About the Climate Equity Reference Project Effort-sharing Approach

This report approaches fair shares in a manner that draws directly from the core equity principles of the UNFCCC. These principles have been nicely summarized[1] as follows:

  1. A precautionary approach to adequacy, referring to the collective obligations of countries to undertake and support urgent and adequate global action to prevent dangerous impacts of climate change and provide effective adaptation to unavoidable impacts, without which there can be no justice. (Article 3.3: “The Parties should take precautionary measures to anticipate, prevent and minimize the causes of climate change and mitigate its adverse effects.”)
  2. Common but differentiated responsibility and respective capability (CBDR+RC), in which obligations to take action and provide support, and rights to receive such support, are accepted as functions of both historical and current emissions, and of capability to act. (Article 3.1: “The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities.”)
  3. The right to sustainable development, which we understand as the right of all countries to not just lift their people out of poverty, but also to provide their citizens with sustainable and universalizable living standards. By sustainable we mean “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” By universalizable, we mean living standards that could be made available to the citizens of all countries. (Article 3.4: “The Parties have a right to, and should, promote sustainable development.”)

The Climate Equity Reference Calculator, within which the calculations in this report were done, is an online tool and database that allows the user to select a global mitigation pathway of a specified level of ambition, thereby determining the amount of required global mitigation effort – a mitigation gap – to be fairly shared among countries according to the UNFCCC principles of equity.[2] The user then selects specific equity-related settings relating to responsibility and capability, and other key parameters, which are used to calculate the implied national fair shares of the global mitigation effort for all countries. In particular, each country’s fair share of the global mitigation effort in each year is determined by its share of global responsibility and capability, which are calculated in a manner that can exclude the income and emissions of individuals below some specified threshold.

Global-Mitigation-Wedge-Strong-2C RCI-Fair-Share-Wedges-Strong-2C
Figure 1: Total globally required mitigation (blue area) divided among countries in proportion to their share of global responsibility and capability.

Figure 1 illustrates the general effort-sharing approach of this analysis, for it shows how a mitigation gap is partitioned into mitigation fair shares that are assigned to individual countries on the basis of their responsibility and capability.

As has become customary in discussions of equitable effort-sharing, capability is represented in financial terms. This is not necessarily because financial income is the only important type of capability for dealing with climate change, though it is very highly correlated with the other various types of capability that are also important (technological capability, institutional capability, etc.). Just as income is typically considered in a progressive manner in national tax policy, it can analogously be defined in a progressive manner for the purposes of defining capability. A straightforward method for doing this is to define an income level below which income does not count toward capability, similar to a “0% tax bracket” that exists in most national tax schedules. Extending the comparison to a tax schedule, a higher income level can also be set at which income counts fully toward national capability, analogous to the maximum tax bracket. Between the two income levels, income increasingly counts toward the calculation of a country’s capability. The Climate Equity Reference Calculator refers to the lower income level as the “development threshold” and the higher income level as the “luxury threshold”.

While setting this lower threshold to reflect a ‘development threshold’ allows one to exempt the emissions and income of poor individuals, it is far from being a guarantee of equitable access to sustainable development. In particular, it does not assert a positive right  to development, or even a positive right to energy services. That said, an exclusion set to reflect a development threshold does make a significant difference in the calculation of fair shares for countries (e.g. LDCs, India) with mostly poor people.

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Figure 2: This graph illustrates the contribution of income to capability for three different possible progressivity settings.

Figure 2 illustrates the three different progressivity cases presented in this report. In the “No progressivity” case, every dollar of income earned by every person in the country, regardless of their total income, would count 100% toward the calculation of a country’s capability (red line). In the “Weak progressivity” case, income earned below a lower income threshold (here shown at $7,500/year) does not count toward national capability, and income above counts 100% (blue line). In the “High progressivity” case, income below the lower income threshold does not count, income above a higher threshold counts 100%, and between the two thresholds income counts to an extent that gradually rises from 0% to 100% (the green line). These calculations are done using income distributions (see Figure 3) based on data from the World Bank World Development Indicators and the World Income Inequality Database.

figure A3Responsibility is represented by cumulative GHG emissions from some user-specified initial year, which directly reflects a nation’s contribution to climate change. Similar to the definition of capability, responsibility is defined in a manner that excludes emissions corresponding to consumption below the specified lower income threshold.

Using these definitions, responsibility and capability can be calculated for each country over time, and used to create a combined Responsibility and Capability indicator (RCI). The simplest way to create an RCI is to weight responsibility and capability equally (simply averaging them together), reflecting the perspective that the two should count equally toward determining a country’s fair share. Alternatively, the Calculator allows users to weight the two unequally, giving greater priority to either capability or responsibility (including weighting either factor at 100% and excluding the other).

For several representative countries (or groups), Table 1 below shows the share of global capability and responsibility in 2010, and averaging them, the RCI in 2010. The RCI in 2020 and 2030 is shown as well. As the countries’ economies and emissions are projected to grow at different rates over time, their share of global capability and responsibility correspondingly varies. For each country, this RCI can then be used to determine its fair share of the globally required mitigation effort, as illustrated in Figure 1, above.

Table A1Table 1: For a representative set of countries (and groupings), population, income, capability and responsibility (for 2010), and combined Responsibility and Capability Indicator – RCI (for 2010, 2020, and 2030). These results are based on “medium equity settings” as defined in this report, i.e., medium progressivity (a development threshold set at $7,500 (Purchasing Power Parity dollars and no luxury threshold) and medium responsibility (a historical emissions start date of 1950). Responsibility and capability are equally weighted, as they are in all the results given in this report.

A nation’s fair share of the global mitigation effort may be quite different from its domestic mitigation potential. For wealthy and high emitting countries (i.e., those with higher capability and responsibility, like the U.S.), the fair share generally greatly exceeds the country’s domestic mitigation potential (and perhaps even its domestic emissions, like Switzerland). This is especially true in countries where capability is greater than responsibility, (i.e., wealthy countries where carbon intensity is relatively low). For poor and low emitting countries (i.e., those with lower capability and responsibility, like India) – the domestic potential for curbing emissions may greatly exceed the country’s fair share of the global mitigation effort. This is the fundamental reason that fair shares must be seen not only in terms of domestic reductions obligations, but also in terms of required support for mitigation in other countries. Otherwise, the wealthier countries would be saddled with greater mitigation obligation than they can possibly discharge, and poorer countries would be left with great deal of unexploited mitigation options, an untenable situation rendering impossible the pursuit of any ambitious global mitigation pathway. Consequently, this report explicitly presents fair shares in terms of the sum of reductions achieved domestically and reductions achieved through the transfer of international support.

[1] This summary was done by the Equity / Effort-sharing Working Group of the Climate Action Network. See The Core Convention-based Equity Principles, a Climate Action Network position paper of September 2013. This discussion paper contains much more information of how CAN has defined the Convention’s core equity principles, and what kinds of indicators it sees as appropriate to their measurement. Note also that this analysis is hardly the last word. A great deal of work remains to be done on Convention-compliant effort sharing.

[2] This mitigation gap is defined relative to a global business-as-usual emissions path. Effort-sharing frameworks (unlike resource-sharing frameworks that divide up, say, a fixed emissions budget) require emissions baselines, because a “effort” must be measured against a business-as-usual pathway that reflects “no effort” or “no policies”. In this report, the calculations are based on a set of national no-effort baselines that, in turn, rely as heavily as possible on existing, widely known and well vetted national projections for all key indicators (i.e. population projections, GDP projections, carbon intensity projections) updated for recent history. For much more on all this, see Definition, sourcing, and updating of the emissions baselines. Also, note that, as with global mitigation pathways, the Calculator can be adapted to support any set of national business-as-usual pathways, if fully specified as described above for mitigation pathways. Please contact us if you are interested in exploring alternative mitigation pathways or business-as-usual pathways.