India in the Coming Climate G2?

17 Pages Posted: 10 Jan 2020 Last revised: 14 Jan 2020

See all articles by Jonathan Camuzeaux

Jonathan Camuzeaux

Environmental Defense Fund

Thomas Sterner

Göteborg University - Department of Economics

Gernot Wagner

New York University (NYU) - Department of Environmental Studies; New York University (NYU) - Robert F. Wagner Graduate School of Public Service

Date Written: December 12, 2019

Abstract

China and the United States are the two largest emitters of greenhouse gases, making them pivotal players in global climate negotiations. Within the coming decade, however, India is set to become the most important counterpart to the United States, as it overtakes China as the country with the most at stake depending on the type of global burden-sharing agreements that reached, thus becoming a member of the “Climate G2.” We analyse financial flows that are necessary to equilibrate marginal abatement costs across countries and regions under a wide range of burden-sharing agreements: from pure grandfathering based on current emissions to equal per-capita allocation. Among the four largest players, the United States, the EU-27, China, and India, it is China that would currently be the largest net seller of emissions allowances in all but the grandfathered scenario. The United States would be the largest net buyer. However, India is poised to take China’s position by around 2030. That leaves the United States and India as the two major countries with most to gain and lose, depending on the type of climate deal reached.

Keywords: India, China; G2, climate club; carbon emissions trading, allowance allocation, burden sharing; climate change

JEL Classification: Q5, F5

Suggested Citation

Camuzeaux, Jonathan and Sterner, Thomas and Wagner, Gernot, India in the Coming Climate G2? (December 12, 2019). NYU Wagner Research Paper, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3515379 or http://dx.doi.org/10.2139/ssrn.3515379

Jonathan Camuzeaux

Environmental Defense Fund ( email )

1875 Connecticut ave
257 Park Avenue South
Washington, DC 20009
United States

Thomas Sterner

Göteborg University - Department of Economics ( email )

Göteborg
Sweden

Gernot Wagner (Contact Author)

New York University (NYU) - Department of Environmental Studies ( email )

285 Mercer Street
New York, NY 10003
United States

New York University (NYU) - Robert F. Wagner Graduate School of Public Service ( email )

The Puck Building
295 Lafayette Street, Second Floor
New York, NY 10012
United States

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