Naomi Shimberg

The important interaction between trade and climate policy has sharpened the case for a coalition of countries that commit to price industrial emissions at home and use border adjustments to apply a carbon price to imports from nonmembers. We propose a coalition that initially targets four emissions-intensive industries—iron and steel, aluminum, cement, and nitrogen fertilizers—which together account for roughly 20% of global greenhouse gas (GHG) emissions. Using plant-level microdata and trade modeling, we examine two institutional designs that have emerged in policy discussions: a uniform price regime with a common carbon price floor and a graduated price regime with income-tiered floors. We show that a first-wave coalition could cut global GHG emissions by roughly 1.5% [2.0% of carbon dioxide (CO₂) emissions] relative to 2023 levels while keeping industrial output impacts small, limiting leakage, and raising almost $200 billion per year in public revenues.

Carbon Pulse, Harvard Salata Institute, Max Planck Institute for Research on Collective Goods, EurekAlert!

This paper studies the effects of the COVID-19 pandemic on small businesses between March and November 2020 using new survey data on 35,000 small businesses in eight Latin American countries. We document that the pandemic had large negative impacts on employment and beliefs regarding the future, which in turn predict meaningful economic outcomes in the medium-term. Despite the unprecedented amount of aid, policies had limited impact for small and informal firms. These firms were less aware of programs, applied less, and received less assistance. This may have lasting consequences, as businesses that received aid reported better outcomes and expectations about the future.

Yale Economic Growth Center, J-PAL

One of the key justifications for the Inflation Reduction Act (IRA) was its potential to create jobs. I examine the short-run employment effects of the IRA's clean electricity tax credits using industry-by-county data from the Quarterly Census of Employment and Wages. I implement a synthetic difference-in-differences design, comparing counties with high propensity for solar and battery development to those without, based on irradiance and transmission capacity. By 2025Q2, employment increased by nearly 100 jobs per county in directly-related construction industries (an 18% increase relative to the pre-IRA mean), with spillovers of approximately 90 jobs per county in related construction industries (a 17% increase). These gains amount to an increase of 190,000 jobs, or 2.2 jobs per MW of new solar and battery storage capacity. Local gains were concentrated in populous counties whose residents were more likely to support climate policy, limiting the scope for the law's wind and solar tax credits to build new political constituencies.

This report proposes the formation of a multilateral climate coalition that brings together countries willing to coordinate on carbon pricing and related policies. The initial focus would be on carbon-intensive industries, like iron and steel, aluminum, cement, and fertilizers, which account for more than 20% of global carbon emissions. Member countries would commit to a carbon price floor—i.e., a minimum carbon price that would apply to all emissions from these target industries within their borders. To ensure that similar carbon-related costs apply, both to firms within member countries and to goods imported from firms in non-member countries, members would apply border carbon adjustments (BCAs) to imports from non-member countries. At the same time, member countries would provide positive incentives for low- and middle-income countries to join the coalition and increase their climate ambition—for example, through support for low-carbon technologies, climate finance, institutional capacity building, and preferential market access. Over time, the coalition could expand in both membership and sectoral coverage, yielding commensurately greater emissions and economic benefits.

Financial Times, Carbon Pulse, Bloomberg, E&E News, Brazil Ministry of Finance, Sustainability Magazine, Harvard Gazette, MIT Sloan

As global consensus moves slowly and emissions remain high, a smaller group of willing countries can lead. A coalition focused initially on four heavy industries could cut emissions up to seven times more than the status quo and raise nearly $200 billion in revenue for member governments.

Episodes I produced:
2. What’s the Right Price for Carbon Emissions?
9. Without National Climate Action, How Can US States Put a Price on Carbon?
Bonus Episode: Hank Green on How to Talk About Climate Change
13: Could a New Global Currency Help Avert the Climate Crisis?

Other episodes:
0. Welcome to Pricing Nature
1. Intro to Carbon Pricing
3. The Road to Paris: 30 Years of Climate Negotiations in Under an Hour
4. Why doesn’t the US have a national price on carbon?
Bonus Episode: Climate Stories
5. The Conservative Case for Carbon Pricing
6. Carbon Pricing Hits a Brick Wall on the Left
Welcome Back to Pricing Nature
7. There’s a New Global Carbon Trading System—Article 6. Is It What We Need?
8. What Can COPs Accomplish? A Field Trip to COP26 in Glasgow
Bonus Episode: A Man, A Plan, A Canal, Carbon Price
10. Tax Ourselves? Why Companies and Institutions Are Pricing Their Own Emissions
11. What Have We Learned From Internal Carbon Pricing?
12. Carbon Offsets: One Quandary After Another
14. Kim Stanley Robinson, Kate Raworth, and Delton Chen Discuss Carbon Currency