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reduce correlated local pollution in devel-
POLICY FORUM oping countries, because jurisdictions that
take on increased mitigation efforts as a
CLIMATE POLICY result of linkage, many of which will be
low-income developing countries, will see
Linking climate policies local pollution decrease along with lower
GHG emissions.
serious concern of linkage
A more
stems
to advance global mitigation from the automatic propagation of some de-
sign elements from one system to another, in
Joining jurisdictions can increase efficiency of mitigation particular, cost-containment mechanisms in
cap-and-trade systems—banking, borrowing,
and price collars. This means that there is de-
1,2
By Michael A. Mehling, Gilbert E. in their NDCs (see the figure). For example, creased autonomy, as rules in one system can
Metcalf, 3,4,5 Robert N. Stavins 4,5,6 the baseline efficiency of energy use in low- affect prices in another. All of this refers to
income countries is very low, relative to high- what we think of as “hard linkage,” a formal
he November 2017 negotiations in income countries. Linking can leverage such recognition by a mitigation program in one
Bonn, Germany, under the auspices of differences to reduce overall mitigation cost. jurisdiction of emission reductions under-
the United Nations Framework Con- In effect, linkage drives participating juris- taken in another jurisdiction for purposes of
vention on Climate Change (UNFCCC) dictions toward a common cost of carbon, complying with the first jurisdiction’s miti-
validated that the Paris Agreement has equalizing the marginal cost of abatement gation program. Examples of hard linkage
T met one of two necessary conditions and producing a more efficient distribution are the links between cap-and-trade systems
for success. By achieving broad participation, of abatement activities. These benefits could in the state of California, USA, and Québec,
including 195 countries, accounting for 99% potentially reduce the cost of achieving the Canada, and, more recently, the European Downloaded from
of global greenhouse gas (GHG) emissions emissions reductions specified in the initial Union (EU) and Switzerland.
(1), the agreement dramatically improves on NDCs under the Paris Agreement 32% by But another possibility is “soft linkage,”
the 14% of global emissions associated with 2030 and 54% by 2050 (4). by which we mean an agreement—explicit
countries acting under the Kyoto Protocol In addition to lowering costs, linkage can or implicit—to harmonize carbon prices
(2), the international agreement it will re- improve the functioning of individual mar- either at a specific level or within overlap-
place in 2020. But the second necessary con- kets, reducing market power by including ping bands. With soft linkage, there is no
dition, adequate collective ambition of the more firms and reducing price volatility by recognition of emission reductions in one
nationally determined contributions (NDCs) enlarging the market. Beyond such direct system by the other system for purposes http://science.sciencemag.org/
that countries have individually pledged, has economic benefits, political benefits exist. of compliance. Still, by aligning carbon
not been met. One promising approach to As jurisdictions band together, linking can prices, such harmonization improves over-
incentivize countries to increase ambition signal political momentum that contributes all economic efficiency.
over time is to link different climate policies, to more policies where they do not yet ex-
such that emission reductions in one juris- ist and more ambitious policies where they LINKAGE IN THE PARIS AGREEMENT
diction can be counted toward mitigation are already in place. Also, administrative Article 6.2 of the Paris Agreement provides
commitments of another jurisdiction. Draw- economies of scale can be achieved through a foundation for linkage by recognizing that
ing on our research and our experiences in knowledge sharing in policy design and op- parties to the agreement may “choose to on March 1, 2018
Bonn, we explore options and challenges for eration and through shared administrative pursue voluntary cooperation in the imple-
facilitating such linkages in light of the con- costs. Finally, and importantly, linkage can mentation of their” NDCs through “the use
siderable heterogeneity that is likely to char- allow for the key UNFCCC equity principle of of internationally transferred mitigation
acterize regional, national, and subnational “common-but-differentiated responsibilities outcomes” (ITMOs) (5). In contrast to the
policy efforts. and respective capabilities” to be pursued Kyoto Protocol (which also includes provi-
Linkage is important, in part, because it without sacrificing cost-effectiveness. sions for international cooperation), the
can reduce the costs of achieving a given There are also legitimate concerns with voluntary and flexible architecture of the
emissions-reduction objective (3). Lower linkage, including distributional impacts Paris Agreement allows for wide variation,
costs, in turn, may contribute politically to within and across jurisdictions, even though not only in the types of climate policies
embracing more ambitious objectives. In a aggregate abatement costs are reduced. Be- countries choose to implement but also in
world where the marginal cost of abatement cause linking is inherently voluntary, how- the form and stringency of the abatement
(that is, the cost to reduce an additional ton ever, linking will generally not occur unless targets they adopt.
of emissions) varies widely, linkage improves both parties to a link anticipate that overall To be clear, there are three conceptually—
overall cost-effectiveness by allowing juris- benefits of the link, including revenue from and operationally—distinct aspects of inter-
dictions to finance reductions in other ju- selling emission reductions, will outweigh national policy linkage: (i) (the focus of our
risdictions with relatively lower costs while costs. Likewise, individual exchanges made analysis) provisions in Article 6.2 of the Paris
allowing the former jurisdictions to count between compliance entities are voluntary. Agreement and related guidance that can
the emission reductions toward targets set Transferring pollution obligations can facilitate international linkage, by provid-
raise concerns about environmental jus- ing, for example, for ITMOs to be used as an
1 tice. Although GHGs are a global pollut- accounting mechanism when “compliance”
Massachusetts Institute of Technology, Cambridge, MA, USA.
2 3
University of Strathclyde, Glasgow, UK. Tufts University, ant, changes in GHG emissions can affect with NDCs is measured; (ii) agreements be-
4
Medford, MA, USA. National Bureau of Economic Research, emissions of correlated local pollutants tween two or more jurisdictions to recognize
5
Cambridge, MA, USA. Resources for the Future,
6
Washington, DC, USA. Harvard University, Cambridge, MA, (for example, particulate matter). This is a emission reductions generated in the other
USA. Email: robert_stavins@hks.harvard.edu reasonable concern, but linkage could help jurisdictions; and (iii) two or more compli-
SCIENCE sciencemag.org 2 MARCH 2018 • VOL 359 ISSUE 6379 997
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