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What to Expect at COP-27 in Sharm El Sheikh

The negotiators gathering for the 27th Conference of the Parties (COP-27) of the United Nations Framework Convention on Climate Change (UNFCCC) in Sharm El Sheikh, Egypt will try to tackle a significant number of important issues, with questions relating to increased ambition and financial transfers among those at the top of the agenda. This is the focus of my podcast conversation with Ray Kopp, Senior Fellow at Resources for the Future (RFF), in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. You can listen to our full conversation here.

Ray Kopp will be at COP-27 with the delegation of RFF. I’ll be there, as well, leading our group from the Harvard Project on Climate Agreements. At the end of this blog post, I provide a list of our activities at COP27.

Ray Kopp, who has been a leader in the design of domestic and international polices to combat climate change, explains in our conversation that the representatives gathering in Sharm El Sheikh will focus much of their attention on the implementation of the Paris Agreement, and therefore on the Nationally Determined Contributions (NDCs) – emissions reductions that individual countries have pledged under the Agreement. Under the provisions of the Paris Agreement, signatories are strongly encouraged to increase their levels of ambition and reduce emissions even further over time through the so-called “ratchet mechanism” that can bring the world closer to the goal of preventing temperature increases this century greater than 1.5 or 2 degrees Celsius, compared with pre-industrial temperatures.

In the podcast, Ray Kopp notes, “That mechanism will not be formally deployed until 2023. But I will say that there’s a synthesis report that has already come out from the UNFCCC Secretariat that gives us an idea of what those gaps look like with respect to hitting the targets, and they’re not encouraging. We already know that there’s going to be a major gap. We’ve known that for quite some time. I haven’t seen a lot of countries step forward to increase their ambition in the recognition of that gap. So, the jury is out on how effective this mechanism is going to be.”

Another very important and contentious issue on the table at COP-27, Kopp explains, is that of monetary transfers from developed to developing countries to help them with their mitigation efforts and help pay for adaptation measures. This is the well-known commitment from the developed countries to send $100 billion per year, starting in 2020, to the developing world. That target level of annual finance has not yet been achieved.

“Right now, there is a bit of a lack of trust between the developing world and the developed world with respect to the deliverability of those funds going forward. And [for] developed countries, there is the problem that to be able to hit those particular targets you need a lot of private investment, not just government funds. And the private investment has been lacking considerably,” he remarks.

Debates around the so-called “loss-and-damage” issue will also play out in Sharm El Shiekh, Kopp notes, referring to the call by developing countries for the largest global emitters to pay for current and future climate change damages in the most vulnerable countries.

“This is … one of these issues that … becomes more salient and both sides become more vocal about it [at every COP], not surprisingly, because we are now seeing the impact of climate change, not only in the developing world, where it is severe and where people are at most risk, but here in the U.S. [as well],” Kopp argues. “There’s always going to be opportunities for the U.S. to provide aid to countries that are suffering these horrific damages associated with climate change. One of the issues is whether it is going to be taking the form of aid, which means it’s more of a voluntary contribution on the part of the U.S., or whether it’s compensation associated with some formal liability that the U.S. bears for these damages?”

Kopp says that negotiators could make headway on the ‘loss and damage’ issue if they take reasonable approaches.

“If both sides stick to their hard positions, where [in] the developed world it’s only about aid, and the developing world it’s about liability, and there’s no middle ground, then this will just be a confrontational experience. Somewhere there’s got to be a middle ground … where we can think about insurance markets, [and] … other ways of financing the rebuilding after these particular [climate] episodes take place.”

When I ask Ray Kopp how he determines the success of failure of individual COPs, he responds by saying that each meeting is just one part of an ongoing process, and that in his opinion, the process is working.

“[Each COP] is an opportunity for the world to come together and talk about these things. The UNFCCC has put together an enormous amount of transparency in reporting. Sounds like things that are not all that exciting, but they’re fundamental to an understanding of where we are with respect to climate change and how to reduce emissions going forward,” he says.

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As I noted at the outset of this blog post, I will be in Sharm El Sheikh, leading our group from the Harvard Project on Climate Agreements. Here’s some information below – in chronological order – about our five events hosted by the Harvard Project on Climate Agreements or in which my Harvard colleague, Daniel Jacob, or I are speaking.

1. Discussion of the China National Climate Change Assessment Report

Wednesday, November 16, 2022, 9:00 – 10:30 am

China Pavilion, Area E

Hosted by the Ministry of Science and Technology and the Institute of Energy, Environment, and Economy at Tsinghua University.

Robert Stavins is a panelist.

2. Frontiers in Carbon Pricing

Wednesday, November 16, 2022, 12:00 – 1:30 pm

Pavilion of the International Emissions Trading Association (IETA)

Hosted by the Harvard Project on Climate Agreements

Panel: Daniele Agostini, Head of Energy and Climate Policies, Enel Group

Lisa DeMarco, Senior Partner and CEO, Resilient LLP

Andrei Marcu, Founder and Executive Director, European Roundtable on Climate Change and Sustainable Transition (ERCST)

Robert Stavins (moderator)

3. The 8th Global Climate Change Think Tank Forum

Wednesday, November16, 2022, 4:00 – 6:45 pm

China Pavilion, Area E

Hosted by the China National Center for Climate Change Strategy and International Cooperation

Robert Stavins presents on “Carbon-Pricing Policy: Carbon Taxes vs. Cap-and Trade”

4. Using Satellite Observations of Atmospheric Methane to Advance Global Climate Change Policy
Thursday, November 17, 2022, 11:30 am – 1:00 pm, Side Event Room: Thutmose

Hosted by the Harvard Project on Climate Agreements and the Enel Foundation

Panel: Daniele Agostini, Head of Energy and Climate Policies, Enel Group

Brendan Devlin, Adviser for Strategy and Foresight, DG Energy, European Commission

Lena Höglund-Isaksson, Senior Research Scholar, International Institute for Applied Systems Analysis (IIASA)

Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry and Environmental Engineering, Harvard University

Claudia Octaviano, General Coordinator for Climate Change and Low Carbon Development, National Institute for Ecology and Climate Change, Mexico

Robert Stavins (moderator)

5. Measuring up to the Methane Challenge

Thursday, November 17, 2022, 3:00 – 4:30 pm, Pavilion of the International Emissions Trading Association (IETA)

Hosted by IPIECA

Daniel Jacob is a panelist.

We hope to see many of you at one or more of these events, other meetings, in the hallways, or elsewhere at COP27 in Sharm El Sheikh!

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Again, I encourage you to listen to the 41^st episode of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.
Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics, University of Chicago.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

Leading Academic Economist Offers Optimism about Climate Change Policy

Over the past three years, I’ve had the pleasure of engaging in podcast conversations with some truly outstanding scholars who have carried out important research in the realm of environment, energy, and resource economics, and recently was no exception, when my guest was Michael Greenstone, the Milton Friedman Distinguished Service Professor of Economics at the University of Chicago. You can listen to our conversation in the latest episode of my podcast, “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program.” Our full conversation is here.

In our conversation, Michael Greenstone talks about his graduate work in economics at Princeton, the path that took him to faculty positions at the University of Chicago, MIT, and then back to Chicago, as well as his time in government during the Obama administration at the Council of Economic Advisers. In the process, Michael identifies both some high points and low points of his time in government, as well as some of the changes he has seen over the past twenty years in environmental economics scholarship.

When Michael reflects on his time serving as chief economist at the White House Council of Economic Advisers, he describes his work on regulatory policy, in particular trying to find a way to estimate in economic terms the benefits of reducing CO₂ emissions.

“So, I had this idea, why shouldn’t the government have a coherent and uniform social cost of carbon? And I suggested it to [then Administrator of the White House Office of Information and Regulatory Affairs] Cass Sunstein at lunch one day, and we decided to set off on this journey to set a social cost of carbon for the U.S. government,” he remarks. “And we co-ran an inter-agency process and one thing led to another, and there was a U.S. government social cost of carbon at the end.”

Related to this, in recent years Michael helped launch and now co-leads the Climate Impact Lab at the University of Chicago, which is building a comprehensive body of research quantifying the impacts of climate change.

Interestingly, when I ask him to comment on the explosion of youth climate activism in recent years, although Michael voices some disappointment with young activists who have tried to turn climate change into a moral issue rather than an environmental, technological, and economic one, he notes that the energy and passion that young people have brought to the climate debate has been very effective in making others pay attention to it.

“These youth movements have been incredibly successful, in my view, in raising political consciousness in ways … that cold blooded cost benefit analysis somehow [doesn’t] seem to hit the mark. And I give them a lot of credit for that,” he says. “A second reaction is, I do not think that the right way to confront climate change is by treating it as a moral issue, or as an issue that is beyond economics. I think it’s a really interesting economic question that has all kinds of subtleties, but I do not think that the tools of cost benefit analysis and or economic analysis are inappropriate for climate change.”

Having worked extensively and intensively on climate change in both the scholarly and policy worlds, he voices considerable optimism about where we are now, and what the future is likely to bring. He points to two trends he feels are most critical for building momentum in climate change policy debates. The first, he says, is that opportunities to leverage technology to reduce CO₂ emissions are becoming more realistic as the costs of alternative energy sources continue to fall compared with the costs of fossil fuel sources of energy. The second, he says, is that people are beginning to experience in real time the impacts of climate change.

“I do think a real game changer has been that we can see the fingerprints of climate change now, in ways that we couldn’t 10 or 15 years ago,” he says. “I think the two things that we can see – the fingerprints and that it’s not as economically challenging a bar to jump over – have come together in a reinforcing way, and helped with the youth activism [by underscoring the fact that] we don’t have only infeasible responses.”

For this and much more, I hope you will listen to this 40^th episode of the Environmental Insights series, with future episodes scheduled to drop each month. You can find a transcript of our conversation at the website of the Harvard Environmental Economics Program. Previous episodes have featured conversations with:

Gina McCarthy, former Administrator of the U.S. Environmental Protection Agency
Nick Stern of the London School of Economics discussing his career, British politics, and efforts to combat climate change
Andrei Marcu, founder and executive director of the European Roundtable on Climate Change and Sustainable Transition
Paul Watkinson, Chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA) within the United Nations Framework Convention on Climate Change
Jos Delbeke, professor at the European University Institute in Florence and at the KU Leuven in Belgium, and formerly Director-General of the European Commission’s DG Climate Action
David Keith, professor at Harvard and a leading authority on geoengineering
Joe Aldy, professor of the practice of public policy at Harvard Kennedy School, with considerable experience working on climate change policy issues in the U.S. government
Scott Barrett, professor of natural resource economics at Columbia University, and an authority on infectious disease policy
Rebecca Henderson, John and Natty McArthur University Professor at Harvard University, and founding co-director of the Business and Environment Initiative at Harvard Business School.
Sue Biniaz, who was the lead climate lawyer and a lead climate negotiator for the United States from 1989 until early 2017.
Richard Schmalensee, the Howard W. Johnson Professor of Management, and Professor of Economics Emeritus at the Massachusetts Institute of Technology.
Kelley Kizier, Associate Vice President for International Climate at the Environmental Defense Fund.
David Hone, Chief Climate Change Adviser, Shell International.
Vicky Bailey, 30 years of experience in corporate and government positions in the energy sector.
David Victor, professor of international relations at the University of California, San Diego.
Lisa Friedman, reporter on the climate desk at the The New York Times.
Coral Davenport, who covers energy and environmental policy for The New York Times from Washington.
Spencer Dale, BP Group Chief Economist.
Richard Revesz, professor at the NYU School of Law.
Daniel Esty, Hillhouse Professor of Environment and Law at Yale University.
William Hogan, Raymond Plank Research Professor of Global Energy Policy at Harvard.
Jody Freeman, Archibald Cox Professor of Law at Harvard Law School.
John Graham, Dean Emeritus, Paul O’Neill School of Public and Environmental Affairs, Indiana University.
Gernot Wagner, Clinical Associate Professor at New York University.
John Holdren, Research Professor, Harvard Kennedy School.
Larry Goulder, Shuzo Nishihara Professor of Environmental and Resource Economics, Stanford University.
Suzi Kerr, Chief Economist, Environmental Defense Fund.
Sheila Olmstead, Professor of Public Affairs, LBJ School of Public Affairs, University of Texas, Austin.
Robert Pindyck, Bank of Tokyo-Mitsubishi Professor of Economics and Finance, MIT Sloan School of Management.
Gilbert Metcalf, Professor of Economics, Tufts University.
Navroz Dubash, Professor, Centre for Policy Research, New Delhi.
Paul Joskow, Elizabeth and James Killian Professor of Economics emeritus, MIT.
Maureen Cropper, Distinguished University Professor, University of Maryland.
Orley Ashenfelter, the Joseph Douglas Green 1895 Professor of Economics, Princeton University.
Jonathan Wiener, the William and Thomas Perkins Professor of Law, Duke Law School.
Lori Bennear, the Juli Plant Grainger Associate Professor of Energy Economics and Policy, Nicholas School of the Environment, Duke University.
Daniel Yergin, founder of Cambridge Energy Research Associates, and now Vice Chair of S&P Global.
Jeffrey Holmstead, who leads the Environmental Strategies Group at Bracewell in Washington, DC.
Daniel Jacob, the Vasco McCoy Family Professor of Atmospheric Chemistry & Environmental Engineering at Harvard.

“Environmental Insights” is hosted on SoundCloud, and is also available on iTunes, Pocket Casts, Spotify, and Stitcher.

Can Europe Decarbonize in the Midst of a Geopolitical Crisis?

Is the geopolitical crisis due to the Russian invasion of Ukraine likely to accelerate or retard the energy transformation in the European Union? This and related topics on decarbonizing Europe were central to the most recent webinar in our series, Conversations on Climate Change and Energy Policy, sponsored by the Harvard Project on Climate Agreements (HPCA). This time, we featured a conversation with Dan Jørgensen, the Danish Minister of Climate, Energy, and Utilities, who expressed his hope (if not expectation) that the tragic war in Ukraine will help accelerate the clean energy transformation by weaning Europe off Russian gas. A video recording (and transcript) of the entire webinar is available here.

As many readers of this blog know, in this webinar series I feature leading authorities on climate change policy, whether from academia, the private sector, NGOs, or government. In this most recent Conversation, I was fortunate to engage with someone who has had solid and important experience in government.

Dan Jørgensen, who played a significant role in maintaining the focus on reducing the rise of global temperatures during the 26^th Conference of the Parties (COP-26) to the United Nations Framework Convention on Climate Change (UNFCCC) in Glasgow last November, lauded the efforts of European countries like Greece that are proclaiming their intent to reduce their use of Russian gas in favor of other energy sources, although Greece has simultaneously announced that it will therefore have to increase its use of coal for electricity generation.

“One of the few positive things that might come out of a terrible situation is that we will now be forced to speed up the green transformation away from fossils in Europe,” Jørgensen says. “It has opened the eyes… I think, for decision makers all over Europe to ramp up the replacement of fossils – that’s gas, that’s oil, that’s coal, with renewables. And we have a lot of potential for that in Europe.”

Jørgensen talks about important legislation being negotiated in the European Union which would create new directives on energy efficiency and renewable energy that could, he states, help EU countries greatly reduce their dependency on Russian fossil fuel.

Much of the discussion also focuses on COP-26 and the decision by participating countries to agree on language calling for a “phase down” of unabated coal and to reduce inefficient fossil fuel subsidies.

“On one hand, I’m disappointed that the text is not stronger than it is on those issues. On the other hand, it is really huge progress that it’s now in the text, meaning that…[it will be] the starting point for the next negotiations [at COP-27 in Sharm el-Sheikh, Egypt],” Jørgensen remarks. “The overall result was a positive one. There was some real progress. But first and foremost, the aim of the COP-26 meeting was to keep 1.5 alive, so to speak. What does that mean? It means that if we hadn’t made the decisions that we actually made then…it would be almost impossible for us to keep the promise of staying below 1.5 alive, and it wouldn’t be credible.”

Looking ahead to COP-27, Jørgensen says negotiators will focus on the promise of more ambitious nationally determined contributions (NDCs) as well as questions surrounding finance for developing countries requiring short-term assistance to reduce their dependency on fossil fuels and adapt to climate change.

“I do understand how some of the growing economies of this planet that are also now amongst the biggest emitters, why they think it’s only fair that the richer countries of the planet help them in the transformation,” he states. “We have a climate problem because rich countries have been polluting for more than 100 years. Now, some countries are raising their standard of living and…starting to pollute more. But I don’t really think it would be fair for us to say, ‘You cannot have the same standard of living as we do.’ That would not be legitimate, in my point of view. And it wouldn’t be fair if we didn’t also offer help to mitigate the problem. So, we need to have a clear focus on the financing part.”

Jørgensen also shares his thoughts on the potential for carbon trading systems to reduce global emissions, arguing that pricing can be complicated but is absolutely necessary.

“We need clear price signals in the market,” he says. “It needs to be more expensive to produce in a way where you’re dependent on fossil fuels and less expensive to do the opposite.”

I ask Jørgensen about the European Union’s Emissions Trading System (EU ETS), established in 2005 as the first large greenhouse gas emissions trading scheme in the world, and which now covers more than 11,000 factories, power stations, and other installations in 31 countries, including all 27 EU countries.

“It is actually pretty incredible that we have this well-functioning system with 27 countries that is economically rational, that works, that cuts emissions, even in times of crisis where normally many countries will probably say, ‘Okay, well, we want to save the climate, but we need to get through this crisis first,’” he says. “In times of crisis like that, it’s extremely important that we have these systems. And what I like especially about it is that it’s a win-win. I mean, it is the cheapest, most efficient way of making a transformation.”

During the forum, Jørgensen also responds to questions from attendees from around the world, including questions focusing on carbon capture and sequestration, solar radiation management, methane, nuclear power, and the youth climate movement.

All of this and much more can be seen and heard in our full Conversation here. I hope you will check it out.

Previous episodes in this series – Conversations on Climate Change and Energy Policy – have featured Meghan O’Sullivan’s thoughts on Geopolitics and Upheaval in Oil Markets, Jake Werksman’s assessment of the European Union’s Green New Deal, Rachel Kyte’s examination of “Using the Pandemic Recovery to Spur the Clean Transition,” Joseph Stiglitz’s reflections on “Carbon Pricing, the COVID-19 Pandemic, and Green Economic Recovery,” Joe Aldy describing “Lessons from Experience for Greening an Economic Stimulus,” Jason Bordoff commenting on “Prospects for Energy and Climate Change Policy under the New U.S. Administration,” Ottmar Edenhofer talking about “The Future of European Climate Change Policy,” Nathaniel Keohane reflecting on “The Path Ahead for Climate Change Policy,” Valerie Karplus talking about “The Future of China’s National Carbon Market,” Laurence Tubiana reflecting on “A European Perspective on COP26,” and Congressman Garret Graves on “U.S. Climate Change Policy in an Era of Political Polarization.”

Watch for an announcement about our next webinar. You will be able to register in advance for the event on the website of the Harvard Project on Climate Agreements.