Diffusion Of Technology, Economic Incentives For Reducing Global Greenhouse Gas Emissions Examined By Policy Experts From China, Japan, And U.S.

December 20, 1996

WASHINGTON, DC -- As awareness increases of the need for international cooperation to reduce greenhouse gas emissions, climate change policy experts from China, Japan, and the United States have launched an investigation of innovative and cost-effective options for reducing global levels of these emissions. To help identify how multi-national cooperative efforts might be structured, research teams are analyzing opportunities and obstacles for transferring and diffusing lower-emissions technology in developing countries, and evaluating the potential for the increased use of economic incentives for industrialized countries to invest in these production processes.

The project brings together diverse national, institutional and disciplinary perspectives from the Beijing Environment and Development Institute (BEDI) in China, the Central Research Institute for the Electric Power Industry (CRIEPI) in Japan, and Resources for the Future (RFF) in the U.S. Its major strength is the participation of experts from China who are working in concert with American and Japanese researchers to promote a better understanding of the issues and opportunities for international cooperation from a Chinese perspective.

"International cooperation is crucial if we are going to effectively achieve reductions in greenhouse gas emissions," says Michael Toman, RFF's lead investigator and director of RFF's Climate Economics and Policy Program, which aims to increase understanding and knowledge of the complex issues that must be addressed to design appropriate domestic and international climate change policies that are reliable and efficient. "This project looks at how we can make such international cooperation work."

Greenhouse gases, which include carbon dioxide, water vapor, methane, and chlorofluorocarbons (CFCs), transmit or reflect different types of radiation from the sun. An atmospheric increase of greenhouse gases is the result of human activity -- deforestation; the burning of fossil fuels such as gasoline, oil, coal and natural gas; and the emission of pollutants by cars, power plants, and factories. Such activity is widely believed to be changing the way the Earth absorbs and emits energy. This change results in temperature and climate changes affecting rainfall and sea levels and other natural processes that could have significant social and economic consequences.

Researchers are considering a variety of obstacles to the international transfer and diffusion of climate-friendlier technologies that can curb greenhouse gas emissions while providing economic benefits to suppliers and recipients. Aside from the limited availability of funding for such new technologies, obstacles include: energy sector pricing and investment distortions; problems in technology markets such as insecure intellectual property and inadequate institutions for spreading information; and fiscal, trade and investment policies that limit the sharing and adoption of technology.

They are also investigating how to strengthen economic incentives for the mutually-beneficial, international diffusion of technology. One such approach is joint implementation, where industrialized countries meet their obligations for greenhouse gas reductions by receiving credits for investing in emissions reductions in developing countries. Proponents argue that such an international trade in emissions credits would achieve greenhouse gas reductions in industrialized countries at much lower costs while providing foreign investment benefits to developing countries. Critics argue that joint implementation compromises the sovereignty and development interests of developing countries, and diminishes incentives for industrialized countries to develop better ways for reducing their own emissions. The BEDI-CRIEPI-RFF collaboration addresses issues raised by both these perspectives as well as other related concerns, such as the identification of credible baselines for assessing emissions reductions and the development of feasible methods for verifying emissions reductions.

The project is expected to be completed by the Fall of 1997 when researchers will present their findings at a major research workshop in Beijing, China. They will also issue a number of reports that will address options for implementation of international agreements to limit greenhouse gases. Such agreements are expected to be established at the December 1997 Conference of Parties to the Framework Convention on Climate Change in Kyoto, Japan.
Resources for the Future (RFF) is an independent, nonprofit organization that conducts original policy analysis and environmental economics research. RFF aims to provide accurate, objective information to policy makers, legislators, public opinion leaders, environmentalists, and the public to help them make better decisions about the conservation and use of their natural resources and the environment.

RFF helped found China's non-governmental Beijing Environment and Development Institute (BEDI), which is staffed by many of China's leading experts in environmental economics, in 1995.

To speak to Michael Toman about this project or other related climate change issues, please contact Michael Tebo in RFF's public affairs office at (202) 328-5019.

Resources for the Future (RFF)

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