law Commission’s Articles on the Responsibility of States for Internationally Wrongful Acts (ILC ASR) clarify that states must make full reparation for injury caused, ‘whether material or moral’, which are ‘financially assessable and may be the subject of a claim for compensation’ rather than satisfaction or restitution, or a fortiori punitive damages (UN General Assembly, 2001).7 Non-economic damages can also occur in the context of detrimental social impacts on individuals and communities. Compensation for personal injury has also been dealt with by human rights bodies, in particular the European and Inter-American Court of Human Rights. Awards of compensation encompass material losses (loss of earnings, pensions, medical expenses, etc.) as well as nonmaterial damage (pain, suffering, mental angst, loss of enjoyment of life, etc.). The latter category is usually quantified on the basis of an ‘equitable assessment’ (Crawford, 2002; Randelzhofer and Tomuschat, 1999). In 2005, the UN General Assembly adopted the Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law (UN General Assembly, 2006). These principles include the following forms of reparation: restitution, compensation, rehabilitation, satisfaction, and guarantees of non-repetition. For example, in these guidelines, rehabilitation is defined as including medical and psychological care as well as legal and social services (UN General Assembly, 2006; Hyvarinen, 2012). The latter might be difficult to financially assess and could pose potential challenges to legal proceedings claiming compensatory remedy for human rights violations. The theory and practice of reparation for human rights violations are evolving and are discussed in more detail in Chapters 11 and 22 in this volume.8   See ILC Articles 31 and 34–37. Until very recently, the issue of moral damages had arisen in very few international disputes. However, in 2008 and 2009 alone no less than five arbitration awards in investor–state disputes discussed the issue. In one such case, Desert Line Projects LLC v Yemen, the Arbitral tribunal awarded an amount of US$1 million in compensation to an investor. 8   Another area of concern is climate-induced migration of people and the resulting harm to communities and individuals. Problematic in this context is the causality chain between climate change and migration as climate change needs to be seen as a threat multiplier, adding to pre-existing stress on individuals and communities. See for more detail Chapter 22 in this volume. 7

21. climate change and damages   469 The relationship between material and non-material damages becomes especially relevant in the context of environmental damages. In the next section, we will thus turn to environmental damages in international law.

2.2 ‘Environmental’ Damages Defining environmental harm or damage in international law is an intricate issue. Different definitions and approaches exist in treaty law and in the legal literature (Sands and Peel, 2012). The commentaries to the ILC Articles on Prevention of Transboundary Harm from Hazardous Activities (2001) accept a broad understanding of environmental harm as effects on ‘human health, industry, property, environment or agriculture in other States’ (ILC, 2001b; ILC, 2001c). Damage to persons or properties is also covered by the general obligation on states not to inflict damage on, or violate the rights of other states. This was recognized already in the Trail Smelter arbitration, one of the most well-known cases involving transboundary air pollution, where Canada was found liable for economic harm ‘to the territory of another or the properties or persons therein’; in this case the US state of Washington (Trail Smelter case, 1905; Birnie et al, 2009). Environmental damage, such as the destruction of coral reefs, ecosystem changes, or destruction of biological diversity is much more difficult to quantify and to define (Bowman and Boyle, 2002). Despite the general acceptance of environmental damages in international law,9 it is questionable whether such damages are capable of being measured by factual and objective standards. In cases where compensation has been awarded or agreed following an internationally wrongful act that causes or threatens environmental damage, payments have been directed to reimbursing the injured state for expenses incurred in preventing or remedying pollution, or to providing compensation for a reduction in the value of polluted property (Crawford, 2002).10 For example, in Lac Lanoux, a possibility of environmental harm in the pure sense was indirectly recognized, as the Court referred to changes in, for example, composition and temperature of the waters which allegedly injured Spanish interests (RIAA, 1957). International jurisprudence seems to support the approach that environmental damage also encompasses damage to the intrinsic value of the environment, beyond   Compensation for environmental damage was provided by the UN Security Council Resolution 687 in 1991 reaffirming that Iraq was ‘liable under international law for any direct loss, damage, including environmental damage and the depletion of natural resources . . . occurring as a result of its unlawful invasion and occupation of Kuwait’. 10   See the decision of the arbitral tribunal in the Trail Smelter Arbitration, which provided compensation to the United States for damage to land and property caused by sulphur dioxide emissions from a Canadian smelter across the border. Compensation was assessed based on the reduction in value of the contaminated land. 9

470   part v. climate change litigation resources of a direct economic value.11 Claims regarding damage to the environment were put forward in both of the Nuclear Tests cases and in the case concerning Certain Phosphate Lands in Nauru (Nuclear Tests I and II, 1974; Nuclear Test II, 1995; Phosphate Lands in Nauru, 1992). The latter case concerned the Island State Nauru which had had almost one-third of its rich phosphate deposits removed while it was administrated by Australia. Nauru claimed Australia’s violation of its rights under the UN Trusteeship provisions and general principles of international law, inter alia, by not providing for the rehabilitation of the phosphate lands, and failing to pay Nauru proper compensation for the exploitation (Phosphate Lands in Nauru, 1992). None of these cases were judged on the merits but the ICJ, in its dismissal order of the second Nuclear Test case recognized ‘obligations of States to respect and protect the natural environment’ (Nuclear Test II, 1995). In the subsequent Advisory Opinion on the Legality of Nuclear Weapons the ICJ referred explicitly to a responsibility of states to control damage to the environment, which was reaffirmed in the Pulp Mills and Gabčíkovo-Nagymaros cases (Legality of Nuclear Weapons, 1996; Pulp Mills on the River Uruguay, 2010; Gabčikovo-Nagymaros, 1997). In the latter case it was also stated that the environment was ‘not an abstraction but represents the living space, the quality of life and the very health of human beings, including generations unborn’ and the Court recognized that prospective environmental damage could occasion a ‘state of necessity’ (Legality of Nuclear Weapons, 1996; Gabčikovo-Nagymaros, 1997). In environmental soft law, principle 21 of the Stockholm Declaration and principle 2 of the Rio Declaration refer to responsibility for ‘damage to the environment’ without providing any particular definition of what is meant by environmental damage. However, the documents indicate that it includes something more than just loss of resources with an economic value (Jervan, 2014). It has been argued that the ‘intrinsic value of the environment’ is covered by the contemporary concept of harm, including both whole ecosystems and individual components (Jervan, 2014; Fitzmaurice, 2007). In the context of climate impacts (as will be shown below), environmental damage will often extend beyond that which can be readily quantified in terms of clean-up costs or property devaluation. Damage to ‘wider’ environmental values, such as biodiversity and ecological integrity is, ‘as a matter of principle, no less real and compensable than damage to property, though it may be difficult to quantify’ (Birnie et al, 2009).

2.3 The Work of the International Law Commission on Transboundary Environmental Damages Of particular importance in the formulation of legal norms with respect to environmental damages is the work of the International Law Commission (ILC) that   For an excellent analysis if the contribution of the ICJ to the international rule on prohibition of transboundary harm see Jervan’s Transboundary Environmental Harm and the ICJ (Jervan, 2014). 11

21. climate change and damages   471 resulted in the 2001 Articles on Prevention of Transboundary Harm from Hazardous Activities (Cameron et al, 1989; Kroner, 1993; Willisch, 1987; Okowa, 2000; Utton, 1973).12 Following the international community’s recognition of a need for more generalized rules and principles regarding transboundary harm, the ILC was in 1978 given the task of formulating a legal framework built on the Trail Smelter decision (Stephens, 2009). The work was initiated as ‘international liability for injurious consequences arising out of acts not prohibited by international law’ (Stephens, 2009). The ILC separated these works from its more general work on state responsibility for internationally wrongful acts, and made a distinction between ‘lawful’ and ‘wrongful’ activities resulting in transboundary environmental harm (ILC, 2001a).13 The ILC eventually divided the topic in two parts, the first one being the primary rules relating to the obligation to prevent transboundary harm, the other being the secondary rules on state responsibility for breaches of primary rules. The work on the first part has resulted in two separate texts: the 2001 Articles on Prevention of Transboundary Ham from Hazardous Activities, and the 2004 Principles on the Allocation of Loss in the Case of Transboundary Harm Arising out of Hazardous Activities (ILC, 2004; ILC, 2000). The second part led to the adoption of the Articles on responsibility of states for internationally wrongful acts. However, it has been argued that the articles are essentially codifying already existing obligations and are ‘securely based in existing precedents’, drawing on case law, treaties and soft law instruments such as the Rio Declaration (Jervan, 2014; Birnie et al, 2009; Stephens, 2009). The Articles on Prevention give an ‘authoritative exposition’ of existing law on the matter, and have been cited in the pleadings of the parties in several cases concerning transboundary harm (Birnie et al, 2009; Jervan, 2014; MOX Plant Arbitration, 2003; Pulp Mills on the River Uruguay, 2010). Consequently, it seems that the articles are accepted to have significant persuasive authority.

2.4 The Threshold of Harm In their encounters, states need to balance state sovereignty and territorial integrity. It lies implicit in this balance that states cannot engage in or permit activities on their territory without regard to the impacts this may have on areas outside their jurisdiction (Jervan, 2014). At the same time, a state cannot demand that others abstain   Report of the International Law Commission for its fifty-third session, General Assembly, Official Records, fifty-sixth session, Supplement No. 10 (A/56/10), pp. 144–370, Report of the International Law Commission for fifty-eighth session, General Assembly, Official Records, sixty-first session, Supplement No. 10 (A/61/10), pp. 101–82. 13   See further Jervan, noting, ‘Because most activities that cause transboundary environmental harm are in themselves lawful, the distinction has been much criticized. The critics have argued that in cases such as Trail Smelter, where industrial activities cause harm, the wrongful act is the failure to prevent significant environmental damage from occurring’ (Jervan, 2014). 12

472   part v. climate change litigation from all activities that may have transboundary impacts on its environment (Craik, 2008). This acknowledgement leads to the assumption that prohibitable transboundary environmental harm must be of a certain degree of severity (Jervan, 2014). This was already recognized by principle 21 of the Stockholm Declaration and principle 2 of the Rio Declaration. Principle 21 of the Stockholm Declaration states: States have, in accordance with the Charter of the United Nations and the principles of international law, the sovereign right to exploit their own resources pursuant to their own environmental policies, and the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction.

Although not explicitly mentioned in the Stockholm Declaration, the requirement of significant or severe damage is reflected in the balance between the sovereign right to exploit natural resources and the responsibility not to cause environmental damage. Twenty years later, the principle was substantially repeated in the principle 2 of the 1992 Rio Declaration, except for the added words: ‘their own environmental and developmental policies’ (UN Conference on Environment and Development, 1992). Neither of these documents, however, formulates explicit thresholds of harm.14 A threshold must also be interpreted into other international law instruments prohibiting environmental harm that do not contain an explicit threshold (Birnie et al, 2009; Ruud and Ulfstein, 2011). Although the need for a threshold criterion is widely recognized, it remains far from settled where to draw the line (Jervan, 2014; Birnie et al, 2009). So far, different terms have been used for qualifying damage, for example ‘substantial’, ‘serious’, ‘appreciable’, and ‘significant’.15 Each of these terms has a different meaning and affects the duty imposed on the state. Early jurisprudence on transboundary harm suggests a relatively high threshold. In Trail Smelter, the arbitral tribunal only considered activities which caused injury of ‘serious consequences’, and similarly, the tribunal in the Lac Lanoux case set the threshold at ‘serious injury’ (ILC, 1974). Jervan notes, ‘It is however assumed that the threshold is lower today, due to the increased focus on environmental protection and recognition of the severity of irreversible environmental harm’ (Trail Smelter, 1905; Jervan, 2014). However, it is now well established that the prohibition is only violated if the environmental harm is ‘significant’ (Lefeber, 1996; ILC, 2001c). According to the commentaries to the ILC Articles on Prevention, ‘significant’ is ‘something more than   Other examples of international legal instruments that do not have explicit qualification of thresholds in their text are UN Convention on the Law of the Sea Article 194(2) and Article 7(1) of the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and Other Celestial Bodies. It is clear that although they do not specify the threshold, these and other provisions only apply to harm of a certain qualification. 15   In the ILC’s work on no-navigational use of international watercourses, the threshold criterion has been changed from ‘serious’ to ‘appreciable’ and then to ‘significant’, which illustrates how difficult it was to find a general accepted rules in this field of law (Xue, 2004). 14

21. climate change and damages   473 “detectable” but need not be at the level of “serious” or “substantial”’, which clearly shows that this is meant to be a lower requirement of harm than that expressed in the Trail Smelter and Lac Lanoux cases (Jervan, 2014; ILC, 2001b). However, in the Pulp Mills case, the Court stated that the obligation applied to ‘significant damage to the environment’ (Pulp Mills on the River Uruguay, 2010). The method of establishing the precise threshold is not clear. Jervan identifies two alternative approaches for determining the precise threshold of harm. The first approach implies that the threshold of harm must be determined by balancing the socio-economic utility of an activity towards its detrimental effects on the environment, and consequently implies that the threshold of harm is different for developed countries and developing countries (Lefeber, 1996). The second approach is to apply a ‘de minimis test’ to the harm, a test which implies that if the harm is not minor, i.e. insignificant or trivial the threshold is crossed (Lefeber, 1996; Jervan, 2014). The approach does not clarify what harm is significant, and what is insignificant (Lefeber, 1996). The second approach is also supported by the ILC, as the commentaries to the Articles on Prevention define significant as something more than ‘detectable’ (ILC, 2001b). The second approach seems to be the more pragmatic and practicable one. However, in defence of the first approach it needs to be noted that this approach may be more conducive to the principles of equity and fairness as enshrined in international law.

2.5. Reparation In international law, there has been an intensive debate regarding damages as a requirement for establishing state responsibility. With the ILC ASR, this debate seems to be resolved. There is no general requirement of damages to establish state responsibility, unless the primary obligation on which to establish the responsibility of a state is directed towards avoiding damages (Crawford and Olleson, 2003). The question of damages as a requirement for state responsibility is thus to be determined by the contents of the relevant primary obligation (Crawford and Olleson, 2003). In general, the mere breach of an international obligation is sufficient to give rise to responsibility. As an exception, in particular in the context of environmental harm, for example pollution of rivers, it is necessary to show some substantial negative impact on the environment or on people before responsibility will arise (Crawford and Olleson, 2003).16

 Noting that the mere risk of future harm was not a sufficient basis for responsibility in the Lac Lanoux case arbitration. Similarly, the ICJ in Gabčikovo-Ngymaros rejected a breach of treaty 16

474   part v. climate change litigation In the context of environmental degradation and transboundary damage, the law of state responsibility17 has two functions: first, to support primary rules established by treaties or customary law which aim at preventing environmental damages; second, to provide injured states with a right to wipe out consequences. As noted above, state responsibility for a wrongful act gives rise to a secondary obligation to make reparation while the primary obligation to not cause transboundary harm persists (Article 29 ASR). In the 1927 Chorzow Factory case, the Permanent Court of International Justice (PCIJ) established the principle of restitution in integrum in the following way: The essential principle contained in the actual notion of an illegal act—a principle which seems to be established by international practice and in particular by the decisions of international tribunals—is that reparation must as far as possible, wipe out all the consequences of an illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed. Restitution in kind, or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; the award, if need be, of damages for loss sustained which would not be covered by restitution in kind or payment in place of it—such are the principles which should serve to determine the amount of compensation due for an act contrary to international law. (PCIJ, 1927)

Secondary reparation duties can take the form of restitution, compensation, or satisfaction, alone or in combination.18 The state is obliged to make full reparation for any injury caused. This principle is well established in international law. This approach is also reflected in the ILC’s ASR which envisage that the reparation for the injury shall take the form of restitution, compensation, and satisfaction. (Articles 31–35). According to the articles, compensation is to include any financially assessable damage.19 In cases involving climate change damages, it might in fact be physically impos­ sible to restore the situation ex ante. A victim state will, therefore, be seeking financial compensation to cover the costs associated with material damage to environmental resources (pure environmental damage) and consequential damage to people and property (consequential environmental damage), including restoration. We can briefly summarize here that there are different types of damages recognized in international law. These include direct injuries through the internationally wrongful act as well as indirect harm. Moreover, there are purely material damages as well as damages that are not so easily expressed in financial terms, such as environmental damages and social or cultural impacts on communities and individuals. as long as the diversion of water by the construction had actually caused damage to another state (Gabčikovo-Ngymaros, 1997).   There are many open questions related to the invocation of state responsibility in the context of climate change, in particular the determination of the internationally wrongful act or the question of attributability of wrongful behaviour to a state, which cannot be discussed in the course of this chapter (Verheyen, 2005; Voigt, 2008). 18   ILC ASR Article 36.    19 Ibid. 17

21. climate change and damages   475 In order to claim compensation for such damages, they need to be financially assessable. Here, room for legal development exists.

3.  Climate Damages 3.1 A Definition under the UNFCCC? In the part of its Fifth Assessment Report entitled Climate Change 2014: Impacts, Adaptation and Vulnerability, the Intergovernmental Panel on Climate Change (IPCC) provides an assessment of observed and future impacts of climate change that could affect peoples and ecological systems worldwide (IPCC, 2014). In this report, the IPCC concludes that: In recent decades, changes in climate have caused impacts on natural and human systems on all continents and across the oceans. Evidence of climate-change impacts is strongest and most comprehensive for natural systems. Some impacts on human systems have also been attributed to climate change, with a major or minor contribution of climate change distinguishable from other influences. (IPCC, 2014)

The report further identifies the following key risks as reasons of concern, all of which are identified with high confidence and span sectors and regions: i. Risk of death, injury, ill-health, or disrupted livelihoods in low-lying coastal zones and small island developing states and other small islands, due to storm surges, coastal flooding, and sea level rise. ii. Risk of severe ill-health and disrupted livelihoods for large urban populations due to inland flooding in some regions. iii. Systemic risks due to extreme weather events leading to breakdown of infrastructure networks and critical services such as electricity, water supply, and health and emergency services. iv. Risk of mortality and morbidity during periods of extreme heat, particularly for vulnerable urban populations and those working outdoors in urban or rural areas. v. Risk of food insecurity and the breakdown of food systems linked to warming, drought, flooding, and precipitation variability and extremes, particularly for poorer populations in urban and rural settings. vi. Risk of loss of rural livelihoods and income due to insufficient access to drinking and irrigation water and reduced agricultural productivity, particularly for farmers and pastoralists with minimal capital in semi-arid regions.

476   part v. climate change litigation vii. Risk of loss of marine and coastal ecosystems, biodiversity, and the ecosystem goods, functions, and services they provide for coastal livelihoods, especially for fishing communities in the tropics and the Arctic. viii. Risk of loss of terrestrial and inland water ecosystems, biodiversity, and the ecosystem goods, functions, and services they provide for livelihoods. These key risks are potentially severe impacts relevant to Article 2 of the UNFCCC, which refers to ‘dangerous anthropogenic interference with the climate system’. Many key risks constitute particular challenges for the least-developed countries and vulnerable communities, given their limited ability to cope (IPCC, 2014). Figure 21.1 shows IPCC’s examples of global impacts projected for climate changes (and sea level and atmospheric carbon dioxide where relevant) associated with different increases in global average surface temperature in the twenty-first century. The report also shows that the regional impacts differ, with South-America, Africa, and Asia being the regions to expect the most impacts. Such impacts could materi­alize themselves, for example, in increases in water-resource stress for people living in watersheds, increases in average annual numbers of coastal flood victims, or increases in populations at risk of hunger (IPCC, 2014). Humans and nature have always been exposed to, and vulnerable to weather and climate events and have (largely) been able to adapt. Yet, accelerating climate change poses unprecedented challenges to these adaptive strategies. Adaptive capacity refers to the ability of a system or individual to adapt to climate change and is at the forefront of thinking regarding how to respond to the impacts of climate change. Adaptation and adaptive capacity are very complex concepts and can be used in a variety of ways. Adaptation can be anticipatory and require the capacity to anticipate risk or it can be responsive, and require the capacity to react once an extreme event takes place. Moreover, having the capacity to change is a requirement to adapt to climate change. Viewing adaptation as requiring transformation implies that it cannot simply be understood as only a set of actions that physically protect people from climate impacts (Pelling, 2010). While adaptation can significantly reduce vulnerability to climate change impacts, it is argued that no level of adaptation will allow for a complete avoidance of the impacts of climate change (Verheyen, 2005). Thus, there is potential for residual damage. Such damage occurs when adaptation measures are not possible, not sufficient, or are absent because of technical, economic, or capacity constraints. The concept of damages associated with the adverse effects or impacts of climate change is being widely discussed and analysed. While ‘climate damages’ have not been clearly defined under the Convention, Article 1(1) UNFCCC defines adverse effects of climate change as ‘changes in the physical environment or biota resulting from climate change which have significant deleterious effects on the composition, resilience, or productivity of natural or managed ecosystems

20

  The black lines link impacts, dotted arrows indicate impacts continuing with increasing temperature. Entries are placed so that the left-hand side of the text indicates the approximate onset of a given impact (IPCC, 2007).

Figure 21.1  Key impacts as a function of increasing global average temperature change.20

21. climate change and damages   477

478   part v. climate change litigation or on the operation of socio-economic systems or on human health and welfare’. However, as mentioned above, the key risks identified by the IPCC are relevant in the context of Article (2) UNFCCC as indicators for ‘dangerous interference with the climate system’. The Cancún Agreements provide additional guidance by referencing impacts from extreme weather and slow onset events, including sea level rise, increasing temperatures, ocean acidification, glacial retreat, and related impacts, salinization, land and forest degradation, loss of biodiversity, and desertification (UNFCCC, 2011). Yet, defining ‘climate damages’ is inherently difficult. Not only is the range of adverse effects and impacts large. The main handicap, however, might be establishing the causal link between increased greenhouse gas concentration in the atmosphere and a particular harm. Many different factors attribute to the final harm. These include, for example, exposure of buildings on a hillside prone to soil erosion or of coastal property to floods. In these cases, not only the climatic event, but also insufficient zoning and planning laws or unlawful development in vulnerable areas, could contribute to damage. There is still a need to create more clarity around the definition of climate change damages. Perhaps this need is best reflected in the fact that the Warsaw international mechanism is mandated to undertake ‘[a]‌ction to address gaps in the understanding of and expertise in approaches to address loss and damage associated with the adverse effects of climate change’ (IPCC, 2013).

3.2 Other Approaches to Defining ‘Climate Change Damages’ Given the absence of a clear definition or meaningful articulation emanating from the UNFCCC, within the last couple of years, a range of perspectives on climate damages has emerged. These range from purely quantitative calculations of economic loss to more holistic approaches, incorporating qualitative analysis and capturing intangible impacts (UNFCCC, 2012b). An interesting new set of tools is emerging from those schools and concepts, combining knowledge and technical skills from Disaster Risk Reduction (DRR), catastrophe modelling, and the newer but fast-emerging field of climate change assessment (IPCC, 2012a). Moreover, damage assessments can be based on the analysis of losses that have occurred in the past or the estimation of future losses and damage usually with a strong focus on the quantification of direct and indirect impacts (Handmer and Tibbits, 2005). In addition to this economic dimension, there is a wider range of less measurable impacts, including impacts on social vulnerability and resilience. Quantification of these impacts poses conceptual, ethical, and empirical challenges. Even where monetization of impacts is possible, a large degree of

21. climate change and damages   479 uncertainty remains. Loss and damage in the climate change context also adds a time dimension to the debate, requiring a differentiation between current and future risks.

3.3 Disaster Risks As indicated above, climate impacts occur based on a complex set of causes. In the context of climate damages it is necessary to understand that the actual impacts of climate change on human and natural systems—as well as damage in a legal sense— will depend not only on the climate event itself, but also on the extent of risk to a community, country, or ecological system. Key determinants of risk are exposure and vulnerability to weather and climate events. Both exposure and vulnerability determine potential impacts and the likelihood of disaster (IPCC, 2012a). Climate damages are therefore determined by (at least) three components: the climate/ weather event, exposure, and vulnerability. This ‘triangular’ causal picture has important legal repercussions as we will see below. The inter-linkages of vulnerability, exposure, and climate events is discussed by the IPCC in its recent Special Report Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation in 2012. The report states clearly that: The character and severity of impacts from climate extremes depend not only on the extremes themselves but also on exposure and vulnerability. In this report, adverse impacts are considered disasters when they produce widespread damage and cause severe alterations in the normal functioning of communities or societies. Climate extremes, exposure, and vulnerability are influenced by a wide range of factors, including anthropogenic climate change, natural climate variability, and socioeconomic development [. . .] Disaster risk management and adaptation to climate change focus on reducing exposure and vulnerability and increasing resilience to the potential adverse impacts of climate extremes, even though risks cannot fully be eliminated  . . . Although mitigation of climate change is not the focus of this report, adaptation and mitigation can complement each other and together can significantly reduce the risks of climate change. (IPCC, 2012b)

Further developing the importance of understanding the intersection of climate change, exposure, and vulnerability, the following list includes some of the key points from the 2012 IPCC Special Report on Extreme Events (SREX): • Even without taking climate change into account, disaster risk will continue to increase in many countries as more people and assets are exposed to weather extremes. • Evidence suggests that climate change has changed the magnitude and frequency of some extreme weather and climate events (‘climate extremes’) in some regions already.

480   part v. climate change litigation • Climate change will have significant impacts on the severity and magnitude of climate extremes in the future. For the coming two or three decades, the expected increase in climate extremes will probably be relatively small compared to the normal year-to-year variations in such extremes. However, as climate change becomes more dramatic, its effect on a range of climate extremes will become increasingly important and will play a more significant role in disaster impacts. • High levels of vulnerability, combined with more severe and frequent weather and climate extremes, may result in some places, such as atolls, being increasingly difficult places in which to live and work. • A new balance needs to be struck between measures to reduce risk, transfer risk, (e.g. through insurance) and effectively prepare for and manage disaster impact in a changing climate. This balance will require a stronger emphasis on anticipation and risk reduction. • In this context, existing risk management measures need to be improved as many countries are poorly adapted to current extremes and risks, let alone those projected for the future. • Countries’ capacities to meet the challenges of observed and projected trends in disaster risk is determined by the effectiveness of their national risk management system. • In cases where vulnerability and exposure are high, capacity is low, and weather and climate extremes are changing, more fundamental adjustments may be required to avoid the worst disaster losses. • Any delay in greenhouse gas mitigation is likely to lead to more severe and frequent climate extremes. Exposure in this context can be understood as the presence of people, livelihoods, environmental services and resources, infrastructure, or economic, social, or cultural assets in places that could be adversely affected by climate impacts (IPCC, 2012a). Meanwhile, vulnerability refers to the propensity or predisposition to be adversely affected (IPCC, 2012a). In other words, vulnerability is defined as the extent to which natural or social systems are susceptible to sustaining damages from climate change (Verheyen, 2005). Exposure and vulnerability are dynamic, varying across temporal and spatial scales, and depending on economic, social, geographic, demographic, cultural, institutional, governance, and environmental factors (IPCC, 2012a). In order to effectively manage risk, it is essential to understand what determines vulnerability. The IPCC in its SREX report notes significant drivers of risk, which are particularly related to vulnerability. These include population growth, rapid and inappropriate urban development (the growth of megacities, especially in developing countries, for example, has led to the emergence of highly vulnerable urban communities, particularly through informal settlements and inadequate land management), international financial pressures, increases in socio-economic inequalities,

21. climate change and damages   481 Disaster

Vulnerability

CLIMATE Natural Variability

Anthropogenic Climate Change

Weather and Climate Events

DEVELOPMENT Disaster Risk Management

DISASTER RISK

Climate Change Adaptation

Exposure

Greenhouse Gas Emissions

Figure 21.2.  Illustration of the core concepts of SREX (IPCC, 2012a).21 and trends and failures in governance (e.g., corruption, mismanagement and environmental degradation) (IPCC, 2012a). Climate change damage is thus a broad term that is conditioned upon climate and/or weather events plus exposure and vulnerability of the affected state or community. Furthermore, it encompasses both residual damage and the risk of such damage. It has been suggested that it can be used synonymously with the terms negative climate change impacts, or injury, or harm (IPCC, 2012a; Tol and Verheyen, 2004). Figure 21.2 shows how the IPCC illustrated this interconnectedness.

3.4 Damage Assessment Damage assessment is part of risk assessment, and its goal is to measure, mostly in monetary terms, the impact of disasters on the society, economy, and environment of the affected country or region in order to estimate the cost of a specific event, 21   The report evaluates the influence of natural climate variability and anthropogenic climate change on climate extremes and other weather and climate events that can contribute to disasters, as well as the exposure and vulnerability of human society and natural ecosystems. It also considers the role of development in trends in exposure and vulnerability, implications for disaster risk, and interactions between disasters and development. The report examines how disaster risk management and adaptation to climate change can reduce exposure and vulnerability to weather and climate events and thus reduce disaster risk, as well as increase resilience to the risks that cannot be eliminated. Other important processes are largely outside the scope of this report, including the influence of development on greenhouse gas emissions and anthropogenic climate change, and the potential for mitigation of anthropogenic climate change (IPCC, 2012a).

482   part v. climate change litigation either actual (post-impact) or hypothetical (ECLAC, 2003). In practice, damage assessments usually quantify physical and economic past or future impacts of an event, while less attention is paid to social, environmental, or psychological damage embedded in disasters (Kelly, 2008). Since important social and environmental aspects of loss and damage, such as cultural heritage, environmental qualities, and governance and trust, cannot be easily quantified, it has been suggested that qualitative approaches such as community-based disaster risk management (DRM) and vulnerability capacity assessment should complement other existing approaches. While these approaches might be helpful in reducing the risk of damages, they might not prove to be particularly promising in the context of compensation litigation. As mentioned above, compensation includes both monetary and moral damage. The Damage and Loss Assessment Methodology defines damage as the monetary value of partially destroyed assets, assuming that the assets will be replaced in the same condition—in quantity and quality—as before the disaster (ECLAC, 2003). Losses are defined as changes in the flow of goods and services that will not be forthcoming until the destroyed assets are rebuilt, over the timespan that elapses from the occurrence of the disaster to the end of the recovery period.

3.5 Costs of Damage Prevention Material damage includes all potential losses in infrastructure, property, and other clearly defined economic assets, including costs incurred in preventing of and responding to pollution damage. Such damages—taken literally—include also any adaptation measure against the adverse effects of climate change. Adaptation measures are means of preventing or alleviating pollution damage (and other types of expected damage). Such measures can come before and/ or after an environmental change has occurred—that is, as ex ante and ex post behaviour. In any case, adaptation measures aim at reducing the impact of climate change and limiting potential losses. If, however, the international wrongful act has been established, then such adaptation measures as applied by the affected state cannot be seen as a reason for reducing a reparation claim. Rather, costs that occurred when trying to limit the damaging effect of the wrongful act are part of the material damage. In the context of climate change, material damages will be easier to define and to assess in financial terms than purely environmental or ecological damages. This section has shown that, despite the slow progress in developing a definition of climate change damages under the UNFCCC, other processes have been helpful in framing the issue. In particular the IPCC Special Report on Extreme Events (SREX) provides a methodological framework for assessing exposure and vulnerability to weather and climate events. The report examines how disaster risk

21. climate change and damages   483 management and adaptation to climate change can reduce exposure and vulnerability to weather and climate events and thereby reduce disaster risk, as well as increase resilience to the risks that cannot be eliminated.

4.  Causation and Contribution In order to establish legal responsibility for climate change damages, it is further necessary to prove that there is a causal link between the activity and the climate event that leads to the occurring damage.

4.1 General Causation Because of the multiplicity of factors in the causal chain, it is useful here to distinguish between general causation and specific causation. The first type refers to a general link between increasing anthropogenic greenhouse gas emissions and a climate change event. This causation chain is not discussed here as almost universal international scientific consensus exists on these issues; specific causation is discussed in detail below (IPCC, 2013).

4.2 Specific Causation The other critical element is the causal link between a specific climate22 or weather event, such as a drought or flood or typhoon, and the resulting damage. As we have seen above, the character and severity of impacts from extreme climate events depend not only on the events themselves but also on the level of exposure and vulnerability of communities or societies. Climate events, whether extreme events or slow onset changes per se, do not alone determine the extent of the damage. The most severe forms of damage are likely to occur where the climate event hits places with high risk for such damages, that is places with high exposure and vulnerability levels to such impacts. The relative importance of the underlying physical and social determinants of risk of damages varies with the scale of the climate event and the levels of exposure and vulnerability. Potentially negative consequences of climate events can be moderated in important ways (though rarely eliminated   This part draws upon Voigt’s State Responsibility for Climate Change Damages (Voigt, 2008).

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484   part v. climate change litigation completely) by implementing corrective disaster risk management strategies that are reactive as well as anticipatory, adaptive, and sustainable (IPCC, 2012a). In other words, climate damage occurs where adaptive, transformative governance strategies to reduce exposure and vulnerability and increase resilience have failed or were missing altogether. This issue and its legal implications will be discussed in more detail below.23 Specific causation requires proof that a specific activity causes a specific damage. The fact that a polluting activity was not prohibited domestically is irrelevant in this context (Birnie et al, 2009). The near impossibility of attributing emissions of a specific country to specific damages, due to the complex and synergetic effect of the diverse pollutants and polluters and the non-linearity of climate change, is problematic (Allen, 2007). It has been claimed that causation cannot be proven even in cases of long range air pollution, where the damage is due to multiple sources and where the single emitters cannot be clearly identified or where no one behaviour is sufficient to bring about the injury in itself. The ‘but for test’ or condition sine qua non formula generally applied to establish causation is of limited use in these situations. This test implies that a causal connection exists between a particular act and an injury when the injury would not have arisen but for the act. As said above, climate change damage occurs as a result of many interacting causes. Singling out increasing greenhouse gas concentrations in the atmosphere as an indispensable condition may thus not always be possible. However, multiple causes are not generally an impediment for establishing causation. In Trail Smelter, multiple causes did not deter the tribunal in its award of damages. Rather, the fact that the injury was at least partially caused by the polluting activity of the smelter in Trail, Canada, appeared to be sufficient. However, as shown above, when it comes to climate change damages, the situation is much more complex. The question is whether legal theory is able to develop innovative theories that can deal with increasingly complex causation questions or whether legal doctrine stops at this point. Some suggestions could be made in this context. There are at least two ways to approach causation: first, causation could be established on the sole basis of contribution (for example expressed in percentage of contribution to overall, global greenhouse gas emissions) to the problem of climate change by a specific actor. The question how much damage might have been caused by this contribution is irrelevant in this respect; it will, however, play a role at the stage of apportioning costs (Voigt, 2008). Second, as Verheyen has argued, any emission of greenhouse gases could be recognized as having increased the risk (Risikoerhöhungslehre) of a specific damage by contributing to the increased concentrations of greenhouse gases in the atmosphere (Verheyen, 2005).

  See 4.5, below Contribution to the Injury and Concurrent Causes.

23

21. climate change and damages   485 Still, in the absence of an agreed approach in international law on the determination of causation, it is not clear how a court or tribunal would deal with the issue of complex and cumulative causes. Most likely is the recourse to principles found in domestic legal systems, but even at that level there is no coherence regarding the applicability of causation theories.

4.3 Standard of Proof It is further difficult to ascertain when a piece of evidence will be accepted by an international court or tribunal as sufficient to meet the required standard of proof to establish causation. This issue is particularly pertinent in the case of climate change damages due to the non-linearity of the climatic system, which inherently involves uncertainty. There is no evidence that full proof would be required. In Corfu Channel, the first case brought before the International Court of Justice, the Court indicated that proof based on the ‘balance of probabilities’ would suffice (Corfu Channel, 1949). Still, the quantum of proof required might differ from forum to forum and from case to case. The International Tribunal of the Law of the Sea’s recent reliance on the precautionary principle to establish the standard of proof in the Southern Bluefin Tuna case demonstrates one way in which the standard of proof varies across fora when they confront complex causation questions (Southern Bluefin Tuna, 1999). In this case, the principle was used to lower the standard of proof in situations where the complexity of facts leads to a degree of uncertainty (Corfu Channel, 1949). Still, the relationship between the precautionary principle and the law on state responsibility is not settled. Therefore, it might only be suggested that using the principle in the context of standard of proof or even reversal of proof might ease otherwise heavy burdens placed on the harmed state which has to establish causation.

4.4 Break of the Causal Chain? Another challenge to ‘legal’ causation is the lack of directness between cause and effect due, in significant part, to a multitude of interfering physical and chemical processes. In fact, increasing greenhouse gas concentrations in the atmosphere trigger other natural processes which then bring about the injury. One such example of long and complex causation chains is increasing greenhouse gas concentration in the atmosphere, which lead to increasing surface air temperatures, those temperatures increase ocean temperatures which again interfere with air currents and lead to stronger and more frequent storms. Such storms can lead to very different scales of damage to coastal communities, depending on the level of care that has been taken in planning and developing housing adapted to such

486   part v. climate change litigation conditions—as exemplified in 2013 by Typhoon Hiyan which caused tragic devastation and loss of human lives in the Philippines, while causing comparatively minor damages in neighbouring countries. While, of course, the strength of the storm was reduced by the time it hit other countries, the high toll the Philippines had to pay was partly due to inadequate housing and high population concentrations in exposed areas. It is, however, accepted in international jurisprudence that ‘it matters not how many links there may be in the chain of causation’, connecting the wrongful act with the injury sustained ‘provided there is no break in the chain’ (Mixed Claims Commission, 1956). Still, it remains rather unlikely that a specific hurricane might be caused by emissions from a specific country, despite their disastrous effects. The general causal chain between greenhouse gas emissions and other climate change impacts, such as land inundation by rising sea levels or loss of permafrost soil and sea ice, is probably easier to establish than the more specific causation between a climate change impact and the damage that has occurred. Although there might be ‘many links’ connecting greenhouse gas emissions to the resulting impacts, there is, arguably, no break in the general causality chain. However, this view depends on a better scientific understanding of the causes and effects of climate change and the reflection of this understanding within the law. When it comes to specific causation, the situation is less clear. International tribunals have held governments responsible only for proximate and foreseeable causes of their acts and have denied compensation for remote consequences (Cheng, 1953). Also, the International Law Commission suggests a ‘proximate cause’ to restrict causation—while failing to define how this criterion might be applied in a specific case. The proximate criterion does not seem to provide any substantial help with regard to climate change damages. All anthropogenic greenhouse gas emissions are in principle equally ‘proximate’ to the resulting chain of causation leading to ‘climate change damages’. However, in some cases there are intervening forces that break the change of causation (e.g., are superseding). The circumstances on which causation will develop will vary from case to case. In all cases, however, causation can only be established by a thorough understanding of the underlying science as well as of the geographical, political, economic, and other circumstances.

4.5 Contribution to the Injury and Concurrent Causes In legal proceedings involving reparation for damages, account needs to be taken of the contribution of the injured state to the harm. This issue is regulated in Article 39 ASR which states that where the claimant has, through wilful or negligent behaviour or omission, contributed to the injury, the extent of the reparation must be adjusted accordingly. Contribution to the damage will, therefore, not lead to an exculpation of the wrongful act, but may limit the legal consequences flowing

21. climate change and damages   487 from it accordingly. This could result in burden sharing between the injured ­country and the country partially responsible for the injury (Tol and Verheyen, 2004). In the case of climate change damages, the injured state will also have emitted greenhouse gases to some extent and thereby will be partly responsible for the ensuing damage. Depending on the extent of the injured country’s own contribution to greenhouse gas emissions, the amount of compensation may be reduced accordingly. While the actual contributions to the cause of extreme climate events in terms of greenhouse gas emissions might nevertheless be small for large parts of developing countries, the injured country’s contribution might be an increase in risk for climate disasters. Legal proceedings involving climate change damages, thus, are much more complex than just ‘victim states’ claiming injury by states that are major emitters of greenhouse gases. As we have seen above, climate damages come about by the interplay of different factors: (1) climate impacts (e.g. storms, floods, droughts, etc.), (2) exposure, and (3) vulnerability of the affected community or state. These again are influenced by a wide range of factors, including anthropogenic climate change, natural climate variability, and socio-economic development. High vulnerability and exposure are generally the outcome of non-sustainable development processes, such as those associated with environmental mismanagement, demographic changes, rapid and unplanned urbanization in hazardous areas, failed governance, corruption, and the scarcity of livelihood options for the poor (IPCC, 2012a). This issue can be captured as ‘concurrent causes’. Concurrent causes are conditions for damages that are not the result of the internationally wrongful act. In the context of climate damages, concurrent causes are those causes that lead to climate damages but which are not related to climate events per se, such as drought, floods, storm surges, etc. Consequently, concurrent causes are those causes that increase the risk of damage when a climate event occurs. As mentioned above, causes like environmental mismanagement, corruption, elite capture, and other governance failures, unsustainable agricultural practices, and inadequate land planning and management through the rapid growth of megacities and informal settlements, have led to highly vulnerable urban and rural communities in many states and, thus, potentially function as concurrent causes of climate change damages. In a claim for climate change damages, these concurrent causes will almost certainly have to be taken into account by any court or tribunal. They also need to be taken into account when designing the international framework for ‘loss and damages’ under the UNFCCC. Concurrent causes play an important role in the question of causation. These causes have rendered human and natural systems vulnerable, with climate change only providing additional stress (Verheyen, 2005). The legal question at stake is whether increased climate vulnerability as a concurrent cause (which is not the result of an internationally wrongful act) limits a state’s entitlement to recover climate losses and damages.

488   part v. climate change litigation This question cannot be answered in general terms. Much depends on the facts of the individual case and the extent of the injured country’s own contribution. In principle, a line can be drawn where the injured state’s contribution amounts to contributory negligence or contributory fault. In common-law jurisdictions contributory negligence can function as a partial or full affirmative defence to a claim based on negligence, an action in tort. It applies to cases where plaintiffs/ claimants have, through their own negligence, contributed to the harm they suffered. International law recognizes the relevance of contributory fault to discussions of causation and concurrent causes, treating it as a factor that potentially reduces the amount of compensation (Bedermann, 1989).24 The current predominant approach centres on the apportionment of liability for damages between the claimant and the defendant where the claimant’s fault has materially added or contributed to the loss or damage sustained by the claimant due to the conduct of the defendant (Bedermann, 1989). The concept of contributory fault can also be linked to the concepts of inadequate assessment of risk and assumption of risk where ‘a victim evidenced an understanding of a dangerous situation and voluntarily encountered it’. In international legal practice, the relevance of contributory fault has arisen in situations where the victim’s conduct was unlawful, negligent, or imprudent. In the latter instances, a test of reasonableness has been employed to determine whether the victim’s conduct amounted to comparative negligence. The PCIJ in SS Wimbledon and the ICJ in La Grand were both confronted with conduct of the claimant in determining the form and amount of reparation and recognized forms of contributory fault (SS Wimbledon, 1923; La Grand, 2001). The ILC Articles on State Responsibility similarly recognize the relevance of contributory fault in the determination of reparation. Article 39, ‘Contribution to the injury’, reads as follows: In the determination of reparation, account shall be taken of the contribution to the injury by wilful or negligent action or omission of the injured States or any person or entity in relation to whom reparation is sought.

Article 39 embodies a restrictive notion of contributory fault, in the sense that it does not completely negate the state responsibility of the state conducting the internationally wrongful act. It merely foresees that the contribution to the injury by wilful or negligent conduct of the injured state may influence the ‘form’ and ‘extent’ of reparation. To be taken into account, the victim’s conduct must involve ‘a lack of due care . . . for his or her own property or rights’ (Crawford, 2002). When contributory fault is established, the compensatory award is to be reduced proportionally with the injury caused by the injured state (Ripinsky and Williams, 2008). 24   For an overview see also, Damages in International Investment Law, British Institute of International and Comparative Law (Ripinsky and Williams, 2008).

21. climate change and damages   489 The ILC in its report of the 53rd session made clear that ‘international practice and the decisions of international tribunals do not support the reduction or attenuation of reparation for concurrent causes, except in cases of contributory fault’ (ILC, 2001d). Consequently, in cases of contributory fault, and provided that ‘part of the injury can be shown to be separable in causal terms from that attributed to the responsible State’, the responsible state will not be held liable for all consequences, and the amount of reparation will be reduced in proportion to the injured state’s own contribution. If the ILC’s view and international legal practice were to be applied in the context of climate change damages, it would need to be investigated to what extent the injured state has acted with a lack of due care. If the country where the damage occurred did not address drivers of vulnerability, such as those mentioned above, and thereby increased the risk for climate disaster, contributory fault might be established. This determination needs to be based on the individual circumstances of the particular case and the capacities of the injured state. Such determination would also have to take into account the principle of common but differentiated responsibility and respective capabilities, acknowledging that different countries have different capacities to reduce their vulnerability through implementing effective adaptation measures, yet all have a shared responsibility to do so. To summarize, it can be stated that the existence of concurrent causes in the form of increased vulnerability can limit an injured state’s entitlement to recover compensation if such causation rises to the level of contributory and comparative fault.

5.  Summary and Conclusions This chapter has shown that international law has been dealing with transboundary damages, more or less since its inception. Damages, whether material or immaterial, have been subject to many inter-state disputes judged upon by international courts and tribunals. Environmental transboundary damages are a somewhat newer phenomenon. They include damages to natural resources, but also air, water, land, flora, and fauna. In general, damages need to be financially assessable in order to be recoverable. One challenge, however, is to quantify intrinsic ecological damages, such as destruction of coral reefs, ecosystem changes, or reduction or loss of biological diversity. In cases where compensation has been awarded for ‘purely’ environmental damages, payments

490   part v. climate change litigation have been directed to reimbursing the injured state for expenses incurred in preventing or remedying pollution damages. Climate change damages elevate the legal discussion around quantification, responsibility, and compensation to a whole new level of complexity. As we have seen, adverse effects of climate change are defined as ‘changes in the physical environment or biota resulting from climate change which have significant deleterious effects on the composition, resilience, or productivity of natural or managed ecosystems or on the operation of socio-economic systems or on human health and welfare’.25 It is expected that climate change will severely impact natural ecosystems as well as societies and economies. Despite the general acceptance of ecological damages in international law, it still remains questionable whether such damage is capable of being measured by factual and objective standards. In this regard, legal development might be necessary in order to capture fully such damages. Moreover, in the context of climate change it is important to understand that the actual impacts of climate events on ecosystems and socio-economic systems depends only partly on the climate event itself. The impact will also be defined by the extent of risk to human and natural systems. Key determinants of risk are exposure and vulnerability to climate events. Exposure and vulnerability are dynamic, varying across temporal and spatial scales, and depending on social, economic, geographic, demographic, cultural, institutional, governance, and environmental factors. With respect to possible reparation claims, this aspect needs to be taken into account and could result in burden sharing between the injured country and the country partially responsible for the injury. High exposure and vulnerability of socio-economic systems as contributors to the extent of impact to these systems are often the result of environmental mismanagement, unsustainable agricultural policies, inadequate land management, and rapid urban growth including in informal settlements. These factors function as concurrent causes of climate change damages and will almost certainly be taken into account by any court or tribunal and may limit the injured states’ entitlement to recover their losses. The question as to which extent such reduction of entitlement might occur cannot be answered in general terms. The determination needs to be based on the assessment of due diligence of the injured state as well as the individual circumstances of the particular case and country. Such determination would also have to take into account the principle of common but differentiated responsibilities and respective capabilities, acknowledging that different countries have different means and ways to reduce exposure and vulnerability. Yet all states share the responsibility to do so. It is in this context, that the importance of implementing effective adaptation measures and comprehensive risk management strategies come in. It is crucially   See Article 1(1) UNFCCC.

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21. climate change and damages   491 important that countries prone to climate change damages design and implement effective adaptive strategies—and that the necessary and adequate financial, technological, and capacity means are provided. After all that has been said, it remains to point out that international law today does not comprise readily all of the answers to dealing with climate change damages. Indeed, given its global and complex nature, global climate change requires new approaches (Xue, 2003). Especially with respect to issues of causation, burden of proof, and the use of the precautionary principle, new thinking and legal development are necessary if international law is to be equipped to deal with complex global challenges such as climate change. The development of treaty regimes with stricter and more effective standards needs to complement the general law on state responsibility. Indeed, the issue of transboundary climate change damages demonstrates that, in today’s world, where it is said that the membrane of sovereignty has become porous, concerted, effective international action for the protection of the atmosphere and a safe global climate becomes essential—and very urgent (Xue, 2003).

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21. climate change and damages   493 Kelly C. (2008). Damage, Needs or Rights?: Defining What is Required After Disaster, Benfield UCL Hazard Research Centre Disaster Studies and Management - Working Paper no. 17, July 2008. Kroner R.P. (ed). (1993). Transnational Environmental Liability and Insurance. Springer: Berlin. La Grand. (2001). (Germany v United States of America) (Merits). ICJ Rep. 466, para 57. Lefeber, R. (1996). Transboundary Environmental Interference and the Origin of State Liability Kluwer International Law: The Hague; London; Boston. Legality of Nuclear Weapons. (1996). ICJ Rep. Mixed Claims Commission. (1956). War Insurance Premium Claim, Administrative Decision No. II, VII RIAA 29. MOX Plant case (Ireland v UK). Suspension of Proceedings on Jurisdiction and Merits, and Request for Further Provisional Measures, Order No. 3, PCA, 24 June 2003, 42 ILM 1187 (2003). Nuclear Tests I and II. (1974). ICJ Rep. 457. Nuclear Test II. (1995). ICJ Rep. 288. Okowa P. N. (2000). State Responsibility for Transboundary Air Pollution in International Law. Oxford University Press. Pelling, M. (2010). Adaptation to Climate Change: From Resilience to Transformation. Abingdon: Routledge. PCIJ. (1927). Ser. A, No 17, 47. Phosphate Lands in Nauru. (1992). ICJ Rep. 240, 243. Pulp Mills on the River Uruguay. (2010). ICJ Rep. 56 para 101. Randelzhofer A. and Tomuschat C. (1999). State Responsibility and the Individual: Reparation in Instances of Grave Violations of Human Rights. Kluwer Law International: The Hague. RIAA. (1957). Vol. 12 p. 303. Ripinsky S. and Williams K. (2008). Damages in International Investment Law. British Institute of International and Comparative Law. Ruud M. and Ulfstein G. (2011). Innføring i folkerett (4th edn). Oslo: Universitetsforlaget. Sands P. and Peel J. (2012). Principles of International Environmental Law. Cambridge: Cambridge University Press. Siders A. (2002). Bangladesh Argues for ICJ Hearing on Climate Change, Climate Law Blog— Center for Climate Change Law, Columbia Law School, see (accessed 18 August 2015). SS Wimbledon. (1923). PCIJ report, Ser. A, No. 1, 15. Stephens T. (2009). International Courts and Environmental Protection, Cambridge University Press. Tanzi A. (1987). ‘Is Damage a Distinct Condition for the Existence of an Internationally Wrongful Act?’, in United Nations Codification of State Responsibility (Spenedi M., and Simma B., eds). New York: Oceana. The Southern Bluefin Tuna cases. (1999). (New Zealand v. Japan; Australia v. Japan): International Tribunal For The Law Of The Sea, Order For Provisional Measures of 27 August 1999. Tol R.S.J. and Verheyen R. (2004). ‘State responsibility and compensation for climate damages—a legal and economic assessment’, 32 Energy Pol’y, 1110. Trail Smelter case. (1905). (U.S./Ca.) 3 RIAA., reprinted in 35 AJIL 684 (1941). 1965.

494   part v. climate change litigation UN Conference on Environment and Development. (1992). Rio Declaration on Environment and Development, see (accessed 18 August 2015). UNFCCC. (2011). Decision 1/CP.16, paragraphs 25–29. UNFCCC. (Oct. 2012). Background paper to the expert meeting on: A range of approaches to address loss and damage associated with the adverse effects of climate change, including impacts related to extreme weather events and slow onset processes, see (accessed 18 August 2015). UNFCCC. (2012a). Decision 3/CP.18. UNFCCC. (2012b). Current knowledge on relevant methodologies and data requirements as well as lessons learned and gaps identified at different levels, in assessing the risk of loss and damage associated with the adverse effects of climate change, Technical Paper, FCCC/TP/2012/1. UNFCCC. (2013). Decision 20/CP.19, Warsaw international mechanism for loss and damage associated with climate change impacts, paragraph 2. UN General Assembly. (2001). Annex to General Assembly resolution 56/83, and corrected by document A/56/49(Vol.)/Corr.4. UN General Assembly. (2006). Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law, UN Doc. A/RES/60/147 21. UN News Center. (2011). Palau seeks UN World Court opinion on damage caused by greenhouse gases, see (accessed 18 August 2015). Utton A.E. (ed). (1973). Pollution and international Boundaries: United States-Mexican Environmental Problems. University of New Mexico Press. Verheyen R. (2005). Climate Change Damage and International Law. Brill: Leiden. Voigt C. (2008). ‘Climate Change Damages and State Responsibility’, 77 NJIL 1–22. Walsh B. (2013). Greenhouse Effect: CO2 Concentrations Set to Hit Record High of 400 PPM, Time, see (accessed 18 August 2015). Watt-Cloutier S. (2005). ‘Petition to the Inter-American Commission on Human Rights Seeking Relief from Violations Resulting from Global Warming Caused by Acts and Omissions of the United States’, see < http://www.ciel.org/Publications/ICC_Petition_7Dec05.pdf>. Willisch J. (1987). State Responsibility for Technological Damage in International Law. Berlin: Duncker and Humboldt. Wong J. (2013). ‘The compensatory nature of moral damages in investor-state arbitration’, in Perspectives on topical foreign direct investment issues, Vale Columbia Center on Sustainable International Investment, No. 88, see (accessed 18 August 2015). World Environment New. (2002a). ‘US faces legal battles as climate bogeyman’, see (accessed 18 August 2015). World Environment News. (2002b). ‘Tuvalu seeks help in US global warming lawsuit’, see  (accessed 11 November 2015). Xue H. (2003). Transboundary Damage in International Law. Cambridge: Cambridge University Press.

Chapter 22

HUMAN RIGHTS AND CLIMATE CHANGE BROADENING THE RIGHT TO ENVIRONMENT

Philippe Cullet

1. Introduction

496

2. The Climate Regime and Human Rights

498

3. Human Rights Perspectives on Climate Change

500

4. Climate Change Considerations in Human Rights Policy and Practice

503

5. The Human Right to Environment and Climate Change

506

6. Limitations of Addressing Climate Change through the Human Right to Environment

509

7. Rethinking the Framework for Addressing Climate Change in Human Rights Terms: Reviving Solidarity Rights

510

8. Conclusion

514

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1. Introduction The relationship between climate change and human rights has been described as ‘far from self-evident’.1 Yet, since the second half of the last decade, the relationship has attracted significant attention.2 The introduction of a human rights perspective to climate change debates is important because it provides an entry point to integrating more effectively human needs and concerns, something that the State-based international climate change regime has not been able to do satisfactorily. International environmental law includes instruments that embrace the human dimensions of environmental issues, as reflected, for instance, in the definition of sustainable development adopted in the Johannesburg Declaration on Sustainable Development at the Johannesburg World Conference on Environment and Development in 2002.3 Recognition by the international community about the human impacts from climate change has generated useful discussion on how a human rights perspective on climate change can lend additional value to the environmental perspective.4 Further, the question arises as to whether individual human rights can provide a suitable answer to an issue such as climate change, which requires significant collective action.5 Human rights constitute the branch of international law that can provide the most effective additional lens needed to highlight the glaring shortcomings of the climate change regime.6 This is probably most evident in how the realization of human rights is currently impeded due to the impacts of ongoing climate change, such as in the case of extreme weather events. At the same time, it is also vital to consider the human rights consequences of climate change mitigation actions. Indeed, the climate change regime may itself facilitate undesirable human rights impacts that can impede the realization of human rights or contribute to human rights violations.7  United Nations Office of the High Commissioner for Human Rights, Climate Change and the Human Rights to Water and Sanitation—Position Paper (United Nations Office of the High Commissioner for Human Rights, 2009). 2  For example, see International Council on Human Rights Policy, Climate Change and Human Rights—A Rough Guide (Geneva: ICHRP, 2008). 3  Johannesburg Declaration on Sustainable Development, 4 September 2002, UN Doc. A/CONF.199/20 (2002). 4  Daniel Bodansky (2010), ‘Introduction: Climate Change and Human Rights: Unpacking the Issues’, 38 Ga. J. Int’l & Comp. L. 511. 5   Ole W. Pedersen (2011), ‘The Janus-Head of Human Rights and Climate Change: Adaptation and Mitigation’, 80/4 Nordic J. Int’l L. 403. 6   On the climate change regime, see Daniel Bodansky, ‘The History of the Global Climate Change Regime’ in Urs Luterbacher and Detlef F. Sprinz (eds.), International Relations and Global Climate Change 23 (Cambridge, Mass: MIT Press, 2001). 7   Naomi Roht-Arriaza (2010), ‘Human Rights in the Climate Change Regime’, 1/2 J. Hum. Rts & Env. 211. 1

22.  human rights & climate change    497 Inversely, climate change provides a very interesting conduit to consider human rights in a broader context that builds on the existing recognition of the human right to environment in various countries and regions of the world,8 while extending the human rights discourse through the unavoidable global perspective inherent in any climate change discussion. Such a global perspective is not present in general human rights debates. Where climate change impacts are global but not equally distributed, there is a need to take into account the interaction between individuals and States in the face of climate change.9 This makes the inquiry all the more interesting. Indeed, the human rights framework is largely focused on the recognition of individual entitlements and on the relationship between an individual and a State. Considering human rights in the transnational and thus globalized context of climate change requires looking beyond the parameters of the human rights framework. This chapter first looks at the points of intersection between the climate change and human rights regimes. It starts by examining the extent to which the climate change regime has recognized and addressed the human rights dimensions of climate change. It then looks at the way in which the human rights regime has considered climate change in general terms and some of the answers that have been offered to date in specific situations, in particular responses to the impacts of climate change aimed to further the realization of human rights. This chapter then moves on to examining the human right to environment, which provides in effect the underlying conceptual framework for considering the link between human rights and climate change. Indeed, in a context where climate change is but one of many global environmental issues and where the climate change regime is part of the corpus of international environmental law,10 it is appropriate to examine the extent to which the evolving debate on a right to environment can be used in the context of climate change. The last section of this chapter addresses the limited scope of the human right to environment as currently recognized directly and indirectly at the national and regional levels. It proposes that the way forward is to go back to the notion of solidarity rights within which the human right to environment was first suggested a few decades ago. While solidarity rights proved to be ahead of their time in the 1980s, they should be reconsidered in the context of searching for effective responses to climate change beyond what can be accomplished at the national and regional levels.

  See n 56 for further details.   Stephen L. Kass (2009), ‘Integrated Justice: Human Rights, Climate Change, and Poverty’, 18 Transnat’l L. & Contemp. Probs. 115. 10   Pedersen (2011) at 406 noting that ‘[t]‌he relevant human rights obligations arising out of climate change are not exclusively relevant to climate change as such’. 8

9

498   part v. climate change litigation

2.  The Climate Regime and Human Rights Climate change has become over the past decade the pre-eminent environmental policy issue at the international level. Its prominence is rooted in the global nature of the problem and the impossibility for any one State or groups of States to address it in the absence of full global cooperation. This also reflects the all-encompassing nature of climate change as an environmental problem under which many other environmental concerns can be subsumed. The importance given to climate change by an increasing number of actors has ensured that climate change is now an issue debated in multiple fora. This has generated greater awareness of the need for urgent and significant action—action to mitigate further sources of greenhouse gas emissions and to adapt to ongoing climate change impacts. At the same time, the pre-eminent focus on climate change has marginalized other environmental issues. Further, while climate change is understood and addressed by States at all levels, the global dimension often seems to prevail in the public’s and policy-maker’s imagination. This is problematic because while local thinking is directed towards specific environmental issues, global problems are understood in terms of climate change. The conceptualization of climate change as a global issue together with the traditional structure of international environmental law, which is framed as State-based obligations, diverts the focus of the climate regime away from direct human rights considerations. There is indeed no mention of human rights in the two constitutive instruments of the climate change regime, the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.11 This is not to say that the climate change regime, any less than other international environmental regimes, entirely fails to consider human impacts. In fact, the climate change regime is particularly progressive in emphasizing the fact that States, and by consequence their citizens, are differentially vulnerable in the face of climate change. The more vulnerable countries are often the poorest.12 The link between vulnerability and poverty constitutes one of the reasons why the climate change regime was built from the outset around the need to ensure equity between developed and developing countries. This translates into the principle of common but differentiated responsibilities (CBDRs) that recognizes that climate change must be   United Nations Framework Convention on Climate Change, 9 May 1992 and the Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 11 December 1997, 2303 UNTS 148. 12   Roht-Arriaza (2010) at 211 noting that ‘effects will not fall equitably—the poorest and most vulnerable people, those with fewest resources and who are most dependent on natural ecosystems for survival, will suffer the most severe impacts’. 11

22.  human rights & climate change    499 seen in the context of the historical contributions to its creation and the different capacities of States to respond to it. The inequities of climate change impacts can open the door, at least conceptually speaking, to accounting for a human rights perspective.13 Despite the obvious links with human rights, the architects of the climate change regime, including States, refrained from addressing human rights. The climate change regime’s first acknowledgment of a link occurred in reaction to developments in human right. This can be found in the preamble to the Cancún Agreements.14 The Conference of the Parties to the UNFCCC notionally declared ‘that Parties should, in all climate change related actions, fully respect human rights’.15 One of the aspects of the emergence of human rights considerations in the climate change regime is the attention to the impacts of climate change on the realization of human rights. In other words, this concerns the human rights impacts caused by climate change.16 Yet, there is relatively little on human rights in the climate change regime beyond the declaratory statement by the Conference of the Parties. Evidence of this can be seen in the context of specific mechanisms developed under the climate change regime such as the Clean Development Mechanism (CDM). The Executive Board under the CDM has resisted examining human rights impacts of projects17 that have an adverse impact on the realization of affected people’s human rights.18 The climate change regime has demonstrated superficial links between climate change and human rights. This is not surprising when considering that international environmental law and policy-making is traditionally focused on the obligations of States. At the same time, other environmental treaties have forged links between environmental and human rights law. The Århus Convention that contains a series of procedural individual rights guaranteeing access to 13   Margaretha Wewerinke (2014), ‘The Role of the UN Human Rights Council in Addressing Climate Change’, 8/1 Hum. Rts & Int’l Leg. Discourse 10. 14   UNFCCC, Decision 1/CP.16, ‘The Cancún Agreements: Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention’, Report of the Conference of the Parties on its sixteenth session, held in Cancún from 29 November to 10 December 2010, UN Doc. FCCC/CP/2010/7/Add.1 (Cancún Agreements). The last paragraph of the preamble states:

Noting resolution 10/4 of the United Nations Human Rights Council on human rights and climate change, which recognizes that the adverse effects of climate change have a range of direct and indirect implications for the effective enjoyment of human rights and that the effects of climate change will be felt most acutely by those segments of the population that are already vulnerable owing to geography, gender, age, indigenous or minority status, or disability. 16   UNFCCC, Decision 1/CP.16 (2013) para 8.   Roht-Arriaza (2010) at 226.   For instance, in the case of forestry projects that lead to displacement. Olivier de Schutter (2011), ‘The Green Rush: The Global Race for Farmland and the Rights of Land Users’, 52 Harv. Int’l L.J. 503, 523 (2011). 18   Hans Morten Haugen (2013), ‘What Role for Human Rights in Clean Development Mechanism, REDD+ and Green Climate Fund Projects?’, 1 Nordic Environmental Law Journal 51. 15

17

500   part v. climate change litigation information, participation, and access to justice is a case in point.19 Lessons from the Århus Convention provide a model for integrating human rights into the climate change regime.

3.  Human Rights Perspectives on Climate Change International human rights law goes beyond other areas of international law by providing a framework wherein individuals are the subject of its obligations. As a result, a human rights approach to climate change can contribute to addressing questions that environmental law has failed to address effectively.20 Concerns about the protection of human rights arise both in the context of mitigating and adapting to climate change. The climate change regime has emphasized, up to now, mitigation, which does not present human rights challenges directly. Human rights debates tend to focus more on adaptation. There are good reasons for this. Indeed, adaptation is the part of the climate change regime that focuses on the impacts caused by climate change, which includes the human rights consequences of climate change-induced natural disasters. The negative consequences of climate change for human rights protection are more easily identifiable. There is a wide range of human rights affected by climate change impacts. The rights that are often discussed in this context are the rights to food, health, and water.21 Other rights, however, such as the right to property—recognized in several human rights treaties22—can also be at risk due to climate change. More remotely, but still grave, is the potential curtailment of civil and political rights that may occur due to the civil unrest caused by climate change-induced chaos. Where mitigation is concerned, the concerns relate to the impacts of climate on human rights in the longer term. These include, for instance, the threat to   Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, Århus 25 June 1998, (1999) 2161 UNTS 447; 38 ILM 517. 20   Svitlana Kravchenko (2010), ‘Procedural Rights as a Crucial Tool to Combat Climate Change’, 38 Ga. J. Int’l & Comp. L. 613. 21   Laura Westra (2010), ‘Climate Change and the Human Right to Water’, 1/2 Journal of Human Rights and the Environment 161, Columbia Law School—Human Rights Institute, Climate Change and the Right to Food—A Comprehensive Study (Berlin: Heinrich Böll Foundation, 2009). 22   European Convention for the Protection of Human Rights and Fundamental Freedoms, Rome, 4 November 1950 (1950) ETS5; 213 UNTS 221, Protocol 1, Article 1, and American Convention on Human Rights, San José, 22 November 1969, (1969) 1144 UNTS 123; 9 ILM 99, Article 21. 19

22.  human rights & climate change    501 the realization of the right to water caused either by saline ingress in the case of rising sea levels in coastal areas or by diminishing water availability in the case of reduced snow cover affecting river flows. Efforts at mitigation raise the question of achieving the proper balance between measures taken to mitigate climate change and the realization of human rights. Thus, mitigation should not undermine the progressive realization of socio-economic rights.23 For instance, any measures to reduce coal-based electricity generation must be accompanied by measures to ensure the sufficient access to electricity for people who normally do not have it. There is no reason why adaptation should be privileged in a human rights debate relating to climate change. Looking at human rights through an adaptation lens has the disadvantage of focusing more on addressing immediate crises and its negative impacts on the realization of human rights.24 Addressing human rights through mitigation is just as important, if not more so, because it provides the basis for taking forward-looking measures that may contribute to the realization of human rights in the long term. Mitigation and adaptation actions are obviously crucial and must be considered together. Indeed, the argument that mitigation and adaptation are largely separate because they address climate change at different stages only holds when human rights are considered at the national level.25 This is in fact why we need to reconsider the scope of the human right to environment, discussed in the last section of this chapter. In the past few years, commentators have developed a strong interest in the link between human rights and climate change.26 The thrust of the academic interest remains, however, focused on a relatively limited number of issues, largely looking at the way in which human rights obligations contained in the prevailing human rights instruments are relevant in addressing the impacts of climate change (i.e. adaptation). Consequently, more focus is devoted to the extent to which climate change can become a consideration in human rights law rather than the extent to which human rights can become an integral part of the climate change regime. The first question often posed in the academic discourse is whether the impacts of climate change constitute actual violations of human rights, rather than simply

  International Covenant on Economic, Social and Cultural Rights, New York, 16 December 1966, Article 2(1). 24   Margaux J. Hall and David C. Weiss (2012), ‘Avoiding Adaptation Apartheid: Climate Change Adaptation and Human Rights Law’ 37 Yale J. Int’l L. 309, 313 arguing that ‘a human rights approach is far more able to address adaptation’. 25   Ibid, 321. 26   Stephen Humphreys ed., Human Rights and Climate Change (Cambridge: Cambridge University Press, 2009) and Siobhán McInerney-Lankford, Mac Darrow, and Lavanya Rajamani, Human Rights and Climate Change—A Review of the International Legal Dimensions (Washington, DC: World Bank, 2011). 23

502   part v. climate change litigation undermining human rights in their realization.27 Another issue is that it is insufficient to simply declare that climate change threatens the enjoyment of a right in order for a violation to be established. A breach of a legal duty is needed to demonstrate a violation.28 The interpretation of human rights obligations by courts and tribunals do not require States to prevent all environmental degradation but only that which appreciably affects human beings. This relatively high threshold thus makes it difficult to enforce human rights obligations until the impacts are severe. In sum, all of these considerations pose hurdles to overcome in making a successful human rights claim directly linked to climate change. Another issue raised by the critics is that socio-economic rights, such as the rights to water, food, and health that are more directly impacted by climate change are types of human rights that are not as justiciable. This stands in contrast to civil and political rights under human rights treaties that contain mechanisms which make human rights enforceable.29 The earlier jurisprudence on environmental human rights did not envision harms of a transboundary nature.30 However, climate change is a problem whose effects are transboundary. The application of human rights instruments differ in that they are structured to address the human rights violations occurring in one State. Even at the national level, there are difficulties in linking responsibility for global climate change and specific human rights violations on the ground.31 Aggravating these problems is the application of human rights obligations only to State actors rather than private actors who are more directly responsible for contributing to climate change.32 Linking climate change and human rights regimes is fraught with challenges. They contain obligations that affect different subjects. The treaties which make up the regimes also differ in terms of their enforcement mechanisms. At the broadest level, the negative impacts of climate change on the enjoyment of human rights are not doubted. Yet, the conceptual bases and practical mechanisms proposed to address it vary significantly between the two regimes. The next section examines two different human rights responses to climate change. First, I look at policy development concerning the links between climate change and human rights as developed by the political organs under the UN human rights system. Second, I move on to look at the response that human rights bodies at the regional level have provided in response to the harms from climate change. 27   Edward Cameron (2010), ‘Human Rights and Climate Change: Moving From an Intrinsic to an Instrumental Approach’, 38 Ga. J. Int’l & Comp. L. 673. 28   Ole W. Pedersen (2010), ‘Climate Change and Human Rights: Amicable or Arrested Development?,’ 1/2 J. Hum Rts & Env. 236. 29  Ibid. 30   John H. Knox (2009), ‘Climate Change and Human Rights Law’, 50 Va. J. Int’l L. 163. 31   Stephen Humphreys, ‘Introduction: Human Rights and Climate Change’, in Stephen Humphreys ed., Human Rights and Climate Change 1 (Cambridge: Cambridge University Press, 2009). 32   Knox (2009) at 165.

22.  human rights & climate change    503

4.  Climate Change Considerations in Human Rights Policy and Practice Provisions relating to climate change are not found in any international human rights treaties. However, the growing concern over the impacts of climate change have led international human rights bodies to take notice of the issue. The first direct acknowledgment was by the UN Human Rights Council in a resolution that requested the preparation of a study on the relationship between climate change and human rights.33 Subsequently, the Council facilitated a panel discussion on the relationship between climate change and human rights,34 and organized a full day of discussion on this theme in March 201535 and subsequently requested the preparation of a detailed analytical study on the relationship between climate change and the human right to health.36 More substantively, the UN Human Rights Council has affirmed in several resolutions since 2008 ‘its concern that climate change poses an immediate and far-reaching threat to people and communities around the world and has adverse implications for the full enjoyment of human rights’.37 More recently, the Council has expressed in different terms ‘its concern that the adverse effects of climate change have a range of direct and indirect implications for the effective enjoyment of all human rights’.38 In more specific contexts, such as the rights of internally displaced persons, the Council has specifically recognized that adverse effects of climate change may contribute to ‘environmental degradation and extreme weather events, which may, among other factors, contribute to human displacement’.39 The UN Human Rights Council’s statements remain at a level of generality that merely suggests that climate change is a concern that needs to be considered. Some further developments have taken place, such as the issuance of the 2009 Report of 33   UN Human Rights Council Resolution 7/23, Human Rights and Climate Change, Report of the Human Rights Council on its Seventh Session, UN Doc. A/HRC/7/78 (2008). See also Report of the Office of the United Nations High Commissioner for Human Rights on the Relationship Between Climate Change and Human Rights, UN Doc. A/HRC/10/61 (2009). 34   UN Human Rights Council Resolution 10/4, Human Rights and Climate Change, Report of the Human Rights Council on its Tenth Session, UN Doc. A/HRC/10/29 (2009). 35   UN Human Rights Council Resolution 26/27, Human Rights and Climate Change, UN Doc. A/HRC/RES/26/27 (2014). 36   UN Human Rights Council Resolution 29/15, Human Rights and Climate Change, UN Doc. A/HRC/RES/29/15 (2015). 37   UN Human Rights Council Resolution 18/22, Human Rights and Climate Change, Report of the Human Rights Council on its Eighteenth Session, UN Doc. A/HRC/18/2 (2011). 38   UN Doc. A/HRC/26/27, n 35 at para 1. 39   UN Human Rights Council Resolution 20/9, Human Rights of Internally Displaced Persons, Report of the Human Rights Council on its Twentieth Session, UN Doc. A/HRC/20/2 (2012).

504   part v. climate change litigation the Office of the United Nations High Commissioner for Human Rights, which concluded that climate change impacts ‘have a range of implications for the effective enjoyment of human rights’.40 Yet, on the whole, these pronouncements amount to little in terms of developing international law in this area. Nevertheless, the development of the relationship has been advanced by regional human rights courts and tribunals.41 Over time, regional human rights bodies have increasingly regarded environmental law as an integral part of a broader framework to be considered in applying human rights. The European Court of Human Rights (ECtHR) has developed jurisprudence concerning the links between environmental harm and civil and political rights protected under the European Convention on Human Rights (ECHR).42 The Court has heard claims that relate to or are based on environment-related events over several decades.43 The jurisprudence on these environmental human rights cases could easily be applied to climate change-related cases. Some of the leading ECtHR cases concern environmental harm and damages where the Court recognized the causal relationship between such harm and damages and the negative impacts on human rights.44 For climate change, the human impacts are more disparate and abstract and thus the establishment of a causal connection between them and human rights violations is more difficult to demonstrate. At the same time, climate change issues can materialize in various ways. Thus it is conceivable that the ecosystemic complexity of climate change issues can be broken down into discrete, and localized, situations. Further, the eventual harms associated with climate change over a longer time period will become more evident thus establishing a causal link between the harm and the obligations to prevent such harm on human rights grounds. This could even extend to acts that have transboundary effects.45 The ECtHR jurisprudence has already provided the basis for human rights claims arising from climate change impacts. The ECtHR established in the Öneryildiz case that the right to life entails a ‘primary duty on the State to put in place a legislative and administrative framework designed to provide effective deterrence against threats to the right to life’.46 In addition, the Court found that authorities ‘knew or ought to have known that there was a real and immediate risk to a number of

  UN Doc. A/HRC/10/61 (2009), n 33 at para 92.   See generally Dinah Shelton (2010), ‘Developing Substantive Environmental Rights’, 1/1 J. Hum. Rts & Env. 89. 42   (1953) 213 UNTS, entered into force 3 September 1953. 43   For instance, see Powell and Rayner v The United Kingdom, European Court of Human Rights, Judgment, 21 February 1990; Fredin v Sweden (No. 1), European Court of Human Rights, Judgment, 18 February 1991. 44   Öneryildiz v Turkey, European Court of Human Rights (Grand Chamber), Judgment, 30 November 2004. 45 46   Pedersen (2011) at 420.   Öneryildiz v Turkey, n 44 at para 89. 40 41

22.  human rights & climate change    505 persons’.47 Such thresholds, such as being at ‘immediate risk’, may possibly not be met in a climate change-related claim but the ECtHR jurisprudence has, at least, embedded the seeds for developing climate change—human rights linkages, at least in the context of civil and political human rights. While the European Social Charter48 has not been the source of the same jurisprudential contributions as the ECtHR, the European Committee of Social Rights has addressed a human rights issue that is specifically linked to climate change. In Marangopoulos Foundation for Human Rights (MFHR) v Greece,49 the complainant submitted that Greece failed to remove as far as possible the causes of ill-health caused by lignite mines and the operation of lignite-fired power plants by permitting their operation without sufficient regard to environmental impacts. The Committee discussed at length Greece’s climate change obligations under the Kyoto Protocol and concluded that there had been a violation of the right to health because Greece had not struck ‘a reasonable balance between the interests of persons living in the lignite mining areas and the general interest’.50 Another issue relevant to linking climate change impacts to human rights violations is the extent to which States can be held responsible for the activities of private actors. Human rights courts have found that the State can be held accountable for human rights violations in situations where the State is implicated in the private activity that has caused the environmental harm or damage. In the López Ostra case, the town had allowed the plant causing the environmental damage to be built on its land and subsidized the plant’s construction.51 The Court ruled that there was a violation of Articles 3 (‘No one shall be subjected to torture or to inhuman or degrading treatment or punishment’) and 8 (right to respect for private and family life, home, and correspondence) of the ECHR. Human rights violations have also been found by the ECtHR where the State had failed to properly regulate private sector activities.52 Similarly, in the Ogoniland case, the African Commission on Human and Peoples’ Rights ruled that States must also protect their citizens ‘from damaging acts that may be perpetrated by private parties’.53 The Commission had also found that the Nigerian government was actively participating in the activities that led to the harm caused.54 48   Ibid, para 101.   (1961), 529 UNTS 89, ETS No. 35, 18 October 1961.   Marangopoulos Foundation for Human Rights (MFHR) v Greece, Collective Complaint No. 30/2005, Case Document No 1, 26 April 2005. 50   Ibid, para 221. 51   López Ostra v Spain (Application No. 16798/90), European Court of Human Rights, Judgment, 9 December 1994, para 52. 52   Fadeyeva v Russia (Application No. 55723/00), European Court of Human Rights, Judgment, 9 June 2005, paras 124ff. 53   The Social and Economic Rights Action Center and the Center for Economic and Social Rights v Nigeria, Communication No. 155/96 (Ogoniland case), African Commission on Human & Peoples’ Rights, 30th Ordinary Session, 13–27 October 2001, para 57. 54   Ibid, para 58. 47

49

506   part v. climate change litigation Although promising, the use of the cases to support the application of human rights instruments to climate change-related human rights cases may be limited because the effects of climate change are mainly caused by private sector activity. The active participation of a State in a climate change-related activity linked to human rights violations is less likely to occur. Overall, the existing human rights jurisprudence provides a strong basis for fortifying the climate change–human rights linkages. However, it does not immediately lend itself to the direct application of human rights obligations to climate change situations. This is not particularly surprising considering that human rights treaties and other instruments were not designed with an environmental context in mind. Despite the advances in human rights cases addressing environmental harm, a relatively high threshold of demonstrating environmental harm remains necessary to trigger a violation of a right protected under the ECHR. Indeed, the ECtHR has clearly stated that ‘the crucial element which must be present in determining whether, in the circumstances of a case, environmental pollution has adversely affected one of the rights safeguarded by Article 8(1) of the ECHR is the existence of a harmful effect on a person’s private or family sphere and not simply the general deterioration of the environment’.55 The normal burden in human rights cases to demonstrate attribution of a violation to State conduct is even more challenging in climate change cases. Mindful of this difficulty, this chapter now looks to the developments of the human right to environment codified in international treaties and other instruments.

5.  The Human Right to Environment and Climate Change The human right to environment takes the above discussion of the linkages between human rights and climate change to a different level. Instead of considering the links between the environment, and in particular climate change, and human rights through a paradigm that is not centred on environmental protection, the approach stems from environmental concerns being the starting point. Two main trends can be identified with regard to the right to environment in both domestic and international instruments. There has been little progress over the past couple of decades towards the recognition of the right at the international   Kyrtatos v Greece (Application No. 41666/98), European Court of Human Rights, Judgment, 22 May 2003, para 52. 55

22.  human rights & climate change    507 level. However, a majority of States incorporate a form of this right in their domestic laws.56 This alone might populate the State practice needed to show the customary international law status of the human right to environment. This section considers developments concerning the right to environment and then analyses some aspects of this right that limit its applicability in the context of climate change.

5.1 The Human Right to Environment: Developments from the International and Regional to the National Level The link between international environmental law and human rights was first recognized in the Stockholm Declaration—the earliest constitutive legal instrument of international environmental law.57 Principle 1 declares that ‘[m]‌an has the fundamental right to freedom, equality and adequate conditions of life, in an environment of a quality that permits a life of dignity and well-being’.58 This initial expression of the human right to environment was not expanded upon in the Stockholm Declaration. This early start to the development of what could have become an internationally recognized human right to environment was not pursued further. In fact, in later decades, international environmental law instruments have at best stagnated, as confirmed by the Rio Declaration that moved further away from characterizing the human right to environment using human rights language. The first principle declared that ‘[h]uman beings are at the centre of concerns for sustainable development’.59 No further significant affirmation of the right to environment followed the Rio Declaration, with the exception of the Århus Convention, which significantly expanded the scope of the protection of procedural environmental rights. In the early 1990s, Ms Fatma Zohra Ksentini was appointed the Special Rapporteur on Human Rights and the Environment. This presented an opportunity to advance the acceptance of a human right to environment. In the aftermath of the Rio Earth Summit of 1992, it seemed that a human right to environment might be affirmed within a few years. The final report of Ms Ksentini did include a set of Draft Principles on Human Rights and the Environment.60 However, no further mandate   For a recent map of countries recognizing the right to environment, see David R. Boyd, ‘The Constitutional Right to a Healthy Environment’, Environment: Science and Policy for Sustainable Development (July–August 2012), available at (accessed 18 August 2015). 57   Declaration of the United Nations Conference on the Human Environment, Stockholm, 16 June 1972 (Stockholm Declaration). 58   Ibid, principle 1. 59   Rio Declaration on Environment and Development, (1992) 31 ILM 874, Rio de Janeiro, 14 June 1992. 60   UN Commission on Human Rights, Human Rights and the Environment—Final Report, Prepared by Mrs Fatma Zohra Ksentini, Special Rapporteur, UN Doc. E/CN.4/Sub.2/1994/9 (1994). 56

508   part v. climate change litigation on the environment was given by the Human Rights Commission—she was only given a narrower mandate as Special Rapporteur on the adverse effects of the illicit movement and dumping of toxic and dangerous products and wastes on the enjoyment of human rights.61 In 2012, a specific ‘human rights and environment’ mandate was established with the appointment of Professor John Knox as Independent Expert.62 The resolution setting up this mandate failed to refer to earlier work done by UN human rights organs in the 1990s, including that of Ms Ksentini, suggesting that the mandate was in effect to address a new subject. Overall, the development of a human right to environment in the United Nations system is limited. The positive enthusiasm following the years after the first Rio Summit vanished after 1995. This can be partly attributed to the ongoing resistance of some States, in particular the United States, that has consistently rejected the existence of a human right to environment. The limited recognition of a human right to environment at the international level contrasts with the practice of a vast majority of States that recognize the right to environment either in their domestic framework or through their support of its recognition in a regional human rights treaty. Interestingly, the State that constantly rejects a right to environment in international law, that is the United States, has several states within it that include the right in their constitutions. The right to environment is recognized at the regional level. The right has been declared in two of the three main regional human rights conventions. In the American region, the individual right to ‘live in a healthy environment’ is declared in the Additional Protocol.63 The collective right to ‘a general satisfactory environment favourable to their development’ exists in the African Charter on Human and Peoples’ Rights.64 However, in the case of the Additional Protocol, the right is not justiciable and there is only limited jurisprudence in the case of the African Charter. This limits their relevance in terms of extracting lessons for climate change. In Europe, there is no similar provision to that found in the other two regions but environmental rights have been strengthened through enshrining procedural environmental rights in the Århus Convention, a treaty developed through the United Nations Economic Commission for Europe. At the national level, a variety of environmental rights provisions have been adopted. They differ in their formulation, with the inclusion of qualifiers such as ‘the right to a healthy’ or ‘clean’ environment. There is neither consensus around   UN Human Rights Commission, Resolution 1995/81, Adverse effects of the Illicit Movement and Dumping of Toxic and Dangerous Products and Wastes on the Enjoyment of Human Rights, Report on the 51st Session, UN Doc. E/CN.4/1995/176 (1995). 62   UN Human Rights Council, Resolution 19/10, Human Rights and the Environment, UN Doc. A/ HRC/RES/19/10 (2012). 63   Additional Protocol to the American Convention on Human Rights in the Area of Economic, Social and Cultural Rights, San Salvador, 14 November 1988. 64   African Charter on Human and Peoples’ Rights, Banjul, 27 June 1981, Article 24. 61

22.  human rights & climate change    509 the appropriate qualifier nor whether one is needed at all.65 The scope of the right is indeed a key issue in the context of climate change. One of the elements that needs to be given particular consideration is the link between economic development and environmental protection that is particularly prominent in understanding climate change. The climate change regime has been mostly characterized by restricting entitlements to pollute, rather than on a basis of the need to prevent pollution entirely. Indeed, even what are seen as progressive proposals to allocate burdens under the climate change regime—such as establishing per capita emission targets—start from a premise that there is a right to emit CO2. From a human rights perspective, it would seem inappropriate to define a human right in the context of climate change in such a way that accepts a right to pollute.66 At the same time, considering the eradication of poverty in carbon-based economies requires some entitlement to emissions. The realization of the conditions necessary for a decent standard of living for the poorest must be prioritized regardless of the level of environmental protection.

6.  Limitations of Addressing Climate Change through the Human Right to Environment The limitation of a right to environment in the climate change context is due to the traditional human rights framework. First, the basic structure of human rights instruments, regardless of the level (i.e. national, regional, or international), focuses on the relationship between individuals and the State. This structure constitutes the first impediment to the relevance of the human right to environment in a climate change context that must be addressed at least in part at the global level. Second, human rights obligations apply to individuals within a State’s territory. Harms ensuing from human rights violations may not be traced back to States in whose territory the violations occur. The existing framework makes it difficult to expand the reach of human rights law application beyond a State’s borders.   See Shelton (2010) at p. 100 concerning Montana’s debates on the drafting of their environmental right; and Philippe Cullet (1995), ‘Definition of an Environmental Right in a Human Rights Context’, 13 Netherlands Q. Hum. Rts 25. 66   Tim Hayward (2007), ‘Human Rights Versus Emissions Rights: Climate Justice and the Equitable Distribution of Ecological Space’, 21/4 Ethics & International Affairs 431. 65

510   part v. climate change litigation Nevertheless, there have been some developments in applying human rights obligations to other States. Indeed, the UN Covenant on Economic, Social and Cultural Rights provides a good basis for such application, calling on all States ‘to take steps, individually and through international assistance and co-operation’ to achieve the realization of protected rights.67 More specifically, decisions of the European and American human rights courts suggest that, in certain cases, States may be responsible for human rights violations against an individual beyond their jurisdiction.68 Further developments in this direction would be helpful but this would likely remain limited because the existing human rights framework will find it difficult to consider climate change as anything more than a series of individual transboundary harms.69 Inter-state cooperation in realizing human rights obligations of individuals outside their territory should reflect the essence of international environmental law which is largely concerned with actions that States take to protect the environment beyond their jurisdiction. The principle that bridges the two regimes most effectively is the CBDR principle: it clearly confirms that there is an international cooperation component to climate change and the cooperation is linked to a State’s levels of economic development. If there is a human right to environment, the corresponding duties will be for States to prevent the impacts of climate change that, at the same time, assist in the realization of human rights.

7.  Rethinking the Framework for Addressing Climate Change in Human Rights Terms: Reviving Solidarity Rights Over the past couple of decades, States have developed an intricate cooperative regime to address climate change. This has proven to be insufficient to effectively combat the problem but reflects a willingness by the overwhelming majority of States to at least engage in debating potential solutions.

67   International Covenant on Economic, Social and Cultural Rights, New York, 16 December 1966, Article 2(1), U.N. Doc. A/6316 (1966); 993 UNTS 3; (1967) 6 ILM 368. 68  John H. Knox, ‘Diagonal Environmental Rights’, in Mark Gibney and Sigrun Skogly (eds), Universal Human Rights and Extraterritorial Obligations, pp. 82, 87 (University of Pennsylvania Press, 2010). 69  Eric Brandstedt and Anna-Karin Bergman (2013), ‘Climate Rights: Feasible or not?’, 22/3 Environmental Politics 394.

22.  human rights & climate change    511 Concurrently, States have developed human rights obligations to address environmental harms, particularly at the regional level. Further, a right to environment is now protected under the national laws and constitutions of a majority of States in the international community. Both developments demonstrate a genuine response of States to coordinate efforts to protect human rights and combat climate change. Nevertheless, developments at the regional level are limited by the structure of human rights instruments. Environmental protection has been an additional factor for existing human rights or a new right restricted by the existing human rights framework. The focus within human rights on the relationship between individuals and one State limits how much the framework can address a multidisciplinary imperative such as climate change. An effective human rights response to climate change must be able to take into account the local, national, and global dimensions of climate change. What is in effect needed is a strengthening of the links between the international environmental law and human rights fields. International environmental law needs to accommodate people’s interests and rights in a much more direct manner. Human rights need to move beyond considering only individuals as direct victims of climate change. Indeed, the causal relationship between individual harm and climate change-induced events is difficult to establish but the impacts from climate change on a whole class of affected people may be much clearer. Similarly, mechanisms for allocating responsibility for human rights violations need to be extended beyond borders in human rights instruments and institutions. Climate change often affects the States that have contributed little to the problem and have limited capacity to respond most severely.70 The unique transboundary nature of climate change impacts presents further challenges for the development of human rights as an effective remedy. It beckons the need for environmental rights to be applied extraterritorially in order to have a meaningful effect. Climate change must be addressed concurrently at all levels. The current climate change regime has largely failed to do so. First, States have not been able to agree to comprehensive emission reduction targets. Second, the climate change regime has failed to address the impacts of climate change on individual’s rights and freedoms. Third, while the climate change regime has welcomingly opened itself to the participation of the private sector, there has been little corresponding engagement of individuals and communities whose input into the solutions is critical for success. As indicated above, there have been various positive developments within human rights regimes to account for environmental impacts. Further, the limitations of the existing framework gave rise to proposals for the recognition of a ‘third generation’ 70  Stephen Humphreys, ‘Climate Change and International Human Rights Law’, in Rosemary Rayfuse and Shirley V. Scott, International Law in the Era of Climate Change, p. 29 (Cheltenham: Edward Elgar, 2012).

512   part v. climate change litigation of rights (in addition to the two already recognized categories of rights: socio-­ economic and civil and political rights) or ‘solidarity rights’.71 The idea of solidarity in a human rights context reflects the increasing interdependence of the world.72 Certain problems cannot be effectively addressed by understanding them only as individual harms. They either have both an individual and collective dimension or are best understood as collective harms. Solidarity reflects the need for States to take common action to promote and protect human rights. The interdependence of all States provides the basis for conceiving human rights as not necessarily falling under the jurisdiction of States.73 Human rights are, in effect, solidarity rights, based on the idea that the complexity of certain problems has drastically reduced the capacity of States to govern alone. Environmental degradation of a global nature due to phenomena such as climate change is an extremely complex problem that requires solidarity between States. As a result, States are not in a position to dictate their own solutions. Collective action to protect a solidarity right is thus required in a way that also recognizes States’ increased inter-dependence with other actors in the international community. The concept of solidarity has more resonance when it is juxtaposed with international environmental law principles. The CBDR principle is on the whole a manifestation of inter-State solidarity.74 It affirms that global issues can be addressed in a differentiated manner among States that takes into account the inherent inequalities between sovereign States. The principle of common heritage of humankind (CHH) also recognizes that some issues cannot be appropriately managed by individual States.75 CHH is a principle that is enshrined in treaties such as in the United Nations Convention on the Law of the Sea (UNCLOS).76 The UNCLOS established a specific regime for the exploitation of deep seabed minerals, and the sharing of the benefits from such exploitation, that lie beyond the State parties’ jurisdiction.77 The CHH principle puts solidarity into practice, codified in a treaty where the international   Karel Vasak, ‘Pour les droits de l’homme de la troisième génération: les droits de solidarité’ (Leçon inaugurale à la dixième session d’enseignement de l’Institut international des droits de l’homme, Strasbourg, 2–27 July 1979, on file with the author). 72   William Andrew Shutkin (1991), ‘International Human Rights Law and the Earth: The Protection of Indigenous Peoples and the Environment’, 31/3 Virginia J. of Int’l L. 479. 73   Mohammed Bedjaoui, ‘Report: The Difficult Advance of Human Rights Towards Universality’, in Universality of Human Rights in a Pluralistic World—Proceedings of the Colloquy Organised by the Council of Europe in Co-operation with the International Institute of Human Rights, Strasbourg 17–19 April 1989, at 32 (Kehl am Rhein: Engel, 1990). 74  Philippe Cullet, Differential Treatment in International Environmental Law (Aldershot: Ashgate, 2003). 75  Rüdiger Wolfrum, ‘Common Heritage of Mankind’, in Rüdiger Wolfrum (ed.), Max Planck Encyclopedia of Public International Law (Oxford: Oxford University Press, 2012). 76   United Nations Convention on the Law of the Sea, Montego Bay, 10 December 1982 (1982) 1833 UNTS 3; 21 ILM 1261. 77   Ibid, part XI. 71

22.  human rights & climate change    513 community, rather than individual States, shall have the right to share in the benefits from the development of seabed resources. Despite its presence in the UNCLOS, the CHH principle has been difficult to implement. It runs up against an opposing view of economic development, which militates against solidarity. As a result, today there is ‘a tendency to treat common heritage as an intellectual artifact, a relic of a time when a sense of global community was based on solidarity and shared values rather than participation in a global market place of shared consumer preferences’.78 The principles of CBDR and CHH are direct reflections of the need for States to enhance solidarity, particularly with issues where States are clearly interdependent. Solidarity therefore provides a model from which to bridge human rights and climate change. It constitutes an appropriate basis to rethink States’ rights and obligations in these areas. While States have a duty to cooperate, most of them are unable to fulfil their human rights commitments linked to climate change alone and most of them should not be expected to shoulder the cost of adaptation for a problem they have contributed little to cause. Solidarity rights can establish the framework within which the global nature of human rights can be considered beyond individual claims in individual countries. Solidarity also provides the basis for broadening our understanding of human rights. This is particularly important in the case of the environment where the local and the global dimensions are interconnected and the environmental, human, and livelihood dimensions must be considered jointly. Indeed, this is what led the first Special Rapporteur on Human Rights and the Environment, Ms Ksentini, to argue that the right to environment is a right of solidarity involving duties and responsibilities at the national and international level.79 One of the important influences of solidarity on the human rights discourse is a broadening of the categories of holders of rights beyond individuals to that of collective groups. The idea of collective rights has been fiercely contested for a long time. Individual rights are viewed as the manifestation of the liberal conception of rights enshrined in international law.80 While the major multilateral conventions on human rights reflect this position, the notion of collective rights has been accepted in certain regions. In Africa, the human rights regime has been built around a broader understanding of human rights that embraces the concept of collective rights.81 Collective rights are also enshrined in some form in   Karin Mickelson (2014), ‘The Maps of International Law: Perceptions of Nature in the Classification of Territory’, 27/3 Leiden J. Int’l L. 621, 636. 79   UN Commission on Human Rights, Human Rights and the Environment—Preliminary Report Prepared by Mrs Fatma Zohra Ksentini, Special Rapporteur, UN Doc. E/CN.4/Sub.2/1991/8 (1991). 80   Marlies Galenkamp (1991), ‘Collective Rights: Much Ado About Nothing?—A Review Essay’, 9/3 Netherlands Q. Hum. Rts 291 and Francesco Francioni (2010), ‘International Human Rights in an Environmental Horizon’, 21 Eur. J. Int’l L. 41, 54. 81   Charter on Human and Peoples’ Rights, Banjul, 19 January 1982, OAU Doc. CAB/LEG/67/3/Rev.5. 78

514   part v. climate change litigation instruments such as the UN Covenant that contains, for instance, the protection of minorities.82 In the context of the environment, individual and collective interests are not neatly separated.83 Solidarity rights encompass a collective or ‘common’ responsibility of States. There is obvious difficulty in ensuring, let alone agreeing to, an equitable sharing of collective responsibilities in an international instrument. Yet, overall, the notion of solidarity is essential to successfully addressing the linkage between human rights and climate change.

8. Conclusion Human rights play a central role in a successful climate change regime. Yet, the climate change and human rights regimes are not linked and operate largely in parallel. This conceptual gap can be bridged in principle from either side of the divide. Historically, the climate change regime has not featured human rights elements. In contrast, the human rights regime has seen tremendous progress in integrating environmental concerns into human rights. First, regional human rights regimes have been innovative in ensuring that environmental harm can be the source of human rights violations in existing treaties. Second, a majority of States have recognized a right to environment in either their domestic laws or through a regional convention. Third, discussions at the UN level on linking human rights and the environment and more recently human rights and climate change have brought the issue into the limelight even if no concrete developments have ensued. Climate change issues can be advanced in part through the developments that have already taken place in human rights regime. Yet, a lot more needs to be done if the broader concerns of climate change are to be effectively tackled. The human right to environment must be given a more generous application to ensure that the global dimension of environmental problems such as climate change can be effectively addressed. Solidarity rights, debated in the early years of the recognition of the right to environment at the international level, have sown the seed for the broader application of environmental rights. Solidarity rights also provide the basis for taking into account individual and collective human rights that are equally important in the context of climate change. 82   International Covenant on Civil and Political Rights, 16 December 1966, Article 27, GA Res. 2200A (XXI), 21 UN GAOR Supp. (No. 16) at 52, UN Doc. A/6316 (1966); 999 UNTS 171; 6 ILM 368 (1967). 83   Francioni (2010).

22.  human rights & climate change    515 The very idea of moving beyond the existing framework of individual human rights has been attracting criticism for decades. Yet, the nature of various environmental challenges including the moral imperative of climate change necessitates new thinking that goes beyond established human rights paradigms. Laws and institutions must show their ability to adapt to changing circumstances for fear of losing their relevance. Adaptation is necessary to meet the current and future challenges posed to the planet by climate change.

Part VI

LIVING WITH CLIMATE CHANGE AND CLIMATE CHANGE ADAPTATION MEASURES

Chapter 23

CLIMATE CHANGE-RELATED DISPLACEMENT OF PERSONS Jane McAdam*

1.  Introduction

520

2.  The Scope of Existing International Protection Frameworks

521

3.  Next Steps

531

4.  Conclusion

536

*  This chapter contains figures current as at September 2013.

520    part vi.  climate change & adaptation measures

1. Introduction The idea of the ‘climate change refugee’ is a powerful way of illustrating some of the most deleterious impacts of climate change on human society. However, from both a legal and an empirical perspective, this notion is conceptually flawed. The relationship between climate change and human mobility is complex, and a careful appreciation of its dynamics is an essential precursor to understanding the role of international law in this context. Extensive research over the past few years has enabled scholars to establish some common understandings about the impacts of climate change on human mobility (Government Office for Science, 2011).1 There is now scientific consensus that the effects of climate change are aggravating many ‘natural’ environmental hazards, including sudden-onset events such as flooding, cyclones, storm surges, waterlogging, salinity intrusion, and riverbank erosion, and slow-onset processes like coastal erosion, predominantly through rising sea levels (Intergovernmental Panel on Climate Change, 2007). Climate change amplifies the risk of more severe and more frequent disasters, rather than ‘causing’ discrete events to occur (Huber and Gulledge, 2011, p. 2). While climate change will affect migration, it will not be the sole cause. Rather, climate change will interact with a range of economic, social, and political drivers, which themselves affect migration. For this reason, it is conceptually sounder to view climate change-related movement as a part of global migration dynamics, rather than as a discrete, independent category. Climate change-related displacement is likely to take different forms, and will require a variety of responses at the local, national, regional, and international levels. Migration can be a form of adaptation to environmental and climate change, and in many cases will be an extremely effective way to build long-term resilience. However, while measures that prevent or reduce harmful environmental changes and build resilience in communities will reduce the influence of climate change on migration, they will be unlikely to prevent it fully. Finally, and importantly from the standpoint of international law, most movement will be within countries rather than across borders (Huber and Gulledge, 2011, pp. 9–10, 37; Asian Development Bank, 2012, pp. viii, 4). The extent to which international law and international institutions respond to climate change-related movement will depend in part upon: (a) whether such   In addition to a wealth of academic articles, one major report deserves special mention. In 2011, the UK Government Office for Science released Foresight: Migration and Global Environmental Change, a report involving over 350 experts in over thirty countries across a range of different disciplines. Its aim was to use the best available science and other evidence to develop a vision for how migration might be affected by environmental change, including climate change, between now and 2060, and to identify the choices that policy-makers need to make to ensure that new policies and legal frameworks are resilient to the wide range of future uncertainties (Government Office for Science, 2011). 1

23.  climate change & displacement of persons    521 movement is perceived as voluntary or forced; (b) the nature of the trigger (a disaster versus a slow-onset process); (c) whether international borders are crossed; (d) the extent to which there are political incentives to characterize movement as linked to climate change or not; and (e) whether movement is driven or aggravated by human factors, such as discrimination. At present, international law acknowledges only a very small class of forced migrants as people whom other countries have an obligation to protect: ‘refugees’, ‘stateless persons’, and those eligible for complementary protection. This means that unless people fall within one of those categories, or can migrate lawfully for reasons such as employment, family, or education, they run the risk of interdiction, detention, and expulsion if they attempt to cross an international border and do not have a legal entitlement to stay in that other country. This chapter examines the scope of existing international law to address ‘climate change-related displacement’. While this term is problematic for the reasons outlined above, it is used to describe movement where the impacts of climate change affect mobility decisions in some way (McAdam, 2012).

2.  The Scope of Existing International Protection Frameworks This section examines in turn the role of international refugee law, human rights law, and the law on statelessness in protecting people displaced by the impacts of climate change. It also considers the extent to which existing principles on internal displacement provide normative and practical guidance.

2.1 Refugee Law The legal definition of a ‘refugee’ is a term of art set out in Article 1A(2) of the 1951 Refugee Convention relating to the Status of Refugees, read in conjunction with its 1967 Protocol (Convention Relating to the Status of Refugees, 1951). A ‘refugee’ is someone who: owing to well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable, or owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it.

522    part vi.  climate change & adaptation measures In most cases, the elements of this definition will not be met by people displaced in the context of climate change. That is not to say that it cannot apply, but rather that this type of application will be rare. Its requirements might be met, for instance, were a government to: use starvation or famine as a political tool (SERAC and CESR v Nigeria, 2002, para 44); target particular groups reliant on agriculture for survival; or consciously withhold or obstruct assistance in order to punish or marginalize someone for a Convention reason (UNHCR, May 2009, pp. 9–10; UNHCR [Bellagio Deliberations], Feb. 2011a, para 8). However, there are a number of difficulties in applying refugee law to climate change-related displacement more generally. First, the refugee definition only applies to people who have already crossed an international border. Much of the anticipated movement in response to climate change will be internal, and thus will not meet this preliminary requirement. Second, it is difficult to characterize ‘climate change’ as ‘persecution’. ‘Persecution’ entails violations of human rights that are particularly egregious owing to their inherent nature or cumulative impact (Council Directive 2011/95/EC, 2011).2 It remains very much a question of degree and proportion, and is assessed according to the nature of the right at risk, the nature and severity of the restriction, and the likelihood of the restriction eventuating in the individual case (GoodwinGill and McAdam, 2007, p. 92). General claims based on ‘climate change’ do not fit this framework, as decision-makers have explained in a number of cases in Australia and New Zealand in which Pacific Islanders have sought to claim asylum on the basis of climate change impacts on their home countries.3 While the adverse impacts of climate change are harmful, they do not meet the threshold of ‘persecution’ as this is currently understood in international and domestic law circumstances (Goodwin-Gill and McAdam, 2007, pp. 90–134)—even if those   It may include a threat to life or liberty, significant physical harassment or ill-treatment, or significant economic hardship or denial of access to basic services or denial of capacity to earn a livelihood, where such hardship or denial threatens the applicant’s capacity to subsist (Migration Act, 1958, s 91(R)(2)). 3   New Zealand cases: Teitiota v The Chief Executive of the Ministry of Business, Innovation and Employment [2015] NZSC 107; Teitiota v The Chief Executive of the Ministry of Business, Innovation and Employment [2014] NZCA 173; Teitiota v The Chief Executive of the Ministry of Business Innovation and Employment [2013] NZHC 3125; AD (Tuvalu) [2014] NZIPT 501370; AC (Tuvalu) [2014] NZIPT 800517–520; AF (Kiribati) [2013] NZIPT 800413; Refugee Appeal No 72719/2001, RSAA (Sept. 2001) (Tuvalu); Refugee Appeal No 72313/2000, RSAA (Oct. 2000) (Tuvalu); Refugee Appeal No 72314/2000, RSAA (Oct. 2000) (Tuvalu); Refugee Appeal No 72315/2000, RSAA (Oct. 2000) (Tuvalu); Refugee Appeal No 72316/2000, RSAA (Oct. 2000) (Tuvalu); Refugee Appeal Nos 72179–72181/2000, RSAA (Aug. 2000) (Tuvalu); Refugee Appeal Nos 72189–72195/2000, RSAA (Aug. 2000) (Tuvalu); Refugee Appeal No 72185/2000, RSAA (Aug. 2000) (Tuvalu); Refugee Appeal No 72186/2000, RSAA (Aug. 2000) (Tuvalu). Australian cases: 1004726 [2010] RRTA 845 (Sept. 2010) (Tonga); 0907346 [2009] RRTA 1168 (Dec. 2009) (Kiribati); N00/34089 [2000] RRTA 1052 (Nov. 2000) (Tuvalu); N95/09386 [1996] RRTA 3191 (Nov. 1996) (Tuvalu); N96/10806 [1996] RRTA 3195 (Nov. 1996) (Tuvalu); N99/30231 [2000] RRTA 17 (Jan. 2000) (Tuvalu); V94/02840 [1995] RRTA 2383 (Oct. 1995) (Tuvalu). 2

23.  climate change & displacement of persons    523 impacts are conceived of as breaches of socio-economic rights, which can amount to ‘persecution’ in certain circumstances (Foster, 2007). Part of the problem here is identifying a ‘persecutor’. Whereas a refugee flees from his or her persecutor, in the climate change context the person may flee to a State that is a major contributor to greenhouse gas emissions (in other words, a State that is partly responsible for the harm). Third, even if it were possible to establish that the impacts of climate change constituted ‘persecution’, the Refugee Convention poses an additional hurdle for those displaced by climate change: namely, that persecution is for reasons of an individual’s race, religion, nationality, political opinion, or membership of a particular social group. The impacts of climate change are largely indiscriminate, rather than tied to particular characteristics. An argument that such people might together constitute a ‘particular social group’ would be difficult to establish, since to do this the group must be connected by a fundamental, immutable characteristic other than the risk of persecution itself (Goodwin-Gill and McAdam, 2007, pp. 79–80; Applicant A v Minister for Immigration and Ethnic Affairs, 1997, p. 264 (McHugh J), 341 (Dawson J)).4 Courts around the world have explained that the Refugee Convention does not protect victims of natural disasters or those in search of better living conditions, even though ‘both of these cases might seem deserving of international sanctuary’, and ‘even when the home state is unable to provide assistance’ (Canada (Attorney General) v Ward, 1993, p. 732 (emphasis added)). This is because the requirement of ‘persecution’ and the ‘list of Convention reasons’ limit the Convention’s scope, such that those fleeing ‘natural disasters and bad economic conditions’ or ‘famine’ fall outside it (Applicant A v Minister for Immigration and Ethnic Affairs, 1997, p. 248 (Dawson J); Horvath v Secretary of State for the Home Department, 2001, pp. 499–500 (Lord Hope); Minister for Immigration v Haji Ibrahim, 2000, pp. 48–9 (Gummow J)). Notwithstanding the fact that the Refugee Convention has little direct relevance to most situations of climate change-related displacement, the standard it imposes for assessing protection needs is instructive in the climate change context. A ‘well-founded fear of persecution’ can be less than a fifty per cent chance of harm—maybe even as low as ten per cent—provided that the possibility is not farfetched (INS v Cardoza-Fonseca, 1987, p. 431; Chan v Minister for Immigration and Ethnic Affairs, 1989).5 Thus, in refugee law, a degree of speculation about future 4   Note, however, Foster’s remark that: ‘it is clear that the poor can properly be considered a PSG [particular social group], such that if being poor makes one vulnerable to persecutory types of harm, whether socio-economic or not, then a refugee claim may be established’ (Foster, 2009, p. 310). Even if this test could be met by certain people displaced by climate change, the difficulty would remain in establishing ‘persecution’ in the context of climate change-related displacement. 5   The UNHCR Handbook on Procedures and Criteria for Determining Refugee Status under the 1951 Convention and the 1967 Protocol relating to the Status of Refugees, paragraph 42, states: ‘In

524    part vi.  climate change & adaptation measures risk does not preclude a person from being recognized as a refugee. Indeed, refugee status determination is an ‘essay in hypothesis, an attempt to prophesy what might happen to the applicant in the future, if returned to his or her country of origin’ (Goodwin-Gill and McAdam, 2007, p. 54). This ‘speculative’ standard is apt when considering the likely future impacts of climate change on an individual or community.

2.2 Complementary Protection The negative impacts of climate change on the enjoyment of human rights have been amply documented (Humphreys (ed), 2010; UNHRC, 2009; UNHRC, 2012; McInerney-Lankford et al, 2011). For instance, extreme weather events can threaten the right to life; increased food insecurity can threaten the right to adequate food; water stress can jeopardize the right to safe drinking water; the adverse health impacts of climate change, such as a higher incidence of waterborne diseases or illness associated with higher temperatures, can impair the right to health; and sea level rise and flooding can disrupt the right to adequate housing. When these issues are considered alongside pre-existing stressors such as overcrowding, environmental fragility, poor development practices, food scarcity, and so on, then cumulatively they may threaten people’s ability to live in safety and dignity. When it comes to displacement in this context, it is helpful to consider that States’ non-refoulement obligations under international human rights law extend further than refugee law’s prohibition on return to persecution for one of five reasons. Human rights law precludes States from removing people to a place where they would face a risk of torture or cruel, inhuman, or degrading treatment, or arbitrary deprivation of life. An extensive analysis of each of these grounds is beyond the scope of this chapter, but a number of important issues emerge.6 First, although decision-makers traditionally have failed to accord the same weight to economic, social, and cultural rights as they have to civil and political rights, it has been recognized that the (cumulative) impacts of socio-economic harms can amount to inhuman or degrading treatment. In other words, breaches of socio-economic rights can be ‘re-characterized’ as violations of a civil and political right giving rise to international protection. Thus, ‘destitution’ or ‘dire humanitarian conditions’ can amount to inhuman or degrading treatment (R v Secretary of State general, the applicant’s fear should be considered well-founded if he can establish, to a reasonable degree, that his continued stay in his country of origin has become intolerable to him for the reasons stated in the definition, or would for the same reasons be intolerable if he returned there’ (UNHCR, 1992, para 42).   For a detailed analysis of the potential application of these in the context of climate change, see McAdam, 2012, ch 3. 6

23.  climate change & displacement of persons    525 for the Home Department, ex parte Adam [2005] UKHL 66; Sufi and Elmi v United Kingdom, 2011, para 292). Second, however, courts have carefully circumscribed the meaning of ‘inhuman or degrading treatment’ so that it cannot be used as a remedy for general poverty, unemployment, or a lack of resources or medical care except in exceptional circumstances (D v United Kingdom, 1997; N v Secretary of State for the Home Department, 2005; HLR v France, 1997, para 42; AD v The Netherlands, 2000, para 7.2). They have been especially reluctant to find that a person needs international protection unless a State deliberately withholds resources or actively occasions harm (as opposed to that person experiencing general conditions of impoverishment on account of a country’s lack of resources).7 This is why Australian law requires that inhuman or degrading treatment be ‘intentionally inflicted’,8 for instance, and some jurisdictions also preclude protection from being granted if the harm is faced generally by a whole population (Migration Act (Aus), 1958, s 36(2B)(c); Qualification Directive (EU), 2011, recital 35; Immigration and Refugee Protection Act (Can), 2001).9 It is therefore unlikely that a lack of basic services alone would substantiate a complementary protection claim unless this were to render survival on return impossible. Something else—a distinguishing feature making the lack of such services particularly deleterious to the applicant—would appear to be necessary. Third, the timing of a claim matters. There have already been a number of cases brought in Australia and New Zealand by Pacific Islanders seeking protection as a result of their fears about the future impacts of climate change on their island homes.10 No case has succeeded, partly because the requisite level of ‘persecution’ has not been made out in refugee law and there has been no nexus with one of the five Refugee Convention grounds. However, in the first such case to consider complementary protection grounds in addition to refugee law, the importance of timeframes also came to the fore. In that case, which involved a man from Kiribati, the New Zealand Immigration and Protection Tribunal held that there was no evidence to establish that the environmental conditions faced by the man on return to Kiribati would be ‘so parlous that his life [would] be placed in jeopardy, or that he and his family [would] not be able to resume their prior subsistence life with dignity’ (AF (Kiribati), 2013, para 74). The Tribunal emphasized that the man was unable to show that there was a sufficient risk to his life ‘at the present time’   See e.g. BG (Fiji) [2012] NZIPT 800091, para 148: ‘Treatment’ requires a positive act or omission by an authority that ‘transcend[s]‌failure of the state’s general economic policies to provide for an adequate standard of living’. 8   Migration Act, 1958, s 5(1): definitions of ‘cruel or inhuman treatment or punishment’, ‘degrading treatment or punishment’. 9   For a recent example in the refugee context but in relation to climate change impacts, see AF (Kiribati), 2013, para 75. 10   See cases above (n 3). 7

526    part vi.  climate change & adaptation measures (AF (Kiribati), 2013, para 89). These findings were upheld by the New Zealand courts (Teitiota, 2013, 2014, 2015). It is worth recalling that all refugee determinations require some degree of speculation as to possible future harm. Indeed, as noted above, someone can satisfy the ‘well-founded fear’ of persecution threshold even if there is a less than fifty per cent chance of the harm eventuating. The risk itself just has to be based on objective evidence—in other words, it cannot be far-fetched or fanciful. This is why refugee status determination is a very different task from dispute resolution, operating more like an injunction to prevent future harm than an adjudication of past harmful conduct. Without considerable jurisprudential development, however, current complementary protection mechanisms will not offer assistance to people seeking to escape the future impacts of climate change. This is because many effects of climate change will take years to manifest at a sufficiently harmful level to satisfy the required threshold for ‘inhuman or degrading treatment’ or a threat to life, or the effects may be severe but temporary and not render return unlawful, or an internal flight alternative may be considered reasonable. Like refugee law, complementary protection is essentially remedial and does not readily accommodate pre-emptive movement where conditions are anticipated to become dire. For this reason, complementary protection is not a viable solution for people trying to move before the situation becomes intolerable.

2.3 Will People Be ‘Stateless’? In the context of small island States whose territorial integrity is threatened by the slow-onset impacts of climate change, in particular rising sea levels, could the law relating to statelessness provide a remedy if people are displaced? Answering this question is contingent on another: when does a State cease to exist? This is because the legal definition of a ‘stateless person’ is deliberately restricted to people who are ‘not considered as a national by any State under the operation of its law’ (1954 Statelessness Convention, Article 1). It does not extend to situations of de facto statelessness where a person formally has a nationality but it is ineffective in practice. Short of stripping citizens of their nationality, which is unlawful under international law (1961 Statelessness Convention, Article 8; 1966 ICCPR, Article 24(3); 1948 UDHR, Article 15; 1954 Statelessness Convention, Article 32), the statelessness definition would seem only to be triggered in the present context once a small island State was no longer recognized as being a ‘State’. In other words, the once-citizen of the small island State would become stateless because there was no longer a ‘State’ able to consider him or her as its national. The international law principles on the extinction of States do not contemplate the physical disappearance of States. International law regulates the formal

23.  climate change & displacement of persons    527 dissolution of a country in cases of absorption (by another country, such as through a referendum), merger (with another country, as in the reunification of West and East Germany), and dissolution (with the emergence of successor countries, as in the break-up of the former Soviet Union and Yugoslavia). It has never had to deal with the potential extinction of a country because of physical disappearance. In reality, it is likely that a loss of population, and with it the loss of effective government, will be the first signs that a country has started to ‘disappear’ as a legal entity (McAdam, 2012, ch 5; Park, 2011; Rayfuse, 2009; Stoutenburg, 2013). This is because small island States are likely to become uninhabitable as a result of diminished water supplies long before they physically disappear. Climate change will exacerbate the already serious problem of water scarcity in small island States (e.g., as a result of more frequent and severe droughts, and the salination of the fresh water lens through storm surges, king tides, and overtopping waves). But international law does not deal with the dissolution of a State on this ground, either. Accordingly, scholars have taken an inverse approach to the creation of States to identify when, and if, a State might lose its statehood as a result of climate change. For a ‘State’ to exist, it must have a defined territory, a permanent population, an effective government, and the capacity to enter into relations with other countries (Montevideo Convention on the Rights and Duties of States, 1934, Article 1).11 While all four criteria need to be present for a State to come into existence, the lack of one or more elements may not mean the end of a State. As Crawford observes, ‘[a]‌ State is not necessarily extinguished by substantial changes in territory, population or government, or even, in some cases, by a combination of all three’ (Crawford, 2006, p. 700). This is because of the strong presumption of continuity of existing States (Crawford, 2006, pp. 701, 715),12 which may account for the fact that since the establishment of the UN Charter in 1945, there have been very few cases of extinction of States and virtually none of involuntary extinction (Crawford, 2006, p. 715). It is also significant that so-called ‘failed States’ have continued to be recognized as States even during the period when they were objectively failing (Thürer, 1999).13 As Craven observes, an analysis of State practice reveals that ‘in many cases the issue   The Montevideo Convention is now generally accepted as reflecting the position in customary international law. 12   Crawford says international law is ‘based on this assumption’: Crawford, 2006, p. 715, 701. He says ‘there is a strong presumption against the extinction of States once firmly established’: p. 715. See generally references referred to there: Marek, 1954; Schachter, 1993, pp. 258–60; Mushkat, 1997, pp. 183–7; Koskenniemi, 1994. 13   Crawford argues, however, that the notion of a ‘failed State’ involves some conceptual confusion, and that many cited cases of ‘failed States’ are in fact crises of government or governance, rather than about the extinction of the State in question (Crawford, 2006, pp. 721–2). If a ‘failed State’ describes ‘a situation where the structure, authority (legitimate power), law, and political order have fallen apart and must be reconstituted in some form, old or new’, the very notion of ‘reconstitution’ suggests that a reformulation of the State is possible, qua State, rather than as some other kind of entity (Crawford, 2006, p. 720 (citing Zartman, 1995, p 1)). 11

528    part vi.  climate change & adaptation measures is not simply one of determining the existence of the state, but rather the degree of identity and extent of continuity’ (Craven, 1998, p. 160). In particular, the role of recognition by other States is crucial. The strong presumption of continuity of an existing State, and the absence of a self-executing mechanism for a State’s cessation, means that other States may continue to treat an entity as a State, despite its lack of effectiveness or even a ‘very extensive loss of actual authority’ (Crawford, 2006, p. 89). Past State practice suggests that the international community would be willing to continue to accept maintenance of the status quo for some time (recognition of ongoing statehood) even if the facts no longer seem to support the State’s existence. As Kälin observes, it is ‘difficult to imagine that any other UN member state would want to tarnish its own reputation by being seen as lacking any compassion for the dire fate of such island states by asking for their exclusion from . . . international organisations’ (Kälin, 2010, p. 102). Presumably, then, the ‘deterritorialized’ State would continue to interact as part of the community of nations. The upshot of this analysis is that the law on statelessness is unlikely to have much practical utility for the (former) inhabitants of small island States. In addition to the definitional obstacles which limit its application in the present context, the law on statelessness is reactive rather than proactive and does not facilitate pre-emptive movement: relevant treaty provisions are only ‘triggered’ once a person is physically present in another State. The statelessness treaties are also very poorly ratified and most States lack formal procedures for determining the legal status of stateless persons. Accordingly, there are no clear means by which treaty benefits could be accessed. That said, there is an institutional advantage of invoking the statelessness regime. The United Nations High Commissioner for Refugees (UNHCR) has a mandate to prevent and reduce statelessness, and is therefore empowered to advocate on behalf of affected populations and engage with States about trying to prevent statelessness and assist (possible future) stateless populations. By contrast, the UNHCR does not have a formal mandate with respect to people displaced by climate change or natural disasters in other contexts, since they are not ‘refugees’.

2.4 Internally Displaced Persons As noted at the outset of this chapter, most movement influenced by climate change will occur within countries rather than across international borders (Government Office for Science, 2011, pp. 9–10, 37; Asian Development Bank, 2012, p. 4). States are responsible for protecting and assisting both citizens and non-citizens within their territory, and should have in place domestic laws relating to matters such as disaster risk reduction and management (Budayeva v Russia, 2008; Kälin and Haenni Dale, 2008, p. 39).

23.  climate change & displacement of persons    529 The 1998 United Nations Guiding Principles on Internal Displacement are relevant in the context of climate change and disasters (Guiding Principles on Internal Displacement, 1998). They already expressly encompass people who leave their homes on account of natural or man-made disasters, but may extend to other groups as well, since the internally displaced person (IDP) category is descriptive rather than providing a fixed legal definition. Indeed, the Special Rapporteur on the Human Rights of IDPs has made climate change a focal point of his mandate (UNHRC, Aug. 2011, section III; Beyani, 2011; UNHRC, Dec. 2011, paras 4, 7, 12–13, 35–6, 58). The Guiding Principles themselves are not legally binding, but they draw on binding principles from international refugee law, human rights law, and humanitarian law, and highlight their applicability during all phases of internal displacement. In this way, they provide a useful tool for States to develop appropriate national laws and policies to assist and protect IDPs—from preventing displacement in the first place, to addressing their needs during displacement, to assisting during the return and recovery phase. In Africa, the Guiding Principles were instrumental in the creation of the Kampala Convention on IDPs. This is the first multilateral treaty on internal displacement, and the first treaty to recognize climate change as a cause of displacement. Relevantly, it requires States to ‘take measures to protect and assist persons who have been internally displaced due to natural or human made disasters, including climate change’ (Kampala Convention, 2009, Article 5(4)). Of course, the treaty only binds States that have ratified it, and then only in respect of internal (not cross-border) displacement. The Special Rapporteur on IDPs has noted that in the context of climate change, the Guiding Principles provide a mechanism for States to respond, at least in part, to paragraph 14(f) of the Cancun Adaptation Framework adopted at the Sixteenth Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC COP16), which invites them to ‘enhance action on adaptation . . . taking into account their common but differentiated responsibilities and respective capabilities, and specific national and regional development priorities, objectives and circumstances, by undertaking, inter alia, the following’: (f) Measures to enhance understanding, coordination and cooperation with regard to climate change induced displacement, migration and planned relocation, where appropriate, at the national, regional and international levels.14

One way in which climate change-related movement presents a slightly different challenge from other forms of internal displacement, such as conflict-related displacement, is in the need for States to focus on their positive obligations to protect   This point was made by the Special Rapporteur on the Human Rights of IDPs (UNHRC, Aug. 2011, paras 44–45). 14

530    part vi.  climate change & adaptation measures and plan to prevent displacement, rather than just to respond to ‘arbitrary’ displacement (UNHRC, Aug. 2011, para 53). Accordingly, States should develop mechanisms to identify ‘capacities to detect potential disaster and displacement situations early on, accountability mechanisms to ensure that follow-up prevention and protection measures are taken, and more effective systems of local and regional consultation which engage affected populations in decisions about their future’ (UNHRC, Aug. 2011, para 55). For slow-onset situations, pre-emptive socio-economic measures relating to ‘economic diversification, the development of alternative forms of livelihoods, addressing issues related to the management of natural resources and putting in place appropriate social safety nets for the most vulnerable sectors of the population’ are also needed (UNHRC, Aug. 2011, para 55). With respect to protection from disasters more generally, since 2007 the International Law Commission (ILC) has been preparing Draft Articles on the Protection of Persons in the Event of Disasters to clarify the legal regulation of disaster-related relief and assistance. They emphasize the primary duty of the State affected by a disaster to provide protection (ILC, 2012, draft article 9; ILC 2011, commentary, draft article 9), which in this context refers to relief, assistance, and ‘all activities aimed at obtaining full respect for the rights of the individual in accordance with the letter and the spirit of the relevant bodies of law (i.e., HR law, IHL, refugee law)’ (Inter-Agency Standing Committee, 1999, p. 5).15 The Draft Articles focus on all persons in need of such protection, whether displaced or not (ILC, 2012, draft article 2; ILC, 2010, commentary, draft article 2). They may therefore be of particular value to ‘internally stuck persons’16 or ‘trapped populations’ whose inability to move may signal an even greater vulnerability than those who are displaced (Government Office for Science, 2012; IOM, 2012). The Draft Articles are also helpful in identifying norms of general international law that would usefully underpin frameworks and solutions relating to climate change-related movement: the duty to cooperate, the principle of humanity, and the principle of human dignity (ILC, 2012, draft articles 5–7; UNHCR, 2011a, para 15; Nansen Principles, 2011, Principle 1). The ILC has emphasized that the principle of humanity is ‘the cornerstone for the protection of persons in international law since it place[s]‌the affected person at the centre of the relief process and recognize[s] 15   Here, the Inter-Agency Standing Committee cites ICRC, 1999, Third Workshop on Protection, Background Paper. Within the quote, ‘HR law’ means ‘human rights law’; ‘IHL’ means ‘international humanitarian law’. 16   The term ‘internally stuck persons’ is used in a number of different contexts in the literature. According to Norah Niland, the UN Coordinator’s Office created the term to draw attention to the plight of Afghans who were unwilling or unable to flee during the period of Taliban-run Afghanistan (Niland, 2006, p. 193). However, it has often been used in the context of Palestinians living in ‘seam zones’—‘sections of Palestinian land within the occupied Palestinian territory (oPt), which fall between the illegal Israeli Annexation Wall and the 1949 Armistice Line (The Green Line) and are therefore severed from the OPT’ (Joint Written Statement submitted by the Al Mezan Centre for Human Rights, 2012, para 1).

23.  climate change & displacement of persons    531 the importance of his or her rights and needs’ (ILC, May–Aug. 2010, Article 3, para 4), and that human dignity underscores all human rights and should guide legal and policy outcomes (ILC, July 2010, p. 7; ILC, 2011, p. 256). This was reinforced in the Nansen Principles, the outcome of a high-level conference on climate change and displacement hosted by the Norwegian government in 2011, discussed below (Nansen Principles, 2011).

3.  Next Steps 3.1 A New Treaty? While there are some existing mechanisms to address internal displacement in the context of climate change, it is generally assumed that there are legal gaps when it comes to the protection of people displaced across international borders. A conventional response to a perceived gap in international law is to call for a new treaty, and there have been a number of different proposals along these lines with respect to climate change-related movement (EquityBD, 2009; Biermann and Boas, 2010; Williams, 2008; CRIDEAU and CRDP, 2008; Docherty and Giannini, 2009; Byravan and Rajan, 2010; Hodgkinson et al, 2010; The Council of Europe Parliamentary Assembly, 2008; Ammer et al, 2013; Displacement Solutions, 2013; Hodgkinson and Young, 2013). The proposals range from creating a protocol to the Refugee Convention or the UNFCCC, to creating a stand-alone treaty to provide so-called ‘climate refugees’ with international protection, including a legal status and the opportunity to integrate locally or resettle elsewhere (UNFCCC, 1992). The proposals also vary with respect to how the displaced are defined, and whether they have to go through individual status determination procedures or instead can receive prima facie protection based on the conditions in the country from which they have come. While States do need to develop coordinated responses that acknowledge crossborder movement as a rational adaptation measure to climate change, discussions to date about creating a remedial instrument to protect those displaced by climate change are problematic for at least four reasons. I have set out this argument in detail elsewhere, so will only sketch the key elements here (McAdam, 2011; Edwards, 2012; Wyman, 2013). First, the chief problem with many of the treaty proposals is their attribution of causation to ‘climate change’. There are both conceptual and empirical problems with establishing climate change as the cause of movement. Certainly, climate change is already contributing to displacement, but it is only one of a number of

532    part vi.  climate change & adaptation measures reasons why people decide to move. This is because climate change tends to multiply pre-existing stressors, rather than causing movement on its own. Second, and related closely to the first point, some of the treaty proposals suggest establishing an expert scientific body to determine the role of climate change in each case. In my view, this is unworkable in the protection context. It misplaces the real focus of the inquiry, which should be on the nature of harm feared if a person is returned home. From the perspective of climate science, asking whether climate change has ‘caused’ a particular event is nonsensical. Its relevance is in assessing the probability of certain types of events or processes occurring, and attributing those occurrences to patterns consistent with global warming (Huber and Gulledge, 2011). Third, most movement is likely to be internal and/or gradual, rather than in the nature of refugee ‘flight’ (Government Office for Science, 2011; Asian Development Bank, 2012; Laczko and Aghazarm, 2009; EACH-FOR, 2009). An international treaty might reaffirm States’ existing commitments to protect those displaced within their borders, but it does not create new obligations. For example, the Kampala Convention is a multilateral treaty that deals with internal climate change-related displacement, but it simply reinforces States’ existing responsibilities to protect those displaced internally, and to implement effective national laws to do so. It does not require them to assume additional international obligations. Additionally, a refugee-like treaty would also have difficulty accommodating those who move pre-emptively, in anticipation of the slower-onset impacts of climate change and gradual environmental deterioration, as opposed to fleeing from a sudden-onset disaster. Fourth, some scholars argue that focusing on the role of climate change arbitrarily privileges one group of forced migrants over others (such as those escaping from poverty), without an adequate legal and/or moral rationale (Betts, 2013). It also privileges climate change-related occurrences (floods, droughts, and so on) over geophysical ones (such as earthquakes and volcanoes), especially when the latter may result in more permanent displacement. From a human rights perspective, the focus of international protection should be on the harm that people fear, not its cause. Given the issue of multicausality discussed above, this is particularly pertinent. Related to this is the fact that people themselves may articulate their reasons for moving away from the same conditions in different ways. For instance, in urban slums in Bangladesh, some people say that they have been driven from their homes by the impacts of climate change; some cite a lack of livelihood opportunities (which could alternatively be conceptualized as climate change-related, such as more frequent extreme weather events making it impossible to sustain an agricultural livelihood), some speak of impoverishment, others refer to poor environmental conditions.17 17   Discussions with slum dwellers showed that some had moved on account of environmental degradation, although this was a very small sample size so no firm conclusions can be drawn: author interviews in Shonamia bosti (slum) (Dhaka, Bangladesh, June 2010).

23.  climate change & displacement of persons    533 Finally, there is little political appetite for a new international agreement. This was demonstrated most starkly in 2011, when UNHCR sought to mobilize States to commit to the gradual development of a global guiding framework ‘to assess the protection gaps created by new forms of forced displacement, especially environmentally-related cross-border displacement’ (UNHCR, 2011c, p. 1), and climate change-related displacement (UNHCR, 2011d). UNHCR’s rationale was that ‘while the nature of forced displacement is rapidly evolving, the responses available to the international community have not kept pace’ (UNHCR, 2011b, p. 3). However, at a special Ministerial Meeting convened by UNHCR in December 2011, only five of 145 States (Norway, Germany, Costa Rica, Mexico, and Switzerland) were willing to do this (Hall, 2013; Hurwitz, 2012; McAdam, 2013). This was notwithstanding the fact that they were not even being requested to commit to the creation of a soft law instrument, much less a treaty. However, even if a treaty were concluded, States would have to demonstrate sufficient political will to ratify, implement, and enforce it. For example, international refugee law is very well established and there are 148 parties to the Refugee Convention and/or its Protocol. Nevertheless, there are still some fifteen million refugees in the world without a durable solution (UNHCR, 2013, p. 3).18 In my view, the problem is not an absence of law, but an absence of political will to implement the law. I have already detailed why existing human rights law mechanisms possess the capacity to encompass the kinds of harms (holistically conceived) faced by people fleeing the impacts of disasters or climate change. Just because they are not being used in this way does not necessarily mean that there is a legal gap, but rather that States and decision-makers are not (yet) prepared to extend them to their full capacity. This was recognized in Principle VII of the Nansen Principles, which states that in addition to addressing normative gaps, ‘[t]‌he existing norms of international law should be fully utilized’ (Nansen Principles, 2011). Alice Edwards also emphasizes this point, arguing that it is important ‘to reinvigorate existing concepts and to consolidate gains rather than to develop new terms or instruments’ (Edwards, 2012, p. 63). In her view, the concept of international protection ‘should be slightly reframed and widened to mean surrogate or substitute protection in circumstances of serious threats to one’s life or freedom or other human rights, regardless of the cause, coupled with a failure or absence of state protection’ (Edwards, 2012, p. 63). Of course, it may be helpful to articulate more clearly how existing legal frameworks could apply and be extended in the specific context of cross-border displacement in the event of disasters and the slower-onset impacts of climate change, and think about how proactive mechanisms might be developed to facilitate voluntary movement away from vulnerable areas. It is essential that we do not default to a remedial displacement model but instead think of ‘protection’ in a more variegated way.   This includes 4.9 million Palestinian refugees registered by UNRWA (UNHCR, 2013, p. 3).

18

534    part vi.  climate change & adaptation measures This is a function that the Nansen Initiative on Disaster-Induced Cross-Border Displacement seeks to perform. Established in October 2012 by the Norwegian and Swiss governments, it aims to build ‘a consensus on key principles and elements regarding the protection of persons displaced across borders in the context of natural disasters that sets the agenda for future action at domestic, regional and international levels’ (The Nansen Initiative, 2012a, p. 4 (emphasis removed)). It marks a tentative ‘first step’ towards international policymaking in this field. The Nansen Initiative is a State-led, intergovernmental process, which immediately distinguishes it from UNHCR’s attempt to take a leading role on the issue. It does, however, seek to realize Norway and Switzerland’s pledges to UNHCR in 2011 to take action on this issue, and is also a response to paragraph 14(f) of the 2010 Cancun Adaptation Framework (Cancun Agreements, 2011). Through a series of sub-regional consultations, the Nansen Initiative aims to gather more nuanced information about the challenges of disasters (in the context of climate change) in different parts of the world, and to identify good practices that might be adopted elsewhere. In October 2015, it released a non-binding ‘Protection Agenda’, setting out the tools and strategies required at the national, regional and international levels to address mobility in the context of disasters and climate change. It is envisaged that this will serve as ‘a framework for further normative, institutional and operational development at different levels’ (The Nansen Initiative, 2012b, p. 2).

3.2 Managed Migration Managed international migration may provide a relatively safe way for people to move away from the effects of climate change without having to demonstrate illtreatment by a persecutory or abusive State. In particular, it is a more appropriate response to slow-onset climate change impacts, which are unlikely to trigger existing (or future) temporary protection mechanisms designed for sudden disasters. A focus on voluntary migration also shifts the emphasis away from a discourse about rescuing helpless victims to focus instead on the positive contributions that migrants can make as active and valued members of new communities. This is a central tenet, for example, of Kiribati’s policy of ‘migration with dignity’—a long-term merits-based mobility strategy that embraces education and vocational training to make its citizens ‘competitive and marketable’ in international labour markets (Maclellan, 2011). Indeed, in the refugee context, Katy Long has suggested that labour migration needs to be reconceptualized as a durable solution to displacement. It provides ‘a means by which the normality of human mobility can be recognized and placed at the centre of refugee solutions’, harnessing refugees’ skills, increasing their agency, and enabling them to contribute actively to their new society (Long, 2009, p. 1).

23.  climate change & displacement of persons    535 At the Nansen Initiative’s first-ever regional consultation, held in the Cook Islands in the Pacific in May 2013, there was a striking focus on ‘self-help’: the need to strengthen community resilience, raise awareness, and increase preparedness. Participants identified initiatives at the community, national, regional, and international levels that would facilitate adaptation and enable people to remain in their homes for as long as possible, while also developing strategies to enhance mobility for those who wished to move. These included the importance of training and education within their countries to equip people with the skills to work abroad, as well as to contribute to their own society while they remained there. In this regard, they encouraged States to review their admission and immigration policies and examine their citizenship laws to ensure that dual nationality was permitted, to help safeguard the cultural identity of those who migrate on a permanent basis. Standard migration schemes can also facilitate mobility for people from places hard hit by climate impacts, even if those schemes are not expressly characterized as climate change-related. Indeed, two programmes that are widely considered successful (both by the sending and receiving States) are partly conceived of as development initiatives. First, New Zealand has long had in place special concessionary schemes that facilitate permanent residence and citizenship for Pacific Islanders, the latest iteration of which is the Pacific Access Category. The rationale of this and its predecessor work and visa waiver schemes for people from Tuvalu, Kiribati, and Tonga is to promote economic development in Pacific Island countries (Stahl and Appleyard, 2007, p. iv). Contrary to popular reports, the Pacific Access Category was not a response to climate change-related displacement. The scheme permits up to seventy-five citizens each from Tuvalu and Kiribati and 250 each from Tonga (and previously Fiji), plus their partners and dependent children, to move to New Zealand as permanent residents (on the path to citizenship, should they desire it) (Immigration New Zealand, 2010). To be eligible, an applicant must be aged between 18 and 45, have a job offer in New Zealand, meet a minimum income requirement, and have a minimum level of English. Selection takes place via a ballot. Second, although Australia does not have a similar visa category, since 2006 it has funded the Kiribati Australia Nursing Initiative (KANI) through its former foreign aid agency, AusAID (Australian Government, 2013). In 2004, the President of Kiribati requested Australia’s assistance to create an ‘education pathway’ to educate young I-Kiribati women for overseas employment opportunities as nurses (KANI, 2006, p. 1). KANI was created ‘to increase the migration opportunities and remittances of I-Kiribati’ (KANI, 2006, p. A-74). Through scholarships, I-Kiribati have the opportunity to train as nurses in Australia and remain in the country if they successfully complete their degree. This is on the presumption that they will be qualified to obtain work visas as nurses in Australia (an identified skills shortage), leading to permanent residence. So far, eighty-two students have received scholarships to undertake the programme. According to the government of Kiribati, it is

536    part vi.  climate change & adaptation measures a ‘win–win situation’: they can choose to stay in Australia, or they can return to Kiribati and contribute to its own health sector (Maclellan, 2011). Both Australia and New Zealand also have temporary migration schemes that enable Pacific Islanders to work for roughly half the year in the horticultural or agricultural industry (Ramasamy et al, 2008; New Zealand Department of Labour, 2013; Australian Government Department of Education, Employment and Workplace Relations, 2012). This kind of circular migration, while not without its challenges, provides opportunities for livelihood diversification, skills development, and the injection of money back into the home State via remittances and savings. Schemes developed at the local or regional levels can respond in a more targeted way to the needs of particular communities, especially when it comes to questions of who wants to move, when, and for how long. Strategies such as staggered migration or circular migration, in addition to more permanent movement, can hold appeal for sending and receiving States alike.19

4. Conclusion International protection frameworks grounded in refugee and human rights law provide important benchmarks for assessing needs and responses to climate change-related mobility. They are helpfully buttressed by soft law instruments on internal displacement and disasters. But they must be complemented by other strategies from the areas of migration, sustainable development, urban planning, climate change adaptation, and disaster risk reduction, among others. Further, these sectors need to become better integrated so that responses can be effective and holistic. That complementarity needs to be achieved not only among different policy areas, but also across different levels of governance. We therefore need multiple and comprehensive approaches at the local, national, regional, and international levels to respond to climate change-related movement. Of course, just as in all mobility contexts, some people will move as an adaptation strategy to enhance their resilience to climate change, while others will use it ‘to survive, but not flourish’ (Warner et al, 2013, p. 8). For the latter group, movement is an ‘erosive coping strategy’ that highlights their vulnerability. By contrast, more resilient households can use migration as a risk management strategy to diversify livelihoods and improve the economic condition (and possibly also the social status) 19   This is the preferred approach of the government of Kiribati, for example (McAdam interview with Kiribati President Anote Tong, May 2009). See also comments of Kiribati’s Foreign Secretary, Tessie Lambourne, cited in Goering, 2009.

23.  climate change & displacement of persons    537 of the family (Rashid, 2009, p. 166), facilitated by such things as social and kinship networks, education, greater assets, and community or government support programmes. For example, heavy monsoonal rains in Bangladesh in 2007 reportedly led to 3,000 people a day moving to the capital Dhaka because there was inadequate relief or livelihood support in their home areas. By contrast, in situations where aid has been effectively distributed and food markets supported, migration has been minimal (Black et al, 2011, p. 443). This is why the legal structures and anticipatory mechanisms that States put in place will ‘play a leading role in determining the degree to which migration is a form of adaptation, or an indicator of a failure to adapt’ (Warner, 2010, p. 8; Warner et al., 2013, p. 8; UNHRC, Aug. 2011, para 57). Finally, it is imperative that human rights principles are brought to bear on issues relating to the entry and admission of both forced and voluntary migrants, and on their subsequent treatment and legal status in host States. While legal and policy responses must safeguard specific human rights, they must also be grounded in broader humanitarian norms, such as the principles of humanity and dignity.

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23.  climate change & displacement of persons    539 Goering L. (2009) ‘Kiribati Officials Plan for “Practical and Rational” Exodus from Atolls’, Reuters AlertNet, (accessed 28 September 2015). Goodwin-Gill G.S. and McAdam J. (2007). The Refugee in International Law, 3rd edn, Oxford Univ. Press. Government Office for Science. (2011). Foresight: Migration and Global Environmental Change: Future Challenges and Opportunities. Guiding Principles on Internal Displacement. (Feb. 1998). UN Doc E/CN.4/1998/53/Add.2. Hall N. (2013). Moving Beyond its Mandate? UNHCR and Climate Change Displacement, 4 J. Int’l Org. Stud. 91. HLR v France (1997) 20 EHRR 29. Hodgkinson D. et al. (2010). ‘The Hour When the Ship Comes In’: A Convention for Persons Displaced by Climate Change, 36 Monash Univ. L. Rev. 69. Hodgkinson D. and Young L. (2013). In the Face of Looming Catastrophe: A Treaty for Climate Change Displaced Persons and its Discontents, Gerrard and Wannier (eds), Cambridge Univ. Press. Horvath v Secretary of State for the Home Department, [2001] 1 AC 489. Huber D. and Gulledge J. (December 2011). Extreme Weather and Climate Change: Understanding the Link and Managing the Risk, Center for Climate and Energy Solutions. Humphreys S. (ed). (2010). Human Rights and Climate Change, Cambridge Univ. Press. Hurwitz A. (2012). Norm-Making in International Refugee Law, 106 Proceedings of the Annual Meeting (American Society of International Law) 430. ILC. (July 2010). ‘Protection of Persons in the Event of Disasters, Statement of the Chairman of the Drafting Committee’, . ILC. (May–August 2010). Report on the Work of its Sixty-Second Session, Commentary, UN Doc A/65/10. ILC. (April–August 2011). Report on the Work of its Sixty-Third Session, Commentary, UN Doc A/66/10. ILC. (May–August 2012). Report on the Work of its Sixty-Fourth Session, UN Doc A/67/10. Immigration and Refugee Protection Act, S.C. 2001, c. 27 (Canada). Immigration New Zealand, Pacific Access Category (last updated 19 March 2010). See . INS v Cardoza-Fonseca. (1987). 480 US 421. Inter-Agency Standing Committee. (Dec. 1999). Protection of Internally Displaced Persons: Inter-Agency Standing Committee Policy Paper. Intergovernmental Panel on Climate Change. (2007). Climate Change 2007: Synthesis Report: Summary for Policymakers, Cambridge Univ. Press. International Covenant on Civil and Political Rights (adopted 16 December 1966, entered into force 23 March 1976) 999 UNTS 171 (ICCPR). IOM (2012) Moving to Safety: Migration Consequences of Complex Crises, International Dialogue on Migration, No 20. (accessed 15 September 2015). Joint Written Statement submitted by the Al Mezan Centre for Human Rights. (Sept. 2012). Al-Haq—Law in Service of Man, the BADIL Resource Center for Palestinian Residency

540    part vi.  climate change & adaptation measures and Refugee Rights, Non-Governmental Organizations in Special Consultative Status, UN Doc A/HRC/21/NGO/58. Kälin W. (2010). ‘Conceptualising Climate-Induced Displacement’ in McAdam J. (ed). Climate Change and Displacement: Multidisciplinary Perspectives, Hart Publishing. Kälin W. and Haenni Dale C. (2008). Disaster Risk Mitigation: Why Human Rights Matter, 31 Forced Migration Rev. 38. KANI, Kiribati–Australia Nursing Initiative: Final Draft Design. (Nov. 2006). Koskenniemi M. (1994). The Wonderful Artificiality of States, 88 Proceedings of the American Society of International Law 22. Laczko F. and Aghazarm C. (eds). (2009). Migration, Environment and Climate Change: Assessing the Evidence, IOM. Long K. (2009). Extending Protection? Labour Migration and Durable Solutions for Refugees, UNHCR, New Issues in Refugee Research, Research Paper No. 176. Maclellan N. (Dec. 2011). ‘Kiribati’s Policy for “Migration with Dignity”’, Inside Story (citing Tessie Lambourne, Permanent Secretary of the Ministry for Foreign Affairs & Immigration, Kiribati). Marek K. (1954). Identity and Continuity of States in Public International Law, Libraire E Droz. McAdam J. (2011). Swimming against the Tide: Why a Climate Change Displacement Treaty is Not the Answer, 23 Int’l J. Refugee L. 1. McAdam J. (2012). Climate Change, Forced Migration, and International Law, Oxford Univ. Press. McAdam J. (2013). Creating New Norms on Climate Change, Natural Disasters and Displacement: International Developments 2010–13, 29 Refuge 11. McInerney-Lankford S., Darrow M., and Rajamani L. (2011). Human Rights and Climate Change: A Review of the International Legal Dimensions, The World Bank. Migration Act 1958 (Cth). (1958) (Australia). Minister for Immigration v Haji Ibrahim, (2000) 204 CLR 1. Montevideo Convention on the Rights and Duties of States (adopted 26 December 1933, entered into force 26 December 1934) 165 LNTS 19. Mushkat R. (1997). Hong Kong and Succession of Treaties, 46 International and Comparative Law Quarterly 181. N v Secretary of State for the Home Department, [2005] UKHL 31. The Nansen Initiative. (Oct. 2012a). A Protection Agenda for Disaster-Induced CrossBorder Displacement: Concept Note, 4. The Nansen Initiative. (Oct. 2012b). Towards a Protection Agenda for Disaster-Induced Cross-Border Displacement, 2, Leaflet. Nansen Principles. (June 2011). Nansen Conference on Climate Change and Displacement in the 21st Century, Oslo. New Zealand Department of Labour, Labour Market Strategy: Recognised Seasonal Employer Policy, see (accessed 24 August 2013). Niland N. (2006). ‘Taliban-Run Afghanistan: The Politics of Closed Borders and Protection’ in Bayefsky (ed). Human Rights and Refugees, Internally Displaced Persons and Migrant Workers: Essays in Memory of Joan Fitzpatrick and Arthur Helton, Martinus Nijhoff. Park S. (May 2011). ‘Climate Change and the Risk of Statelessness: The Situation of LowLying Island States’, UNHCR Legal and Protection Policy Research Series, PPLA/2011/04.

23.  climate change & displacement of persons    541 R v Secretary of State for the Home Department, ex parte Adam [2005] UKHL 66. Ramasamy S. et al. (2008). The Recognised Seasonal Employer Policy: Seeking the Elusive Triple Wins for Development through International Migration, 23 Pacific Economic Bulletin 171. Rashid S. (2009). ‘Migration for Livelihood: Social Protection Issues of Rural Bangladeshis’, in Abrar C. and Seeley J. (eds). Social Protection and Livelihoods: Marginalised Migrant Workers of India and Bangladesh, The Univ. Press Dhaka. Rayfuse R. (2009). ‘W(h)ither Tuvalu? International Law and Disappearing States’, Univ. of New South Wales Faculty of Law Research Series Working Paper No. 9. Report of the Conference of the Parties on its sixteenth session, held in Cancun from 29 November to 10 December 2010, The Cancun Agreements: Outcome of the Work of the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention, Decision 1/CP.16, UN Doc FCCC/CP/2010/7/Add.1 (March 15, 2011), available at . Schachter O. (1993). State Succession: The Once and Future Law, 33 Virginia Journal of International Law 253. SERAC and CESR v Nigeria, Decision regarding Communication No 155/96. (May 2002). ACHPR/COMM/A044/1, ‘15th Annual Activity Report of African Commission on Human and Peoples’ Rights’, annex V. Stahl C. and Appleyard R. (April 2007). Migration and Development in the Pacific Islands: Lessons from the New Zealand Experience, AusAID. Stoutenburg J. (2013). ‘When Do States Disappear?: Thresholds of Effective Statehood and the Continued Recognition of “Deterritorialized” Island States’ in Gerrard M. and Wannier G. (eds). Threatened Island Nations: Legal Implications of Rising Seas and a Changing Climate, Cambridge Univ. Press Sufi and Elmi v United Kingdom. (June 2011). App nos 8319/07 and 11449/07, ECtHR. Teitiota v The Chief Executive of the Ministry of Business, Innovation and Employment [2015] NZSC 107. Teitiota v The Chief Executive of the Ministry of Business, Innovation and Employment [2014] NZCA 173. Teitiota v The Chief Executive of the Ministry of Business Innovation and Employment [2013] NZHC 3125. Thürer D. (1999). ‘The “Failed State” and International Law’, 81 Int’l. Rev. of the Red Cross 731. UNHCR. (1992). The UNHCR Handbook on Procedures and Criteria for Determining Refugee Status under the 1951 Convention and the 1967 Protocol relating to the Status of Refugees, UN Doc HCR/IP/4/Eng/Rev.1, 2nd edn. UNHCR. (20 May 2009). Forced Displacement in the Context of Climate Change: Challenges for States under International Law, Submission to the 6th Session of the Ad Hoc Working Group on Long-Term Cooperative Action under the Convention. UNHCR. (22–25 Feb. 2011a). Summary of Deliberations on Climate Change and Displacement, (UNHCR Expert Roundtable on Climate Change and Displacement, Bellagio (April 2011) [Bellagio Deliberations]. UNHCR. (7 Dec. 2011b). UNHCR Intergovernmental Meeting at the Ministerial Level Intergovernmental Event at the Ministerial Level of Member States of the United Nations on the Occasion of the 60th Anniversary of the 1951 Convention relating to the Status of Refugees and the 50th Anniversary of the 1961 Convention on the Reduction of Statelessness: Statement by Mr António Guterres.

542    part vi.  climate change & adaptation measures UNHCR. (8 Dec. 2011c). UNHCR Intergovernmental Meeting at the Ministerial Level Intergovernmental Event at the Ministerial Level of Member States of the United Nations on the Occasion of the 60th Anniversary of the 1951 Convention relating to the Status of Refugees and the 50th Anniversary of the 1961 Convention on the Reduction of Statelessness: Closing Remarks by the United Nations High Commissioner for Refugees. UNHCR. (7–8 Dec. 2011d). Intergovernmental Event at the Ministerial Level of Member States of the United Nations on the Occasion of the 60th Anniversary of the 1951 Convention relating to the Status of Refugees and the 50th Anniversary of the 1961 Convention on the Reduction of Statelessness: Background Note for the Roundtables, UN Doc HCR/MINCOMMS/2011/08 (18 November 2011). UNHCR. (2013). Displacement: The New 21st Century Challenge, UNHCR Global Trends 2012. UNHRC. (Jan. 2009). Report of the Office of the United Nations High Commissioner for Human Rights on the Relationship between Climate Change and Human Rights, UN Doc A/HRC/10/61. UNHRC. (4 Jan. 2011a). Report of the 2010 Social Forum (Geneva, 4–6 October 2010). UN Doc A/HRC/16/62. UNHRC. (9 Aug. 2011b). Protection of and Assistance to Internally Displaced Persons: Note by Secretary-General (transmitting the report of the Special Rapporteur on the human rights of internally displaced persons, Chaloka Beyani, UNGA, 66th Session), UN Doc A/66/285 (9 August 2011), . UNHRC. (26 Dec. 2011c). Report of the Special Rapporteur on the Human Rights of Internally Displaced Persons, Chaloka Beyani (UN Human Rights Council, 19th Session) UN Doc A/HRC/19/54 (26 December 2011). UNHRC. (10 April 2012). Report of the United Nations High Commissioner for Human Rights on the Outcome of the Seminar Addressing the Adverse Impacts of Climate Change on the Full Enjoyment of Human Rights, UN Doc A/HRC/20/7. United Nations Framework Convention on Climate Change (UNFCCC) (adopted 9 May 1992, entered into force 21 March 1993) 1771 UNTS 107. Universal Declaration of Human Rights (UDHR) (adopted 10 December 1948) UNGA res 217A (III). Warner K. (June 2010). Assessing Institutional and Governance Needs Related to Environmental Change and Human Migration, Study Team on Climate-Induced Migration, German Marshall Fund of the United States. Warner K. et al. (June 2013). Changing Climates, Moving People: Framing Migration, Displacement and Planned Relocation, UN Univ. Policy Brief No 8. Williams A. (2008). Turning the Tide: Recognizing Climate Change Refugees in International Law, 30 Law & Policy 502. Wyman K. (2013). Responses to Climate Migration, 37 Har. Envtl. L. Rev. 167. Zartman I. (1995). ‘Introduction: Posing the Problem of State Collapse’ in Zartman I. (ed). Collapsed States: The Disintegration and Restoration of Legitimate Authority, Lynne Rienner Publishers.

CHAPTER 24

CLIMATE, OCEANS, AND THE LAW OF SPECIAL AND GENERAL ADAPTATION Josh Eagle and U. Rashid Sumaila

1.  Introduction

544

2.  Special Adaptation Rules for Mari-Engineering

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3.  General Adaptation Rules for International Fisheries

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4.  Conclusion

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544    part vi.  climate change & adaptation measures

1. Introduction As climate change impacts continue to emerge, people will respond, either to avoid losses or to take advantage of new opportunities; this is known as adaptation (US Global Change Research Program, 2009; Ruhl, 2010).1 Adaptation law consists of rules aimed at minimizing the social costs associated with human response to climate impacts. Adaptation law can be used to shape the behavior of private actors or public institutions. Rules aimed at individuals might, for example, provide incentives to make enterprises more resilient so that, when environmental change occurs, capital is not unnecessarily stranded. Institutional adaptation law would include measures such as procedural decision-making rules that empower government resource managers to act more quickly in the face of rapid environmental change. One might also categorize adaptation rules on the basis of whether or not the rules in question are directed at a specific, identifiable adaptive behavior. In some cases, it is reasonably foreseeable that individuals or states will attempt to adapt to climate change in certain ways. So, for example, it would be reasonable to assume that some people will attempt to respond to rising sea levels by constructing sea walls, or other erosion-control devices meant to protect land or structures. Law aimed at encouraging or discouraging the use of erosion-control devices might be called ‘special adaptation law’. In other cases, it is difficult or impossible to predict the range of possible human responses to climate impacts. This will be true because the nature or degree of the eventual impacts is uncertain and because those affected have a wide range of adaptive options. Will, for example, the farms of central California receive, on average, more or less precipitation? If the latter, will farmers who are faced with persistent drought purchase more water, switch crops, or change businesses altogether? With respect to this set of cases, the law should be concerned with enabling individuals and states to prepare for, or to operate within, a realm of greatly enhanced environmental uncertainty—more frequent, more extreme, and more unpredictable change. We can call these kinds of rules ‘general adaptation law’.2 This entry surveys the literature of adaptation law in the context of international ocean governance. In order to illustrate the challenges faced by those who   The conscious failure to respond can be considered ‘adaptation’ because such a non-response represents a decision that may have an impact on others (Ruhl, 2010). 2   Categorizing adaptation law in this way is similar to previous categorizations, such as Brasseur and Granier’s approach of dividing adaptation law into anticipatory and reactive measures (Brasseur and Granier, 2013). Our approach differs insofar as it is based less on timing and more on the state of knowledge. General adaptation law includes measures adopted when all that is known is that novel, unpredictable, and rapid changes are on the horizon. Special adaptation law, on the other hand, is an option once it becomes clear that people are likely to respond to those changes in a particular way. 1

24.  climate, oceans, & the law of adaptation    545 design and implement adaptation law in the ocean context, the chapter focuses on two examples: international fisheries and ‘mari-engineering’. International fisheries, defined below, represent an ongoing ocean use regulated by a well-developed body of international law. Due to the wide range of possible climate impacts and adaptive responses, proactive changes to existing fisheries rules in anticipation of climate change fit into the category of general adaptation law. On the other hand, mari-engineering, that is, engineering the seas in an effort to slow or halt climate change impacts, represents an ocean use never before undertaken on a large scale and thus not currently regulated.3 New rules governing the testing and implementation of mari-engineering projects would represent a kind of special adaptation law insofar as they would target an identifiable, reasonably foreseeable response to climate impacts.4 International law, though in many cases ultimately concerned with regulating the behavior of individuals and firms, ordinarily attempts to shape state behavior. In the two illustrative examples of adaptive response, changes to national fisheries policy and geoengineering, the question is whether the international community— or some subset of it—believes it would be in its best interest, that is, would be worth the costs of organizing, to galvanize in order to encourage or discourage particular national responses (Snidal, 1985). Snidal explains that ‘[t]‌he problem of international cooperation is essentially one of collective action applied to the particular circumstances of the international system’ (Snidal, 1985). The adaptive potential, or responsiveness, of international ocean law with respect to climate change will in part be defined by its own ‘particular circumstances’. Specifically, there are two features of the current Law of the Sea that bear on the question of coordination costs. On one hand, the existence of both framework and area-specific international ocean agreements means that states might be able to reduce costs by using these agreements as vehicles for adaptation measures. On the other hand, although the Law of the Sea treaty greatly reduced the   One might consider geoengineering to be a form of mitigation (slowing climate change) or a form of adaptation (response to climate change). In one of the earliest full discussions of geoengineering as a policy option, a National Research Council panel classified geoengineering as a mitigation tool, while at the same time noting that manmade CO2 emissions constitute a form of geoengineering, that is, human climate modification (National Research Council, 1992). We opt to place it in the adaptation category here insofar as implementing a project would represent a single, discrete response to changes wrought by long-term, diffuse emissions. Perhaps the most important point is that, in considering how to regulate geoengineering, it does not make much—if any—difference whether it is called ‘mitigation’ or ‘adaptation’. 4   Of course, the distinction between specific and general adaptation rules is somewhat arbitrary. So, for example, we might reasonably believe that states will turn to a specific adaptation measure, geoengineering, in the future. At the same time, we cannot be certain about what kind of geoengineering measure this will be. The question for policymakers is whether we know enough about the bounds of the geoengineering category to merit an effort to design and implement proactive regulation. As discussed below in section 2.4, some scholars believe that we do not know enough, right now, to make such an effort worthwhile. 3

546    part vi.  climate change & adaptation measures amount of international ocean space governed by the principle of ‘freedom of the seas’, that principle still applies to large parts of the world’s oceans.5

2.  Special Adaptation Rules for Mari-Engineering Although all geoengineering projects will affect the seas, mari-engineering projects by definition directly use the seas and are thus most clearly within the traditional realm of ocean law.6 Like geoengineering, mari-engineering might influence the climate in one of two ways. The first is to affect what Keith calls the ‘energy balance’ of the earth (Keith, 2000). This would be accomplished by reducing the impact of radiative inputs, either by increasing the reflectivity of the earth or its atmosphere (‘albedo’), or by limiting atmospheric concentrations of greenhouse gases, thereby allowing more energy to escape (‘emissivity’).7 Another possible route for mariengineering projects would be to alter ‘energy transport’, that is, the pathways of heat transfer within global systems, with the goal of controlling local and regional climate impacts (Keith, 2000; Welch, 2012). Over the past forty years, scientists and engineers have envisioned numerous types of mari-engineering approaches to altering emissivity and albedo.8 In considering proactive regulation of mari-engineering, there are a wide range of issues that should be considered. Some of these issues relate to the political context in which any geoengineering project would be designed, tested, and deployed. A second category of issues concerns the direct environmental impacts on the ocean and marine   Andrew Serdy argues that remnant ‘freedom of the seas’, insofar as it makes state participation in the management of international fisheries essentially optional, represents the most significant obstacle to the kinds of changes, e.g., the entry of new national fleets into existing fisheries, likely to arise in the future (Serdy, 2011). 6   Classic works on geoengineering from the science and engineering perspectives include ‘Climate Stabilization: For Better or for Worse?’ by W.W. Kellogg and S.H. Schneider, Policy Implications of Greenhouse Warming: Mitigation, Adaptation, and the Science Base by the National Research Council, David W. Keith’s ‘Geoengineering the Climate: History and Prospect’, and S.H. Schneider’s, ‘Geoengineering: Could We or Should We Make it Work?’ (Kellogg and Schneider, 1974; National Research Council, 1992; Keith, 2000; Schneider, 2008). 7   Albedo and emissivity projects are also sometimes known as ‘solar geoengineering’ and ‘carbon geoengineering’, respectively (Welch, 2012). Energy transport projects, such as damming the Bering Strait, are rarely discussed at present. 8   As far as we know, no state, organization, firm, or individual has yet begun to implement any mari-engineering (or geoengineering) project. Some small-scale experiments have been conducted (National Research Council, 1992). 5

24.  climate, oceans, & the law of adaptation    547 systems, for example, pollution. Finally, mari-engineering raises issues—as all geoengineering projects do—with respect to the ultimate expected and unexpected impacts that such projects might have on global or regional climate.

2.1 Political Context and Issues From a political perspective, geoengineering projects are, in a few ways, similar to nuclear weapons.9 The conventional wisdom is that, as with nuclear weapons, actors are most likely to deploy geoengineering as a last resort, in situations where tensions are high and an air of desperation prevails. Assuming that actors understand the science behind the various geoengineering approaches, the conventional wisdom should only be true for albedo modification, which has the potential to reduce global temperatures quickly. Emissivity projects, on the other hand, would have a slower impact on climate because, at least as currently described, they are meant to reduce the amount of carbon that enters the upper atmosphere. In truth, to be effective, any geoengineering project would be most effectively deployed long before a climate crisis. For example, none of the suggested approaches to geoengineering would reduce sea levels; at best, implementation would slow or halt rising seas. Also as with nuclear weapons, the deployment of geoengineering can be undertaken by a sole actor—state, organization, or individual—possibly without notice to the rest of the world. Unlike nuclear weapons, however, it is also very possible, and in fact probably desirable, that a group of nations might make a multi-lateral decision to deploy a geoengineering project.

2.2 Impacts on the Marine Environment All forms of mari-engineering, by definition, would result in significant alteration of marine systems. For example: • Ocean fertilization. This is an emissivity project aimed at removing CO2 from the atmosphere by artificially stimulating increases in the productivity of marine systems. The most commonly described approach, which has been tested on a limited scale,10 is the addition of large amounts of particulate iron to the ocean.11   David Victor makes this point (Victor, 2008). Along the same lines, Carlarne analogizes the dynamics of geoengineering to those of international terrorism (Carlarne, 2011). 10  ‘Between 1993 and 2009, 13 relatively small-scale iron fertilization field experiments were performed in the tropical Pacific, Southern Ocean, North Pacific and tropical Atlantic’ (Williamson, 2012). 11   Other fertilization approaches could include the addition of phosphorus or nitrogen, or the use of mechanical devices to force upwelling, which would ‘bring deeper, nutrient-rich water to the sunlit, upper ocean’ (Williamson, 2012). 9

548    part vi.  climate change & adaptation measures Because lack of iron constrains productivity, at least in some regions, the addition of iron would increase the biomass of marine vegetation, leading to increased carbon uptake. • Cloud formation. One author has noted the possibility of ‘installing machines on the ocean that could blow water vapour into the atmosphere’ (Victor, 2008). In theory, this would increase the albedo of the earth by creating more cloud cover and, therefore, more reflective surface.12 • Direct injection of CO2. Storing CO2 in the ocean is another means of controlling emissivity: ‘The CO2 generated from oxidation of fossil fuels can be captured by separating CO2 from products of combustion or by reforming the fuel to yield a hydrogen-enriched fuel stream for combustion and a carbon-enriched stream for sequestration’ (Keith, 2000). This CO2 stream could be pumped into the deep ocean ‘where most of it would remain isolated from the atmosphere for centuries’ (IPCC, 2005).13 While it is clear that such large-scale projects would likely have significant impacts on the marine environment, it is less clear what those impacts might be. With respect to fertilization, Wallace et al. state that: Large-scale fertilization could have unintended (and difficult to predict) impacts not only locally, e.g. risk of toxic algal blooms, but also far removed in space and time. Impact assessments need to include the possibility of such ‘far-field’ effects on biological productivity, sub-surface oxygen levels, biogas production and ocean acidification (Wallace, 2010; National Research Council, 1992).

The direct impacts of mechanical ‘cloud-making’ would seem to be less severe, although this prediction depends on the scale of the endeavor. The permanent installation of cloud-making facilities might ultimately lead to the same kinds of siting conflicts generated by other types of structures, such as oil and gas rigs or wind turbines.14 Finally, using the ocean to store a few gigatons of carbon dioxide ‘would produce a measurable change in ocean chemistry in the region of injection, whereas injection of hundreds of [gigatons] would eventually produce measurable change over the entire ocean volume’ (IPCC, 2013). Moreover: Experiments show that added CO2 can harm marine organisms. . . . Observed phenomena include reduced rates of calcification, reproduction, growth, circulatory oxygen supply and mobility as well as increased mortality over time. In some organisms these effects are seen in response to small additions of CO2. Immediate mortality is expected close to injection points or CO2 lakes. Chronic effects may set in with small degrees of long-term CO2 12   A similar approach would use the exhaust generated by ships or ocean-sited power plants to stimulate cloud formation (Science News, 1995). 13   The gas could also be injected into rock formations that lie below the seabed. 14   The use of ocean-based exhaust to generate clouds might result in increased levels of acid rain (National Research Council, 1992).

24.  climate, oceans, & the law of adaptation    549 accumulation, such as might result far from an injection site, however, long-term chronic effects have not been studied in deep-sea organisms. . . . It is expected that ecosystem consequences will increase with increasing CO2 concentration, but no environmental thresholds have been identified. It is also presently unclear [sic] how species and ecosystems would adapt to sustained, elevated CO2 levels (IPCC, 2013).

As discussed further in section 2.4 below, the uncertainty surrounding the effects of mari-engineering on both climate and the marine environment leads legal scholars to different conclusions with respect to the most appropriate approach to regulation. On one hand, some believe that the process of developing regulation would benefit from transparent, small-scale experimentation, and that the development of specific rules for large-scale mari-engineering should be postponed until greater understanding exists. In other words, the argument would be that this is not an area well-suited to special adaptation rules. Perhaps because they believe that the scientific uncertainties are irreducible, others advocate for special adaptation rules: the immediate development of restrictions or prohibitions on some or all forms and scales of mari-engineering, including experimentation.

2.3 Distribution of Mari-engineering’s Climate Impacts There is at least one important way in which, as a policy problem, geoengineering differs from nuclear proliferation: future geoengineers would likely act without the intention of harming people or the planet. Despite best intentions, it is probable that climate modification would, at least in the short-term, leave some of the earth’s population worse off than before. First, in the short-term, climate change will prove regionally beneficial to some; geoengineering would slow the rate of these improvements and prevent some potentially beneficial changes from occurring. Second, like the effects of climate change, the results of any given geoengineering project will be uncertain: In many simple nonlinear systems, the phenomenon of hysteresis is observed. In these cases, as some physical variable is changed, the system changes its state in a particular way, but if the same physical variable is then returned to its initial value, the system does not retrace the path; it changes state along a different path. Thus attempting mitigation by decreasing the quantity of greenhouse gases in the atmosphere could, in principle, lead the system into a region of instability even though increasing them had not done so. The problem we face is that, given that the climate system is nonlinear and that we do not understand its state space, all actions can potentially lead to instability, and even a small-scale action is not necessarily less likely to do so than a large-scale action (National Research Council, 1992).

Like the generalized scientific uncertainty described above, distributional uncertainties can lead to differing opinions regarding an appropriate, near-term legal response. Here, however, the different views would be based on varying degrees of trust in international institutions. Essentially, strong belief in the ability of such institutions to prevent unilateral applications of mari-engineering would lead to

550    part vi.  climate change & adaptation measures the conclusion that the international community should build institutions more quickly. The opposing view would be that both the will to create institutions and the effectiveness of those organizations depend on the acquisition and acceptance of information necessary to drive consensus.

2.4 Legal Opinions on International Control of Mari-engineering These aspects of mari-engineering lead to the question of whether and how the international community should prepare for future experimentation and implementation. Victor notes that ‘the standard answer [to the question] is that a legally binding regulatory treaty is needed, along with a careful global assessment that gives all nations the opportunity to participate formally in evaluating geoengineering science’ (Victor, 2008). Victor essentially takes the position that geoengineering is not yet ripe for special adaptation rules, for example, a comprehensive international agreement focused on geoengineering, because we currently lack sufficient information about future geoengineering technologies and their impacts. He also makes the case for rejecting a ban on testing on the ground that ‘it would leave less responsible governments and individuals—those most prone to ignore or avoid inconvenient international norms—to control the technology’s fate’ (Victor, 2008). Victor concludes that the best approach would ‘lay [. . .] the groundwork for future negotiations over norms rather than attempting to codify immature norms now’ using a ‘decentralized process of research and assessment’ meant to ‘generate the information needed to assess different engineering options’ (Victor, 2008).15 There are some who take the opposite view.16 Abelkop and Carlson argue that: [N]‌egotiations must begin now, on the basis of basic norms of international environmental governance, before states begin large scale geoengineering experiments with potentially harmful transboundary impacts and before the political leaders of those states are captured by scientists or commercial geoengineers who are committed to a particular geoengineering path (Abelkop and Carlson, 2013; Victor, 2008).

Given the certain transboundary impacts, negotiations should be open not only to those states most likely to develop and implement projects, but to all interested 15   This view is consistent with Schneider’s view that, although geoengineering should be a ‘last resort’, ‘R&D is needed and should be an early part of the climate policy investment sequencing’ (Schneider, 2008). Other papers taking this position include William Daniel Davis (Davis, 2009). 16   The approach advocated by Abelkop and Carlson is founded on principles laid out by Rayner, Redgwell, Savulescu, Pidgeon, and Kruger in a memorandum to the UK’s House of Commons (Rayner, 2009). Others have considered whether existing international agreements, such as the Convention on Biological Diversity or the London Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, could or should be modified to incorporate governance of geoengineering (Welch, 2012; Williamson, 2012; Carlarne, 2011; Bertram, 2010; Purdy, 2006).

24.  climate, oceans, & the law of adaptation    551 states (Abelkop and Carlson, 2013).17 The ultimate treaty should include procedures for determining whether a proposed project could be initiated as well as norms to be used to inform this determination (Abelkop and Carlson, 2013). The authors’ emphasis on transboundary effects and the two-tier political nature of the issue (actor states and affected states) leads them to conclude that an equity norm should be central to the calculus. They contend, however, that a mere showing of potential harm would not necessarily mean that a project should not go forward. ‘[U]‌nder an equity principle, the risks of climate change that geoengineering could ameliorate would need to be weighed against the countervailing risks that geoengineering raise’ (Abelkop and Carlson, 2013). Should a project go forward, the state proponent would be liable for harm caused to other states (Abelkop and Carlson, 2013).18

3.  General Adaptation Rules for International Fisheries In many cases, our ability to anticipate the specific timing and nature of adaptive responses is limited. In the case of fisheries, predicting human responses to climate change impacts requires us to answer four difficult questions: How will increased atmospheric concentrations of greenhouse gases affect the physical properties of oceans, for example, temperature, salinity, and pH? How will those physical changes affect marine plants and animals? How will physical and ecological changes to the oceans affect the populations and distribution of marketable fish? It is only after answering these three questions that we arrive at the adaptation question: How will states, firms, and individuals alter their behavior in response to the different configuration of these ecosystem goods?19 17   Abelkop and Carlson reject models that would include only the likely actors or that would give all states an equal say. They instead call for a governance structure similar to the one used by the International Monetary Fund, which would give likely actors more voting power and, thus, more incentive to participate (Abelkop and Carlson, 2013). 18   The authors suggest that the treaty could be designed to require payments directly from an actor state, or from a compensation fund. They do not specify what the standard for liability, e.g., strict liability, should be (Abelkop and Carlson, 2013). This will be an important question given the uncertainty surrounding cause and effect in global climate models (Schneider, 2008; National Research Council, 1992). 19   Ruhl summarizes these uncertainties in general terms:

 . . . [C]‌limate change will play out over the globe in a multitude of dynamic, feedback-plagued, nonlinear physical and biological trends that will be uneven spatially and temporally across the planet and will pose numerous policy trade-offs. Sea level will rise here and fall there; there will be more rain here and less there; some species will die, some will move, and some will stay; some crops will fail where they once thrived and some will thrive where they once had no hope; some humans will get poorer, some richer, some will move around, and some will die. The picture of

552    part vi.  climate change & adaptation measures Due to the difficulty in answering these questions with any degree of confidence, adaptation law cannot be directed at encouraging or prohibiting specific adaptive responses; rather, it can only prepare private actors and public institutions for a world characterized by enhanced uncertainty, that is, a world in which our ability to predict future service flows is greatly reduced. The question that follows is how can international law be used to shape public and private behavior so that individuals and government institutions are better prepared for a more unpredictable world?20 In the ocean context, international law occupies a unique space as the undisputed infrastructure of regulation at the international level, for example, rules governing the use of resources in which multiple nations possess direct interests (‘shared resources’), such as highly migratory fish stocks, and at the domestic level, for example, rules governing the use of resources within areas, such as Exclusive Economic Zones (EEZs), that are under the control of a single nation. Here, the focus is on the former, that is, rules governing the use of a shared resource: international fisheries.

3.1 Climate, Uncertainty, and International Fisheries In the case of fisheries, climate change will alter the supply of available fish as well as, in all likelihood, the places where that supply is located (Pinsky, 2013; Cheung, 2010). The legal challenge in the international fisheries context is to prepare individuals, firms, states, and multinational organizations who are currently engaged in fishing (or managing fisheries) for scenarios in which the natural fluctuations in, and movements of, fish populations are both greater and less predictable. Specifically, decision-makers will be required to contend with scientific, socioeconomic, and political uncertainty.

A. Scientific Uncertainty Increased concentrations of greenhouse gases in the atmosphere have had, and will continue to have, direct and indirect effects on marine ecosystems. Direct effects are effects arising out of the physical interaction between the chemicals in greenhouse gases and the oceans. To date, the most significant direct effect is ocean acidification, one result of marine systems’ increasing uptake of carbon dioxide (IPCC, 2013).21 Indirect effects are effects attributable to climate change produced how these and other impacts will play out will change over time, and it will all be happening under a new set of rules about which we know very little at the moment. How bad it will be for any particular local or regional community is unclear; indeed, it won’t be so bad for some people or other species in some places—it might even be smashingly good. (Ruhl, 2010)   On general problems in crafting adaptation law on a regional basis (Termeer, 2011).   The mechanisms for uptake are complex and not completely understood (Raven and Falkowski, 1999). 20 21

24.  climate, oceans, & the law of adaptation    553 by increased atmospheric concentrations of greenhouse gases. The range of indirect effects on ocean systems can be graded along a causal spectrum. Changes in atmospheric temperature and precipitation patterns are closely linked to rising greenhouse gas concentrations; these effects, in turn, alter ocean temperature and salinity (IPCC, 2013). Changes in ocean temperatures and salinity, together with ocean acidification, will have significant—if somewhat unpredictable—follow-on impacts on marine life.22

B. Scientific-economic Uncertainty Healthy marine systems play a critical role in supporting fisheries—the targeted capture of fish for commercial and other purposes.23 As noted above, climate change will have significant impacts on marine life. Of direct concern to fishermen, targeted populations of marine plants and animals might benefit (e.g., through increased reproductive or growth rates), suffer adverse effects (e.g., through increased mortality or decreased growth rates), or migrate to more suitable areas (Hollowed, 2013; Petigas, 2013; Pinsky and Fogarty, 2012). These responses will alter the availability of fish to fisheries by changing the costs and benefits of targeting particular stocks.24

C. Socio-economic and Political Uncertainties If it is difficult to predict ecosystem responses to climate change, it is even more difficult to predict the ways in which people will individually or collectively alter their behavior in anticipation of, or in response to, those ecosystem changes. Responses to fisheries impacts are likely to occur at both an individual (or firm) level, and on the national level. Responses at either level might be proactive or reactive. A proactive fishing company, for example, will be uncertain about how the stocks it targets will react to climate change. In the face of that uncertainty, the firm might decide on a variety of adaptation strategies such as the diversification of capital investment into other fisheries or opportunities or the gradual relocation of its assets to new areas where it expects fishing for targeted stocks to improve (Herrick, 2010). Reactive firms will simply wait for changes to occur before responding. At a   For recent reviews of literature assessing these impacts see Projected Impacts of Climate Change on Marine Fish and Fisheries, Impacts of Climate Change on the Complex Life Cycles of Fish, and Impacts of Climate Change on Fisheries (Hollowed, 2013; Petigas, 2013; Brander, 2010). 23   In addition to business opportunities, fisheries also provide many other services, including recreational opportunities, and support for cultural traditions. 24   A recent article by Sumaila et al., however, describes ‘how [climate change impacts] are expected to affect the economics of global marine fisheries…’. According to this study: ‘The economic consequences of climate change on fisheries might manifest themselves through changes in the price and value of catches, fishing costs, fishers’ incomes, earning to fishing companies, discount rates and economic rent (that is, the surplus after all costs, including ‘normal’ profits, have been covered) . . . ’ (Sumaila, 2011). Due to ‘key knowledge gaps’, the authors cannot estimate the extent or direction of these consequences (Sumaila, 2011; Ruckelshaus, 2013; Badjeck, 2010). 22

554    part vi.  climate change & adaptation measures national level, a country might act proactively by using capacity-reduction measures to increase the profitability (and, thus, the resilience) of its industry. A country might also enact these same kinds of measures after change has occurred in order to organize or finance the transition to fisheries that would be sustainable under the changed conditions.

3.2 Existing Institutions Aside from the resolution of wars, ocean use is perhaps the most venerable subject of international legal agreements: some of the earliest formal fishing treaties, for example, came into existence in the mid-fourteenth century (Fulton, 1911). Indeed, a 1609 treatise by the distinguished Dutch scholar and lawyer Hugo Grotius, Mare Liberum, served as the basis of the fundamental principle of international law of the sea, that is, freedom of the seas, until well into the twentieth century (Juda, 1996). Grotius’ conclusions that all nations had fundamental rights to navigate and fish, and that claims of national sovereignty were thus unlawful, could be supported by two very different propositions: that the seas belonged to all nations as a form of common property, or that they were entirely unowned. In either case, no one nation would have the legal right to prevent another nation from using and enjoying the seas. The current version of international ocean law, embodied in the treaty finalized in 1982 by the United Nations Convention of the Law of the Sea (UNCLOS), is premised on the idea that, because the oceans are common property belonging to all the world’s nations, the mechanisms for establishing regulation of ocean use ought to be jointly determined by the international community (United Nations, 1982).25 That being said, the convention process resulted in a treaty that essentially divides the world’s oceans into two categories with respect to the exploitation of living marine resources: areas primarily within coastal state jurisdiction, for example, EEZs, and areas that for the most part continue to be governed (or ungoverned) by Grotius’ Mare Liberum principles, for example, the High Seas. The division of the oceans into EEZs and the High Seas created unique management problems with respect to fisheries. As the old saying goes, fish are not aware of legal boundaries.26 As the following diagrams show, there are a range of possible fishery patterns under the UNCLOS boundary system:

  It is true that certain outputs of the UNCLOS process, such as the Articles V and VI, grant coastal states relatively greater rights over areas of the sea adjacent to their terrestrial boundaries. However, these rights are properly viewed as concessions jointly granted to coastal states by all nations. 26   Although, there are some studies showing that fish learn to avoid areas of high fishing pressure (Alós, 2015). 25

24.  climate, oceans, & the law of adaptation    555 EEZ 1

High Seas

EEZ 1

2. Straddling Stock (mostly High Seas)

1. Straddling Stock (mostly EEZ) EEZ 1

High Seas

High Seas

EEZ 4

EEZ 1

EEZ 1

3. Straddling Stock (evenly distributed) High Seas

EEZ 2

EEZ 1

High Seas

EEZ 4

EEZ 1

EEZ 1

High Seas

EEZ 2

5. Straddling Stock (transboundary)

4. Straddling Stock (extensive distribution)

High Seas

High Seas

6. Transboundary, Joint or Shared Stock (Not Straddling) EEZ 1

High Seas

EEZ 2

EEZ 2

EEZ 3

EEZ 5

8. Highly “Mobile” Migratory Fish Stock (e.g. Skipjack)

EEZ 2 9. Discrete Stock (only High Seas Not Straddling)

7. Highly Migratory Stock (Tunas and Tuna-like Species)

Figure 24.1  Straddling and Highly Migratory Fish Stocks. The combination of migratory fish stocks and a legal structure that includes both areas of individual coastal state jurisdiction (EEZs) and a large area similar to a commons (the High Seas) opens the door to prisoner’s dilemma problems characterized by varying degrees of complexity (Snidal, 1985).27 Munro illustrates with a simple example involving a fish population that migrates between two nations’ EEZs (Scenario 6 in Figure 24.1): Consider a transboundary fishery resource shared by two coastal States, A and B, and suppose further that there is no significant resource management cooperation between the 27   Note that complexity is infinite if one drops the (never perfectly true) assumption that fishing in any one area affects all areas evenly!

556    part vi.  climate change & adaptation measures two. A and B manage their respective segments of the resource on their own, in accordance with the provisions of the 1982 Convention. If A were to undertake to restrict harvests in order to invest in the resource, the benefits from this action would not be enjoyed by A alone, but would rather be shared with B. What assurance would A have that B would also undertake to conserve the resource? Since there is no cooperation, the answer is none. It is only too possible that B would be content to be a free rider taking advantage of A’s resource investment efforts. In these circumstances, it is likely that A will conclude that the return on its resource investment would be less than the cost, and that its best course of action (‘strategy’) would be to do nothing. B could be expected to come to the same conclusion. Worse, A has to allow for the possibility that B might deliberately deplete the resource. If A seriously believes this, then it could decide that its best strategy is to strike first. Once again, B could follow the same line of reasoning (Munro, 2008).

UNCLOS merely ‘admonish[es] those exploiting transboundary fishery resources to cooperate in the conservation and management of these resources, either directly or through subregional/regional organizations’ (Munro, 2000). The later-adopted United Nations Agreement on Straddling Fish Stocks and Highly Migratory Fish Stocks (entered into force in 2001) took on these issues in a more thoughtful manner, attempting to create incentives for all states involved in covered fisheries to collaborate in, and to follow rules developed through, ‘appropriate subregional or regional fisheries management organizations’ (United Nations, 1995).28 While the Straddling Stocks Agreement creates incentives for states to participate in fisheries management organizations (FMOs), and in fact contains language that requires states to participate in order to have access to fishery resources under FMO management, the provisions of the agreement, the difficulties of punishing non-compliance, and general principles of sovereignty all represent significant challenges to effective management (Agnew, 2009; Sumaila, 2006). The Straddling Stocks Agreement allows all states ‘having a real interest in the fisheries concerned’ to join FMOs (United Nations, 1995). The potential for the addition of unlimited new members undoubtedly impacts the incentives of existing members in that they may adopt an unhealthy short-term view of management. More important, perhaps, the actual addition of new members can put a strain on the resources themselves. Both the terms of the Straddling Stocks Agreement and principles of sovereignty, as well as the physical scope of the oceans, make it very difficult for the FMO or member states to detect and punish those states which either opt not to join the FMO or opt to join and then not follow the rules (Agnew, 2009; Sumaila, 2006). 28   See Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, Aug. 4, 1995, 34 ILM 1542 (1995), hereinafter ‘Straddling Stocks Agreement’, Article 8.1. The Straddling Stocks Agreement does not address transboundary fisheries, presumably leaving the situation described by Munro to be resolved by States A and B (United Nations, 1995).

24.  climate, oceans, & the law of adaptation    557

3.3 Proposals for Proactive Change to International Fishing Agreements In order to get a sense of the kinds of problems climate change is likely to add or exacerbate to the governance of international fisheries, we need simply imagine rapid changes to the size or location of fish populations in the various jurisdictional areas. So, for example, what kinds of problems would result if, in Scenario 1 in Figure 24.1, the targeted population relocated so that it could be fished exclusively in one state’s EEZ? From the perspective of the coastal state (call it State X), this would not seem to be a problem: after all, its fleets would now have more fish to catch, and it would have exclusive management authority over the fishery. However, these two ostensible benefits might also have associated costs. The government of State X would need the capacity to manage the stock. In addition, the increase in fishing opportunities could put immediate stress on that capacity if, for example, the ‘new’ fishery began to attract State X fishermen who had not previously targeted the species. The problems for non-coastal-state fleets which had previously targeted the stocks in the High Seas are more apparent. Relocation of the stock would dislocate both fishermen and capital, putting pressure on their state of origin (call it State Y) to find opportunities elsewhere. The governments of State Y might make demands on State X for continued access based on arguments of equity, tradition, or simple economic need. To the extent that States X and Y interacted in other fisheries or other economic domains, State Y might attempt to resolve this problem in those arenas. Finally, if State Y fleets simply moved on to target other High Seas stocks, the new effort would put stress on management (and populations) of those fisheries. The possible permutations of shifts in fish populations and fishermen are endless.29 How should the international community, through UNCLOS, or other multilateral and regional fisheries organizations prepare for these varied scenarios? In their work, for example, Miller et al. point out that the increased likelihood of abrupt and unpredictable changes in the productive potential and migratory behavior of exploited fish stocks may threaten to disrupt current management arrangements, especially, the cooperative management of shared fish stocks (Miller, 2013).30 With these changes in mind, Miller et al. discuss the value of contingency planning based on anticipation of the possibility of such events. After reviewing a number of case studies, the authors identified three ways to achieve effective and proactive governance of internationally shared fisheries in the face of changing climate. These are 1) creative mechanisms to make cooperation between agents sharing a given 29   For excellent descriptions of how such permutations might manifest in international tuna fisheries, see Effects of Climate Change on Oceanic Fisheries in the Tropical Pacific: Implications for Economic Development and Food Security and Climate Variability and Tropical Tuna: Management Challenges for Highly Migratory Stocks (Bell, 2013; Miller, 2007). 30   Examples of shared stock management include those of Barents Sea cod stocks and hake stocks of the Benguela Current Large marine ecosystem (Sumaila, 2013).

558    part vi.  climate change & adaptation measures fish stock economically worthwhile; 2) mechanisms to improve the resilience and adaptability of cooperative management arrangements to environmental perturbations; and 3) improved integration of scientific research and ecosystem monitoring in management of the shared fisheries. Similarly, McIlgorm et al. (2010) discuss the findings of seven case studies that examined institutional capacity in both domestic and international fisheries (McIlgorm, 2010). Their recommendations include: (1) reduce uncertainty by researching and disseminating the best available information about how commercial fishery resources may change in the future; (2) allocate fishery resources in ways that reduce risks associated with resource changes;31 (3) reduce restrictions on the mobility of fishermen and processors to reduce vulnerability to changes in the geographic distribution of fishery resources; (4) facilitate development of new fisheries by having mechanisms in place to allow responsible utilization of new species or new fishing grounds; (5) plan for potential resource decline so that governments, communities and individuals understand what kind of assistance and compensation will or won’t be available if resource decline occurs (Doremus, 2013).

In addition to focusing on the kinds of institutional changes that would help states and management organizations prepare for climate change impacts, Grafton (2010) also develops a model, based on vulnerability assessment, to assist policymakers in determining when such changes ought to be considered (Grafton, 2010). The author concludes that institutions should ‘promote resilience in bio-physical and socioeconomic systems where the current state is desirable’, and ensure that management is ‘actively adaptive and . . . ensures a speedy response to shocks’ (Dulvy, 2010). As for the timing of changes, Grafton argues that: Risk management that (1) incorporates an assessment of current and future vulnerabilities; (2) engages stakeholders; and (3) models and simulates different states of the world and strategies, should be . . . used today even if the actual planned adaptation from this process may not occur for several years to come. Without a precautionary decision-making process, current actions may increase vulnerabilities (mal-adaptation) or be inadequate (under-adaptation) to manage either the increased probability or greater magnitude of environmental shocks attributable to climate change (Dulvy, 2010; Ruhl, 2013; Craig, 2010).

In order for states to take proactive steps in the area of international fisheries, it will be first necessary for states to reach the consensus that existing institutions are inadequate for the challenges likely to be posed by climate change. Moreover, states will also have to agree that the benefits of taking those proactive steps, even if significant, will outweigh the costs of implementing them. Fisheries management presents an interesting case insofar as existing fisheries law, because of the difficulty in assessing fish stocks and the effects of fishing on productivity, is designed to deal 31   For example, tradable quotas might serve this purpose, by allowing states or individual vessels to exit and enter fisheries more easily. The use of such systems in the international context raises a suite of new issues (Doremus, 2013).

24.  climate, oceans, & the law of adaptation    559 with uncertainty (Carlarne and Eagle, 2012).32 Existing institutional capacity regarding uncertainty would reduce the costs of making adaptation-driven changes to existing law; at the same time, however, existing capacity also reduces the potential benefits. In addition to the costs of convening and participating, states would also likely weigh the potential harm to their interests in opening existing arrangements to change (Young, 1989).

4. Conclusion Despite their obvious differences, mari-engineering and fishing are similar insofar as they represent controllable human inputs into large, dynamic systems where other, more potent inputs play a dominant role. So, while we presume to ‘manage’ fisheries, fisheries management institutions govern only one input into the condition of fish stocks, that is, fishing effort.33 And, while greenhouse gas emissions are certainly within human control, mari-engineering represents a climate input that will be easier to manipulate and, in theory at least, easier to regulate. From a legal perspective as well, fishing and mari-engineering present similar challenges. In both cases, unilateral action by one party can make management of all other parties’ actions irrelevant. The primary, and critical difference, is that while the world generally views fishing at a sustainable rate morally acceptable, we are far from reaching that same consensus with respect to geo- or mari-engineering. In the case of fisheries, there is an imperative to ensure fishing in the unpredictable context of future climate change remains sustainable, that is, can continue without unnecessary damage to marine systems and people dependent on fishing or consuming fish. In the case of mari-engineering, the imperative is far less clear. Due to the effects that individual projects could have on all states, we might prefer to initiate a process aimed at reaching some moral consensus on when and how projects might proceed. On the other hand, if one assumes that a single party might undertake a project prior to the formation of an international moral consensus, then we might prefer to create a legal regime that governs testing and implementation, and invites parties to participate without judgment. Some would object to this approach on the ground that it seems to sanction or facilitate an activity of questionable morality. At the   For this reason, one could argue that the potential impacts of climate change on at least some fisheries will be quantitative rather than qualitative, and thus there is little or no need to alter existing laws. This argument has been made in other contexts (Saba, 2013). 33   Other inputs affected by human action, such as climate and habitat, are for the most part beyond the control of fisheries institutions. 32

560    part vi.  climate change & adaptation measures same time, it might make it possible for all parties to gain insight into the moral and technical paths that others are on. Of course, the ultimate question is whether the gradual flow of scientific and social science information on climate change impacts will be sufficient to overcome inertia. It would seem that, regardless of one’s views on the amount of information that would justify an effort needed to develop new or significantly altered legal regimes, current information justifies the effort needed to convene interested parties for initial discussions.

References Abelkop A.D.K., and Carlson J.C. (2013). ‘Reining in Phaethon’s Chariot: Principles for the Governance of Geoengineering’, 21 Transnat’l L. & Contemp. Probs. 763. Agnew D.J., et al. (2009). ‘Estimating the Worldwide Extent of Illegal Fishing’, PLOS ONE, DOI: 10.1371/journal.pone.0004570. Alós J., et al. (2015). ‘Recreational Angling Intensity Correlates with Alteration of Vulnerability to Fishing in a Carnivorous Coastal Fish Species’. 72(2) Can. J. of Fisheries and Aquatic Sci. 217. Badjeck M.C., et al. (2010). ‘Impacts of Climate Variability and Change on Fishery-Based Livelihoods’, 34 Marine Pol’y 375. Bell J.D., et al. (2013). ‘Effects of Climate Change on Oceanic Fisheries in the Tropical Pacific: Implications for Economic Development and Food Security’, Climatic Change, doi 10.1007/s10584-012-0606-2. Bertram C. (2010). ‘Ocean Iron Fertilization in the Context of the Kyoto Protocol and the Post-Kyoto Process’, 38 Energy Pol’y 1130. Brander K. (2010). ‘Impacts of Climate Change on Fisheries’, 79 J. Marine Systems 389. Brasseur G.P., and Granier C. (2013). ‘Mitigation, Adaptation or Climate Engineering’, 14 Theoretical Inq. L. 1, 13–14. Carlarne C.P. (2011). ‘Arctic Dreams and Geoengineering Wishes: The Collateral Damage of Climate Change’, 49 Colum J. Transnat’l L. 602, 660. Carlarne C.P., and Eagle J. (2012). ‘Food Security, Fisheries, and Ecosystems’, in The Law of Adaptation to Climate Change, Gerrard M. and Kuh K. (eds). Chicago, Illinois: ABA Publishing. Cheung W., et al. (2010). ‘Large-Scale Redistribution Of Maximum Fisheries Catch Potential in the Global Ocean under Climate Change’, 16(1) Global Change Biology 24. Craig R.K. (2010). ‘“Stationarity Is Dead”—Long Live Transformation: Five Principles For Climate Change Adaptation Law’, 34 Harv. Envtl. L. Rev. 9. Davis W.D. (2009). ‘What Does Green Mean: Anthropogenic Climate Change, Geoengineering, and International Environmental Law’, 43 Ga. L. Rev. 901. Doremus H. (2013). ‘Why International Catch Shares Won’t Save Ocean Biodiversity’, 2:2 Mich. J. Envtl. & Admin. L. 385–428. Dulvy N.K., et al. (2010). ‘Fisheries Management and Governance Challenges in a Climate Change’, in OECD, The Economics of Adapting Fisheries to Climate Change.

24.  climate, oceans, & the law of adaptation    561 Fulton T.W. (1911). The Sovereignty of the Sea: An Historical Account of the Claims of England to the Dominion of the British Seas, and of the Evolution of the Territorial Waters, with Special Reference to the Rights of Fishing and the Naval Salute, 67. Edinburgh: William Blackwood and Sons. Grafton R.Q. (2010). ‘Adaptation to Climate Change in Marine Capture Fisheries’, 34 Marine Pol’y 606. Herrick S.F., et al. (2010). ‘Global Production and Economics of Small, Pelagic Fish’, in Checkley A., et al. Climate Change and Small Pelagic Fish. Cambridge: Cambridge University Press. Hollowed A.B., et al. (2013). ‘Projected Impacts of Climate Change on Marine Fish and Fisheries’, ICES Journal of Marine Science, see doi10.1093/icesjms/fst081. IPCC. (2005). Working Group III, IPCC Special Report on Carbon Dioxide Capture and Storage, 279 see (accessed 6 November 2015). IPCC. (2013). Working Group I Contribution to the IPCC Fifth Assessment Report Climate Change 2013: The Physical Science Basis, Chapter 3, pp. 3–41, 3–44, see (accessed 18 August 2015). Juda L. (1996). International Law and Ocean Use Management, 8–16. Oxon: Routledge. Keith D.W. (2000). ‘Geoengineering the Climate: History and Prospect’, 25 Annu. Rev. Energy Environ. 245. Kellogg W.W., and Schneider S.H. (1974). ‘Climate Stabilization: For Better or for Worse?’, 186 Science 1163. McIlgorm A., et al. (2010). ‘How Will Climate Change Alter Fishery Governance? Insights from Seven International Case Studies’, 34 Marine Pol’y 170. Miller K.A. (2007). ‘Climate Variability and Tropical Tuna: Management Challenges for Highly Migratory Stocks’, 31 Marine Policy 56. Miller K.A., et al. (2013). ‘Governing Marine Fisheries in a Changing Climate: A Game Theoretic Perspective’, 61(2) Can. J. of Agric. Econ. 309. Munro G.R. (2000). ‘The United Nations Fish Stocks Agreement of 1995: History and Problems of Implementation’, 15 Marine Res. Econ. 265, 266. Munro G.R. (2008). Game Theory and the Development of Resource Management Policy: The Case of International Fisheries, in Game Theory and Policymaking in Natural Resources and the Environment, pp.16–17, A. Dinar et al. (eds). Oxon: Routledge. National Research Council, (1992). Policy Implications of Greenhouse Warming: Mitigation, Adaptation, and the Science Base 433. Washington, D.C.: National Academy Press. Petigas P., et al. (2013). ‘Impacts of Climate Change on the Complex Life Cycles of Fish’, 22(2) Fisheries Oceanography 121. Pinsky M.L., et al. (2013). ‘Marine Taxa Track Local Climate Velocities’, 341 Science 1239. Pinsky M.L., and Fogarty M. (2012). ‘Lagged Social-Economic Responses to Climate and Range Shifts in Fisheries’, 115 Climatic Change 883. Purdy R. (2006). ‘The Legal Implications of Carbon Capture and Storage Under the Sea’, 7 Sustainable Dev. & Pol’y 22. Raven J.A., and Falkowski P.G. (1999). ‘Oceanic Sinks for Atmospheric CO2’, 22(6) Plant, Cell, & I. 741. Rayner S., et al. (2009). ‘Brief Memorandum on Draft Principles for the Conduct of Geoengineering Research from Professor Steve Rayner et al. to the House of Commons

562    part vi.  climate change & adaptation measures Sci. & Tech. Comm. Enquiry into the Regulation of Geoengineering’, see (accessed 26 August 2015). Ruckelshaus M., et al. (2013). ‘Securing Ocean Benefits for Society in the Face of Climate Change’, 40 Marine Policy 154. Ruhl J.B. (2010). ‘Climate Change Adaptation and the Structural Transformation of Environmental Law’, 40 Envtl. L. 363. Saba A., et al. (2013). ‘Getting Ahead of the Curve: Supporting Adaptation to Long-term Climate Change and Short-term Climate Variability Alike’, 1 Carbon & Climate L. Rev. 3. Schneider S.H. (2008). ‘Geoengineering: Could We or Should We Make it Work?’, 366 Phil Trans. R. Soc. A 3843. Science News, (1995). 148 Science News 220. Serdy A. (2011). ‘Postmodern International Fisheries Law, or We are All Coastal States Now’, 60 Intl. & Comp. L. Q. 387. Snidal D. (1985). ‘Coordination Versus Prisoners’ Dilemma: Implications for International Cooperation and Regimes’, 79 (4) Am. Pol. Sci. Rev. 923. Sumaila U.R. et al. (2006). ‘Global Scope and Economics of Illegal Fishing’, 30 Marine Pol’y 696. Sumaila U.R. et al. (2011). ‘Climate Change Impacts on the Biophysics and Economics of World Fisheries’, Nature Climate Change, DOI: 10.1038/NClimate1301, at 3. Sumaila U.R. (2013). ‘Game theory and Fisheries: Essays on the tragedy of free for all fishing’. Oxon: Routledge. Termeer C., et al. (2011). ‘The Regional Governance of Climate Adaptation: A Framework for Developing Legitimate, Effective, and Resilient Governance Arrangements’, 2 Climate L. 159. United Nations. (1982). United Nations Convention on the Law of the Sea, 1833 U.N.T.S. 397. United Nations. (1995). Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 Relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 34 ILM 1542. US Global Change Research Program. (2009). Global Climate Change Impacts in the United States, 11 see (accessed 18 August 2015). Victor D.G. (2008). ‘On the Regulation of Geoengineering’, 24 Oxford Rev. Econ. Pol’y 322, 325. Wallace D.W.R., et al. (2010). Ocean Fertilization: A Scientific Summary for Policymakers, 1 see (accessed 26 August 2015). Welch A., et al. (2012). ‘Climate Engineering: The Way Forward?’, 2 Envt’l Dev. 57. Williamson P., et al. (2012). ‘Ocean Fertilization for Geoengineering: A Review of Effectiveness, Environmental Impacts and Emerging Governance’, 90 Process Safety & Envt’l Prot. 475. Young O.R. (1989). International Cooperation: Building Regimes for Natural Resources and the Environment, 1–6. New York: Cornell University Press.

Chapter 25

FORESTRY AND AGRICULTURE UNDER THE UNFCCC A JIGSAW WAITING TO BE ASSEMBLED?

Charlotte Streck and Darragh Conway

1.  Introduction

564

2.  A Scattered World: Land Use under the Existing Climate Regime

565

3.  Outlook: Agriculture, Forestry, and Other Land Uses in a Future Climate Treaty

575

4.  Outlook and Conclusions

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1. Introduction Our natural landscapes—forests, wetlands, and agricultural lands—will be immensely affected by climate change through higher temperatures, greater crop water demand, more variable rainfall, and weather extremes. Feeding an increasing world population in the face of the changing climate is one of the major challenges of the coming decades. Yet achieving food security should not come at the expense of forests and other ecosystems. Forests harbour great biodiversity and provide a wide range of ecosystem services—including regulating the local water cycle and moderating effects of temperature on neighbouring land—that sustain livelihoods and human wellbeing. Forests are also important carbon storage reservoirs. Tropical forests alone store some 229 billion tons of carbon in their vegetation (Baccini et al., 2012). While adaptation is a condition for resilient landscape, the land-use sector also holds significant emission reduction potential. Responsible for twenty-two per cent of global greenhouse gas (GHG) emissions, the forestry and agriculture sectors hold the potential for cost-efficient emission reductions (United Nations Environment Programme, 2012: 11). Despite recognizing the importance of forestry and agriculture in Articles 2 and 4 of the UN Framework Convention on Climate Change (UNFCCC, or Convention), the climate regime fails to formulate a coherent vision or set of incentives for encouraging mitigation in the land-use sector while maintaining the ecological and social functions of our landscapes (UNFCCC, 1992: Articles 2 and 4). Quite the contrary, the UNFCCC and the Kyoto Protocol formulate a fragmented set of rules, incentives, and obligations. The Kyoto Protocol considers forest emissions in developed countries, but fails to create incentives for the sector’s highest emission reduction (deforestation) and carbon storage (soils) potential in developing countries. Developed countries have to account for some gases, activities, and lands as part of their emission targets under the Kyoto Protocol, but significant elements can be excluded. Under the Convention, countries are encouraged to mitigate GHG emissions and enhance carbon stock removals through addressing drivers of deforestation and through nationally appropriate mitigation actions. The partly overlapping reporting and accounting frameworks create concrete risks of double-counting on one hand, and significant accounting gaps on the other. The various existing and emerging incentive frameworks, meanwhile, make it difficult to create consistent national strategies that consider the land-use sector as a whole rather than only through particular emission sources. The negotiation of a future climate treaty presents the opportunity to improve the current system and create an integrated accounting and incentive framework that facilitates the formulation of robust and complementary adaptation and mitigation

25.  forestry and agriculture under the unfccc    565 strategies across all land uses. However, given the division of land use across separate agenda items and negotiation streams within the international climate negotiations, there is a risk that, absent a concerted effort, future efforts will be equally fragmented. The objectives of this chapter are, first, to describe the historic treatment of the land-use sector under the UNFCCC and the Kyoto Protocol and, second, to discuss options for how various financial incentive and accounting frameworks can complement each other under a Paris climate agreement. The chapter begins by discussing the existing reporting and accounting regimes set out by the Convention and the Kyoto Protocol, including the treatment of land use under the Protocol’s ‘flexible mechanisms’. It then goes on to consider recent developments focused on broadening consideration of land management activities, namely the recent reforms to the Kyoto Protocol’s land-use rules and the consideration of agriculture and forestry under the Convention. Following this discussion, the chapter explores options for consolidating the various frameworks in the context of a future climate treaty. It concludes by offering some final thoughts on the way forward for the sector under a future regime.

2.  A Scattered World: Land Use under the Existing Climate Regime 2.1 Mitigation Commitments A. Obligations under the Convention The climate regime developed under the UNFCCC places obligations on Parties that directly or indirectly affect forestry and agriculture. The linkage between climate change and agriculture is addressed directly in Article 2 of the treaty, which states: stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system . . . should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.

Further, under Article 4 of the Convention, developed countries have the specific obligation to ‘adopt national policies and take corresponding measures on the mitigation of climate change by protecting and enhancing its greenhouse gas sinks and reservoirs’ (UNFCCC, 1992: Article 4(2)(a)).

566    part vi.  climate change & adaptation measures As its name indicates, however, the UNFCCC is a framework treaty, designed to lay down the foundational architecture of the climate regime. As such, when formulating Party obligations, the Convention, rather than focusing on specific mandatory obligations, focuses on general preparatory measures. It states, for example, that all Parties shall: Promote sustainable management, and promote and cooperate in the conservation and enhancement, as appropriate, of sinks and reservoirs of all greenhouse gases not controlled by the Montreal Protocol, including biomass, forests and oceans as well as other terrestrial, coastal and marine ecosystems (UNFCCC, 1992: Article 4(1)(d)),

and shall: Cooperate in preparing for adaptation to the impacts of climate change; develop and elaborate appropriate and integrated plans for coastal zone management, water resources and agriculture (UNFCCC, 1992: Article 4(1)(e)).

B. Obligations under the Protocol The Kyoto Protocol introduced binding mitigation commitments for developed country Parties (listed in Annex B to the Protocol). It lists promotion of sustainable forest management practices, afforestation and reforestation, and sustainable forms of agriculture as ways for developed countries to achieve these emission reductions and limitation targets (Kyoto Protocol, 1997: Article 2(1)(a)(ii)–(iii)). The call for sustainable land-use policies was uncontroversial in the negotiations that led to the Kyoto Protocol. In contrast, the question of how to treat land-use emissions in the context of specific mitigation commitments became a point of great controversy as the outcome could dramatically alter the scope and stringency of Parties’ mitigation targets. In particular, there was considerable controversy over, first, whether to include land use, land-use change, and forestry (LULUCF) emissions within developed country baseline emissions and, second, how to account for this category of emissions in meeting total emission reduction commitments. Among the contentious rule choices was whether to measure net humaninduced land-use emissions in absolute terms or relative to a base year. This issue is substantially more complex in LULUCF than in other sectors due to the frequently long time-scales between LULUCF emissions or removals and the activities from which they arise, as well as the sometimes complex relationship between human-induced and non-human-induced emissions or removals. The rules established that the first commitment period would include both approaches, as described below. Emissions for grassland management, revegetation, and cropland management are subject to a ‘net–net’ approach that compares net emissions to those in the reference year (Kyoto Protocol, 1997: Article 3.4). Emissions for deforestation, afforestation, reforestation, and forest management, meanwhile, are subject to a ‘gross–net’ approach that measures changes in carbon stocks during the commitment period

25.  forestry and agriculture under the unfccc    567 without referring to a reference year (Kyoto Protocol, 1997: Article 3.3). As with other emissions under the Protocol, LULUCF emissions reductions can be used to meet the emission limitation targets of developed countries. Article 3.7 of the Protocol, however, constrains which developed country Parties can use LULUCF emissions reductions to this end, noting that only: Parties included in Annex I for whom land-use change and forestry constituted a net source of greenhouse gas emissions in 1990 shall include in their 1990 emissions base year or period the aggregate anthropogenic carbon dioxide equivalent emissions by sources minus removals by sinks in 1990 from land-use change for the purposes of calculating their assigned amount.

As a result of this constraint, for the large majority of developed countries,1 LULUCF emissions are not included in their baseline emissions. Contrastingly, agricultural emissions (CH4 and NO2) are accounted for as baseline emissions. This also means that for most Parties, assigned amount units (AAUs) were issued only for agricultural activities, not for LULUCF activities. Parties may, however, issue Removal Units (RMUs) relating to net removals occurring during the commitment period, and can use such RMUs for its own compliance purposes or transfer them to other Parties. RMUs are, for the most part, equal to AAUs, though they may not be carried forward to the second commitment period (UNFCCC, 2005: para 16).

2.2 Accounting for LULUCF Emissions A. Reporting Requirements The Convention establishes a dedicated reporting framework for land use, forestry, and agriculture. Article 12 requires both developed and developing country Parties to submit national GHG inventories that include sources and sinks. The requirements for developed and developing country Parties, as further elaborated in decisions of the Conference of the Parties (COP), are substantially different in terms of frequency and detail. For example, developing country Parties are entitled to receive technical and financial support to assist in inventory preparation. Further, developed country Parties are required to submit a detailed national emissions inventory each year (UNFCCC, 1998: para 2(b); UNFCCC, 2006; UNFCCC, 2010a: para 40(a)), which is subject to an in-depth review by expert panels (UNFCCC, 1995; UNFCCC, 1997). Developing country Parties, by contrast, have until recently only been required to include inventory reports as 1   The main beneficiary of this clause was Australia, as it allowed it to include the net emissions from LULUCF in 1990 to include deforestation emissions in the base year emissions, thereby inflating Australia’s base year emissions, effectively converting Australia’s 108 per cent target into the equivalent of a 142 per cent increase on 1990 levels using the standard accounting rules (Macintosh, 2011).

568    part vi.  climate change & adaptation measures part of national communications and in accordance with less stringent guidelines (UNFCCC, 1996). Land-use emissions (mainly CO2 emissions and removal from LULUCF activities), and agricultural emissions (mainly CH4 and NO2 emissions from human-induced biological processes) are reported separately in national inventory reports (UNFCCC, 2011a). The 2006 Guidelines for National Greenhouse Gas Inventories, developed by the Intergovernmental Panel on Climate Change (IPCC), reform the existing approach and integrate the LULUCF and agricultural sectors into a single agriculture, forestry, and other land uses (AFOLU) sector. This reflects the strong inter-linkages between emissions and removals from all types of land, and seeks to improve the consistency and completeness of GHG estimation and reporting system (IPCC, 2006). However, the COP has not yet adopted the 2006 IPCC Guidelines. While the COP has not adopted the IPCC Guidelines, it has moved forward in other ways with efforts to reform the emissions reporting system. At its seventeenth session in Durban in 2011, the COP adopted modalities and procedures for international assessment and review of the biennial reports submitted by developed country Parties (UNFCCC, 2011b: Annex II). These biennial reports include not only inventories but also progress towards achieving Parties’ emission reduction targets and mitigation actions for the year 2020, as pledged under the Copenhagen Accord (UNFCCC, 2009; UNFCCC, 2011c; UNFCCC, 2011d). In many cases, these pledges include AFOLU emissions (UNFCCC, 2011b: paras 23–36, Annex II). While it is not clear which accounting rules should apply to these commitments, recent practice suggests that developed country Parties—both those participating and not participating in the second commitment period of the Kyoto Protocol— continue to use the Kyoto Protocol’s LULUCF accounting, reporting, and review framework for their biennial reports. Meanwhile, developing country Parties are required to submit biennial reports containing details of their GHG inventories, which will be subject to international consultation and analysis, a facilitative review process different than that applied to developed countries (UNFCCC, 2010a: paras 60–64; UNFCCC, 2011b: Annex III).

B. Land-based Versus Activity-based Accounting All developed country Parties, and a growing number of developing countries, report GHG emissions and removals on all areas of land under the Convention according to a land-based approach that requires the reporting of all land-use changes, forestry emissions, and removals (Prag, Hood, and Martins Barata, 2013: 41). At the same time, developed countries report and account for emissions and removals from land-use activities under the Kyoto Protocol according to an activity-based approach. Both of these approaches merit further consideration. Under a land-based approach, managed lands are classified according to the IPCC system of land categories—forest land, cropland, grassland, wetlands, settlements,

25.  forestry and agriculture under the unfccc    569 other land—and five different carbon pools: aboveground biomass, belowground biomass, dead wood, litter, soil, and organic carbon (IPCC, 2003). For each type of land and for each land conversion (change from one category to another) default methodologies and protocols for emission estimates are provided by the IPCC (Prag, Hood, and Martins Barata, 2013: 41). Under an activity-based approach lands are classified according to the predominant activity exercised under a particular land unit, with hierarchy applied where various activities may coexist on the same unit. Under the Kyoto Protocol, Parties must account for emissions and removals from deforestation, afforestation, and reforestation, while also accounting for forest management, cropland management, and grazing land management; accounting for revegetation is optional. For each activity, default emission/removal factors are calculated and multiplied by the area. To ensure that any subsequent changes in emissions or removals are accounted for, any optional activities once chosen must continue to be included in subsequent commitment periods. For agriculture, this means that emissions resulting from land management (crop or grazing land) are optional in their accounting. Land-based accounting, in theory, uses a ‘wall-to-wall’ comprehensive inventory of all carbon over the chosen land units. This approach is substantively and procedurally demanding as it requires gathering, accessing, and processing vast amounts of data. This is a costly and time-intensive process. However, land-based accounting has a clear advantage over the activity-based approach in that it includes all landuse activities avoiding accounting gaps as well as double counting. On the other hand, land-based accounting also captures a large amount of emissions that are not the product of human activity (e.g., emissions arising from natural disturbances) and, thus, cannot be easily controlled (Prag, Hood, and Martins Barata, 2013: 41).

C. LULUCF in the Second Commitment Period of the Kyoto Protocol At COP17/MOP7 [meeting of the parties] in Durban in 2012, Parties agreed on a revised set of rules to be applied to accounting for LULUCF emissions under the Kyoto Protocol’s second commitment period (UNFCCC, 2011e: Annex I). In contrast with the first commitment period, the new rules were agreed in parallel with Parties’ mitigation commitments for the second period, hence enabling an integrated discussion of the level of targets and the rules influencing the effort required for their achievement (Prag, Hood, and Martins Barata, 2013: 43). The most significant changes for the second commitment period relate to forest management. First, accounting for forest management is now mandatory and includes harvested wood products, putting to a closure discussions on accounting for carbon stored in wood products that have been ongoing since 1999 (UNFCCC, 1999). Second, accounting for forest management will move from the gross-net approach to the use of Forest Management Reference Levels (FMRLs). FMRLs reflect counterfactual scenarios based on a combination of historical figures and projected

570    part vi.  climate change & adaptation measures trends. The COP/MOP has approved individual FMRLs for each Party following Party proposals reviewed by expert review teams (UNFCCC, 2010b: Appendix II). The use of FMRLs provides a flexible approach that is adaptable to country circumstances, while reducing the risk that Parties are credited for ‘business-as-usual’ removals. At the same time, the difficulties inherent in projecting future emission scenarios makes FMRLs prone to significant variations depending on the data and assumptions used (Prag, Hood, and Martins Barata, 2013: 44). An additional change in forest management is the replacement of the countryspecific limits on the level of forest management units that can be generated in each year of the commitment period with a uniform limit of 3.5 per cent of base year emissions per year. Other main changes for the Kyoto Protocol’s second commitment period are the inclusion of wetland drainage and rewetting as an optional activity; and the adoption of provisions for the optional exclusion of emissions in the forest management, afforestation, or reforestation categories caused by natural disturbances that are not ‘materially influenced’ by the Party. In addition to adopting the changes described above, COP17/MOP7-initiated work programmes under the Convention’s Subsidiary Body for Scientific and Technological Advice (SBSTA) on several important issues with a view to adopting decisions at COP19/MOP9 in 2013 (UNFCCC, 2012b). The work programmes consider: • the need to develop more comprehensive accounting mechanisms for LULUCF emissions and removals, including considering moving from an activity-based to land-based approach or adopting a more ‘inclusive’ activity-based approach; • expanding the range of LULUCF activities eligible under the clean development mechanism (CDM); • developing alternatives to the temporary credit scheme that is currently used to address permanence under the CDM (see below); and • developing modalities and procedures for applying additionality. The outcome of these work programmes would have consequences for the treatment of LULUCF in Kyoto’s second commitment period. Progress remains slow, however, and Parties to the UNFCCC did not succeed in agreeing decisions on any of the above issues at COP19/MOP9, instead only agreeing on procedural steps to facilitate coming to agreement in 2016.

2.3 The Flexible Mechanisms and Land Use The Kyoto Protocol also provides developed country Parties the possibility to invest in GHG abatement projects in developing countries through the CDM or in other developed countries through joint implementation (JI). The resulting emission reductions are estimated, and then transferred to the investor country as ‘Emission

25.  forestry and agriculture under the unfccc    571 Reduction Units’ (ERUs), which are generated and issued under JI, or as ‘Certified Emissions Reductions’ (CERs), which are generated and issued under the CDM. Since JI operates only within countries with emission reduction commitments, the inclusion of LULUCF under this programme did not raise significant additional controversy. As a result all LULUCF-related activities are eligible for inclusion in JI projects and the general accounting rules apply to these projects. In the years following the entry into force of the Kyoto Protocol, however, a number of technical problems emerged that deterred any JI LULUCF activities (Schlamadinger, Streck, and O’Sullivan, 2007). The most important of such problems turned out to be the fact that only RMUs (not AAUs) can be converted into ERUs in the context of JI LULUCF projects. In substance that means that ERUs cannot be issued for carbon sequestration activities in developed countries. What is more, since most countries have elected to account for RMUs only at the end of the Kyoto Protocol commitment period, ERUs from JI projects implemented in those countries will only be issued in 2014 or 2015. The deferred issuance of credits increases the risks to project investors and severely reduces the financial incentive that comes with generating emission reductions. In contrast, the inclusion of LULUCF activities under the CDM was very controversial from the start. The controversy arose largely out of the nature of the CDM as an offset mechanism. Parties ultimately agreed only to permit afforestation and reforestation activities under the mechanism and to limit their use by developed country Parties to one per cent of the baseline emissions of the respective Party, times five (UNFCCC, 2003). This way the risk of flooding the market in carbon credits from avoided deforestation projects was averted, albeit at the cost of failing to define any substantive incentives for reducing tropical deforestation. Additional measures managed the risks of ‘permanence’ and ‘leakage’ associated with forestry projects; two risks that are discussed in greater detail below. Considering permanence, crediting LULUCF emission removals raises the risk that emission reductions or removals achieved by the project will later be reversed, resulting in the existence of emission units (CERs) that do not represent lasting environmental benefits; that is, there is a risk of creating ‘paper tonnes’ (Streck and Scholz, 2006: 868). The CDM addresses this risk through two means, the choice of which is left to the project partners. The first is through the creation of temporary credits (tCERs), which are valid for five years and may be replaced upon the certification that carbon stocks equivalent to all issued credits remain on the land. The second approach involves the issuance of ‘long-term’ credits (lCERs), which remain valid for the lifetime of the project but must be immediately (within one month) replaced where periodic certification finds that the carbon stocks they represent no longer exist. The effect of both types of credits is similar; in each case parties must ultimately replace the credits once the project finishes, and thus until completion of the project, the only ‘rent’ compliance (Streck and Scholz, 2006: 868). This temporary nature affects the value of these credits, making them ultimately

572    part vi.  climate change & adaptation measures less desirable than credits from other project types. To address these issues, the UNFCCC Secretariat issued a technical paper in 2014 that looked at alternative approaches to address permanence (UNFCCC, 2014). A second issue concerns leakage; that is, the question of how the project influences emissions beyond the project area. Leakage is a concern across emission reduction measures, but takes on particular relevance under LULUCF activities where displacement of activities often happens easier and faster. Project proponents must address leakage in the design of CDM projects, for example through undertaking activities that reduce demand, create alterative income sources for local people, or adjust emission estimates to account for potential leakage problems. Any residual leakage has to be monitored and accounted for. Positive leakage, whereby a project has the effect of influencing further emission reductions or removals beyond the project area, may not be accounted for.

2.4 REDD+: Curbing Deforestation in Developing Countries Based on a proposal by Papua New Guinea and Costa Rica at COP11 in 2005, Parties to the UNFCCC initiated a process to explore options for creating incentives to avoid deforestation in developing countries, and thus fill the major gap left by the Kyoto Protocol. The proposal to avoid or slow deforestation was welcomed by the global community as one of the first internationally publicized efforts of developing countries to make a quantifiable contribution to scaled-up mitigation efforts under the Convention. This process resulted in the inclusion of tropical deforestation as one of the elements of the 2007 Bali Action Plan. Gradually expanding in activity scope, ‘avoided deforestation’ was first replaced with ‘REDD’, or Reducing Emissions from Deforestation and Forest Degradation, and later (in 2007) further expanded through the concept of ‘REDD+’, which also includes conservation, sustainable management of forests, and enhancement of forest carbon stocks. REDD+ is being discussed under the Convention (UNFCCC, 2013: §I (iii)) as: policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.

REDD+ covers all forest carbon stock changes, but excludes agriculture or other land-use emissions. Later UNFCCC decisions have reemphasized the importance of REDD+ and formulated initial guidance for the development of accounting and measurement

25.  forestry and agriculture under the unfccc    573 systems, safeguards, and financial support. While the incentive and support mechanisms for REDD+ are still under consideration, they can potentially credit a much wider range of activities than avoiding further deforestation, such as replanting trees, forest restoration, rehabilitation, sustainable management, and afforestation and reforestation. A major milestone was reached at the climate conference in Cancún in 2010, where Parties decided that REDD+ should be implemented in three phases, starting with national planning and preparation, followed by demonstration activities, and finally leading to the implementation of results-based actions that correspond to emission reductions that are measured against national baseline or reference (emission) levels (UNFCCC, 2010a: para 73). For all phases, developed countries are called upon to provide significant financial support (UNFCCC, 2010a: para 76). Broad agreement on the arrangements for providing this support was reached at COP19 in Warsaw in 2013. Countries reaffirmed previous decisions, stating that ‘results-based finance’ for REDD+ ‘may come from a variety of sources, public and private, bilateral and multilateral, including alternative sources’ (UNFCCC, 2011e: para 4). The decision also confirms the key role to be played by the Green Climate Fund (GCF) in channelling results-based finance to developing countries, and provides guidance to the GCF on the application of finance. Financing entities outside the UNFCCC framework are ‘encouraged’ to follow the same guidance, and it is likely that most will seek to do so in order to achieve coherence (UNFCCC, 2011f: paras 6–7). In Durban, Parties also adopted guidance on forest reference emission levels/ forest reference levels to establish benchmarks that would serve to account for emission reductions from REDD+ activities (UNFCCC, 2011g). Subsequently, in Warsaw Parties agreed on procedures for the UNFCCC to assess the forest reference emission levels/forest reference levels proposed by REDD+ countries (UNFCCC, 2011f) and agreed to tie this assessment to the provision of results-based finance (UNFCCC, 2011f: paras 6–7). From the outset, there were concerns among observer organizations and some parties that a poorly designed international and badly implemented national REDD+ mechanism might have detrimental impacts on the social and biological environment (See, e.g., Aguilar, 2013). Such fears date back to the initial negotiations of the Kyoto Protocol and include fears ranging from concern over the introduction of monoculture plantations or invasive species with negative impacts on biodiversity or other aspects of local environments, to concerns about the limitation of the rights of indigenous peoples and local communities who depend on forests for their livelihoods. Consequently, REDD+ negotiations staged long discussions about the role of international law in defining the safeguard criteria that would minimize the harm and maximize the co-benefits of REDD+ activities.

574    part vi.  climate change & adaptation measures As a result of these negotiations, in Cancún, Parties agreed on seven broad safeguard principles for the implementation of REDD+. In key part, these principles focus on ensuring that the REDD+ process promotes: transparency, the participation of stakeholders, the protection of biodiversity and ecosystem services, and respect for the rights of indigenous and local communities (UNFCCC, 2010a: Appendix 1). A year later, in Durban, an agreement was reached that Parties undertaking REDD+ activities ‘should provide a summary of information on how the [Cancún] safeguards are being addressed and respected’ (UNFCCC, 2011g). COP19 in Warsaw then confirmed that developing countries that seek financing for REDD+ actions under any future UNFCCC mechanism are expected to comply with the Cancún Safeguards as well as any procedures stipulated by the UNFCCC COP decisions (UNFCCC, 2011f: para 4).

2.5 Recent Developments in Considering Agriculture Despite explicitly mentioning the need to address sector-specific emissions in Article 4(1)(c) of the Convention, the Kyoto Protocol did not single out any sectoral action. The Bali Action Plan changed this when it introduced sector-specific approaches within the post-2012 negotiating framework (UNFCCC 2011h: para 1 (b)(iv)). As a result, from 2010 to 2012, agriculture was negotiated under the agenda item ‘cooperative sectoral approaches and sector-specific actions’ in the context of the Ad-Hoc Working Group on Long-Term Cooperative Action (AWG-LCA). Thus, for the first time agriculture was discussed as a sector that required special attention. Following Bali, agriculture was considered as part of the AWG-LCA negotiating stream, under which a dedicated drafting group on agriculture was established in 2009. Building on a technical paper outlining opportunities in agriculture prepared by the UNFCCC Secretariat, the drafting group prepared a draft text in 2009 proposing the establishment of a work programme on agriculture. However, no agreement could be reached on this text before the AWG-LCA was dissolved in 2012. Two key disagreements underlie the lack of progress in agriculture negotiations. The first is the extent to which any work programme should be framed within the principle of common but differentiated responsibilities (CBDR) (Bickersteth, 2013). Second, Parties differ over the scope of a work programme, and in particular whether it should include only adaptation or also mitigation. Several Parties are concerned that the inclusion of mitigation in the work programme may lead to sectoral-specific mitigation commitments in agriculture, thereby threatening states’ sovereignty over their own food security and leading to climate-motivated trade measures. The draft conclusions of SBSTA’s June 2013 meeting suggests the negotiations may be leaning towards limiting the scope to

25.  forestry and agriculture under the unfccc    575 adaptation.2 This remains subject to further consideration by the COP, however, meaning that a broader compromise on the issues may yet be in reach.

3.  Outlook: Agriculture, Forestry, and Other Land Uses in a Future Climate Treaty 3.1 What Makes Land Use Special? REDD+ is the only item on the agenda of current UNFCCC negotiations that considers a particular incentive framework addressing a particular source of emissions in developing countries. In addition, agriculture is one of only three sectors considered for ‘cooperative sectoral approaches’ under the UNFCCC framework. The other two sectors considered for ‘cooperative sectoral approaches’ are international aviation and maritime transport. Both of these areas are inherently transboundary, making them unsuitable for domestic regulation.3 While there are fundamental barriers to treating land-use contributions, or incentives, on a basis comparable with other sectors, land use merits a few special considerations. With its mitigation potential and adaptation needs, agriculture embodies unique characteristics that distinguish it from other sectors. For one, there is probably no other sector where adaptation and mitigation are so closely linked. Adaptation is a necessary precondition for food security and resilient agricultural systems are the basis for human survival. Further, forests and rural landscapes create livelihoods and employment for the majority of people in developing countries. More than any other activity, land use caters to the very basic needs of people. Land-use patterns are therefore highly diverse and context-specific. When it comes to climate change, practices and technologies that may be complementary in one context may have 2   Para 2 of the draft conclusions reads, in relevant part: ‘The SBSTA invited Parties and admitted observer organizations to submit . . . their views on the current state of scientific knowledge on how to enhance the adaptation of agriculture to climate change impacts while promoting rural development, sustainable development and productivity of agricultural systems and food security in all countries, particularly in developing countries. This should take into account the diversity of the agricultural systems and the differences in scale as well as possible adaptation co-benefits’ [emphasis added] (Subsidiary Body for Scientific and Technological Advice, 2013). 3   Substantive negotiations on international aviation and maritime transport emissions take place under the International Civil Aviation Organization and the International Maritime Organization, respectively. Nonetheless, they remain on the agenda of the UNFCCC, which in effect takes a ‘wait and see’ approach to progress in these organizations.

576    part vi.  climate change & adaptation measures significant detrimental effects in another due to differing climatic or agricultural conditions (Streck et al., 2011). The agricultural sector has great potential for developing synergies among the objectives of mitigation, adaptation, food security, and poverty reduction. At the same time, there is the potential, and sometimes the necessity, for trade-offs across these objectives. Agricultural production will need to grow in order to meet increased demand for food (Streck et al., 2011: section 1.3 page 4). At the same time, when climate change threatens food production and supply, adaptation measures become essential. Consequently, in the next decades, one of the most important areas where trade-offs might occur is between mitigation and food security. Agriculture also implicates complex links among the issues of climate change, food security, and trade. Climate change will likely affect agricultural production, with concomitant effects not only on the supply and distribution of food, but also on food prices. Fluctuating food prices might, in turn, lead to significant changes in global trade flows (Streck et al., 2011: section 2.3, page 5). With climate change mitigation in the agricultural sector being inherently controversial, creating incentives for REDD+ is decisively less controversial. For one, financial transfers to tropical forest countries in REDD+ do not raise the same concerns around competitiveness as does mitigation support in the industrial or the energy sectors. REDD+ is also more closely related to poverty reduction and human development than most other mitigation actions. Similarly, REDD+ activities, at least in theory, provide cost-efficient mitigation opportunities that may serve as a bridging strategy and first step towards more comprehensive low-carbon development. Forests also serve a wide variety of key environmental and social purposes beyond carbon sequestration. Forests provide essential ecological functions including: watershed regulation, local climate control, soil management, and, as host to some ninety per cent of the world’s terrestrial species, biodiversity conservation (Stern, 2006). Though the land-use sector is not unique in holding links with other social and environmental concerns—the energy sector, for example, is closely connected with local air pollution and poverty alleviation—the links here are more fundamental and more complex than elsewhere. As a result, it is essential that adaptation and non-carbon benefits are taken into account in order to ensure that reductions in GHG emissions do not come at the expense of other important goals. AFOLU also raises complex accounting questions that are implicated by mitigation measures in the land-use sector, particularly concerning questions about the permanence of emissions reductions. The inverse side of permanence is the long time lag between removals and the activities underlying them, meaning that removals in a given commitment period are frequently the result of activities that occurred long before the period began. This raises issues of attribution and—potentially—additionality, and the quest for rules to ensure that credits are issued only for removals arising from intentional and verifiable mitigation actions. Closely related to this issue is the fact that a large portion of land-use emissions

25.  forestry and agriculture under the unfccc    577 and removals occur naturally, requiring the development of methods to ensure only anthropogenic emissions and removals are accounted for. Given the complex relationship between human activities and natural ecological cycles, this is seldom straightforward. Lastly, land use is the only mitigation area under which biological sequestration and removals are possible. This means that it is the only mitigation area that can serve not only as a source of emissions but also as a sink. Agriculture, forestry, and other land uses are linked in multiple ways. In almost all countries, as well as on the global level, there is strong competition among various land-use options. Consequently, agriculture is one of the principal drivers of deforestation. Cautious intensification of agriculture, depending on the context and policies used, could reduce or increase pressure on forests. Improved governance, land tenure reform, enhanced regulatory frameworks, compliance mechanisms, and more integrated policies and planning may be used in managing trade-offs and creating synergies across land uses. The coordination and eventual integration of land-use policies requires inter-ministerial collaboration to balance the interests of agriculture, infrastructure, rural development, and the environment. This type of integrated landuse planning and policy-making is not easy to achieve. The fragmentation of land-use measures, with badly coordinated and sometimes directly contradictory policies, is to a certain extent mirrored at the international level with its competing accounting and financial incentive frameworks under the UNFCCC.

3.2 Consolidating Land-use Accounting The treatment of land use under the current climate regime suffers from two main problems: LULUCF accounting under the Kyoto Protocol is limited by its focus on particular activities; and, the land-use agenda under the UNFCCC puts agriculture and forests into separate negotiation streams. Considering that sustainable landuse strategies require coordinated policy-making for all land uses, the separation into LULUCF accounting activities on one hand, and forests versus agriculture and other land uses on the other, fails to create incentives for integration of the different land uses. An integrated land-use agenda would be greatly preferable, and more comprehensive coverage could unlock more mitigation potential. The lack of comprehensive land-use coverage has resulted in serious difficulties in the case of bioenergy and biofuels, because the effect of bioenergy production on GHG emissions and removals on land not included is missed (Estrada et al., 2014). There is broad agreement among Parties that the current approach to land-use accounting under the Kyoto Protocol is too narrow, allowing potentially considerable sources of emissions to be omitted. These emissions are then beyond the scope of Parties’ commitments, creating an important gap that threatens the overall environmental integrity of the targets formulated under the Kyoto Protocol. Recognizing this, COP17/MOP7 put in place a work programme to consider ‘more

578    part vi.  climate change & adaptation measures comprehensive accounting’ of land-use emissions and removals (UNFCCC, 2011e: para 5). The two principal options on the table are a land-based approach or an expanded activity-based approach. In principle, a full land-based approach provides the more comprehensive solution to land-use accounting. By including all emissions and removals within a land area, this approach increases the accounting scope and reduces the potential for selective inclusion of activities. It also removes the, at times, artificial distinctions between different activity types and reduces the need for a single agreed-upon definition of forest, which has proven one of the more contentious aspects of land-use negotiations to date. Additionally, in the context of the Kyoto Protocol, moving to a land-based approach would reduce the reporting burden by aligning the approaches used under the Protocol with the approach applied under the UNFCCC. The adoption of a land-based approach does not by itself, however, lead to more comprehensive accounting. Much depends on the accounting rules adopted and, moreover, whether and how many land categories are omitted from mandatory accounting. A broad-based and inclusive landscape approach can ensure maximum coverage by including all land categories. Moreover, it can greatly reduce the complexity of accounting rules through, for example, reducing the potential for leakage, doublecounting, and selective inclusion. Ultimately, this would lead to more transparent accounting and less scope for rules to be shaped by political manoeuvring (Cowie, Kirschbaumb, and Ward, 2007: 308–9). This approach provides greater incentives for mitigation and provides also opportunities for countries with low forest cover to gain benefits from enhancing mitigation in the land-use sector (Dewi et al., 2009). In spite of the REDD+ acronym, which suggests a focus on particular mitigation activities (e.g., reduced deforestation and degradation, forest management, conservation, and forest carbon stock enhancement), many countries preparing for REDD+ apply a ‘wall-to-wall’ approach towards forest carbon monitoring. However, REDD+ is limited to forest land and forest conversion and does not take into account broader landscape impacts. Observers and parties alike have criticized the limitation on the forest sector and have argued that a more comprehensive landscape-based approach—also known as ‘Reducing Emissions from All Land Uses’—would provide a more comprehensive solution (see, e.g., World Agroforestry Centre, 2012). Several challenges remain to adopting a comprehensive landscape-based approach. There remain significant data shortages for several land-use categories (not only in developing, but also in developed countries), while carbon accounting methodologies for some categories remain less developed than for others. In this context, one can envisage a stepwise approach being taken towards a comprehensive landscapebased framework. In the context of emission caps, this could comprise mandatory accounting for all land-use categories and land-use changes, except categories where experience with existing methodologies are less developed or where there is a lack of data, with these categories becoming mandatory over time (see, e.g., Submission

25.  forestry and agriculture under the unfccc    579 by Cyprus and the European Commission on Behalf of the European Union and its Member States, 2012: para 5). Similarly, developing countries would be permitted to exclude certain categories from the scope of incentive mechanisms where data is unavailable, while introducing measures to improve data and increase coverage over time, all the while aiming to minimize selective accounting.

3.3 Aligning Policies and Incentives Land use is characterized by a close interconnectivity between adaptation needs and mitigation pressures. Farmers will not consider mitigation measures where they could threaten yields; yields can only be maintained if agricultural systems adapt. The proximity between adaptation and mitigation means that the sector has great potential for synergies among the objectives of mitigation, adaptation, food security, and poverty reduction. As noted above, however, there is the potential, and sometimes the necessity, for trade-offs across these objectives. How to maximize the synergies and minimize the trade-offs is an increasingly pressing challenge that both policy-makers and farmers are being called upon to address. Sustainable land-use policies require the close alignment between ensuring system resilience and resource protection and reducing detrimental emissions. It is therefore sensible that policy-makers formulate complementary and synergistic policies. Such synergies would best be supported by incentive systems at the international levels that consider adaptation as well as mitigation. It may make sense therefore to combine policy incentives for adaptation and mitigation in land use in an integrated framework. This is especially relevant to activities in developing countries, where the UNFCCC framework is expected to play a prominent role in supporting adaptation measures. There are different views though on how closely adaptation and mitigation should be integrated. On one end of the continuum, Parties could consider a joint mechanism for addressing adaptation and mitigation in the land-use sector in a fully integrated manner. This approach has been extensively lobbied for by Bolivia, which envisages such a mechanism providing fund-based finance to reward national integrated and sustainable forest management initiatives (see The Plurinational State of Bolivia, 2012). The COP17 in Durban ‘[took] note’ that such an approach ‘could be developed’ (UNFCCC, 2011b: para 67). However, in June 2015 Parties decided against the adoption of a stand-alone mechanism, instead recognizing joint mitigation and adaptation as a variation of REDD+ that developing countries are free to develop to donor countries are “encouraged” to support. Parties further decided that such approaches are subject to UNFCCC decisions covering REDD+ (UNFCCC, 2015). Despite the appeal such a joint mechanism may have had, the existing UNFCCC framework—with separate consideration of adaptation and mitigation—arguably is incompatible with efforts to move towards more substantial integration. Climate

580    part vi.  climate change & adaptation measures change mitigation presents a classic ‘tragedy of the commons’ scenario, whereby the benefit a country obtains in taking mitigation action is often small compared with the cost of doing so, while the benefit to the group (in this case, the global community) is greater (Hardin, 1968: 1243–8). Mitigation in developing countries, which are not subject to mitigation targets, is thus based on incentives, frequently in the form of financial rewards for measured, reported, and verified (MRV) mitigation actions. The benefits of adaptation actions, on the other hand, lie primarily in the country in which they are implemented and are thus inherently incentivized in the implementing country and of less direct concern to other countries. Adaptation, therefore, does not so much require an incentive framework as supportive mechanisms based on knowledge sharing, capacity building, and needs-based financing. In this context, MRV of pure results becomes less relevant even though there will still be a need to develop some form of success indicators for ensuring funding is appropriately used. Given that adaptation needs are often highly location-specific, these indicators will likely vary significantly from country to country, with guidance at the UNFCCC level continuing to be framed in relatively broad terms. This contrasts with the central tenet of results-based finance for mitigation, which is based primarily on tonnes of carbon dioxide equivalent (CO2e) avoided or sequestered. Moreover, while adaptation benefits may be attainable in many mitigation initiatives, there may equally be many perfectly valuable mitigation initiatives in which they are not, or at least not to a great extent, which may ultimately be excluded from a joint mechanism. These differences indicate that a joint mechanism does not fit easily into the silos, buckets, and mechanisms that organize climate negotiations and allocate financial support. One solution to ensure integration without dismissing accurate carbon accounting would be to create integrated low-carbon development strategies for the land-use sector that consider adaptation alongside mitigation. Such strategies could set mitigation baselines while identifying adaptation needs. The development of combined plans could also include the whole AFOLU sectors thus ensuring combined consideration of agriculture, wetlands, forestry, and other land uses. Such an approach could arguably fit within the framework of the decision agreed by Parties in 2015. The least ambitious approach is to discourage actions in one sphere that negatively impact the goals of the other sphere. This approach is already reflected in UNFCCC decisions, with the guidance on REDD+ adopted in the Cancún Agreements stipulating that REDD+ (mitigation) actions should ‘be consistent with the adaptation needs of the country’ (UNFCCC, 2010a: Appendix I, para 1(h)). While this is a highlevel approach with, arguably, minimal normative impact, such an approach could be further developed through, for example, more detailed guidelines on reporting on the integration of adaptation concerns in REDD+ safeguard information systems. On the adaptation side, the COP could conceivably adopt guidelines that promote land-use sector mitigation synergies in national adaptation plans or national adaptation programmes of action. Additionally, funding of adaptation actions through the GCF or other means could be focused towards exploiting synergies where they exist.

25.  forestry and agriculture under the unfccc    581

3.4 Combined Framework for Developing and Developed Countries The frameworks for developed and developing countries with respect to land-use emissions have to date been largely distinct. Developed countries have been subject to binding emission mitigation targets under the Kyoto Protocol, while the participation of developing countries in land-use mitigation has been exclusively through voluntary emission reduction projects under the CDM or the fast-tracking of REDD+ programmes or initiatives. Both have to some extent been subject to the same broad emissions reporting framework under the Convention, though even here reporting requirements differ significantly in terms of frequency, detail, and level of review. This existing division is fundamentally a reflection of the hitherto strict Annex I/ non-Annex I ‘firewall’, based on the principle of CBDR—developed countries with binding commitments and stringent reporting requirements; developing countries with voluntary incentives and more flexible reporting. The extent to which these frameworks can or should be integrated under a future regime is therefore closely related to how the CBDR principle evolves over the coming years. As noted above, under the AWG-DP negotiating stream set forth at COP17, Parties have moved away from the strict ‘firewall’ approach embodied in the Kyoto Protocol. However, this by no means eliminates the principle of CBDR, but rather opens it up to fresh discussions on how it can be meaningfully applied in the context of present needs and capabilities (Brunné and Streck, 2013). The central question naturally surrounds the assumption of commitments by developed and developing country Parties and the form those commitments will take. In a system where developed and developing countries alike assume comparable emission mitigation commitments, integrated accounting and incentive systems for land-use emissions become conceivable. Over the past years, more and more countries have advocated this very approach, arguing for an interpretation of CBDR that would go beyond the simple distinction between developed and developing countries. The group of least developed countries, in its August 2012 submission to the UNFCCC, called for an assessment of what is a ‘fair contribution by all to a regime that is applicable to all and that can achieve the goal of limiting warming below 1.5°C’ (UNFCCC, 2012a). In this process ‘the common but differentiated responsibility; countries’ different and evolving capabilities; equity; historical, current and future trend of emissions; all need to be addressed in a meaningful and constructive manner’. The African Group also referred to equity in the ‘assessment of the adequacy of general commitments and specific commitments by various Parties’ (UNFCCC, 2012b). Brazil on the other hand stresses that the CBDR principle must be the ‘basis for the negotiation of all aspects of the Durban Platform, which must aim to strengthen the regime by enhancing both effectiveness and fairness. Equitable

582    part vi.  climate change & adaptation measures obligations must characterize all aspects of the Durban Platform’s final outcome’ (UNFCCC, 2012c). In contrast, Chile and Colombia suggested finding a ‘method of defining mitigation commitments in the context of the principle of common but differentiated responsibilities and respective capabilities with a specific target or commitment for each country as a result’ (UNFCCC, 2012d). The submission by UNFCCC Parties of intended climate targets and actions in the form of ‘Intended Nationally Determined Contributions’ in 2015 has seen this evolving interpretation of CBDR become a reality. Over 150 countries have submitted some form of mitigation targets—compared with 38 under the Kyoto Protocol—though ambition varies and most large developing country emitters have adopted relative rather than absolute emission reduction targets. It remains less than clear, however, whether such commitments will translate into equivalent rules on accounting and MRV, and the extent to which they would include land-use emissions. The reporting and review frameworks for developed and developing countries elaborated in Cancún and Durban continue the differentiated approach, despite for the first time applying some form of review to developing country reporting (UNFCCC, 2010a: paras 60–64; UNFCCC, 2011b: paras 23–36 and Annexes II and III). As of October 2015 these accounting issues remain unresolved in the UNFCCC negotiating text, though the majority of initial INDCs submitted implicitly include land use as part of economy-wide targets, and over 40 include specific land-use targets. Though the adoption of binding commitments would likely require some form of accounting and MRV, developing countries are likely to continue to insist on differentiation. This is particularly so in the context of land-use emissions, where data in many countries is likely to be scarce and even developed countries retain a significant degree of accounting flexibility. Where significant differences in the stringency and coverage of the two systems remain, the potential for a fully integrated framework involving trading of emissions rights becomes lower. This does not mean, however, that accounting frameworks cannot to some extent be integrated. To the extent that developing countries agree to include land-use emissions within their targets, they could be subject to the same overall reporting rules as developing countries, though with the flexibility to apply lower ‘tiers’ of calculations depending on abilities, which could gradually be increased. Such a framework would promote greater efficiency and allow accounting for developed and developing countries to be progressively integrated as capacities grow. A related question is whether developing countries will adopt separate frameworks for measuring, reporting, and verifying their overall emission reduction targets and their voluntary actions under REDD+ or any future agriculture or other land-use mechanism. The receipt of results-based payments will require robust MRV rules that may extend significantly beyond what Parties are willing to agree for overall emissions accounting. In this context, Parties could consider a phased approach under which stringent rules are applied for emissions included in REDD+ actions,

25.  forestry and agriculture under the unfccc    583 while more flexible rules are applied to other emissions. As capacities grow or Parties expand the scope of their REDD+ actions, more stringent rules could be more broadly applied. Where stringent rules become broadly applied, this could open the possibility of Parties moving from REDD+ to international emissions trading for land-use emissions, as is the case for developed countries under the Kyoto Protocol. At the same time, emission reductions or removals that result in the creation of carbon credits—and potentially those giving rise to results-based payments—that relate to emissions or removals Parties have agreed to include in their targets must be accounted for against those targets. This fact may influence the willingness of countries with significant land-use mitigation potential to include land-use emissions within their targets, though perhaps less so where the option for international emissions trading is available. In the area of adaptation we are perhaps less likely to see integration of developed and developing country frameworks. Under the UNFCCC framework, adaptation is squarely focused on developing countries, again reflecting the fact that adaptation is primarily a national concern and that developed countries are not eligible for international support. Interactions surrounding adaptation are therefore likely to be limited to financing, and sharing of technologies, information, and best practices.

4.  Outlook and Conclusions The accounting and incentive systems for AFOLU under the UNFCCC are in dire need of reform. The current system arises from ad hoc consideration of issues as they come up, and is very much a product of the political process of the UNFCCC. It also continues to carry the stamp of those that traditionally have been suspicious of forestry and land use, viewing it as a cheap and less credible form of mitigation action. In particular, EU actors have stressed on several occasions that they consider LULUCF emissions as inferior and less desirable than emission cuts from industry and energy (Commission of the European Communities, 2008). While not being widely shared by other developed or developing countries, the reluctance of the EU to embrace forestry and agriculture as viable sectors for mitigation actions has been supported by many non-governmental organizations, thus severely delaying any consideration of land-use mitigation options. It is thanks to the engagement of developing countries and their willingness to embrace REDD+ that a debate on emission reductions from deforestation was put on the UNFCCC agenda in 2005. This broader vision will hopefully replace the limited scope of the Kyoto Protocol by creating incentives to reduce deforestation and forest degradation as well as the enhancement of soil carbon stocks through cropland or rangeland management in

584    part vi.  climate change & adaptation measures developing countries. Left out due to methodological challenges and political controversy, those problems recede behind the need to have these lacunae filled in the context of a future climate regime. The negotiations on a post-2020 framework for addressing climate change present opportunities for consolidation and for adopting all rules together as an integrated and comprehensive package under a new treaty. More comprehensive treatment of land use will enhance system integrity (e.g., better capture the cross-sector spillovers in bioenergy) and the definition of comprehensive mitigation targets can enhance the cost-effectiveness if it increases the range of lower-cost mitigation opportunities available, relative to other sectors (Estrada et al., 2014). However, it is important to remember that consolidation and integration remain a formidable challenge. Many of the political issues that made previous agreements difficult remain. These issues include: the complex, bureaucratic, and cumbersome UNFCCC negotiation process (with all its different tracks); the controversial issue of CBDR; the political manoeuvring of parties seeking to protect specific interests. A single unified system of AFOLU that combines adaptation and mitigation, developed and developing countries, and forestry and agriculture is unlikely to emerge in the short term. However, integration can follow a stepwise approach. There are plentiful opportunities for incremental integration that can help to consolidate the planning process and reduce the number of fragmented tracks. Integrating frameworks for developed and developing countries, for example, has potential promise in the context of evolving roles and changing understanding of CBDR. However, developing countries are wary of combining REDD+ with LULUCF accounting due to the level of effort (and in some cases political capital) that has been put into devising and building frameworks for REDD+. Any moves to combine them would therefore need to proceed cautiously, ensuring that the current REDD+ framework is built upon, rather than replaced, and that clear distinctions are made between the level of responsibility of developed and developing countries. Finally, and of course, there is the risk that the lack of will and common understanding will lead once more to a complicated compromise with significant holes and gaps. This time, however, the differences would be less obvious and the chances for success greater. Since the negotiations of the Kyoto Protocol much knowledge has been built, data collected, and confidence gained. The trench between developing and developed countries has not disappeared, but it is now criss-crossed by a complex pattern of alliances collaborating and opposing each other depending on their particular interests, constraints, and policy priorities (Brunné and Streck, 2013). As a result, Parties’ individual commitments may take many different forms reflecting national circumstances and capabilities. This multitude of commitments and action would greatly benefit from an increased coherence in accounting and the alignment of incentive structures.

25.  forestry and agriculture under the unfccc    585

References Aguilar, Y. (2013). ‘Is it still possible to rectify the negative impact of REDD-plus at the present course of current negotiations? A view from Central America’, REDDMonitor.org, see (accessed 1 September 2014). Baccini, A. et al. (2012). ‘Estimated carbon dioxide emissions from tropical deforestation improved by carbon-density maps’, see (accessed 2 June 2014). Bawden, T. (2013). ‘China agrees to impose carbon targets by 2016’, Independent, London 21 May 2013. Bickersteth, S. (2013). ‘OPINION: The current climate of agriculture in the UNFCCC’, see (accessed 1 September 2014). Brunné, J. and Streck, C. (2013). ‘The UNFCCC as a negotiation forum: towards common but more differentiated responsibilities’, Climate & Policy Special Issue on Changing Geopolitics of Climate Change, Sep. 2013. Commission of the European Communities. (2008). Impact Assessment, Commission Staff Working Document, accompanying document to the proposal for a Directive of the European Parliament and of the Council amending Directive 2003/87/EC so as to improve and extend the EU greenhouse gas emission allowance trading scheme (COM(2008) 16 final)(SEC(2008)53, 23/1/2008). Cowie, A. L., Kirschbaumb, M. U. F., and Ward, M. (2007). ‘Options for including all lands in a future greenhouse gas accounting framework’, Environmental Science & Policy 10 (306). Dewi, S., Hall, J., Minang, P. A., Raptala, S., and Van Noordwijk, M. (2009). Reducing Emissions from All Land Uses (REALU): The Case for a whole landscape approach, ASB Policy Brief 13, ASB Partnership for the Tropical Forest Margins, Nairobi, Kenya. Estrada, M., Lee, D., Murray, B., O’Sullivan, R., Penman, J., and Streck, C. (2014). Land Use in a Future Climate Agreement. Winrock International. Prepared with support from cooperative agreement # S-LMAQM-13-CA-1128 with U.S. Department of State. Hardin, G. (1968). ‘The Tragedy of the Commons’, Science 162 (3859). IPCC. (2003). Good Practice Guidance for Land Use, Land-Use Change and Forestry, Vol. Intergovernmental Panel on Climate Change, Hayama, Japan. IPCC. (2006). 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 4: Agriculture, Forestry, and Other Land Use, 1.4. Kyoto Protocol. (1997). Kyoto Protocol to the United Nations Framework Convention on Climate Change, entered into force 16 Feb. 2005. Macintosh, A. (2011). ‘LULUCF offsets and Australia’s 2020 abatement task’, ANU Center for Law and Policy, see (accessed 4 August 2013). Prag, A., Hood, C., and Martins Barata, P. (2013). ‘Made to measure: options for emissions accounting under the UNFCCC’, International Energy Agency Environment Directorate COM/ENV/EPOC/IEA/SLT(2013)1. Schlamadinger, B., Streck, C., and O’Sullivan, R. (2007). ‘Will Joint Implementation LULUCF projects be impossible in practice?’, Point Carbon, see (accessed 2 June 2014). Sethi, N. (2013). ‘India readying to take on absolute emission reduction cuts’, Times of India, New Delhi, 10 April 2013. Stern, N. (2006). Stern Review: The Economics of Climate Change. See (accessed 16 September 2015). Streck, C. and Scholz, S. M. (2006). ‘The role of forests in global climate change: whence we come and where we go’, International Affairs 82: 5, 861–79. Streck, C. et al. (2011). ‘Addressing Agriculture in Climate Change Negotiations: A Scoping Report’, Meridian Institute, available from (accessed 1 September 2015). Submission by Cyprus and the European Commission on Behalf of the European Union and its Member States, (16 July 2012). Submission on issues related to a more comprehensive accounting of anthropogenic emissions by sources and removals by sinks from LULUCF, including through a more inclusive activity-based approach or a land-based approach, as referred to in decision 2/CMP.7. Subsidiary Body for Scientific and Technological Advice. (2013). Thirty-eighth session Bonn, 3–14 June 2013, Agenda item 9: Issues relating to agriculture: Draft conclusions proposed by the Chair. The Plurinational State of Bolivia. (2012). ‘The Joint Mitigation and Adaptation Mechanism for the Integral and Sustainable Management of Forests’, Presented to the UNFCC August, 2012. UNFCCC. (1992). United Nations Framework Convention on Climate Change, entered into force 21 March 1994. UNFCCC. (1995). Review of first communications from the Parties included in Annex I to the Convention, Decision 2/CP.1 (6 June 1995). UNFCCC. (1996). Communications from Parties not included in Annex I to the Convention: guidelines, facilitation and process for consideration, Decision 10/CP.2 (29 October 1996). UNFCCC. (1997). Communications from Parties included in Annex I to the Convention, Decision 6/CP.3 (25 March 1998). UNFCCC. (1998). National communications from Parties included in Annex I to the Convention, Decision 11/CP.4 (25 January 1999). UNFCCC. (1999). Report of the subsidiary body for scientific and technological advice on its eleventh session, FCC/SBSTA/1999/14 (31 January 2000). UNFCCC. (2003). Modalities and procedures for afforestation and reforestation project activities under the clean development mechanism in the first commitment period of the Kyoto Protocol, Decision 19/CP.9 (30 March 2004). UNFCCC. (2005). Modalities for the accounting of assigned amounts under Article 7, paragraph 4, of the Kyoto Protocol, Decision 13/CMP.1 (30 March 2006). UNFCCC. (2006). Updated UNFCCC reporting guidelines on annual inventories following incorporation of the provisions of decision 14/CP.11, UN Doc FCCC/SBSTA/2006/9. UNFCCC. (2009). Copenhagen Accord, Decision 2/CP.15 (30 March 2010). UNFCCC. (2010a). The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention, Decision 1/CP.16 (15 March 2011). UNFCCC. (2010b). The Cancun Agreements: Land use, land-use change and forestry, Dec. 2/CMP.6 (15 March 2011).

25.  forestry and agriculture under the unfccc    587 UNFCCC. (2011a). Guidelines for the preparation of national communications by Parties included in Annex I to the Convention, Part I: UNFCCC reporting guidelines on annual greenhouse gas inventories, Annex to Decision 15/CP.17 (15 March 2012). UNFCCC. (2011b). Outcome of the work of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention, Decision 2/CP.17 (15 March 2012). UNFCCC. (2011c). NAMA submissions, Doc FCCC/AWGLCA/2011/INF.1. UNFCCC. (2011d). Annex I emission reduction targets, see (accessed 1 September 2015). UNFCCC. (2011e). Land use, land-use change and forestry, Decision 2/CMP.7 (15 March 2012). UNFCCC. (2011f). Work programme on results-based finance to progress the full implementation of the activities referred to in decision 1/CP.16, paragraph 70, Decision 9/CP.19 (31 January 2014). UNFCCC. (2011g). Report of the Conference of the Parties, Decision 12/CP.17, UN Doc FCC/CP/2011/9/Add.2 (15 March 2012). UNFCCC. (2011h). Establishment of an Ad Hoc Working Group on the Durban Platform for Enhanced Action, Decision 1/CP.17 (15 March 2012). UNFCCC. (2012a). Submission by the Gambia on behalf of the Least developed Countries (LDC) Group on the views to advance the work of the Ad-hoc Working Group on Durban Platform for Enhanced Actions, retrieved from (accessed 1 September 2015). UNFCCC. (2012b). Submission by Swaziland on behalf of the Africa Group on the Vision, Ambition and Principle under the ADP, retrieved from (accessed 1 September 2015). UNFCCC. (2012c). Views on a workplan for the Ad Hoc Working Group on the Durban Platform for Enhanced Action, FCC/ADP/2012/MISC.3. UNFCCC. (2012d). Input by the Governments of Chile and Colombia on the Organization for the Ad Hoc Working Group on the Durban Platform (ADP), retrieved from (accessed 1 September 2015). UNFCCC. (2013). Outcome of the work of the Ad-hoc Working Group on Long-term Cooperative Action under the Convention, Decision 2/CP.17 (15 March 2012). UNFCCC. (2014). Options for possible additional land use, land-use change and forestry activities and alternative approaches to addressing the risk of non-permanence under the clean development mechanism. FCCC/TP/2014/2 (23 April 2014), retrieved from (accessed 1 September 2015). UNFCCC. (2015). Recommendation of the Subsidiary Body for Scientific and Technological Advice - Draft decision -/CP.21. Alternative policy approaches, such as joint mitigation and adaptation approaches for the integral and sustainable management of forests. UN Doc FCCC/SBSTA/2015/L.5/Add.2 (9 June 2015). United Nations Environment Programme (UNEP). (2012). The Emissions Gap Report, Nairobi. World Agroforestry Centre. (2012). ‘Reference Emission Levels (REL) in the context of REDD and land-based NAMAS: forest transition stages can inform nested negotiations’, Submission to SBBSTA UNFCCC, see (accessed 3 June 2014).

Chapter 26

CLIMATE CHANGE AND DISASTER LAW Daniel Farber

1.  Introduction

589

2.  Climate Change and Disaster Risk

590

3.  Disaster Risks, Climate Change, and International Law

592

4.  Climate Change, the Disaster Cycle, and the Legal System

594

5.  Conclusion

600

26.  climate change and disaster law    589

1. Introduction Disasters are a fact of life. Considering just a single country, the United States, disaster costs have averaged twelve billion dollars per year over the past half-century (Kousky, 2012). From 1980 to 2004, the United States experienced sixty-two weather events causing a billion dollars or more in damages (Miskel, 2008). Averages are misleading, however: Hurricane Katrina alone caused about US$100 billion in direct damage, accounting for one-sixth of the fifty-year average by itself (Miskel, 2008). These mega-disasters pose unique challenges to societies around the world.1 Developed countries may have the highest economic losses, but by far the greatest number of disaster-related deaths take place in developing countries (Farber, Chen, Verchick, and Sun, 2010). Climate change will greatly accentuate disaster risks, putting even more stress on disaster response systems (Farber, Chen, Verchick, and Sun, 2010). The list of potential disasters is a long one, including ‘heat waves, droughts, crop failures, wildfires, and outbreaks of illness’ (Verchick, 2011). Besides the direct threats to human life and property, impacts on food supplies could be severe due to pests, water scarcity, diseases, and weather extremes (Verchick, 2011). Adaptation to these impending changes poses serious challenges.2 Adaptation to changes in averages may be less difficult than adaptation to extreme events associated with climate change. Simply put: ‘Extreme events such as floods and drought cause extensive damage to many parts of society, and thus a critical issue for adaptation is the degree to which frequency, intensity, and persistence of extreme events change’ (Easterling III, Hured, and Smith, 2004). Current systems for disaster mitigation and response are often already hard-pressed to deal with the current baseline level of disaster events. Adaptation to climate change will require improving these systems at all stages, from pre-disaster risk mitigation and emergency response through rebuilding. This chapter focuses on this specific dimension of adaptation to climate change, adaptation to extreme events. It begins by reviewing the prospects for increases in disaster risk due to climate change. It then considers arguments that governments have a duty under international law to respond to these increased risks. The focus then turns to the multiple stages of disaster response and the international challenges posed by each stage. The chapter then closes with a brief summary and some thoughts about directions for future research. 1   For a US perspective on the issues, see Farber, D., Chen, J., Verchick, R., and Sun, L., (2015), Disaster Law and Policy, 3rd edn. New York: Wolters Kluwer. 2  These challenges are discussed in Bonyhady, T., Macintosh, A., and McDonald, J., (2010), Adaptation to Climate Change: Law and Policy; United States Government Accountability Office, (2010), ‘Climate change adaptation: strategic federal planning could help government officials make more informed decisions’, see (accessed 18 August 2015). Chapter 24 of this book deals generally with adaptation issues.

590    part vi.  climate change & adaptation measures

2.  Climate Change and Disaster Risk Climate change is already underway. With rare exceptions, recent years rank at the top of the list of the warmest global temperatures, and depending on future emissions and climate sensitivity, the world will end up 2–7° Celcius warmer than it is today (Archer and Rahmstorf, 2010). Temperature change in the arctic will be about twice as great (Archer and Rahmstorf, 2010). It is difficult to link specific disasters with climate change, but there are strong indications that some recent disasters might not have occurred in the absence of climate change. The most notable example is the European heat wave during the summer of 2003, which was the hottest in at least 500 years (Larsen, 2006). Estimates of the total number of deaths begin at 30,000 and run as high as 50,000 (Larsen, 2006). The heat wave was extreme compared to historical temperatures, but less abnormal compared to recent decades because of the long-term increase of very hot days in Europe (Rebetez, 2006). Scientists have concluded that ‘past human influence has more than doubled the risk of European mean summer temperatures as hot as 2003’ and that ‘the likelihood of such events [is] projected to increase 100fold over the next four decades’ (Stott, Stone, and Allen, 2004). Even assuming that the average global temperature change is only 2°C, which is at the lower end of the projections, the earth would become warmer than it has been in millions of years (Stott, Stone, and Allen, 2004). Extreme events such as fires, floods, and heat waves would become more widespread (Stott, Stone, and Allen, 2004; Cullen, 2010; Kunreuther and Michel-Kerjan, 2009). In terms of precipitation, according to the IPCC: It is likely that the frequency of heavy precipitation or the proportion of total rainfall from heavy falls will increase in the 21st century over many areas of the globe. This is particularly the case in the high latitudes and tropical regions, and in winter in the northern mid-latitudes. Heavy rainfalls associated with tropical cyclones are likely to increase with continued warming. There is medium confidence that, in some regions, increases in heavy precipitation will occur despite projected decreases in total precipitation in those regions. Based on a range of emissions scenarios (B1, A1B, A2), a 1-in-20 year annual maximum daily precipitation amount is likely to become a 1-in-5 to 1-in-15 year event by the end of the 21st century in many regions, and in most regions the higher emissions scenarios (A1B and A2) lead to a stronger projected decrease in return period (IPCC, 2012).

Heat extremes will also become increasingly problematic. According to the IPCC: It is virtually certain that increases in the frequency and magnitude of warm daily temperature extremes and decreases in cold extremes will occur in the 21st century at the global scale. It is very likely that the length, frequency, and/or intensity of warm spells or heat waves will increase over most land areas. Based on the A1B and A2 emissions scenarios, a 1-in-20 year hottest day is likely to become a 1-in-2 year event by the end of the 21st century in most regions, except in the high latitudes of the Northern Hemisphere, where it is likely to become

26.  climate change and disaster law    591 a 1-in-5 year event (see Figure SPM.4A). Under the B1 scenario, a 1-in-20 year event would likely become a 1-in-5 year event (and a 1-in-10 year event in Northern Hemisphere high latitudes) (IPCC, 2012).

Just as changes in weather averages may be less significant than changes in extreme weather, so impacts on average members of the population may be less significant than impacts on vulnerable populations. Climate change will disproportionately affect vulnerable individuals3 and ‘poorer regions and countries, that is, those who have generally contributed the least to human-induced climate change’ (Humphreys, 2008).4 In assessing the impacts of extreme events, it is important to keep in mind that the ‘fatalities from natural disasters are disproportionately incurred in developing countries, and mortality in these countries can be high’ (Kousky, 2012). Low-income countries are home to one-third of global population but experience two-thirds of the fatalities (Kousky, 2012). In terms of purely economic losses, ‘when differences . . . in economic development are removed, India and China then account for 90 percent of total damages’ (Kousky, 2012). India provides an apt example of the potential consequences of climate change (Rosencranz, Singh, and Pal, 2010). Water supplies are likely to be impacted, ‘[f]‌reshwater resources are already stressed in many parts of India, and climate change will only exacerbate the situation. The gross per capita water availability in India is projected to decline from approximately 1820 cubic meter/year in 2001 to as low as approximately 1140 cubic meter/year in 2050’ (Rosencranz, Singh, and Pal, 2010). In 2012, India experienced its second drought in four years, with sharply reduced agricultural production in agricultural areas in the North and West, and in Punjab rainfall was seventy percent below normal (Eshelman, 2012). The drought may have contributed to a massive blackout affecting half of the country as farmers turned to electric groundwater pumps (Eshelman, 2012). ‘As damaging as the drought has been’, however, ‘scientists and environmental experts warn that it also brings into sharp focus India’s long-term vulnerabilities to climate change’ (Eshelman, 2012). Effects are likely to be even greater if the globe warms by 4°C, which is a likely outcome if emissions continue to rise. According to the World Bank, the 4°C scenarios are devastating: inundation of coastal cities; increasing risks for food production potentially leading to higher malnutrition rates; many dry regions becoming dryer, wet regions wetter; unprecedented heat waves in many regions, especially in the tropics; substantially exacerbated water scarcity in many regions; increased frequency of high-intensity tropical cyclones; and irreversible loss of biodiversity, including coral reef systems (World Bank, 2012). 3   Other authors observe that ‘[s]‌tudies on adaptive capacity, in many cases, challenge existing social and economic orders by illustrating that adaptation by the most vulnerable social classes may require redistribution of resources and improved access to finance, land, technology, water, and other assets, as well as enhanced access to decision-making and governance’ (Eakin and Pratt, 2011). 4   The Office of the UN High Commissioner for Human Rights also discusses the ‘human rights implications of response measures’ (UN Office of the High Commissioner for Human Rights, 2009).

592    part vi.  climate change & adaptation measures Sea level rise could reach one meter above current levels, and monthly temperature averages of 40°C are predicted in places such as Australia (World Bank, 2012). Meanwhile, according to the Climate Institute, a 3–4°C increase would mean a twenty percent increase in wildfire risk, and would require major relocation of infrastructure (The Climate Institute, 2012). ‘And most importantly’, according to the World Bank, ‘a 4°C world is so different from the current one that it comes with high uncertainty and new risks that threaten society’s ability to anticipate and plan for future adaptation needs’ (World Bank, 2012). The 4°C world would be plagued by local disasters, but warming might produce harm on a vaster scale. Climate change does not merely intensify the potential for local disasters; it could also produce a worldwide disaster, as Harvard economist Martin Weitzman has emphasized (Weitzman, 2009). He estimated the odds of a temperature increase over 10°C at about five percent (Weitzman, 2009). As Weitzman points out, ‘such high temperatures have not existed for hundreds of millions of years and such a rate of global temperature change might be unprecedented even on a timescale of billions of years’ (Weitzman, 2009). Weitzman sees ‘a nonnegligible probability of worldwide catastrophe’ (Weitzman, 2009). Even putting aside the possibility of global disaster that Weitzman highlights, it is also clear that climate change entails an increase in various kinds of local disasters such as droughts and floods. There is an urgent need to limit greenhouse gases if humanity is to avoid unacceptable risks of catastrophe. But as discussed, even if climate change can be kept to the 2°C level, society will experience increased risks of weather-related disasters. This chapter now turns to the question of how the legal system should respond to this situation, beginning with the international legal standards applicable to climate-related disaster risks.

3.  Disaster Risks, Climate Change, and International Law To the extent climate change cannot be (or simply is not) avoided, adaptation measures will be necessary.5 International law has begun to move towards recognition of an obligation to engage in adaptation efforts. According to Article II(12) of the Cancun Agreement, ‘action on adaptation . . . should follow a country-driven, gender-sensitive, participatory and fully transparent approach, taking into consideration vulnerable groups, communities and ecosystems’ (Cancun Agreement, 2010). Moreover, Article II(14) of the Cancun Agreement invites ‘all Parties to enhance action on adaptation . . . taking into account their common but differentiated 5   Adaptation requires society to manage climate impacts using strategies of resistance, adjustment, and retreat (Verchick, 2011).

26.  climate change and disaster law    593 responsibilities and respective capabilities by undertaking [specified actions]’ (Cancun Agreement, 2011). Article III(14) of the Cancun Agreement calls on ‘all Parties to enhance action on adaptation . . . taking into account their common but differentiated responsibilities and respective capabilities by undertaking [specified actions]’ (The Cancun Agreements: Outcome of the Work of the Ad Hoc Working Group on Long Term Cooperative Action under the Convention, 2011). International law has also begun to address specifically the need to reduce disaster risks as part of the process of adapting to climate change. The Rio+20 Declaration also recognizes the need to address the link between climate change and disaster risks. Paragraph 184 provides: We stress the importance of stronger interlinkages among disaster risk reduction, recovery and long-term development planning, and call for more coordinated and comprehensive strategies that integrate disaster risk reduction and climate change adaptation considerations into public and private investment, decision-making and the planning of humanitarian and development actions, in order to reduce risk, increase resilience and provide a smoother transition between relief, recovery and development (Rio+20, 2012).

Paragraph 190 also ‘emphasize[s]‌that adaptation to climate change represents an immediate and urgent global priority’ (Rio +20 Declaration, 2012). These international declarations are bolstered by principles of human rights law, which provide an arguable basis for a human right to disaster prevention and relief (Kent, 2001). The rationale for recognizing such a right derives ultimately from Article 3 of the Universal Declaration of Human Rights, which provides that ‘[e]‌veryone has the right to life, liberty, and security of person’ (UN Declaration of Human Rights, 1948). Additionally, Article 25 provides every person with a right to security and protection of basic needs ‘in the event of . . . circumstances beyond his control’ (UN Declaration of Human Rights, 1948). Climate change is certainly an event beyond any individual’s control, as are disasters such as floods or droughts caused by climate change. Indeed, some scholars have recently argued in favor of recognition of a legal right to climate adaptation (Hall and Weiss, 2012). They suggest that recognition of this right could help prioritize adaptation funding (Hall and Weiss, 2012). This line of argument is promising, but we are a long way from implementation of such a right to climate adaptation or more specifically to resilient infrastructure. Other human rights claims could be more focused. Impacted groups, especially among those who lack the resources to protect themselves from climate change, may pick up and move. Arguments have been made to protect these ‘climate refugees’ through domestic and international law, but these efforts ‘have proven controversial and largely unsuccessful to date, leaving those people with minimal legal protections and reliant on inadequate sources of climate change adaptation assistance for relief ’ (Carlarne, 2009). There have been proposals for an international convention to protect these individuals, at least when they cross national borders (Mayer, 2011; Docherty and Giannini, 2009).6 Some writers have gone further and called   See Chapter 23 of this book for further discussion of these issues.

6

594    part vi.  climate change & adaptation measures for an international convention that covers internal displacement (Hodgkinson and Young, 2012). General principles of international law mean little without implementation. Daniel Bodansky has observed that implementation in international environmental law generally follows a managerial rather than enforcement model, relying primarily on monitoring and capacity building rather than adjudication or sanctions (Bodansky, 2010). Thus, compliance with any potential legal duty to deal with climate-related disaster risks will probably turn to a large extent on the willingness of the international community, and developed countries in particular, to provide technical and financial support for adaptation efforts in developing countries. As the IPCC points out, ‘[i]‌nternational funding for disaster risk reduction remains relatively low as compared to the scale of spending on international humanitarian response’ (IPCC, 2012). There are now over twenty funds engaged in adaptation funding (UNFCCC, 2014a). Disaster risks are the focus of at least one fund, the Global Facility for Disaster Reduction and Recovery (GFDRR) managed by the World Bank (UNFCCC, 2014b). The funding for the GFDRR is relatively modest (about $300 million) compared with the need for improved disaster response, but at least this is a start (GFDRR, 2012). It seems clear that there is going to be a need for consolidation or at least intensive coordination of the various different funding efforts, and a need for tracking how much the combined efforts of these funds is being dedicated to disaster-related projects. Dealing effectively with disaster risks requires more than funding and technical expertise. It requires an institutional and legal framework to ensure that funding is devoted to uses that best mitigate disaster impacts while serving other societal needs. Levees do not build themselves or pick their own locations, first responders do not spontaneously train and organize themselves, and towns may not spontaneously build themselves in safe locations. The next section explores how domestic legal systems will need to adapt to more effectively handle disaster risks.

4.  Climate Change, the Disaster Cycle, and the Legal System Physical ‘phenomena are a necessary component of risk, but they are only the starting point in addressing safety concerns’—calculating and planning for disaster risk must account for ‘acts of nature, . . . weaknesses of human nature, and . . . side effects

26.  climate change and disaster law    595 of technology’ (Farber et al., 2006). The degree of harm from a weather event such as a flood depends on many factors beyond the severity of the event itself: the number of people and value of property at risk, vulnerability of infrastructure, adequacy of emergency responses, availability of funds for recovery, and the level of organization characterizing rebuilding efforts. A growing community of legal researchers recognizes the need for the legal system to respond to extreme events more effectively and is formulating solutions under the rubric of disaster law. This emerging legal academic field encompasses a wide-ranging, interdisciplinary body of research that seeks to inform and improve disaster-related decision-making, as evidenced by recent books, and a rapidly expanding number of law review articles (Farber, Chen, Verchick, and Sun, 2010; Nolon and Rodriguez, 2007; Verchick, 2010; Hunter, 2009). This literature addresses all phases of the disaster cycle: mitigation, emergency response, compensation, and rebuilding, with rebuilding completing the circle by including (or failing to include) mitigation measures to deal with the risk of another disaster event (Farber, Chen, Verchick, and Sun, 2010). Below, we briefly discuss how climate change intensifies problems at each stage of the cycle.

4.1 Mitigation of Disaster Risks If we begin with the situation before the disaster, successes and failures in risk mitigation can spell the difference between a routine disruption and a major catastrophe. Infrastructure is perhaps the first thing that comes to mind in thinking about reducing disaster risks. Some types of infrastructure such as levees and sea walls are specifically intended to reduce a disaster risk. Other types of infrastructure have different purposes but pose potential risks in the event of a disaster, whether the risk is a collapsing building, a broken dam, or a damaged nuclear reactor. In either case, correctly estimating the probability of harm and the potential type and extent of harm is critical. A recurrent problem in infrastructure planning is unwillingness to imagine the full scope of potential disaster risks. The Fukushima nuclear accident is a good example. The reactors in question were situated on a small bluff, which was thought to provide sufficient protection from tsunamis. History indicated otherwise. There is a historical record of a huge tsunami in July of 869, and geological evidence indicating a thousand-year return cycle (Ewing, Ritsema, and Brenner, 2011). Indeed, in 2008, experts at the company that operated the reactors had performed some preliminary modeling suggesting that the tsunami hazard was much greater than its previous estimate (Acton and Hibbs, 2012).7 Until 2006, the Japanese government 7   The utility’s simulations ‘performed computer simulations suggesting that a repeat of the devastating earthquake of 869 would lead to a tsunami that would inundate the plant’ (Acton and Hibbs, 2012).

596    part vi.  climate change & adaptation measures did not even discuss tsunamis in its safety guidelines, and even then it insisted that the ‘robust sealed containment structure around the reactor itself would prevent any damage to the nuclear part of the reactor from a tsunami . . . No radiological hazard would be likely’ (Perrow, 2011). Thus, even though earthquakes are a familiar hazard in Japan, the government fatally dismissed the potential harm from the earthquake-related possibility of a tsunami. Fukushima was not the first time that Japanese reactor designers underestimated earthquake risks. On 16 July 2007, an earthquake damaged a reactor in another location. The designers had used the historic record and added a margin of safety— but still only prepared for forty percent of the actual quake strength. Apparently, what they thought were three small faults were actually part of one large fault. The accident also involved unforeseen mechanisms of harm. One company official said, ‘It was beyond our imagination that a space could be made in the hole on the outer wall for the electric cables’ (Kumar and Ramana, 2007). The Japanese experience illustrates the need for planning processes that ensure realistic consideration of potential risks. Scenario analysis is one method of pushing decision-makers outside of their comfort zone by making them contemplate situations in which their own assumptions might fail.8 Some planners for climate-related disasters have already begun to turn to scenario analysis. In its 2008 framework for climate adaptation, the British government called for the use of scenarios in drought planning by local governments, one with a fifty percent probability and a more extreme one with a ten percent probability (Her Majesty’s Government, 2008). In the United States, some local authorities are also beginning to use scenario planning.9 Scenario planning should be understood as a precautionary strategy. As such, it has a kinship with the precautionary principle (Nash, 2008).10 Principle 15 of the Rio Declaration states that ‘to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities’, and that given ‘threats of serious or irreversible damage, lack of scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation’ (Rio Declaration, 1992; Hunter, Salzman, and Zaelke, 2002). The precautionary principle also appears in international conventions on ozone, global 8   For information about implementing scenario planning, see A. Marcus (2009), Strategic Foresight: A New Look at Scenarios. Robert Verchick has emphasized the importance of scenario analysis—and of the act of imagination required to construct and consider these scenarios—in the face of uncertainty (Verchick, 2010). 9   The San Francisco Bay Conservation and Development Commission is using scenario planning to address sea level rise; see < http://www.bcdc.ca.gov/planning/climate_change/climate_change.shtml> (accessed 18 August 2015) (staff recommendations can be found under ‘Proposed Climate Change Bay Plan Amendment’). The New York Sea Level Rise Task Force is taking a similar approach; see (accessed 18 August 2015). 10   The precautionary principle has been called ‘nothing short of ascendant on the international stage, so much so that many categorize it as constituting customary international law’ (Nash, 2008, p.499).

26.  climate change and disaster law    597 climate and biodiversity, among others, and has entered the domestic legal systems in countries such as Germany, Canada, Pakistan, and India (Hunter, Salzman, and Zaelke, 2002).11 Something slightly different is needed in disaster law. The precautionary principle calls for prudent action to prevent harm to the environment, even when the harm is uncertain. Disasters involve harm from the environment, raising a different issue. Given the increased risks of natural disasters due to climate change, we may need a ‘reverse precautionary principle’, requiring prudent action to prevent harm to people and infrastructure from the physical world (rather than harm to the physical world). The disaster precaution principle should guide construction of major infrastructure, but it also applies to the more mundane processes of urban planning, zoning, building codes, and much more. Disaster costs have spiraled upwards in recent years, partly due to climate change but also to the increased number of people and infrastructure in vulnerable areas.12 If we insist on putting infrastructure and people in harm’s way, we cannot be surprised if there is widespread harm. To the extent possible, law should try to steer development to safer locations and to minimize risks when development does take place in more dangerous areas.

4.2 The Emergency Response Often, as the saying goes, an ounce of prevention is worth a pound of cure, but after a disaster takes place, the resulting harm must be dealt with. International disaster relief has a long history, dating back at least to the great earthquake that destroyed Lisbon in 1755 (Urioste, 2006). Three years later, Vattel recognized a duty to provide humanitarian aid as part of international law (Fidler, 2005). By 1921, the Red Cross had recommended an international convention on disasters, leading to the creation of an International Relief Union (IRU) that unfortunately did not survive the Second World War (Fidler, 2005; Urioste, 2006). The IRU’s successor was the UN Disaster Relief Coordinator, later subsumed into the Office for the Coordination   On the Canadian experience, see Abouchar (2002), The precautionary principle in Canada: the first decade, 32 Envtl. L. Rep., 11407. 12   According to the IPCC: 11

Settlement patterns, urbanization, and changes in socioeconomic conditions have all influenced observed trends in exposure and vulnerability to climate extremes (high confidence). For example, coastal settlements, including in small islands and megadeltas, and mountain settlements are exposed and vulnerable to climate extremes in both developed and developing countries, but with differences among regions and countries. Rapid urbanization and the growth of megacities, especially in developing countries, have led to the emergence of highly vulnerable urban communities, particularly through informal settlements and inadequate land management (high agreement, robust evidence). Vulnerable populations also include refugees, internally displaced people, and those living in marginal areas (IPCC, 2012).

598    part vi.  climate change & adaptation measures of Humanitarian Affairs (Urioste, 2006). There are also some regional conventions and some specialized institutions dealing with specific areas such as telecommunications and aviation after natural disasters (Fidler, 2005; Urioste, 2006). Continuing efforts at codification include the Sphere Project, a joint effort by non-governmental organizations (NGOs) such as the Red Cross, to formulate international standards for disaster relief (Urioste, 2006). Despite these international efforts, the Red Cross still sees a ‘yawning gap’ in international law regarding disaster response (Urioste, 2006). Some of the problems can be seen in the massive international response to the Southeast Asian tsunami in 2004, which involved more than 200 NGOs and a dozen governments. In the resulting confusion, communication was poor, efforts were duplicated, and lack of shared expertise led to failures in assistance (Urioste, 2006). Other problems surfaced in the response to the 2010 Haitian earthquake. A study by Tulane University and the State University of Haiti evaluated the earthquake response and concluded that the humanitarian response met immediate needs but undermined long-term resilience (Tulane University, 2012). According to the study, ‘the humanitarian response frequently undermined the capacity of Haitian individuals and organizations’ as ‘[k]‌ey organizations were hindered by poaching of staff and their inability to compete with larger, international NGOs for support and access to the decision-making process’ (Tulane University, 2012). As the International Red Cross has said, ‘[a]‌t the dawn of the 21st century, a cohesive approach to international disaster law is not much farther along than it was at the start of the 20th’ (International Federation, 2007).13 The Southeast Asian tsunami and the Haitian earthquake illustrate some of the resulting problems: lack of coordination and failure to empower local authorities and communities. Welldesigned coordination and communication systems need to be in place prior to disasters to avoid these flaws, which in turn requires a comprehensive legal framework for international cooperation.

4.3 Compensation and Rebuilding Methods for financing reconstruction and recovery are an underdeveloped aspect of international disaster response. Post-disaster compensation generally takes one of three forms: private insurance, government aid, or the tort system.14 Each form of compensation has serious limitations.   In the interest of brevity and because the term is more familiar to American readers, I will refer to this organization as the Red Cross, but with no desire to slight the Red Crescent component of the Federation. 14   These issues are discussed in detail, in a multi-national comparison, by R. Rabin and S. Bratis (Rabin and Bratis, 2006). 13

26.  climate change and disaster law    599 Private insurance for catastrophic disasters faces serious problems. Climate change will increase the likelihood of such major disasters, but it may be difficult for insurance companies to predict shifting levels of risk. When the extent of a risk is poorly understood or controversial, insurers demand high premiums or refuse to provide insurance at all (Kunreuther et al., 2010). Insurers must also provide more capital to underwrite catastrophic risks (Kunreuther et al., 2010). Although risks in any one locality may be small, the risk of a catastrophic impact is larger for wider areas—for instance, a one-in-six chance of a weather event in Florida causing US$10 billion of harm (Rabin and Bratis, 2006). Insurers can cope with excess risk by reinsuring, but there are limits to the capacity of reinsurance companies (Kunreuther et al., 2010). For this reason, in order to take advantage of the large pool of capital available through global financial markets, there is increasing interest in using disaster-linked securities (so called ‘cat [catastrophe] bonds’) to handle large risks (Kunreuther et al., 2010). Clearly, policymakers need to give careful consideration to how to improve private risk markets—and because reinsurance and financial markets are international, adequate planning may require international coordination. Other international mechanisms are beginning to emerge to a limited extent to assist countries hit by natural disasters. The International Monetary Fund (IMF) can make special funding available to countries if a disaster disrupts their balance of payments (Gold, 1990). The IMF has ‘provided resources in cases of earthquakes, drought, hurricanes, floods, and cyclones’ (Gold, 1990). The World Bank has also been involved in disaster funding. Examples are provided by the creation of ‘special purpose funds’ by the Bank for reconstruction efforts in Indonesia and Haiti (Hernandez and Johnson, 2011). As discussed earlier, international mechanisms are beginning to emerge for funding pre-disaster mitigation measures, but the international community also needs to do more to provide post-disaster assistance for reconstruction given the increasing risk levels caused by climate change. Rebuilding poses challenges even apart from funding issues. Mitigating future disaster risks should be part of the rebuilding process, but doing this appropriately may be easier said than done. For example, after major earthquakes in Pakistan, international agencies financed more earthquake-resilient construction. Unfortunately, the construction was not necessarily well-suited for local conditions in other ways: The evaluation mission observed that the new earthquake-resistant design for homes in the earthquake zone appears to require two to three times more wood for heating than the traditional design. With all the hazards they posed, traditional houses did provide insulation in ways that cement blocks and light metallic roofs cannot match. The region is already deficient in forest resources and the increased demand for firewood will place an additional strain on those. The other environmental issue of importance is that mountain roads being constructed or widened in the region have caused widespread landslips. No attention seems

600    part vi.  climate change & adaptation measures to be paid to the treatment of the cuts and fills during road construction, resulting in accelerated erosion and loss of productive natural resources (Watt, 2009).

Problems of this kind seem inevitable without close attention to local conditions, the understanding of which requires considerable input from local communities.15 In sum, reconstruction requires funding that may not be readily available even in developed countries and is even less likely to be available in developing countries. Climate change will increase the severity of risks and the likely need for postdisaster reconstruction. This change makes improvements in methods for financing reconstruction imperative. Reconstruction should obviously include measures to reduce harm from future climate-related disasters. As the Pakistani post-earthquake experience shows, doing so effectively while serving the needs of local communities requires better procedures for combining outside expertise with sensitivity to local conditions.

5. Conclusion Even without climate change, disasters would be an inevitable part of our future, much as we may wish to deny it. Climate change will intensify this problem, leading to more droughts, floods, heat waves, and severe weather generally. International law is beginning to recognize a duty to reduce disaster risks, with specific reference to climate-related risks. Implementing this duty, as we have seen, requires careful attention to all phases of the disaster cycle from pre-disaster risk reduction through emergency response, compensation, and rebuilding. These issues are beginning to receive sustained attention from scholars, but much remains to be done. Research in several directions is needed to map policy responses to the increased disaster risks associated with climate change. Because disaster policy exists at many scales, scholars dealing with international law, comparative law, and domestic law all have something important to contribute.   This illustrates a point made by the IPCC:

15

Integration of local knowledge with additional scientific and technical knowledge can improve disaster risk reduction and climate change adaptation (high agreement, robust evidence). Local populations document their experiences with the changing climate, particularly extreme weather events, in many different ways, and this self-generated knowledge can uncover existing capacity within the community and important current shortcomings. Local participation supports community-based adaptation to benefit management of disaster risk and climate extremes. However, improvements in the availability of human and financial capital and of disaster risk and climate information customized for local stakeholders can enhance community-based adaptation (medium agreement, medium evidence) (IPCC, 2012).

26.  climate change and disaster law    601 In terms of international law, the duty to respond to disaster risks needs to move from vague generalities to a clearly articulated set of duties. These duties need to be bolstered by mechanisms for assessing compliance and providing support for laggard states and for states that have the desire but not the resources to comply. The most catastrophic events will remain beyond the response capacities of many individual countries, but the world lacks a comprehensive framework for organizing international assistance more than a century after one was first proposed. Such a framework must guard against gaps and overlaps in international assistance while respecting the prerogatives and capacities of local authorities. International law scholars should have much to contribute to developing the outlines of such a framework. There is also much for scholars to contribute to the design of national disaster management. Some of the key problems are universal, such as ensuring that planners consider a full range of disaster scenarios rather than limiting themselves to the most likely, less severe possibilities. Other problems are common to many countries but have distinctive local features, such as the appropriate relationship between national authorities and the local governments that are typically the first responders. Comparative law scholars can identify best practices, while domestic law scholars must confront the unique attributes of each society including variations in governance systems. Climate change makes the need to improve disaster law more pressing because we anticipate more and bigger disasters. But climate change also has a more subtle significance for disaster problems. Climate change is a global problem to which activities in many countries have contributed. Because climate change is a global problem, response to the disaster risks from climate change is also a global responsibility. Thus, we are entering an era of globalization for disaster law in which global and transnational efforts will be crucial.

References Acton, J. and Hibbs, M. (2012). ‘Fukushima was preventable’, NY Times. Archer, D. and Rahmstorf, S. (2010). The Climate Crisis: An Introductory Guide to Climate Change. Cambridge Univ. Press. Bodansky, D. (2010). The Art and Craft of International Environmental Law. Harvard Univ. Press, 235–51. Bonyhady, T., Macintosh, A., and McDonald, J. (2010). Adaptation to Climate Change: Law and Policy. Sydney: Federation Press. Cancun Agreements. Decision 1/CP.16. (2011). The Cancun Agreements: outcome of the work of the ad hoc working group on long-term cooperative action under the convention, (UN Doc. FCCC/CP/2010/7/Add.1, 15 March 2011). Carlarne, C. (2009). ‘Risky business: the ups and downs of mixing economics, security and climate change’. Melbourne Journal of International Law. 10. p.439.

602    part vi.  climate change & adaptation measures The Climate Institute, (2012). ‘Coming ready or not: managing climate risks to Australia’s infrastructure’, 9. Cullen, H. (2010). The Weather of the Future: Heat Waves, Extreme Storms, and Other Scenes from a Climate-Changed Planet. New York: HarperCollins. Docherty, B. and Giannini, T. (2009). ‘Confronting a rising tide: a proposal for a convention on climate change refugees’, 33 Harv. Envtl. L. Rev. 349. Eakin, H. and Pratt, A. (2011). ‘Are adaptation studies effective, and what can enhance their practical impact?’, Wiley Interdisciplinary Reviews: Climate Change. Easterling III, W.E., Hured, B.H., and Smith, J.B. (2004). ‘Coping with global climate change: the role of adaptation in the United States’, 17, see (accessed 18 August 2015). Eshelman, R.S. (2012). ‘India’s drought punishes farmers, highlights challenges to climate change adaptation’, E&E News, see (accessed 18 August 2015). Ewing, R., Ritsema, J., and Brenner, D. (2011). ‘Fukushima: what don’t we know?’, Bulletin of the Atomic Scientists, 30th June, see . Farber, D., Chen, J., Verchick, R., and Sun, L. (2009). Disaster Law and Policy. 2nd edn. New York: WaltersKluwer. Farber, D. et al. (2006). ‘Reinventing flood control’, 81 Tul. L. Rev. 10850. Fidler, D. (2005). ‘Disaster relief and governance after the Indian Ocean tsunami: what role for international law?’, 16 Melbourne J. Int’l L. 458. GFDRR. (2012). ‘Consolidated pledges and contributions as of 31 December 2012’, see

(accessed 18 August 2015). Gold, J. (1990). ‘Natural disasters and other emergencies beyond control: Assistance by the IMF’, 24 Int’l L. 621. Hall, M. and Weiss, D. (2012). ‘Avoiding adaptation apartheid: climate change adaptation and human rights law’, 37 Yale J. Int’l L. 309. Her Majesty’s Government. (2008). ‘Adapting to climate change in England: A framework for action’. Hernandez, J. and Johnson, A. (2011). ‘A call to respond: the international community’s obligation to mitigate the impact of natural disasters’, 25 Emory Int’l L. Rev. 1087. Hodgkinson, D. and Young, L. (2012). ‘In the face of looming catastrophe: a convention for climate change displaced persons’, CCDP Convention, see (accessed 18 August 2015). Humphreys, S. (2008). ‘Climate change and human rights: a rough guide’, International Council on Human Rights Policy, 3. Hunter, N. (2009). The Law of Emergencies: Public Health and Disaster Management. Washington, DC: Elsevier. Hunter, D., Salzman, J., and Zaelke, D. (2002). International Environmental Law and Policy, 2nd edn, Foundation Press. International Federation of Red Cross and Red Crescent Societies, (2007). World Disaster Report 2000. IPCC. (2012). Special Report of the Intergovernmental Panel on Climate Change, Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation: Summary for Policymakers, 11. Kent, G. (2001). ‘The human right to disaster mitigation and relief ’, Environmental Hazards, (3) 137.

26.  climate change and disaster law    603 Kousky, C. (2012). ‘Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options’, (RFF Discussion Paper 12-28). Kumar, A. and Ramana, M.V. (2007). ‘Nuclear safety lessons from Japan’s summer earthquake’, Bulletin of the Atomic Scientists, 4th December, (accessed 18 August 2015). Kunreuther, H. and Michel-Kerjan, E. (2009). At War with the Weather: Managing LargeScale Risks in a New Era of Catastrophes, MIT Press, 11–12. Kunreuther, H. et al. (2010). At War With the Weather: Managing Large-Scale Risks in a New Era of Catastrophes, Massachusetts Institute of Technology. Larsen, J. (2006). ‘Setting the record straight: more than 52,000 Europeans died from heat in summer 2003’, Earth Policy Institute, see (accessed 18 August 2015). Mayer, B. (2011). ‘The international legal challenges of climate-induced migration: proposal for an international legal framework’, 22 Colo. J. Int’l Envtl. L. & Pol., 357. Miskel, J. (2008). Disasters Response and Homeland Security: What Works, What Doesn’t, 25. Broadway, CA: Stanford University Press. Nash, J. (2008). ‘Standing and the precautionary principle’, 208 Columbia L. Rev. 494. Nolon, J. and Rodriguez, D. (2007). Losing Ground: A Nation on Edge. Washington, DC: Environmental Law Institute. Perrow, C. (2011). ‘Fukushima, risk, and probability: expect the unexpected’, Bulletin of the Atomic Scientists, see (accessed 18 August 2015). Rabin, R. and Bratis, S. (2006). ‘United States’, in Faure, M. and Hartlief, T. (eds). Financial compensation for victims of catastrophes: A Comparative Legal Approach. Germany: Springer. Rebetez, M. (2006). ‘Heat and drought 2003 in Europe: a climate synthesis’, Annals of Forest Science 63. Rio Declaration on Environment and Development. (1992). Report of the United Nations Conference on Environment and Development, G.A. Res. 48/190, 48 U.N. GAOR Supp. No. 49 at 167, U.N. Doc. A/48/49. RIO+ 20. (2012). Accessed at . Rosencranz, A., Singh, D., and Pal, J. (2010). 22 ‘Climate change adaptation, policies & measures in India’, Geo. Int’l. Envtl. L. Rev., 575. Stott, P., Stone, D.A., and Allen, M.R. (2004). ‘Human contribution to the European heatwave of 2003’, 432 Nature 610. Tulane University and the State University of Haiti. (2012). Haiti Humanitarian Assistance Evaluation from a Resilience Perspective. UN. (1948). ‘The universal doctrine on human rights’, see (accessed 18 August 2015). UNFCCC. (2014a). ‘Adaptation Funding’, see (accessed 18 August 2015). UNFCCC. (2014b). ‘Adaptation Funding: GFDRR’, see (accessed 18 August 2015). UN Office of the High Commissioner for Human Rights. (2009). Report of the Office of the United Nations High Commissioner for Human Rights on the relationship between climate change and human rights (UN Doc A/HRC/10/61).

604    part vi.  climate change & adaptation measures United States Government Accountability Office. (2010). ‘Climate change adaptation: strategic federal planning could help government officials make more informed decisions’, see (accessed 18 August 2015). Urioste, A.D.E. (2006). ‘When will help be on the way? The status of international disaster response law’, 15 Tul. J. Int’l. & Comp. L. 181. Verchick, R. (2011). ‘Adapting to climate change while planning for disasters: footholds, rope lines, and the Iowa floods’, BYU L. Rev., 2203, 2207. Verchick, R. (2010). Facing Catastrophe. Cambridge, MA: Harvard University Press. Watt, J. (2009). Evaluations of the FAO response to the Pakistan earthquake, May–July 2008. . Weitzman, M. (2009). ‘On modeling and interpreting the economics of catastrophic climate change’, 91 Rev. Econ. & Stat. 1. World Bank. (2012). ‘Turn down the heat: why a 4 °C warmer world must be avoided’, see (accessed 18 August 2015).

Part VII

REGIONAL AND COUNTRY-SPECIFIC PERSPECTIVES

Chapter 27

UNITED STATES CLIMATE CHANGE LAW Michael B. Gerrard

1. Introduction

608

2. Evolution of US Climate Change Law and Policy

608

3. The Clean Air Act

612

4. Other Federal Authorities

616

5. Regional, State, and Local Efforts

621

6. Civil Litigation

625

7. Conclusion

631

608   part vii. region-specific perspectives

1. Introduction The United States is the world’s largest economy and for many years it was the largest emitter of greenhouse gases (GHGs), until it was overtaken by China in around 2006 (PBL Netherlands Environmental Assessment Agency). However, a significant portion of China’s emissions are attributable to the manufacture of goods for export to the United States, Europe, and elsewhere (Worldwatch Institute, 2013). Its domestic and international climate change policies have tremendous global impact, both physically and politically. The United States has no comprehensive statute on climate change. A sweeping climate change bill passed the House of Representatives in 2009 but died in the Senate, and the political situation is such that it now appears that it will be at least several years before Congress enacts any serious climate change legislation. Meanwhile, the federal government is utilizing old statutes, especially the Clean Air Act of 1970, to cobble together a regulatory program. States and regional groupings of states, as well as cities, are also playing important roles in formulating climate change strategies. This chapter begins by tracing the evolution of US climate change law and policy, including the United States’ stance on international climate agreements. It will then discuss the emerging programs under the Clean Air Act, followed by other statutes. State, regional, and local efforts are covered next. Finally, the role of the courts is considered.

2.  Evolution of US Climate Change Law and Policy Resource conservation has been an issue since the nineteenth century, but modern US environmental law burst forth in 1970. That year, President Richard Nixon signed the National Environmental Policy Act (NEPA) and the Clean Air Act (CAA), and created the US Environmental Protection Agency (EPA). Those actions were followed by, among other important statutes, the Clean Water Act (1972), the Endangered Species Act (1973), the Resource Conservation and Recovery Act (1976), the Toxic Substances Control Act (1976), and the Comprehensive Environmental Response, Compensation and Liability Act (1980). All of these laws are still on the books, albeit in somewhat amended forms. None of the original enactments or subsequent amendments envisioned climate change or directly addressed it.

27.  united states climate change law    609 The first US statute to mention climate change explicitly was the National Climate Program Act, signed into law by President Jimmy Carter in 1978. It launched a program to study climate change within the Department of Commerce (United States Congress, 1978). More than a decade—and the entire presidency of Ronald Reagan—passed before Congress revisited the issue at all. George H.W. Bush was inaugurated as President in 1989, and in 1990 Congress passed the Global Change Research Act, which set up a multi-agency research program on a variety of issues, including climate change (United States Congress, 1978). The Bush administration became actively involved in the negotiations that led to the United Nations Framework Convention on Climate Change (UNFCCC) and played an important role in keeping mandatory emissions caps out of that agreement. The United States signed the UNFCCC on June 12, 1992, and the Senate ratified it on October 7, 1992. To implement one of the UNFCCC’s requirements, Congress in 1992 directed the preparation of a national inventory of GHG emissions (United States Congress, 1992). In November 1992, Bill Clinton defeated George H.W. Bush in the national election. In the years that followed, the administration of President Clinton and Vice President Al Gore participated in the negotiations to develop agreements to implement the UNFCCC. However, in the midst of these negotiations in early 1997 the Senate, by a vote of 95-0, passed the Byrd–Hagel resolution, which said the United States should not sign any protocol to the UNFCCC unless it, among other things, required developing countries to limit or reduce their GHG emissions within the same compliance schedule as the developed countries or that ‘would result in serious harm to the economy of the United States’ (United States Senate, 1997). With this resolution hanging in the background, Vice President Gore led the US delegation to the 1997 Conference of the Parties in Kyoto, Japan. The resulting Kyoto Protocol did not impose emissions reductions requirements on developing countries. President Clinton signed it, but he never submitted it to the Senate for ratification, knowing it would be defeated. Three years later, with the Kyoto Protocol continuing to lack the ratifications necessary to bring it into force, George W. Bush prevailed in the 2000 presidential election over Vice President Gore. Shortly after taking office in 2001, the second President Bush expressly repudiated the Kyoto Protocol, citing its lack of binding emission reduction requirements for China and India. Throughout the eight years of George W. Bush’s presidency, the US federal government refused to take regulatory action on climate change. In key part, EPA’s general counsel rejected the reading of his predecessors under President Clinton that the Clean Air Act authorized the agency to regulate GHGs. In response, several environmental groups and sympathetic states launched a campaign of administrative petitions and then lawsuits to try to overturn this interpretation. This culminated in 2007 with the landmark US Supreme Court decision in Massachusetts v EPA, in which the Court (by a 5-4 majority) found that the plaintiffs had standing to sue, that GHGs do fit within the CAA’s definition of ‘air pollutant’, and that EPA must

610   part vii. region-specific perspectives either regulate them or offer a reasoned explanation of why not (Massachusetts v EPA, 2007). This decision was issued twenty months before the expiration of President Bush’s term. EPA made no findings and proposed no GHG regulations during that period, but in July 2008 it issued an ‘advanced notice of proposed rulemaking’ that set forth numerous regulatory options and requested public comment. Climate change was not a contested issue in the 2008 presidential election campaign. Both the Republican nominee, Senator John McCain of Arizona, and the Democratic nominee, Senator Barack Obama of Illinois, affirmed the reality of anthropogenic climate change and supported a cap-and-trade law. Immediately upon taking office in January 2009, President Obama directed the EPA to move vigorously in exercising the authority the Massachusetts v EPA decision found it had. In so doing, President Obama made it clear that the Clean Air Act was not the ideal device for fighting GHGs, but instead was being used as a spur for Congressional action and as a backup in case such action failed. By any gauge, 2009 was a tumultuous year for climate change politics in the United States; President Obama pressed for a cap-and-trade law. Such a bill passed the House of Representatives on June 26, by a vote of 219-212. Called the Waxman– Markey bill, it would have established an economy-wide cap-and-trade program. It also contained extensive provisions on energy efficiency, international offsets, carbon capture and sequestration, and other climate-related matters. The bill was 1,428 pages long and embodied numerous compromises that were necessary in order to obtain a sufficient number of votes. Despite the watered-down nature of the bill, in retrospect, its passage in the House of Representatives marked the apogee to date of US political support for regulating GHG emissions. The bill immediately ran into trouble in the Senate, however. Interest groups (especially those involved in extracting and using fossil fuels) mobilized effectively and persuaded many senators to oppose it. A campaign to question the validity and integrity of climate science took off and found many adherents. The worldwide financial crisis increased unemployment in the United States and heightened concerns that climate regulation would hurt the economy. Thus, although President Obama had hoped to go to the 15th Conference of the Parties to the UNFCCC in Copenhagen in December 2009 armed with domestic legislation, or at least the solid expectation that such legislation was forthcoming, he could not do that. This inability, coupled with other factors, meant that the Copenhagen conference fell far short of the expectations that had been raised for it just a few months earlier, as discussed in Chapter 5 of this volume. Sealing the end to the burst of energy brought about by the election of President Obama, in July 2010 the Democratic majority leader of the Senate officially declared that there were not enough votes to pass the bill. Though the Senate has 100 members, under its current rules a minimum of sixty votes are needed to get a bill to the floor. The November 2010 Congressional elections were calamitous for the Democrats and for the prospects for climate legislation. The Republicans seized decisive control of the House of Representatives, and while the Democrats retained control of the

27.  united states climate change law    611 Senate, their majority became much slimmer. Many of the new Republican members of both houses were supported by a loosely organized rightwing faction that came to be known as the Tea Party. Its focus was on lowering taxes and reducing the size of government, including in the regulatory arena. But the Tea Party also came to deny the existence of anthropogenic climate change and to reject any mandates to reduce GHGs. This faction essentially took control of the House and of the Republican caucus in the Senate. The long-standing bipartisan consensus on environmental regulation—which had propelled legislation from 1970 through 1990— had long evaporated, and was replaced by a stark partisan divide (Skocpol, 2013). This divide was reflected in the 2012 elections. In the crowded field of Republican candidates for President, all of them rejected the concept of GHG regulation (except for one whose polling numbers never went above a sliver, and who left the race early). This included at least two candidates who had previously embraced such regulation, one of whom, former Massachusetts Governor Mitt Romney, became the nominee. President Obama continued to support regulation but the topic had become so politically toxic that he barely spoke of the issue during the campaign. While President Obama was re-elected and the 2012 election slightly reduced the number of Republicans in the House and the Senate, the Republican Party’s opposition to climate regulation did not waver, and the House majority remained implacable. Numerous bills were passed in the House that would strip EPA of its authority to regulate GHGs and otherwise block climate mitigation, adaptation, and research, but none advanced in the Senate, and President Obama vowed to veto any that might reach his desk. Neither side had enough votes to either pass new legislation or repeal existing statutes, so the decades-old statutory structure, built before ­climate change became an issue, remained in place. In January 2013, in his second inaugural address, and in February 2013, in his State of the Union address, President Obama firmly spoke of society’s obligation to future generations to combat climate change. He said that if Congress did not act, which he knew it would not, he would use his existing authority to combat climate change. On June 25, 2013, President Obama issued his plan. It relied heavily on the CAA, as discussed below. It also announced many initiatives on energy efficiency and renewable energy, and it included measures to reduce emissions of hydrofluorocarbons and methane. It emphasized the importance of adaptation to climate change, including directing agencies to support climate-resilient investment, identifying vulnerabilities of key sectors of the economy to climate change, and managing the risks of drought, wildfires, and floods. The national elections of November 2014 brought the Republicans into power in the Senate. The new Senate leaders were as firmly opposed to climate regulation as their counterparts in the House, and the chair of the Senate committee with jurisdiction over environmental matters is a leading climate denier. President Obama’s final term expires in January 2017, and his successor will be elected in November 2016. As this is written in August 2015, the presidential

612   part vii. region-specific perspectives campaign is already proceeding at a high pitch. Most of the leading Republican candidates are opposed to climate regulation, while all the leading Democratic candidates favor it. As the preceding discussion should make clear, we are in a protracted era of Congressional paralysis, and the principal variable in national climate policy is the identity of the occupant of the White House. So far, climate change has not been an issue in any presidential election (though that may well change in 2016), so the fate of US climate policy is largely determined by the views of the candidates and the public on a range of other economic, social, and cultural issues, which tend to determine the outcome of presidential elections. However, with the exception of emissions from the transport sector, the actual level of US GHG emissions is, so far, primarily influenced by factors that are wholly apart from climate policy. GHG levels from motor vehicles are largely determined by three factors: federally set fuel economy and emissions standards; the carbon content of fuels; and vehicle miles traveled. For stationary sources, especially electric generating units, fuel switching has played a key role. The unanticipated and rapid growth in the supply and the decline in the price of natural gas, caused largely by the emergence of hydraulic fracturing technologies, have severely cut into the use of coal, and have also hurt the competitive positions of nuclear power and renewable energy. When it is burned, natural gas emits only about half the GHGs as coal per unit of electricity produced—though controversy remains about the extent to which the leakage of methane in the extraction, processing, transport, and use of natural gas reduces this advantage. The overall level of economic activity, the export of manufacturing activity to the rapidly developing economies of Asia, and the diffusion of energy efficient technologies are also important factors. Having drawn the backdrop for US climate change policy, the remainder of this chapter explores its component parts in greater detail.

3.  The Clean Air Act Though it has antecedents from the 1960s, the CAA was enacted in more or less its current form in 1970, with significant amendments in 1977 and 1990. That 1990 amendment, together with the Oil Pollution Act of the same year, were the most recent important environmental laws passed by Congress. The CAA requires EPA’s Administrator to regulate sources of air pollution ‘which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare’ (United States Congress, Nov. 2008; United States Congress,

27.  united states climate change law    613 1990). Thus one of the first actions of President Obama’s first EPA Administrator, Lisa Jackson, was to start the process of issuing an ‘endangerment finding’ for GHGs. After extensive public comment, she issued this finding in December 2009.

3.1 Mobile Sources This endangerment finding triggered several subsequent regulatory actions. Most directly, it gave the EPA the responsibility of regulating GHGs from motor vehicles. Under the CAA, EPA issues emission standards, and under the Energy Policy Conservation Act, the National Highway Traffic Safety Administration (NHTSA) issues Corporate Average Fuel Economy (CAFE) standards (United States Congress, Dec. 2007a). When it comes to carbon dioxide they amount to basically the same thing, since the only known way to reduce carbon dioxide emissions from motor vehicles is to lower their fuel consumption. There is one federally set national standard; states cannot set their own standards. The critical exception to this rule is that California may set its own standard and, if EPA approves it, other states may adopt California’s standard. The G.W. Bush administration had denied California’s request to establish its own standard for carbon dioxide. The Obama administration was reconsidering that denial, but then found itself enmeshed in the threatened bankruptcy of several large US automakers. The complex ‘car deal’ that emerged bailed out the automakers, and also led to an agreement that there would be a single nationwide carbon dioxide standard for automobiles and light trucks. This deal covered Model Years 2016 through 2025, and will yield vehicles that are about twice as efficient as those made in 2010. EPA has yet to issue GHG standards for several other categories of mobile sources, such as off-highway engines, aircraft, and ships. Petitions have been filed seeking to force standards for all of these categories, and more, and EPA has announced it will consider aircraft standards. Standards for medium and heavy-duty trucks are in place through Model Year 2018; EPA has proposed more stringent post-2018 standards.

3.2 Stationary Sources Having made great progress on GHG emissions from mobile sources, the Obama administration turned to stationary sources. One important program for such sources is the CAA’s prevention of significant deterioration (PSD) program, which requires permits for certain kinds of new sources. The statute’s numerical thresholds for the applicability of this program were designed for conventional air pollutants such as sulfur dioxide, but those numbers are extremely low if applied to carbon dioxide; application of the standard thresholds to carbon dioxide would require hundreds of thousands or perhaps millions of facilities to obtain permits.

614   part vii. region-specific perspectives EPA had no appetite for that, so it issued the ‘tailoring rule’—a rule to increase the thresholds so that only a little over 10,000 facilities would be covered. Without this special rule, a source that emitted as low as 100 tons per year (tpy) of a GHG would require a permit; with the rule, the threshold started at 100,000 tpy. The endangerment finding, the tailoring rule, and other EPA actions were challenged in more than 100 lawsuits filed with the US Court of Appeals for the District of Columbia. That court combined the cases and on June 26, 2012, it dismissed them all, finding that EPA was acting well within its statutory authority (Coalition for Responsible Regulation v EPA, 2012). On June 23, 2014, the Supreme Court affirmed most of that decision, but it invalidated a small portion of the rule (Utility Air Regulatory Group v EPA, 2014). Much of the attention to stationary sources is focused on coal-fired power plants, which are by far the largest source of GHG emissions in the United States. The New Source Performance Standard (NSPS) program of the Clean Air Act empowers EPA to issue emission standards for major new stationary sources of air pollution. In April 2012, EPA issued a proposed NSPS for carbon dioxide from new fossil fuel-powered power plants. The proposed standard was the same regardless of the primary source of fuel. It could be met by combined cycle natural gas power plants, but it could not be met by coal-fired power plants unless they possessed, or committed to build on a set timetable, capacity for carbon capture and sequestration, which requires application of a technology that is not yet used in general commercial application. The proposed rule would have effectively barred the construction of any new coal-fired power plants for the foreseeable future. The proposed rule generated one lawsuit, which was dismissed as premature, and more than two million comments from the public (Las Brisas Energy Center v EPA, 2012). EPA issued the final rule in August 2015, and while it differed in several respects from the proposed rule, it still had the practical effect of barring new coal-fired power plants, at least until carbon capture and sequestration technology became commercially viable. However, the reality is that very few new coal plants are planned in the United States, largely due to a wide range of environmental regulations, and (even more importantly) competition from inexpensive natural gas. Thus from a GHG perspective, the major issue is the fate of the existing coal-fired power plants. A different subsection of the Clean Air Act governs existing facilities, and it is much more cumbersome than the NSPS standard for new plants. For existing facilities, EPA must issue proposed standards, and tell the states to prepare detailed plans to meet them. If any state fails to prepare a satisfactory plan, EPA may issue a substitute federal plan. The process of proposing standards and revising, reviewing and possibly substituting for state plans is very lengthy and invites litigation at multiple points. EPA issued its ‘Clean Power Plan’ final rule on August 3, 2015. It aims to reduce carbon pollution from the power sector to thirty-two percent below 2005 levels. It gives each state numerical goals it must meet, and it gives the states until

27.  united states climate change law    615 September 2016 (though they may get extensions of up to two years) to submit plans to achieve those goals. States are provided great discretion in how to meet the goals; the most likely methods will be a combination of more renewable energy, efficiency measures by electricity consumers, and switching from coal to natural gas (EPA, 2015). As this is written, many states and industries are launching litigation to challenge the rule, and other states and industries, as well as environmental groups and others, have vowed to support it. There are also efforts in Congress to halt the rule. Coal-fired power plants are the largest but not the only large stationary source of GHGs. Standards may yet be issued for such other major categories as petroleum refineries and Portland cement manufacturers. If EPA does not propose these standards on its own, citizen groups may be expected to sue EPA to force their issuance. Several pending EPA regulations under the Clean Air Act would restrict air pollutants that are not GHGs, but that come from GHG-emitting sources. These regulations could inhibit the construction of some of these sources, and lead to the closure or more efficient operations of others. Among the rules in the regulatory pipeline is the Utility Maximum Achievable Control Technology (‘Utility MACT’), which sets limits on mercury, acid gas, and other toxics from new power plants by specifying the maximum achievable control technology. In June 2015 the Supreme Court found that EPA had made procedural errors in promulgating this rule, but it left the rule in effect while the US Court of Appeals considers whether to vacate the rule while EPA corrects the error (Michigan v EPA, 2015). Still pending is the ‘Boiler MACT’, which likewise would regulate industrial boilers and incinerators. Other important rules are the Cross-State Air Pollution Rule, which addresses sulfur dioxide and nitrogen oxides, and which has experienced repeated setbacks in court (EPA v EME Homer City Generation LLC, 2014), and new ambient air quality standards for ground-level ozone, sulfur dioxide, and fine particulates (PM2.5).

3.3 Fugitive Methane Emissions Natural gas is mostly methane, which is a potent GHG. There is growing concern that a great deal of methane is escaping in the extraction, processing, transport, and use of natural gas and certain types of oil extraction. This concern is heightened by the tremendous growth of the use of hydraulic fracturing techniques. In April 2012, EPA finalized rules that will reduce emissions of certain non-GHGs from new oil and natural gas systems; this will also reduce methane leakage. EPA could also regulate methane from new sources in this sector directly, which it has so far declined to do, as well as adopt rules for existing systems. Such rules could have a substantial effect on the ‘lifecycle’ advantage of electricity generation using natural gas versus coal. Controlling fugitive methane from extraction is especially important as power

616   part vii. region-specific perspectives generation relies more heavily on natural gas. A great deal of methane also escapes from coal mines. EPA could issue performance standards for new coal mines, and guidelines for states to regulate existing mines, but so far it has refused to do so. Municipal solid waste landfills are another source of methane emissions. Emissions of volatile organic compounds from landfills are already regulated under the CAA; this incidentally also captures a great deal of methane. These standards could be strengthened, or new standards could be promulgated specifically for methane.

3.4 HFCs Under Title VI of the CAA, which helps implement the Montreal Protocol on Substances that Deplete the Ozone Layer, EPA may regulate Hydrofluorocarbons (HFCs). HFCs are powerful GHGs and are used primarily for refrigeration and air conditioning. A phase-down of HFCs has already been proposed, but this could be accelerated, yielding considerable GHG benefits. Moreover, the Department of State could press for further international reductions in HFCs and other ozonedepleting substances under the framework that led to the Montreal Protocol. In July 2013, the United States and China announced an agreement on cooperative action to reduce HFCs.

4.  Other Federal Authorities In addition to the Clean Air Act, several other sources of federal authority can be utilized in the fight against climate change.

4.1 National Environmental Policy Act NEPA, adopted in 1970, requires the preparation of environmental impact statements (EISs) for major federal actions that may significantly affect the environment. Several judicial decisions have held that climate change is an appropriate subject for analysis in EISs (Ctr. for Biological Diversity v Nat. Highway Traffic Safety Admin, 2008; Mid States Coalition for Progress v Surface Transport Board, 2003). On February 18, 2010, the Council on Environmental Quality (CEQ), the unit of the Executive Office of the President that oversees implementation of NEPA, issued

27.  united states climate change law    617 draft guidance on NEPA and climate change (Sutley, 2010). After the receipt of large numbers of comments and extensive deliberations, on December 24, 2014, CEQ issued revised draft guidance (Council on Environmental Quality, 2014). The draft guidance directs agencies to consider the potential effects of a proposed action on climate change, using projected GHG emissions as a proxy for those effects. CEQ identifies a reference point of 25,000 metric tons of carbon dioxide equivalents (CO2e) annually as a threshold below which a quantitative analysis of GHG emissions is not recommended unless it can be easily accomplished. The draft guidance instructs agencies to assess both direct and indirect climate change effects, taking into account both the proposed action and any ‘connected’ actions, so long as these effects are ‘reasonably foreseeable’. Specifically, the NEPA analysis should account for emissions from activities that have a ‘reasonably close causal relationship’ to the Federal action, including those that occur as a predicate for the agency action (upstream emissions) and as a consequence of the agency action (downstream emissions). For example, the guidance notes that the NEPA analysis for a proposed open-pit mine could include the reasonably foreseeable emissions from different components of the mining process, such as clearing land for extraction, building access roads, transporting the extracted resource, refining or processing the resource, and consuming the resource. The guidance clarifies that agencies will continue to have ‘considerable discretion’ when determining the appropriate level (broad, programmatic, or project-specific) and type (quantitative or qualitative) of analysis required to comply with NEPA. It instructs agencies to apply a ‘rule of reason’ when deciding how to analyze these issues, taking into account the availability of information, the usefulness of that information to the decision-making process and the public, and the extent of the anticipated environmental consequences. In applying this rule, agencies should aim to ensure that ‘the level of effort expended in analyzing GHG emissions or climate change effects is reasonably proportionate to the importance of climate change related considerations to the agency action being evaluated’. The guidance also directs agencies to consider the implications of climate change impacts on the proposed action, including potential adverse environmental effects that could result from drought or sea level rise. According to CEQ, such considerations are squarely within the realm of NEPA and will enable the selection of smarter, more resilient actions. Several states are ahead of CEQ in requiring climate disclosures in their own state-level environmental review laws (Gerrard, 2009). For example, on July 15, 2009, the New York Department of Environmental Conservation issued a policy on assessing energy use and GHG emissions in EISs (New York State Department of Environmental Conservation, July 2009). Similarly, consideration of climate change has become a standard part of the EIS process under California’s equivalent of NEPA, the California Environmental Quality Act.

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4.2 GHG Reporting Rule EPA promulgated the final Mandatory Greenhouse Gas Reporting Rule (Reporting Rule) on October 30, 2009 (EPA, 2009). It was authorized by information-gathering provisions of the Clean Air Act and by the FY2008 Consolidated Appropriations Act (United States Congress, Dec. 2007b; United States Congress, Oct. 1990a; United States Congress, Oct. 1990b). It applies to air pollution sources within any of a long list of industry categories. Certain kinds of sources automatically need to report; others must report only if they emit at least 25,000 metric tons per year of carbon dioxide equivalent. Suppliers of fossil fuels and certain industrial gases must also report. Covered sources were to begin monitoring their emissions on January 1, 2010, except that for three months (and twelve months under some circumstances) owners had some flexibility in the methods by which they would determine their emissions. The EPA regulation has considerable sector-by-sector detail about the methods of monitoring and reporting (Ternes, 2009). The initial regulation covered thirty-one industry sectors. Several additional sectors have subsequently been added. The first annual emissions monitoring reports were due March 31, 2011. Failure to monitor, to report, or to carry out the rule’s other requirements are violations of the Clean Air Act, and the rule specifically provides that each day of violation constitutes a separate violation (United States Congress, Dec. 2009). EPA has compiled the reports and issued a national emissions inventory, which is posted on its website (EPA, April 2013). This inventory allows identification of the largest GHG emitters in the country, in each state, and in cities. This is very similar to the Toxic Release Inventory reports compiled by EPA under the Emergency Planning and Community Right-to-Know Act. These lists garner considerable attention, sometimes leading to public campaigns to pressure the largest emitters. The new GHG inventory also helps define the universe of entities that will be regulated in any future Congressional enactment on GHGs.

4.3 Securities Disclosure The Securities and Exchange Commission (SEC) regulates, among other things, the capital markets, and it imposes numerous disclosure requirements on publicly traded corporations. On January 27, 2010, the SEC adopted an interpretive guidance document regarding disclosure related to climate change—a significant development for those who practice at the intersection of securities law and environmental law (United States Congress, Feb. 2010). The guidance built upon the SEC regulations that are familiar to lawyers in this area. Regulation S-K tells securities registrants to disclose certain environmental information. Item 101 of Regulation S-K requires a description of the business, including certain costs of complying with environmental laws. Item 103 mandates disclosure of

27.  united states climate change law    619 material pending legal proceedings. Item 303 concerns management’s discussion and analysis of financial condition and results of operations. Item 503(c) requires disclosure of risk factors. Regulation S-K was first adopted in 1982, and since then lawyers have accumulated a great deal of experience in making environmental disclosures under it. For several years, it had been apparent that disclosure of climate risks was going to be required. In 2008 CERES, the Environmental Defense Fund, and others formally petitioned the SEC to issue guidance on the topic. Also in 2008, New York Attorney General Andrew Cuomo launched an investigation into the climate disclosures of five electric utility companies, and he has reached settlements with three of them. Cautious lawyers were advising their clients to make disclosures. The SEC guidance lists four ways that climate change may trigger disclosure: The first is the impact of actual and proposed climate legislation and regulations. Significantly, the guidance states, ‘management must evaluate whether the pending legislation or regulation is reasonably likely to be enacted. Unless management determines that it is not reasonably likely to be enacted, it must proceed on the assumption that the legislation or regulation will be enacted’ (United States Congress, Feb. 2010). The guidance also specifies that disclosure of proposed laws must include positive as well as negative consequences. For example, companies should disclose if they will be able to profit from the sale of allowances or offset credits (United States Congress, Feb. 2010). Disclosure is also required of the costs to comply with new regulatory limits, or ‘[c]‌hanges to profit or loss arising from increased or decreased demand for goods and services produced by the registrant arising directly from legislation or registration, and indirectly from changes in costs of goods sold’ (United States Congress, Feb. 2010). The second item is the business impact of treaties or international accords relating to climate change. For example, the current uncertainty about the future of the Clean Development Mechanism (CDM) under the Kyoto Protocol will affect some businesses with operations in signatory countries. For example, a large industrial facility in Europe may be counting on purchasing offsets from a wind project it is financing in China under the CDM. If the CDM were to be eliminated, such allowances might no longer be available, and the facility might have to find another way for its GHG emissions to comply with the applicable GHG emission limitations. The third item is the indirect consequences of regulation on business trends. Among the examples given by the SEC are: decreased demand for goods that produce significant GHG emissions; increased demand for goods that result in lower emissions than competing products; increased competition to develop innovative new products; increased demand for generation and transmission of energy from alternative energy sources; and decreased demand for services related to carbonbased energy sources, such as drilling services. Also included in this category is the effect of climate regulation on a registrant’s reputation. Here the SEC specifically refers to the public’s perception of any publicly available data relating to companyspecific GHG emissions (United States Congress, Feb. 2010). EPA’s Reporting Rule is, of course, a prime source of such data.

620   part vii. region-specific perspectives The fourth item is the physical impacts of climate change. The SEC lists several examples, including: property damage to operations along coastlines; effects of severe weather, such as hurricanes or floods; increased insurance claims; decreased agriculture production; and increased insurance premiums and deductibles (United States Congress, Feb. 2010). Though the SEC guidance received a great deal of attention when it was issued, SEC has taken little or no enforcement action to ensure compliance. Rigorous adherence to the guidelines might induce corporate managements to think more systematically about how their operations affect the climate, and how the climate affects their operations. This in turn could lead to more corporate efforts at both mitigation and adaptation. The absence of enforcement is thus a lost opportunity (so far) to change corporate behavior.

4.4 Endangered Species Act The Endangered Species Act (ESA) aims to protect species from extinction. It directs a federal agency, the Fish and Wildlife Service, to designate certain species as endangered or threatened; for marine species, that task falls to the National Marine Fisheries Service. Federal agencies undertaking, authorizing, or funding physical projects must determine whether any endangered or threatened species are present on the project site and, in some instances, in the nearby area. If any are, the agency must ‘insure that any [such] action . . . is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species’ if that habitat has been designated as ‘critical’ (United States Congress, Nov. 1988a). This provision has been interpreted literally by the courts, and can lead to the halting of large projects (Tennessee Valley Authority v Hill, 1978). A separate program under the ESA applies to private parties. It provides that ‘it is unlawful for any person subject to the jurisdiction of the United States to . . . take any [endangered] species within the United States or the territorial sea of the United States,’ without obtaining what is termed an ‘incidental take permit’, the availability of which is severely restricted (United States Congress, Nov. 1988a; United States Congress, Nov. 1988b). The term ‘take’ is defined and interpreted very broadly (United States Congress, Oct. 1988a; United States Congress, Oct. 1988b; Babbitt v Sweet Home Chapt. of Communities for a Great Oregon, 1995). Some commentators have suggested that the ESA could be used to fight GHG emissions anywhere in the United States, on the theory that the cumulative load of GHGs is contributing to the extinction of many species (Moritz et al, 2008). However, the impossibility of attributing impacts on any given species to the emissions from any particular source has convinced most scholars and activists that this method would be ineffective, and no lawsuits asserting this theory have been brought (Ruhl, Aug. 2009).

27.  united states climate change law    621 Nonetheless, there has been considerable litigation seeking to force the listing of certain species that are imperiled by climate change. The most prominent of this litigation has concerned the polar bear, which has now been listed as threatened (In re Polar Bear Endangered Species Act Listing & Section 4(d) Rule Litigation, 2013). The effect may be to inhibit or regulate activities in the Arctic in or near polar bear habitat, such as oil drilling in certain locations.

4.5 Energy Policy and Conservation Act of 1975 The Energy Policy and Conservation Act of 1975 (EPCA) does not explicitly address climate change, but it plays a crucial role in a strategy that is central to reducing GHG emissions, energy efficiency (Gerrard, 2011; United States Congress, Oct. 1992). In addition to requiring the establishment of CAFE standards for motor vehicles, as addressed above, EPCA, as amended several times since 1975, sets energy efficiency standards for certain consumer products and authorizes the Department of Energy to set or revise others. It also establishes a program for testing, labeling, and standard-setting for commercial and industrial equipment. Another energy-specific enactment, the Energy Policy Act of 2005, as expanded in 2007, establishes a renewable fuel standard that requires petroleum refiners and importers to blend large quantities of ethanol and biodiesel into fuel supplies. This was touted as a way to reduce GHG emissions and improve energy security, but the climate benefits are the subject of considerable debate, especially in view of the lifecycle GHG impacts of producing this fuel; the standard’s principal backers have been agricultural interests, especially corn producers who have greatly benefited from the increased demand for their product for the production of ethanol as a result of this standard.

5.  Regional, State, and Local Efforts During the G.W. Bush administration, one of the ways that frustration over federal inaction manifested itself was through efforts at subnational levels to adopt climate regulatory programs. These were generally seen as interim measures to pressure Congress to act, and as ways to test out and refine methods such as cap-and-trade on a small scale before they were adopted nationally. When the political shift signified by the 2010 election meant that congressional action was still years away, these programs took on added significance.

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5.1 Regional By 2007 at least eight multi-state groupings had formed with the objective of creating regional systems of GHG regulation, mostly based on cap-and-trade programs. Only one of these ever actually went into operation; the others faded away, largely due to lack of enthusiasm by the relevant governors. The one program that was actually launched and is still operational is the Regional Greenhouse Gas Initiative (RGGI). RGGI was initiated in 2003 when George Pataki, a moderate Republican who was governor of New York, invited several other Northeastern and Mid-Atlantic states to develop a regional strategy to reduce GHG emissions. Ten states ultimately joined—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Maryland, and Delaware. RGGI eventually shrunk to nine states in 2011 when Governor Chris Christie unilaterally withdrew New Jersey, and then vetoed state legislation that would keep the state in. The participating states adopted a Memorandum of Understanding under which each agreed to adopt its own program through either legislation or regulations to reduce GHG emissions from its power plants, to auction emissions allowances, and to utilize the proceeds of those auctions. RGGI applies only to carbon dioxide emissions from fossil-fuel power plants with a capacity of at least 25MW; discussions of expanding the covered pollutants and source categories have not borne fruit. Each covered plant in the region must purchase one allowance for each ton of carbon dioxide it emits. The allowances are sold in quarterly auctions; the first was held on September 25, 2008, for the compliance period that began January 1, 2009. They are also traded in a secondary market. At the outset a total regional emissions cap was set, and each state was allocated a certain emissions budget, set at the actual level of emissions from the covered plants in 2005. The total emissions budget was frozen for the period 2009 through 2014; starting in 2015, the emissions cap would decline by 2.5 percent per year, so that by 2019, all state budgets would be ten percent below the initial base. The auction revenues go to the participating states in proportion to the allowances bought by the generating plants in those states. As of December 2014, the total auction proceeds that had been returned to the states were approximately US$1,934,000,000 (Analysis Group, 2015). The states have put about half of this money into energy efficiency programs, and one-fifth into general state government funding, and the rest into a variety of renewable energy investments; education, outreach and job training; direct bill assistance to consumers; and administrative costs for GHG programs (Hibbard et al, 2011). The auction price of allowances peaked at $3.51 in the March 2009 auction. It then declined precipitously, mostly as a result of the economic downturn and the conversion of much electric generating capacity from coal to natural gas. From 2010 through 2012, allowances told at or near the established floor of about $1.90. Though the auctions still generated substantial revenues for the states, the allowance price

27.  united states climate change law    623 was too low to have much direct effect on GHG emissions. Thus the RGGI states in 2013 lowered the total emissions cap in the hopes that this would raise the allowance price; that succeeded, and the June 3, 2015 auction price was $5.50 (RGGI, 2015). As the allowance price rises, so too does concern that more power will be imported into the region. The RGGI states are connected by the electricity grid to their neighbors. If the price of generating electricity in an RGGI state goes up as a result of having to purchase carbon dioxide allowances, the electricity distribution companies in a state, which, after restructuring of the electricity industry, for the most part no longer own the generating plants, will have an incentive to buy power from out-of-region generators that do not have to pay for allowances. This phenomenon, known as ‘leakage’, would negate the GHG advantages of RGGI, since more power would be bought from and generated by power plants that are not constrained by the RGGI cap and do not have to pay for allowances. The RGGI states are working to find the best way to address this issue within the constraints imposed by the Commerce Clause of the US Constitution.

5.2 State Programs Every state has laws and programs that have bearing on climate change, whether directly or indirectly. They can be put into three categories—explicit climate change programs, electricity sector initiatives, and land use and building programs.

A. Explicit Climate Change Programs As of August 2015, thirty-four states have completed climate action plans (Center for Climate and Energy Solutions, Aug. 2015a). Twenty of these states have GHG emissions targets or goals (Center for Climate and Energy Solutions, Aug. 2015b). But only one state—California—has set up an economy-wide cap on emissions with enforcement provisions. Indeed, California is unquestionably leading the nation, and is arguably leading the world, in its climate change program. In 2006 Governor Arnold Schwarzenegger signed California’s Global Warming Solutions Act, also known as AB32. It requires California to lower GHG emissions to 1990 levels by 2020. To meet this requirement, the state has adopted a series of measures. The most important of these are: • A cap-and-trade program, whose first phase took effect in January 2013, covering over 300 large emitters; a second phase covering many more emitters took effect in 2015. This program has been linked to a similar program in Quebec, Canada, and discussions are underway with Ontario. • A plan to generate thirty-three percent of electricity from renewable sources by 2020, with a proposal by the current Governor to achieve fifty percent by 2030.

624   part vii. region-specific perspectives • A plan to expand and strengthen the state’s already leading energy efficiency program, including appliance and building standards. • A land use program to encourage transit-friendly densities. • A low carbon fuel standard for vehicle fuels. California’s program also includes an elaborate set of measures to adapt to climate change. In 2010 a state-wide ballot initiative sought to suspend the operation of AB32 for an indefinite period of time. The campaign for this initiative was largely funded by a handful of fossil fuel companies. The initiative was resoundingly defeated; 38.5 percent of the votes were in favor and 61.5 percent were opposed. In the same election, the voters sent or returned to the Governor’s office and the US Senate candidates who staunchly supported climate regulation. Thus the political support in California for continuation of the climate change program remains solid. The AB32 program, however, has also been the subject of a large number of lawsuits, some brought by industries that oppose strong regulation, and others brought by environmental justice advocates who oppose cap-and-trade techniques. This litigation has delayed implementation of some elements of AB32, but most of the program has survived challenge and moved forward with little modification.

B. Electricity Sector Initiatives Many states have adopted programs to lower the carbon content of their electricity sector. A total of thirty states have enacted renewable or alternative energy portfolio standards, which mandate that a certain percentage of the electricity generated in the state come from renewable or alternative sources. The states vary considerably in the required percentage, the definition of eligible energy sources, and other design features. Some of the states have ‘carve-outs’ that require a certain percentage of the power to come from specified types of sources, such as solar, and some also require certain expenditures for energy efficiency. Another seven states have renewable or alternative energy goals (Center for Climate and Energy Solutions, Aug. 2015c). These renewable portfolio programs have generally been found to be quite effective in encouraging the development of renewable energy facilities, especially wind (Delmas and Montes-Sancho, 2011; Carley, 2009; Wiser et al, 2007). Many states have also adopted public benefit funds, sometimes called system benefit charges. These are small fees or surcharges on electricity bills that must be used to help pay for renewable energy, energy efficiency measures, and assistance to low-income consumers. Additionally, most states require ‘net metering’, under which customers who generate their own electricity from renewable sources are able to sell their excess electricity back into the grid; in effect, the meter runs backward. In all, forty-four states have this requirement (Database of State Initiatives for

27.  united states climate change law    625 Renewables & Efficiency, August 2015). Tax credits and grant and loan programs for renewables and efficiency are also common.

C. Land Use and Building Programs Many states have adopted energy efficiency building codes, often based on model codes prepared and periodically updated by the International Code Council and the American Society of Heating, Refrigerating and Air-Conditioning Engineers. As noted above, California has a program that requires land use plans to encourage use of public transit, but for the most part, land use is a matter of local control. State infrastructure policies—for example where to build roads and commuter train tracks—have an important influence on land use and travel patterns, of course.

5.3 Local Programs Several large cities have included in their building codes important provisions requiring energy efficiency. Most of these concern new buildings, but increasingly cities are also focusing on the retrofitting of existing buildings. Where the states have not adopted the model energy efficiency codes, many cities have done so. Many cities and smaller municipalities require new or modified buildings to meet the Leadership in Energy and Environmental Design (LEED) standards adopted by the US Green Building Council. Many cities have also embraced programs to discourage automobile use through such means as bicycle lanes, carpool incentives, and tolls and fees. Cities are also targeting emissions from municipal vehicle fleets, such as waste collection trucks, as well as emissions from sewage treatment plants and municipal solid waste landfills. Increasingly, cities also are turning attention to the challenges of adapting to the climate change that is already occurring and that will become more severe in the years to come. In the wake of Hurricane Sandy in October 2012, for example, New York’s Mayor Michael Bloomberg released a $20 billion adaptation plan. His successor, Bill de Blasio, is moving forward with the plan and has expanded it, as at the time of writing (City of New York, 2015).

6.  Civil Litigation Beyond federal regulation and sub-federal actions, litigation has also played a crucial role in shaping US climate change law and policy. There are two major kinds of litigation about climate change in the United States. These are administrative

626   part vii. region-specific perspectives litigation, in which the action or inaction of a government agency is challenged, and common law litigation, in which courts are asked to formulate rules about liabilities and obligations. The administrative cases have, with one exception, garnered relatively little attention, but some have had great impact. In contrast, the common law cases have attracted much attention but have had almost no tangible impact outside, perhaps, of the realm of public opinion.

6.1 Administrative Cases One distinctive aspect of US environmental law is the access it provides to the courts for people and groups who wish to sue the government. The Administrative Procedure Act and most of the federal environmental statutes authorize suits against EPA and other federal agencies if they take actions that violate statutorily required procedures, or do not properly apply established standards (United States Congress, Jan. 2011). Suits are also allowed if the government fails to take required actions or meet deadlines. As discussed above, the Supreme Court’s 2007 decision in Massachusetts v EPA made it clear that EPA has the power and the duty to take action to control/regulate GHGs. While the decision had little immediate impact on an unsympathetic administration, as soon as a president took office who supported action to combat climate change, the decision in Massachusetts v EPA enabled the EPA to unleash a flurry of regulatory activity. Every major EPA regulatory action, and many minor ones, lead to a gauntlet of litigation. In response to each major regulatory action EPA initiates, it is typical for industry and anti-regulation states to respond by saying EPA went too far or too fast, while environmental groups and pro-regulation states respond by saying EPA did not go far enough, or moved too slowly. Litigation was a major spark behind much of the activity described above under NEPA, the ESA, and other statutes. In the United States, litigants typically bear their own legal costs, unlike in those countries where the loser usually pays; thus the fear of having to pay for the other side’s lawyers does not normally inhibit the bringing of lawsuits. The principal constraint on environmental litigation is the standing doctrine, under which plaintiffs much have a sufficient stake in a case before they may get into court. This doctrine is primarily founded on the provision in the US Constitution that the federal courts may hear only actual ‘cases and controversies’, and may not issue advisory opinions. The doctrine had little force in the environmental arena until a series of decisions written by Justice Antonin Scalia (Lujan v Nat’l Wildlife Fed’n, 1990; Lujan v Defenders of Wildlife, 1992). For a time it appeared that cases about climate change might be kept out on the basis of this doctrine, in part because few specific individual actions can have a detectable effect on the global climate and therefore plaintiffs might not have a sufficiently definite stake

27.  united states climate change law    627 in the outcome of a particular case. The Massachusetts v EPA ruling allayed these concerns to a certain extent.

6.2 Common Law Cases The administrative cases ask judges to apply rules established by Congress, state legislatures, and administrative agencies. The common law cases, instead, ask judges to apply and extend doctrines that have been created by prior judges over a period of centuries. The doctrine that is most pertinent in the climate context is public nuisance. The Second Restatement of Torts defines a common law public nuisance as an activity that creates an ‘unreasonable’ interference with a right common to the general public (Second Restatement of Torts, 1979). Determining whether an interference is unreasonable requires weighing ‘the gravity of the harm against the utility of the conduct’ (Second Restatement of Torts, 1979). Between 2004 and 2008, several lawsuits were filed in the federal courts against major industrial companies claiming their GHG emissions, or the emissions from their products, exacerbated climate change and amounted to a public nuisance. One of the cases sought injunctive relief; the others demanded very large money damages. These cases received a great deal of publicity, and ignited hopes in some that the courts would step in to correct a problem that Congress had been unwilling to solve. This line of cases ran into a brick wall with the June 2011 decision of the US Supreme Court in American Electric Power v Connecticut (AEP) (American Electric Power v Connecticut, 2011). By way of background, in 2004 two suits were brought against six electric power companies that ran fossil fuel plants in a total of twenty states. One suit was brought by eight states and New York City; the other suit was brought by three land trusts. The plaintiffs in both cases claimed that the GHGs from the power plants constitute a common law nuisance, and they asked the court to issue an injunction requiring the plants to reduce their emissions. In 2005, the district court dismissed the cases on the grounds that they raise non-justiciable political questions (Connecticut v American Electric Power, 2005). The Second Circuit heard oral argument in June 2006. As the third anniversary of that argument passed, the Second Circuit’s long delay in issuing a decision became one of the great mysteries in climate change law. Meanwhile, the Supreme Court issued the landmark decision in Massachusetts v EPA, and later one of the three members of the panel that heard the arguments in the AEP case was elevated to the Supreme Court, Judge now Justice Sonia Sotomayor. Finally, in September 2009, the two remaining members of the panel—Judge Joseph McLaughlin, an appointee of the first President Bush, and Judge Peter W. Hall, appointed by the second President Bush—issued the decision (Connecticut v American Electric Power, 2009).

628   part vii. region-specific perspectives The Second Circuit decision was a major win for the plaintiffs. First, the panel found that the case was indeed justiciable and did not raise political questions, as that concept has been interpreted by the Supreme Court. Second, though it did not need to, the panel found not only that the states had standing to sue, which might have been foreshadowed by the Massachusetts decision, but also that the private land trusts had standing because they alleged that their property was being harmed by climate change. This finding potentially opened the courthouse doors to broad classes of people and entities beyond states. Third, the panel found that the federal common law of nuisance applied, and that it had not been displaced by the Clean Air Act and EPA actions under that statute. Based on these conclusions, the Second Circuit remanded the case to the district court for further proceedings. The Supreme Court reversed the Second Circuit decision. Eight justices participated; Justice Sotomayor was recused. The decision was unanimous, 8-0, and was written by Justice Ruth Bader Ginsburg. The decision found that the federal common law nuisance claims could not proceed. The sole reason was that the Clean Air Act, as interpreted in Massachusetts v EPA, gave EPA the authority to regulate greenhouse gases, and EPA was exercising that authority. This displaced the federal common law of nuisance. The Court declared, ‘Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants; the delegation is what displaces federal common law’. Thus it is not for the federal courts to issue their own rules. The Court explicitly did not decide whether the Clean Air Act preempts state public nuisance litigation over GHGs. The plaintiffs in AEP v Connecticut could have pressed this claim on remand, but they chose not to. If another plaintiff group brings such a state claim, the defendants would certainly argue that the Clean Air Act pre-empts state common law nuisance claims as well. The plaintiffs would no doubt counter that the Clean Air Act has provisions that explicitly say that common law claims are not preempted, at least by certain parts of the Clean Air Act (United States Congress, Nov. 1990; United States Congress, Nov. 1977; Her Majesty the Queen in Right of the Province of Ontario v City of Detroit, 1989; Gutierrez v Mobil Oil Corp., 1992). In the next volley, the defendants would quote Justice Ginsburg’s statement in AEP that ‘judges lack the scientific, economic, and technological resources an agency can utilize in coping with issues of this order . . . Judges may not commission scientific studies or convene groups of experts for advice, or issue rules under notice-and-comment procedures’. Pressing state common law nuisance claims would raise several additional complications. One of them is the question of which state’s law would apply. If relief is sought against a particular facility, it might well be the law of the state where the facility is located. The Fourth Circuit in 2010 considered common law nuisance claims against facilities in several states in a case concerning conventional air pollutants, not GHGs (North Carolina v Tennessee Valley Authority, 2010). There, the court found that the laws of the states where the plants were located specifically

27.  united states climate change law    629 allowed the activities—in other words, the facilities were operating pursuant to, and in compliance with, state permits—and therefore nuisance actions were precluded. If the same doctrine applied to the defendants’ facilities in a new case about GHGs, the plaintiffs would face a tough burden in proving that the plants were not operating in accordance with state law. However, in 2013 the Third Circuit held that a facility (in that case, a coal-burning power plant) could be liable under the law of its own state for a common law air pollution nuisance even if was operating in accordance with its air pollution permits (Bell v Cheswick Generating Station, Aug. 2013). It remains to be seen whether this decision will spark GHG litigation. Another complication with state common law nuisance claims is that some states would act to bar such claims. On June 17, 2011, Governor Rick Perry of Texas signed a bill providing that companies sued for nuisance or trespass for GHG emissions would have an affirmative defense if those companies were in substantial compliance with their environmental permits (Texas, 2011). Since the AEP opinion was based entirely on displacement by Congressional designation of EPA as the decision-maker on GHG regulation, if Congress takes away EPA’s authority to regulate GHGs but does not explicitly bar federal common law nuisance claims, these cases will come back. Thus this interestingly changes the political dynamic a bit—success by opponents of GHG regulation in their efforts to take away EPA’s authority could swiftly bring back the common law claims, unless they are also able to muster enough votes to go further and explicitly preempt the federal and state common law claims. Another question left open was whether the Supreme Court’s decision bars all federal common law nuisance claims, or only those like AEP that seek injunctive relief. This particular question was soon answered in one of the other GHG related public nuisance cases, Village of Kivalina v ExxonMobil. This was a suit by a native village in Alaska that was endangered by the loss of the sea ice around it. The plaintiffs sued several major oil and coal companies for the cost of relocating away from the endangered coastline. The suit was dismissed by the district court on political question grounds (Village of Kivalina v ExxonMobil Corp., 2009). The appeal to the Ninth Circuit was put on hold pending the decision in AEP. After the Supreme Court ruled in that case, the Ninth Circuit dismissed Kivalina on the grounds that claims for money damages were barred by the displacement doctrine of Connecticut (Village of Kivalina v ExxonMobil Corp., 2012). Another notable common law nuisance case was Comer v Murphy Oil, a suit brought by Mississippi landowners saying that Hurricane Katrina was made more intense as a result of climate change. That suit was dismissed by the district court; reversed by the Fifth Circuit; and then undone through a bizarre procedural sequence in which the court granted en banc review and vacated the panel decision, and then lost a quorum for en banc review but left the panel decision vacated (Comer v Murphy Oil USA, 2010). The plaintiffs in Comer re-filed the case, but that

630   part vii. region-specific perspectives attempt was rebuffed by the Fifth Circuit on res judicata grounds (Comer v Murphy Oil, May 2013). The complaints in both Kivalina and Comer also raised the claim that some of the defendant companies have aggressively misrepresented and concealed scientific information about climate change, and alleged that this amounted to an actionable civil conspiracy. This claim was not raised in AEP, and it was not decided in either Kivalina or Comer (or any other US case). Thus it is likely to be raised again. None of these cases has come close to the merits. There was no discovery in any of them, or litigation of such difficult issues as how a district court would determine what is a reasonable level of GHG emissions from a myriad of industrial facilities, or, in the cases seeking money damages, what defendants would be liable, what plaintiffs would be entitled to awards, what defendants would have to pay what share of the award, and what plaintiffs would enjoy what share of the award. Among the other issues that would have to be addressed are: extraterritorial jurisdiction over foreign entities, whether there are limits to how many third-party defendants can be brought in, the impossibility of attributing particular injuries to particular defendants, and the effect of the fact that most of the relevant emitting facilities were presumably operating in accordance with their governmentally issued emissions permits.

6.3 Our Children’s Trust Cases The cases just discussed were under the common law doctrine of public nuisance. A separate line of cases under a different common law doctrine was launched in 2011 by a non-profit group called Our Children’s Trust. These cases were all founded on the common law doctrine of the public trust, in which certain features of the natural world are held by the government in a public trust, and the government is obligated to protect them, at least unless the relevant legislature takes a different view. This doctrine had long been applied to certain coastal waters, and in some jurisdictions to parkland. The 2011 cases sought to extend it to the atmosphere. The lawsuits were brought against state and federal governments, and sought court orders that these governments adopt and enforce plans to reduce GHG emissions so that the atmosphere is preserved. None of these cases has succeeded. The one that got furthest was in Texas, where a judge found in July 2012 that a provision of the Texas Constitution did include the atmosphere in the public trust; but less than a month later the judge said that it was not the court’s role to intrude on the legislature’s decisions as to environmental policy (Bonser-Lain v Texas Commission on Environmental Quality, 2012). The other cases were dismissed on the grounds that the public trust doctrine does not extend to the atmosphere, or that the doctrine of separation of powers does not

27.  united states climate change law    631 allow the courts to make policy decisions of the sort requested (Alec L. v Jackson, 2012; Barhaugh v State, 2011).

7. Conclusion The United States has a large and growing body of law related to climate change, but it is scattered and not very coordinated. No comprehensive climate statute will emerge until there is a major shift in the nation’s political dynamic. Meanwhile, the President has the authority to utilize the Clean Air Act and other existing statutes to advance suboptimal but constructive measures to reduce greenhouse gas emissions. As this chapter is written in 2015, the President supports GHG regulation and both houses of Congress are opposed but without large enough majorities to override a presidential veto. Amid this Congressional paralysis, the President’s existing authority remains in place but neither expands nor contracts. Future Presidents and future Congresses could lead to much more or much less GHG regulation. Some states will probably continue to take vigorous action, but the Commerce Clause of the Constitution and other legal doctrines and statutes limit the ability of states to influence national activities, such as the generation of energy. The nation has only begun to grapple with the multiple challenges of adapting to climate change, but this is likely to become a prominent set of issues in the years to come. This is especially so to the extent that extreme weather events are attributed to climate change, increasing pressure on government to take action.

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632   part vii. region-specific perspectives Center for Climate and Energy Solutions. (Aug. 2015a). ‘Climate Action Plans,’ (accessed August 19, 2015). Center for Climate and Energy Solutions. (Aug. 2015b). ‘Greenhouse Gas Emissions Targets’, (accessed August 19, 2015). Center for Climate and Energy Solutions. (Aug. 2015c). ‘Renewable and Alternative Energy Portfolio Standards,’ (accessed August 19, 2015). City of New York. (2015). ‘One New York: The Plan for a Strong and Just City’, . Coalition for Responsible Regulation v EPA. (2012). 684 F.3 102 (D.C. Cir.). Comer v Murphy Oil USA, Inc. (2013). 718 F.3d 460 (5th Cir.). Comer v Murphy Oil USA. (2010). 607 F.3d 1049 (5th Cir.). Connecticut v American Electric Power. (2009). 582 F.3d 309 (2d Cir.). Connecticut v American Electric Power. (2005). 406 F. Supp.2d 265 (SDNY). Council on Environmental Quality (2014). Revised Draft Guidance for Federal Departments and Agencies on Consideration of Greenhouse Gas Emissions and the Effects of Climate Change in NEPA Reviews, 79 Fed.Reg. 77802 (Dec. 24, 2014). Ctr. for Biological Diversity v Nat. Highway Traffic Safety Admin. (2008). 538 F.3d 1172 (9th Cir.). Database of State Initiatives for Renewables & Efficiency, ‘Net Metering’, (accessed August 19, 2015). Delmas M. and Montes-Sancho M. (May 2011). ‘US state policies for renewable energy: Context and effectiveness’, 39 Energy Policy 2273–88. EPA. (April 2013). ‘National Greenhouse Gas Emissions Data’, (accessed August 19, 2015). EPA. (Oct. 2009). 74 Fed. Reg. 26260. EPA. (2015). Carbon Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 80 Fed.Reg. 64662 (Oct. 23, 2015). EPA v EME Homer City Generation, L.P. (2014). 134 S.Ct. 1584. Gerrard M. (ed.). (2011). The Law of Clean Energy: Efficiency and Renewables. Chicago, IL: American Bar Association. Gerrard M. (March 2009). ‘Greenhouse Gases: Emerging Standards for Impact Review,’ N.Y.L.J. Gerrard, M. and Freeman J. (2014). Global Climate Change and US Law (2nd edn). Chicago, IL: American Bar Association. Gutierrez v Mobil Oil Corp. (1992). 798 F. Supp. 1280, 1282 (W.D. Tex.). Her Majesty the Queen in Right of the Province of Ontario v City of Detroit. (1989). 874 F.2d 332, 342 (6th Cir.). Hibbard P. et al. (Nov. 2011). ‘The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States’, Analysis Group. In re Polar Bear Endangered Species Act Listing & Section 4(d) Rule Litigation. (2013). 709 F.3d 1 (D.C. Cir.). Las Brisas Energy Center v EPA. (2012). No. 12-1248 F.3d (D.C. Cir.). Lujan v Nat’l Wildlife Fed’n. (1990). 497 US 871. Lujan v Defenders of Wildlife. (1992). 504 US 555.

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634   part vii. region-specific perspectives Village of Kivalina v ExxonMobil Corp. (2012). 696 F.3d 849 (9th Cir.). Village of Kivalina v ExxonMobil Corp. (2009). 663 F.Supp.2d 863 (ND Cal.). Wiser R. et al. (May 2007). ‘The Experience with Renewable Portfolio Standards in the United States’, The Electricity Journal, 8–20. Worldwatch Institute. (2013). ‘Exports Account for One-Third of China’s Emissions,’ (accessed August 19, 2015).

Chapter 28

CLIMATE CHANGE POLICY AND LAW IN CHINA Alex L. Wang*

1. Introduction

636

2. Background

637

3. Policy and Law on the Books

641

4. Challenges in Practice

652

5. Conclusion

661

*  The author is grateful to the editors of this volume, and to Edward Parson, Jonathan Zasloff, Tim Malloy, Sam Bray, Christina Ho, and Alvin Lin for their thoughtful comments on earlier drafts of this chapter.

636   part vii. region-specific perspectives

1. Introduction The extraordinary growth of greenhouse gas (GHG) emissions in China represents the single greatest challenge to global climate change efforts in coming decades. China is the world’s leading emitter of greenhouse gases, having surpassed the United States in 2006 (Olivier et al., 2012). China’s greenhouse gas emissions accounted for nearly a third (twenty-nine percent) of the global total in 2011, slightly more than emissions of the United States and the European Union combined (twenty-seven percent).1 This state of affairs is the result of more than three decades of energyintensive, coal-fired economic growth, wherein China’s GDP grew by an average of ten percent a year.2 And, while emissions in the developed world are steady or declining, China’s greenhouse gas emissions are expected to account for half of the global growth in energy-related carbon dioxide emissions between now and 2030 (IEA, 2012). Without significant contribution from China, efforts to find a solution to global climate change are unlikely to succeed. Perhaps recognizing the urgency of the matter, Chinese leaders have begun to implement a range of policies and laws aimed at improving the energy and carbon intensity3 (though not absolute emissions) of its economy.4 These moves were initially motivated by non-climate objectives such as economic development, energy security, social stability, and international reputation, but, since 2007, Chinese leaders have framed their actions explicitly as part of a comprehensive national climate change program. China’s climate change program is designed to address the primary sources of greenhouse gas emissions: fuel combustion and, to a lesser extent, industrial processes and land use changes.5 The program attempts to address these sources primarily through (1) reduced reliance on energy-intensive heavy industry; (2) greater energy efficiency and conservation; (3) increased use of non-fossil energy and less carbon-intensive fossil fuels; and (4) expansion of carbon sinks (e.g., through afforestation). China’s regulatory approach relies heavily on top-down, command-and-control regulation, built around bureaucratic targets and controls for local officials and 1   Excluding land use change and forestry (LUCF), as well as emissions from flaring gas during oil and gas production and underground coal fires. The United States accounted for sixteen percent, EU for eleven percent (Joint Research Centre—EDGAR, 2013). 2   This growth resulted in a twenty-eight fold increase in overall GDP between 1978 and 2014 (US DOA, 2015). 3   Intensity refers to the amount of energy or carbon emitted per unit of economic output. 4   China is not subject to an internationally binding greenhouse gas emissions reduction target. 5   In China, fuel combustion causes ninety-one percent of non-land use emissions; industrial processes nine percent (Cohen-Tanugi, 2010).

28.  climate change policy and law in china    637 state-owned enterprise leaders. This top-down control is nonetheless coupled with extensive leeway for local experimentation and flexibility in implementation. More recently, leaders have pressed for greater utilization of market measures transparency, and public supervision. This chapter offers an overview of China’s developing climate change response by examining the framework on the books and significant implementation challenges in practice. First, it offers background on China’s contribution to global climate change and its positions in international climate negotiations. Second, it describes China’s formal framework of climate change-related laws and policies. This body of authorities has expanded significantly since the beginning of China’s eleventh five-year plan in 2006 (PRC, 2006).6 This part also describes the preliminary results as reported by official and third-party sources.7 Finally, this chapter concludes by discussing several dynamics that will influence the efficacy of China’s climate change efforts in practice. These include the evolution of various co-benefits (i.e., economic growth, pollution reduction, social stability, and enhancement of international reputation) and their impact on China’s cost–benefit calculation for climate change action; the extent to which implementation problems can be resolved; and whether China’s still-developing interior regions continue to be the locus of carbon outsourcing (from wealthier coastal regions of China) or instead shift toward a low-carbon growth path.

2. Background 2.1 China’s Climate Change Contribution China is the world’s largest emitter of greenhouse gases and the largest consumer of energy (Olivier et al., 2012; Swartz, 2010). This marks a dramatic change over thirty years, as rapid economic growth has resulted in a six-fold increase in energy consumption.8 China’s energy mix is fossil fuel-intensive, with coal supplying seventy

  Five-year plans, a feature of the planned economy era, remain an important governance tool in China. These plans ‘set forth essential guidance on the direction of economic and social development. In practice, priorities set forth in the plan . . . receive significant financial, policy, and legal support’ (Wang, 2013). 7   It can be difficult to verify the accuracy of official Chinese data sources and commentators have raised questions about the quality of such data in a number of contexts. See Wang (2013): 424–9 for a fuller discussion of these issues. 8   China’s total primary energy consumption was 17.29 quadrillion BTUs in 1980 and 109.62 quadrillion BTUs in 2011, a 6.34-fold increase (EIA, 2013b). Over the same period, US total primary energy consumption increased by 1.25 times, albeit from a much higher baseline (78.07 quadrillion BTUs in 1980; 97.26 in 2011) (EIA, 2012). 6

638   part vii. region-specific perspectives percent of total energy.9 This increase in carbon intensive energy use has led to a several-fold increase in greenhouse gas emissions.10 Put another way, in 2011, China accounted for ten percent of global gross domestic product (GDP),11 but used twenty-one percent of the world’s energy12 and emitted twenty-nine percent of the global carbon dioxide emissions. China’s energy use and greenhouse gas emissions would be even greater if not for significant energy intensity improvements. In large part as a result of the introduction of market reforms and the upgrade of China’s industrial facilities, ‘[b]‌y 2000, Chinese economic activity required two-thirds less energy per unit of output than in 1978’ (Bergsten et al., 2008). Whereas China’s real GDP grew by more than seven times between 1980 and 2000, energy use only slightly more than doubled in the same period (US DOA, 2015). But, from 2002–2005, China encountered an ‘investment-led energy surprise’ when energy consumption increased more quickly than GDP growth, largely due to expanded investment in energy-intensive industries, such as cement and steel (Bergsten et al., 2008). This shift reversed the two-decade-long trend of year-overyear energy efficiency improvements. While the trend toward greater energy efficiency resumed in the eleventh five-year plan as the result of a number of efforts discussed below, continued rapid economic growth has caused absolute energy use and greenhouse gas emissions to rise sharply nonetheless.

2.2 China’s Evolving Role in International Climate Change Negotiations As its greenhouse gas emissions have increased, Chinese leaders have publicly acknowledged that China must play a central role in any solution to the challenge of climate change. But there is deep disagreement between China and other countries about the appropriate relative allocation of responsibilities among nations (Clark, 2011; Pan et al., 2008; Harris, 2003). China’s official position in international climate negotiations has remained relatively unchanged over the last two decades, with a continued focus on ‘state sovereignty, Third World–First World inequity, and the responsibility of the advanced industrialized states’ (Economy, 1997; Bailey, 2013). In particular, China has declared its need for economic development, the greater historical responsibility 9   Fossil fuels accounted for ninety-three percent of total energy consumption in 2009 (seventy percent coal, nineteen percent oil, four percent natural gas) (EIA, 2013a). This compares to eighty-two percent of primary energy consumption from fossil fuels in the United States in 2011 (twenty percent coal; thirty-six percent oil; twenty-six percent natural gas). 10   China’s annual carbon dioxide emissions from fossil fuel consumption increased from 1.448 to 8.715 billion metric tons of CO2 from 1980 to 2011 (EIA, 2013c). 11 12   10.3 percent in 2011 (World Bank, 2011).   20.53 percent in 2011 (EIA, 2012).

28.  climate change policy and law in china    639 of developed countries with respect to cumulative emissions,13 its lower per capita emissions, and the balance of emissions embodied in trade to argue against emission limits for developing countries and in favor of north–south monetary and technology transfers (Rogers and Evans, 2011; Pan et al., 2008; Brahic, 2008). Indeed, as Chinese negotiators often emphasize, this notion that developed nations should bear a greater burden for responding to climate change was formally embedded in the 1992 UN Framework Convention on Climate Change (UNFCCC)—and ratified by 195 countries—as the principle of ‘common but differentiated responsibilities’.14 Nonetheless, given China’s rapidly increasing contribution to greenhouse gas emissions and its surging economic growth, the United States and other countries have argued that China (and other large emerging economies) should take on greater responsibilities commensurate with the magnitude of their greenhouse gas emissions, growing wealth, and capacity to address the problem. Indeed, as of 2011, China’s per capita emissions had increased to a level on par with the European Union and within the range of major industrialized countries.15 China’s engagement in the international climate change negotiations can be divided, roughly speaking, into three phases: (i) a ‘learning’ phase from 1989 to 1995; (ii) a shift toward more active participation between 1995 and 2007; and (iii) more comprehensive engagement on climate change domestically and internationally around the time of the UN Climate Conference in Bali in 2007 (Xu and Zhang, 2013). According to Zou Ji, a Chinese climate official and researcher, from 1989 to 1995, ‘China learned about climate change[,]‌ . . . started to participate in international discussions[, and] mainly went along with the global process’ (Xu and Zhang, 2013). Nonetheless, China still actively intervened on certain key issues, such as differentiated responsibilities for developing countries, in the early international negotiations that led to the UNFCCC at the Rio Earth Summit in 1992 (Zang, 2009). The relatively low domestic priority of climate change in China at the time was reflected in the internal allocation of responsibilities for the climate change negotiations. China’s early participation in climate change negotiations was formally led by less powerful agencies with a scientific or environmental (rather than economic) focus (Zang, 2009; Lewis, 2007–08). For example, the State   ‘China’s Chief Negotiator Su Wei warned developed countries that their historical responsibility for climate change is unevadable’ (Xinhua, 2013b; Xinhua, 2010; Ellerman et al., 2011). 14   This was the idea that developed countries, due to more than 150 years of industrial activity, were principally responsible for the current levels of GHGs in the atmosphere, and would thus ‘take the lead’ in combatting climate change through binding emission reduction commitments, and support for developing countries in the form of funding and technology transfer (UNFCCC: Article 3.1). 15   Note that ‘in 2011, China’s average per capita carbon dioxide . . . emissions increased by 9 percent to 7.2 tonnes CO2 . . . [T]‌his is similar to the per capita emissions in the European Union of 7.5 tonnes in 2011 . . . China . . . is now well within the 6 to 19 tonnes/person range spanned by the major industrialised countries’ (Olivier et al., 2012). 13

640   part vii. region-specific perspectives Meteorological Administration was tasked with coordinating China’s involvement with the Intergovernmental Panel on Climate Change (IPCC), and the State Science & Technology Commission led the domestic National Climate Change Coordination Group, created in 1990.16 In practice, though, the development-­ oriented agencies, such as the State Planning Commission, China’s lead economic planning agency, and the Ministry of Energy, still dictated the key Chinese negotiation positions in the meetings leading to the UNFCCC and the Kyoto Protocol (Hatch, 2003). The second phase of climate engagement from 1995 to 2007 was marked by growing engagement and a gradual elevation of climate change as a policy priority. China actively participated in the negotiations that led to the 1997 Kyoto Protocol, and was designated a non-Annex I country without binding emissions reduction targets under that agreement. The creation of the high-level National Climate Change Countermeasures Coordination Group in 1998, led by the powerful State Development and Planning Commission (SDPC),17 reflected the increasing policy priority of climate change. An alternative view is that this institutional elevation of climate change was not primarily an attempt to strengthen state capacity to address climate change, but rather an effort merely to signal to external and domestic observers alike China’s increased concern with climate change. Another view is that the elevation of climate change reflected concern about the potential constraints climate change policy might place on economic growth. Thus, the elevation could be seen as a defensive move to ensure that climate change policy would not unduly hinder economic growth. The institutionalization of the SDPC’s leading role in climate change in 1998 formalized what had always been an implicit development focus in China’s climate change positions. The third phase of climate engagement—beginning around 2006–07—was marked by a more comprehensive approach to climate engagement. This included the release of the first national climate change program and the establishment of the National Leading Group on Climate Change in 2007,18 led by the Premier of China’s State Council. This Premier-led National Leading Group signalled a further elevation of the policy priority of climate change within the Chinese bureaucracy. 16  National Climate Change Coordination Group—guojia qihou bianhua xietiao xiaozu, 国家气候变化协调小组 (People’s Daily, 2009). This group was under the State Council’s State Environmental Protection Commission (guowuyuan huanjing baohu weiyuanhui, 国务院环境保护 委员会). The State Science & Technology Commission was reorganized as the Ministry of Science & Technology in 2003. 17   National Climate Change Countermeasures Coordination Group—guojia qihou bianhua duice xietiao xiaozu, 国家气候变化对策协调小组 (People’s Daily, 2009). The State Planning Commission was reorganized as the State Development and Planning Commission in 1998. The SDPC was restructured as the National Development and Reform Commission in 2003. 18   The National Leading Group on Climate Change—guojia yingdui qihou bianhua lingdao xiaozu, 国家应对气候变化领导小组 (NDRC, 2013c).

28.  climate change policy and law in china    641

3.  Policy and Law on the Books Since the beginning of its eleventh five-year plan (2006–2011), China has developed an extensive policy and law framework on the books for addressing climate change. Official reports and third-party analysis suggest that these efforts have helped China to avoid billions of tons of greenhouse gas emissions. At the same time, extraordinary continued growth in China’s emissions put international goals for climate change mitigation at serious risk. This section will describe the basic contours of China’s framework, and preliminary results based on official and thirdparty reports. In 2007, six months before the 13th Conference of Parties to the UNFCCC in Bali, Chinese authorities announced for the first time a comprehensive National Climate Change Program.19 The report did not establish new policy, but rather presented a range of existing policies created earlier to address other energy and environmental issues. Nonetheless, this marked the first time that China had formally framed these policies collectively as a climate change program. China’s National Climate Change Program focused on four central goals related to emissions mitigation: (i) adjusting the industrial structure, (ii) improving energy efficiency and reducing energy consumption, (iii) optimizing China’s energy structure through the use of renewables and less carbon-intensive fossil fuels, and (iv)  expanding carbon sinks.20 The 2007 climate program (but not later editions) also listed China’s family planning efforts as a major climate initiative, noting that the approximately 300 million averted births from the one-child policy were equivalent to 1.3 billion tons of avoided CO2 emissions reductions in 2005. While the main objectives in China’s national climate change program have not changed since the 2007 program, the number of implementation initiatives has increased significantly.21 With respect to the choice of regulatory tools, policymakers have largely relied on ‘administrative measures’ (xingzheng shouduan, 行政手段). These include a range of command-and-control approaches organized around bureaucratic targets for carbon and energy intensity improvements and pollution emissions   Chinese authorities have released new editions of the Program annually, except for 2010 (NDRC 2007a, 2009, 2012a, 2013a; State Council 2008, 2011b). This document has no legal or otherwise binding force on its own, but is rather a summary document issued pursuant to Article 4.1 of the UNFCCC. 20   Although this chapter focuses on climate mitigation, China also has an extensive policy framework on adaptation to climate change (NDRC 2013a; Farber, 2011). 21   These elements of the program were formalized in a range of domestic planning, policy, and legal documents during the eleventh and current twelfth five-year plan periods; they were first framed as a climate change program during the twelfth five-year plan. See the twelfth five-year plan (PRC, 2011), the State Council ‘12th Five-Year’ Work Plan on Controlling Greenhouse Gas Emissions (State Council, 2011a) and a range ancillary official documents pursuant to these. 19

642   part vii. region-specific perspectives reduction. More recently, Chinese authorities have emphasized the need for market measures, and begun to implement subsidies, tax reform, and pilot experiments with carbon trading.

3.1 Targets At the heart of China’s climate change program is a set of quantitative targets, including carbon intensity, energy intensity, non-fossil energy, and afforestation targets. Like quarterly earnings targets in a publicly traded corporation, these bureaucratic targets, created as part of the five-year state planning process, become the focal point of leadership efforts and are supported by a suite of laws, policies, and fiscal incentives. In theory, promotions, bonuses and other rewards or punishments for local government officials are closely tied to target performance.22 Economic growth, social stability, and one-child policy targets have been the most important targets. In 2006, however, China’s central authorities elevated certain environmental and energy efficiency targets on paper to the highest level of state priority.23 Specifically, the plan established a target to reduce the energy intensity of the economy by twenty percent, and targets to reduce absolute emissions of two key pollutants, sulfur dioxide for air and chemical oxygen demand for water, by ten percent.24 Previous fiveyear plans contained energy efficiency and environmental targets, but they had always been lower priority non-binding targets. Also, in past years, environmental targets were typically the responsibility of the specialized agencies. In contrast, now the ‘leading cadres’—the most senior officials at each level of government—would be personally responsible for environmental target achievement. Extending this approach, in 2009, China expanded its national targets to encompass climate-specific targets. A month before the Copenhagen climate change negotiations, President Hu Jintao announced at the United Nations in New York that China would implement targets to reduce carbon intensity by forty to forty-five percent from 2005 levels by 2020, increase the percentage of non-fossil energy in China’s energy mix to fifteen percent by 2020, and increase the afforestation rate to 21.66 percent (State Forestry Administration, 2011). These targets were subsequently incorporated into Chi­na’s twelfth five-year plan (2011–15). The key twelfth five-year plan targets included a seventeen percent reduction in carbon intensity, a sixteen percent reduction in energy intensity, and a non-fossil energy target of 11.4 percent of total energy use by 2015.25 22  Poor performance, however, typically does not result in commensurate punishments in practice (Landry, 2008). 23   These were known as the ‘energy saving, emissions reduction’ (ESER, or jieneng jianpai) targets, which in the eleventh five-year plan were designated as ‘binding’ hard targets. 24   Reductions from 2005 levels by 2010. 25   The intensity targets refer to reductions from 2010 levels by 2015. Non-fossil energy (nuclear and renewables) made up 9.6 percent of China’s energy mix in 2010 (Wang, 2010).

28.  climate change policy and law in china    643 Climate Change-Related Five-Year Plan Targets Target

11th FYP (target)

11th FYP (reported)

12th FYP (target)

Energy Intensity

–20%

–19.1%

–16%

Carbon Intensity

–

–

–17%

Non-Fossil Energy

10%

9.6%

11.4%

Afforestation Rate

20%

20.36%

21.66%

•  Sulfur dioxide

–10%

–14.29%

–8%

• COD

–10%

–12.45%

–8%

Pollution Reduction

•  Nitrogen oxides

–

–

–10%

•  Ammonia nitrate

–

–

–10%

These efforts resulted in a reported energy intensity reduction of 19.1 percent during the eleventh five-year plan, nearly meeting the target. Only interim performance figures have been released for the twelfth five-year plan targets.26 In 2013, officials announced air quality targets and associated targets for absolute reductions in coal use in parts of the country (State Council, 2013c; MEP et al., 2013; Guangdong EPB et al., 2013; Stanway and Edwards, 2013; Stanway, 2013).

3.2 Policies and Laws Central and local authorities have established an extensive framework of policies, laws, regulations, and financial incentives for each of these targets.

A. Adjusting the Industrial Structure A central component of China’s climate program is the restructuring of the economy to reduce reliance on inefficient heavy industry and exports. The main approaches to achieving this are campaigns to shut down small-scale, inefficient industrial facilities, and the promotion of low-carbon industries, such as services, ‘green’ industries and high-tech. 26   By the end of 2013, ‘energy intensity fell 9.03 percent and carbon intensity fell 10.68 percent from 2010 levels, while non-fossil fuels supplied 9.8 percent of China’s total energy needs last year.’ (Shao and Stanway, 2014). Carbon intensity fell by 3.5 percent in 2012 (Xu and Stanway, 2013). Energy intensity fell by 1.9 percent in 2011 and 3.6 percent in 2012—the first two years of the twelfth five-year plan (Houser, 2013).

644   part vii. region-specific perspectives

i. Shutdowns During the eleventh five-year plan, for example, China’s State Council announced a policy—colloquially known as ‘Implement the Big, Crush the Small’ (shangda, yaxiao)—aimed at shutting down fifty gigawatts of inefficient power plants, and other ‘backwards’ facilities (luohou channeng, 落后产能) (State Council, 2007). Seventy-two point one (72.1) gigawatts were reportedly closed, surpassing the original target (Wen, 2011). Environmental regulators supported this effort by limiting the further construction of heavily polluting, energy-intensive industrial facilities. The policy was intended to accelerate energy efficiency improvements and pollution reduction through rapid shutdown of backwards facilities and construction of larger, more efficient facilities. In the twelfth five-year plan, the campaign to shut down ‘backward production capacity’ has continued. In 2011 alone, China shut down ‘small thermal power generating units with a total generating capacity of 8 million kw’ and millions of tons of ‘obsolete production capacity’ in iron smelting, steel, cement, coking, plate glass, paper, electrolytic aluminium, copper smelting, lead smelting, and coal production (NDRC 2012a; USCBC, 2013).

ii.  Strategic emerging industries Another way in which Chinese authorities are attempting to promote economic transformation is through high-level support of seven low-carbon industries. Three of these so-called ‘strategic emerging industries’ are energy and environmental industries (State Council, 2009, 2010): • energy-efficient and environmental technologies; • new energy (e.g., nuclear, solar, wind, biomass); and • new energy vehicles (e.g., low emissions, fuel-cell, plug-in hybrid, and pure electric vehicles). Strategic emerging industries development is led by the powerful National Development and Reform Commission and its local affiliates. The other four industries—next-generation information technologies, biotechnology, high-end equipment manufacturing, and new materials—are high value-added industries that use relatively less energy and generate less pollution (State Council, 2010, 2012b; NDRC, 2011a, 2013b; MIIT, 2012a, 2012b; MOF and NDRC, 2012a). Strategic emerging industries are supported by quantitative targets and supporting policies and regulations. These industries are expected to account for eight percent of GDP by 2015 and fifteen percent by 2020 (up from two to four percent in 2010) (State Council, 2010). Supporting policies include state funding and other incentives, as well as the elimination of existing market-entry thresholds (e.g., governing registered capital, total investment, and land supply) that had created barriers to private company investment (State Council, 2010; Naughton, 2011). Central leaders are expecting substantial financial support from the provincial governments and private entities, and have promised no more than twenty-five percent of the

28.  climate change policy and law in china    645 necessary funding (State Council, 2010; USCBC, 2013; MOF and NDRC, 2012). The twelfth five-year plan requires provincial governments to develop local special funding pools for the strategic emerging industries. Provinces have already created funds, such as the Jiangsu Special Fund for Software and Integrated Circuit Industries, the Hubei Special Fund for Major Science and Technology Projects, and the Shanghai Special Fund for the Development of Major Projects of Indigenous Innovation and High & New Technology Industries (USCBC, 2013). In practice, policies promoting adjustment of industrial structure have not been effective. One study found that structural adjustments ‘had a relatively small and fluctuating influence’ on energy consumption during the eleventh five-year plan in comparison to energy efficiency (Ke et al., 2012). Efforts to promote structural adjustment continue in China’s twelfth five-year plan.

B. Improving Energy Efficiency Energy efficiency is another central component of China’s climate change policy. Central regulators developed new energy efficiency policies in the early 2000s, not to combat climate change, but to address energy shortages and a dramatic rise in inefficient energy use (Levine et al., 2009). The sharp increase in energy intensity in China between 2002 and 2005, in particular, spurred the inclusion of energy efficiency as a top priority of the eleventh five-year plan. Two of the most important policy initiatives for energy efficiency were the ‘Top 1,000 Enterprises’ (qianjia qiye jieneng xingdong, 千家企业节能行动) and ‘Ten Key Energy Efficiency Projects’ (shida zhongdian jieneng gongcheng, 十大重点节能工程) programs. The Top 1,000 Enterprises program set efficiency improvement targets for the most energy-intensive facilities in nine top energy-consuming industrial sub-sectors in China. These nine sub-sectors are (in decreasing order of energy consumption): iron and steel, petroleum and petrochemicals, chemicals, electric power generation, nonferrous metals, coal mining, construction materials, textiles, and pulp and paper (Price et al., 2010). These thousand or so facilities accounted for a third of national energy usage (Price et al., 2010). The Top 1,000 Enterprises program established targets for provincial officials and state-owned enterprises. In principle, failure to meet these targets would result in loss of annual rewards, honorary titles, and, in the worst cases, promotions. In addition to these bureaucratic ‘sticks’, the program established a range of financial ‘carrots’, including grants, rewards, and rebates for demonstrated energy efficiency improvements, and differentiated energy pricing (i.e., higher energy prices for less efficient industries) (Price et al., 2010). Financial incentives with negative impacts on energy efficiency, such as tax rebates on energy-intensive products, were eliminated. The Ten Key Energy Efficiency Projects program provided central and local government financial incentives for a range of upgrades and retrofits, including renovation of coal-fired industrial boilers, development of district heat and power cogeneration, projects to utilize waste heat, installation of efficient lighting, and

646   part vii. region-specific perspectives building energy efficiency design and retrofits. The other five categories were oil conservation and substitution, motor system energy efficiency, energy systems optimization, government procurement of energy efficient products, and monitoring and evaluation systems (NDRC, 2011b; ChinaFAQs, 2009). According to official Chinese sources, these programs met their targets and collectively saved an estimated 743 million tons of carbon dioxide equivalent during the eleventh five-year plan (ChinaFAQs, 2009). In addition, overall energy intensity declined by 20.7 percent from 2006 to 2011, saving 710 million tons of standard coal equivalent. This includes overall efficiency improvements brought about by the shutdown of smaller, less-efficient power plants and industrial facilities (‘The country has eliminated small thermal power units with a total generating capacity of 80 million kw, saving more than 60 million tons of raw coal annually’ State Council, 2012a). Independent researchers have noted that these claims are difficult to verify because of limited government information disclosure (Ke et al., 2012). Central regulators have expanded these approaches in the twelfth five-year plan. The successor to the Top 1,000 Enterprises program is the Top 10,000 Enterprises program, which, as the name suggests, extends the original program to the next tier of energy-consuming facilities. Regulators have continued the Top 10 Key Energy Efficiency Projects program as well.

C. Optimizing Energy Structure The third pillar of China’s National Climate Change Program is the ‘optimization’ of the national energy structure. This includes three major strategies to reduce the carbon intensity of China’s energy use: (i) expansion of non-fossil energy use; (ii) increased use of less carbon-intensive fossil fuels, like natural gas; and (iii) improved efficiency in China’s traditional fossil fuel-based power infrastructure. Overall, China’s energy policy is to expand all types of energy resources, while also increasing the relative contribution of natural gas, hydropower, nuclear, wind, solar, biomass, geothermal, and other forms of energy (State Council, 2012a).

i.  Non-fossil fuel energy China has established an extensive policy framework for promoting ‘non-fossil’ energy, which includes traditional renewable energy, such as hydropower, wind, and solar, as well as nuclear power. In 2012, China was the world leader in total installed renewable energy capacity (accounting for one-fourth of installed capacity among G20 nations), and the number one destination for clean energy investment (Pew Charitable Trusts, 2012).27 It ranked first in the world in hydropower and wind 27   The Pew definition of ‘clean energy’ includes: solar, wind, small hydro, geothermal, marine, and biomass energy. It does not include large hydropower and nuclear, which are included in official Chinese definitions of ‘new and renewable energy’ or ‘non-fossil energy’.

28.  climate change policy and law in china    647 Table 28.1  Non-Fossil Energy Consumption and Installed Capacity Targets

Non-Fossil Energy Consumption

8.3% (2010)

2015 Target

2020 Target28

11.4%

15%

Installed Capacity Hydropower

230 GW†

290 GW†

420 GW†††

Nuclear

12.86 GW*

40 GW†

58 GW**

Wind

47 GW†

100 GW

200 GW††

Solar PV

6.5 GW††

35 GW***

100 GW††

†

  State Council, 2012a; ††  State Council, 2014; †††  350 GW conventional hydropower, 70 GW pumped storage; State Council 2014; State Council 2013a. * IAEA, 2013; ** Xinhua, 2013a; *** State Council, 2013b. †

capacity (State Council, 2012a). Renewable energy capacity has grown at a rate of twenty-three percent a year on average from 2007 to 2012 (see Table 28.1). This rate of growth places China fourth behind South Korea, Turkey, and Italy. China has plans to expand its nuclear power capacity significantly from 12.86 GW to more than 40 GW, which would put China behind only the United States, France, and Japan (State Council, 2012a; IAEA, 2013). China has achieved this rapid growth in non-fossil energy through the establishment of state planning targets, supported by a range of implementation measures set forth in policies and laws. Approximately nine percent of China’s primary energy consumed is obtained from non-fossil sources. Official targets aim to increase this to 11.4 percent in 2015, and fifteen percent in 2020 (NDRC, 2007b; NDRC, 2008; NDRC, 2012c). Policy measures include a mandatory connection and purchase policy, a national feed-in tariff system, government investment and concession programs, and other measures (Schuman and Lin, 2012: 90). • Mandatory Connection and Purchase Policy. The Renewable Energy Law sets forth, among other things, a requirement for grid companies and oil companies to purchase, respectively, renewable power and liquid bio-fuels (Schuman and Lin, 2012). Grid companies are required to obtain, by 2010, one percent of total power generation from non-hydropower renewable power; by 2020, three  Chinese planning is primarily operationalized around five-year planning cycles. The state does engage in longer-term planning exercises that result in publicly announced medium or long-term targets such as the ones in this chart. Interim five-year and annual targets are typically set with these longer-term goals in mind, but short, medium, and long-term goals are all subject to change and in practice it is not unusual for targets to be modified. 28

648   part vii. region-specific perspectives percent (NDRC, 2007b). Grid companies are required to sign agreements with renewable energy generators to purchase all electricity produced by these generators (Renewable Energy Law, 2009: Article 14). • Feed-in Tariff. The law requires establishment of a feed-in tariff that provides renewable electricity generators a fixed subsidy over and above the wholesale electricity price for coal-fired power (Renewable Energy Law, 2009: Article 19, 20; Schuman and Lin, 2012). • Cost-Sharing and Other Financial Support. Rules provide for an electricity price surcharge to fund the feed-in tariff and other actions required by law (Renewable Energy Law, 2009: Article 21). Local governments are also required to set up renewable energy funds and offer other forms of fiscal and tax support (Renewable Energy Law, 2009: Article 24).

ii.  Less carbon-intensive fossil fuels and more efficient coal use China’s energy policy is also aimed at reducing the carbon intensity of China’s fossil fuel use through the development of natural gas and more efficient use of coal. Annual output of shale gas, for example, is expected to increase to 6.5 billion cubic meters by 2015 (State Council, 2012a). National policy also promotes the installation of large-scale coal-fired power plants based on the most efficient coal-fired power plant technologies (known as supercritical or ultra-supercritical). As of 2012, China had forty ultra-supercritical power generating units with capacity of 1 GW or larger, and large thermal power units with capacity greater than 300 MW accounted for 74.4 percent of total thermal generating capacity in China (State Council, 2012a). This rapid construction (at a pace of one a month) of advanced technology coal plants and the continued policy of shutting down ‘backward’ and small-scale coal-fired power capacity has caused the overall efficiency of China’s coal plants to surpass that of the coal-fired power plant fleet in the United States (Seligsohn et al., 2009; Bradsher, 2009). According to official Chinese sources, non-fossil energy use avoided the equivalent of 600 million tons of carbon dioxide emissions as of 2011 (State Council, 2012a). The policy to optimize China’s energy structure is aimed at lowering the carbon intensity of China’s energy utilization. However, given that the overall percentage of China’s energy mix from non-fossil energy will remain relatively low for the foreseeable future, it is likely that transition fossil fuels such as natural gas and more efficient coal technologies will play an important role in China’s overall climate strategy in the near-term.

D. Increasing Carbon Sinks Carbon sinks are the fourth major component of China’s National Climate Change Program. These include afforestation, grassland protection and restoration, and agricultural sink programs. In the twelfth five-year plan this includes, among other

28.  climate change policy and law in china    649 things, a target to increase the forest coverage rate to 21.66 percent and to increase forest stock by 600 million cubic meters. China’s afforestation level is low compared to other major economies. By comparison, forest cover in the United States is 33.3 percent; the EU, 42 percent; Brazil, 61.2 percent; and Indonesia, 51.7 percent (World Bank, 2013). EU Forests and other wooded land ‘now cover 155 million ha and 21 million ha, respectively, together more than 42% of EU land area’ (European Commission, 2013). Like other components of China’s climate change program, these initiatives were initially instituted to address more immediate concerns, such as flood prevention, desertification, as well as loss of cropland and wetlands. For example, China instituted a broad-based ban on logging in natural forests in 1998 in the wake of major floods on the Yangtze and other major rivers (Illegal Logging Portal, 2004; FAO, 2001). The increasing prevalence of major sandstorms and desertification drove afforestation efforts in northern China. However, the afforestation programs are actually ‘increasing environmental degradation in arid and semiarid regions’. The planting of trees unsuitable to these low precipitation regions has resulted in overall tree survival rates of only fifteen percent, reduced vegetation cover, decreased groundwater supplies, and increased wind erosion of soil (Cao, 2008). While China’s National Climate Change Program documents set forth a range of figures regarding the amount of land area involved in these carbon sink initiatives, the program does not provide estimates of carbon mitigation impact (NDRC, 2013a).

3.3 Carbon Trading Pilot Projects and Other Market Measures China’s twelfth five-year plan has emphasized in particular the need to utilize market measures, such as carbon trading and taxes, to improve environmental policy implementation. China’s initial experience with carbon trading was through the Clean Development Mechanism (CDM) of the UNFCCC. Pursuant to the UNFCCC and its Kyoto Protocol, Annex I developed countries can meet their emissions reduction obligations in part by purchasing offset credits generated in developing countries. China has in past years accounted for nearly half of all CDM-related certified emissions reductions globally, by developing emissions reduction projects such as HFC23 destruction projects, energy efficiency projects, wind and solar installations, and landfill methane capture systems. As of July 2011, China CDM projects accounted for 45.67 percent of registered projects around the world. China has subsequently established of a number of ‘climate exchanges’ between 2008 and 2010, including the Tianjin Climate Exchange, the China Beijing Environment Exchange, the Shanghai Environment and Energy Exchange, and the Shenzhen Environment Exchange. These exchanges have handled CDM

650   part vii. region-specific perspectives transactions and Voluntary Emission Reductions. The latter provide a means by which enterprises can gain experience trading emissions on a voluntary basis. In July 2012, the NDRC promulgated Interim Measures on Voluntary Greenhouse Gas Emissions Trading (NDRC, 2012b). However, there have been very few voluntary trades to date. The exchanges have thus far played mainly a public relations role and a capacity-building function for the development of registries, standards, and methodologies (Han et al., 2012: 18–20). In 2011, China’s National Development and Reform Commission, looking to develop experience with the use of market-based programs, announced plans for carbon trading pilots in seven provinces and cities: Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong, and Shenzhen (NDRC, 2011c). The seven regional pilots alone likely cover 800 million to one billion tons of carbon emissions. This would make China’s program the second largest GHG cap-and-trade program in the world, after the European Union’s Emissions Trading System (EU ETS).29 In June 2013, Shenzhen became the first city to launch its carbon emissions trading pilot. The Shenzhen pilot included 635 industrial and construction companies in twenty-six sectors, which composed 31.7 million tons of GHGs or thirty-eight percent of Shenzhen’s total emissions in 2010 (Hook, 2013). Initial trading has been light and the performance of this experiment remains to be seen (Haas, 2013). In 2013, Shanghai, Beijing, Guangdong, and Tianjin also commenced pilots on carbon trading; Hubei and Chongqing began operation in 2014 (Munnings, et al., 2014). In September 2015, President Xi Jinping announced China’s intention to establish a national carbon trading scheme by 2017 (US‒China, 2015). A carbon tax proposal is reportedly under consideration; however, no firm announcement has been made as to whether or when such a proposal would actually be deployed (Caijing, 2013).

3.4 Low-Carbon Pilot Projects In 2010, the NDRC established low-carbon pilots in five provinces and eight cities.30 These pilot jurisdictions account for ‘36 percent of China’s national gross domestic product (GDP), 31 percent of its energy consumption, 27 percent of its energyrelated carbon emissions, and 27 percent of the nation’s population’ (Karlenzig and Zhu, 2011: 5). Another twenty-nine pilots were approved in November 2012.31 29   The EU ETS covers 2.1 billion tons from thirty-one countries. Australia’s carbon trading system covers 380 million tons. California’s system covers 165 million tons (UPI, 2013). 30   Five provinces: Guangdong, Liaoning, Hubei, Shaanxi, Yunnan. Eight cities: Tianjin (province-level), Chongqing (province-level), Shenzhen (Guangdong), Xiamen (Fujian), Hangzhou (Zhejiang), Nanchang (Jiangxi), Guiyang (Guizhou), and Baoding (Hebei). 31   Province: Hainan. Cities: Beijing (province-level), Shanghai (province-level), Shijiazhuang (Hebei), Qinhuangdao (Hebei), Jincheng (Shanxi), Hulunbei’er Prefecture (Inner Mongolia), Jilin (Jilin),

28.  climate change policy and law in china    651 The NDRC has described these projects in very broad terms, stating that they will address ‘greenhouse gas accounting, low-carbon development planning, industrial and economic policy, government official training, communications and international cooperation’ (Karlenzig and Zhu, 2011: 5; NDRC, 2010; Baeumler et al., 2012 39–45). These low-carbon pilot projects, as a policy matter, are an effort to generate local experience to support the achievement of national targets. As of February 2011, 230 cities at or above the prefecture level were proposed to be ‘eco-cities’. In addition, nearly half of these cities (133, or 46.3 percent) have established climate-related ‘low-carbon city’ targets. These pilot designations have led to the development of ‘low-carbon’ planning documents with specific targets for carbon intensity, energy intensity, ‘new energy’ development and forestry cover. For example, Baoding City in Hebei Province established a target to reduce carbon intensity by thirty-five percent by 2020 (compared to 2010) and increased new energy to twenty-five percent of industrial output value. However, despite this volume of activity, an evaluation of low-carbon eco-city development in China concluded: ‘[I]‌t remains unclear what defines a low-carbon eco-city’ (Zhou et al., 2012). Jiang Kejun, a senior Chinese researcher, has said that ‘[t]hese so-called “low-carbon cities” are actually high-carbon’ and suggested that the pilots have been ‘disastrous’ (Liu, 2010).

3.5 A Climate Change Law? Alongside the proliferation of discrete energy and climate-related plans, policies, and projects, China’s National Development and Reform Commission is leading an effort to draft national climate change legislation. The content of the law remains to be determined, but NDRC Vice-Chairman Xie Zhenhua has noted that it will incorporate the experience gained from ongoing emissions trading pilot projects (Bloomberg, 2013). Thus far, however, China’s climate change program has not relied on legislative authorization. A substantial program has emerged through the state planning process and related targets and policy documents. It is unclear what function legislation would serve that is not already served by state planning documents and their related targets, policies, and regulations. Legislation could serve to memorialize chosen allocations of authority and regulatory mechanisms in a more permanent way, and the legislative process could at a minimum provide another forum for competing interests to negotiate China’s climate policy. Daxing Anling Prefecture (Heilongjiang), Suzhou (Jiangsu), Huai’an (Jiangsu), Zhenjiang (Jiangsu), Ningbo (Zhejiang), Wenzhou (Zhejiang), Chizhou (Anhui), Nanping (Fujian), Jingdezhen (Jiangxi), Ganzhou (Jiangxi), Qingdao (Shandong), Jiyuan (Henan), Wuhan (Hubei), Guangzhou (Guangdong), Guilin (Guangxi), Guangyuan (Sichuan), Zunyi (Guizhou), Kunming (Yunnan), Yan’an (Shaanxi), Jinchang (Gansu), and Urumqi (Xinjiang). Only Hunan, Ningxia, Tibet, and Qinghai do not have at least one low-carbon pilot (Wang, 2012).

652   part vii. region-specific perspectives

4.  Challenges in Practice Laws and policies on the books are one thing, but implementation is, of course, another. As the Chinese saying goes, ‘the heavens are high, and the emperor is far away’. This part focuses on three dynamics in the domestic context that will affect the implementation of China’s climate change framework in practice. First, the value that various levels of the Chinese state place on a range of climate change co-benefits (such as developing a low-carbon economy, improving environmental quality and public health, maintaining social stability, and building China’s international reputation) will in large part determine the level of political will available for China to sustain and deepen its climate change program. Second, principal-agent problems of policy implementation, caused by political, institutional, public choice, and capacity issues, are rampant in China. The degree to which these problems can be resolved will be critical to the success of China’s climate program. Finally, the impact of China’s regional economic disparities has not been sufficiently appreciated. The path China chooses for the development of its poorer interior regions—that is, whether it continues to replicate past models of ‘pollute first, remediate later’ or, instead, pushes forward with a low-carbon pathway supported by China’s more developed regions— will have enormous implications for China’s overall carbon pathway in the future.

4.1 Evolving Climate Change Co-Benefits Domestic and international pressures largely unrelated to climate change have been the primary motivators of China’s engagement with climate change to date.32 Nonetheless, these pressures have compelled China to take actions on energy and environment that, if official data are to be believed, are playing a role in reducing the growth rate of China’s climate change emissions. The co-benefits in each of these areas help to explain China’s unilateral moves to develop an extensive national climate change program in the first instance, despite the lack of binding obligations at the international level for China (Wiener, 2008; Wang, 2013). Key among motivating factors are: energy security and the reversal of energy efficiency trends; leadership concerns about the continued viability of an economic model based on investment in heavy industry; and increased leadership awareness   This is not to say that concerns about climate change are not a motivating factor of policymaking. Indeed, China’s official documents, particularly since 2007, express concern about the harms to human health, increased disease and greater prevalence of natural disasters, among other things. Public awareness of climate change, particularly in relation to extreme weather events, has been rising. However, this chapter takes the position that near-term socio-economic factors are still the most salient motivator of policy change toward climate change. 32

28.  climate change policy and law in china    653 of the economic costs and the potential for social unrest associated with environmental degradation. On the international stage, climate change actions may be part of a broader campaign to increase China’s soft power. Leadership attitudes toward these factors are not static though, and the Chinese political will to engage in and deepen climate change actions will be affected to a large degree by future developments in each of these areas.

A. Economic Transformation In public statements, Chinese officials have expressed concern about the durability of China’s three-decades-long ‘economic miracle’. This has been the stated justification for policies to transform China’s model of economic growth from an export- and industry-based economy to a consumption-based, services-oriented model (Balme, 2012). The result of such a shift in economic structure would be a less energy-intensive model of growth. The effort at economic transformation is an ongoing one, and experts hold sharply divergent views on the ability of China’s economy to shift in this way. This chapter will not attempt to predict whether or not these efforts will succeed. The point is that the success of this shift and the speed at which it occurs will have a significant impact on China’s climate change program. An economic slowdown could lead to a loosening of Chinese commitments to energy efficiency, renewables, and lower carbon intensity and a clinging to old familiar ways of doing business—that is, heavy industry and investment-led growth. Concerns about unrest due to insufficient jobs and worsening economic wellbeing create pressure in this direction. But a downturn could just as plausibly lead to further efforts to stimulate the development of low-carbon industries and technologies, which generate GDP, mitigate energy security problems, and create jobs. Another area of uncertainty is the extent to which vested economic and political interests will resist the proposed economic transformation. In some regards, carbonintensive economic interests are aligned with the interests of the climate program. The national power companies, for example, have been heavy investors in China’s renewables sector. Similarly, state oil concerns are investing in shale gas. But powerful, largely state-owned, economic interests in the carbon-intensive industries—such as steel, cement, and chemicals—may also see the shift in economic structure as a destabilizing reorganization of economic power, or even an existential threat.

B. Environmental Quality Another significant co-benefit of climate mitigation is the reduction of traditional air pollution. Thus, unlike in developed nations where the costs of responding to climate change are being assessed at a time when traditional pollution problems have already been mitigated to a large degree, in China, the cost–benefit balance is altered by the opportunity for a given investment to provide both climate mitigation and pollution and health co-benefits.

654   part vii. region-specific perspectives Since the 1990s, various studies have attempted to quantify the costs of air pollution—health and otherwise—in China and found them to be substantial (Ho and Nielsen, 2007; World Bank, 1997). For example, a 2007 study by the World Bank and China’s Ministry of Environmental Protection found that the ‘combined health and non-health cost of outdoor air and water pollution for China’s economy comes to around $100 billion a year (or about 5.8% of the country’s GDP [at the time])’ (World Bank, 2007). Outdoor air pollution was the cause of approximately 1.2 million premature deaths in China in 2010 (Wong, 2013a). Current climate change policies, which include plans to shut down outdated power plants, improve energy efficiency through substitution of heavy industry, and increase reliance on renewable energy have the potential to mitigate these environmental and health costs as well. Indeed, China’s 2013 national Air Pollution Action Plan, issued in the wake of emergency levels of air pollution in many regions of the country, contains measures that in significant part overlap with key elements of the National Climate Change Program, such as low-carbon economic transformation, promotion of non-fossil energy, and energy efficiency (MEP et al., 2013). The more immediate costs of air pollution, including the very visible nature of the emergency-levels of air pollution in China today, offer an immediate impetus for air quality measures that have significant climate change mitigation benefits as well. Air pollution concerns have led to additional measures with significant air pollution and climate change benefits. The most important examples of this are planned absolute caps on coal use in several provinces (Beijing, Tianjin, Hebei, Shandong, and Guangdong), established as part of the 2013 Air Pollution Action Plan. Nonetheless, some measures designed to improve air quality actually increase climate change emissions. For example, China’s more than forty planned projects to produce natural gas from coal will provide eastern urban areas with much-needed cleaner-burning natural gas (Yang and Jackson, 2013). This would have air pollution benefits in eastern urban areas that use the gas; however, the process of converting coal to gas is itself extremely carbon intensive, producing greenhouse gas emissions seven times greater than conventional natural gas. Thus, the urgency of air pollution prevention in China could prove a boon to China’s climate change program, creating near-term political will for aggressive implementation. But, if carbon impacts are not properly considered, air pollution action could also lead to significant increases in climate change emissions.

C. Social Stability Heavy air pollution from power plants and other industrial facilities has triggered social unrest and strong public dissatisfaction in China. Protests in Guangdong province against a proposed coal-fired power plant, major protests in Xiamen, Dalian, Kunming, Ningbo, and other cities against proposed paraxylene (PX) chemical plants, and dozens of protests over heavy metal pollution from smelters

28.  climate change policy and law in china    655 and battery plants are but a few examples of tens of thousands of environmentrelated protests in China each year. The effort of Chinese authorities to shift away from coal and to limit the growth of heavy industry has the potential advantage of relieving some of these pressures as well. Social stability is an overriding political priority in China. Despite continued efforts at political, media, internet, and other controls, technological advances and greater access to information have enabled citizens to better recognize risks and to organize accordingly. Officials have the opportunity to improve social stability through the enactment of a range of climate mitigation actions that also reduce more immediate harms from pollution (Bradsher, 2012).

D. International Reputation Looking outward, high-level concerns about international reputation have the potential to push China either toward more or less action on climate change. In fact, a 2003 strategic assessment by the leading State Council thinktank made explicit concerns about energy security and international pressure to reduce GHG emissions that motivated China’s move toward the development of climate change policy (Chen et al., 2003). China’s growing energy needs and economic expansion have created tensions with other nations that could be ameliorated through climate change action. Chinese leaders have talked about seeking to increase China’s ‘soft power’ and reducing domestic and international climate change risks would be a means of building Chinese national strength through contribution to a global public good (Nye, 2004). Nonetheless, Chinese leaders may find that taking a stance of resistance to international pressures on climate change action can garner support from nationalist constituencies domestically, and protect Chinese politicians from accusations of being too compliant in the face of foreign demands. None of these four factors— economic transformation, environmental quality, social stability, and international reputation—inevitably push China toward more or less climate change action. Yet it is critically important to understand how each of these factors may influence Chinese climate change policies. Each is dynamic and subject to rapid, potentially dramatic change, with resulting impacts on the shape and effectiveness of Chinese climate change policy. The more climate change action supports other priorities important to China’s self-interest, the more likely it is that authorities will grant the necessary policy focus and resources to bring about effective climate change mitigation.

4.2 Persistent Barriers to Implementation Even if climate change is an important state priority in China, there is no guarantee that authorities will be able to overcome a range of pathologies of implementation.

656   part vii. region-specific perspectives In the environmental context, there is a rich literature regarding the factors that have limited implementation.33 These include bureaucratic fragmentation, corruption, interference from economic and political interest groups, political metrics prioritizing economic growth and social stability, and local protectionism enabled by significant de facto local discretion in implementation. These include informal political factions, government ministries and other institutions, local governments, and business interests (state-owned, private, and foreign). For example, China’s state-owned oil companies long resisted making fuel quality standards more stringent to avoid additional costs in the refining process (Wong, 2013b). China’s environmental regulatory system has been hampered by capacity problems, insufficient transparency, lack of diversity in enforcement channels, and weak citizen involvement. All of these factors have created an overwhelming culture of non-compliance that compounds implementation problems. Finally, data quality problems render it difficult to identify and ascertain the extent of implementation challenges. Implementation problems in the climate change context are exacerbated by the complexity of climate change regulation. Common regulatory tools for climate change require a high degree of regulatory sophistication. For example, a carbon trading system, generally speaking, requires five components: (i) the establishment of a cap; (ii) allocation of the cap among emitters; (iii) GHG accounting and verification rules; (iv) registries, exchanges, or other trading mechanisms; and (v) a framework for punishing and deterring non-compliance (Han et al., 2012). Each component is a complex endeavor that requires expertise and a strong regulatory backstop to prevent cheating or misfeasance. These implementation challenges are neither novel nor limited to China. But Chinese authorities have begun to implement a range of initiatives designed to counter these implementation problems, including investment in monitoring and environmental infrastructure and governance reforms to strengthen top-down control. The success of these initiatives is anything but inevitable. China has invested substantial resources in improved environmental monitoring and environmental infrastructure. In principal agent terms, investment in environmental monitoring is a way for central regulators to reduce information asymmetry. This includes expansion of both ambient monitoring networks and a mandated installation of facility-level continuous emissions monitoring in key state-controlled polluting facilities (Wang, 2011; Zhang and Schreifels, 2011). Central government mandates and funding support have created incentives for substantial investment in energy efficiency and pollution control as well. The installation of environmental infrastructure is no guarantee of its proper use, but is a necessary first step in implementation.   For a few examples, see Ma and Ortolano (1999), van Rooij (2006), Zhao and Ortolano (2010), Kostka and Hobbs (2010), and Wang (2013). 33

28.  climate change policy and law in china    657 Central authorities have also implemented a range of initiatives for improving top-down control of local agents. Party authorities have been given greater authority to punish bureaucrats and state-owned enterprise leaders for failing to meet energy, carbon, and pollution targets; in practice, it is not clear that this authority is being utilized (van Aken, 2012/13; Landry, 2008). To counter capacity problems, central agencies issued detailed implementation rules and offered trainings to assist local government actors in implementation.34 To counter information problems and cheating on target implementation, central regulators developed multiple data sources and more readily observable proxies for target implementation (Wang, 2013). Authorities have apparently limited propaganda restrictions on reporting of environmental problems and increased environmental information disclosure, possibly to encourage so-called ‘public opinion supervision’ (yulun jiandu, 舆论监督) or ‘fire alarm’ supervision over environmental policy implementation. Studies have shown that in practice enforcement is becoming more stringent and legalistic in certain (typically wealthier) parts of China (van Rooij and Lo, 2010). In addition to these efforts, greater Chinese government, business, and citizen engagement with international actors has influenced enforcement in a number of ways, including through government-to-government knowledge transfer, informal supply chain regulation, and greater transparency of environmental information. For example, government researchers are active in researching international experience (such as the EU emissions trading system, and trading of sulfur dioxide emissions rights in the United States) to develop best practices for the Chinese context. Various levels of the Chinese government have executed agreements with foreign governments on policy design collaborations, such as the US–China Strategic & Economic Dialogue and the NDRC–State of California Memorandum of Understanding on Climate Change (US Dept. of State, 2013; Dearen, 2013). The extraordinary amount of manufacturing within China for global supply chains delivering finished goods to the United States, EU, and other developed regions has created an opportunity for informal regulation of Chinese polluters by multi-national corporations and civil society groups. These efforts are typically motivated either by corporate interest in cost reduction (such as through energy efficiency improvements)35 or public pressure that threatens multi-national corporations with reputational damage (Plambeck et al., 2012). This is an example of what Julia Black has called ‘decentered regulation,’ which emphasizes the role of nongovernmental organizations, businesses, technology, and other non-state factors in regulation (Black, 2002). 34   Interview with central government environmental official (noting that local officials found achievement of central targets to be difficult in the absence of specific implementation guidance). 35   PR Newswire (2013)—a Walmart press release—notes efforts that reduced greenhouse gas emissions in Walmart stores by 11.3 percent in 2012 compared to a 2005 baseline.

658   part vii. region-specific perspectives These various efforts hold out the possibility that environmental enforcement and implementation in China could improve substantially in coming years. But improvement is not assured. Changing priorities, corruption, collusion, interest groups opposed to environmental protection, and other factors could just as easily overwhelm initiatives to improve implementation.

4.3 The ‘Two Chinas’ Problem A third major challenge for climate mitigation arises out of China’s sharp regional economic disparities, and the possibility that this will lead to carbon ‘outsourcing’ to the poorer parts of the country in coming decades. In the climate change debate, China’s rising economic clout has drawn two common reactions. On one hand, it has led to calls for China to take on more substantial international obligations for mitigation and adaptation. For example, in international treaty negotiations, the United States has often argued that China should be treated as a ‘major polluter’ or an ‘emerging economy’. Such categorization would place China in a different position than the prototypical developing, non-Annex I country—not a developed country, but also not quite a developing nation either. On the other hand, others have argued that China remains, on average, a poor country. Professor Zou Ji, deputy director of China’s National Centre for Climate Strategy and International Cooperation, put it this way (Xu and Zhang, 2013): The international community has some misconceptions, such as believing China is now a developed nation. This could mean China ends up taking on more global responsibility than its capabilities allow. We’ve held the Olympics and sent astronauts into space, but you can’t look at the richest parts of Beijing and Shanghai and assume the whole country is like that. The welfare of hundreds of millions of rural residents isn’t yet assured . . . Overall, China is still a developing nation.

Scholars have begun to acknowledge, however, that China is not a monolith and by virtue of its size and relatively sharp geographic disparities in wealth can (and should) be conceptualized as a jurisdiction containing ‘a quasi-developed country and a quasi-developing one’ (Farber, 2013).36 The Chinese government itself has in fact formally divided China into at least ‘three Chinas’—eastern, central, and western. The eastern provinces are the most economically developed, the western provinces the least, and the central provinces somewhere in between. This three-region designation first appeared in the seventh 36   Wang (2013, 2014) notes China’s ‘common but differentiated responsibilities’ approach to allocation of provincial pollution reduction targets). Abebe and Masur (2010) argue that severe income disparities may lead to growing GHG emissions for longer than predicted by many extant models. Hu (2009a, 2009b) proposes a framework for allocating carbon reduction targets among Chinese provinces according to their Human Development Index level and emissions volume.

28.  climate change policy and law in china    659 five-year plan (1986–90) (PRC, 2007). The seventh five-year plan also set forth a framework by which the poorer interior regions would support the economic development of eastern regions through the provision of raw materials and energy: Regional economic development in China must correctly resolve the relationships among the three economic regions—eastern coastal, central, and western. During the ‘7th five-year plan’ through the 1990s, we must accelerate the development of the eastern coastal region. At the same time, we must focus heavily on energy and raw materials development in the central region, and vigorously make incremental steps to prepare for the development of the western region. We should connect up the development of the eastern coastal region and the exploitation of the central and western regions, creating a situation of mutual support and promotion.

Toward the end of the twentieth century, China began to devote more resources to ‘Western development’, or the acceleration of economic development in China’s interior provinces (China Development Gateway, 2010). In the climate context, this internal development pattern has resulted in an outsourcing of carbon dioxide from the wealthier eastern provinces to the interior provinces. Feng et al. have shown that ‘the production, consumption, and export of high-value goods and services in rich regions depend upon the emissions-intensive products from poorer regions in China, consistent with what has become clear about embodied carbon in international trade’ (Feng et al., 2013; Qi et al., 2013; Peters and Hertwich, 2008). This dynamic is due to the expansion of traditional energy-intensive industries (such as energy and raw materials) in the interior, as well as migration of energy-intensive industry from the coastal provinces. The question for the future then is whether China will engage in a pattern of domestic development that essentially duplicates what has happened at the global level, whereby wealthier ‘countries’ (provinces) outsource polluting industries to developing ‘countries’ (provinces). This underappreciated dynamic could lead to China’s carbon emissions growing for a longer time than predicted by current emissions models (Abebe and Masur, 2010; Wiener, 2010). Such an outcome is not inevitable, however. For one, a ‘pollute first, clean up later’ approach in the interior provinces is constrained by the same domestic dynamics that are generating political will for climate mitigation in China nationwide—an imperative for economic transformation, emergency levels of pollution, environment-related protests, and leadership desire to improve international relations and Chinese soft power (Wiener, 2008; Wiener, 2010).37 Moreover, China’s sharp regional economic disparities also provide some potential advantages or benefits in support of achievement of these economic, environmental, and socio-political co-benefits. The primary advantage is lower marginal costs of abatement (in labor, materials, etc.). Thus, Chinese authorities can utilize   See Section 4.1, above.

37

660   part vii. region-specific perspectives the interior provinces as a low-cost laboratory for development of renewable energy, energy efficiency, environmental infrastructure, and services industries. Another advantage is that the interior provinces are still relatively undeveloped and good planning can build greater efficiency and lower pollution into new-build industrial facilities, buildings, and transport infrastructure rather than having to rely on more expensive retrofit. Regional economic disparities also provide a source of funding for greener development in China’s interior. Wealthier coastal provinces can both subsidize green development in the interior and take on greater environmental obligations commensurate with their rapidly growing economic power. Such an approach (which is not currently Chinese policy) would be analogous to the ‘common but differentiated responsibilities’ approach to climate mitigation at the international level.38 However, such an approach has the potential to work more effectively at the domestic level for a number of reasons. First, wealth transfers to China’s interior are arguably appropriate as a matter of reciprocity. Chinese policy over the last thirty-five years has explicitly required interior provinces to support economic development in the coastal provinces. This debt to the interior provinces has been a part of leadership rhetoric since Deng Xiaoping. Second, greener development in China’s interior provinces contributes to achievement of a number of other state priorities, including poverty alleviation, mitigation of internal migration of rural workers to coastal cities and associated costs, and national unification. Thus, direct support for development in the interior provinces accrues to the benefit of the state in various ways, rather than just to an amorphous global commons. Third, coastal provinces benefit directly from support for the interior provinces in the form of reduced conventional air pollution. There is already precedent in China for this sort of ‘payment for ecosystem services’. Existing experiments in eco-compensation (shengtai buchang, 生态补偿) schemes involve transfer payments from more developed regions to subsidize pollution reduction (mostly in the water pollution context) in developing parts of the country. A recent example in the air pollution context concerns the substantial amount of pollution that interior (and much less developed) Hebei Province contributes to developed Beijing. Commentators have raised the idea of wealthier Beijing paying Hebei Province not to pollute (Jiang, 2013). A central compensation scheme announced in late 2013 offers payments to poorer provinces around Beijing as an incentive for air pollution reduction (that could also double as climate change mitigation). 38   At the international level, countries have attempted to mitigate global GHG emissions, while also taking this economic disparity into consideration, according to the principle of ‘common but differentiated responsibilities’. Thus, the Kyoto Protocol creates binding reduction targets for developed countries but not developing countries, and developed countries support mitigation in developing countries through funding and technology transfers. This approach has failed to stem the growth of emissions and has led to gridlock in the treaty negotiations process.

28.  climate change policy and law in china    661 Thus, the rough foundations for a different (more efficient, lower carbon) development model are in place in China, but at the same time the path of least resistance would likely be a continuation of the so-called ‘two highs, one resource’ (lianggao yizi, 两高一资)—referring to high energy consuming, high pollution, and resourceintensive production—model of economic growth that has driven Chinese economy for nearly four decades. How the battle between these two approaches plays out will have major implications for climate mitigation in China in the coming decades.

5. Conclusion China is without a doubt an indispensable component of any effective solution to climate change. Chinese authorities have established a more extensive climate change program on the books than is commonly recognized outside of China. However, questions remain as to whether China’s climate change policies will be properly implemented in practice, and whether they are sufficiently ambitious to address global climate change even if fully implemented. What is clear is that tremendous efforts must still be made if China is to reduce its impact on global climate change.

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Chapter 29

CLIMATE CHANGE LAW AND POLICY IN THE EUROPEAN UNION Sanja Bogojević*

1. Introduction

671

2. EU Climate Change Law and Policy: An Overview

674

3. EU’s Climate Ambitions and the Question of Environmental Leadership

681

4. The ‘Gecko Effect’

683

5. Conclusion

687

*  I thank Vetenskapsrådet for generously sponsoring this research and Kevin Gray, Harro van Asselt, and the anonymous reviewer for constructive comments on earlier drafts of this chapter. All errors remain my own.

29.  climate change law and policy in the eu    671

1. Introduction This chapter is concerned with European Union (EU) climate change law and policy and its role in spurring climate change action at a global level. Legal scholars often discuss the EU as an environmental leader, capable of shaping international environmental agendas.1 The EU certainly seeks to claim such influence. When accepting the EU’s Nobel Prize for Peace, José Manuel Barroso, then President of the European Commission, explained that acting on climate change is an example of the ‘concrete engagement of the European Union in the world’.2 This commitment to promote measures at the international level ‘to deal with regional and worldwide environmental problems, and in particular combating climate change’3 is indeed codified in the Lisbon Treaty as a key EU environmental objective. Moreover, climate change action is part of the EU’s ten-year growth strategy, ‘Europe 2020’. The pledge to ‘outreach to other parts of the world in pursuit of a worldwide solution to the problems of climate change’4 is identified as one of the core components of the growth strategy. The EU’s ambition to act on climate change is thus clearly voiced and linked to an international context. The fact that EU climate change law and policy is often discussed in a global outlook is in part due to the nature of climate change. It is a problem shared by all, and so climate change policies and regulation, even if carried out at a local or regional level, are understood to have a global, or external, dimension.5 Moreover, the EU has assumed a leading role in promoting climate change action during a period when the global community sought leadership on this issue. The international institutional failure, or the so-called ‘leadership vacuum’,6 is evidenced by substantive details of

  Much of the literature on this topic discusses the diverse roles that the EU takes, could take, or ought to take in acting on climate change. See for instance, S. Oberthür and C. Kelly, ‘EU Leadership in International Climate Policy: Achievements and Challenges’ (2008) 43 International Spectator 35, J. Gupta and M. Grubb (eds), Climate Change and European Leadership: A Sustainable Role for Europe? (Springer 2000), C. Parker and C. Karlsson, ‘Climate Change and the European Union’s Leadership Moment: An Inconvenient Truth’ (2010) 48 Journal of Common Market Studies 923. 2   European Union (EU)—Nobel Lecture: ‘From War to Peace: A European Tale’, available at (accessed 19 August 2015). 3   Article 191(1) TFEU, Consolidated Versions of the Treaty on the Functioning of the European Union (TFEU), [2008] OJ C115/49. Emphasis added. 4   COM(2010) 2020 final. 5   See S. Bogojević, Emissions Trading Schemes: Markets, States and Law (Hart Publishing 2013), Chapter 6; J. Scott, ‘The Multi-Level Governance of Climate Change’ in Paul Craig and Gráinne de Búrca (eds), The Evolution of EU Law (2nd edn, Oxford University Press 2011) 805. 6   E.U. Petersmann, ‘Cosmopolitan “Aggregate Public Goods” Must be Protected by Cosmopolitan Rights and Judicial Remedies’ in Ernst-Ulrich Petersmann (ed), Multilevel Governance of Interdependent Public Goods: Theories, Rules and Institutions for the Central Policy Challenge in the 21st Century (EUI Working Paper RSCAS 2012/23) 195. 1

672   part vii. region-specific perspectives the international climate change response under the United Nations Framework Convention on Climate Change (UNFCCC),7 and its successor agreements still being undecided.8 Such lacuna in the international climate change regime has arguably left room for a relevant actor to take the (regulatory) lead and thereby influence climate change action elsewhere—a role the EU is keen on playing.9 This is not to say that EU climate actions and ambitions exist in a vacuum. On the contrary, they are carried out in the context of a system of ‘multi-level governance’ wherein climate change laws and policies emerge in a fragmented fashion, originating, as they do, from local, national, regional, and global, as well as private and public legal regimes.10 This multilateral regulatory context creates an opportunity for regulatory competition. That is, it allows environmental regulatory authorities to behave competitively by ‘relaxing or tightening their own standards’11 in response to each other’s actions. From this perspective, the competition between regulatory regimes offers the opportunity for decision-makers to learn which climate change laws and policies are most effective in different contexts, thus informing future decisions between sovereign states concerning the allocation of regulatory jurisdiction over transboundary problems.12 The question that arises, and which is examined in this chapter, is the extent to which EU climate change law and policy create a so-called ‘Brussels effect’; that is, the extent to which EU law- and policy-making influence the enactment of similar regulatory standards elsewhere in this multilateral regime.13 This includes investigating whether the international climate change regime ‘tightens’ its own standards so as to match EU climate change law and policy. If it does, this helps confirm the external impact of EU climate change regulation and support continuing efforts on the part of the EU to lead by action.

7   United Nations Framework Convention on Climate Change (UNFCCC) opened for signature 9 May 1992, 31 ILM 849 (entered into force 21 March 1994). 8   Note that the Doha Amendment to the Kyoto Protocol establishes a second commitment period of the Kyoto Protocol, which, as of 2 September 2015, forty-three countries have ratified (see ). The Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP) still needs to develop another legal instrument or an agreed outcome with legal force under the Convention, which, at the time of writing, is outstanding. 9   According to the EU Commissioner for Climate Action and Energy, Miguel Arias Canete, the EU is ‘a global leader in climate action’, see speech delivered on 12 November 2014, available at (accessed 28 September 2015). 10  Scott ‘Multi-Level Governance’ (n 5). For instance, in the EU, much climate change action occurs at the national levels, see M. Finck, ‘Above and Below the Surface: The Status of Sub-National Authorities in EU Climate Change Regulation’ (2014) 26 Journal of Environmental Law 443. 11  V. Heyvaert, ‘Regulatory Competition: Accounting for the Transnational Dimension of Environmental Regulation’ (2012) 25 Journal of Environmental Law 1, 2 12   M. Maslin and J. Scott, ‘Carbon Trading Needs a Multi-Level Approach’ (2011) 475 Nature 445, 445. 13  A. Bradford, ‘The Brussels Effect’ (2012) 107 Northwestern University Law Review 1. See also E. Fahey, ‘The EU Emissions Trading Scheme and the Court of Justice: The “High Politics” of Indirectly Promoting Global Standards’ (2012) 13 German Law Journal 1247, 1250.

29.  climate change law and policy in the eu    673 These opening remarks, and the aim of this chapter, are in need of caveats. To start with, EU climate change law and policy is not only one of the most dynamic and fast-developing areas of EU environmental law,14 but it is also abundant,15 covering matters concerning energy, transportation, land-use planning, agriculture— and this is by no means an exhaustive list. Lawmaking in all of these areas has the potential to affect in some way the EU’s mitigation efforts and ability to adapt to climate change.16 In this chapter, however, only climate change laws with external features are examined. There are a number of such laws,17 including rules for the promotion of energy from renewables in joint projects between Member States and third countries.18 This chapter focuses on the European Union Emissions Trading Scheme (EU ETS) and some of its key legal features that have external impact.19 This is because the EU ETS is the EU’s flagship climate change policy, which, moreover, plays a significant role in EU external relations.20 Focusing on the capacity of the EU to shape the international climate change regime allows a spectrum of factors to be considered, including the role the EU plays in international environmental negotiations.21 Here, only the regulatory impact, that is, the international response to EU climate change action and, particularly with regard to the expansion of the EU ETS to aviation, is considered. This is a widely debated topic.22 What this focused analysis seeks to reveal is the degree to which the EU, through its progressive system of climate change law and policy, has successfully played an important role in global   S. Kingston, ‘Surveying the state of EU environmental law: much bark with little bite?’ (2013) 62 International and Comparative Law Quarterly 965, 966. Lefevere makes a similar remark, describing climate change law one of the fastest, ‘if not the fastest’ developing legal areas, see J. Lefevere, ‘A Climate of Change: An Analysis of Progress in EU and International Climate Change Policy’ in Joanne Scott (ed), Environmental Protection: European Law and Governance (Oxford University Press 2009) 171. 15   For an overview of EU climate change laws and policies see (accessed 19 August 2015). For a more general description of the abundances of ‘climate change law’ see J. Peel, ‘Climate Change Law: The Emergence of a New Legal Discipline’ (2008) 32 Melbourne University Law Review 922. 16   See for instance, A. Epiney, ‘Climate Protection Law in the European Union—Emergence of a New Regulatory System’ (2012) 9 Journal of European Environmental and Planning Law 5. 17   The fuel quality directive, [2009] OJ L140/88, is such an example. For an analysis thereof, see J. Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (2015) 17 Cambridge Yearbook of European Studies 1. 18   See [2009] OJ L140/16. 19   Including the allocation methods, linking opportunities, and coverage of the EU ETS. This is further explained in Section 2. 20   K. Kulovesi, ‘Climate Change in EU External Relations: Please follow my example (or I might force you)’ in Elisa Morgera (ed), The External Environmental Policy of the European Union: EU and International Perspectives (Cambridge University Press 2012) 115, 135. 21   See T. Delreux, The EU as International Environmental Negotiator (Ashgate 2011). 22   See for instance J. Scott, ‘The Multi-Level Governance of Climate Change’ (2011) 5 Carbon and Climate Law Review 25, E. Morgera and K. Kulovesi, ‘The Role of the EU in Promoting International Climate Change Standards’ in Inge Govaere and Sara Poli (eds), EU Management of Global Emergencies: Legal Framework for Combating Threats and Crises (Martinus Nijhoff 2014) 304. 14

674   part vii. region-specific perspectives climate change debates, not necessarily in dictating but in initiating these discussions and exercising political pressure on other states to follow regulatory suit. This chapter starts by briefly outlining EU climate change law and policy, focusing on the EU ETS and some of its core features that have external impact: allocation methods, linking opportunities, and the expansion of the scope of the trading regime to include additional sectors, such as aviation. The following section examines the rationale underpinning the EU’s ambitions to act on climate change and pursuing other states to follow its example. The final section examines EU climate change actions against the backdrop of regulatory competition, analysing the extent to which the EU’s climate change laws with external effect fit and are able to materialize in the multilateral climate change regime in which they are pursued. These conclusions form the basis for understanding the role that EU climate change law and policy can be expected to play in shaping the future international climate change regime.

2.  EU Climate Change Law and Policy: An Overview Combating climate change both regionally and worldwide is a core EU environmental objective that finds expression in at least four distinct ways. First, it is reflected institutionally. More precisely, in 2009 the EU created the DirectorateGeneral for Climate Action (DG CLIMA) to exclusively deal with climate changerelated issues, such as the consequences of and international negotiations on climate change.23 Second, the EU has ‘been a strong supporter of a robust multilateral framework’.24 It has signed and ratified all major international environmental agreements dealing with climate change, including the UNFCCC and the Kyoto Protocol,25 and supported the extension of the second commitment period (2013–2020) of the Kyoto Protocol. Third, the EU has unilaterally committed to reducing its greenhouse gas emissions. The initial target was to reduce emissions by eight per cent against 1990 levels by 2012,26 then by twenty per cent by 2020,27   See (accessed 19 August 2015). For a broader overview of how environmental DGs operate, see E. Schön-Quinlivan, ‘The European Commission’ in Andrew Jordan and Camilla Adelle (eds), Environmental Policy in the EU: Actors, Institutions and Processes (Routledge 2013) 95. 24   Kingston (n 14) 966–7. 25   Kyoto Protocol to the United Nations Framework Convention on Climate Change, opened for signature 11 December 1997, 37 ILM 22 (entered into force 16 February 2005). 26   See Decision 1600/2002/EC of 10 September 2002 laying down the Sixth Community Environment Action Programme [2002] OJ L 242/6, Article 5. 27   This unilateral commitment includes two further objectives: raising the share of EU energy consumption produced from renewable resources to twenty per cent, and a twenty per cent improvement 23

29.  climate change law and policy in the eu    675 and in 2014 the Commission proposed a reduction target of forty per cent by 2030,28 which was subsequently endorsed by the European Council.29 Over and above this, the ‘2050 Roadmap’ suggests that the EU will increase its emissions reductions to eighty to ninety-five per cent by 2050, if other major economies in the developed and developing countries commit to undertake a global emissions reduction effort.30 This, the Commission President Jean-Claude Juncker argues, has prepared the EU not to sign ‘just any deal’ at international climate conferences, but to push for the adoption of ‘an ambitious, robust and binding global climate deal’.31 Fourth, the EU has adopted a series of environmental laws, including a broad portfolio on climate change law, judged to be ‘among the world’s strictest and most ambitious’.32 The corpus of EU climate change law is codified in the Climate and Energy Package,33 which is an ambitious body of law, covering a wide field of measures, aiming to provide a comprehensive and integrated climate change framework. It includes measures promoting the use of renewable energy,34 specifying and thus helping to monitor and reduce greenhouse gases from fuel,35 setting standards for new passenger cars,36 establishing a framework for the geological storage of carbon dioxide,37 outlining the effort of Member States to reduce greenhouse gases to meet the 2020 commitments,38 as well as revising the EU emissions trading regime.39 Although the Package contains a number of elements whereby the EU seeks to influence and model climate change action beyond its jurisdiction, including creating a framework for carbon capture and storage to be used as ‘a source of inspiration for the development of international law’,40 the focus here is exclusively on the EU

in EU’s energy efficiency, both by 2020, see COM(2008) 30 final. The EU is committed to reduce its emissions to thirty per cent by 2020 if other major economies in the developed and developing countries commit to undertake global emissions reduction effort, see COM(2010) 265 final.   COM(2014) 15 final.   See European Council conclusions, 23–24 October 2014, available at (accessed 28 September 2015). 30   COM(2011) 112 final. 31   President of the European Commission, Jean-Claude Juncker, Speech on State of the Union 2015: ‘Time for Honesty, Unity and Solidarity’, delivered on the 9 September, available at (accessed 28 September 2015). 32   D. Kelemen and D. Vogel, ‘Trading Places: The Role of the United States and the European Union in International Environmental Politics’ (2009) 43 Comparative Political Studies 427, 432. 33   [2009] OJ L140. Although EU countries have agreed on a new 2030 Framework for climate and energy, the new policies set forward therein, for instance on reforming the EU ETS regime in light of COM(2014) 20, have, at the time of writing, not yet been adopted. 34   See n 18.    35  See n 17.    36  [2009] OJ L140/1. 37   [2009] OJ L140/114. See also I. Havercroft, R. Macrory, and R. Stewart (eds), Carbon Capture and Storage: Emerging Legal and Regulatory Issues (Hart Publishing 2011). 38 39   [2009] OJ L140/136.   [2009] OJ L140/63. Hereinafter the ‘Revised EU ETS Directive’. 40  K. Kulovesi, E. Morgera, and M. Munoz, ‘Environmental Integration and Multi-faceted International Dimensions of EU Law: Unpacking the EU’s 2009 Climate and Energy Package’ (2011) 48 Common Market Law Review 829, 872. 28

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676   part vii. region-specific perspectives ETS. This is because the EU ETS is one of the ‘cornerstones’41 of EU environmental protection policies and, moreover, it is prominent in EU external relations policy. As such, it serves as a suitable backdrop against which the external effects of EU climate change law can be examined. For explanations on the functioning of trading schemes, including the EU ETS, I direct the reader to other chapters in this Handbook that discuss this matter.42 What is, nevertheless, important to note here is that the EU ETS is limited in scope and applies only to certain private sectors, including the power and the heavy industry sectors across the Union43 as well as international aviation, as a result of the Aviation Directive.44 In establishing this trading regime, the EU is described as a rule or norm generator that is capable of influencing the enactment of the same, or similar, regulatory standards beyond its jurisdiction.45 By studying the Revised EU ETS Directive and the Aviation Directive, it becomes apparent that the EU exercises such norm-generating capabilities in two distinct ways: encouraging climate change action, and conditioning climate change inaction.46 It is to these legal frameworks, and their external effect on the international climate change regime, that the chapter now turns.

2.1 Revised EU ETS Directive The EU emissions trading regime started operating in 2005. Initially, the Member States were entrusted with the decision to set the total quantity of emissions allowances intended for distribution to national industries.47 Following the Commission’s approval of the national allocation plans, allowances were distributed to the relevant installations and then trading started. The first period of emissions trading was judged as having been ‘generally positive’.48 Following the first publication of   Opinion of AG Maduro (delivered 21 May 2008) in Case C-127/07 Arcelor Atlantique and Lorraine and Others v Commission [2008] ECR I-09895, para 2. 42   See for instance Shi-Ling Hsu’s Chapter 12 and Harro van Asselt’s Chapter 16 in this volume. 43   [2003] OJ L 275/32, to which Annex I lists categories of activities that, if an installation emits applies the EU ETS. 44   [2009] OJ L8/3. 45   C. Parker and C. Karlsson, ‘Climate Change and the European Union’s Leadership Moment: An Inconvenient Truth’ (2010) 48 Journal of Common Market Studies 923, 928, L. van Schaik and S. Schunz, ‘Explaining EU Activism and Impact in Global Climate Politics: Is the Union a Norm- or Interest-Driven Actor?’ (2012) 50 Journal of Common Market Studies 169. 46   This distinction is set out in and takes inspiration from J. Scott and L. Rajamani, ‘EU Climate Change Unilateralism’ (2012) 23 European Journal of International Law 469. 47   Note that the Commission had the power to accept or reject the NAPs, see Article 9 (n 43). 48   J. Delbeke (ed), EU Energy Law: The EU Greenhouse Gas Emissions Trading Scheme (Claeys & Casteels 2006) 10. Similarly, Vis describes the first allocation period of emissions allowances to have passed ‘remarkably well’, see P. Vis, ‘The First Allocation Round: A Brief History’ in J Delbeke (ed) EU Energy Law: The EU Greenhouse Gas Emissions Trading Scheme (Leuven: Claeys & Casteels 2006) 187, 212. 41

29.  climate change law and policy in the eu    677 verified emissions data it, nevertheless, became apparent that Member States had handed out allowances to domestic industries ‘in a very generous manner’, resulting in a huge surplus of emissions allowances and subsequently competition distortion in the trading regime.49 With the aim of stabilizing the carbon market, ensuring high prices for emissions allowances and allocating these on equal terms across the Union, the Revised EU ETS Directive centralizes the cap-setting procedure. As a result, a Union-wide quantity of allowances is issued each year; as a result of a declining cap, these allowances decrease by a linear factor of 1.74 per cent per year.50 Such a decrease is understood to lead to an overall reduction of emissions at least twenty per cent below 1990 levels by 2020, which matches the objectives of the Climate and Energy Package.51 Besides this centralizing characteristic, two important international features were added to the Revised EU emissions trading regime: one relating to the use of auctioning revenues, and one concerning linking opportunities between the EU ETS and other carbon markets.52 Under the initial EU ETS Directive, the allocation of emissions allowances was predominantly free of charge. The Revised EU ETS Directive amends this by making auctioning the basic mechanism for allocation.53 The reason is that auctions are thought to be ‘the simplest and . . . the most economically efficient system’,54 and to provide harmonized conditions of allocation. Yet, auctioning also has an alternative purpose relating to the use of revenues. At least fifty per cent of the revenues generated (or the ‘equivalent in financial value of those revenues’) should be used for activities related to climate mitigation and adaption projects.55 This 49   For an overview see J. Wettestad, P. Eikeland, and M. Nilsson, ‘EU Climate and Energy Policy: A Hesitant Supranational Turn?’ (2012) 12 Global Environmental Politics 67, 75–9. 50   The level of emissions will compare to the average annual total quantity issued by Member States in their NAPs for the period 2008 to 2012, see the Revised EU ETS Directive (n 39) Article 9. 51   Note that under the under the framework for climate and energy in the period from 2020 to 2030, this linear factor will be adjusted to reach a higher reduction target, see n 28. 52   Kulovesi, Morgera, and Munoz, ‘Climate and Energy Package’ (n 40) also discuss carbon leakage in this regard. 53   Revised EU ETS Directive (n 39) Article 10 provides that from ‘2013 onwards, Member States shall auction all allowances which are not allocated free of charge’. Note, however, that the application of auctioning is restricted in scope. It applies only to the power sector; sectors considered carbon sensitive, such as the heating industry, receive free emissions allowances until 2027 according to harmonized EU-wide rules. The Commission understands this restriction as necessary on the basis that it protects certain energy-intensive actors in the EU that are subject to international competition, and that would be put at an economic disadvantage in relation to industries that are not subject to comparable regulation. In other words, these rules are revised so as to avoid carbon leakage, see the Revised EU ETS Directive, Article 10(a). Moreover, recently the volume of greenhouse gas emission allowances to be auctioned in 2013–20 was further reduced, see [2014] OJ L 56/11. 54   COM(2008) 16 final. See also S. Weishaar, ‘CO2 Emission Allowance Allocation Mechanisms, Allocative Efficiency and the Environment: A Static and Dynamic Perspective’ (2007) 24 European Journal of Law and Economics 29. 55   Revised EU ETS Directive (n 39), Article 10 (3).

678   part vii. region-specific perspectives means that, although the basic idea is that the Member States organize and manage their respective auctions, they are restricted from using revenues generated entirely according to their will. The Revised EU ETS Directive includes a list of relevant projects in which the revenues may be invested, covering measures that contribute to the Union’s ‘20 per cent by 2020’ target, as well as activities relating to technology transfers, afforestation, and reforestation in developing countries, and contributions to international climate change funds.56 In this way, the amending provisions enable important links between internal and international climate change objectives to be drawn. More precisely, the Revised EU ETS Directive develops methods through which financial resources may be channelled to help developing countries deal adequately with climate change, as well as creating systems that generate revenues for this purpose. From this viewpoint, the EU has constructed and revised its climate change laws so as to promote climate change action both within and beyond its borders.57 Another important global aspect of the revised emissions trading regime is the increased number of ‘linking’ possibilities between the EU ETS and other carbon markets. Initially, rules on linking allowed each emissions allowance under the EU ETS to be identified or linked to an assigned amount under the Kyoto Protocol, thereby enabling cross-market trade to take place.58 The Revised EU ETS Directive broadens the scope of such trading possibilities by inserting that the EU ETS can be linked to other carbon markets on the condition that these are ‘mandatory’ with ‘absolute emissions caps’ and established in ‘any other country or in sub-federal regional entities’.59 This means that subnational carbon markets in, for instance, the United States, which previously could not be linked to the EU ETS, as the United States was not a Party to the Kyoto Protocol, can now be linked to the EU ETS.60 Also of relevance to linking is the recently agreed upon legal framework for determining international   Ibid, Article 10(3)(a)–(i).   For an analysis of how the EU relied on the auctioning revenues in determining its contribution to climate finance funds under international climate change law, see Kulovesi, Morgera, and Munoz, ‘Climate and Energy Package’ (n 40) 858. Also, note that according to Revised EU ETS Directive Article 10(2)(a), ten per cent of the total quantity of allowances that are auctioned in the EU as a whole should be distributed amongst certain Member States for the ‘purpose of solidarity’. Hilson argues that this risks the EU considering the common but differentiated standards internally but not externally, see C. Hilson, ‘Common but Differentiated Responsibilities in EU Climate Change Law: A Case of Double Standards?’ in Malcolm Evans and Panos Koutrakos (eds), The International Responsibility of the European Union: European and International Perspectives (Hart Publishing 2013) 275. 58   See M. Mehling, ‘Linking Emissions Trading Schemes’ in David Freestone and Charlotte Streck (eds), Legal Aspects of Carbon Trading: Kyoto, Copenhagen, and Beyond (Oxford University Press 2009) 108. 59   Revised EU ETS Directive (n 43), Article 25(1)(a). For an overview see R. Leal-Arcas, ‘Unilateral Trade-related Climate Change Measures’ (2012) 13 Journal of World Investments & Trade 875, 907–9. 60   Kulovesi, Morgera, and Munoz, ‘Climate and Energy Package’ (n 40) 862. 56 57

29.  climate change law and policy in the eu    679 emissions credit entitlements.61 This new framework, coupled with the abovementioned provisions in the Revised EU ETS Directive, confirms the idea that the EU ETS ‘should only be the beginning’62 of an international emissions trading regime, as well as a ‘nucleus’63 on which a much larger global carbon market can be based.64 Here it is important to note that the EU’s criteria for the use of international emissions credit entitlements are qualitatively restricted and firmer than the international climate change regime.65 For instance, in the EU system, the use of international credits from projects involving the destruction of industrial gases is banned, whereas they are recognized under the international framework.66 These projects are particularly cost-efficient and subsequently popular carbonoffsetting mechanisms but in the EU they are deemed unable to ‘assist in the reduction efforts necessary to progress towards the 2 degree target’.67 China, as the host of most industrial gas destruction projects, heavily opposes EU’s restrictions. The EU, nevertheless, aims, through its ban, to decrease the demand for these projects, and instead helps steer more advanced countries to gradually move away from using the Clean Development Mechanisms (CDM) as the main mechanism for generating emissions credits towards participating in sectoral market mechanisms and ‘ultimately in cap-and-trade systems’.68 This is accordingly another example of the EU’s attempts to shape international climate change practices. Each of these briefly described features of the Revised EU ETS Directive demonstrates the EU’s ambition to act on climate change and provide an example that other jurisdictions can follow. The EU encourages action on climate change in at least two ways. First, it commits to binding emissions reduction targets and enacts climate change laws, in this case the EU ETS, to make those targets reachable. Second, it enables other jurisdictions to follow suit by offering linking opportunities, and thereby taking a key step towards the creation of a global carbon trading regime.   [2013] OJ L 299/32.   D. Meadows, ‘The Emissions Allowance Trading Directive 2003/87/EC Explained’ in Jos Delbeke (ed), EU Energy Law: The EU Greenhouse Gas Emissions Trading Scheme, vol IV (Claeys & Casteels 2006) 63, 100. 63   EUROPA, ‘Climate Change: Commission welcomes final adoption of Europe’s climate and energy package’, available at: (accessed 19 August 2015). 64   For an overview of the latest updates on linking opportunities, see (accessed 19 August 2015). Also, on possible China–EU links on emissions trading see M. Timoteo (ed), Environmental Law in Action: EU and China Perspectives (Bononia University Press 2012). 65   Kulovesi, Morgera, and Munoz, ‘Climate and Energy Package’ (n 40) 850. 66 67   [2011] OJ L 149/1, Article 1.   Ibid, Preamble Article 4. 68   Ibid, Preamble Article 5. 61

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2.2 Aviation Directive According to the Aviation Directive, each of the aircraft operators taking off or landing at an EU airport must hold and surrender emissions allowances for each tonne of carbon dioxide generated during their flights per year.69 In other words, it amends the EU ETS regime to include emissions from international aviation.70 The Commission, in particular, pushed for the realization of this Directive. It identified the rapid growth of air travel as threatening to undermine the emissions reductions made in the other sectors.71 The estimate was that even with fuel efficiency improvements, global international aviation emissions would grow by up to 700 per cent higher than 2005 levels by 2050.72 For a number of years, discussions regarding the possible use of market-based measures to deliver emissions reductions from aviation was organized by the International Civil Aviation Organization (ICAO)—a specialized agency of the UN established to promote safety and proper development of civil aviation.73 These efforts, however, proved futile in obtaining a final agreement. When the Commission initiated the legislative proposal in 2008, which led to the adoption of the Aviation Directive, this thus occurred against the backdrop of the failure to successfully secure an international agreement. The reason why the Aviation Directive is relevant to the discussion on external impacts of EU climate change law is not only related to the fact that the EU addresses aviation’s impact on the environment at a time when the international community fails to do it. More importantly, what the Aviation Directive does is to apply the EU ETS to emissions that are generated also outside of the EU airspace by conditioning access to the internal market on such compliance. In a frequently quoted example, Scott and Rajamani clarify how this is controversial by explaining that during a flight from San Francisco to London, twenty-nine per cent of emissions occur in US airspace, thirty-seven per cent in Canadian airspace, twenty-five per cent over the high seas, and only nine per cent in the EU—but that according to the Aviation Directive, all emissions need to be accounted for in the EU emissions trading regime.74   See Annex I, Aviation Directive (n 44).   For a broader analysis see S. Bogojević, ‘Legalising Environmental Leadership: A Comment on the CJEU’s Ruling in C-366/10 on the Inclusion of Aviation in the EU Emissions Trading Scheme’ (2012) 24 Journal of Environmental Law 345. 71   COM(2005) 459 final. 72   Jos Delbeke, Directorate-General for Climate Action, ‘A New Flightplan—Getting global aviation climate measures off the ground’ (Speech at the conference on ‘Getting Global Aviation Climate Measures off the Ground’, 7 February 2012), available at (accessed 19 August 2015). 73  K. Kulovesi, ‘Make your own Special Song, even if Nobody Else Sings Along: International Aviation emissions and the EU Emissions Trading Scheme’ (2011) 2 Climate Law 535. 74   As described by Scott and Rajamani, ‘EU Climate Change Unilateralism’ (n 46) 471. 69 70

29.  climate change law and policy in the eu    681 In light of the above, the EU is seen to rely on its market power in attempting to achieve compliance with its internal climate change laws through measures that control emissions that occur, in part, outside the EU’s jurisdiction. However, reading the Aviation Directive, it is apparent that it does not seek to substitute but rather complement the international climate change regime.75 It stipulates that the ‘Community and its Member States should continue to seek an agreement on global measures to reduce greenhouse gas emissions from aviation’.76 In this regard, it proposes that ‘the Community scheme may serve as a model for the use of emissions trading worldwide’,77 but from the mere wording, this is not an obligation. Also, where a third country adopts measures for reduction of aviation emissions, or where a bilateral or global deal is struck, the Directive may cease to apply according to a so-called ‘escape route’.78 This suggests that the EU only seeks to temporarily fill the gaps in the international climate change regime, while simultaneously seeking to facilitate climate actions that have stalled at the international level. Even though the Aviation Directive stipulates that it is not a substitute for international climate change law, and that it only applies until an international agreement on emissions from aviation is adopted, its application ultimately enables the EU to address climate inaction beyond the EU’s borders. This so-called ‘contingent unilateralism’79 provides a significant possibility for the EU to extend the impact of its domestic climate change law,80 and thereby respond to the failings of global climate change governance.81

3.  EU’s Climate Ambitions and the Question of Environmental Leadership The previous sections have illustrated a number of ways in which EU climate change law and policy is constructed so as to spur the enactment of similar regulatory standards to its own and condition inaction elsewhere. There are a number of 75   J. Scott, ‘EU Global Action on Climate Change: Contingent Unilateralism and Regulatory Penalty Defaults’ (2012) 2 SADC Law Journal 1. 76   Recital 17, Aviation Directive (n 44).    77 Ibid. 78   Article 25a, ibid. Also, certain de minimis levels are listed in Annex I (ibid). 79   J. Scott and L. Rajamani, ‘Contingent Unilateralism—International Aviation in the European Emissions Trading Scheme’ in Bart van Vooren, Steven Blockmans, and Jan Wouters (eds), The EU’s Role in Global Governance: The Legal Dimension (Oxford University Press 2013). 80   Herlin-Karnell sees this as ‘spilling’ over its own values beyond its border, see E. Herlin-Karnell, ‘The EU as a Promoter of Values and the European Global Project’ (2012) 13 German Law Journal 1225. 81   G. Shaffer and D. Bodansky, ‘Transnationalism, Unilateralism and International Law’ (2012) 1 Transnational Environmental Law 1, 10.

682   part vii. region-specific perspectives explanations as to why the EU seeks to achieve this objective.82 One obvious reason is environmental protection. Climate change is by now widely understood as an acute problem, caused by anthropocentric activity that needs to be addressed.83 Another related motive is security. The potential environmental consequence of climate change, including environmental disasters, as well as displaced persons questions that subsequently may arise, and the overreliance on imported energy are security-related topics that are increasingly considered in the context of climate change.84 President Juncker anticipates this challenge by discussing ‘climate refugees’ in terms of a ‘new migration phenomenon’.85 Climate change action is also thought to enhance the EU’s credibility internationally.86 More precisely, the idea is that if the EU seeks to establish itself as a reliable and plausible international player, it needs to fulfil its commitments also under international environmental law, and therefore successfully implement its agenda on climate change.87 Or to put it more bluntly, the EU seeks to ‘practice what we [the EU] preach’.88 An additional, underpinning motivation for climate change action, relates to the economic benefits that derive from creating a pioneering ‘green economy’. According to Connie Hedegaard, at the time the EU Commissioner for Climate Action, the EU ETS is a key strategy for the EU to pursue in order to situate itself prominently in the ‘global race for green growth and jobs’.89 Gaining ‘a leading edge’90 in using a particular regulatory mechanism, such as the EU ETS, is understood to grant competitive advantages, including enabling the EU to influence and establish rules for an international emissions trading scheme by which competitors must abide.91 President Juncker provides the figures on this. More precisely, he explains that the EU’s:92 forward-looking climate policy is also delivering on our much needed Energy Union goals: it is making us a world leader in the renewable energy sector, which today employs over one million people across the EU and generates €130 billion turnover, including €35 billion worth of exports. European companies today hold 40% of all patents for renewable technologies and the pace of technological change increases the potential for new global trade in green technology.

In the long run, however, there is a risk that European industry will be economically disadvantaged unless an international agreement is reached, which would ensure   For an in-depth analysis on this point, see Bogojević, Emissions Trading Schemes (n 5) Chapter 4.   See reports available at (accessed 28 September 2015). 84  E. Boasson and J. Wettestad, EU Climate Policy: Industry, Policy Interaction and External Environment (Ashgate 2013) 44. 85   Speech on ‘Honesty, Unity and Solidairty’ (n 31).    86  Ibid, 118. 87   J. Vogler and H. Stephan, ‘The European Union in Global Environmental Governance: Leadership in the Making? ‘ (2007) 7 International Environmental Agreements: Politics, Law and Economics 389, 409. 88   Speech on ‘Honesty, Unity and Solidairty’ (n 31). 89   Connier Hedegaard, EU Commissioner for Climate Action, ‘Europe’s View on International Climate Policy’ (Speech at Harvard Kennedy School, Cambridge 20 September 2010), available at (accessed 19 August 2015). 90   See for instance COM(2000) 87 final 10. 91   D. Kelemen, ‘Globalizing European Union Environmental Policy’ (2010) 17 Journal of European Public Policy 335, 339. 92   Speech on ‘Honesty, Unity and Solidairty’ (n 31). 82 83

29.  climate change law and policy in the eu    683 that similar climate change obligations are imposed on the European economy and its competitors alike.93 Along similar lines, and as explained by Vedder, a global agreement on climate change is necessary because the EU seeks to establish itself as a ‘technology leader in the field of climate change abatement equipment’.94 The demand for green technology, however, will increase only if there is shared belief that greenhouse gas emissions need to be reduced.95 From this perspective, it is in the interest of the EU to construct its climate change laws so as to impact climate change action at the global level. Clearly, various environmental, security, and economic interests underlie the EU’s climate change-related ambitions. According to Keohane and Victor, the generally diverse reasons for acting on climate change deem any effort to build a comprehensive regime unrealistic. Instead, they suggest, attention needs to be directed at how these distinct climate change laws interact in the ‘regime complex’96 that climate change governance builds upon. The question that then arises is how the EU climate change regime fits—if at all—into such a crossjurisdictional and multi-level regulatory framework. This question of ‘fit’ is examined next.

4. The ‘Gecko Effect’ As described earlier, EU climate change law and policy exists in a multi-level governance regime. This signifies a ‘decentralized, disaggregated’97 governing system that operates across different levels and that involves a number of different sources   This is named the ‘regulatory politics approach’, referring to a situation where a state’s support for international environmental agreements is a function of the relative political strength of environmental advocates and associated changes in the economic interests of domestic producers, see Kelemen (n 91), 336, 343–4. 94   H. Vedder, ‘Diplomacy by Directive? An Analysis of the International Context of the Emissions Trading Scheme Directive’ in Malcolm Evans and Panos Koutrakos (eds), Beyond Established Legal Orders: Policy Interconnections between the EU and the rest of the world (Hart Publishing 2011) 105, 106. 95  Ibid. 96   In this regard, it is commonly held that in order to understand how set climate change laws fit this particular governance regime, the various sources of legal authority regulating climate change—their hierarchies, synergies and tensions—need to be analysed; see R. Keohane and D. Victor, ‘The Regime Complex for Climate Change’ (2011) 9 Perspectives on Politics 7. For an overview of this scholarship, see K. Kulovesi, ‘Exploring the Landscape of Climate Change Law and Scholarship: Two Emerging Trends’ in Erikki Hollo, Kati Kulovesi and Michael Mehling (eds), Climate Change and the Law (Springer 2013) 31. 97   J. Peel, L. Godden, and R. Keenan, ‘Climate Change Law in an Era of Multi-Level Governance’ (2012) 1 Transnational Environmental Law 245, 245. See also, Scott ‘Multi-Level Governance’ (n 5). 93

684   part vii. region-specific perspectives and jurisdictions. Although tensions in such a system are recognized,98 often its plurality and possible advantages are put in focus.99 There are at least two sets of advantages of this type of pluralistic approach to regulating climate change put forward in the legal scholarship.100 First, it lessens the need for finding global consensus on climate change action. In the case of the EU, it has invested heavily in the EU ETS and its Climate and Energy Packages in dealing with climate change. A different regulatory approach favouring a different regulatory mechanisms,101 or mere emission reduction targets,102 would arguably be more difficult to agree on with the EU.103 Second, a pluralistic approach to climate change could create diverse offset systems, which other jurisdictions could learn more about and potentially mimic. In other words, competition between different regulatory schemes could provide comparative models that will help decision-makers determine which mechanism are most effective in dealing with climate change.104 In this regard, the advantage of regulatory pluralism is the opportunity it affords to create healthy competition from which mechanisms to regulate a particular environmental problem may be chosen. Creating regulatory competition is appealing, particularly when the international climate change negotiations are uncertain in their prospects and continue to develop ‘at a snail’s pace’.105 The possible risk of regulatory competition resulting in a ‘race to the bottom’ or, conversely a ‘race to the top’ approach is rejected by Heyvaert. She argues that a new competitive pattern is emerging that responds strongly to the design, implementation, and governance of environmental standards, and which evidences that market actors will avoid becoming thought of as ‘low rent’ regulators. As such, competition between the regulatory systems will remain healthy.106 EU climate change law and policy has certainly played a crucial role in contributing to a competitive climate change regime beyond its borders. Although the EU carbon market is the largest in the world, accounting for nearly eighty-five per cent of world carbon trading, and worth over US$175 billion a year,107 other carbon   Shaffer and Bodansky (n 81) 11. Here, international law is identified as the ‘consolidator’ of such tensions. 99   H. van Asselt, M. Mehling, and C. Kehler Siebert, ‘The Changing Architecture of International Climate Change Law’, in Geert van Calster, W Vandenberghe, and L. Reins (eds), Research Handbook on Climate Change Mitigation Law (Edward Elgar 2015) 1, N. Krisch, ‘The Decay of Consent: International Law in an Age of Global Public Goods’ (2014) 108 American Journal of International Law 1. 100   For an excellent overview of the relevant scholarship see Heyvaert (n 11). 101 102   Peel, Godden, and Keenan (n 97) 253.   Keohane and Victor (n 96) 14. 103   J Wettestad, ‘The EU emissions trading system: frontrunner in trouble’, in Geert van Calster, W Vandenberghe, and L. Reins (eds), Research Handbook on Climate Change Mitigation Law (Edward Elgar 2015) 451, 474. 104   Keohane and Victor (n 96) 15. 105   C. Streck, ‘Innovativeness and Paralysis in International Climate Policy’ (2012) 1 Transnational Environmental Law 137, 138. 106   Heyvaert (n 11) 2, 24. 107   R. Calel, ‘Carbon Markets: A Historical Overview’ (2013) 4 WIREs Climate Change 107, 112. 98

29.  climate change law and policy in the eu    685 markets have also been established.108 China, despite its, to date, refusal to commit to binding greenhouse gas emission targets in international climate negotiations, introduced in 2013 a national scheme of pilot emissions trading, heavily influenced by the EU ETS experience.109 The EU’s attempt to regulate international aviation emissions, however, has resulted in a range of different retaliatory implications by other states. To start with, several US airlines, led by Air Transport Association of America—the trade body for US airlines—challenged the validity of the Aviation Directive before the Court of Justice of the European Union (CJEU) in light of international law and international customary principles.110 The CJEU found that, as the EU seeks to ensure a high level of environmental protection it may ‘choose to permit a commercial activity . . . to be carried out in the territory of the European Union only on condition that operators comply with the criteria that have been established by the European Union and are designed to fulfil the environmental protection objectives which it has set for itself ’.111 The court thus justifies territorial conditioning in pursuing climate change action. Although the judgment may be criticized for ducking complex questions about when and to which extent extraterritorial greenhouse gas emissions may be regulated,112 the court succeeds in sending a powerful message in positioning environmental protection at the forefront of economic activities and thereby legitimizing the EU’s efforts to spur climate change action beyond its jurisdiction.113 Nevertheless, this case, together with the Aviation Directive more generally, has elicited strong resistance from the international community.114 In the United States, the House of Representatives passed the EU ETS Prohibition Act 2011 that prohibits US aircraft operators from participating in the EU emissions trading regime.115 China took an equally firm stance and prohibited all Chinese airlines from participating 108   This list of countries includes South Korea, as well as Kazakhstan. For an overview, see ICAP website, available at (accessed 19 August 2015). 109   See China Carbon Market Research Report 2014, available at (accessed 19 August 2015). See also X. Dai and Z. Diao, ‘Towards a New World Order for Climate Change: China and the European Union’s Leadership Ambition’, in Rüdiger Wurzel and James Connelly (eds), The European Union as a leader in international climate change politics (Routledge 2011) 252. For an overview of the Chinese carbon market, see C. Tung, ‘Reflections on the Chinese carbon market’, in Geert van Calster, W Vandenberghe, and L. Reins (eds), Research Handbook on Climate Change Mitigation Law (Edward Elgar 2015) 86. 110   Case C-366/10 Air Transport Association of America and Others v Secretary of State for Energy and Climate Change [2011] ECR I-13755. 111   Ibid, para 128. 112   J. Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (n 17). 113   Bogojević, ‘Legalising Environmental Leadership’ (n 70). 114   See for instance the New Delhi Declaration, created by twenty-six countries, opposing the inclusion of global aviation emissions in the EU ETS, available at (accessed 19 August 2015). 115  European Union Emissions Trading Scheme Prohibition Act 2011 (HR) 2492, passed on 24 October 2011.

686   part vii. region-specific perspectives in the EU ETS without government approval,116 in addition to threatening to suspend orders for aircraft worth US$4bn from the EU as a retaliation measure.117 The European aviation industry, in turn, pressed the EU to halt the ‘carbon row’,118 whilst fears mounted of ‘an all-out trade war’.119 Such a trade war, however, never materialized due to the ‘stop-the-clock decision’. More precisely, in April 2013, the European Parliament and the Council decided to temporarily derogate from the application of the EU ETS to flights operating from or to non-European countries.120 The motive behind such an initiative was to allow the ICAO Assembly to meet and discuss how to tackle aviation emissions within an international legal framework. The outcome was an agreement within the ICAO Assembly to develop, by 2016, a global market-based mechanism to address international aviation emissions and apply it by 2020. The parties, however, made no progress on creating a framework for emissions targets.121 Moreover, this experience led the EU to exclude any extraterritorial shipping emissions within the EU ETS.122 This may be seen as a clear call to question any claim that the EU is able to increase the regulatory competition in favour of widespread climate action. In my view, the international response to the application of the Aviation Directive illustrates, what I call, ‘the gecko effect’.123 When under threat, gecko lizards can shed their tail as a defence mechanism. In the same way, the EU has shed some of its environmental ambitions, or the external features of some of its climate change laws when other countries have failed to follow its lead, or responded in a hostile manner to its policies. As a consequence, the Union’s aspirations to exert an influence on environmental policy globally are thwarted. This consequence testifies to the difficulty for a single actor to attempt at global leadership in a multi-layered climate regime characterized by tough regulatory competition. The gecko analogy might seem to paint a bleak picture of the EU as a keen but stunned champion of environmental protection, yet the EU has managed to exert some pressure on other countries to assume a greater responsibility for climate protection. This is clearly evidenced by the fact that the general assembly for the ICAO has agreed to a global political framework for the regulation of aviation   A. Kotoky, ‘India to Ask Airlines to Shun EU Carbon Scheme’ Reuters (19 March 2012).   W. Nichols, ‘Airbus Blames EU carbon trading row for faling Chinese orders’, The Guardian (9 March 2012), T. Hepher, ‘China Halts 10 More Airbus orders in EU Row’ Reuters (15 March 2012). 118   J. Regan, ‘Aviation Chiefs ask EU Leaders to Halt Carbon Row’, Reuters (12 March 2012). 119   Leal-Arcas (n 59) 920; J. Meltzer, ‘Climate Change and Trade—The EU Aviation Directive and the WTO’ (2012) 15 Journal of International Economic Law 1. 120   [2013] OJ L113/1. 121  ICAO Assembly 38th Session, Report on the Executive Commitee on Agenda Item 17, A38-WP/430. 122   J. Scott, ‘The Geographical Scope of the EU’s Climate Responsibilities’ (n 17). 123   I have previously used this analogy in S. Bogojević, ‘EU:s handel med utsläppsrätter och de globala obalanserna’ in Antonina Bakardjieva-Engelbrekt, Lars Oxelheim, and Thomas Persson (eds), EU och de globala obalanserna (Santérus Förlag 2014) 109. 116 117

29.  climate change law and policy in the eu    687 emissions—even if no further measures on this are yet taken. What is important is that through its internal measures the EU has been able to drive forward ICAO discussions and generate momentum at the global level towards global action for addressing aviation emissions.124 In other words, using EU climate change law as a political tool to stimulate agreement is significant.125 What the EU must now focus on is to find unity among the Member States in combating climate change, and at the same time, work towards further strengthening the internal market through which it will be able to condition and spur environmental actions. The internal market allows the EU to exert international pressure, although this pressure will not necessarily lead to the global adoption of a climate regulation uniform with that of the EU.

5. Conclusion This chapter is concerned with EU climate change law and policy and its role in an international climate change regulatory context. The EU is often presented as a climate leader that pushes for climate action also beyond its borders by enacting ambitious climate laws and sometimes giving these extraterritorial effects. Such measures are motivated not solely by environmental ambition but also by economic concerns to stimulate the internal market and ensure that the EU (green) economy is at the international forefront. The internal market plays a significant role in EU climate law and policy: it motivates climate action, as well as enables the EU to give such action external effect. This, however, is not without limitations, as the EU is only able to initiate debates on, as opposed to dictate international climate change rules.

  COM(2013) 722 final, 2.

124

  See van Asselt (Chapter 16) on this point.

125

Chapter 30

CLIMATE CHANGE LAW AND POLICY IN INDIA Deepa Badrinarayana

1. Introduction

689

2. India and Climate Change: Threats and Vulnerabilities

690

3. The Legal Response: Climate Change Treaties and India’s National Action

691

4. Limits of and Challenges to India’s Climate Change Measures 695 5. The Future of India’s Climate Change Action: Finding the Correct Basis for Action

697

30.  climate change law and policy in india    689

1. Introduction Climate change presents a complex challenge for India, which is reflected in its evolving set of climate change laws and policies. On the one hand, India is among nations most vulnerable to climate change catastrophes, from floods to droughts.1 Some of the world’s poorest people live in India and face great danger to life and property because of climate change. On the other hand, because of the extent of poverty in India, economic development is critical, even though the current model of economic development is a key contributing factor to climate change, that is, fossil fuel-based energy use and consumption-intensive growth.2 To further complicate matters, as a result of its recent economic growth and its increased levels of greenhouse gas emissions, treating India as a developing country unburdened by emission reduction obligations under the Kyoto Protocol is contentious. An increasing number of developed, Annex I countries3 view the participation of China and India in a mandatory emission reduction scheme as essential to extending the Kyoto Protocol, or any form of international agreement on climate change.4 Based on its historic and per capita emissions, however, India is reluctant to accept such an obligation. India’s legal and political responses are greatly confined by this dilemma and it is limited to its participation as a non-Annex I country under the Kyoto Protocol and to certain voluntary domestic measures. India’s international position and its laws lag behind its constitutional guarantee to environmental rights under the Constitution. Unless India leads in carving out an extraordinary solution that runs contrary to the current paradigm of growth, neither its acceptance of emission reduction obligations under the current Kyoto Protocol mechanisms, nor its continued rejection of international obligations to collectively mitigate climate change, will likely avert the severe consequences of climate change that may be legally irreparable. Adaptation measures may not be adequate, either. This chapter discusses India’s role in international climate law and its domestic law on climate change and demonstrates the limits of India’s legal position in addressing climate-related threats. 1  India Second National Communication to the United Nations Framework Convention on Climate Change, available at at p. 96 (National Communications Report). 2   Understanding India’s Energy Policy, IEA, (accessed 25 September 2015). 3   Annex I countries are developed countries included in Annex I to the United Nations Framework Convention on Climate Change (UNFCCC) and that have an obligation under Article 2 of the same treaty to lead nations in providing legal and economic support to solving climate change. United Nations Conference on Environment and Development: Framework Convention on Climate Change, opened for signature 4 June 1992, 1771 UNTS 107 (entered into force 21 March 1994). 4   William R. Moomaw, ‘Can the International Treaty System Address Climate Change?’, 37 Fletcher F. of World Aff., Winter 2013, at 105, 109–10; Frank H. Murkowski, ‘The Kyoto Protocol Is Not the Answer to Climate Change’, 37 Harv. J. on Legis. 345, 358 (2000).

690   part vii. region-specific perspectives

2.  India and Climate Change: Threats and Vulnerabilities India’s location makes it highly vulnerable to climate change. Of all the major developing economies, India is most exposed to climate catastrophes, ranging from floods to other natural disasters. The Himalayan Glaciers, which are the primary source of water for parts of Northern India, are endangered by climate change. The melting of the glaciers is predicted to cause substantial floods and droughts throughout the region. Additionally, climate change will likely cause changes in rainfall patterns in parts of India. The effects of such a change will compound problems associated with glacial melt and pose additional challenges for a country that remains predominantly agrarian. Seventy percent of the population relies on agriculture for their livelihood. Thus, climate change is a direct threat to the largest sector of India’s economy. Further, India’s infrastructure is not designed to cope with sudden climatic events. India’s large population, the second largest in the world, and high population density in urban areas, presents unique challenges. Even under normal circumstances, much of the Indian populace struggles to meet basic needs, from water to sanitation to food. In the event of extreme weather events and the additional burdens this places on basic human resources, the country, and eventually its economy, may well be crippled. As an early example, during some heavy rains and floods in 2013, the airport in New Delhi, India’s capital city, became flooded, causing major delays.5 In other regions, flash floods have swept away roads, leaving thousands stranded and making rescue operations arduous. Two striking examples of the potential catastrophic scale of climate change impacts occurred in 2013 and 2014. In 2013, during the peak monsoon season, flash floods in Uttarakhand destroyed centuries-old temple sites, killed several pilgrims, swept away roads, and left thousands stranded, resulting in arduous rescue operations. Similarly, unprecedented floods in Jammu and Kashmir in 2014 killed hundreds, left thousands stranded, and paralyzed the government. As the Chief Minister of Jammu and Kashmir pointed out, he had no government to effect rescue efforts as the floods caused flooding of buildings and loss of all telecommunications.6 In instances, climate change may have served as triggers that exacerbated existing environmental and land use problems, 5   Joanna Sugden and Preetika Rana, ‘What’s Going Wrong at Delhi’s Flooded Airport?’, Wall Street Journal, 22 July 2013, available at (accessed 25 September 2015). 6   ‘I had no government’, NDTV, (accessed 25 September 2015). At the time of writing this chapter, the state of Jammu and Kashmir was still grappling with rescue efforts and nearly 1.5 lakh (150,000) people were stranded for over two weeks.

30.  climate change law and policy in india    691 notably, unchecked and unsustainable construction of buildings and dams, general environmental degradation, and increased population.7 In addition to impacts on people, the floods caused severe damage to infrastructure. Apart from roads and buildings, nineteen hydropower stations were washed away in the floods, causing a loss of INR 77 crores (roughly equivalent to $US14m); the GDP of Uttarakhand for the year 2012–2013 was roughly INR 55 crores.8 The cost of the floods in Jammu and Kashmir is yet to be determined. What both these extremely catastrophic events demonstrate though is that the scale of predicted climate catastrophes pose very real threats to India and its people. It is also predicted that climate change will cause public health problems such as malaria and other vector-borne illnesses.9 India may not be in a position to handle these issues, especially as they combine and interact in complex ways. The scale of catastrophes that are predicted to unfold pose very real threats to the health and well-being of the Indian state and its many citizens.

3.  The Legal Response: Climate Change Treaties and India’s National Action 3.1 India and International Climate Change Law India is a party to both the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.10 Because it is a non-Annex I country, the UNFCCC does not require India to lead in efforts to establish an implementing treaty to mitigate climate change or to provide financial support for climate change action. Annex I countries bear the burden of achieving emission reductions obligations, while a smaller subset of developed countries—Annex II countries—having additional responsibilities relating to technological and financial assistance.11 Like other non-Annex I countries, India is only required to provide national emissions   Indrajit Bose, ‘More Uttarakhand disasters in the offing’, Down to Earth, 28 June 2013, available at . 8   Uttarakhand Planning for 2012–2013 Finalized, Planning Commission, Government of India, 16 July 2012, (accessed 25 September 2015). 9  India Second National Communication to the United Nations Framework Convention on Climate Change, (accessed 25 September 2015) at p. 96 (National Communications Report). 10   Kyoto Protocol to the United Nations Framework Convention on Climate Change, opened for signature 16 March 1998, 2303 UNTS 148 (entered into force 16 February 2005). 11   Article 4(4) and (5), UNFCCC. 7

692   part vii. region-specific perspectives data, take voluntary climate action, and report such measures.12 Therefore, under the Kyoto Protocol, the implementing treaty to the UNFCCC, India is not obligated to accept time-bound, targeted emission reductions. By ratifying the Kyoto Protocol, India obligated itself to cooperate and participate in efforts to mitigate and adapt to climate change but in a very generalized fashion. In ratifying the Kyoto Protocol, India thus avoided any potentially costly concrete emission reduction obligations while creating economic and environmental opportunities by making itself eligible to participate in some of the Kyoto Protocol’s market-based flexibility mechanisms. In terms of potential economic and environmental opportunities, under Article 11 of the Kyoto Protocol, India as a developing country is entitled to receive financial and technology transfer assistance from Annex I countries.13 Additionally, under Article 12 of the Kyoto Protocol, India is able to participate in Clean Development Mechanism (CDM) projects.14 The CDM is designed to mutually benefit Annex I and non-Annex I countries by generating emission reduction credits for Annex I countries when they invest in emission reduction projects in developing countries, with the understanding that these projects should promote sustainable development.15

3.2 National Laws The Government of India has adopted various domestic initiatives to comply with its voluntary obligations under the Kyoto Protocol. The key national initiative on climate change is the National Action Plan on Climate Change (NAPCC or National Action Plan), prepared by the Prime Minister’s Council on Climate Change in 2008.16 Action under NAPCC is premised on the principle of sustainable development, which for the purposes of climate change means achieving growth while at the same time minimizing greenhouse gas emissions. To achieve this objective, the National Action Plan has established out eight missions or programs that focus on specific aspects such as energy and forestry, as well as broader matters such as sustainable development to mitigate and adapt to climate change. Specific missions to mitigate climate change include, the National Solar Mission, the National Mission for Enhanced Energy Efficiency, the National Mission on Sustainable Habitat, the National Mission for Sustaining the Himalayan Ecosystem, and the National Mission for a Green India. The National Missions on Water and on Strategic Knowledge for Climate Change focus on both mitigation and adaptation aspects. Each mission focuses on a specific aspect as indicated by its title. For example, the National Solar 13   Article 4(1)(a) read with Article 12(1), UNFCCC.   Article 11, Kyoto Protocol.   National Clean Development Mechanism Authority, ‘About Us’, available at (accessed 25 September 2015). 15   Article 12, Kyoto Protocol. 16   (accessed 25 September 2015). 12

14

30.  climate change law and policy in india    693 Mission sets out expansion of solar energy as a key mission to reduce emissions.17 The National Mission for a Green India is broader and seeks to increase forest cover and support the promotion of climate-conscious efforts. These missions are being executed by existing government ministries correlating to the goals of the Missions. For example, the National Mission for Enhanced Energy Efficiency identifies four initiatives that will be implemented through the Bureau of Energy Efficiency, which was established under the Energy Conservation Act of 2001.18 These ministries are also required to cooperate with other government departments, notably the Ministry of Finance and the Planning Commission, as well as experts and representatives from industry, academia, and civil society. In addition to the missions, the NAPCC has established an Advisory Council on Climate Change chaired by the Prime Minister to provide advice on multilateral and bilateral programs. The National Action Plan contains existing mitigation action and future programs that also promote economic growth. The NAPCC is not the only source of domestic climate action. Notably, the Government of India has established a National Clean Development Mechanism Authority (National CDM Authority) to implement CDM, as required by the Seventh Conference of Parties meeting to the UNFCCC.19 The National CDM Authority is located in the Ministry of Environment and Forests (MoEF), but comprises representatives from other relevant ministries, including finance, planning, and energy ministers.20 This Authority processes CDM projects and is responsible for ensuring that the certified emission reduction certificates are not undervalued.21 The National CDM Authority has authorized over 200 projects, indicating that the Indian government is taking advantage of this Kyoto Protocol mechanism. The Indian government’s focus, however, is not limited to these programs. On a broader scale, the government is focusing on establishing a meaningful energy policy, one that will meet the energy needs of an ambitious economy while minimizing negative impact on the environment conditions, and maximizing economic benefits. India relies heavily on imports for key energy sources, notably oil and coal. These fuel sources not only trigger global warming, but are also economically undesirable given that they are not domestically produced. Therefore, India has a significant domestic interest in increasing energy efficiency and energy independence. The Indian government has been introducing energy reforms since the mid2000s. The National Electricity Policy of 2005 and the Tariff Policy of 2006, for example, introduced measures to ensure competitive pricing of renewable energy   Ibid. at page 3.    18  Ibid. at page 3.   See generally, ‘Report of the Conference of the Parties on its Seventh Session held in Marrakesh from 29 October to 10 November 2001, Addendum’, FCCC/CP/2001/13/Add.1, 21  January 2002, Decision7/CP.7, paragraph 1(c), (accessed 15 August 2015). 20 21   http://www.cdmindia.gov.in/constitution.php> (accessed 20 August 2015).  Ibid. 17

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694   part vii. region-specific perspectives in order to promote investment. In a complementary fashion, to facilitate supply and distribution, the Electricity Act of 2003 requires state electricity boards to buy and supply renewable energy along with traditional energy. Also, in 2006 the Indian government adopted an integrated energy policy to identify India’s energy challenges and solutions. Prepared by the Planning Commission of India, the Integrated Energy Policy (IEP) is an important effort to identify ways to integrate energy and development goals with climate mitigation strategies, and thus compliment efforts under the NAPCC.22 The IEP sets out India’s energy challenges, including dependence on foreign sources of fossil fuels to meet basic energy needs. To reduce such dependency, the IEP suggests shifting to alternative fuels, which it recognizes would also complement climate mitigation strategies. The IEP recommends a broadening of India’s renewable energy portfolio, as well as nuclear and hydro-electricity sources of energy, while at the same time encouraging innovation to increase energy efficiency, including by incorporating market mechanisms. Like the NAPCC, the IEP regards the Bureau of Energy Efficiency (BEE) as an important institutional mechanism to implement its recommendations.23 Of the various renewable energy sources, the Indian government is emphasizing the need to expand domestic use of solar energy. The Jawaharlal Nehru National Solar Mission (JNNSM or the Nehru Solar Mission), launched by the Prime Minister of India in 2010, aims to generate 20,000 megawatts of energy by 2022. To achieve this goal, the Ministry of New and Renewable Energy, which administers JNNSM, has issued a set of guidelines that provide support to investors, including lower tariffs and purchase guarantees.24 In addition to renewable energy, India’s nuclear energy program is expanding significantly. This expansion has been facilitated by the US–India Nuclear Agreement, which removed an earlier ban on trading nuclear technology and materials with India that was imposed by the Nuclear Suppliers Group.25 Despite general ambivalence about the use of nuclear energy to mitigate climate change, particularly following the Fukushima nuclear disaster in Japan, India is continuing to expand its civilian nuclear energy program.26 In addition to mitigation efforts, the Indian government is devising adaptation policies and goals. Since India remains primarily an agricultural economy, India’s 22   Planning Comm’n, Gov’t of India, Integrated Energy Policy: Report of the Expert Committee (2006), available at (accessed 20 August 2015). 23  Deepa Badrinarayana, ‘India’s Integrated Energy Policy: A Source of Economic Nirvana or Environmental Disaster?’, 40 ELR 1076 (2010). 24   See