Flexible Mechanisms - Views On The Flexibility Mechanisms

Views On The Flexibility Mechanisms

As stated in the lede, one of the main arguments made in favour of the flexibility mechanisms is that of cost-effectiveness. The principle of cost-effectiveness is included in the UN Framework Convention on Climate Change (UNFCCC). The economic basis of costs being reduced through flexibility is discussed in emissions trading#Applying the economic theory and economics of climate change mitigation#Flexibility.

A number of concerns were raised about flexibility in the lead-up to negotiations of the Kyoto Protocol. Two examples of issues raised were that of domestic emissions reductions in the developed countries, and the issue of developed countries effectively taking up all the low-cost emissions reductions in developing countries. The idea behind the first view was that most emissions reductions should occur first in the developed countries - this would encourage the development of low-carbon energy technologies which could then be taken up later on by developing counties. The second idea was that all of the low-cost emissions reductions in developing countries would, in effect, be stolen by the developed countries. Thus, when it came time for developing countries to take on their own commitments to reduce emissions, it would be more costly for them to do so.

Differing views on flexibility were summarized in the Intergovernmental Panel on Climate Change's (IPCC) Second Assessment Report. The basic economic argument in favour of flexibility was that, in principle at least, issues to do with fairness ("equity" in the language of economics) could be separated from efficiency (i.e., reducing emissions most cheaply). From this viewpoint, flexibility through emissions trading could promote efficiency, while arguments of equity could be partially addressed through, for example, the allocations of emissions rights between different countries.

During negotiations, the US was a supporter of flexibility, while several other negotiating parties were in favour of uniform emissions cuts (e.g., the Alliance of Small Island States, ASIS). In the end, flexibility was incorporated into Kyoto's design, but the treaty still places an emphasis on developed countries achieving the bulk of their emissions reductions domestically, rather than in developing countries (i.e., by using the Clean Development Mechanism, CDM). The balance between domestic emissions reductions in developed countries and reductions through the CDM is not, however, quantified.