Carbon Pricing, Technology Investment, and Trade

The idea of forming a low-carbon club on carbon pricing to enhance collective action on climate change is gaining unprecedented momentum, yet the design elements of such a club are still unclear. State and subnational governments could benefit from common standards and excludable benefits that a club could offer, especially on technology investment and innovation.

Trade could be used as an excludable benefit so that club members that have a price on carbon maintain comparable competitiveness to nonmembers. How such a club will come to fruition is difficult to foresee. Phases of cooperation are a likely strategy to initiate standard setting in the early stages and linking state and subnational policies on price, technology, and trade in the future. A basic definition of club could be any actor with (or willing to place) a price on carbon and with the desire to increase policy cooperation to fairly and transparently limit free riding.

This workshop uncovered a number of plausible design elements for a club that requires further exploration, and this summary should be used as a guide for future conversations on the design elements for a robust carbon pricing club.