Why the Paris Climate Agreement Might be Doomed to Fail
An economist argues that the international accord, which depends on collective action, does not include the kinds of incentives and penalties that would ensure that countries do their part.
The slogan "For the planet" is projected on the Eiffel Tower as part of the World Climate Change Conference 2015 (COP21) on Dec. 11, 2015 in Paris, France. Credit: Chesnot/Getty Images
Not long before the Paris Agreement was signed in 2015, Scott Barrett wanted to test how likely it was that the pact would work. As an economist who studies international cooperation, Barrett decided to design a game to model how the signatories might behave.
Poker chips stood in for emissions cuts. The goal was to avoid “catastrophe,” which players could achieve by contributing some of their chips to a collective pot. Just as no one knows the exact level of emissions cuts necessary to avoid a given amount of warming, the players did not know exactly how many chips the pot needed to avoid catastrophe, only that the threshold lay within a certain range.
Players were told to agree on a common goal for the pot, and to make pledges for their own contributions. If they avoided catastrophe, everyone received a substantial pay-out. If they failed, each player was given only a small number of chips, creating a clear incentive to reach the goal.
Barrett is the vice dean of Columbia University’s School of International and Public Affairs, and designed the experiment with Astrid Dannenberg, a behavioral and environmental economist at the University of Kassel, in Germany. The key question was whether the “name-and-shame” structure of the Paris Agreement, in which governments periodically review each others’ pledges, would lead countries to make steeper emissions cuts.
Barrett and his colleague ran many rounds of the game with different players, and the result was clear: The pact’s design led players to agree on a higher collective goal, and to make more ambitious individual pledges. But for the most part, players ended up contributing fewer chips than they had promised, barely giving more than they would have without the “name-and-shame” design, which did little to avoid catastrophe.
The outcome of the game illustrates a problem inherent to climate change: Success or failure is determined only by whether the collective goal is achieved, regardless of how much any single country contributes. So while countries are all but assured of a bad outcome if they don’t take action, they could be even worse off if they limit their own emissions sharply but others do not.
“What they want is some kind of assurance that others will contribute,” Barrett said.
The game showed that the Paris accord, like the global climate pacts that preceded it, fails to provide this assurance, Barrett said.
But there is another treaty, created 34 years ago in response to a threat to the atmosphere’s ozone layer, that is widely viewed as a success and credited with preventing hundreds of millions of cases of skin cancer. And Barrett thinks that earlier accord has lessons to offer international leaders, as they struggle to reach climate goals.
Limiting Free Rides
The Montreal Protocol was adopted in 1987 to phase-out a group of chemicals, including chlorofluorocarbons, or CFCs, which were creating dangerous holes in the ozone layer. The agreement set hard limits on the production and consumption of CFCs—used in air conditioners, refrigerators and industry—that ratcheted down over time. It also prohibited trade in the chemicals or in products that used them between countries that had signed the agreement and those that hadn’t. As more countries joined the pact, the global refrigerant market shrank for those that hadn’t signed, creating a tipping point that all but forced countries to join up once a critical mass was reached.
The Montreal Protocol created positive incentives, too. It gave chemical companies certainty that there would be a growing market for CFC replacements, and helped facilitate innovation in the industry. And, critically, in order to entice developing countries to join, it created a mechanism for wealthy countries to help pay the costs for poorer ones to comply, and to share technologies they had developed. This pairing of carrots and sticks pressed countries not only to join but to comply: In the jargon of international diplomacy, the protocol was self-enforcing.
India initially resisted joining the agreement. At the time, the country was planning to expand the production and use of CFCs. But in 1992, as it saw its potential trading market shrink because it could not make deals with countries that had signed, and with the promise of payments to help phase out CFCs if it joined, India signed the protocol.
In contrast, in 2015, not long before signing the Paris Agreement, India announced plans to double its coal production. “And the rest of the world just pretty much shrugged its shoulders,” Barrett said.
India wanted to develop its economy and reduce poverty. Burning more coal was the simplest way to do that, and the accord gave no compelling incentives to look at alternatives.
“If you have an effective system for negotiation,” Barrett said, “then what the rest of the world should have said is, ‘Of course we understand why you want to do that. But if you do that, you’re going to undermine your future development as well as that of everyone else. And’—this is really critical—‘Here’s another technology that gives you the same energy you would have gotten from coal, and the only reason you’re not going to it in the first place is because it’s more expensive. But we’re going to pay you the difference.’”
To work, Barrett said, diplomats would also have needed a stick to punish India if it didn’t agree, as they did with the trade barrier in the Montreal Protocol.
One of the key shortcomings of the Paris Agreement, Barrett argues, is that it fails to address the “free-rider problem,” which stems from the fact that countries would enjoy the benefits of global efforts to limit emissions regardless of their contributions. This creates a temptation to ride on the emissions cuts of other nations, and can doom the overall effort: If everyone shirks, the global cuts never materialize.
“And that’s been the whole problem from the beginning,” he said. “We’ve had 30 years of negotiations, more diplomatic effort on this than any other in all of world history, and all this time global emissions have been rising.”
Fossil Fuels and the First Order Problem
There was another reason the Montreal Protocol worked, many policy experts say: DuPont, the leading U.S. manufacturer of CFCs, wanted it to. The chemicals had come off patent by the late 1980s, and were no longer earning the company large profits. DuPont had researched replacements, and if it could turn them into commercial products it stood to make money.
To many academics and advocates, this points to a different and more familiar explanation for why the United Nations climate negotiations have fallen short: domestic politics and, ultimately, corporate power.
“Climate change is going to produce winners and losers, and if you’re a loser, you’re going to fight like hell to make sure that climate regulation doesn’t move forward,” said Jessica Green, an associate professor of political science at the University of Toronto. “And in fact, that’s what we’ve seen.”
Green and others identify the decades-long fight waged by the fossil fuel industry as the most important force holding back change. They point to studies that have demonstrated the well-known effects of lobbying by oil and gas companies, and to research findings that run counter to the ideathat global climate efforts have been stymied by the collective action problems Barrett studies.
“I think that the capture of political processes by fossil capital is a huge, huge problem, and it is the first order problem,” Green said. “Unless you deal with that, you can’t make meaningful progress. You make incremental progress, and that’s what we’ve done.”
From this perspective, Montreal’s success hinged on the support it received from the chemical industry. But this glosses over an important detail: It was the agreement itself that helped bring the industry on board.
“When the Montreal Protocol was signed, there was opposition all the way up to the signature,” said Stephen Andersen, who was working at the EPA on ozone-depleting substances at the time, and has devoted his career to supporting the protocol.
“In fact, when the deal was made in Montreal, industry was flabbergasted. They thought they’d blocked it,” Andersen said. Only about two-dozen countries joined the agreement initially, “but as soon as it was signed, industry started looking at it and saying, ’Well, if this is what’s happening, what should we do?’”
Andersen, who is now director of research at the Institute for Governance and Sustainable Development, described an almost overnight change in the industry’s attitude. He hosted a side event in Montreal before the signing that focused on alternatives to CFCs, but the corporate representatives who attended presented few options.
“It was almost a joke, there was so little that people would disclose,” he said. “But once the treaty was signed, people realized there’d be change and they said, ‘Well, what do we actually have that we can do?’ And it turned out to be much more than they expected themselves.”
Barrett acknowledges that Montreal is an imperfect analogue for the Paris Agreement. While CFCs were used in a relatively narrow set of products, fossil fuels power the global economy. DuPont and other chemical companies were in the best position to produce alternatives, but it is not clear whether oil companies have any competitive advantage in the renewable energy sector or other fields.
But he is not alone in thinking that the Paris Agreement’s avoidance of trade restrictions misses an important opportunity to press countries to act.
“Trade is the thing that drives climate change,” said Diann Black-Layne, ambassador for climate change for Antigua and Barbuda and lead climate change negotiator for the Alliance of Small Island States. “If you block the importation of goods and services—and please include services—you would have a transition like you would not believe.”
Piecing Things Together
Some policy experts and academics argue that it’s too soon to say the Paris Agreement will fail.
“We do have good signs that the Paris Agreement is starting to work the way it was intended to work,” said Nathaniel Keohane, president of the Center for Climate and Energy Solutions, a climate change think tank. “If it works, it would be because it creates a framework where countries have to set targets and then are expected to live up to them, and where their progress is monitored and reported on and there’s a real degree of transparency. Now we are just on the cusp of that.”
Barrett said he is not optimistic. But he also doesn’t favor replacing or renegotiating the Paris Agreement. “The message isn’t that Paris is bad, it’s not,” he said. “The message is that Paris is not enough.”
Instead, Barrett points to a more obscure agreement as a model, one that piggy-backed on the Montreal Protocol and could help countries meet their targets under the Paris accord. In 2016, nations agreed on the Kigali Amendment, which targets hydrofluorocarbons, potent greenhouse gases that were developed as ozone-friendly replacements for CFCs. Notably, the chemical industry and Republican Senators pressed the Trump administration to join the agreement, but the White House delayed ratification of the amendment. President Joe Biden initiated the process in January.
Barrett said diplomats should work to create smaller, more technical agreements that could supplement the Paris Agreement, focusing, for example, on emissions cuts in particular industries. These agreements would lack the dramatic appeal of the Paris accord, especially because any gains they achieved would necessarily be incremental and limited. Barrett is not even convinced that these types of pacts could limit warming to within the Paris agreement targets, but he thinks it’s the best shot we’ve got.
“This approach we’re taking of trying to do everything together hasn’t worked,” he said. “Let’s try to build some other agreements. And yeah, each one is not going to solve the problem, but each one will do something. And maybe we can start, over a period of time, start to piece things together.”
Nicholas Kusnetz
Reporter, New York City
Nicholas Kusnetz is a reporter for Inside Climate News. Before joining ICN, he worked at the Center for Public Integrity and ProPublica. His work has won numerous awards, including from the American Association for the Advancement of Science and the Society of American Business Editors and Writers, and has appeared in more than a dozen publications, including The Washington Post, Businessweek, The Nation, Fast Company and The New York Times. You can reach Nicholas at nicholas.kusnetz@insideclimatenews.organd securely at nicholas.kusnetz@protonmail.com.
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