Editing IPCC:AR6/WGIII/Chapter-14 (section)

=== 14.2.1 Framing Concepts for Assessment of the Paris Agreement ===

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Previous IPCC reports have framed international climate cooperation, and indeed climate mitigation more generally, primarily as addressing a global commons problem ( [[#Stavins--2014|Stavins et al. 2014]] ). In this report, by contrast, multiple framings are considered. [[IPCC:Wg3:Chapter:Chapter-1|Chapter 1]] introduces four analytic frameworks: aggregated economic approaches such as cost-benefit analysis, which maps onto the global commons framing; ethical approaches; analysis of transitions and transformations; and psychology and politics of changing course. Here, we highlight some of the findings that are of relevance to international cooperation.

When applied to the international context, the public good (or global commons) framing stresses that the incentives for mitigation at the global level are greater than they are for any single country, since the latter does not enjoy the benefits of its own mitigation efforts that accrue outside its own borders ( [[#Stavins--2014|Stavins et al. 2014]] ; [[#Patt--2017|Patt 2017]] ). This framing does not preclude countries engaging in mitigation, even ambitious mitigation, but it suggests that these countries’ level of ambition and speed of abatement would be greater if they were part of a cooperative agreement.

Theoretical economists have shown that reaching such a global agreement is difficult, due to countries’ incentives to free-ride, namely benefit from other countries’ abatement efforts while failing to abate themselves ( [[#Barrett--1994|Barrett 1994]] ; [[#Gollier--2015|Gollier and Tirole 2015]] ). Numerical models that integrate game theoretic concepts, whether based on optimal control theory or on dynamic programming, consistently confirm this insight, at least in the absence of transfers ( [[#Germain--2003|Germain et al. 2003]] ; [[#Lessmann--2015|Lessmann et al. 2015]] ; [[#Chander--2017|Chander 2017]] ). Recent contributions suggest that regional or sectoral agreements, or agreements focused on a particular subset of GHGs, can be seen as building blocks towards a global approach ( [[#Asheim--2006|Asheim et al. 2006]] ; [[#Froyn--2008|Froyn and Hovi 2008]] ; [[#Sabel--2017|Sabel and Victor 2017]] ; [[#Stewart--2017|Stewart et al. 2017]] ). In a dynamic context, this gradual approach through building blocks can alleviate the free-riding problem and ultimately lead to global cooperation ( [[#Caparrós--2017|Caparrós and Péreau 2017]] ). Much of this literature is subsumed under the concept of ‘climate clubs’ described in the next section. Other developments based on dynamic game theory suggest that the free-riding problem can be mitigated if the treaties do not prescribe countries’ levels of green investment and the duration of the agreement, as countries can credibly threaten potential free-riders with a short-term agreement where green investments will be insufficient due to the hold-up problem ( [[#Battaglini--2016|Battaglini and Harstad 2016]] ). Finally, thresholds and potential climate catastrophes have also been shown, theoretically and numerically, to reduce free-riding incentives, especially for countries that may become pivotal in failing to avoid the threshold ( [[#Barrett--2013|Barrett 2013]] ; [[#Emmerling--2020|Emmerling et al. 2020]] ).

In addition to mitigation in the form of emissions abatement, innovation in green technologies also has public good features, leading for the same reasons to less innovation than would be globally ideal ( [[#Jaffe--2005|Jaffe et al. 2005]] ). Here as well, theory suggests that there are benefits from cooperation on technology development at the regional or sectoral levels, but also that cooperation on technology, especially for breakthrough technologies, may prove to be easier than for abatement ( [[#El-Sayed--2014|El-Sayed and Rubio 2014]] ; [[#Rubio--2017|Rubio 2017]] ). In a dynamic context, the combination of infrastructure lock-in, network effects with high switching cost, and dynamic market failures suggests that deployment and adoption of clean technologies is path dependent ( [[#Acemoglu--2012|Acemoglu et al. 2012]] ; [[#Aghion--2014|Aghion et al. 2014]] ), with a multiplicity of possible equilibria. This implies that no outcome is guaranteed, although the most likely pathway will depend on economic expectations and initial conditions of the innovation process ( [[#Krugman--1991|Krugman 1991]] ). Therefore, the government has a role to play, either by shifting expectations (e.g., credibly committing to climate policy), or by changing initial conditions (e.g., investing in green infrastructure or subsidising clean energy research) ( [[#Acemoglu--2012|Acemoglu et al. 2012]] ; [[#Aghion--2014|Aghion et al. 2014]] ). This result is exacerbated by the irreversibility of energy investments and the extremely long periods of operation of the typical energy investment ( [[#Caparrós--2015|Caparrós et al. 2015]] ; [[#Baldwin--2020|Baldwin et al. 2020]] ).

While the public goods and global commons framing concentrates on free-riding incentives as the primary barrier to mitigation taking place at a pace that would be globally optimal, other factors arise across the four analytic frameworks. For example, within the political framework, [[#Beiser-McGrath--2021|Beiser-McGrath and Bernauer (2021)]] highlight that not just the incentive to free-ride, but also the knowledge that another major emitter is free-riding, could lessen a country’s political incentive to mitigate. [[#Aklin--2020|Aklin and Mildenberger (2020)]] present evidence to suggest that distributive conflict within countries, rather than free-riding across countries, is the primary barrier to ambitious national-level action. Another barrier could be a lack of understanding and experience with particular policy approaches; there is evidence that participation in cooperative agreements could facilitate information exchange across borders and lead to enhanced mitigation policy adoption ( [[#Rashidi--2018|Rashidi and Patt 2018]] ).

The analytic approach focusing on transitions and transformation focuses on path-dependent processes as an impediment to the shift to low-carbon technologies and systems. Cross-Chapter Box 12 on Transition Dynamics (Chapter 16) summarises the key points of this literature. This chapter describes how the two framings focus on different indicators of progress, and potentially different types of cooperative action within the international context. This chapter highlights in later sections conflicting views on whether the Paris Agreement is likely to prove effective ( [[#14.3.3.2|Section 14.3.3.2]] ). To some extent, the dichotomy of views aligns with the two framings: analysis implicitly aligned with the global commons framing is negative about the Paris architecture, whereas that aligned with the transitions framing is more positive ( [[#Kern--2016|Kern and Rogge 2016]] ; [[#Patt--2017|Patt 2017]] ; [[#Roberts--2018|Roberts et al. 2018]] ).

Within the global commons framing, the primary indicator of progress is the actual level of GHG emissions, and the effectiveness of policies can be measured in terms of whether such emissions rise or fall ( [[#Patt--2017|Patt 2017]] ; [[#Hanna--2021|Hanna and Victor 2021]] ). The fact that the sum of all countries’ emissions has continued to grow ( [[#IPCC--2018a|IPCC 2018a]] ), even as there has been a global recognition that they should decline, is seen as being consistent with the absence of a strong global agreement. Within this framing, there is traditionally an emphasis on treaties’ containing self-enforcing agreements ( [[#Olmstead--2012|Olmstead and Stavins 2012]] ), ideally through binding commitments, as a way of dealing with the overarching problem of free-ridership ( [[#Barrett--1994|Barrett 1994]] ; [[#Finus--2015|Finus and Caparrós 2015]] ; [[#Tulkens--2019|Tulkens 2019]] ). However, as discussed above, the emphasis has now shifted to a gradual cooperation approach, either regional or sectoral, as an alternative way of dealing with free-riding incentives ( [[#Caparrós--2017|Caparrós and Péreau 2017]] ; [[#Sabel--2017|Sabel and Victor 2017]] ; [[#Stewart--2017|Stewart et al. 2017]] ). The gradual linkage of emissions trading systems (discussed in [[#14.4.4|Section 14.4.4]] ), goes in the same direction. There is also literature suggesting that the diversity of the countries involved may in fact be an asset to reduce the free-rider incentive ( [[#Pavlova--2013|Pavlova and De Zeeuw 2013]] ; [[#Finus--2019|Finus and McGinty 2019]] ), which argues in favour of a system where all countries, irrespectively of their income levels, are fully involved in mitigation, unlike the Kyoto Protocol and in line with the Paris Agreement. Finally, recent efforts have discussed potential synergies between mitigation and adaptation efforts in a strategic context ( [[#Bayramoglu--2018|Bayramoglu et al. 2018]] ) ( [[#14.5.1.2|Section 14.5.1.2]] ) In general, current efforts go beyond considering climate policy as a mitigation-only issue, much in line with the discussion about linkages between climate change and sustainable development policies described in detail in Chapters 1 and 4 of this report.

In the transitions framing, by contrast, global emissions levels are viewed as the end (and often greatly delayed) result of a large number of transformative processes. International cooperation may be effective at stimulating such processes, even if a change in global emissions is not yet evident, implying that short-term changes in emissions levels may be a misleading indicator of progress towards long-term goals ( [[#Patt--2017|Patt 2017]] ). [[#Hanna--2021|Hanna and Victor (2021)]] suggest a particular focus on technical advances and deployment patterns in niche low-carbon technologies, such as wind and solar power, and electric vehicles. However, this is one among many suggestions: the literature does not identify a single clear indicator to use, and there are many metrics of technological progress and transformation, described in [[IPCC:Wg3:Chapter:Chapter-16#16.3.3|Section 16.3.3]] of this report. These can include national-level emissions among countries participating in particular forms of cooperation, as well as leading indicators of such emissions such as changes in low-carbon technology deployment and cost.

Just as the transition framing highlights indicators of progress other than global emissions, it de-emphasises the importance of achieving cost-effectiveness with respect to global emissions. Hence, this strand of the literature does not generally support the use of international carbon markets, suggesting that these can delay transformative processes within countries that are key drivers of technological change ( [[#Cullenward--2020|Cullenward and Victor 2020]] ). For similar reasons, achieving cross-sectoral cost-effectiveness, a goal of many carbon markets, is not seen as a high priority. Instead, within the transitions framing, the emphasis with respect to treaty design is often on providing mechanisms to support Parties’ voluntary actions, such as with financial and capacity-building support for new technologies and technology regimes ( [[#Victor--2019|Victor et al. 2019]] ). The transitions literature also highlights impediments to transformation as being sector specific, and hence the importance of international cooperation addressing sector-specific issues ( [[#Victor--2019|Victor et al. 2019]] ). While such attention often starts with promoting innovation and diffusion of low-carbon technologies that are critical to a sector’s functioning, it often ends with policies aimed at phasing out the high-carbon technologies once they are no longer needed ( [[#Markard--2018|Markard 2018]] ). In line with this, many scholars have suggested value in supply-side international agreements, aimed at phasing out the production and use of fossil fuels (Collier and Venables 2014; [[#Piggot--2018|Piggot et al. 2018]] ; [[#Asheim--2019|Asheim et al. 2019]] ; [[#Newell--2020|Newell and Simms 2020]] ).

Analytic approaches centred on equity and development figure prominently within this report, with many of the key concepts addressed in Chapter 4. Primarily the focus is on aligning climate policy at the international level with efforts to shift development pathways towards improved quality of life and greater sustainability (Cross-Chapter Box 5 in Chapter 4). There are also overlaps between the equity framework and the others. Within the global commons framing, the emphasis is on international carbon markets to reduce the costs from climate policies, and as way of generating financial flows to developing countries ( [[#Michaelowa--2019a|Michaelowa et al. 2019a]] ). The transitions framing, while focused empirically primarily on industrialised countries, nevertheless aligns with an understanding of climate mitigation taking place within a wider development agenda; in many cases it is a lack of development that creates a barrier to rapid system transformation, which international cooperation can address ( [[#Delina--2018|Delina and Sovacool 2018]] ) (Cross-Chapter Box 12 in Chapter 16).

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