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Negotiating effective institutions against climate change

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  • Christian Gollier and Jean Tirole

Abstract

In environmental matters, the free riding generated by the lack of collective action is aggravated by concerns about leakages and by the desire to receive compensation in future negotiations. The dominant "pledge and review" approach to mitigation will deliver appealing promises and renewed victory statements, only to prolong the waiting game. The climate change global commons problem will be solved only through coherent carbon pricing. We discuss the roadmap for the negotiation process. Negotiators must return to the fundamentals: the need for uniform carbon pricing across countries, for verification, and for a governance process to which countries would commit. Each country would enjoy subsidiarity in its allocation of efforts within the country. We suggest an enforcement scheme based on financial and trade penalties to induce all countries to participate and comply with the agreement. Finally, the choice among economic approaches, whether a carbon price commitment or a cap-and-trade, is subject to trade-offs, on which alternative reasonable views may co-exist. We discuss monitoring reasons for why we personally favor an international cap-and-trade agreement.

Suggested Citation

  • Christian Gollier and Jean Tirole, 2015. "Negotiating effective institutions against climate change," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
  • Handle: RePEc:aen:eeepjl:eeep4-2-gollier
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    References listed on IDEAS

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    Cited by:

    1. Adrian Amelung, 2016. "Das "Paris-Agreement": Durchbruch der Top-Down-Klimaschutzverhandlungen im Kreise der Vereinten Nationen," Otto-Wolff-Institut Discussion Paper Series 03/2016, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    2. Merrill, Ryan & Sintov, Nicole, 2016. "An Affinity-to-Commons Model of Public Support For Environmental Energy Policy," Energy Policy, Elsevier, vol. 99(C), pages 88-99.
    3. Frondel, Manuel, 2017. "Deutschlands Klimapolitik: Höchste Zeit für einen Strategiewechsel," RWI Materialien 117, RWI - Leibniz-Institut für Wirtschaftsforschung.
    4. Peter Cramton, Axel Ockenfels, and Steven Stoft, 2015. "An International Carbon-Price Commitment Promotes Cooperation," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    5. Marie Petitet, Dominique Finon, and Tanguy Janssen, 2016. "Carbon Price instead of Support Schemes: Wind Power Investments by the Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    6. repec:eee:resene:v:49:y:2017:i:c:p:1-15 is not listed on IDEAS
    7. Cseh, Arpad, 2016. "Designing a Climate Agreement for the Reality of Self-interested and Short-term Oriented Nations," MPRA Paper 71428, University Library of Munich, Germany.
    8. Anderson, Brilé & Bernauer, Thomas, 2016. "How much carbon offsetting and where? Implications of efficiency, effectiveness, and ethicality considerations for public opinion formation," Energy Policy, Elsevier, vol. 94(C), pages 387-395.
    9. Christian Gambardella & Michael Pahle & Wolf-Peter Schill, 2016. "Do Benefits from Dynamic Tariffing Rise? Welfare Effects of Real-Time Pricing under Carbon-Tax-Induced Variable Renewable Energy Supply," Discussion Papers of DIW Berlin 1621, DIW Berlin, German Institute for Economic Research.
    10. Grégoire Garsous & Tomasz Kozluk, 2017. "Foreign Direct Investment and The Pollution Haven Hypothesis: Evidence from Listed Firms," OECD Economics Department Working Papers 1379, OECD Publishing.
    11. Peter Cramton, Axel, Ockenfels, and Steven Stoft, 2015. "Symposium on "International Climate Negotiations" - Introduction," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    12. repec:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9352-2 is not listed on IDEAS
    13. Lucas Bretschger, 2017. "Equity and the convergence of nationally determined climate policies," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 1-14, January.
    14. Alfredo Sirkis & J.C Hourcade & Dipak Dasgupta & Rogério Studart & Kevin Gallagher & B Perrissin-Fabert & José Eli Da Veiga & Etienne Espagne & Michele Stua & Michel Aglietta, 2015. "Moving the trillions a debate on positive pricing of mitigation actions," Post-Print hal-01692638, HAL.
    15. Joachim Weimann & Rüdiger Pethig & Barbara Hendricks & Ottmar Edenhofer & Thomas Puls & Thilo Schaefer & Heinrich Bottermann & Marc Gronwald & Marc Oliver Bettzüge & Jakob Peter, 2016. "Anspruch und Wirklichkeit: Kann das Pariser Klimaabkommen funktionieren?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(03), pages 03-29, February.

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    • F0 - International Economics - - General

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