: Activists carry a globe after a protest in Glasgow, where some 200 countries are wrestling with how the goal of limiting global warming can still be achieved. November 12, 2021.

Publication Type

The portfolio of economic policies needed to fight climate change

Olivier Blanchard (PIIE), Christian Gollier (Toulouse School of Economics) and Jean Tirole (Toulouse School of Economics)
Working Papers 22-18
Photo Credit: DPA/Christoph Soeder


Climate change poses an existential threat. The authors argue that carbon pricing and green research and development (R&D) support are good economics, but their implementation can be improved. Even if carbon prices are generalized and given more substance, green R&D is still likely to be smaller than needed. Much more money must be spent on it than is now the case, and this money must be properly allocated in order to have an impact. Moreover, done well, other policies, such as standards, bans, and targeted subsidies, can be good economics. But they have often been incoherent and their implementation is delicate. The authors also argue that domestic and international compensation is key to the acceptability of efficient policies. Finally, although a country’s emissions will not materially alter the course of climate change, individual countries can still show the way ahead: They can develop technologies that can be used by other, poorer, countries. They can provide leadership/momentum on global agreements and on the need to fund climate change policies in developing economies.

Data Disclosure:

This publication does not include a replication package.

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