The feasibility of ambitious climate agreements: Norway as an early test case

Abstract

There are considerable differences between developed countries as to how difficult it will be to meet their commitments under the Kyoto Protocol. ‘High-cost abatement countries’ are particularly interesting as they can be seen as ‘test-cases’ for other nations in more ambitious climate policy agreements. We assume that a country’s objective is to develop an efficient climate policy, achieving cost effectiveness and environmental effectiveness, and that also is politically feasible. Norway is among the countries that will have a hard time in meeting their obligations. Our study suggests that Norway’s climate policy has emphasized an international approach, whereas the domestic performance on cost effectiveness has been more moderate. An obvious reason for this is the lower cost associated with the international approach. A ‘political cost’ associated with such a policy can be criticism from environmental NGOs and other countries. At least in the near term there is little reason to expect ‘climate enthusiasm’ from the public or many countries of the world. Therefore, just like Norway, they will want emissions reductions carried out as cheaply as possible, which could imply extensive international quota trading, whereas compromises with regard to cost effectiveness are struck at the domestic scene for political feasibility reasons.