Holland and Young THe economic implicaTions of climaTe cHange miTigaTion policies: inTroducTion r1 *United Nations. E-mail: hollandd@un.org. **National Institute of Economic and Social Research. E-mail: g.young@niesr.ac.uk. THE ECONOMIC IMPLICATIONS OF CLIMATE CHANGE MITIGATION POLICIES Dawn Holland* and Garry Young** Climate change poses signifcant risks to the well-being of people throughout the world. Recent extreme weather events have highlighted that these risks are already uncomfortably high. Sir David Attenborough described the Australian bushfres as the moment of crisis to address climate change. Moreover, he lamented the lack of action in addressing the issue, arguing that “this is an urgent problem that has to be solved and, what’s more, we know how to do it – that’s the paradoxical thing, that we’re refusing to take steps that we know have to be taken”. 1 The risks posed by climate change are widely recognised and have led to promises of action. More than 190 countries have signed the 2015 Paris Agreement and set a goal to limit average global temperature rises to well below 2 degrees above pre-industrial levels. 2 Signifcantly though, the United States has embarked on the process of withdrawing from the Paris Agreement because it is deemed to impose an unfair economic burden on American workers, businesses, and taxpayers. The articles in this issue of the Review highlight some of the economic issues involved in acting to cut greenhouse gas emissions to a level consistent with the ambition to limit global temperature increases. Together they help explain why progress in tackling this “urgent problem”is likely to be slow even though “we know how to do it”. While all countries may agree on the need to cut carbon emissions, a key focus in climate negotiations the most to gain from a grandfathered allocation, with will be on how much each country is allowed to emit. Jonathan Camuzeaux, Thomas Sterner and Gernot Wagner examine different scenarios for greenhouse gas emissions and argue that by 2030 the main protagonists in climate negotiations are likely to be the United States and India. At present the United States and China are responsible for about 40 per cent of global greenhouse gas emissions. However, under current policy China’s emissions are expected to peak within a decade, whereas emissions from India are projected to continue rising, given that the fast-growing economy is a heavy user of carbon-intensive coal. The type of global agreements reached on emissions policy may, therefore, have an even greater impact on India than on China. Given their different paths of development and historic greenhouse gas emissions, the United States and India are likely to prefer opposing methods of allocating rights to emit greenhouse gases. As Camuzeaux et al. point out, the costs of mitigating climate change that each country bears will depend on how rights to emit are allocated. They consider a number of allocation mechanisms ranging from a ‘grandfathered’ allocation, where rights depend on historic emissions, to equal per capita emissions. They argue that by around 2030, the United States and India will have the most to gain and lose depending on which allocation mechanism is chosen and that this will turn the two countries into the most signifcant negotiating partners in any form of global climate negotiations. In particular, the United States has © National Institute of Economic and Social Research, 2020. DOI: 10.1017/nie.2020.1