The Glasgow Climate Pact—signed by representatives from nearly 200 countries at the conclusion of COP26, the United Nations conference on climate action held in November 2021—is the latest in a string of international accords meant to formalize a cohesive global strategy for mitigating climate change. Like the 2015 Paris Agreement on which it builds, the pact features emissions-cutting commitments by its signatories. But are such national goals likely to result in significant emissions reductions? Would a global minimum price of carbon be more effective? Chicago Booth’s Initiative on Global Markets asked its US and European panels of economic experts to weigh in.

Statement A: Voluntary national targets are unlikely to be an effective mechanism for achieving sharp reductions in greenhouse gas emissions.

Responses weighted by each panelist’s confidence

Franklin Allen, Imperial College London
“These voluntary targets are probably better than nothing. But it is not clear how effective they will be. Politics will be important.”
Response: Uncertain

Darrell Duffie, Stanford
“This is a classic free-rider problem. Every country will want other countries to bear the cost.”
Response: Agree

Jan Pieter Krahnen, Goethe University Frankfurt
“Implemented rules of self-commitment may have an important role-model effect, leading to spillovers to other countries.”
Response: Disagree

Richard H. Thaler, Chicago Booth
“Depends a lot on international social norms. We have avoided (so far) a nuclear-war ending to the world. Might happen again.”
Response: Uncertain

Statement B: Agreement on a significant global price floor for all carbon emissions would be an effective step toward achieving sharp reductions in emissions.

Responses weighted by each panelist’s confidence

Christian Leuz, Chicago Booth
“A significant floor would not only provide incentives for reductions and innovations but also some policy certainty.”
Response: Agree

Kenneth Judd, Stanford
“If the cost of emitting CO2 goes up, emissions will go down.”
Response: Agree

Emmanuel Saez, University of California at Berkeley
“For economists, [a] price floor is great, but in reality, it could create a populist backlash and put us further behind.”
Response: Uncertain

John Van Reenen, London School of Economics
“It would be great, but highly unlikely to be accomplished politically. That’s why voluntary agreements are probably the only game in town.”
Response: Agree

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