Climate Clubs Research Articles

Carbon border adjustments or climate clubs: Impacts on African agricultural sectors under different cooperative scenarios

AbstractDespite the rapid acceleration of climate change, international climate negotiations have yet to implement effective mitigation action. This failure can be attributed to the phenomenon of free‐riding behaviours and the adverse effects of unilateral abatement policies, such as carbon leakage. The introduction of a Carbon Border Adjustment Mechanism (CBAM), as planned by the EU and the creation of climate clubs represent two potential solutions. However, both present uncertainties regarding their trade impacts, effectiveness and equity implications, particularly for developing countries. The outcome of these alternative unilateral or cooperative solutions is analysed using a dynamic CGE model, with a particular focus on the EU‐Africa relations and the agricultural sector. The results indicate that the effectiveness of CBAM in preventing carbon leakage and supporting EU climate goals depends on foreign partners implementing domestic carbon pricing mechanisms. Conversely, for African regions, domestic mitigation efforts and exemption from CBAM can enhance export competitiveness on EU markets while reducing global carbon leakage. Overall, the establishment of climate clubs, coupled with the transfer of technology and the diffusion of best practices in agriculture, can support developing countries and facilitate an inclusive and environmentally beneficial development transition.

Climate clubs and firm environmental performance: A regional institutional perspective

This research focuses on informal club-based institutions to boost a firm's engagement in environmental practices. Specifically, we investigate the effect of a firm's climate club membership on its corporate environmental performance. Our empirical analyses rely on a sample of firms from 142 Western European regions during 2011-2019. Results show that stronger climate club engagement of firms within a same region of a focal firm may act as an informal institution, improving the latter's environmental performance. We also find that the impact of those informal club-based institutions outsizes the effect exerted by the quality of formal regional institutions, and that strong informal climate club-based institutions might be able to partly replace the role of regional formal institutions in that ESG domain. Finally, we delve into several mechanisms potentially driving the observed impacts of regional formal and informal institutions on firms’ environmental performance.

Addressing Impacts from Climate Change Within International Legal System: More Precise Distribution of Responsibilities

As the international challenges resulting from climate change become emergent, how to reform international law and institutions to reduce the effects of climate change has become a crucial issue. This paper carries out surveys on regulating and restructuring the present international law system about current issues and provides suggestions for further practice. We can also consider building a climate club. The existing climate regulation mechanism needs to improve, leading to problems such as carbon leakage and free riding. Climate clubs can urge countries to fulfill their obligations by rewarding member states that fulfill their obligations and cracking down on non-member states. Apart from efforts in environmental governance, the international law system should also attach attention to the issue of climate refugees as a reaction to climate change. The last article argues that international society should provide legal protection for climate refugees, and it is reasonable for them to acquire a formally defined legal status for future humanitarian care. This thesis also explores the potential role of regional bodies in addressing climate change outside of the United Nations Framework Convention on Climate Change (UNFCCC) and the legitimacy of their responsibilities based on constitutional treaties, their role in regulating the international commons, and their relationship to the UNFCCC. Based on this, this thesis suggests that regional institutions take on more responsibility in regulating state obligations and propose possible solutions to the climate change crisis. CBDR is an essential principle in the cooperation among countries to solve the problem of global climate change. It makes global cooperation fairer and more effective but also generates some problems. The main problem is that there is no clear division of responsibilities between countries, and policies must be implemented. This paper proposes three ways to divide responsibilities and argues that companies must actively participate in global emission reduction activities.

Supply‐side climate policy: A new frontier in climate governance

AbstractFrom the margins of climate governance, supply‐side policies that seek to restrict the production of climate‐heating fossil fuels and keep sizeable quantities of remaining reserves in the ground are gaining greater prominence. From national‐level production bans and phase‐out policies to divestment campaigns and the creation of “climate clubs,” such as the Beyond Oil and Gas Alliance (BOGA), an increasing number of such policies are being adopted by national and state governments, cities and financial actors around the world. This marked shift in climate governance reflects a growing recognition that the temperature goals of the Paris Agreement cannot be achieved without enhanced efforts to leave large swathes of remaining fossil fuel reserves in the ground and actively phase‐out existing fossil fuels infrastructures. Unsurprisingly, there has been increasing scholarly attention to different dimensions of supply‐side policy: from identifying the nature and scale of the “production gap” (between planned fossil fuel production and that which is compatible with climate goals), to initial attempts to map and explain the adoption of supply‐side policies across different regions and sectors, as well as forward‐looking analysis of possible pathways to multilateral supply‐side agreements. This article surveys this academic and policy landscape to review what we currently know about supply‐side policies: how, when, why and by whom they are adopted, how significant they are, and the ways in which national and regional measures might be supported multilaterally.This article is categorized under: Policy and Governance > Multilevel and Transnational Climate Change Governance Climate, Nature, and Ethics > Climate Change and Global Justice

Centralized climate clubs and decentralized governance: A model of global CO2 mitigation

AbstractThis paper extends the climate literature by examining the feasibility of integrating sub‐national governance into global club governance for mitigating CO2 emissions. Global climate clubs become an argument for having separate bundles of emission targets and incentive mechanisms in the form of opportunities for climate finance and technology sharing among the club members. An exploratory analysis is important to examine the role of import and export taxes and other channels, such as the clean development mechanism, in meeting the objective of nonmember countries to join the club. The crux, however, is how, after determining national‐level quotas, the mitigation responsibilities are shared with subnational entities. We propose a design of a carbon entry tax at the subnational level, namely states, districts, and municipalities. The carbon entry tax uses the nighttime luminosity data published by NASA as a measure of carbon, which constitutes the tax base. The carbon entry tax serves as a fiscal instrument of decarbonization in a decentralized framework.

Bridges over troubled waters: Climate clubs, alliances, and partnerships as safeguards for effective international cooperation?

Driven by the motivation to raise the ambition level of climate action and to foster the transformation of economies, current climate policy discourse revolves around ways to improve cooperation between industrialized countries and emerging economies. We identify three broad types of initiatives—multilateral-cross sectoral, multilateral, sector specific, and climate and development partnerships—and assess them for potentials to deliver on such objectives with a specific focus on industry transformation. This paper provides new reflections on the institutionalization of international climate cooperation. Specifically, we demonstrate the urgent need to understand what values, norms, and underlying principles drive a cooperation in order to draw conclusions on how to best institutionalize climate cooperation rules.in-use. We conclude that an overemphasis on a CO2 price and on carbon border adjustment mechanisms, such as in the context of the initial proposals for a cross-sectoral climate club envisaged by G7 countries, would have contributed to a further polarization of the international landscape. We find, however, that multilateral, sectoral alliances play an important role for international goal setting and the convergence on standards, metrics, and benchmarks. Based on our analysis, we recommend strengthening multilateral, sector-specific partnerships. These can be focused on sectoral topics as a connector between countries, allowing for a strategically-aligned, increasingly deep collaboration. However, for any initiative to succeed, processes of international institutionalization will be needed in order to agree on rules for implementation based on aligned interests and equity. Building such institutions may well serve as a steppingstone toward more durable cooperation structures between developed economies and emerging economies. In sum, no existing cooperation approach is perfect, but three actions may be taken to move the agenda forward: First, reform of the carbon border adjustment mechanism and removing it from the center of climate club discussions, second, coupling sectoral alliances with climate and development partnerships, and three, designing them in a way to address fears of political influence seeking and superimposition of global north agendas on the global south.

Climate clubs in the laboratory

International efforts to mitigate climate change are lagging behind. We study in an experiment a stylized climate club along the line of Nordhaus’s proposal to assess the behavioral effects on cooperation and surplus. We also evaluate in isolation the effects of different elements of the club design. Overall, a climate club increases cooperation but not surplus, with respect to voluntary cooperation in a baseline public good game.

EU Climate Leadership: Contradictions Inherent in Carbon Regulation

The article analyzes the EU Carbon Border Adjustment mechanism (CBAM) through the lens of the EU’s aspiration to strengthen its leadership in fighting climate change. The introduction of CBAM is viewed as another step toward achieving the EU's goal of climate neutrality, which has become a standard for global development. By studying the internal and external dynamics of CBAM's implementation, the article aims to analyze its role as a tool for diplomatic and exemplary leadership. On the one hand, the EU seeks to protect European producers from producers from countries with lower climate standards. On the other hand, the EU’s desire to involve other countries in creating CBAM-style mechanisms is supposed to strengthen the EU’s leadership, contributing to the formation of multilateral “climate clubs” and the gradual revision of the existing climate regime. However, the article suggests that there are inherent contradictions in the EU's approach. While it seeks to protect its economy through CBAM, it also frames these measures within the narrative of multilateral cooperation. This dual approach poses challenges to the EU's leadership potential. The protectionist nature of CBAM makes other global players, primarily the U.S., follow the same path of taking protective measures. China is not willing to give up its own framing of the climate agenda due to its importance for the construction of China’s international identity. Russia’s perception of the climate change problem is infl uenced by its national interests and the structure of economy. The projection of regulatory power beyond the EU’s borders also provokes resistance from developing and least developed countries, which can seriously damage the EU’s role as a normative power.

Effective climate clubs require ambition, leverage and insulation: Theorizing issue linkage in climate change and trade

Effective climate clubs require ambition, leverage and insulation: Theorizing issue linkage in climate change and trade

Understanding supply-side climate policies: towards an interdisciplinary framework

Once marginal in climate governance, supply-side policies which seek to restrict the production of climate warming fossil fuels are now gaining greater prominence. From national level bans and phase out policies to divestment campaigns and the creation of ‘climate clubs’ such as the Beyond Oil and Gas Alliance, an increasing number of such policies are being adopted by governments, cities and financial actors around the world. But why would states voluntarily relinquish potentially profitable reserves of fossil fuels? How can we account for the rise of supply-side policies, the form they take and the sites in which they are being adopted? What conditions and contexts are most conducive to the adoption and sustainability of ‘first mover’ bans and phase out policies? This paper seeks to build an interdisciplinary account fusing insights from diverse theoretical traditions from international political economy, political science, sociology and the literature on socio-technical transitions in order to capture the interaction of political, economic and socio-cultural drivers in national and international settings which can provide the basis of a more integrated and multi-dimensional understanding of supply-side policies. Such an account, we suggest, helps to understand the origins and evolution of supply-side policies and, more critically, the conditions which might enable the expansion of supply-side climate policies to new sites.

Protecting Future Generations Through Minilateralism: Climate Clubs and Normative Legitimacy

Despite three decades of global climate negotiations and high expectations for the 2015 Paris Agreement, global emissions continue to grow. To protect future generations from severe harm, scholars, environmentalists, and politicians alike explore potential supplements to the United Nations Framework Convention on Climate Change process. One potential supplement is climate clubs of a type where a small number of “enthusiastic” countries embark on ambitious mitigation efforts while encouraging other, more “reluctant” countries to join. Previous research has shown that this club type possesses a significant potential for expanding membership and eventually becoming highly effective in reducing global emissions. A common criticism of climate clubs, however, is that they lack legitimacy. Assessing this criticism, we argue that climate clubs of the type considered here can be normatively legitimate. The main challenge for normative legitimacy concerns climate clubs’ use of incentives, particularly negative incentives, to attract members. However, we argue that even negative incentives for participation can be legitimate, assuming they meet a set of relevant legitimacy criteria—including that the club respects human rights, provides a comparative benefit, maintains institutional integrity, implements only proportional incentives, and fulfills a requisite set of epistemic criteria. We also argue that the normative legitimacy of climate clubs’ use of incentives for compliance is less challenging than the normative legitimacy of their use of incentives for participation.

Article: Climate Clubs: An International Tax Law Perspective

Global carbon pricing has often been portrayed as an interesting idea that will never be implemented due to political hurdles. Yet, this description is being challenged: growing political support for climate clubs suggests that a global carbon price might become reality in the future. This article investigates the conditions for the adoption and implementation of a climate club based on a global carbon price by comparing it to the international corporate tax club created by Pillar Two, which was also described as politically impossible a few years ago. This comparison highlights that establishing a climate club will require addressing design issues and institutional obstacles that might be even more complex than those that characterized the negotiations of the global anti-base erosion (GloBE) rules. Climate club, carbon border adjustment measures, global carbon price, global carbon tax, GloBE rules, inclusive forum on carbon mitigation approaches, inclusive framework, international corporate tax club, Pillar Two

Climate Clubs: Their Emergence and Implications for Trade Policy

Climate Clubs: Their Emergence and Implications for Trade Policy

Mapping the empirical relationship between environmental performance and social preferences: Evidence from macro data

This paper investigates the relationship between measures of environmental performance and of social preferences, thanks to the availability of a recently published dataset on global pref- erences. Using cross-sectional observations from 76 countries, this study finds evidence from macro data of a positive and statistically significant relationship between measures of proso- cial preferences, such as positive reciprocity, trust, and altruism, and environmental policy indicators in the categories of agriculture, forestry, and climate change after controlling for economic and geospatial factors. At the micro level, the results presented in this paper suggest a broader theory of collective action that is based on a behavioral approach to climate policy to mitigate motivational crowd out in settings of high reciprocity and trust. At the macro level, the results presented in this paper suggest a broader theory of climate clubs that includes pro- social preferences, such as positive reciprocity, trust, and altruism, as key cooperation mech- anisms in International Environmental Agreements.

Climate Equivalence and International Trade

AbstractThis article examines a significant question in navigating trade and climate tension: how to recognize another country as having equivalent climate regulations. Such equivalence forms a core component of many proposed models of so-called climate clubs. Establishing equivalence between distinct national climate regulation regimes poses a unique challenge that draws upon both trade and environmental international cooperation. Drawing on existing proposals, I examine prospects for country-based cooperation through three models: ETS-linking, benchmarking of shared methods and minimum standards, and benchmarking of outcome duties. The analysis concludes that all models necessitate some trade-offs between the goals of rigorous oversight of climate objectives, inclusivity, and WTO compliance. Benchmarking of shared methods and minimum standards seems most feasible, and would provide a deeper level of integration between trade and climate cooperation, but necessitates a shift in how countries, particularly the EU, oversee regulatory compliance.

Carbon Border Adjustments, Climate Clubs, and Subsidy Races When Climate Policies Vary

Jurisdictions adopt climate policies that vary in terms of both ambition and policy approach, with some pricing carbon and others subsidizing clean production. We distinguish two types of policy spillovers from these diverse approaches. First, when countries have different levels of climate ambition, free-riders benefit at the expense of more committed countries. Second, when countries pursue different approaches, carbon-intensive producers within cost-imposing jurisdictions are at a relative competitive disadvantage compared with producers in subsidizing jurisdictions. Carbon border adjustments and climate clubs respond to these spillovers, but when countries have divergent approaches, one policy alone cannot address both spillovers. We also consider the policy dynamics arising from carbon border adjustments and climate clubs; both have the potential to encourage upward harmonization of climate policy, but come with risks. Further, the pressures of international competition may result in subsidy races, with attendant risks and benefits.

GLOBAL INITIATIVESTO PREVENT “CARBON LEAKAGE”: RISKS AND OPPORTUNITIES FOR RUSSIA

Tightening climate policies in some countries brings about a need to toughen them in others. More stringent requirements for national producers of carbon-intensive products within one country, for example, in the form of increased coverage or level of domestic carbon price, stimulates partial replacement of domestic production with foreign analogs from the countrieswith relatively looser greenhouse gas emissions regulation. This phenomenon is referred to as 241“carbon leakage”. This paper systematizes practical and theoretical approaches to combat “carbon leakage” and compares these approaches in terms of possible implications for a long-term social and economic development of Russia. The authors examine exceptions to the general rules of emissions regulation for some vulnerable industries subjected to “carbon leakage”, implementation of cross-border carbon barriers in trade, formation of climate clubs of countries and the introduction of a global minimum carbon price. Specialization in producing and exporting carbon-intensive products leaves no opportunity for Russia to stay aside of thedevelopment of the global system of greenhouse gas emissions regulation. The findings showthat introducing a global minimum price for carbon seems to be the best alternative to the formation of a climate club, which may be established if other countries importing fossil fuels and carbon-intensive products join the EU carbon border adjustment policy.

Carbon pricing, border adjustment and climate clubs: Options for international cooperation

In a dynamic, three-region environmental multi-sector general equilibrium model, we find that carbon pricing generates a long-lasting downturn as production costs rise. Dirty production is shifted towards countries with laxer climate policies, known as carbon leakage. A border adjustment tax mitigates but does not prevent carbon leakage. Its impact on emissions is limited, and it mainly “protects” dirty domestic production sectors with tradeable goods (in relative terms). Benefits from lower emissions damage materialize only in the medium to long run. From the perspective of a region that introduces carbon pricing, the downturn is smaller and long-run benefits are larger if more regions participate. However, for non-participating regions, there is no incremental incentive to participate as they forego trade spillovers and face higher production costs along the transition. Because of the costly transition, average world welfare may fall as a result of global carbon pricing unless “the rich” assist “the poor”.

The Arctic Council, the International Maritime Organization, and the Polar Code

Numerous scientific investigations and multilateral efforts have contributed to our understanding of environmental challenges and how to deal with them; yet little effective and coordinated action has been taken. We review existing literature on climate clubs and on international society in the English School of international relations in order to assess how environmental and security risks can result in the formation of international institutions that seek to transcend the free-rider problem. We then ask what factors explain the emergence of the International Code for Ships Operating in Polar Waters (Polar Code) adopted in 2014, and how powerful states worked through the Arctic Council (AC) and International Maritime Organization (IMO) to establish it. We identify three parameters with respect to the shipping industry and Arctic region that made this advance possible at the nexus of environment and security: the identification of culprits, great power interest, and the socio-economic context. We find a degree of success even when substantive differences exist both inside and outside of the region and industry. Thus, the case study points to important applications of these parameters for future environmental peacebuilding.

The long and winding road towards the creation of climate clubs: Transatlantic negotiations, potential regulatory models and challenges ahead

AbstractProposals for the establishment of plurilateral climate clubs have gained momentum, and both the European Union (EU) and the United States (US) will play a pivotal role in forthcoming negotiations. This article closely examines EU and US proposals to uncover distinctive features in their regulatory approaches and to critically assess different potential models for sectoral climate club arrangements. The article argues that a middle ground could be reached by combining the US policy‐neutral approach with the EU distinctive product‐based focus. A bottom‐up model involving average sectoral carbon intensity reduction targets, product standards and bans could provide an effective and practicable way forward. Recent declarations confirm that the negotiations of the Global Steel and Aluminium Arrangement are focusing on product standards. Nonetheless, several challenges lie ahead. These include the difficult coordination between plurilateral arrangements and the EU carbon border adjustment mechanism, and the US focus on non‐market economies and excess capacity.