A Proposal to Integrate Price Mechanisms into International Climate Negotiations

Asia and the Pacific Policy Studies (APPS), vol. 1, no. 3, pp. 600–608

9 Pages Posted: 2 Oct 2014

See all articles by Warwick J. McKibbin

Warwick J. McKibbin

Australian National University

Adele C. Morris

The Brookings Institution

Peter J. Wilcoxen

Brookings Institution

Date Written: September 17, 2014

Abstract

The Parties to the United Nations Framework Convention on Climate Change continue their efforts to forge a new binding international agreement by 2015. This article proposes to adapt international negotiations to allow for hybrid price and quantity-based commitments. The economic risks surrounding target-only commitments — the current approach — are enormous. Combining a clear cumulative emissions target with price-based limits on the cost associated with achieving that target would reduce those risks, ensure that commitments by Parties remain feasible and reduce the chance that the agreement would collapse. Moreover, we argue that adding prices into the agreement offers transparent and verifiable assurance of the comparability of effort across countries. Finally, we also show that it is possible to calculate ‘carbon price equivalents’ of quantity-based climate commitments in a conceptually similar way to the tariff equivalents used in international trade negotiations.

Keywords: climate policy; uncertainty; price collar; UNFCCC; carbon price equivalence

Suggested Citation

McKibbin, Warwick J. and Morris, Adele C. and Wilcoxen, Peter J., A Proposal to Integrate Price Mechanisms into International Climate Negotiations (September 17, 2014). Asia and the Pacific Policy Studies (APPS), vol. 1, no. 3, pp. 600–608, Available at SSRN: https://ssrn.com/abstract=2504390

Warwick J. McKibbin (Contact Author)

Australian National University ( email )

Crawfrod School of Public Policy
Canberra, ACT 2600
Australia
02-61250301 (Phone)
02-62735575 (Fax)

HOME PAGE: http://www.sensiblepolicy.com

Adele C. Morris

The Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/morrisa.aspx

Peter J. Wilcoxen

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/wilcoxenp.aspx

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