The United Nations climate change conference in Glasgow, Scotland—known as COP26—closed on Nov. 13 with a new climate agreement: the Glasgow Climate Pact. The pact reaffirms the global community’s commitment to limiting warming to 1.5 degrees Celsius and includes commitments to reduce methane, end deforestation, and support the countries most impacted by climate change.
But like most international agreements, the pact lacks an enforcement mechanism. States are strongly encouraged to reduce emissions, but they can’t be forced to do so, and if they fall short of targets, there will be few repercussions—if any. As a result, some experts are putting their money on economic rather than political solutions to the climate crisis.
One of them is “club theory,” popularized by Nobel Prize-winning economist William Nordhaus in 2015. The “club” is a group of countries wherein members adhere to a common carbon tax or “price on pollution.” Nonmember countries are subjected to a 3 percent tariff on products they sell to members, incentivizing them to join. To date, more than 3,600 economists have signed a statement saying carbon taxes are the most “cost-effective lever to reduce carbon emissions.”