Every year new summers of the century, hurricanes and floods – the effects of climate change are becoming increasingly visible and are affecting the lives and health of people worldwide. In business, society and politics, the realization has prevailed that consistent countermeasures are necessary in order to preserve the basis of life for future generations. Despite e.g. T. very ambitious goals, annual climate conferences and quite considerable efforts in some countries, global CO2 emissions continue to rise. From a global perspective, there is a gap in terms of ambition and implementation when it comes to climate protection. The main reason for this is that there is little incentive for individuals or countries to make climate protection efforts, since the benefits accrue to everyone, while the costs have to be borne where investments are made in climate protection. The major challenge is therefore to agree on an internationally coordinated approach to climate protection efforts. Instead of purely national or regional efforts, which are expensive and not very effective, global, reciprocal approaches that stimulate international cooperation should be used. The G7 climate club is an important step in this regard. In addition, state and private actors should invest significantly more in research and development in order to develop innovative solutions and reduce the costs of climate protection.
Climatic changes are constantly increasing worldwide in terms of both number and intensity and lead to crop failures, flooding and forest fires, which threaten people’s livelihoods. Although international organizations have been pointing out the dangers of climate change for many years, state actors have found it difficult to counter the global phenomenon with global solutions. Instead, a wide range of climate protection measures are being taken worldwide (albeit at different speeds and with different levels of ambition) at national level or within the framework of the European Union. However, this often happens without sufficient consideration of how this affects incentives to mitigate climate change in other countries, and it weakens the negotiating position with less ambitious countries. For example, particularly strict regulations to avoid emissions or damage to the environment in one region can result in relevant economic activities being concentrated on other regions from now on. In addition to potentially negative economic and associated social effects in the region of origin, this does not help the climate, because a regional shift in emissions makes no difference globally; Ultimately, it can even lead to rising emissions: If energy-intensive industries migrate from Europe, for example, the demand for fossil fuels would decrease in the short term, which would lead to falling prices worldwide. This would create incentives in other regions to use these energy sources more intensively. This would lead to a global increase in CO2 or methane emissions if less stringent energy efficiency standards apply there than in Europe.
Global rules based on reciprocity should be agreed upon in order to prevent ambitious climate protectors from being exploited and to set incentives for less ambitious climate protectors to cooperate. These should lay down certain obligations for everyone that are as transparent as possible and easily comparable. An example is a carbon price floor. From a game-theoretical point of view, reciprocal approaches lead to more effective and efficient solutions than voluntary self-commitments, which, although associated with high costs, calm the (national) conscience, but do not change the global situation. However, if climate change is taken seriously as a global challenge by all actors involved, a shared mutual commitment in the sense of: “If you do more, I also try harder” can lead to the respective costs for the individual being lower and the overall result is better for everyone. A model for this is provided by international customs agreements, which offer all cooperation partners equal added value, since globally binding rules prevent a “race to the bottom”.
In addition to binding reciprocal solutions at global level, state and private actors should also increasingly look for innovative technical solutions to counteract climate change. Incentive systems should be designed in such a way that the greatest emission savings or efficiency gains are rewarded, regardless of the technology used – this is how innovative markets develop and politicians do not run the risk of (too) one-sidedly relying on existing solutions. By focusing on R&D and innovation, for example, Europe could develop alongside the USA as a green lead market for climate (adaptation) technologies. In this way, the costs incurred by exporting climate-friendly products and services could also be offset.
Effectively advancing climate protection is a huge cooperation problem. The prospects of global cooperation e.g. Achievements such as global carbon pricing are not the best given rising geopolitical tensions and national decisions such as the US Inflation Reduction Act. Nevertheless, international cooperation efforts should be intensified, for example through the G7 climate club. After all, national measures will only be accepted in the long run if they are not perceived as a one-sided burden.
A notice: This Policy Brief was created on the basis of the ECONWATCH meeting “Climate Cooperation: How global climate protection can succeed” with Prof. Dr. Axel Ockenfels (University of Cologne).