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Climate Change: Game changer

Updated Thursday 12th January 2012

William Brown uses Game Theory to show how the EU has taken on a tougher stance in the Durban climate change negotiations - and for the first time got a deal bringing developed and developing nations to cut emissions.

Durban Climate Change summit Creative commons image Icon By Oxfam International via Flickr under Creative Commons license under Creative-Commons license Protest outside the Durban Summit

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Sound effects used under CC-BY licence from audible-edgemusicmasta1 and strangely_gnarled

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In December 2011, world leaders met in Durban in South Africa to discuss climate change. After two weeks of intense negotiations, developed developing countries finally reached agreement. It aims to set the framework for global cooperation on climate change for the next decade or more.

A change in the EU’s negotiating stance over climate change was a key factor in forcing this agreement at the Durban summit. But did this switch signal that the EU had successfully moved from acting weak to acting tough in a climate change game of chicken?

For twenty years, the structure of climate change politics at the level of international negotiations has barely shifted. From the negotiations which founded the UN Framework Convention on Climate Change in 1992, to the debacle of the Copenhagen talks in 2009, the essential positions have remained unchanged. 

On one side is the USA, the world’s second biggest annual emitter of CO2. The USA made it clear it would not commit to a legally binding treaty to cut emissions, especially if large developing countries like China, India and Brazil were not making similar commitments. 

On the other side was China and other developing countries. They argued – with some justification - that they should not be subject to the same restrictions. After all, they had far less of a role in creating the problem in the first place.

But taking a different stance from these two was the EU. The EU had long argued for a legally binding treaty. Along with some other developed countries, it was committed to legally binding cuts under the Kyoto Protocol, signed in 1997. This was despite the fact that others – the USA and China especially – were not making similar commitments. 

Game theory is a technique used in social science to analyse situations like climate change as if they were a game. It assumes that the players are the leading states. And it assumes they will act in their own self interest, not the common good of humanity. One version of game theory is called the chicken game. It is similar to an episode from the Hollywood movie, Rebel Without a Cause. In it, two teenagers drive towards each other at high speed in the middle of the road. The one that swerves, the chicken, loses. If both swerve, they face mild embarrassment. If neither swerve, they crash. If it is a game, it is, like climate change, a very serious one. 

Viewed in these game theory terms, we might suggest that the EU was playing the role of the chicken. By agreeing to the Kyoto Protocol, it ‘swerved’, promised to cut its emissions, while the USA, China and India played tough. However, as a result the Kyoto process produced a less than ideal outcome. In game theory this is known as the sub-optimal outcome. Here the EU committed to cuts and got the sucker’s payoff with all the costs of cutting CO2 and no benefits. The tough group refused and gained the competitive advantage from not having to restructure their economies. The world carried on warming.

What seems to have changed at Durban was that the EU refused to carry on like this, and stuck to that position. 

A critical decision for the Durban summit was whether or not to renew the Kyoto Protocol past its deadline of 2012. The EU had always said it was in favour of continuing. The big emitting developing countries like China and India, supported this, because continuation meant they would not be called on to cut their emissions. Most other developing countries backed China in what was known as the G77+China. The USA, Canada and others, said they would refuse to take part in any new legally binding agreement.

However, at the start of the Durban summit, the EU announced that it would not back a continuation of Kyoto for a ‘second phase’ unless there was a parallel commitment by China, India, Brazil. It demanded that they agree to a new, separate and legally binding agreement which would follow on from the second phase of Kyoto. That is, it made renewal of its Kyoto commitments conditional on there being a follow-up agreement which included all major economies. Such a follow up would end the divide between industrialised countries and large developing countries. 

This had two crucial effects. 

First, by taking this tough stance, it signalled to China that if China continued to play tough (not swerve in terms of the chicken game), the EU would not ‘swerve’ either, leading to a collapse of existing commitments and rules which had been so painstakingly built up. This was something China was loathe to see happen. 

Second, it drove a wedge between many smaller, poorer and more vulnerable developing countries and the larger developing economies. 

Up to now, the smaller nations had lined up behind China in the hope that global warming would be tackled by cuts by the industrialised countries alone. Now this option was looking increasingly unlikely if even the EU was backing out of those commitments. 

The EU thereby successfully convinced both China and the smaller developing countries that it was going to play hardball. Without the backing of large numbers of developing countries, China’s position was weakened . In a significant shift signalled that it would now accept the principle that it should be part of a legal (as opposed to purely voluntarily-enforced) treaty. This move also opened the way for the USA to come back into the fold as it removed the single biggest obstacle to its participation so far.

In game theory terms, if you are involved in a game of chicken, convincing the other players that you are going to play tough (not swerve) is key to persuading them to swerve. The tactics adopted by Connie Hedegaard, the EU chief negotiator, seem to have produced an outcome few anticipated.

That all this was possible just as the EU was mired in disputes over the euro crisis might seem surprising. However, Europe’s economic woes may have in fact helped convince other parties that it was going to abandon emissions commitments. In the midst of an economic crisis, it seemed more plausible that Europe would pull out of its Kyoto commitments and no longer take the economic costs of tackling climate change alone.

Has the world thereby avoided the ‘head-on collision’ of climate change? By no means. So far there is only agreement to negotiate a new deal, it hasn’t been agreed yet. There is a very, very long road and many years of rising CO2 emissions between the Durban summit and a new global deal in 2020. Many environmentalists and scientists say this will be far too little too late. Nevertheless, the game of climate change negotiations seems to have changed for the first time in many years. 

 

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