De-risking Decarbonization: Accelerating Fossil Fuel Retirement by Shifting Costs to Future Winners

Abstract

AbstractFossil fuel–rich developing countries should be included in climate change mitigation. But they need money, above what rich countries have been willing to provide, to do so. I argue that existing approaches to international and intergenerational transfers have failed to bridge the gap between developing and developed countries’ interests. I present a new model in which the costs of present climate action are distributed not according to present or historical wealth but according to future wealth. I demonstrate the basic feasibility of this approach with an implementation I call income-adjusted guarantees. I argue that such an arrangement can help accelerate fossil fuel retirement in developing countries and break the deadlock over global climate financing.