Who picks up the remainder? Mitigation in developed and developing countries

A fair, effective, flexible and inclusive climate regime beyond 2012 will need several political balances. Mitigation and funding will be at the heart of the agreement. The IPCC's Fourth Assessment Report indicates that absolute reductions will be needed in Annex I (AI) countries and substantial deviation from baseline in some non-Annex I (NAI) regions by 2020. Although the latter was not explicitly quantified by the IPCC, the EU subsequently proposed a range for developing countries. Sharing the burden for mitigation is essentially zero-sum: if one does less, the other has to do more. We critically examine the implicit assumption that NAI countries would pick up the remainder of the required global effort minus the AI contribution. We suggest that greater levels of ambition can be achieved by turning the formula around politically, starting from the achievable 'deviation below baseline' given NAI's national programmes and appropriate international support. AI countries may have to exceed the IPCC ranges or pay for the remainder. For notional levels of NAI mitigation action, Annex I has to reduce by between - 52% and - 69% below 1990 by 2020, only dropping to a domestic - 35% with commitments to offset payments through the carbon market. Given the large mitigation gap, a political agreement on the question of 'who pays' is fundamental. The carbon market will provide some investment, but it mainly serves to reduce costs, particularly in developed countries, rather than adding to the overall effort. Market-linked levies and Annex I public funding will therefore be crucial to bridge the gap.