This paper explores the future of global climate cooperation in light of US withdrawal from global climate agreements and the reversal of US federal climate policy. At present, the free-rider problem hampers global collective action; the world needs better mechanisms to incentivize bolder climate policy. Toward this end, the authors suggest a heavy industry climate coalition. Countries would “join” the coalition by committing to apply a carbon fee (or an equivalent emissions trading system) to emissions-heavy industries, and they would couple that fee with a carbon border adjustment mechanism. The authors suggest a tiered pricing approach that would be sensitive to countries’ economic development levels to broaden coalition participation. The coalition would pair the carbon-pricing mechanism with other inducements for members, including market access, climate finance commitments, and technology transfer agreements. The authors estimate that a heavy industry climate coalition has the potential to reduce worldwide emissions substantially, acting as a stepping stone for further international climate cooperation.
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