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Model Governance and Emissions Models, Transparency and Climate Policy in China and the EU

Last week Reuters published a brief article updating the public on the status of Beijing’s emissions trading system, with its thinly traded volumes and largely opaque transactions. The crux of the article comes in the last paragraph, Without transparent data, it is hard for investors to position themselves,” said another trader, who asked not to be identified because he is not authorized to speak to the media. It doesn’t bode well for the strength of China’s emissions trading system that the person willing to speak out about its core problem, lacking the State’s imprimatur to open his or her mouth, prefers to remain anonymous. This is not the kind of environment in which strong climate policy can prosper.

But opaque climate policy is not just the purview of post-communist oligarchies.  Earlier this month at a meeting on modeling for climate policy at Breugel, a Brussels-based economic policy think tank, attendees were privy to the spectacle of Peter Zapfel, Assistant to the European Commission’s Director General for Climate Action, telling the crowd that they should ask themselves how much transparency the public really needed. The issue in question was the closed-source PRIMES model, the partial equilibrium model used by the European Commission to determine the impacts of different climate policies and to justify the policies selected by the Commission for the achievement of their own 2030 targets for climate clean energy. Attendees representing environmental NGOs in the room, including Friends of the Earth, WWF, and Greenpeace were demanding that that the basic assumptions of the model be made public.

Zapfel’s response, in essence, was that the top line outputs of the model were all that mattered; civil society didn’t need to worry its little head about the inputs. To illustrate his point, Zapfel added that he used to want to know all of the technical specifications of his camera or computer, but then he realized that that was too much information, and all he really needed to know was whether the camera or computer was good or not.

It was a strange analogy from a technocrat, given that revelations about unbounded reach of the United States NSA have recently left the whole world to learn the hard way the dual perils both of not fully understanding the capabilities of their own high technology and of taking a government that says, “just trust us, it’s for your own good” at its word.

Complex systems create the possibility for magnification of small error; therefore, as societies increasingly rest on complex systems, they have a greater, not lesser need for transparency and for civil society organizations to observe and translate the importance of the small details to the public. Whether those details are the discount rates or technology assumptions used in a model, or the quality of continuous emissions monitors used to measure the integrity of an emissions trading system, they have the potential to create consequences of national and even global significance when climate change is what is at stake.

The European Commission has listed “new governance systems” as one of the key elements of the policy framework for its 2030 climate and energy goals. As the Commission sorts out exactly what this means, it would do well to remember just how foundational transparency is to good governance. Both China and the European Union are making real attempts to find the best solutions—both in policy formation and implementation—for the reforming their energy systems, but gagging or blinding their best watchdogs is the wrong way to be spending their efforts.

This article was also posted on The Energy Collective.

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