Equity Implications of the COP21 Intended Nationally Determined Contributions to Reduce Greenhouse Gas Emissions

Abstract

This chapter examines the equity implications of the “bottom-up” approach to climate change negotiations by analyzing the individual country unconditional greenhouse gas reduction pledges specified in the COP21 Agreement of 2015. It compares the implications before and after emissions trading in terms of the standard equity metrics of the Gini coefficient and Atkinson index for three major countries/regions: the European Union, China, and California. The chapter adapts a nonlinear programming model well suited to this purpose that determines the equilibrium emissions allowance price, mitigation costs, and allowance purchases and sales from trading. It also tests the sensitivity of the results to macroeconomic conditions and technological change. The findings are that the pledges made at COP21 reflect substantial inequality in general and run counter to most equity principles. They are definitely a major departure from the Egalitarian, Vertical, and Rawlsian equity principles proposed for many years by developing countries.