Climate policy architecture for the Cancun paradigm shift: building on the lessons from history

Abstract

International audienceThe economics of climate policy after Rio led to a climate centric paradigm which departs from the original UNFCCC’s cooperative framework for designing climate policies from the perspective of sustainable development. This resulted in a cap-and-trade approach which aims to mitigate the adverse effects on development through appropriate transfers to achieve fair burden sharing. However, the continuation of this paradigm cannot untie the development-climate Gordian knot. (The Gordian Knot refers to a seemingly intractable problem. According to a Greek legend, Gordios arrived in Phrygia in an ox cart, was made King and dedicated his cart to Zeus, tying it up with an intricate knot. The person who would untie the knot would rule Asia. Alexander the Great found a solution by cutting it with his sword. Hourcade et al. (The design of climate policy. MIT Press, Cambridge, p 408, 2008) explain that, after Rio Earth Summit (1992), the climate negotiations remained disengaged from the debates on development pathways, thus tying up a new Gordian knot of misunderstandings.) Instead one loses sight of the benefits of cooperation in a global agreement to abate GHGs emissions. The challenge is now to align the development and climate objectives taking into consideration the changing context since the 1990s which includes a re-equilibrium of the world economic balance and the adverse context created by the 2008 financial crisis. This paper proposes that carbon finance should be considered as part of a general reform of the financial system. The adoption of a carbon value as a notional price could trigger a wave of low-carbon investments in the world thereby redirecting some global savings towards low-carbon investments, thus providing a lever for equitable access to development

Macroeconomic and Financial Policies for Climate Change Mitigation

“…To understand why the SVMA enables the incorporation of mitigation co-benefits, it must be compared to the SCC and the SPC. If the economy is not at the PPF, the relation between the SCC, the SPC and the explicit carbon price is not straightforward and requires the investigation of synergies between climate change mitigation and development (Hourcade et al 2015). Early mitigation action can have a positive impact on future PPFs through two main channels: learning-by-doing effects that reduce the future cost of emissions reductions (Bramoullé andOlson 2005, Vogt-Schilb and; and the contribution of the low-carbon transition to Schumpeterian waves of innovation, which moves the PPF outward (Stern 2015).…”

Accelerating the speed and scale of climate finance in the post-pandemic context

“… Creating an instrument of trust and reciprocal gains (Ostrom and Walker, 2005) between developed and developing countries, thereby reducing accumulated 'North-South' political tension in climate negotiations (Hourcade et al, 2015).…”

The politics of multilateral environmental agreements lessons from 20 years of INEA

“…Analysts have examined a range of factors deemed relevant to the implementation of the provisions of MEAs within the political systems of member states (Andresen and Butenschoøn 2001 ; Böhmelt & Butkute, 2018 ; Buchner & Carraro, 2006 ; Heggelund & Backer, 2007 ; Lebel et al, 2018 ; Poussenkova, 2003 ; Salmi, 2008 ). Measures that immunize international commitments from the ups and downs of domestic politics make a difference (Law & Kriwoken, 2017 ).…”