A Quantitative Evaluation of the Post-Kyoto Framework

ABSTRACT

On February 16, 2005, the Kyoto Protocol came into effect through Russia's ratification. As a result of the protocol being put into practice, various proposals are beginning to emerge regarding the post 2013 framework. Most of these proposals lack accurate quantitative understanding, and thus the need for proposals based on quantitative evaluation is growing. In response to this, this report will raise two representative post-Kyoto frameworks-the multi-stage approach and the technical standard approach-and will conduct economic and environmental evaluations of them using a dynamic CGE model. The results of the simulation reveal that the multi-stage approach does not sufficiently reduce GHGs. This is because the participation of the U.S. and China-major polluting countries that advocate the introduction of reduction targets with differing absolute amounts-cannot be counted on. Hypothetically, if these reduction targets are introduced without the participation of these two countries, then Japan, Canada, and the EU, the countries and regions that have ratified the Kyoto Protocol, will have to shoulder reduction obligations above and beyond those stipulated in the protocol. From an environmental perspective, only an extremely small range of countries and regions will become subject to reductions. Additionally, as a result of carbon leakage to countries without reduction targets, the emissions reductions necessary for climate stabilization will not occur. From an economic perspective, the burden for countries and regions with reduction targets will become extremely costly, which would invite economic stagnation in these areas.

On the other hand, the simulation of the technical standard approach revealed more favorable results than the multi-stage approach, based on the condition that China's iron, chemicals, rubber, and plastics sectors achieve Japan's current energy efficiency. From an environmental perspective, carbon leakage is for the most part restrained, and thus it is possible to achieve absolute amount reduction at a level much higher than that of the multi-stage approach. Furthermore, as a result of the expansion of industries and countries subject to the reductions, a further level of reduction can be anticipated. Moreover, from an economic perspective as well, the impact of the technical standard approach on Japan's economy is much lighter than that of the multi-stage approach. As industries and countries subject to the technical standard grow, it will be possible to balance climate stabilization with sustainable economic growth.