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This chapter examines the equity implications of the “bottom-up” approach to climate change negotiations by analyzing the individual country unconditional greenhouse gas reduction pledges specified in the COP21 Agreement of 2015. It compares the implications before and after emissions trading in terms of the standard equity metrics of the Gini coefficient and Atkinson index for three major countries/regions: the European Union, China, and California. The chapter adapts a nonlinear programming model well suited to this purpose that determines the equilibrium emissions allowance price, mitigation costs, and allowance purchases and sales from trading. It also tests the sensitivity of the results to macroeconomic conditions and technological change. The findings are that the pledges made at COP21 reflect substantial inequality in general and run counter to most equity principles. They are definitely a major departure from the Egalitarian, Vertical, and Rawlsian equity principles proposed for many years by developing countries.

This chapter highlights some of the main reasons for uncertainty regarding the Clean Development Mechanism's (CDM) project performance, to assess the complaints brought forward, and to summarize briefly the proposals for reform that have been made up till late 2008. It also discusses whether the Conference of the Parties to the UNFCCC serving as the Meeting of the Parties to the Kyoto Protocol (COP/MOP) has lived up to the expectations of the private sector stakeholders in CDM projects and what still remains to be done. The first section describes the overarching principles of CDM rule-making and how it impacts on CDM project development. The second section focuses on the situation in which project developers as well as Certified Emission Reduction (CER) buyers find themselves when they need to predict if, when, and how many CERs a project will deliver in the future. The third section describes typical reasons for the uncertainty that surrounds the CDM potential of a proposed greenhouse gas (GHG) mitigation project at an early stage of project development, e.g. at Project Identification Note Stage (PIN). The fourth section exemplifies the challenges of determining the CDM potential of a project that has been submitted for validation with a corresponding Project Design Document (PDD). The fifth section looks at reasons for the uncertainty surrounding the issuance of CERs after there has been CDM registration of a project. Finally, overviews on proposals for reform and the decisions made by the COP/MOP in December 2008 designed to improve CDM performance are provided.

The present study incorporated game-theoretic solutions into a well-known integrated assessment (IA) model. The extensive simulations of game-theoretic solutions in the RICE model have shown that the regional incentive to join the global coalition of greenhouse gas (GHG) mitigation is an important aspect of IA modeling. This epilogue suggests future research directions and topics employing the research methodologies in this book. These include coalition formation in an uncertain system, in-depth analysis of subcoalitions, and structuring the “closed-loop” strategies in an IA modeling/game-theoretic solution framework.

This chapter applies the game-theoretic solutions of RICE to some policy-related issues in climate change. It analyzes the difficulties confronted by unilateral actions such as the Kyoto Protocol from an incentive angle. It examines the sustainability of the Lindahl equilibrium solution under various unexpected shocks in economic/climate systems. It considers redistribution and transfer issues in greenhouse gas (GHG) mitigation policies from game-theoretic perspectives. Furthermore, the second-best properties of subcoalitions of GHG mitigations are inspected.