The budget approach: A framework for a global transformation toward a low-carbon economy

Latest research shows that there is only a realistic chance of restricting global warming to 2 °C if a limit is set to the total amount of CO2 emitted globally between now and 2050 (global carbon dioxide budget). We move this global budget to the forefront of our considerations regarding a new global climate treaty in the post-Copenhagen process. [The authors are members of the “German Advisory Council on Global Change” (WBGU). The WBGU recently published a study on “Solving the climate dilemma: The budget approach.” This paper builds on the fundamental ideas and findings of the WBGU study and demonstrates that the budget approach could serve as a cornerstone for an institutional design for a global low-carbon economy.] Combining findings from climate science and economics with fundamental concepts of equity, the “budget approach” provides concrete figures for the emission allowances that are still available to countries, assuming they want to prevent the destabilization of the planet’s climate system. Our calculations demonstrate that the time pressure for acting is almost overwhelming—in industrialized countries and also in emerging economies and many developing nations. We suggest several institutional innovations and rules to manage the global and the national CO2 budgets in a transparent, fair, and flexible way. A sober analysis of the state of the art of climate change science and of the state of multilateral attempts to create an effective climate protection accord so far reveals that the budget approach can provide crucial orientation for the negotiations toward a comprehensive post-Copenhagen climate regime. The approach facilitates at the same time an institutional design for a low-carbon global economy, setting the necessary incentives for decoupling economic growth from the burning of fossil fuels.