We use an econometrically-estimated multi-region, multi-sector general equilibrium model of the world economy to examine the effects of using a system of internationally-tradable emissions permits to control world carbon dioxide emissions. We focus, in particular, on the effects of the system on flows of trade and international capital. Our results show that international trade and capital flows significantly alter projections of the domestic effects of emissions mitigation policy, compared with analyses that ignore international capital flows, and that under some systems of international permit trading the United States is likely to become a significant permit seller, the opposite of the conventional wisdom.
Brookings Senior Fellow and former U.S. State Department Special Envoy on Climate Todd Stern spoke at the US Climate Action Center, at the COP 24 UN climate negotiations, on the future of the Paris Agreement in Katowice, Poland on December 10, 2018.
[On the U.S. negotiating team at the COP 24 climate negotiations in Katowice, Poland] They work seriously, effectively and knowledgeably. There is only this technical negotiating team, not a political one.
[On the role of the United States in the U.N. climate negotiations at COP 24 in Katowice, Poland] You cannot underestimate the negative impact of the U.S. being on the sidelines. With Obama, the U.S. had credibility. We brought China along. We moved a lot of countries out of their comfort zones. That’s all missing now.