A Strawman Proposal to Use International Flexibility in Achieving Developed Countries Climate Targets to Catalyse Global Decarbonisation

The European Union is currently negotiating its 2040 climate target. But domestic emission reduction alone has no significant impact on tackling climate change. To be effective the EU’s pledge needs to be designed to catalyse emission reductions globally, particularly in the absence of ambitious commitments from the United States. To do so, the EU should leverage the buying power of its carbon-intensive industries, its diplomatic weight, and its experience with carbon markets. The article presents a proposal with three complementary pillars: ambitious domestic targets with some international flexibility, a robust architecture for international mitigation trading and the involvement of private money. Challenges to such an approach include how key stakeholders can be committed and encouraged and, at the same time, how effective governance can be ensured. The article responds to eight key concerns and makes the case for why international carbon trading, if used responsibly, can become a powerful element in the EU’s climate diplomacy toolbox.