How do countries set greenhouse gas emissions limits?

Summary

Nationally Determined Contributions (NDCs) are climate action plans for countries to cut emissions and adapt to climate impacts.

NDCs can be absolute or relative — achieving emissions reductions in absolute terms, or relative to a 'business as usual’ scenario or other metric.

NDCs can also be conditional or unconditional — whether or not they depend on international financing and support.

These factors have a significant impact on whether a country can reduce its emissions, and by how much.

As countries refine their NDCs, energy system models can help test the feasibility of their emissions targets.

This is part two in a three-part series on emissions. Part one introduces the concept of emissions limits, while part three provides more detail on Nationally Determined Contributions (NDCs).

In our previous explainer on emissions, we discussed what emission limits are, why they’re important to energy planners and system modellers, and how they’re set at a global and national level.

In this explainer, we’re taking a closer look at the frameworks that determine how countries set their emissions reductions targets, and the impact that they have on global climate change mitigation goals.

What are Nationally Determined Contributions?

A Nationally Determined Contribution, or NDC is a climate action plan for a country to cut emissions and adapt to climate impacts. Each Party to the Paris Agreement is required to establish an NDC and update it every five years.

The first NDCs were set in 2015 at COP21 in Paris. Previous emissions targets lacked the ambition to keep global temperatures ‘well-below 2°C’ compared with pre-industrial levels, so the NDCs were designed to be a mechanism to increase the ambition of delegates and to keep the Paris Agreement’s goal of 1.5°C within reach. That year, 197 countries submitted their NDC.

As part of the agreement, countries were encouraged to submit more ambitious NDCs every five years. As of writing, the level of ambition within NDCs has not significantly increased.

The vast majority of NDC targets are economy-wide, which means that they look beyond the direct greenhouse gas emissions of a nation’s power sector and into the knock-on impacts of emissions mitigation upon the wider economy. Therefore, factors like manufacturing, farming, employment, and transport may be taken into account when drafting an NDC.

NDCs are also based on relative or absolute emission reductions by 2030, with some countries also submitting longer-term targets up to 2050 and beyond.

Relative vs. absolute emissions reduction

NDCs stating absolute emissions reductions could be described as the gold standard, as they leave little room for interpretation: it means that a country will commit to reduce emissions by a certain amount, by a certain year, compared to a previous year. For example, the UK commits to reducing economy-wide greenhouse gas emissions by at least 68% by 2030, compared to 1990 levels. Most Annex I countries have submitted absolute emissions reduction targets.

Relative emissions reductions, on the other hand, especially those based on a relative reduction to a ‘business as usual’ emissions projection, can be far more subjective.

A relative emissions reduction target is relative to

• A ‘business as usual’ (BAU) projection of a nation’s emissions in 2030.

or

• A carbon intensity metric derived from a forward projection of national GDP.

A country might succeed in reducing its emissions relative to an alternative scenario, but still register increased emissions year-on-year at a rate that is incompatible with global climate policy.

Most non-Annex I countries have submitted some form of relative emissions reduction targets. Relative targets can also be unconditional or conditional.

Unconditional vs. conditional emissions targets

Some non-Annex I countries do not have the resources to achieve their NDC targets without significant financial, technology transfer, and capacity-building support from Annex I countries. Therefore, they might include both an unconditional and conditional target when submitting a relative emissions reduction in the NDC. Conditional targets can only be achieved if they receive certain support, such as:

1. Access to affordable international finance streams to fund renewable energy investments
2. Transfers of capital, or international debt relief, for maintaining a global carbon sink such as a rainforest

This table shows a range of Annex I and non-Annex I countries, and the nature of their NDC targets.

How do NDC conditions change a country’s emissions target?

Whether an NDC is relative or absolute, conditional or unconditional can have a significant impact on how likely the country is to meet their goal under a range of different circumstances.

We’ll illustrate this with an example, ‘Country A’, which has submitted two relative NDCs, one conditional, the other unconditional.

In this figure, the blue line shows Country A’s BAU scenario emissions trajectory. As you recall, this is based on a projection of Country A’s emissions if it were to make no attempt to reduce or mitigate its GHG emissions modelled up to the year 2030.

Relative to this BAU scenario, there are two other emissions reduction targets. The green line is a conditional target of 60%. For this target, Country A has been allocated climate finance support under its NDC and is expected to deliver higher emissions reductions. In this scenario, emissions decrease.

Finally, the orange line is an unconditional target of 30% emissions reductions relative to the BAU scenario. For this target, no additional capital or finance has been allocated to Country A under its NDC. As can be seen, the target shows a relative reduction to the BAU scenario but in absolute terms, emissions actually increase.

Using this information, we can now set a carbon budget for Country A, measured in million tonnes of carbon dioxide (MtC02).

As we can see, the BAU scenario and assumptions underlying those projections can have an outsized impact on the level of emissions targets under a conditional or unconditional NDC.

How do we model emissions targets?

As countries and regions continue to refine their NDCs, it becomes essential to integrate these constraints into energy system models to understand the feasibility of meeting these targets while balancing energy demand, technology deployment, and costs.

Now this part gets a bit technical. We include the emissions target in our modelling as an upper bound constraint (i.e., ∑ emissions2030 ≤ carbon budget).

The model underlying our platform (OSeMOSYS) uses ‘perfect foresight’, meaning it can ‘see’ the 2030 target, and calculate the the optimal path forward and necessary rate of decarbonisation leading up to 2030 based on several factors:

• How strict the carbon limit is – The model calculates how much effort (and cost) is needed to cut emissions enough to stay under the target.
• How fast new technology can be built – It considers real-world limits on how quickly low-carbon solutions, like renewables, can be deployed.
• Future vs. current costs – The model factors in how prices for energy and technology might change. For example, if renewables are expected to get cheaper by 2030, it may plan for a faster shift to clean energy later on.

In our next explainer in this series about emissions, we’ll take a look at other concepts that influence NDCs.

Resources

1. Nationally Determined Contributions Registry | UNFCCC
2. IGES NDC Database
3. Home | Climate Action Tracker