The success of the COP21 talks will hinge on the creation of a transparency-and-review mechanism to ensure that countries are meeting their voluntary emissions-reduction targets.

"Given the interest in climate finance by many developing countries, the United States and other donors could condition financial transfers on developing country participation in the transparency mechanism."

The emerging pledge and review approach to international climate policy provides countries with substantial discretion in how they craft their intended emission mitigation contributions. The resulting heterogeneity in mitigation pledges places significant demands for a well-functioning transparency and review mechanism. In particular, the specific forms of intended contributions necessitate economic analysis in order to estimate the aggregate effects of these contributions as well as to permit "apples-to-apples" comparisons of mitigation efforts. This paper discusses the tools that can inform such analyses as well as the institutional needs of climate transparency.

The emerging pledge and review approach to international climate policy provides countries with substantial discretion in how they craft their intended emission mitigation contributions. The resulting heterogeneity in mitigation pledges places significant demands for a well-functioning transparency and review mechanism. In particular, the specific forms of intended contributions necessitate economic analysis in order to estimate the aggregate effects of these contributions as well as to permit "apples-to-apples" comparisons of mitigation efforts. This paper discusses the tools that can inform such analyses as well as the institutional needs of climate transparency.

"The ability to review the outcomes for a mitigation program can demonstrate whether a country undertook a good-faith effort to deliver on its pledged commitment and build trust among those participating in an agreement. An effective system to collect, analyze and disseminate information about countries' pledges can also facilitate subsequent negotiations."

The authors examine the effect of real energy prices and a simulated carbon price on production and net imports. They find modest adverse competitiveness effects for energy-intensive industries.

"Last year at the United Nations General Assembly, heads of state came together to talk about climate change. We had an announcement on carbon pricing signed on by more than 70 countries, more than 1,000 businesses — reflecting this emerging view of both those in public policy and those using the technologies in the business world — that pricing carbon is the way to get us off of fossil fuels, to create that incentive for the technologies that will allow us to still enjoy the level of economic development that we aspire to, without having an adverse impact on the climate."

Inadequate policy surveillance has undermined the effectiveness of multilateral climate agreements. To illustrate an alternative approach to transparency, the author evaluated policy surveillance under the 2009 G-20 fossil fuel subsidies agreement. The Leaders of the Group of 20 nations tasked their energy and finance ministers to identify and phase-out fossil fuel subsidies. The G-20 leaders agreed to submit their subsidy reform strategies to peer review and to independent expert review conducted by international organizations.

The ability to compare the aspirations and effectiveness of domestic actions to mitigate global climate change is vital to the success of international climate agreements. The current research explores a variety of potential metrics that might facilitate comparison of mitigation effort—and how transparency in policy design can contribute to comparability, accountability, and hence the effectiveness of an international agreement.

The comparability of domestic actions to mitigate global climate change has important implications for the stability, equity, and efficiency of international climate agreements. the authors examine a variety of metrics that could be used to evaluate countries' climate change mitigation effort and illustrate their potential application for large developed and developing countries.