Building a scalable climate coalition for heavy industry
Mettre en place une coalition climatique extensible pour l'industrie lourde
Wolfram, Catherine ; Aldy, Joseph ; Bracher, Candido ; Casey, Gregory ; Chaturvedi, Vaibhav ; Clausing, Kimberly ; Fischer, Carolyn ; Gollier, Christian ; Hsiao, Allan ; Jotzo, Frank ; Medeiros, Marcelo ; Meng, Kyle ; Muthitacharoen, Athiphat ; Ockenfels, Axel ; Pangestu, Mari ; Pereboom, Marilyn ; Rao, Arathi ; Rudik, Ivan ; Sembene, Daouda ; Shimberg, Naomi ; Somanathan, E. ; Tingley, Dustin ; Winter, Jennifer
Année de publication
2026
The important interaction between trade and climate policy has sharpened the case for a coalition of countries that commit to price industrial emissions at home and use border adjustments to apply a carbon price to imports from nonmembers. We propose a coalition that initially targets four emissions-intensive industries?iron and steel, aluminum, cement, and nitrogen fertilizers (hereafter, fertilizers)?which together account for roughly 20% of global greenhouse gas (GHG) emissions. Using plant-level microdata and trade modeling, we examine two institutional designs that have emerged in policy discussions: a uniform price regime with a common carbon price floor and a graduated price regime with income-tiered floors. We show that a first-wave coalition could cut global GHG emissions by roughly 1.5% [2.0% of carbon dioxide (CO<sub>2</sub>) emissions] relative to 2023 levels while keeping industrial output impacts small, limiting leakage, and raising almost $200 billion per year in public revenues.</div>
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