Climate change is the most monumental long-term issue facing our planet right now, with the potential to wreak untold devastation on a global scale (IPCC, 2014; IPCC, 2018; IPCC, 2019, IPCC, 2019; Buis, 2019; World Bank Group, 2012). As such, achieving global policy harmonisation that will both mitigate greenhouse gas emissions and build adaptivity measures is critical in a context where our current efforts are dramatically insufficient (figure 1).
However, due in part to the multifaceted and all-encompassing nature of climate change, coordinating global action presents serious challenges. Given that the environment is a global public good (where emissions reduction benefits are accrued regardless of participation), countries have a free-riding incentive. It is also critical that efforts to combat climate change do not perpetuate existing inequalities by unfairly burdening low-income countries; common responsibilities must be assigned in a fair way, and be comprehensive enough to address the problem. These considerations are essential to improving global adoption and to ensuring a just transition that reflects the planet’s needs.
With these factors in mind, exploring the available policy options and their implications is paramount to building the necessary global cooperation. The most evident way we are connected in an increasingly globalised world is through international trade, and these connections can be leveraged to facilitate and encourage global climate action.
One such method could be the inclusion of environmental provisions and regulatory alignment in multilateral trade agreements. For example, the EU and Australia have been negotiating a free trade agreement, but the EU has only been willing to sign the agreement conditional on Australia improving its fuel efficiency standards (Martin, 2019; van Leeuwen, 2020). Countries are generally willing to comply with the more stringent European environmental standards because it provides them with access to one of the world’s largest markets. This improvement in global standards via the EU is known as the “Brussels effect” (Bradford, 2020; White, 2020), which other nations could take advantage of and the EU could further capitalise on (Dröge & Schenuit, 2018).
Another approach can be the mobilisation of trade as an enforcement mechanism for existing global agreements, or even to increase commitments. Countries like Australia could make signing new free trade agreements conditional on emissions reduction targets or compliance with the 2016 Paris Agreement obligations. Similarly, a “carbon border tax” involves altering trade barriers based on whether a country has a carbon pricing mechanism in place. The EU is currently considering implementing this measure (European Union, 2020), despite criticism that it is potentially unjust (Ravikumar, 2020) and ineffective (Zachman & McWilliams, 2020).
An alternative to enforcement-based approaches would be that which both recognises differences in resources and responsibility as well as empowers poorer countries than Australia to make the transition through trade. Options for this include embedding technology transfer (UNFCC, 2018; Ferreira et al., 2020) and investment provisions (International Institute for Sustainable Development, 2015) in trade agreements, as well as investment into green funds (Green Climate Fund, 2020) to equip nations with the ability to make an effective transition without negatively impacting financial well-being.
Indeed, from populist political rhetoric to lobbying by multinational corporations, the barriers to effective climate reform are high. A recent massive setback in the global fight for climate policy came with Donald Trump’s withdrawal of the US from the Paris Agreement, stating that he will only sign an agreement “on terms that are fair to the United States, its businesses, its workers, its people, its taxpayers” (Trump, 2020). He added that the Paris Agreement “disadvantages the United States to the exclusive benefit of other countries”. Trump’s statement echoes the growing cries from Western climate science deniers – the key point being ‘unfairness’.
To consider the truth of this argument, it is worth first looking at historical emissions rates, illustrated in figure 2.
Figure 2 clearly demonstrates how Europe and the US dominated CO2 emissions until the 1970s. Climate advocates argue that this gives the West a certain responsibility to pay for their share of the benefits they have derived from fossil fuels whilst they have ignored the negative externalities for decades.
Furthermore, the US still fails to even do its fair share by global standards, illustrated in figure 3.
It is quite discouraging to see developing countries like Morocco and Gambia having to punch above their weight to make up for wealthy giants like the US, Russia, and Saudi Arabia. This effectively shatters the idea that the US is dealt an unfair hand when considering both their current and historical exploitation of fossil fuels to spur their own economic growth.
Ultimately, the objective that stands is how to motivate all countries to take decisive measures on climate change, a goal that the Earth summit, Kyoto Protocol and Paris agreement have all failed on. Dr Scott Barrett, in his critique of the Kyoto Protocol, argues that future climate agreements must not attempt to encompass everything into one plan(Barrett, 2008). Separate agreements, paired with incentives like subsidisation for renewable projects, may be the key to effective global cooperation and minimising diplomatic flares caused by punitive tariffs and the like.
Concerns domestically are also a key barrier to international climate change cooperation. Without successful policy changes and genuine support within our national sphere, global climate agreements will continue to prove ineffective in changing the way other individual countries act.
One major challenge faced by governments in implementing policy change is how economic growth and development is still heavily reliant on fossil fuels. For example, the Australian government has struggled significantly in forming a clear and prudent stance on emissions, as the prosperity of its economy is deeply entangled with the coal and mining industry. With coal, iron ore and natural gas making up 41.8% of all of Australia’s exports (DFAT, 2020), it becomes clear why the government would be reluctant in committing itself to policies that might decrease the size of one of its most profitable sectors.
Strong backlash from local economies which rely on the mining sector for jobs and investment poses another political threat to implementing climate policy. Individuals within these communities may associate high personal costs with action on climate change, as it creates the potential for higher unemployment and community displacement (Mey & Briggs, 2018). As a result, the heavy politicisation of climate change steers the government’s focus away from methods of emissions reduction to appeasement (Holmes, 2019).
Thus, the inclusion of both climate and energy justice within international agreements is crucial for domestic action. National governments will be more morally incentivized to act if the inequitable effects of climate change on different communities are highlighted (Simmons, 2020). Likewise, stressing the imperative nature of equally distributing the costs and benefits of emission reducing policies among the population will also inspire action (Mey & Briggs, 2018). In turn, we will foster a more just transition into clean energy and climate change action, and reduce opposition locally to advance international cooperation.
The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.
Charlie is a Bachelor of Commerce student majoring in Economics and Finance. He is interested in macroeconomics, politics and current affairs.
I'm a Bachelor of Commerce student in my penultimate year majoring in Economics and Management. My key interests are macroeconomics and technology. As a writer at Cainz, I hope to produce insightful, meticulously researched articles on a wide range of topics.
My name is Ben Griffiths. I’m a bachelor of commerce student majoring in economics and undertaking a language diploma in French. I’m passionate about economics, public policy, global politics, and creating a meaningful social impact.