The Paris Agreement allows countries to voluntarily mitigate greenhouse gas (GHG) emissions using whatever means—i.e., policy instrument/regime, and ends—i.e., social cost of carbon, they desire. Surprisingly, the strategic interconnections between these choices has not been systematically examined even though this is likely to affect the ability for nations to collectively achieve efficient mitigation. This paper fills this gap by examining how decentralized competition in eight different policy regimes affects a nation's willingness to support a uniform social cost of carbon internationally; i.e., their policy conditional preferred social cost of carbon (PSCC). Given the vector of national PSCC, I also evaluate collective support for a policy conditional decision social cost of carbon (DSCC) and, in turn, how this affects collective support for particular policy regimes. I find substantial variation in PSCC and DSCC both across countries and policy regimes. This suggests that ends and means are critically interconnected and the failure to consider both jointly is likely to provide an inaccurate assessment of collective mitigation likely to be achieved by decentralized efforts to address climate change. Competition in caps with international trade in allowances together with the corresponding DSCC gets closest to the Pareto optimal level of global mitigation, providing further support of the benefits from this form of policy competition. This result is robust although only under one decision rule do I find common agreement for caps.
Speaker Bio: Joel Landry is an assistant professor in environmental and energy economics at the Pennsylvania State University in University Park. Dr. Landry's primary field is environmental and energy economics, with additional interest in applied microeconomics, public finance, and political economy. His research focuses on climate change and renewable energy policy.
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