A "deal" is proposed in this paper, whereby all major-emitting countries, including the United States and China, agree to reduce emissions through implementation of significant, mutually agreeable, domestic emission-reduction policies. To resolve the competitiveness and equity concerns, a proposed Carbon Mitigation Fund would be created. This proposed fund is contrasted with other existing and proposed mitigation funds and finance mechanisms. 

The São Paulo Proposal is designed to create a stable, long-term, universal regime based on the principles of equity and common but differentiated responsibilities and respective capabilities. Such a regime is required to encourage the technological change and structural shifts necessary to stabilize greenhouse gas concentrations. Richer countries adopt binding targets that become more stringent over time. Financial and institutional provisions to enhance developing country implementation of mitigation and adaptation actions are strengthened.

This paper offers a framework of formulas that produce precise numerical targets for emissions of carbon dioxide (CO2) in all regions of the world in all decades of this century. The formulas are based on pragmatic judgments about what is possible politically. The reason for this approach is the authors' belief that many of the usual science-based, ethics-based, and economics-based paths are not politically viable. It is not credible that successor governments will be able to abide by the commitments that today’s leaders make, if those commitments would be costly.

The major features of a post-2012 international global climate policy architecture are described with three essential elements: a means to ensure that key industrialized and developing nations are involved in differentiated but meaningful ways; an emphasis on an extended time path of targets; and inclusion of flexible market-based policy instruments to keep costs down and facilitate international equity. This architecture is consistent with fundamental aspects of the science, economics, and politics of global climate change; addresses specific shortcomings of the Kyoto Protocol; and builds upon the foundation of the United Nations Framework Convention on Climate Change.

This paper provides a novel dynamic model of private provision of public goods. The agents can also invest in cost-reducing technologies but, nevertheless, the Markov-Perfect Equilibrium (MPE) is unique and the analysis tractable. The non-cooperative outcome is compared to scenarios where the agents can contract on contributions investment), and the optimal contract is derived.

While the model fits a variety of contexts, the policy implications for climate agree- ments are particularly important. Environmental agreements (e.g. the Kyoto protocol) are typically specifying emissions but not investments in technology, since such e¤orts would be hard to verify. They often have a limited time horizon and future commitments remain to be negotiated.

This paper explores the interactions of international policy architecture and technology availability on the limitation of atmospheric CO2 concentrations to 500 ppm in the year 2095. We find that technology is even more important to reducing the costs of emissions mitigation when international policy structures deviate from immediate and full participation. We also find that the international diffusion of climate technology may be as or more important to domestic mitigation cost containment as domestic technology diffusion. We observe that near-term carbon prices reflect in a very direct way expectations about technology a half century and more into the future. We find that the policy architecture has a relatively modest effect on global emissions limitation pathways when compared with the impact of technology availability and observe that more rapid technology improvements reduce the relative influence of the policy architecture. Finally, we consider the implications combining CO2 capture and storage technology with bioenergy production, namely electricity production with negative carbon emissions.

Despite an enormous amount of work done to persuade the world of the dangers of climate change and the need for quick corrective action, there is little progress toward a global compact for managing climate change. In fact, there are some basic differences of perspectives on climate change policies between developed and developing countries which may bedevil future global agreements on climate change for quite some time. Among the reasons for these differences are the issues of historical responsibility for carbon emission by the developed countries, the need for lifestyle changes in both the developed and developing countries, suspicion in the developing countries about the motives of developed countries and too much focus of current discussions on the very long-term and global effects of climate change.

This paper seeks to explore the potential of sectoral approaches as a post-Kyoto framework.

The shared understanding of sectoral approaches in the academic community can be outlined as follows:

1. Sectoral approaches can potentially engage developing countries in mitigation actions, which would be an accomplishment unachieved by the Kyoto Protocol, and determine politically acceptable national targets anddomestic allowance allocations based on the analysis of reduction potentials from technological perspectives.
2. Sectoral approaches are inherently at a disadvantage compared to the Kyoto-type top-down approach with flexibility mechanisms in terms of cost effectiveness and environmental effectiveness.
3. Sectoral approach-based negotiations will be substantially complex, encompassing data collection issues and multiple sector-specific negotiation processes. Therefore, they are not cost-effective enough to constitute an international framework and can only be complementary or additional to the Protocol.

Given these drawbacks, this paper will propose the Policy-Based Sectoral Approach, under which sectoral approaches would be employed to establish national emission targets and governments would internationally pledge the implementation of policies and measures to achieve the targets.

"Effective strategies for managing the dangers of global climate change are proving very difficult to design and implement. They require governments to undertake a portfolio of efforts that are politically challenging because they require large expenditures today for uncertain benefits that accrue far into the future. That portfolio includes tasks such as putting a price on carbon, fixing the tendency for firms to under-invest in the public good of new technologies and knowledge that will be needed for achieving cost-effective and deep cuts in emissions; and preparing for a changing climate through investments in adaptation and climate engineering. Many of those efforts require international coordination that has proven especially difficult to mobilize and sustain because international institutions are usually weak and thus unable to force collective action...."

"...[I]t is not clear that emissions trade between developed and developing countries is either feasible or desirable at this juncture. Technological change that lowers the prices of competitors to fossil fuels is the only way out. This can be promoted by regulation, tax, and tradeable permits in developed countries that provide inducements for R&D, and no less importantly, by the direct subsidization of R&D. The bulk of the finance for this will have to come from the developed countries. An international agreement involving developing countries should, at least in the coming round of negotiations, confine itself to promoting technical cooperation between regulators and other entities from all countries. It should include financial support from the developed countries for spreading energy conservation technologies and practices. Tropical agriculture will need a major thrust to develop new varieties that will withstand climate change. The necessary research and development cooperation should be part of the new agreement and needs major funding from developed countries. Research can also include emissions cuts from agricultural sources as long as this is financially well supported so that it does not reduce the funds available for promoting research into agricultural productivity."