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Global climate cooperation after 2024: A proposal for a heavy industry climate coalition

Author

Listed:
  • Kimberly A. Clausing

    (Peterson Institute for International Economics)

  • Joseph Aldy

    (Harvard University)

  • Dustin Tingley

    (Harvard University)

  • Catherine Wolfram

    (Massachusetts Institute of Technology)

Abstract

We explore the future of global climate cooperation in light of US withdrawal from global climate agreements and the reversal of US federal climate policy. At present, the free-rider problem hampers global collective action; the world needs better mechanisms to incentivize bolder climate policy. Toward this end, we suggest a heavy industry climate coalition. Countries would “join†the coalition by committing to apply a carbon fee (or an equivalent emissions trading system) to emissions-heavy industries, and they would couple that fee with a carbon border adjustment mechanism. We suggest a tiered pricing approach that would be sensitive to countries’ economic development levels to broaden coalition participation. The coalition would pair the carbon-pricing mechanism with other inducements for members, including market access, climate finance commitments, and technology transfer agreements. We estimate that a heavy industry climate coalition has the potential to reduce worldwide emissions substantially, acting as a stepping stone for further international climate cooperation.

Suggested Citation

  • Kimberly A. Clausing & Joseph Aldy & Dustin Tingley & Catherine Wolfram, 2025. "Global climate cooperation after 2024: A proposal for a heavy industry climate coalition," Working Paper Series WP25-, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp25-16
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    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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