Global Climate Club announced at COP28

Germany announced the formation of a Climate Club to help developing countries decarbonize at this week’s COP28 global climate summit. Over 30 nations, including the U.S., are expected to join with the goal of placing a price on the carbon embedded in certain industry products. The climate club will incentivize decarbonization while providing financial assistance to developing countries in transitioning away from carbon intensive technologies. These are two of three climate policy pillars included in Greenleaf's recommendations forwarded to the U.S., G7 and European leadership in fall of 2022.  The third pillar is an effective national price on carbon in the U.S., and there are increasing congressional initiatives to achieve that as well. To lead to a reduction in our global emissions, it is crucial that the Climate Club members agree on and implement an effective price on carbon and define sanctions for non-members. Otherwise, the club becomes a carrot without a stick.

You can read Greenleaf’s climate policy recommendations in this report prepared by two Presidential advisors; including Dr. Don Wuebbles, expert atmospheric scientist who has contributed to all U.S. Climate Assessments, Dr. Roy Wehrle, Senior Economist and past member of the Council of Economic Advisors, and Dr. Francine van den Brandeler who advised the United Nations’ Global Environmental Outlook for Cities.  Their recommendations are informed by Nobel Laureate William Nordhaus’ work.

Map of carbon pricing initiatives implemented, scheduled, or under consideration. Source: The World Bank

The Citizens' Climate Lobby provides more information on the growing number of carbon pricing bills in the U.S. Congress. The World Bank tracks carbon pricing initiatives on their dashboard and report on the state and trends of carbon pricing in 2023.

The global transition toward clean energy resources remains imperative to avoid the worst effects of climate change.  A crucial component of achieving and accelerating this transition is the implementation of a price on greenhouse gasses (carbon equivalents) reflecting the social cost to society associated with the environmental and health damages caused by pollution and climate change. Dr. Robert Litterman, founding partner of Kepos Capital and Chair of the CFTC Climate-Related Market Risk Subcommittee, provided statements to the US Senate Committee on the Budget on the cost of inaction on climate change and climate-related risks to the economy. In Dr. Litterman’s words:

We need to act — immediately and forcefully. Thankfully, the solutions we need to manage these risks are at hand; in particular, a clear, strong price signal will let markets function efficiently and effectively to reduce emissions. A carbon price can be equitable, bipartisan, and the core of effective climate response.

Posted in Climate.