To combat climate change, would it be useful to form a “climate club”?

Produced by: Science Popularization China

Author: Zhang Gangfeng (Ministry of Emergency Management-Ministry of Education Disaster Reduction and Emergency Management Research Institute, State Key Laboratory of Earth Surface Processes and Resource Ecology, Beijing Normal University)

Producer: China Science Expo

In June 2022, leaders of many countries will attend the G7 summit. One of the main topics of this summit is the global energy crisis. But in fact, as early as January this year, Germany expressed its desire to promote the G7 to become the core of the international climate club. If the world's major economies can establish a "climate club", work together to reduce domestic emissions, and impose carbon emissions taxes on imported goods, it will be possible to encourage all countries to reduce carbon emissions.

If we can promote the establishment of a "Climate Club", it will be possible for the whole world to work together to tackle climate change, but is it really that easy to achieve?

Carbon reduction targets of China, the US and Europe

In recent years, a series of catastrophic problems caused by global climate change, such as glacier melting, forest fires, and sea level rise, have intensified. The report of the United Nations Intergovernmental Panel on Climate Change pointed out that the global climate has warmed significantly since the mid-20th century, and most of it can be attributed to greenhouse gases (mainly carbon dioxide and methane) emitted by human activities.

The 2019-2020 Australian bushfires are closely linked to the climate change the Earth is currently facing

Image credit: flickr/ Bruce Detorres

Therefore, reducing carbon emissions has become the most urgent task and severe challenge in addressing the current global climate change.

China, the United States and the European Union emit half of the world's greenhouse gases each year. All countries hope that the world's three largest economies can set an example in emission reduction.

Factories and power plants are symbols of modern society, but they are also the main sources of greenhouse gas emissions.

Image source: Asian Development Bank

The EU's original goal was to achieve "climate neutrality" by 2050, and it pledged to tighten the carbon pricing system, strengthen environmental supervision, and introduce "carbon border adjustments." This policy refers to requiring imported or exported high-carbon emission products to pay or refund corresponding taxes or carbon quotas on the basis of strict domestic implementation of climate policies.

The measures, which would prevent companies from moving production to countries with looser carbon emissions laws - a process known as "carbon leakage", have previously been shunned due to concerns about a trade war and political conflict with the United States.

At the beginning of last year, Biden, who had just replaced Trump as the new US president, also made a similar promise. The US government will aim to invest in green projects and strengthen supervision to promote decarbonization. Local companies need to bear the cost of carbon emissions in production, and "carbon border adjustments" will be implemented for goods imported from countries that fail to fulfill their climate and environmental obligations.

my country also announced in 2021 that it would achieve its goal of carbon peak before 2030 and carbon neutrality before 2060. In the Outline of the 14th Five-Year Plan for National Economic and Social Development that has been adopted, the Chinese government has also proposed specific measures such as building a clean, low-carbon, safe and efficient energy system, and deepening the low-carbon transformation in industries, construction, transportation and other fields.

Positive factors in forming a climate club

The world is bustling with people, all for profit; the world is bustling with people, all for profit. Since China, the United States and the European Union account for 61% of the world's GDP and 43% of the world's commodity imports, without the joint participation of the above three countries, any form of global climate coordination mechanism is actually meaningless.

If a situation with China, the US and Europe at the core is formed, all countries that trade with the three countries will have an incentive to join the mechanism. For example, the EU-UK trade agreement includes a common commitment to reduce emissions and implement carbon pricing. Canada, as a major exporter of carbon-intensive products to the US, may also seek to join.

In addition, as the cost of reducing emissions falls, the cost of joining the club will also fall. In the past decade, the price of wind power has fallen by 70%, and the cost of photovoltaic power generation has fallen by 90%. PV and wind power are already the cheapest way to generate electricity in many countries.

Solar Power

Image source: wikipedia

At the same time, the study also shows that the global land wind speed is still increasing further in the near future, which will be a major benefit to the development of wind power.

Of course, public opinion in favour of strong climate action by governments is also a positive factor, with a European Commission poll showing that 93% of citizens believe global warming is a serious problem.

The European Investment Bank's 2019-2020 Climate Survey shows that nearly three-quarters of Chinese people believe that climate change is the biggest challenge facing society. About half of Americans believe that addressing global climate change should be the top priority of the president and Congress. Therefore, establishing a climate club and achieving emission reduction targets is a choice that conforms to the public opinion of all countries.

What challenges are we facing?

Just as a coin has two sides, there are certainly great challenges in establishing a climate club.

For example, carbon border adjustment measures have never been implemented nationwide in the United States. So far, only California has adopted this approach. In the California electricity market, electricity importers are responsible for emissions generated in other states. But due to California's low carbon prices and lax environmental regulations, many companies are not very willing to reduce emissions.

Current carbon pricing only covers 22% of global emissions, averaging just $2 per ton. So far, other measures have only been used to prevent carbon leakage, such as issuing emission allowances to emitters in the European carbon market. This system limits the costs of the carbon market industry. To achieve more ambitious climate goals, climate policies need to be tightened, and controls on cross-border trade also need to be tightened.

In addition, high-income countries have emitted more greenhouse gases in the past few decades, which requires them to bear more responsibility for emission reduction than other countries. Therefore, how to define the responsibilities of various countries in emission reduction is a major challenge facing the "Global Climate Club".

In addition to carbon dioxide emissions from industrial production, a large amount of methane is also released from the soil. This also requires club members to play a greater role. Corresponding technological research and development can be encouraged, such as decarbonization technology and curbing the melting of permafrost, but these require a lot of capital investment.

This figure is the global methane budget from 2008 to 2017. The left side shows methane emissions. Methane mainly comes from factories, agriculture and soil microorganisms. The right side shows methane absorption. After subtracting the total absorption from the total emissions, we can see that global methane emissions are also positive. The greenhouse effect of methane is much stronger than that of carbon dioxide, so methane emissions must also be controlled.

Image source: The Global Carbon Project

Since the beginning of the year, major countries around the world have paid more and more attention to energy security. As an almost complete energy importer, the Japanese government said: "Energy security cannot be compromised." The European Union even had a heated discussion on whether nuclear energy and fossil fuel gas are eligible for EU green funding support.

In June this year, both China and India announced plans to increase domestic coal production to meet surging market demand. Coal consumption will remain one of the core pillars of the two countries' economies in the coming decades.

How to do it? Four steps

Preparation is the key to success, and lack of preparation will lead to failure. Economies need to take four important measures to form or join the "climate club".

First, economies must strengthen and align their domestic targets. Each economy can choose its own approach—carbon taxes, emissions trading schemes, or increased environmental regulation. But regardless of the approach, countries should make short-term commitments to achieve a common goal of carbon neutrality, and the timeframes should be roughly similar to avoid carbon leakage.

Second, economies must agree on methods for comparing different climate instruments. Researchers should develop reliable methods for assessing the carbon prices implicit in environmental regulations. This will be critical when comparing these measures with carbon taxes and will ultimately determine a common level of carbon border adjustments.

Third, economies need to agree on standards for measuring the carbon content of complex goods. Knowing the carbon footprint of any product could allow for a “carbon surcharge” (CAT) similar to a value-added tax. Emissions at every stage of production could be taxed so that the end user pays the full carbon cost of the product.

Fourth, the tax and regulatory systems must be transparent. It is critical that carbon border adjustments comply with rules set by the World Trade Organization (of which China, the United States and the European Union are all members). These rules allow economies to impose fees on imports that are “equivalent” to domestic taxes. If the fees charged on carbon border adjustments are not closely aligned with national climate goals, they could be seen as protectionist.

Rapid emission reductions can prevent human society from encountering more global climate disasters. At a crossroads of human destiny, all countries need to work together, no matter what form it takes.

Editor: Wang Tingting

References:

IPCC. Climate Change 2014–Impacts, Adaptation and Vulnerability: Regional

Aspects[M]. Cambridge University Press, (2014).

Tagliapietra, S. & Wolff, GB Form a climate club: United States, European Union and China. Nature 591, 526–528 (2021).

Xinhua News Agency, Outline of the 14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Long-Term Objectives for 2035, http://www.xinhuanet.com/politics/2021lh/2021-03/13/c_1127205564.htm.

Zeng, Z. et al. A reversal in global terrestrial stilling and its implications for wind energy production. Nature Climate Change 9, 979–985 (2019).