Energy

Professor Stavins explained how the global commons dilemma provides a disincentive for action on climate change by individual countries since the climate benefits they gain individually would be less than the cost of action, while on a global basis the benefits could be much greater. Stavins argued that carbon taxes or cap-and-trade systems are the most effective solutions to reduce emissions.

Recent research in economics shows how not to design climate treaties—and suggests how to get it right.

In a new Harvard Project Discussion Paper, Fondazione Eni Enrico Mattei's Valentina Bosetti and Enrica De Cian model the behavior of countries not participating in a cooperative climate regime. The regime imposes counterbalancing influences upon these countries, but under some conditions they may act to both reduce emissions and increase clean-energy R&D

Negotiations under the United Nations Framework Convention on Climate Change (UNFCCC) at Copenhagen in December 2009 did not produce a new international treaty with binding emissions commitments, but have defined a roadmap for dealing with global climate change in the post-2012 era. As countries continue to pursue new models for global agreement, it will be important to learn from the weaknesses of past approaches, while building on positive aspects of the experience with the Kyoto Protocol so far.

"Implementing such a linkage is possible. The Montreal Protocol, successfully protecting the ozone layer, is already restricting trade with non-participants and non-compliers, although only in the substances controlled by the treaty. To repeat this success and overcome the obstacles for a climate agreement, signatories should become favoured trading partners while non-compliance should trigger a temporary denial of this status. Disputes can be solved by expanding the mandate of the WTO's dispute settlement body or another mediator."

Global environmental goals and trade goals can be reconciled.   Globalization and multilateral institutions can facilitate environmental protection rather than obstruct it, if they are harnessed in the right way.  Perhaps most urgent is that negotiators working on a sequel to the Kyoto Protocol agree on guidelines to govern precisely how individual countries can and cannot use trade measures in pursuit of carbon mitigation.

The Kyoto Protocol uses a top-down mechanism to negotiate economy-wide emissions caps. This paper proposes an alternative "sectoral" approach, which would determine industry-level emissions reduction targets based on technological analyses.