Global climate policy: will cities lead the way?

While the Conference of the Parties wrangle at an international scale with climate policy, a quiet set of policies and measures is being implemented at a local scale by municipalities across the globe. This study examines the motivation municipalities have for undertaking policies to reduce their greenhouse gas emissions, when the theory of free-riding would predict that local administrations should find it difficult to unilaterally reduce their emissions for the benefit of the global climate. Through interviews with officials and/or staff in 23 municipalities in the United States enacting climate policy, data are gathered that suggest local government abatement policies are primarily a top–down decision based on what officials or staff members believe to be “good business” or rational policy choices. They are primarily driven by the potential for realised or perceived cost savings and co-benefits rather than by public pressure. Economic data from some dozen municipal projects are analyzed, finding, while municipalities lack sophisticated accounting techniques, some justification for the often-disputed claim that at least initial reductions in emissions can be made at cost savings. In the United States, with the lack of national abatement policies, it is municipalities that are leading the way in beginning to implement mitigation strategies, even if only for initial reductions.     

The impact of potential abrupt climate changes on near-term policy choices

We investigate an important scientific uncertainty facing climate-change policymakers, namely, the impact of potential abrupt climatic change. We examine sequential decision strategies for abating climate change where near-term policies are viewed as the first of a series of decisions which adapt over the years to improving scientific information. We compare two illustrative near-term (1992–2002) policies - moderate and aggressive emission reductions - followed by a subsequent long-term policy chosen to limit global-mean temperature change to a specified ‘climate target’. We calculate the global-mean surface temperature change using a simple climate/ocean model and simple models of greenhouse-gas concentrations. We alter model parameters to examine the impact of abrupt changes in the sinks of carbon dioxide, the sources of methane, the circulation of the oceans, and the climate sensitivity, ΔT _2x. Although the abrupt changes increase the long-term costs of responding to climate change, they do not significantly affect the comparatively small cost difference between near-term strategies. Except for an abrupt increase in ΔT _2x, the investigated abrupt climate changes do not significantly alter the values of the climate target for which each near-term strategy is preferred. In contrast, innovations that reduce the cost of limiting greenhouse-gas emissions offer the potential for substantial abatement cost savings, regardless of which level of near-term abatement is selected.     

Escaping the climate policy uncertainty trap: options contracts for REDD+

Climate policy uncertainty significantly hinders investments in low-carbon technologies, and the global community is behind schedule to curb carbon emissions. Strong actions will be necessary to limit the increase in global temperatures, and continued delays create risks of escalating climate change damages and future policy costs. These risks are system-wide, long-term and large-scale and thus hard to diversify across firms. Because of its unique scale, cost structure and near-term availability, Reducing Emissions from Deforestation and forest Degradation in developing countries (REDD+) has significant potential to help manage climate policy risks and facilitate the transition to lower greenhouse gas emissions. ‘Call’ options contracts in the form of the right but not the obligation to buy high-quality emissions reduction credits from jurisdictional REDD+ programmes at a predetermined price per ton of CO₂ could help unlock this potential despite the current lack of carbon markets that accept REDD+ for compliance. This approach could provide a globally important cost-containment mechanism and insurance for firms against higher future carbon prices, while channelling finance to avoid deforestation until policy uncertainties decline and carbon markets scale up.

Key policy insights

• Climate policy uncertainty discourages abatement investments, exposing firms to an escalating systemic risk of future rapid increases in emission control expenditures.

• This situation poses a risk of an abatement ‘short squeeze,’ paralleling the case in financial markets when prices jump sharply as investors rush to square accounts on an investment they have sold ‘short’, one they have bet against and promised to repay later in anticipation of falling prices.

• There is likely to be a willingness to pay for mechanisms that hedge the risks of abruptly rising carbon prices, in particular for ‘call’ options, the right but not the obligation to buy high-quality emissions reduction credits at a predetermined price, due to the significantly lower upfront capital expenditure compared to other hedging alternatives.

• Establishing rules as soon as possible for compliance market acceptance of high-quality emissions reductions credits from REDD+ would facilitate REDD+ transactions, including via options-based contracts, which could help fill the gap of uncertain climate policies in the short and medium term.

     

Biofuel’s carbon balance: doubts, certainties and implications

In addition to lower carbon dioxide emissions, policies to reduce fossil fuel combustion can yield substantial air quality co-benefits via reduced emissions of co-pollutants such as particulate matter and air toxics. If co-pollutant intensity (the ratio of co-pollutant impacts to carbon dioxide emissions) varies across pollution sources, efficient policy design would seek greater emissions reductions where co-benefits are higher. The distribution of co-benefits also raises issues of environmental equity. This paper presents evidence on intersectoral, intrasectoral and spatial variations in co-pollutant intensity of industrial point sources in the United States, and discusses options for integrating co-benefits into climate policy design to advance efficiency and equity.     

Pledges,politics and performance: an assessment of UK climate policy

Abstract

New Labour came to power in 1997 pledging to put environment concerns at the heart of policy-making. Shortly after being elected, the Labour Government signed the Kyoto Protocol and adopted a voluntary domestic target of a 20% cut in carbon dioxide emissions by 2010. This article looks at the development of UK climate policy since 1997 and the political drivers that have led to development of the climate policy mix. It assesses the Climate Change Programme adopted in 2000 and its delivery, and it also looks at the 5-year Climate Change Programme Review published in March 2006. It conducts a quantitative assessment of the UK's performance by looking at emissions data, and it also provides a qualitative analysis, by looking at the UK policies and measures within their political and institutional context. The article concludes that Labour has been actively promoting climate policy since coming to power and has played a strong leadership role internationally. The UK is on track to meet and surpass its Kyoto target, meeting its international commitments. Between 24.1 and 29.1 million tonnes of carbon savings per year are expected by 2010. Policies and measures in the industrial sector are delivering real emissions reductions, in addition to the reductions made through fuel switching. The Government has found it more difficult to make some of the tough choices necessary to deliver emissions reductions in the transport and the household sectors. The article seeks to explain why the Labour Government has found it uncomfortable, politically, to implement stronger measures in these parts of the economy. The article highlights the changing dynamics within UK politics and concludes that there are two possible avenues for taking more stringent measures in the future. The first involves the development of a cross-party consensus on climate change. The second is to change the way that climate change is framed, so that it is no longer seen as an ‘environment’ issue but one with which voters and decision-makers can immediately connect. Only then will it be possible to implement the necessary policies and measures across the whole economy.     

Climate policy at the local level: Insights from California

Local governments in the United States have been hotbeds of climate change activity. Recently, states have sought to incorporate these primarily voluntary actions into broader climate change mitigation programs. Using the example of California, a national leader in U.S. climate policy, this article examines the scope for effectiveness of local climate action and assesses factors related to adoption of local climate policies. The analysis draws on two original surveys of city and county governments, designed to learn about adoption of comprehensive policy tools (emission inventories and climate action plans) and programs in specific areas (energy, water, land use, transportation). Adoption rates are fairly high and growing; by mid 2010 roughly 70% of all jurisdictions were already engaged or planning to engage in comprehensive climate actions, up from roughly 50% in 2008. The adoption of specific programs varies with the degree of local government authority in different sectors, and is generally higher for programs targeting municipal facilities and operations than those targeting residents and businesses. Population size, household income, and strong support from local leaders and the public are all associated with higher rates of adoption, particularly for comprehensive actions. Partisan attitudes are more important for comprehensive actions than for programs in specific areas such as energy efficiency and renewable energy, mirroring the findings of state and national public opinion surveys, which find broader support for actions like clean energy than for explicit climate change-oriented actions. Qualitative analysis reveals additional keys to success, including partnering with other local governments and private organizations and leveraging cost savings and other potential co-benefits of action. As states move to incorporate local actions into broader plans, mandates will also play an increasing role in setting a floor for local efforts.     

The economic case for prioritizing governance over financial incentives in REDD+

It is argued that the subordination of policies to results-based payments for emissions reductions causes severe economic inefficiencies, which affect the opportunity cost, transaction cost, and economic rent of the programme. Such problems can be addressed by establishing sound procedural, land, and financial governance at the national level, before Reducing Emissions from Deforestation and Forest Degradation (REDD+) economic incentives are delivered at scale. Consideration is given to each governance dimension, the entry points for policy intervention, and the impact on costs. International support must consider the financial and political cost of governance reforms, and use a pay-for-results ethos based on output and outcome indicators. This can be done in the readiness phase but only if the latter's legal force, scope, magnitude, and time horizon are adequately reconsidered. This article provides ammunition for the institutionalists’ argument that United Nations Framework Convention on Climate Change (UNFCCC) Parties must prioritize governance reforms between now and the entry into force of the new climate agreement in 2020. Finally, specific recommendations about how such governance reforms can be achieved, which will create the basis for the programme's financial sustainability, are offered.

Policy relevance

UNFCCC Parties could make the most cost-effective use of REDD+ resources if they were to prioritize investments in governance over the interim period 2012–2020. REDD+’s financial, technical and political capital should be used to establish sound procedural, sectoral (land), and financial governance systems in relevant countries. This will generate long-term economic savings, compared to an approach that privileges the implementation of results-based payments for emissions reductions. In particular, it will reduce economic inefficiencies, which affect the opportunity and transaction costs, and the private rents embedded in the current programme design. In order to promote the necessary policy reforms, stakeholders should work together to address technical, financial, and political economy issues at the domestic level. In particular, UNFCCC Parties should re-conceptualize the readiness phase by strengthening its legal force, expanding its scope, increasing its financial firepower, and extending its time horizon.     

Marginal abatement cost curves and the quality of emission reductions: a case study on Brazil

Decision makers facing emission-reduction targets need to decide which abatement measures to implement, and in which order. This article investigates how marginal abatement cost (MAC) curves can inform such a decision. We re-analyse a MAC curve built for Brazil by 2030, and show that misinterpreting MAC curves as abatement supply curves can lead to suboptimal strategies. It would lead to (1) under-investment in expensive, long-to-implement and large-potential options, such as clean transportation infrastructure, and (2) over-investment in cheap but limited-potential options such as energy-efficiency improvement in refineries. To mitigate this issue, the article proposes a new graphical representation of MAC curves that explicitly renders the time required to implement each measure.

Policy relevance

In addition to the cost and potential of available options, designing optimal short-term policies requires information on long-term targets (e.g. halving emissions by 2050) and on the speed at which measures can deliver emission reductions. Mitigation policies are thus best investigated in a dynamic framework, building on sector-scale pathways to long-term targets. Climate policies should seek both quantity and quality of abatement, by combining two approaches: a ‘synergy approach’ that focuses on the cheapest mitigation options and maximizes co-benefits, and an ‘urgency approach’ that starts from a long-term objective and works backward to identify actions that need to be implemented early. Accordingly, sector-specific policies may be used (1) to remove implementation barriers on negative- and low-cost options and (2) to ensure short-term targets are met with abatement of sufficient quality. Indeed, such policies can avoid under-investment in the long-to-implement options required to reach long-term targets, which are otherwise difficult to enforce.     

Distribution of emissions allowances as an opportunity

Much of the debate on climate policy in the USA focuses on the gain or loss to the macroeconomy of alternative policies to reduce greenhouse gas emissions. However, the economy is made up of multiple individuals, not a single representative agent. This article reports the results of alternative ways of distributing emissions allocations across citizens. Macroeconomic effects interact with the policy for distribution, but the distributional weights are more important for the welfare of individual agents than the economy-wide effects of the emissions reductions. Egalitarian distributions of the emissions allowances have the potential to increase the welfare of most people, even if significant emissions reductions are mandated. Focusing on the distribution of emissions allowances (or the revenues generated from an emissions tax) rather than on aggregate GDP may provide guidance in identifying and implementing politically viable solutions to the climate change mitigation problem.     

Role of energy efficiency in climate change mitigation policy for India: assessment of co-benefits and opportunities within an integrated assessment modeling framework

Addressing the challenges of global warming requires interventions on both the energy supply and demand side. With the supply side responses being thoroughly discussed in the literature, our paper focuses on analyzing the role of end use efficiency improvements for Indian climate change mitigation policy and the associated co-benefits, within the integrated assessment modeling framework of Global Change Assessment Model (GCAM). Six scenarios are analyzed here in total- one no climate policy and two climate policy cases, and within each of these one scenario with reference end use energy technology assumptions and another with advance end use energy technology assumptions has been analyzed. The paper has some important insights. Final energy demand and emissions in India are significantly reduced with energy efficiency improvements, and the role of this policy is important especially for the building and transportation sector under both reference and climate policy scenarios. Though energy efficiency policy should be an integral part of climate policy, by itself it is not sufficient for achieving mitigation targets, and a climate policy is necessary for achieving mitigation goals. There are significant co-benefits of energy efficiency improvements. Energy security for India is improved with reduced oil, coal and gas imports. Significant reduction in local pollutant gases is found which is important for local health concerns. Capital investment requirement for Indian electricity generation is reduced, more so for the climate policy scenarios, and finally there are significant savings in terms of reduced abatement cost for meeting climate change mitigation goals.     

EU corporate action as a driver for global emissions abatement: A structural analysis of EU international supply chain carbon dioxide emissions

Global greenhouse gas emissions driven by European consumption increasingly occur outside European borders. These non-European sources of emissions remain linked to Europe via the international supply chains of European companies. Leading companies are now measuring their supply chain emissions and taking tentative steps to reduce them. If such activities were to become widespread, then an opportunity may exist for European industry to drive significant emissions abatement beyond European borders. This paper provides the first analysis into the maximum potential influence European industry has over its non-European supply chain emissions. The analysis is performed at the level of aggregate industry sectors using a global Multi-Regional Input–Output model. The Total Consumption Attribution method is used to estimate the potential influence of different European industries with detailed decompositions carried out using Structural Path Analysis techniques. The potential influence of European industry over non-European supply chain emissions is found to be greater than one gigatonne of carbon dioxide. The European manufacturing sector is found to have the greatest potential influence over non-European emissions via relatively short supply chains that entail few international border crossings. The results presented in this paper provide initial evidence in support of the development of European climate policies aimed at stimulating supply chain emissions reductions activities within European companies     

Carbon reduction in the real world: how the UK will surpass its Kyoto obligations

Abstract

Carbon dioxide emissions from UK energy use have fallen by more than 20% over the last 30 years, and carbon intensity—carbon emissions per unit of GDP—has halved. These reductions have been achieved by a combination of decarbonisation of the energy system and substantial improvements in energy efficiency. Use of natural gas in power generation has been a big factor in recent years, but energy efficiency improvements in households and particularly industry have been more important over a longer period. Government policies designed primarily to address climate change have not been important contributors, until recently.

Future reductions in emissions will require more proactive policies. However, they are possible without any economic difficulties, notably by adopting cost-effective energy efficiency measures, using new renewable energy sources and reducing dependence on private cars. These policies will improve economic efficiency. The new UK Climate Change Programme includes policies that combine regulation, investment, fiscal measures and other economic instruments. By working with the grain of other social, environmental and economic policies, they can achieve far more than a carbon tax alone, set at any politically acceptable level. Modelling the costs of emission reductions using a carbon tax as the only instrument would not only massively over-estimate costs, it would bear little resemblance to real world politics.

The paper demonstrates that a more diverse set of policy instruments is likely to be an effective and politically acceptable approach in a mature industrial economy. It is concluded that the UK's Kyoto target of a 12.5% reduction in greenhouse gas emissions is not challenging. The UK Government's target of reducing carbon dioxide emissions by 20% between 1990 and 2010 is also achievable. By 2010 per capita emissions from the UK will be well below 2.5 tC per year. Claims that some countries, notably the USA, could not reduce per capita emissions below 6 tC per year seem inconsistent with this experience.     

Modeling endogenous learning and imperfect competition effects in climate change economics

In this two-part paper we evaluate the effect of “endogenizing” technological learning and strategic behavior of agents in economic models used to assess climate change policies. In the first part we show the potential impact of R&D policies or demonstration and deployment (D&D) programs in the context of stringent stabilization scenarios. In the second part we show how game-theoretic methods can be implemented in climate change economic models to take into account three types of strategic interactions: (i) the market power of the countries benefiting from very low abatement costs on international markets for CO₂ emissions, (ii) the strategic behavior of governments in the domestic allocation of CO₂ emissions quotas, and (iii) the non-cooperative behavior of countries and regions in the burden sharing of CO₂ concentration stabilization. The two topics of endogenous learning and game-theoretic approach to economic modeling are two manifestations of the need to take into account the strategic behavior of agents in the evaluation of climate change policies. In the first case an R&D policy or a demonstration and deployment (D&D) program are put in place in order to attain a cost reduction through the learning effect; in the second case the agents (countries) reply optimally to the actions decided by the other agents by exploiting their strategic advantages. Simulations based on integrated assessment models illustrate the approaches. These studies have been conducted under the Swiss NCCR-Climate program.     

EU 20-20-20 energy policy as a model for global climate mitigation

The EU has established an aggressive portfolio with explicit near-term targets for 2020 – to reduce GHG emissions by 20%, rising to 30% if the conditions are right, to increase the share of renewable energy to 20%, and to make a 20% improvement in energy efficiency – intended to be the first step in a long-term strategy to limit climate forcing. The effectiveness and cost of extending these measures in time are considered along with the ambition and propagation to the rest of the world. Numerical results are reported and analysed for the contribution of the portfolio's various elements through a set of sensitivity experiments. It is found that the hypothetical programme leads to very substantial reductions in GHG emissions, dramatic increases in use of electricity, and substantial changes in land-use including reduced deforestation, but at the expense of higher food prices. The GHG emissions reductions are driven primarily by the direct limits. Although the carbon price is lower under the hypothetical protocol than it would be under the emissions cap alone, the economic cost of the portfolio is higher, between 13% and 22%.     

The scale and drivers of carbon footprints in households,cities and regions across India

The carbon footprint (CF) has emerged as an important yardstick to understand the total contribution of countries, sectors and individuals to climate change. In contrast to conventional emissions accounting which captures only territorial or local production activities, the CF includes the emissions imposed by consumption across global supply chains for goods and services. Recent interest has grown in the application of CF assessment for municipalities owing to their large contribution to global carbon emissions and the limited coverage of existing data to monitor their climate pledges. By linking household-level consumer surveys to a global supply chain database, spatially-explicit CF assessment is possible at a district and household scale. To date, such technique has exposed otherwise unforeseen differences in consumer carbon footprints in developed countries. Within this study we calculate and compare the household carbon footprints 623 districts in India, based on micro consumption data from 203,313 households and explain their variation by economic, cultural and demographic factors. We show the eradication of extreme poverty does not conflict with ambitious climate change mitigation in India. However, our analysis suggests CF reduction policies within India need to target high-expenditure households which are responsible for nearly seven times the carbon emissions than low-expenditure households (living on $1.9 consumption a day). These vast disparities between the carbon footprint of citizens in India highlights the need to differentiate individual responsibilities for climate change in national and global climate policy.     

美国宣布退出《巴黎协定》后全球气候减缓、资金和治理差距分析

2017年6月1日,美国总统特朗普正式宣布退出《巴黎协定》,有关美国退协原因、后续影响和应对策略的研究成为国际社会关注的焦点。本文基于自主构建的美国政策评估模型,综合定性定量分析,系统评估了美国宣布退出《巴黎协定》可能造成的全球气候变化减缓、资金和治理"三大赤字",并据此提出中国的应对策略和建议。研究表明,考虑美国退协对后续政策的影响,美国2030年的排放将有可能达57.9（56.0~59.8）亿t CO₂-eq,仅相当于在2005年的水平上下降12.1%（9.1%~15.0%）,相对自主贡献目标情景将上升16.4（12.5~20.1）亿t CO₂-eq,额外增加8.8%~13.4%的全球减排赤字。美国拒绝继续履行资金支持义务还将使得本不充裕的气候资金机制更加雪上加霜,绿色气候基金（GCF）的筹资缺口将增加20亿美元,而长期气候资金（LTF）的缺口每年将增加50亿美元左右。这就要求欧盟和日本对GCF的捐助至少上升40%,同时欧盟及其成员国的长期资金支持至少上浮25.2%才能填补上述资金赤字。美国是全球气候博弈的重要一方,且美国退协的影响已蔓延至全球治理的主要议事平台,期望中欧、基础四国+等模式短期内迅速填补美国退出后全球气候治理的治理赤字是不现实的,政治推动乏力的情况可能会在今后一段时期内始终存在。虽然国际社会对中国领导全球气候治理充满期待,但中国应有清醒认识,全面评估"接盘"美国领导力的成本、效益和可行性,并秉持"国家利益"优先的原则,谋定而后动。同时,中国应聚焦国内工作,凝聚应对气候变化的战略共识,做好长期战略谋划,并积极推动国际社会从合作中寻找出路应对"三大赤字"难题。     

Carbon capture and storage policy in the United States: A new coalition endeavors to change existing policy

Carbon capture and storage (CCS) is considered by some to be a promising technology to reduce greenhouse gas emissions, and advocates are seeking policies to facilitate its deployment. Unlike many countries, which approach the development of policies for geologic storage (GS) of carbon dioxide (CO₂) with nearly a blank slate, the U.S. already has a mature policy regime devoted to the injection of CO₂ into deep geologic formations. However, the existing governance of CO₂ injection is designed to manage enhanced oil recovery (EOR), and policy changes would be needed to manage the risks and benefits of CO₂ injection for the purpose of avoiding GHG emissions. We review GS policy developments at both the U.S. federal and state levels, including original research on state GS policy development. By applying advocacy coalition framework theory, we identify two competing coalitions defined by their beliefs about the primary purpose of CO₂ injection: energy supply or greenhouse gas (GHG) emission reductions. The established energy coalition is the beneficiary of the current policy regime. Their vision of GS policy is protective: to minimize harm to fossil energy industries if climate policy were to be enacted. In contrast, the newly formed climate coalition seeks to change existing GS policy to support their proactive vision: to maximize GHG reductions using CCS when climate policy is enacted. We explore where and at what scale legislation emerges and examine which institutions gain prominence as drivers of policy change. Through a detailed textual analysis of the content of state GS legislation, we find that the energy coalition has had greater success than the climate coalition in shaping state laws to align with its policy preferences. It has enshrined its view of the purpose of CO₂ injection in state legislation, delegated authority for GS to state agencies aligned with the existing policy regime, and protected the EOR status quo, while creating new opportunities for EOR operators to profit from the storage of CO₂ The climate coalition's objective of proactively putting GS policy in place has been furthered, and important progress has been made on commonly held concerns, such as the resolution of property rights issues, but the net result is policy change that does not significantly revise the existing policy regime.     

Carbon taxes: a review of experience and policy design considerations

State and local governments in the USA are evaluating a wide range of policies to reduce carbon emissions, including carbon taxes, which have existed internationally for nearly 20 years. In this article, existing carbon tax policies, both internationally and in the USA, are reviewed, and carbon policy design and effectiveness are analysed. Design considerations include which sectors to tax, where to set the tax rate, how to use tax revenues, what the impact will be on consumers, and how to ensure that emissions reduction goals are achieved. Emissions reductions that are due to carbon taxes can be difficult to measure, although some jurisdictions quantify reductions in overall emissions, others examine impacts that are due to programmes funded by carbon tax revenues.     

Diffusion of global climate policy: National depoliticization,local repoliticization in Turkey

Although climate policy diffusion is widely studied, we know comparatively little about how these global policies and the norms that surround them are used by various political actors seeking to advance their own agendas. In this article, we focus on how global climate norms are diffused differently at national and local scales and used to repoliticize or depoliticize climate change. We focus on the case of Turkey, which carries the stark contrast of showing willingness to achieve global climate goals in the international arena but less so in domestic politics and actions. The article employs a novel methodological approach, using topic modeling and network analyses on a range of climate change–related policy documents, and interviews with high-level officers, conducted at the three jurisdictional levels in Turkey. The findings reveal that although global climate policy is diffused to both national and local governments, it is used in different ways at these levels. The national government uses climate policy diffusion to depoliticize climate change by creating ad hoc climate coalitions and limiting local climate actions to seeking external climate-related funds. Meanwhile, the metropolitan municipalities replicate nationally adopted climate goals, whereas the district municipalities domesticate ambitious climate norms and repoliticize climate change via local climate entrepreneurs and civic action. The paper contributes to understanding how climate policy diffusion and norm domestication can have different political outcomes in achieving global climate goals and argues for increased policy attention to the strategic use of climate policy diffusion for the depoliticization of climate change.     

Delayed action and uncertain stabilisation targets. How much will the delay cost?

Despite the growing concern about actual on-going climate change, there is little consensus on the scale and timing of actions needed to stabilise the concentrations of greenhouse gases. Many countries are unwilling to implement mitigation strategies, at least in the short term, and no agreement on an ambitious global stabilisation target has yet been reached. It is thus likely that international climate policies will be characterized by a high degree of uncertainty over the stringency of the climate objective, and that some countries might delay their participation to global action. What additional economic costs will this delay in the adoption of mitigation measures imply? What would the optimal short-term strategy be given the uncertainty surrounding the climate policy to come? Is there a hedging strategy that decision makers can adopt to cope with delayed action and uncertain targets? This paper addresses these questions by quantifying the economic implications of delaying mitigation action, and by computing the optimal abatement strategy in the presence of uncertainty about a global stabilisation target (which will be agreed upon in future climate negotiations). Results point to short-term inaction as the key determinant for the economic costs of ambitious climate policies. They also indicate that there is an effective hedging strategy that could minimise the cost of climate policy uncertainty over the global stabilisation target: a short-term moderate climate policy would be a good strategy to reduce the costs of delayed action and to cope with uncertainty about the outcome of future climate negotiations. By contrast, failing to curb emissions in the short term imposes rapidly increasing additional costs of compliance.