Monday, January 13, 2014

A Pessimistic Future for a Green(er) World

by Thomas Mahieu


Kyoto Protocol Signings
(countries in blue have agreed to the protocol)
Image Source
On November 1, Professor Timo Goeschl, chair of Environmental Economics at Heidelberg University, gave a guest lecture at the University of Illinois about the climate policy hold-up. During his lecture, the findings from one of his latest research papers were presented. These findings provide a negative outlook for future International Environmental Agreements such as the Kyoto Protocol, which entered into force in 2005 and was signed by a big majority of countries (http://unfccc.int/kyoto_protocol/items/2830.php). Furthermore, not only are these agreements more difficult to reach, the incentives for companies in industrialized countries to develop green technologies (replacing old existing technologies by new, more environmental friendly technologies) - sometimes referred to as ‘Green Gold’ - is less present. It is the combination of these two arguments that leads to a pessimistic view concerning a more green future. Or is there still hope?

In order to arrive at his results, Professor Goeschl used a model that has proven its validity in other fields as well. Based on a number of premises (including in particular that a country will only join an international environmental agreement if it is their own interest), the cost and gains per country of joining an environmental agreement are weighted against each other based upon the known decisions made by the other countries concerning this environmental agreement. When there is a net profit, a country will join the agreement. The results of Professor Goeschl’s simulation are quite astonishing as under certain conditions only two countries (the magic number in previous research in other areas with the same model was 3) would mutually benefit from signing an international environmental agreement and hence only two countries would in effect sign the agreement. This amount of two countries is not promising and harms the belief in future environmental agreements.

Equally surprisingly, developing green technologies by companies in industrialized countries and subsequently selling the patent rights to other countries is also not favored according to the research performed by Professor Goeschl. As the nickname ‘Green Gold’ suggests, it is commonly believed that developing such technology will deliver (massive) profits to companies and the countries in which they are located, since they are able to sell the patent rights of a ‘green’ technology that only they own. However, as Professor Goeschl argues, the benefits from global adoption (i.e. providing the technology for free to all other countries) in terms of mitigation impacts outperform the gains made by selling the patent rights to a smaller amount of countries.

Combining these two findings of the research performed by Timo Goeschl, one could argue for a future in which no international environmental agreements will be agreed upon or green technologies will be developed. However, there is still hope. As already indicated previously, the model used was based on a number of assumptions, of which preeminent among them concerned the joining of an agreement only if it is in a country’s own interest. Knowing that the European Union has ambitions of becoming a world leader in the environmental field (Keleman 2010), an opportunity presents itself. When the European Union puts aside its own interest and would be able to join the rest (or a majority) of the world in a future environmental agreement, it would reach its goal of being the world leader in environmental politics, a role it has tried to obtain since the 1980’s. Furthermore, by having a bigger amount of countries that are obliged to meet certain environmental standards, the incentives to develop green technologies will only increase.

More information on Professor Goeschl’s research can be found at: http://www.uni-heidelberg.de/fakultaeten/wiso/awi/professuren/umwelt/goeschl_e.html

Bibliography
Keleman, R. Daniel. „Globalizing European Union environmental policy.” Journal of European Public Policy, 2010: 335-349.


Thomas Mahieu is an exchange student from Delft University of Technology, The Netherlands, where he will start next semester with the final year of his Msc. degree in Aerospace Engineering. Obtaining a critical view on the European Union and its institutions at a reputable university such as the University of Illinois, including through affiliation with the EU Center, was the main goal of his exchange program.

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