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Concept

Climate club, CO2 pricing and climate justice

We as CCI (Climate Cooperation Initiative) are committed to meeting the 1.5°C target and to climate justice. The Paris Agreement is not sufficient to reduce global emissions fast enough to reach the mentioned target (see "Status Quo"). On this page you will find our concept for a new climate foreign policy - based on the book "Global Carbon Pricing: The Path to Climate Cooperation"1.

A new cooperative approach

From our point of view and from the point of view of many experts, in order to meet the 1.5°C target, not only is a common goal of individual countries needed, but also a common commitment. This enables reciprocity - the most important prerequisite for global cooperation.

We see an effective means in the following demand: We demand that countries commit to a common CO2- minimum price. This can be set in international negotiations and introduced flexibly in individual countries through emissions trading or a CO2- tax. Setting a uniform minimum price provides a solution for the free rider problem. In addition, comparability of effort between countries would be ensured.

The idea of a climate alliance

The climate conferences in Kyoto (1997), Copenhagen (2009) and Paris (2015) have shown that it is not possible to negotiate a sufficiently ambitious and effective agreement within the UN framework. So it would make more sense for an alliance of a few countries to lead the way. Since China, the US and the EU (with the UK) are together responsible for 52.4% of global emissions2, a climate alliance between these countries can have an enormously positive effect.

Such a climate alliance is important as a core starting point for international negotiations. It is crucial for the implementation of an effective carbon price.2If there are countries present at the negotiations that see neither the global nor domestic need for global CO2pricing and do not want to cooperate, the result may be a price that is too low. It is not conclusive how high a global carbon price2needs to be in order to achieve the 1.5°C target. Estimates range from 40€ to 200€ per ton.2 .

What motivates countries to form such a climate alliance?

1. The reciprocal character of a common CO2 price ("we implement the CO2 price if you implement at least the same price") solves the free-rider problem. It is then in the self-interest of each country to implement effective climate protection.

2. Whether the CO2 price is implemented in the countries is transparent and thus creates trust2-Preis in den Ländern umgesetzt wird, ist transparent und schafft somit Vertrauen.

3. Der CO23. The CO2 price can be implemented flexibly in the individual countries.

4. A CO2 price in itself costs nothing.

5. A CO2 price can be designed in a socially just way: Climate dividend (per capita payment) or reduction of other taxes.2-Preis kann sozial gerecht gestaltet werden: Klimadividende (Pro-Kopf-Auszahlung) oder Senkung anderer Steuern

6. The social pressure is growing to finally fight the climate crisis effectively. With the EU, the US and China, more than half of global greenhouse gas emissions would already be priced. However, the call for a global solution to this global crisis must become even louder.

7. Pricing greenhouse gas emissions will make it easier for countries to meet their climate targets.

So how can more countries be motivated to join the climate alliance?

In addition to the above, external reinforcement could be used to persuade more and more countries to commit to a binding carbon price.2"Climate tariffs" could be imposed by Climate Alliance countries on countries that have not yet joined the Climate Alliance. Economically weaker countries would benefit from joining the Climate Alliance through the Climate Cooperation Fund and technology partnerships (see below).
Wirtschaftsschwächere Länder würden über den Climate Cooperation Fund und Technologiepartnerschaften Vorteile erhalten, sich dem Klimaclub anzuschließen.

Climate Justice

The countries that have contributed the least to the climate crisis will suffer the most from its consequences. Therefore, climate justice is the focus of our concept. Developed countries must live up to their historical responsibility and compensate developing countries financially as well as support them in restructuring their economies and energy infrastructure.

Climate Cooperation Fund

To achieve climate justice, it is necessary to establish a Climate Cooperation Fund. Countries with emissions above the global per capita average will pay a CO2- price-linked amount into the fund for each ton of excess emissions. Countries below the average receive this amount. A factor “g” must be negotiated that specifies what percentage of the CO2- price per ton must be paid into the fund. Such a mechanism benefits countries that are below the global average and thus provides an additional incentive to save CO2 .
In addition to the aspect of climate justice, such a fund is also necessary for the functioning of CO2- prices. It also enables economically weaker countries to contribute to a higher price, since they receive financial support depending on the price. 
All national revenues that are not transferred to the Climate Cooperation Fund can be used by the individual countries for their own purposes, with the exception that no subsidies are given to CO2-intensive technologies or sectors. Regardless of how the CO22price is introduced nationally, it is always the net price that counts for the commitment. A tax of 50€/t, while subsidizing fossil fuels elsewhere by 20€/t, only counts as 30€/t.

Technology partnership

A Climate Cooperation Fund by itself is not sufficient to achieve climate justice. While it enables developing countries to transform their economies and energy supplies in a climate-neutral way, we must also ask ourselves where the technologies needed to do so will come from.
Much of the technical know-how, technologies and patents are in the hands of companies from developed countries. If the money from the Climate Cooperation Fund ends up back in the hands of developed countries, because they provide the technologies, this cannot be considered climate justice
It would therefore be necessary to find a way to support economically weaker countries in the introduction of climate-neutral technologies. This could be achieved through so-called Technology Partnerships. The exact form of such technology partnerships must be discussed and negotiated.

Finally, once again our demands!

We call for compliance with the 1.5°C target:

1. The German government must advocate a global minimum CO2- price in the EU, vis-à-vis China and vis-à-vis the USA.

2. To this end, Europe should form a climate alliance with the USA, China and all other interested countries.

3. Countries that do not join the climate alliance should be subject to climate tariffs.

We demand climate justice:

4. Part of the revenues generated from the CO2- price should be transferred to a Climate Cooperation Fund. This should be used to support economically weaker countries that join the Climate Alliance on their way to climate neutrality.

5. Through technology partnerships, knowledge transfers and the release of patents, economically weaker countries will be supported in building a sustainable economy.

Sources

  1. “Global Carbon Pricing: The Path to Climate Cooperation” – Peter Cramton, David JC MacKay, Axel Ockenfels, und Steven Stoft (The MIT Press)

    Das Buch ist auf carbon-price.com als Pdf-Datei erhältlich.

  2. Fossil CO2 and GHG emissions of all world countries (2020 report) – Joint Research Center (European Comission)

  3. Dietz et al. 2018 (www.annualreviews.org%2Fdoi%2Fabs%2F10.1146%2Fannurev-environ-102017-025817&usg=AOvVaw2QLQBNwhxruYbA4banFhgK)