Broader international cooperation has the potential to lower the cost of climate action and accelerate the energy transition.
Today’s policies are often shaped by domestic concerns, delaying progress.
Political efforts to safeguard local jobs and industries can lead to trade protectionism, which may constrain the level of ambition, particularly in sectors such as steel and cement.
This implies that high-income countries adopt the most ambitious reduction targets, while the actual emission reductions occur in regions where they are most cost-effective.
This strategy maximises global impact while minimising expenses, which contributes to an affordable green transition.
To demonstrate the possibilities of this approach, the figure below presents an estimation of the outcomes under a global carbon trading system, assuming participation from all regions, using our in-house climate-economic model, INTERSECT.
The potential impact of this mechanism is substantial: our model forecasts that the total potential could reach 12% of global gross emissions by 2030 and 31% by 2040.
To power the green transition, we must align:
