An international climate club: to give ourselves bigger sticks to combat climate change

climate-smokestacks-international-climate-clubTo prevent global climate catastrophe, humanity needs bigger “sticks” to curb carbon pollution. But how can we enact the necessary requirements, rules, and incentives when certain American politicians are standing in the way?

This piece in The New York Times highlighted an intriguing answer: establish an international climate club. An idea that experts are praising as “exciting and provocative,” the climate club would essentially act as a mechanism for other countries to create smaller sticks with or without initial cooperation from the United States — leading to bigger sticks operating globally.

As proposed by Prof. William Nordhaus at Yale, a renowned scholar on the economics of climate change, the countries committed to reducing carbon emissions could band together to impose a tariff on imports from non-participating countries. The resulting climate club could launch without the initial participation of all countries, including the United States. The expectation is that the eventual costs of non-participation would push holdout nations to join.

Nobel Laureate and professor of economics Robert Shiller explained the concept in The New York Times:

In his presidential address before the American Economic Association in Boston in January, William D. Nordhaus of Yale proposed what he calls “climate clubs.” Here is a genuinely concrete idea that might work to stop global warming. As he defines it, a climate club is a group of countries that agree to create incentives for people to reduce carbon emissions, while also erecting tariff barriers on imports from countries that are not members of the club.

The tariff barriers contribute to a virtuous cycle: They provide an incentive for countries in the club to create incentives for individuals to reduce emissions. Professor Nordhaus’s analysis relies on the economic theory of clubs and on his own Coalition DICE model, which shows costs and benefits from reducing emissions for each country or region in the world today.

A climate club may start with only a few countries and then grow as others join. The club may grow through time rather than collapse as we saw with the Kyoto Protocol. Now they will be coming into the club as they see, over the years, the advantages of membership.

In effect, the international climate club would change the costs-benefits analysis for resistant countries by putting a price on carbon that operates through international trade law. For Americans, the cost of our country not participating would be $44 billion a year—quite the stick to get our country fully onboard.

For more information, see “How Idealism, Expressed in Concrete Steps, Can Fight Climate Change,” The New York Times (2015); “Climate Deal Badly Needs a Big Stick,” The New York Times (2015).