Climate change, Net zero and The Paris agreement

What causes climate change?

The greenhouse effect. The five gases include:

• Carbon Dioxide

• Methane

• Nitrous Oxide

• Chorofluorocarbons

• Water Vapour - Water vapour occurs when water evaporates, when earth warms.

What is a negative externality?

Where an economic activity produces costs to a third party, not directly involved.

Private, external and social costs

Private - The cost to the producer/consumer

External - Cost to the rest of society

Social - The private + external cost

Hence:

MSC = MPC + MEC

What are The Global Commons?

These are the resources that all of society has open access to, where no no singular entity does.

Example could be the atmosphere.

What is the Tragedy of the commons?

Where the open access resource is overused due to private agents’ own personal incentives.

How TOC links to climate change?

Because each country produces their own greenhouse gases, but the negative effects are shared with all the countries, although the singular country used the greenhouse gases for their own incentives.

Can also be referred to as the free rider problem

How can TOC be resolved in link to climate change?

Pigouvian Tax - Tax on the amount carbon pollution that is used, making cost to firms more expensive

Restricted Access - Government intervention on the amount of carbon emissions can actually occur

Private Property Rights - Assigning resources to agents prevents overuse of resource.

Difficulty in providing solution for climate change?

The scale of climate change being global means that polluters and victims are spread across countries.

Hence it is difficult to enforce policies across the globe as countries all have different government and rules.

International agreements are needed.

What is the IPCC and what they do?

Intergovernmental Panel of Climate Change

• Assess already done research on whether:

• Climate is happening

• The effects

• The degree of CC

• Potential solutions

Economic debate on reducing climate change

The cost to reduce climate change:

• Changes to renewable energy sources

• Changes to production costs

• Change in infrastructure

Level of discounting rate:

• Discounting rate refers to by how is the future value reduced compared to the present

• A higher discount rate means that the future savings are less valued today

Flow vs Stock applied to climate change

Flow refers to the amount of something that occurs in a given time period

Stock is the total accumulation of something at particular time period.

The flow could be the greenhouse gases and the total amount of greenhouse gases accumulated is the stock.

So even if the amount of emissions are reduced (flow reduced), the accumulation of emissions (stock) is still going up.

What is net zero emissions?

Net Emissions = Emissions + Removals

Net zero emissions = 0

Removals examples include planting forests and carbon captures.

Why Net zero is needed?

Because when zero, greenhouse gases can still be utilised for production and consumption, whilst flow remains at zero.

So the stock of emissions can then stabilise.

What is the Kyoto Protocol (1997) and its weaknesses?

The attempt to introduce international policies which could reduce emissions.

Involved developed countries having emission targets based off their 1990 emissions.

Weaknesses:

• Difference in requirements of emissions, meant that developing countries could economically progress more than developed countries

• Issue of national sovereignty, where countries didn’t want a central organisation controlling how a country is operated.

What is the Paris Agreement (2016)?

Countries are assigned their own NDC (Nationally determined Contributions).

So countries will set their own targets which include:

• The year at which they will achieve net zero

• Intermediate target, like emissions reduction in the near future

• Policies they use to reduce emissions

Paris Agreement s+ws?

Strengths:

• Most countries are included, no matter state of development

• Countries are able to set their own targets, rather than having a central legislation

• Countries are more likely to follow legislation

Weaknesses:

• Countries still face free rider problem, where a single country can still produce emissions and still benefit off other countries emissions reduction

• Based off unity of countries

• Countries still have different abilities in being able to reduce emissions