GTAP Resources: Resource Display
| GTAP Resource #7143 |
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"A WTO-Compatible Climate Club that Solves the Free-Rider Problem in Global Climate Policy" by Tarr, David G. Abstract The voluntary Paris Climate Agreement (and the Kyoto Protocol) has failed to halt the growth of global emissions of greenhouse gases (GHGs) since it does not address the free-rider problem in international climate agreements. To address the free-rider problem, Nordhaus (2015) proposes a Climate Club based on a minimum carbon price and penalty tariff surcharges on imports of non-members, which he acknowledges needs an amendment to the World Trade Organization (WTO). We explain that an amendment is not viable, and the lack of a viable WTO-complaint path has prevented the Nordhaus-style Climate Club from gaining support in policy circles. We propose a Climate Club in which member countries commit to net-zero emissions by 2050 with intermediate goals, impose penalty tariffs on imports of non-members and progressive tariffs on members who do not meet intermediate targets. This Climate Club meets the conditions of successful cooperative agreements on common resources since it contains reciprocal commitments and has penalties for non-compliance. It is WTO compliant under the GATT Exception clause for the conservation of exhaustible natural resources since, unlike the Nordhaus proposal, countries are permitted to choose their own regulatory regime to achieve net-zero emissions; and it can be implemented immediately. To achieve net-zero emissions by 2050, model estimates indicate the world needs both rapid technological advance to lower the costs of clean energy as well as an effective Climate Club. We propose that all high-income countries devote between 0.15 and 0.20 percent of their GDP to technologies that lower the relative price of green energy. |
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- Climate change policy - Climate impacts - Environmental policies - Renewable energy - Sustainable development - Trade and the environment - Multilateral trade negotiations - Not Applicable |
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Public Access  Paper (594.9 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
