ZEW Experts on the United Nations Climate Change Conference COP20 in Lima, Peru - "UN Negotiations Reveal Costs and Benefits of Climate Protection"

During the 20th yearly session of the Conference of the Parties (COP 20) to the 1992 United Nations Framework Convention on Climate Change, the 195 member states are struggling to propose a draft agreement for a new greenhouse gas emissions reduction target. Setting the course for the 2015 conference in Paris, where the 1997 Kyoto Protocol is to be renewed, will probably take a lot more time. Acting head of the ZEW Research Department "Environmental and Resource Economics, Environmental Management", Dr. Klaus Rennings, and acting deputy Dr. Oliver Schenker comment on the current state of negotiations. Both researchers emphasise that repeated games are being played in Lima.

"The finishing straight to a comprehensive climate agreement is more tedious and the target less ambitious than many would wish for or deem necessary to keep climate change somewhat under control. But despite all these imperfections, today we are closer than ever to achieve negotiated agreements among many important emitters to reduce CO2 emissions.

It is important to keep one's expectations realistic and not be fooled by all the fuss made during these major UN summits. No matter how binding the wording of an agreement appears to be: In the end, each state is sovereign in its actions and in case of doubt it will not let an agreement dictate its emission limits. Thus, such an agreement always merely constitutes the lowest common denominator. One can easily imagine how small that denominator is, given the fact that both the oil-producing countries and the Pacific Island countries participate in the negotiations. In this respect, it is an actual step forward to bring the global climate change process back on track and move it in the right direction, including a monitoring process, instead of bringing it to a complete standstill or steering into a dead end. 

Negotiated agreements - the expression aptly indicates that they are by no means unilateral commitments, but the result of negotiations – with integrated monitoring are in economic terms  a kind of repeating game. By this means, the UN process and the negotiated agreements of the countries fulfil an important function in making government actions regarding climate protection more transparent and thus in providing more certainty for investors and innovators. Ultimately, it also generates additional information and security about the costs and benefits of climate protection.

In the 1990s, Germany also started its climate policy - the Minister of the Environment was then Angela Merkel - with a negotiated agreement. At that time this received a lot of criticism and was considered to lack ambition. Unconnected to a potential threat, negotiated agreements are no more effective than business as usual. The negotiated agreement with the German industry did not even manage to slow down the rolling snowball of climate policy in Germany, which has meanwhile turned into a considerable avalanche (catchword: energy transition).

Against this backdrop, having further maintained the global process, while giving it a perspective for the Paris summit in 2015 and beyond, can already be considered a success of the COP 20 in Lima to. Even if small, at least it would be a start."