CLIMATE CLUBS WITH TAX REVENUE RECYCLING, TARIFFS, AND TRANSFERS

Daigee Shaw () and Yu-Hsuan Fu

Chapter 8 in Climate Change Economics:Commemoration of Nobel Prize for William Nordhaus, 2021, pp 103-116 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The E3ME-FTT model is applied to assess the impacts of alternative climate club structures. We consider two kinds of climate club memberships: the World Climate Club (WCC), where every country in the world joins the club, and the Core Climate Club (CCC), with seven likely club members: EU+5, Japan, South Korea, Canada, Brazil, Mexico, and Australia. First, we find that both the WCC and domestic revenue-neutral recycling matter a lot. The global CO2 emissions in 2050 could be reduced by 50% from BAU under the WCC. With domestic revenue-neutral recycling, there will be large positive impacts on GDP under both the WCC and the CCC. Secondly, the negative effects of trade sanctions on cumulative global GDP and global CO2 emissions make it unwelcome to be used as part of the club design. Lastly, the introduction of international transfers will result in a win—win solution that will not only increase the cumulative global GDP and reduce global CO2 emissions but also enhance the equality among club members and induce more likely participation in the climate club.

Keywords: William Nordhaus; Climate Change; Integrated Assessment; Climate Change Adaptation; Climate Change Policy; Climate Clubs (search for similar items in EconPapers)
JEL-codes: P48 Q5 Q54 R11 (search for similar items in EconPapers)
Date: 2021
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Journal Article: CLIMATE CLUBS WITH TAX REVENUE RECYCLING, TARIFFS, AND TRANSFERS (2020)
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