Quantification of an efficiency–sovereignty trade-off in climate policy

RFF-CMCC-NAVIGATE Webinar February 18, 2021 – h. 03:00 pm CET Speaker: Nico Bauer, Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association, Potsdam, Germany Discussant: Ulrike Kornek, Kiel University (CAU), Mercator Research Institute on Global Commons and Climate Change (MCC), Germany Moderator: Johannes Emmerling, RFF‐CMCC European Institute on Economics and the Environment (EIEE), Centro Euro‐Mediterraneo sui Cambiamenti Climatici, Italy The Paris Agreement calls for a cooperative response with the aim of limiting global warming to well below two degrees Celsius above pre-industrial levels while reaffirming the principles of equity and common, but differentiated responsibilities and capabilities. Although the goal is clear, the approach required to achieve it is not. Cap-and-trade policies using uniform carbon prices could produce cost-effective reductions of global carbon emissions, but tend to impose relatively high mitigation costs on developing and emerging economies. Huge international financial transfers are required to complement cap-and-trade to achieve equal sharing of effort, defined as an equal distribution of mitigation costs as a share of income, and therefore the cap-and-trade policy is often perceived as infringing on national sovereignty. Here we show that a strategy of international financial transfers guided by moderate deviations from uniform carbon pricing could achieve the goal without straining either the economies or sovereignty of nations. Read more here: https://www.cmcc.it/lectures_conferen...