Beatrice Weder di Mauro, 08 November 2021

Submerged beneath the flood of information, initiatives, ideas, and pronouncements, it is hard to keep sight of what is needed for the goal of limiting global warming to 1.5°C.  This column introduces a new eBook that brings together 45 Vox columns on the economics of climate change with the aim of (1) providing an overview of some of the key issues from the economist’s perspective, (2) stimulating further research, and (3) demonstrating how CEPR is fully engaged with this central debate of our times and how the power of its network can promote excellent research and relevant policy.  

Avinash Persaud, 02 November 2021

To meet the Paris agreement, the world would have to eliminate 53.5 billion metric tonnes of carbon dioxide each year for the next 30 years. This column proposes a plan to meet the costs of this in an equitable way. Countries that contribute most to the stock of GHGs could issue an instrument that gives investors in projects anywhere in the world that reduce emissions the right to borrow from them at their overnight interest rates – which are currently near zero – and to roll over this borrowing for as long as the project delivers some minimum rate of reduction in emissions per dollar invested. Luckily, such an instrument already exists in the form of the IMF’s Special Drawing Rights.

Rick van der Ploeg, Armon Rezai, Miguel Tovar, 02 November 2021

Carbon pricing disproportionately hurts poorer households, but cash disbursals from the revenue it raises can compensate these households and lower income inequality. This column evaluates the effects of carbon taxes by employing utility-based measures of whether a household is better off. The transparency of such a policy increases political support if a substantial majority of the population benefit from the carbon tax plus cash disbursal. However, endogenous behaviour blunts the effectiveness of such transfers; for Germany, it diminishes political approval from 60% to 30%. Using revenue for lowering income taxes as well for dividends increases popular support back to above 50%.

Laurence Kotlikoff, Felix Kubler, Andrey Polbin, Simon Scheidegger, 27 October 2021

The replacement of positive with normative economics has left climate policy in its sorry state – as a fight between generations, across regions, and even among economists over climate justice. This column uses a multi-region, overlapping generations model of climate change to study climate policy as an externality whose resolution can uniformly and equally benefit all humankind, regardless of year or place of birth. The optimal uniform welfare-improving policy, implemented via a time-varying global carbon tax plus region- and generation-specific net transfers, can materially limit global emissions, dramatically shorten the use of fossil fuels, and raise the welfare of all current and future agents by over 4%.

Alexander Ludwig, 26 October 2021

A new CEPR ebook focuses on climate policies that it calls "no-brainers” and  "low-hanging fruit”. How far do they get us towards net zero and why, if they really are so obvious, are they not being enacted?

Giovanni Peri, Frédéric Robert-Nicoud, 11 October 2021

Climate change is a defining challenge of our times. This column introduces a special issue of the Journal of Economic Geography on climate change, which provides foundations for well-informed policymaking by addressing two main themes of the economic geography of climate change. First, climate change yields heterogeneous effects across space. Second, a crucial aspect of human adaptation to climate change is geographic mobility. As a consequence, limitations to mobility will worsen the socioeconomic costs of climate change. Other margins of adjustment covered in the issue include fertility, specialisation, and trade.

Francesco Caselli, Alexander Ludwig, Rick van der Ploeg, 08 October 2021

The target for global warming agreed on in the 2015 Paris Agreement implies that effective policies must be implemented to reduce emissions for the whole planet as soon as possible and reach net zero in the second half of the 21st century. The contributions in a new CEPR eBook aim to identity, for each of the featured nations, which climate change policies will have the fastest and/or largest cumulative impact, and which are the most technically, financially, or politically feasible. Although the low-hanging fruit in climate policy vary across countries, this does not mean that one country cannot learn from the debates taking place in another.

Patrick Bolton, Stefan Reichelstein, Marcin Kacperczyk, Christian Leuz, Gaizka Ormazabal, Dirk Schoenmaker, 04 October 2021

The overwhelming majority of publicly listed companies around the world still do not disclose their carbon emissions, and even fewer privately held companies do so. This column introduces a new CEPR Policy Insight in which the authors argue that mandatory carbon disclosures can make an elementary but essential contribution to the global drive towards a net zero economy, and recommend a mandate for the governments represented at COP26 to adopt.

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