Equity Implications of the COP21 Intended Nationally Determined Contributions to Reduce Greenhouse Gas Emissions

The recent Conference of the Parties to the UN Framework Convention on Climate Change (COP21) resulted in voluntary greenhouse gas (GHG) reduction commitments by 195 countries. The purpose of this paper is to analyze the equity implications of this “bottom-up” approach to climate change negotiations in two major ways. First we analyze the GHG reduction targets specified in the COP 21 agreement prior to any emissions trading in terms of the equity metrics of the Gini Coefficient and Atkinson Index. We also match the commitments with specific equity principles, such as the Egalitarian, Ability to Pay, Vertical, and Horizontal equity. Second, we analyze the equity and economic welfare outcomes after emissions trading takes place. We adapt a non-linear programming model well suited to this purpose, which determines the equilibrium emission allowance price, mitigation costs, and allowance purchases and sales between countries from trading. We also test the sensitivity of the results to macroeconomic conditions and technological change. Our findings are that the GHG reduction commitments made at COP 21 run counter to most equity principles. They are definitely a major departure from the Egalitarian, Vertical, and Rawlsian equity principles proposed for many years by developing countries