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Published on Monday, December 14, 2020

Global | A club where no one freeloads off the climate

Europe has invited the US to work on an agenda for global change on four issues that are becoming increasingly challenging: health, the environment, trade and technology, and political governance. However, the mechanisms for implementing these measures have not been mentioned. Altruism and containing China are not enough.

Key points

  • Key points:
  • With climate change, it is particularly important to find effective multilateral governance mechanisms. Despite the Kyoto Protocol and the Paris Agreement, global greenhouse gas emissions have not even stabilized (they only fell in 2009 with the global recession, as they will in 2020).
  • The current nationally determined contributions under the Paris Agreement will not stop temperatures rising. The solution presented by the winner of the Nobel Memorial Prize in Economic Sciences and of the BBVA Foundation's Frontiers of Knowledge Award, W. Nordhaus, is to establish a climate club. The club will have a common and ambitious objective of reducing emissions and will issue fines to those who do not comply with such objectives, particularly to those who are not members of the club.
  • These fines can be implemented with border adjustment mechanisms for the carbon content of imports or directly with a general environmental tariff. The aim is that it will be profitable to be part of the club so people stop freeloading off the climate.

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