Burning of carbon based fuels sincethe industrial revolution has quickly expanded concentrations of air carbondioxide, increasing the rate of global warming and causing anthropogenicenvironmental change.

In December 2015, after years of negotiations, 195countries pledged to work together to address global climate change. Theobjective of the Paris Agreement was to limit warming between 1.5C to 2C duringthis century. To achieve thisambitious and important objective, sufficient funds must be used to strengthenthe developing countries. Human activitiesnot just in developing countries but worldwide are altering the naturalgreenhouse. Over the last century the burning of fossil fuels like coal and oilhas increased the concentration of atmospheric carbon dioxide. This happensbecause the burning process combines carbon with oxygen in the air to make CO2,also the clearing of land for agriculture, industry, and other human activitieshas increased concentrations of greenhouse gases. The majority ofactively publishing climate scientists agree that the key reason of the presentglobal warming trend and climate change is human growth of the greenhouseeffect.

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 I used the data fromWorld Bank to generate a line graph on excel. The graph shows that the growthrate in emissions over the past decade is faster than that of previous decades,indicating carbon dioxide emissions have accelerated in recent years, from 24.7million in 2000 to 36.1 million in 2014.

 Companies and countries make choices overemissions without considering the consequences to other firms, or organisation whoare not directly involved in the transaction. Mass production of carbon has resulted in market failure, without an effectiveintervention, the harm caused by pollution has reached a level where theadvantages from reduction in production were substantially higher than theadvantages of constant abating.__________________________________________________________________________________Science organizations around the world have issued publicstatements which led to in the creation of the Kyoto protocol of 1997. It wassupposed to keep greenhouse gas emissions from human activity at a certainpoint where experts believed would offer the best chance of averting calamitousclimate change.The Kyoto Protocol was a vital first step to a truly global emission reductionregime that would steady GHG emissions.Kyoto Protocol was adopted in December 1997in Kyoto, it required developed countries to cut their greenhouse gas emissionsby at least 5% in the period 2008-2012 compared to 1990. Many developingcountries have also signed the agreement, but only the rich countries arelegally bound to cut.

The failure of the Kyoto Protocol, and thedifficulties of forging effective follow-up regimes, was largely due tofree-riding. Free-riding occurs when a party receives the benefits of a publicgood without contributing to the costs. In this case,countries have an incentive to rely on the emissions reductions of otherswithout taking proportionate domestic abatement. Enjoying the gains fromother countries’ cuts while ignoring its own obligations. Abatement, a countrycan’t limit the benefits of clean air (non-excludable) and their consumption ofclean air does not decrease theirs (non-rivalrous). It is a public good.   For example, two countries, China and theU.S.

Scientists have warned both countries that without reductions in carbonemissions, negative costs will arise. Both countries recognise this, butabatement efforts are a public good. China cannot exclude the U.S.

from thebenefits of China’s abatement efforts, nor the other way around. This can beobserved in the figure below. Each country can abate or pollute. The boxesdescribe the net payoff (benefit- cost) to each nation in each of the fouroutcomes. Outcome 1, both countries can abate and receive 75 each. Outcome 2,China abates and U.

S. ignores, China gets -50 and U.S. gets 100. This isbecause abatement is costly. Outcome 3, U.S. abates, China ignores, U.

S. gets-50, and China gets 100. Outcome 4, both ignore, both get -25.

The sociallyoptimal decision is for China and the U.S. to abate. It is socially optimalbecause it creates the highest overall benefit.

In this scenario, the problem hereis free riding. If the China knows USA will abate, then the best decision forChina is to ignore. And similarly, for the U.S. with over 100 countries, allnations have a comparable pay-off matrix, they have an incentive to rely on theemissions reductions of others without taking domestic abatement which will leadto an outcome in the Nash Equilibrium of zero abatement.

  It committed 37 industrialised nations toreduce their greenhouse gas emissions to below 1990 levels and providedfinancial help to developing countries to accomplish the task. Some nations were on track to meet or exceedtheir Kyoto goals by 2011, but other large nations were falling behind. The twobiggest emitters, the United States and China together emitted more than enoughgreenhouse gas to erase all the reductions made by other countries during theKyoto period. China emitted 22.3% and the U.S emitted 13.4% in 2011. USA’s lack of participation meant that many consideredthe agreement to be in error.

Some countries did not find the Kyoto Protocoleconomically such as Canada, they ratified the protocol but later withdrew in2011. Canada was not on track to meet its targets as emissions increased whilethe economy grew. This allowed Canada to avoid paying penalties of up to 14 billionCanadian Dollars for missing its targets. The Canadian environment minister,Peter Kent said in 2011 “The Kyoto protocol does not cover the world’slargest two emitters, the United States and China, and therefore cannotwork,” He believed that Kyoto did not represent the way forward for Canadaor the world. Thus, it is clear any notion of free-riding makes it impossiblefor international arrangements to work as they rely on shared responsibility,countries need to be sure all other countries are doing their part to cutemissions.The Kyoto Protocol failed due to thedistribution of emission reductions between countries. Nations that havehistorically been exposed to moderate emissions, such as India and Brazil, werenot affected by the requirements of the agreement, even though emissions inthese countries were and still are today increasing strongly.

Developingcountries ratified the protocol, but it did not require them to make any cuts.The protocol did not attract any new members from developing countries. As aresult, there was significant attrition in the coverage of emissions under theprotocol. Also, emissions grew more rapidly in non-covered countries, particularlydeveloping countries.    Other mechanisms used to prevent climatechange such as the EU Emission Trading system have also been proved to beequally flawed.

The EU ETS puts a cap on the carbon dioxide emitted bycorporates and creates a market and price for carbon allowances. It coversairlines and more than 11,000 industrial sites, accountable for around 45% ofEU greenhouse gas emissions currently around 2bn tonnes of CO2 equivalent. Throughemissions trading system, countries could trade emissions permits, theagreement allows countries to follow up their obligations in other ways thansimply cutting domestic emissions, by assigning property rights to abate, thecosts of emissions are now internalised, incentivising countries to decrease,hence a step closer to the social optimum level of emission. Furthermore, anindustrialised country can pay for measures that reduce emissions in anotherindustrialised country.

The country that pays has the right to let out more athome, while the host country can drop out correspondingly less. The EU Emissions Trading System failed dueto poor management of the carbon market which led to an overflow of carbonpermits that reduced the price of permits to a level that it was aninsignificant cost to the industry, hence to this point not cutting downemissions, the agreement did not include international shipping and airtraffic, which accounts for a significant part of global emissions. In addition, the EU Emission trade system has not beencost-effective and has funded polluters at tax payers’ expense, The EU ETS hasconstantly seen firms pass on carbon costs to customers that were neverincurred in the first place. A large amount of companies has gained billions ofeuros in unjust way.it was not until in Paris 2015 thatcountries decided to agree on a new climate agreement that could replace theKyoto Protocol.

The Paris Climate Change Conference is quite different fromthat in Kyoto with a more rational expectation and a more realistic attitude ofall members. In addition, global economic development, the advancement oftechnology, low-carbon development and the international community’s awarenessand attention on climate change have undergone important changes. As a memberof the EU and host country, France was also in active contact with the parties,which reflects the strong political will of countries to address climatechange.The target was toreduce their emissions as quickly as possible, limit warming to 1.5 to 2degrees and continue to present national climate action plans describing theirfuture targets for combating climate change The agreement also specifies theprinciple that future national plans must be at least as ambitious as thecurrent ones that will significantly reduce global emissions. There have beensome critics, for instance, Jørgen E. Olesen, a former member of the UN’sClimate Panel (IPCC) believes that it can be a bit difficult for politiciansand others to understand that climate change is not dependent on what we are releasingright now and here, but what we have totalled over time.

We have not yet seenthe final impact on the climate of the emissions we have had so far. Before andduring the Paris Conference, countries presented comprehensive National ClimateAction Plans aimed at reducing their emissions. The government agreed every 5years to present their contribution to more ambitious goals, they also agreedto inform each other and the public about how to achieve their goals to ensuretransparency and overview. Under the ParisAgreement, the INDC became the first Nationally Determined Contribution whenthe countries ratified the agreement. Once the Paris Agreement was ratified,the NDC became the first greenhouse gas targets under the UNFCCC that appliedequally to both developed and developing countries On 3 August 2016 China andUS ratified 2015 agreement on INDC. Together they both create 38% of totalglobal emission, with China’s alone emitting total of 20%.

  The INDCs will be crucial to the success of the UN’sclimate deal in the future. It is the first time that all countries, whetherrich or poor, have been obliged to come forward with pledges to manage theirgreenhouse gas emissions. The promises made between now and December will,therefore, act as a barometer of where the world stands on tackling climatechange.Analyses of the INDCs submitted by countriesconclude that, while they are moving closer to the 2-degree goal, they are notambitious enough to achieve it. An analysis by the Climate Action Tracker, a groupof research institutions, concluded that the INDCs, if fully implemented, couldresult in warming of 2.7 degrees Celsius, which would be 0.9 degrees lower thanwithout them. it is the flexibility of the INDCs whichcould prove to be the Paris agreements greatest asset.

the absence of a penaltybeing imposed on a nation if failing to meet their specified INDC may haveallowed the Paris agreement to achieve such high levels of participation. Norisk of penalty enables ambitious INDCs and it is expected that this would havea positive impact on countries to submit similarly ambitious targets. For example,the U.S. pledged a domestic reduction of 26% to 28% in greenhouse gases by2025, compared to 2005 levels, working towards the 28% target.

This includesthe land-use sector and excludes international emissions credits. The USA’s participationmeant that many considered the agreement to be accurate. Therefore, the highlevels of participation may prove an effective way to prevent or reduce thefree riding problem. More countries find that the INDCs is economicallybeneficial. As all countries face a similar pay-offmatrix, they all have the incentive to abate thus reducing free-riding. Withmore countries involved in the agreement the pay-off involved in the figureabove, countries abate is significantly greater. In comparison to Kyotoprotocol, the US raised the issue that, developing countries such as India and Chinawere allowed as free-riders and no cuts in emission was required from them.  Their reason for lack of participation wasdue to the failure of the Kyoto Protocol to include all countries, as one ofthe largest emitters, China and India were not included.

  With the Paris agreement, it has managed toinclude the biggest emitters to reduce its emission, both developing and non-developingcountries. India is set to reduce its emissions intensity per unit GDP by 33%to 35% below 2005 by 2030 and China by 60% to 65% by 2030 on 2005 levels.  The INDC agreement is not legally binding,countries must constantly report to the UN on what they’re doing, there’s noone who will come after them with sanctions if they don’t keep theirpromises.  The INDCs is voluntary whichmeans the long-term impact of the agreement may be uncertain. The fact that nationswill not be penalised if they fail to live up to their promises could be thebiggest weakness in the agreement.

Climate Finance:The main purpose of the Paris Agreement isto limit warming to 1.5C to 2C during this century. To achieve this ambitiousand important goal, sufficient funds must be used to strengthen the developingcountries. Article 9 of the Paris Agreement states that developed countriesshall provide financial resources to assist developing countries.

rich nations willcontinue to contribute climate financing to help poor countries both reduceemissions and build resilience to the adverse effects of climate change.  However according Oxfam, they estimated thatjust 16% of the $100 billion a year that was promised by wealthy countries in2009 to aid poorer nations cut carbon emissions has been paid. To partlyrectify the agreement, the COP decided that the $100 billion per year from 2020goal will continue through 2025, and that from 2025. Tracy Carty, Oxfam’s policy adviser said “Weneed to see specific commitments in Bonn to increase adaptation finance and forthat money to be spent supporting small farmers who are on the front lines ofthe climate crisis” she believed that there is lack of commitment to developingcountries, also warning that the issue “cannot be kicked down the road”  Summary In conclusion, theParis agreement is a step in a longer process of fighting global warming. Theadvances that it has made upon its predecessors such as Kyoto is impressive. Unlikethe Kyoto protocol, all nations in the Paris agreement must do their part, withno exception for developing nations. However, it cannot be denied that theagreement has its weaknesses. Because the accord is voluntary, the deal doesn’tneed to be ratified.

Nations do not have to obey the agreement of reduction in emission,they can pollute while all other countries abate. One way to ensure thatcountries obey with their commitments is if there was an effective consequenceto not obeying, this could act as a warning to the free-riding behaviour ofcountries. If the penalty is reliable as a threat, it would be enough forcountries to incentivise compliance. However, many countries would be opposedto the strict enforcement of sanctions. On the other hand, the Paris agreementcould be argued that it has produced the best possible outcome in the shortterm, without an international agreement, it will be harder, if not impossible,to lead international cooperation to counteract climate change. In the longterm, it is too early to assess the impact of the agreement, especially as itdoes not come into force until 2020.

For now, I believe that the Parisagreement can be viewed as a success and it is on the right track