A new global deal on climate change
with Stern, Oxford Review of Economic Policy,24:2, 259-279, 2008.
Keywords: clean development mechanism (CDM) / Climate Change / Climate policy / Emissions trading / ethics / game theory / instrument choice / International negotiations / uncertainty
A global target of stabilizing greenhouse-gas concentrations at between 450 and 550 parts per million carbon-dioxide equivalent (ppm CO2e) has proven robust to recent developments in the science and economics of climate change. Retrospective analysis of the Stern Review (2007) suggests that the risks were underestimated, indicating a stabilization target closer to 450 ppm CO2e. Climate policy at the international level is now moving rapidly towards agreeing an emissions pathway, and distributing responsibilities between countries. A feasible framework can be constructed in which each country takes on its own responsibilities and targets, based on a shared understanding of the risks and the need for action and collaboration on climate change. The global deal should contain six key features: (i) a pathway to achieve the world target of 50 per cent reductions by 2050, where rich countries contribute at least 75 per cent of the reductions; (ii) global emissions trading to reduce costs; (iii) reform of the clean development mechanism to scale up emission reductions on a sectoral or benchmark level; (iv) scaling up of R&D funding for low-carbon energy; (v) an agreement on deforestation; and (vi) adaptation finance.