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INDIA IN THE COMING ‘CLIMATE G2’?

Published online by Cambridge University Press:  05 February 2020

Jonathan Camuzeaux ,
Thomas Sterner  and
Gernot Wagner
Jonathan Camuzeaux
Affiliation:
Environmental Defense Fund. E-mail: jcamuzeaux@edf.org.
Thomas Sterner
Affiliation:
University of Gothenburg. E-mail: Thomas.Sterner@economics.gu.se.
Gernot Wagner*
Affiliation:
New York University, Department of Environmental Studies and NYU Wagner School of Public Service.
*
corresponding author. E-mail: gwagner@nyu.edu
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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 reached, thus becoming a member of the ‘Climate G2’. We create a hypothetical global carbon market based on modelling emissions reduction commitments across countries and regions relative to their marginal abatement costs. We then analyse net financial flows across 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

IndiaChinaG2climate clubcarbon emissions tradingallowance allocationburden sharingclimate change.Q5F5.
Type
Research Article
Information
National Institute Economic Review , Volume 251 , February 2020 , pp. R3 - R12
Copyright
© National Institute of Economic and Social Research, 2020

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Footnotes

For a less technical exploration of aspects of this argument, see Ahuja et al. (2015). We thank Richie Ahuja, Shoibal Chakravarty, Frank Convery, Geoffrey Heal, Nathaniel Keohane, and Johannes Urpelainen for helpful comments and discussions. We thank Dominic Watson for research assistance. Thomas Sterner thanks Mistra Carbon Exit for funding. All remaining errors are our own.

References

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