Global Policy Forum

"World Climate Bank" Could Manage CO2 Emissions

September 1, 2009

A study by the German Advisory Council on Global Change (WBGU) released Tuesday has shown that industrialized nations must do even more if they want to reach the internationally agreed target of limiting global warming by 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels.

Germany would have to halve its CO2 emissions compared to currents levels by 2020, and cut them by even more by 2030 to stay on track, according to the WBGU scientists. Other countries, including the United States, would have to reduce emissions even more drastically.

The climatologists estimated that no more than 750 billion tons of CO2 can be emitted by all countries worldwide between now and 2050 to have a 67 percent chance of limiting global warming by 2 degrees, as agreed by the G-8 summit of industrialized nations in L'Aquila, Italy in July.

WBGU scientists said an emissions cap-and-trade system for individuals could help countries meet that goal. This CO2 emissions global budget system foresees each person on the planet receiving an "account" with the same amount of CO2 emissions permitted into the atmosphere until 2050. The emissions limit for a particular country is based on the size of the population. Emission reduction obligations are calculated in relation to the amount exceeded by a nation. Countries exceeding allotted amounts could purchase rights from other countries.

A "world climate bank," the WBGU suggested, could help manage "accounts" and emissions reduction targets. The scientists hope the German government will take the proposal to the international climate summit in Copenhagen in December.

Deutsche Welle spoke to Dirk Messner, director of the German Development Institute and vice chair of the WBGU, about the CO2 global budget system.

DW: The advisory council suggests determining the caps on emissions for countries based on population. Restricting emissions has been a major hurdle to climate change negotiations. Do you think this plan could represent a breakthrough?

Dirk Messner: I think that our proposal could help speed up the talks on finding a solution to address climate change. We've now reached an impasse in the talks between 30 to 40 nations as to how they will reduce emissions. We've come to the conclusion that 100 countries must actually commit themselves to reducing their CO2 output. If negotiations had to take place with each country individually, we would never be able to slow climate change in the way we need to in time.

That's why our proposal is actually quite simple: We need a formula we can use to calculate by how much all nations need to limit their emissions. The formula reflects the maximum amount of global CO2 emissions permitted if we are going to reach the international goal of limiting global warming to 2 degrees Celsius. The idea is that this amount would be distributed proportionally on a per capita basis - meaning each person is allotted a certain amount of CO2 he or she can emit.

How much can one person put into the atmosphere until 2050?

It's important to say that until the year 2050, each person around the world may only emit between 1 and 1.5 tons of carbon dioxide emissions each year. That is the level India is currently at. In Germany, each person currently emits about 10 tons; in the United States, it's about 20 tons. That gives us a rough idea of how much and how quickly we must limit our emissions. We need to trigger an industrial revolution.

Do you think the German government will take the position presented in the study to negotiations in Copenhagen?

Yes, I hope that the government will use the study's basic principle as a starting point. The 2-degree goal is one that both the German government and the EU as a whole support. International laws must be drawn up to limit global warming by two degrees by globally reducing greenhouse gases using a budget system. That way, we would have a cap on CO2 emissions for the entire global economy, which could help us reach the 2-degree goal. If that could be agreed upon, then the next step would be to distribute the permissible amounts of CO2 emissions fairly among all nations - that would actually only be a small step. It would be a mechanism for calculating how much each country must reduce its greenhouse gas output. It would be fair and transparent, and we would all know where we stand in addressing the climate problem and looking for solutions.

WBGU scientists suggest that a sort of "bank" organize and administrate the system. How is this "world climate bank" supposed to be set up?

We propose that an organization be established for monitoring the use of the CO2 budget system, and that it defines rules for the buying and selling of emissions and emissions certificates. After all, according to our calculations, industrialized countries will not be able to meet emission reduction targets alone in order to transform the global economy into one that is more environmentally friendly. We will have to buy certificates from countries that have emitted fewer gases in the past. That's, of course, why we need rules and an organization that monitors these processes - a world climate bank.

We are also proposing that every country develop a transformation timetable up to 2030, then 2050, that reflects the permissible CO2 amounts and how limitations can help solve the climate problem. These roadmaps must also be reviewed and continually monitored - a second central task the World Climate Bank would have to address. In other words, it would be responsible for establishing the rules and the future emissions trade, and at the same time ensure that countries stay on track with their timetables.

What will motivate countries to change their CO2 output? Most governments think in terms of electoral periods, and not in terms of 20, 30, or 40 years.

First, we need rules for trading emissions. For example, we have to prevent irresponsible governments - such as Mugabe's in Zimbabwe - from selling all of their emissions certificates and then no longer having an emissions budget to subsidize the economic development of their country in the coming decades. All of the certificates cannot be put on the market at once; we need certain rules for that.

Once the rules are established, emissions can be bought and sold, and the market sets the price. If CO2 certificates have a particular price, efficiency will evolve. Industrialized countries will make a point of economizing and becoming as energy-efficient and emissions-efficient as possible because emissions will cost money.

Developing nations will also become as efficient as possible because even if they could theoretically increase their emissions, it would be a loss of money since what they don't use, they can sell to the industrialized nations. They will be able create capital. To summarize: those who are climate and energy-efficient can make themselves more competitive. That is the basic principle behind the budget system.


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