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To reach the Paris Agreement’s goal of keeping global warming well below 2°C, substantial parts of the world’s fossil fuels simply cannot be combusted and must be left in the ground. This seminar examines how the Paris Agreement on climate change could be complemented by an international treaty among fossil fuel producing countries, aimed at restricting global supply.
A supply-side treaty could affect market prices, expectations, and conflicts of interests in ways that promote effective climate policies. It could (i) enhance the impact of the Paris Agreement in the presence of free-riders, (ii) stimulate R&D investment in low-carbon technologies by making climate policies credible, (iii) provide insurance against a failed Paris Agreement, and (iv) make carbon policies more acceptable to fossil fuel producers, thus increasing their support. None of these effects depend on universal producer participation. Such a treaty could help reduce the costs of the required transition to a low-carbon economy.
This seminar provides insights from a recent paper published by the author in the Science journal.
Geir B. Asheim is Professor of Economics at the University of Oslo. After receiving a PhD from UCSB he has visited several North-American universities, including Cornell, Harvard, Montréal, Northwestern and Stanford, and been resident at institutes for advanced study in Marseille and Paris. His research interests include game theory and questions relating to intergenerational equity, in particularly motivated by the need to resolve the intergenerational conflict that climate change poses.