Comparing Climate Commitments: A Model-Based Analysis of the Copenhagen Accord

The political accord struck by leaders at the United Nations negotiations in Copenhagen in December 2009 allows participants to express their greenhouse gas commitments in a variety of ways. This paper compares the environmental and economic performance of these disparate commitments using the G-Cubed model of the global economy. We focus on fossil-fuel-related CO₂ and assume targets are achieved domestically. We show how different formulations make the same targets appear different in stringency and explore the Accord's spillover effects across countries. We find that commitments by Japan and Europe imply high carbon prices and relatively high GDP losses. The United States and China both have moderate carbon prices and moderate GDP effects. Australia and Eastern Europe/Former Soviet Union have relatively large GDP effects despite small or zero carbon prices because their terms of trade decline. OPEC suffers a large drop in GDP from a sharp decline in world oil demand.