Agreement on Technology?

Exploring the political feasibility of technology-oriented agreements and their compatibility with cap-and-trade approaches to address climate change

Climate change has been on the international policy agenda since the United Nations Framework Convention on Climate Change (UNFCCC) was agreed in 1992. Recent authoritative reports have further emphasised the seriousness and urgency of the problem, but have also indicated that climate change can be mitigated if adequate action is taken in the short and medium term. The Kyoto Protocol was the UNFCCC’s answer to the call for measures and has been effective in establishing an international carbon market and reducing emissions in some countries and regions. Its format, a cap-and-trade regime, is in theory economically most efficient, but has been unsuccessful in achieving participation of all relevant countries. Progress on an improved follow-up of the Kyoto Protocol has been slow so far, and alternatives that have been started parallel to the Kyoto Protocol.

The deadlock in the negotiations on an international cap-and-trade based climate regime has renewed interest in other types of agreements. One of the options for a different form of international agreements to address climate change is a group of agreements aimed at advancing greenhouse gas reducing technologies: technology-oriented agreements (TOAs). The question, however, is whether technology- or sector-oriented types of agreements can be designed in such a way that they can lead to real and measurable reductions in emissions. Existing technology agreements are known to have advanced research and development (by providing a "technology push"), but examples of such agreements solving environmental problems (for which a "technology pull" is also needed) are sparse. In addition to this environmental effectiveness, as it is unlikely that the climate regime would be fully founded on agreements related to technology, as a cap-and-trade regime is expected to proliferate within the European Union or within a wider, Kyoto-minded, coalition. Therefore TOAs would have to operate alongside other agreements. Another issue that then requires further exploration is whether TOAs would negatively or positively interact with cap-and-trade regimes, if they would be pursued by different or the same countries at the same time. 

The main objectives of this Scientific Assessment and Policy Analysis for Climate Change (WAB) report are:

• To design concrete hypothetical TOAs and evaluate their environmental effectiveness, costs, and political feasibility.
• To explore how such TOAs could be embedded in the international climate regime.
• To assess the consequences for the attractiveness of an international climate regime as a result of including TOAs alongside a cap-and-trade agreement.
• To evaluate what the institutional interactions between cap-and-trade and technologyoriented agreements would be under different scenarios of co-existence.