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Policy Papers

Towards A More Inclusive G7 Climate Club

Authors: Edward B. Barbier

Abstract

This policy brief outlines a strategy for the Group of Seven (G7) to reduce over-reliance on fossil fuels and promote a transition to clean energy through designing a more inclusive Climate Club. Further details and analysis supporting this strategy can be found in Barbier (2023). At its core are three policies that the G7 can implement over the next few years and at low additional cost: phasing out any remaining consumption and production fossil fuel subsidies; phasing in improved carbon pricing and other policy actions, and recycling revenues to public support for green R&D, key green infrastructure investments and offsetting adverse income and employment effects. Adoption of this policy agenda by all members should be the basis for forming the G7 Climate Club. But to further accelerate global climate action toward the 2050 net-zero goal, the Club should include mechanisms that would encourage other countries to join, including emerging market and developing economies (EMDEs). To achieve these objectives, the Club should require fossil fuel pricing reforms as the main precondition for joining, establish a differentiated carbon price floor, which is lower for EMDEs as opposed to high-income members, and impose a carbon import levy to support the policies adopted by the Club and to encourage more countries to join. Finally, the G7 should target assistance to EMDEs that help them transition to clean energy as well as facilitate their eventual participation in the Climate Club.