What form will sectoral commitments take? Which sectors are best suited to sectoral approaches to climate mitigation? How might sectoral agreements be integrated into the broader climate regime? This report looks at potential answers to these questions.

The concept of sector-based climate agreements has become a staple of climate policy discussions in recent years, in part perhaps because of the daunting diffi culty in negotiating a comprehensive climate agreement for the post-2012 period. Faced with the technical complexities of sectors such as forestry, the political sensitivities and competitiveness concerns of trade-exposed industries such as steel, and the political challenges in persuading major developing countries to take on more comprehensive climate commitments, there is an obvious appeal in trying to address the problem in a more piecemeal manner, or in alternative fora.

There is an irony in this. Negotiations for the fi rst commitment period of the Kyoto Protocol were characterized largely by the unwillingness of most Parties to engage in more detailed discussion of specific approaches to reducing emissions. Better, they argued, to accept national targets and then leave individual countries to work out for themselves how to meet those targets effi ciently and in line with national circumstances and priorities. What, then, could have persuaded them to change their minds?

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The challenge of climate change is enormous and complex, and the need for urgent and meaningful action to address it at the global level is now obvious to governments around the world. Mitigating climate change and avoiding some of the most severe impacts will require signifi cant reductions in global greenhouse gas emissions; achieving these reductions will require cooperation and participation from all of the world’s major emitters. These include not only the major industrialized countries, Annex I and OECD countries, but also a signifi cant number of emerging economies.

Ultimately this will mean bringing together all major emitters in a comprehensive climate agreement. However, we still have some way to go before this will be feasible. Large wealthy countries, such as the US and Australia, have refused to join the Kyoto Protocol, and negotiators have still not reached an agreement for incorporating rapidly growing economies like India and China into international mitigation efforts. The result is that the Kyoto Protocol, though a vital fi rst step, still falls well short of what is needed. Can we fi nd some way of limiting some of these international emissions while a comprehensive agreement remains out of reach?

In this context, focus has increasingly turned towards dividing the mitigation challenge up into more manageable pieces by focusing on action within specific sectors. Under the sectoral approach, governments and/or companies would agree on measures to limit or reduce emissions from key GHG generating sectors such as transportation, power, land use, steel, cement, or other emissions-intensive industries or activities. Advocates argue that such agreements are an attractive concept as they could a) simplify negotiations, b) reduce international competitiveness concerns, c) increase effectiveness through increased participation and reduced leakage.

This paper explores the concept of international sectoral commitments in climate negotiations. It examines the form that such commitments might take, analyzes which sectors are best suited to sectoral approaches to climate mitigation, and evaluates several different models for how sectoral agreements might be integrated into the broader climate regime.

Sectoral approaches will always remain a second-best solution. A more comprehensive climate policy is more efficient economically and more effective environmentally.

But with so much at stake no options should be left off the table. Sectoral approaches could be used to complement, but not to supplant, a global climate arrangement.

Climate change is an unprecedented challenge, and no simple solutions exist. The World Resources Institute has always believed that the best way to shape smart policy is to get the facts right. We hope that this report and the analysis it presents will help policymakers understand more easily the potential and the limitations of sectoral approaches to climate policy.

JONATHAN LASH
PRESIDENT, WORLD RESOURCES INSTITUTE

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The World Resources Institute (WRI) is an environmental think tank that goes beyond research to fi nd practical ways to protect the earth and improve people’s lives.

Our mission is to move human society to live in ways that protect Earth’s environment and its capacity to provide for the needs and aspirations of current and future generations.

Because people are inspired by ideas, empowered by knowledge, and moved to change by greater understanding, WRI provides—and helps other institutions provide—objective information and practical proposals for policy and institutional change that will foster environmentally sound, socially equitable development.

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