Michael Jakob’s research while affiliated with Ecologic Institute and other places

Policymakers frequently voice concerns that carbon pricing could impair economic development in the short run, especially in low-income countries such as Uganda. Using a consumer demand system for energy and food items, we assess how households’ welfare, and demand for food and energy, would respond to a carbon price of USD40/tCO2. We find welfare losses of 0.2–12 per cent of household expenditure on food and fuel, due to the carbon price. Average demand for electricity and kerosene decline by 11 and 20 per cent respectively, while firewood demand rises by 10 per cent on average. We observe shifts within food consumption baskets, with declines in the demand for meat & fish, and vegetables, alongside an increase in cereal consumption. Household nutrition is adversely impacted, with declines in protein and micronutrient intake across the population. Complementary social protection policies such as cash transfers are therefore required to ease adverse effects on economic development in Uganda.

The European Union (EU) will implement a Carbon Border Adjustment Mechanism (CBAM) to reach its climate mitigation targets while avoiding the relocation of its industries to countries with less stringent climate policies (carbon leakage). The exact implementation and possible future extensions of such an EU CBAM are still being debated. Here we apply a throughflow-based accounting method on detailed trade network data to assess the coverage of different implementation options. Using a stylized comprehensive EU CBAM as benchmark, we then quantify how an EU CBAM may affect the EU’s trade partners by channeling the EU carbon price to other countries. We find that middle- and low-income countries for which the EU is an important export market would be disproportionally impacted even under conservative implementation options. We finally explore different international revenue recycling schemes to make the EU CBAM inclusive toward vulnerable countries and able to foster global climate cooperation.

Four broad categories capture countries’ political and economic barriers to quit coal. Use these to tailor solutions. Four broad categories capture countries’ political and economic barriers to quit coal. Use these to tailor solutions.

Economic analysis has produced ample insights on how international trade and climate policy interact (1). Trade presents both opportunities and obstacles, and invites the question of how domestic climate policies can be effective in a global economy integrated through international trade. Particularly problematic is the potential relocation of production to regions with low climate standards. Measures to level the playing field, such as border carbon adjustments (BCAs), may be justified for specific emissions-intensive and trade-exposed sectors but need to be well-targeted, carefully navigating tensions that can arise between the desire to respect global trade rules and the need to elaborate and implement effective national climate policies. The conformity of specific trade measures with international trade and climate change law is not entirely clear. Yet, clarity is needed to ensure that the industry actors affected will find the rules predictable and be able to adhere to them.

In an integrated global economy, trade policy and climate policy are closely intertwined. This paper adopts an interdisciplinary approach to provide an overview of the key debates in economics, political science, and legal studies related to globalization and climate change. We identify a number of emerging issues that deserve increased attention in future research in this direction. These include international financial flows, migration, telecommunication, and digitization as well as changing lifestyles and consumption patterns across the globe. We also present potential research question regarding the diversification of import and export portfolios in the face of growing climate impacts and the decarbonization of industry, aviation, and shipping. Finally, we discuss how these recent developments could shape trade and climate policy formulation. We conclude that ambitious climate policies seem more likely to flourish in an open world trading system which provides sufficient flexibility for individual countries to adopt nationally appropriate climate policies. This article is categorized under: Climate Economics > Economics and Climate Change

With national governments almost universally pledging to achieve net zero emissions, a key uncertainty is how net zero policies will affect global equity. It is unclear which policy measures are available for achieving net zero equitably, what the social and environmental implications of these measures will be under global pathways, or how they might be implemented in ways that advance rather than undermine equity. By means of three stylized future pathways, we show that there are potentially serious international and domestic equity effects from global net zero policies, as well as opportunities to achieve an equitable net zero future for all through appropriate policy design.

This article summarizes lessons learnt from 15 case studies on the political economy of coal following one integrated framework. It proposes four country categories that show comparable properties to analyze the political economy of coal, including countries that i) phase out coal, ii) phase in coal, iii) are established users and iv) depend on coal exports. Regarding the prevalence of coal investments in many countries, it highlights the role of conflicting societal objectives, e.g. affordable electricity prices being more important than environmental targets. Vested interests are mainly related to locally concentrated job losses, expectations regarding regional development, coal royalties, as well as lobbying by a politically well-connected coal industry. Those factors can be either strengthened or extenuated by structural factors, including multi-level governance issues and the structure of the energy market. Entry points for policy vary for different country categories. De-risking financing of alternatives to coal as well as reforms of energy markets are most important entry points in countries that still invest in coal or plan to phase in coal to their energy systems.