Four changes to trade rules to facilitate climate change action
Aaditya Mattoo, Arvind Subramanian, 4 May 2013
Global climate cooperation has collapsed but the need for action has not disappeared. This column argues that only radical technological progress can reconcile climate-change goals with development. It argues that four changes in WTO trade rules could facilitate climate-change action and technological advances without unduly damaging trade.
The research on the links between trade rules and climate-change action has mostly been concerned with how far climate-change action is constrained by current trade rules pertaining, for example, to border-tax adjustments (Horn and Mavroidis 2011), subsidies (Green 2006) and exports of natural gas (Levi 2012 and Hufbauer et al. 2013).
Topics: Energy, Environment
Tags: adaptation, climate change, technology
Geoengineering and abatement: A ‘flat’ relationship under uncertainty
Johannes Emmerling, Massimo Tavoni, 17 April 2013
Implementing comprehensive policies to reduce greenhouse-gas emissions has proved to be difficult. Such sluggishness has increasingly led analysts and researchers to consider geoengineering – the deliberate reduction of the incoming solar radiation – as a viable alternative. Geoengineering used to be seen as somewhat of a ‘last resort’ in terms of climate policy because its implementation would reduce the urgency for current abatement efforts. However, under uncertainty, research suggests that substantial abatement in the short and medium term remains optimal due to the long lead-in time needed for geoengineering projects.
The slow progress in climate-change mitigation policies aimed at reducing greenhouse-gas emissions has fuelled the discussion about alternative policy options in order to cope with the impacts from climate change. The better known one is adaptation, but most recently ‘climate geoengineering’ has begun to attract increasing attention.
Tags: climate change, geoengineering
The sordid history of Congressional acceptance and rejection of cap-and-trade: Implications for climate policy
Richard Schmalensee, Robert N. Stavins, 7 March 2013
Not so long ago, cap-and-trade mechanisms for environmental protection were popular in Congress. Now, such mechanisms are denigrated. What happened? This column tells the sordid tale of how conservatives in Congress who once supported cap and trade now lambast climate change legislation as ‘cap-and-tax’. Ironically, conservatives are choosing to demonise their own market-based creation. The successful conservative campaign that disparaged cap-and-trade means it may now be politically impossible to promote it in the US. The good news? Elsewhere, cap and trade is now a proven, viable option for tackling large-scale environmental problems.
In both his second inaugural and his fifth state of the union addresses this year, President Obama renewed his commitment to address the risk of global climate change, due to increased concentrations of greenhouse gases in the atmosphere, largely (but not exclusively) a consequence of carbon dioxide (CO2) emissions linked with burning fossil fuels to generate energy.
Topics: Energy, Environment
Tags: Cap-and-trade, climate change, US
Moving to Greenland in the face of global warming
Klaus Desmet, Esteban Rossi-Hansberg , 16 January 2013
There are two ways to deal with climate change: mitigation and adaptation. This column argues that in order to adapt, we need to take another look at an age-old coping mechanism: migration. Indeed, if overall hotter temperatures lower productivity in hot regions but raise productivity in what are currently cooler regions, the negative economic effects of climate change are likely to stem from frictions preventing the movement of people and goods. Without these frictions, adapting to climate change becomes that much easier. Climate change policy ought to aim at alleviating mobility frictions.
If populations don’t move, global warming is likely to have disastrous consequences.
Topics: Environment, Migration
Tags: climate change, migration, trade
Imperfect climate policy unlikely to increase domestic emissions
Corrado Di Maria, Ian Lange, Edwin van der Werf, 6 January 2013
By promising to reduce fossil fuel demand in the future, some claim that climate policies will induce supply side responses today; firms will pump out emissions now before demand restrictions tighten. However, this column argues that the ‘green paradox’ is a red herring. Evidence from US coal prices suggests that, in industrialised countries, there is little danger of an increase in domestic emissions in response to imperfect climate policies.
Current implemented policies aimed at reducing greenhouse gas (GHG) emissions are far from perfect and leave owners of stocks of fossil fuels ample scope to increase current (as opposed to future) extraction. Some economists and policymakers fear that emission reduction policies may thereby induce an increase rather than a decrease in CO2 emissions.
Tags: climate change, greenhouse gas emissions
Why do we see unilateral action on climate change?
Simon Dietz, Carmen Marchiori, Alessandro Tavoni, 5 December 2012
In keeping with expectations, recent multilateral climate change talks in Doha have achieved very little. Yet, the good news is that unilateral action is on the up. This column argues that the existing literature explaining unilateral action on climate change by and large neglects the influence of lobbying. Recent research shows that the combined presence of national interests and increased lobbying pressure -- from both business groups and environmentalists -- may create much more scope for unilateral action than previously thought. Yes, getting a ‘broad and deep‘ international treaty remains difficult, but we can look forward to increased unilateral action on climate change, spurred on by lobby groups.
Countries have been negotiating on climate change for about 23 years, and talking about it for even longer. In that time, steps have certainly been taken: a range of institutions have been created, from a UN convention to elements of a global market for CO2 emissions reductions.
Topics: Energy, Environment
Tags: climate change, international treaty, UNFCCC
Global climate talks: If at the 17th you don’t succeed
Richard S J Tol, 27 November 2012
The 18th UN Conference on climate change negotiations has just started in Doha. This column suggests that the probability of success is a mere 2.3%. Recently, over $100 million per year was spent on fruitless negotiations. Having flogged, ever harder for 18 years, the dead horse of legally binding emission targets, the UN should close that chapter and try something new.
Game theory suggests that attempts to negotiate an international environmental agreement, aiming to provide a global public good such as greenhouse gas emission reduction, are bound to fail (Barrett 1991, Carraro and Siniscalco 1992, Carraro and Siniscalco 1993).
Topics: Environment, Global governance
Tags: climate change, global warming, UN
What does trade have to do with climate change?
Harun Onder, 12 September 2012
As multilateral attempts for climate-change mitigation stall, the two-way relationship between trade and climate change is likely to come under further scrutiny. This column explains how liberalised trade has several climate-related consequences. It argues that trade policy could enforce mitigation policies but that multilateral conventions are crucial in preventing undesired protectionist consequences.
The last few decades have witnessed a rapid expansion of international trade and global output (Figure 1). This growth was partially enabled by a gradual reduction in trade barriers in the major export destinations.
Topics: Environment, International trade
Tags: Carbon tax, climate change, pollution haven
The enduring economic aftermath of natural catastrophes
Ilan Noy, 5 September 2012
Over the last decade we have witnessed increasingly devastating natural disasters: south-east Asia, Katrina, Haiti, New Zealand, and Japan to name a few. While much of the focus is understandably on the immediate impact, this column argues that the long-term economic costs are often underestimated or even overlooked.
In the past few days, we have watched Hurricane Isaac strike vulnerable populations over the island of Hispaniola, disrupt the Republican National Convention in Florida, and then move on to inundate parts of the Gulf Coast in Mississippi and Louisiana.
Topics: Development, Environment, Frontiers of economic research
Tags: climate change, natural disasters
The US sulphur dioxide cap and trade programme and lessons for climate policy
Robert N. Stavins, Gabriel Chan, Robert Stowe, Richard Sweeney, 12 August 2012
The US sulphur dioxide cap-and-trade programme, aimed at the acid rain problem, has been hailed as a great success in almost all areas. This column argues that the programme’s success may tell us something about whether cap and trade can be applied more widely in climate policy.
The sulphur dioxide (SO2) allowance-trading programme established under Title IV of the 1990 Clean Air Act Amendments (CAAA) was the world’s first large-scale pollutant cap-and-trade system.
Tags: cap and trade, climate change, sulphur dioxide