Incentivizing participation in ambitious international climate policy
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School of Business |
Bachelor's thesis
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Authors
Date
2020
Department
Major/Subject
Mcode
Degree programme
Taloustiede
Language
en
Pages
25
Series
Abstract
The climate club model has been proposed as an alternative approach to international climate change mitigation policy. Unlike the unilateral negotiations organized under the United Nations climate convention, a climate club would be comprised of countries that commit to ambitious emissions reductions and provide incentives to encourage cooperation and deter free-riding. In this thesis, I conduct a literature review to examine the potential of the climate club approach, intending to discover whether a club mechanism could produce an effective agreement that the UN approach has failed to achieve. The findings from microeconomic theory and simulation models indicate that a climate club might indeed achieve broad participation and significant abatement levels. Of the possible incentive configurations, both side-payments, sanctions, and a combination of club goods and conditional commitments are shown to be effective options. While the theoretical potential of the climate club approach appears high, its implementation would likely be complicated by legal and political barriers. The club design would therefore need to account not only for effectiveness but also for political feasibility.Description
Thesis advisor
Murto, PauliMustonen, Mikko
Saarimaa, Tuukka
Keywords
climate clubs, climate change mitigation, international negotiations, club theory, climate policy