A Copenhagen Collar: Achieving Comparable Effort Through Carbon Price Agreements

Warwick J. McKibbin,
Warwick McKibbin
Warwick J. McKibbin Former expert - Economic Studies, Center on Regulation and Markets, Distinguished Professor of Economics & Public Policy - Crawford School of Public Policy, The Australian National University

Adele Morris, and
adele morris
Adele Morris Former Senior Fellow - Economic Studies
Peter J. Wilcoxen

August 28, 2009

Editor’s Note: This paper will be included in a forthcoming report, to be released in early fall of 2009. The report will further highlight key recommendations to enact globally accepted policies to effectively tackle climate change and protect those most affected.


The global financial crisis proves how unforeseen macroeconomic conditions can affect policies aimed at reducing and stabilizing greenhouse gas emissions. It has made voters uneasy about potential climate policy that could raise energy costs and unemployment. To improve the political stability of any policy agreement emerging from this December’s annual meeting on the U.N. Framework Convention on Climate Change (UNFCCC) in Copenhagen, and to ensure the comparability of commitments and ease the inclusion of developing countries, the authors propose that the UNFCCC supplement emissions targets with a price collar. This paper outlines an example that shows that a price collar can have a negligible expected impact on the outcome that matters most for the climate—increasing emissions.