Climate clubs and positive carbon pricing for a low-carbon Bretton Woods

If global average temperature rise is to be limited to 2°C or even 1.5°C below pre-industrial levels this century, we require a paradigm shift in the way we value and exchange mitigations of Greenhouse Gas Emissions (GHGs). Positive carbon pricing shifts the focus from the cost of GHG emissions to the value of mitigating GHG emissions. We hereby propose a climate club governance arrangement based on Article 6 of the Paris Agreement as well as a robust accounting system to create a positive carbon pricing environment. It provides a starting point for modular, scalable and inclusive climate governance arrangements for environmental and social value creation

Rationale for a climate club embedded in Article 6 of the Paris Agreement: A pathway to carbon neutrality

Recent times have witnessed an increasing number of countries and private firms pledging carbon neutrality by mid-century. Whilst representing a significant improvement in intentions to tackle climate change, such pledges lack substance and structure. For instance, individual pledges lack coordination and aggregation among peers, while strategies and measures to achieve ambitious targets are largely absent. Moreover, current disagreements obstructing progress in international climate change negotiations further undermine the reliability of carbon neutrality objectives. Effective international policies are needed to foster aggregate mitigation ambitions and the creation of adequate supporting mechanisms. This theoretical paper describes a governance innovation aimed at overcoming such shortfalls and disagreements through a unifying yet customizable pathway towards carbon neutrality. It does so by first outlining a political governance framework based on a climate club interpretation of Article 6 of the Paris Agreement. Secondly, it proposes carbon emission mitigation effort sharing on a per capita basis to ensure efficiency, equity and political feasibility. Thirdly, this paper describes how the supply of certified mitigations of carbon emissions required to satisfy effort sharing-based demand can be assetized as carbon credits by operationalizing Article 6 as a joint certification mechanism. The resulting governance architecture for managing demand and supply of mitigations shifts efforts to tackle climate change from a ‘problem-driven’ cost approach to ‘opportunity-driven’ value creation pathways towards carbon neutrality

Climate clubs embedded in Article 6 of the Paris Agreement

Recent times have witnessed an increasing number of countries and private firms pledging carbon neutrality by mid-century. Whilst representing a significant improvement in intentions to tackle climate change, such pledges lack substance and structure. For instance, individual pledges lack coordination and aggregation among peers, while strategies and measures to achieve ambitious targets are largely absent. Moreover, current disagreements obstructing progress in international climate change negotiations further undermine the reliability of carbon neutrality objectives. Effective international policies are needed to foster aggregate mitigation ambitions and the creation of adequate supporting mechanisms. This theoretical paper describes a governance innovation aimed at overcoming such shortfalls and disagreements through a unifying yet customizable pathway towards carbon neutrality. It does so by first outlining a political governance framework based on a climate club interpretation of Article 6 of the Paris Agreement. Secondly, it proposes carbon emission mitigation effort sharing on a per capita basis to ensure efficiency, equity and political feasibility. Thirdly, this paper describes how the supply of certified mitigations of carbon emissions required to satisfy effort sharing-based demand can be assetized as carbon credits by operationalizing Article 6 as a joint certification mechanism. The resulting governance architecture for managing demand and supply of mitigations shifts efforts to tackle climate change from a ‘problem-driven’ cost approach to ‘opportunity-driven’ value creation pathways towards carbon neutrality

COP21 and beyond: challenges for a fair agreement and the significance of the social and economic value of carbon mitigation actions and related positive carbon pricing

On the eve of the 21st Conference of Parties (COP21) a shared optimism is registered among policy-makers, academics and key stakeholders. Six years after Copenhagen a new international agreement on climate change appears now at hand. Yet reaching an effective and strong agreement requires the solution of several open issues, with the recognition of the ‘social and economic value of mitigation actions’ (SEVMA) being at the top of them. This paper aims at framing this recognition both within and beyond the agreement, thus providing evidence of its relevance for the future of climate change mitigation. In doing so, the paper looks at the current state and possible developments of the more practical aspects of the SEVMA proposal, in order to avoid that it become an ‘empty shell.’ The analysis of these practical aspects primarily focuses on the understanding of two different proposals designed within the SEVMA framework and its correlated concept of ‘positive carbon pricing’: the proposal to finance low carbon investment in Europe, advocated by France Stratégie; and the proposal to establish a global carbon mechanism developed by a team of researchers at the University of Sussex