Rebound policy in the Paris Agreement: instrument comparison and climate-club revenue offsets

Abstract

It is argued that without an international climate treaty, or with a soft treaty in the form of voluntary pledges, well-intended local and national climate strategies will seriously rebound in terms of energy use and CO2 emissions. I unravel the complexity of rebound in an international context, for which purpose the distinction between national and international rebound is introduced. The main climate–energy strategies and policies are assessed based on their capacity to control rebound, with carbon pricing – especially cap-and-trade – appearing to be the best approach. It is argued that motivations for further negotiations on amendments to the recent Paris climate agreement, namely on national policy coordination, can be strengthened by rebound concerns. As part of this, a new suggestion is to complement carbon equalization tariffs on carbon-intensive goods imported from countries with weak or non-existent climate policies with ‘revenue-recycling offsets’. These offsets would ease the political way to implementing carbon equalization tariffs, in turn creating pressure on countries to sign an effective climate treaty – a requirement to achieve consistent and serious carbon pricing worldwide. To support these arguments, the empirical patterns of rebound estimates are broadly outlined.Policy relevanceRebound is given scant attention in both IPCC documents and UNFCCC climate summits, where climate agreements are negotiated. This article argues that without an international climate treaty, or with a soft treaty in the form of voluntary pledges, as characterizes the recent Paris climate agreement, well-intended local and national climate strategies will seriously rebound in terms of CO2 emissions. This means that the motivations for climate negotiations can be strengthened by drawing attention to rebound concerns. The major current climate–energy strategies and policies are assessed on the basis of their capacity to control rebound, with carbon pricing – notably cap-and-trade – revealed to be the best approach. Further analysis and discussion of this is welcome, especially as rebound is neglected in the comparisons of carbon tax and emissions trading solutions to global warming. In particular, rebound should be added to the set of core criteria for judging and comparing instruments of climate policy. In addition, a new suggestion offered is to complement a climate club with carbon equalization tariffs on carbon-intensive goods imported from countries lacking strong climate policy with ‘revenue-recycling offsets’. This would make the implementation of such tariffs more politically feasible as well as creating pressure on countries to sign an effective climate treaty.