Global climate cooperation after 2024: A proposal for a heavy industry climate coalition

Kimberly Clausing, Joseph Aldy, Dustin Tingley and Catherine Wolfram Wolfram
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Joseph Aldy: Harvard University
Dustin Tingley: Harvard University
Catherine Wolfram Wolfram: Massachusetts Institute of Technology

No WP25-, Working Paper Series from Peterson Institute for International Economics

Abstract: We explore the future of global climate cooperation in light of US withdrawal from global climate agreements and the reversal of US federal climate policy. At present, the free-rider problem hampers global collective action; the world needs better mechanisms to incentivize bolder climate policy. Toward this end, we suggest a heavy industry climate coalition. Countries would “join†the coalition by committing to apply a carbon fee (or an equivalent emissions trading system) to emissions-heavy industries, and they would couple that fee with a carbon border adjustment mechanism. We suggest a tiered pricing approach that would be sensitive to countries’ economic development levels to broaden coalition participation. The coalition would pair the carbon-pricing mechanism with other inducements for members, including market access, climate finance commitments, and technology transfer agreements. We estimate that a heavy industry climate coalition has the potential to reduce worldwide emissions substantially, acting as a stepping stone for further international climate cooperation.

Keywords: Climate Policy; Carbon Pricing; Climate Cooperation; Carbon Border Adjustments; Decarbonization (search for similar items in EconPapers)
JEL-codes: F18 H23 Q56 Q58 (search for similar items in EconPapers)
Date: 2025-07
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