Global unanimity agreement on the carbon budget

Humberto Llavador and John Roemer

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Carbon budgets are a useful way to frame the climate mitigation challenge and much easier to agree upon than the allocation of emissions. We propose a mechanism with countries agreeing on the global carbon budget, while the decision to emit is decentralized at the country level. The revenue is collected in a global fund and allocated according to endogenously defined weights proportional to the marginal cost of climate change. The proposal features a unanimous agreement of the national citizenries of the world and global Pareto efficiency. We run a simulation in the spirit of the Paris Agreement, with zero emissions after 2055. At the Global Unanimity Equilibrium, permits are priced at 90$/tC, yielding 1.3 trillion dollars annually. Africa, India and the less developed countries in Asia are the only net recipients, while the US and China are the largest net contributors.

Keywords: carbon budget; emissions; international agreement; permits; climate change (search for similar items in EconPapers)
JEL-codes: F53 F64 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2019-04
New Economics Papers: this item is included in nep-ene, nep-env and nep-sea
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Related works:
Working Paper: Global unanimity agreement on the carbon budget (2022)
Working Paper: Global Unanimity Agreement on the Carbon Budget (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1646

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