Benefits of climate change coordination mechanisms

Resources for the Future (RFF) published a report in 2024, "How Carbon Border Adjustments Might Drive Global Climate Policy Momentum," authored by Kimberly Clausing, Milan Elkerbout, Katarina Nehrkorn, and Catherine Wolfram. The report analyzes the potential of Carbon Border Adjustment Mechanisms (CBAMs) to incentivize global climate action. Key Takeaways: 1️⃣ The report's core argument is that CBAMs, like the EU CBAM implemented in 2023, can incentivize countries to adopt or strengthen their own carbon pricing mechanisms. 2️⃣ A key feature of the EU and UK CBAMs is the crediting mechanism for carbon prices already paid in the exporting country. This encourages carbon pricing adoption to avoid tariffs. 3️⃣ The report uses media analysis of carbon pricing and decarbonization terms to demonstrate increased global interest and policy discussions spurred by the EU CBAM. 4️⃣ The report emphasizes the importance of US policy choices and suggests aligning with global efforts through a modest carbon price and CBAM implementation. Challenges: ✴ Rising global fragmentation and nationalism pose a threat to international cooperation on climate policy. ✴ While the EU CBAM aligns with WTO principles, some governments have expressed intentions to challenge it, creating uncertainty. ✴ Crediting mechanisms for carbon prices and other implementation details of CBAMs require careful consideration to avoid unintended consequences and disguised protectionism. ✴ The lack of a clear US policy on carbon pricing and border measures hinders its ability to lead and collaborate effectively on global mitigation efforts. ✴ CBAMs can create adverse distributional consequences for less-developed countries, requiring consideration of differentiated treatment and financial support. Opportunities: ✳ CBAMs create powerful incentives for countries to adopt carbon pricing, turning foreign tariff revenue into domestic revenue and joining global efforts. ✳ CBAMs encourage broader decarbonization efforts, including subsidies and investments in clean technologies. ✳ Expanding CBAM implementation and coordinating carbon pricing can create a virtuous cycle, drawing in more countries and accelerating climate action. ✳ The US has an opportunity to take a leadership role in global climate mitigation by adopting a carbon price and CBAM, influencing other countries and facilitating collaboration. ✳ Greater multilateral coordination on CBAM design and implementation can reduce compliance costs, enhance transparency, and build capacity in individual countries. The report concludes that CBAMs, complemented by carbon pricing and multilateral cooperation, have significant potential to accelerate global climate policy momentum. #CarbonBorderAdjustment #CBAM #ClimatePolicy #CarbonPricing #Trade #EU #US #GlobalCooperation #Decarbonization #EnergyTransition 

Leveraging International Cooperation for Climate Goals: The Role of ITMOs: As we progress towards a more collaborative era of climate action, Article 6 of the Paris Agreement offers us innovative tools like Internationally Transferred Mitigation Outcomes (ITMOs). But what are ITMOs, and why should we, as sustainability professionals, take notice? ITMOs represent a groundbreaking approach where countries can partner to achieve their climate goals more efficiently. They allow for the exchange of emission reductions, enabling countries to finance and claim climate progress through global partnerships. Here's why ITMOs could be a game-changer: 1-    Flexibility in Meeting NDCs: ITMOs provide countries with the flexibility to meet their Nationally Determined Contributions (NDCs) by investing in emission reductions globally. 2-    Stimulating Sustainable Development: By investing in mitigation projects overseas, ITMOs can foster sustainable development in host countries, aligning climate action with economic growth. 3-   Enhancing Transparency: ITMOs encourage transparent reporting and tracking of climate efforts, promoting trust and accountability in international climate cooperation. 4-   Fostering Global Solidarity: The mechanism exemplifies how global solidarity can play a pivotal role in confronting climate challenges, pooling resources, and expertise for greater impact. The potential of ITMOs is not just in carbon trading—it's about catalyzing a cooperative spirit that transcends borders for the health of our planet. As we navigate the complexities of climate commitments, let's explore how such collaborative mechanisms can amplify our impact. #ClimateAction #Sustainability #ParisAgreement #ITMOs #Collaboration #NDCs

Carbon pricing is rapidly emerging as the "go to" solution to accelerating climate action. International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), UN Trade and Development (UNCTAD), The World Bank, and World Trade Organization (WTO) released the report, "Working Together for Better Climate Action: Carbon Pricing, Policy Spillovers, and Global Climate Goals" - It outlines pathways for coordinated approaches on climate action, carbon pricing and the cross-border effects of climate change mitigation policies, with a view to achieving global climate goals. Highlights: - Explicit carbon pricing policies are on the rise since 2010 and currently, 75 carbon taxes and Emission Trading Schemes (ETS) are in operation worldwide, covering approximately 24 percent of global emissions. - Carbon prices can measure average or marginal prices and can consider explicit carbon pricing or also implicit (e.g. fuel excise taxes and fossil fuel consumption subsidies) pricing. - International coordination can help to maximize positive spillovers and limit negative cross-border impacts of climate and climate-related policies - To close the transparency gap, countries could agree on enhanced reporting and transparency of their policy and economic environment related to climate change mitigation - There is a further need for more granular and better data on embedded carbon prices and embedded emissions, the design of border adjustment policies and their interoperability Full report attached.