No, not everything is in vain in climate policy. The G-7 summit at Schloss Elmau was not a “missed opportunity” either, as activists later claimed. In reality, the seven leaders have set the stage for the world to act more decisively and effectively to combat global warming. What is meant is the proposal for a climate club that Chancellor Olaf Scholz submitted to the G7 and which is to be founded at the end of this year. The members of these clubs should cooperate, jointly organize decarbonization and the restructuring of industries, and also enter into partnerships with poorer countries.
True, that’s all still very vague. One can understand if climate protectors are disappointed because of this. However, they overlook the crucial point that a climate club improves the conditions for the fight against global warming in the long term. The problem so far: decarbonization, such as phasing out lignite, is usually expensive and painful for an individual country and its population. While the efforts benefit the climate, the share of these benefits that accrues to the country concerned is negligible. Even if Germany stopped emitting CO₂ from tomorrow, the country would still have to reckon with extreme climate-related weather conditions such as drought and floods. The climate is global, so climate policy can only be global.
The idea came from the American economist William Nordhaus
This is where the idea of a climate club comes in. It originally comes from the American economist William Nordhaus, who was awarded the Nobel Prize in Economics in 2018. Nordhaus had long campaigned for carbon dioxide to be taxed worldwide, which Germany and many other countries are now doing. However, this creates a problem with free riders, i.e. with countries that benefit from the climate policies of others but do not participate themselves and can therefore produce more cheaply. In order to defuse this free-rider problem, the willing climate policy should join forces in a club. Its members support each other, but above all they defend themselves against climate deniers. A country that does not raise the price of CO₂ emissions of its own accord will be subject to punitive tariffs on exports to club countries.
So far, this element has been missing from the Chancellor’s climate club. His plan does not yet provide for sanctions against those who are unwilling, which significantly reduces its effectiveness. But that does not mean that the summit decisions are useless. The institutionalization of a club of willing nations alone could develop its own dynamic. And the EU Commission is planning to impose its own border adjustment on imports from countries without an appropriate climate policy from 2026 onwards. The levy is intended to strengthen climate protection and protect European jobs from unfair competition, just as Nordhaus had imagined.
Even major global climate problems can be solved if states tackle them with determination and if economic interests favor a solution. A good example of this are the fluorocarbons (CFCs), which not only pollute the climate but also destroy the protective ozone layer in the atmosphere. In the 1987 Montreal Protocol, 24 countries committed to phase out CFC production. The agreement was a resounding success, and today the pollution of the atmosphere with the climate toxin is slowly but steadily decreasing. Admittedly, the task back then was easier because it was just a matter of finding new coolants for refrigerators and new propellants for hairspray. On the other hand, public awareness of the climate problem is much greater today than it was then.
The climate club is an idea whose time has come.