Climate equivalence and international trade

Emily Lydgate

No 2022/64, RSCAS Working Papers from European University Institute

Abstract: This article examines a significant question in navigating trade and climate tension: how to recognise another country as having equivalent climate regulation. Such equivalence forms the foundation of many proposed models of so-called climate clubs. Establishing equivalence between distinct national climate regulation regimes poses a unique challenge that draws upon both trade and environmental international cooperation. Drawing on existing proposals, I examine prospects for country-based cooperation through three models: ETS-linking, benchmarking of shared methods and minimum standards, and benchmarking of outcome duties. The analysis concludes that all models necessitate some trade-offs between the goals of rigorous oversight of climate objectives, inclusivity, and WTO-compliance. Benchmarking of shared methods and minimum standards seems most feasible, and would provide a deeper level of integration between trade and climate cooperation, but necessitates a shift in how countries, particularly the EU, oversee regulatory compliance.

Keywords: Climate Equivalence; Climate Clubs; Border Carbon Adjustment (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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