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The Case for an International Climate Organization

After decades of multi-lateral negotiations and underwhelming international treaties, it does not appear that the present policy approach to climate change will help us avoid a two-degree increase in global temperatures. In fact, at the current rate, things will get worse.

There are several reasons why the international community has failed to solve this policy problem. The first is an infamous roadblock that obstructs numerous public policy solutions; which is prisoner’s dilemma. In countless situations requiring cooperation, it often makes more sense to be selfish. Climate change policy is no different. The current international approach does not address the fact that many nations consider themselves immediately better off when skirting carbon-emission caps. Polluting is profitable, at least in the short run.

The way that international climate treaties are structured, like the Paris Climate Agreement, does not help either. There is no legal bound way to enforce a country’s promise on carbon-emissions. Countries set their own goals, and the international community can’t do much if they don’t meet them. With the present strategy, it would be impossible to create an agreement with binding restrictions because few nations would sign it. It isn’t worth the risk for many of these countries and it is hardly politically feasible.

A second factor are the consequences for those who pollute the most. Although the Maldives may be facing an existential threat by rising sea levels, the average American is not. When the consequences of our changing climate (aside from smog) finally do touch a farmer in Iowa or a banker in Shanghai, it will be too late. It just doesn’t hurt enough right now for the major players to change the way they do business.

International climate policy is trying to make a transition in a system that is rigged to work against it. It doesn’t make sense financially or politically for most countries to make considerable climate overhauls. Only by changing the incentives can this shift happen.

A two-pronged policy strategy that, if implemented, will make an impact on our carbon emissions. The first is a shift in local design. Common sense policies to support greener energy and less wasteful economies can be implemented. Pigouvian taxes on single-use plastics and major carbon-emitting industries are a particularly effective strategy to make local change. The revenue of these taxes could be funneled into green subsidies and carbon-reduction research and development.

Of course, a major issue is the political feasibility of these policies at the national level. Climate activists have been calling for these adjustments for a long time, mostly to no avail in the economies that pollute the most. That is why shifting the international incentive structure can actually improve political optics on a local level.

This can be done through the creation of an international climate organization, modeled on the World Trade Organization. The institution’s goal would be to create a set of structures that encourage carbon emission reduction. The organization could operate on a tier system. For example, a nation could receive tariff reductions in accordance with the percentage of electricity they produce from renewables. As the percentage increases, so do things like trade benefits or other financial incentives.

Much like the Green Climate Fund, a green investment endowment can be established to further act as a carrot to onlooking governments. If a member-state makes concrete policy plans to shift to a greener economy, that nation can then receive access to the fund to help its shift. Countries refusing to make the changes sit on the sidelines with no access to these cash incentives.

An organization with goals as ambitious as these could even start small. The General Agreement on Tariffs and Trade, the predecessor to the World Trade Organization, started with only 23 member states. As the organization slowly grows, it becomes more desirable to join the club — the green endowment increases, as do trade perks and other incentives. It is conceivable to get wealthier economies like those in the EU, Canada, or New Zealand to sign on immediately, as they’re already making comparable, earnest attempts to green their societies. Developing countries, a particular concern to climate change as they industrialize, would be incentivized to join the organization due to the financial and diplomatic incentives the body provides. If the United States and China don’t join initially, the world’s biggest polluters could be pressured or compelled to join due to the gains available.

In order for this body to be effective, self-reportage like that in the Paris Agreement won’t work. Internal monitoring and a large bureaucracy must be established to ensure member states are complying with carbon reduction initiatives.

Although difficult to initially construct, this approach deals with the problem of the prisoner’s dilemma. It would no longer be financially reasonable to break from the situation. If we can create an organization that penalizes non-cooperation and has financial incentives that outweigh free-riding, significant gains can be made. The Pigouvian taxes and climate policy at the local level could even be in the interests of the politically powerful, outweighing the lobbying influence of those impacted by these taxes.

Of course, there is no panacea to climate change. This idea is admittedly barebones, but a shakeup is necessary. The unfortunate reality is that on its present course, the international community will only change when the consequences are bad enough — notably when they’re irreversible. Or we create an atmosphere in which it doesn’t make sense to kick this can down the road.