Headline issue

It has long been assumed that international cooperation on climate change has been slow because it is not in the interest of individual countries to act. This is based on the belief that climate change mitigation actions are net-costly for an individual state, despite the global, long-term benefit of avoiding dangerous climate change. Following this logic, individual countries all have the incentive to ‘free-ride’ on the efforts of others. This “individually rational” behaviour would result in climate change mitigation that is “collectively insufficient” to avoid dangerous climate change.

However, this view is increasingly being challenged by theory and evidence. Recent research has suggested that much climate change mitigation action would actually be in states’ self-interest. This paper brings together that research into a single, coherent framework. It argues that there is a strong case that most of the emission reductions needed to avoid dangerous climate change can be achieved in ways that result in national economic benefits that outweigh the costs, even before climate-related benefits are taken into account.

Key findings

  • The national benefits outweigh the national costs of reducing greenhouse gas emissions for most of the needed actions. Decarbonising the economy is likely to be nationally net-beneficial, even leaving aside the benefits of reducing climate change itself.
  • The assumption that countries have no incentive to reduce emissions and that they can ‘free-ride’ on the actions of other countries is mistaken. For the most part, climate change is not a global “prisoner’s dilemma”.
  • A minority of actions to reduce greenhouse gas emissions may be net-costly for countries. These are likely to be concentrated in a few sectors, such as international shipping and aviation, as well as in highly traded, energy-intensive, heavy-industrial sectors.
  • The minority of net-costly sectors will likely continue to pose political challenges for international cooperation, but they should not hold up international and domestic progress in taking the majority of actions that would be net-beneficial for countries. For the latter, countries should use international cooperation as an opportunity to increase and accelerate the realisation of mutual gains associated with reducing greenhouse gas emissions.
  • These findings do not mean that acting on climate change will be easy. There are significant, non-economic barriers at the domestic level that hinder net-beneficial action. Domestic policy, international cooperation and other forms of social agency should focus primarily on overcoming these barriers in order to decarbonise the global economy.
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