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In new report, an international group of researchers propose a path for countries willing to align carbon pricing, avert trade frictions, and unlock $200 billion in annual revenue.
The Global Climate Policy Project at Harvard and MIT Tuesday released its flagship report detailing how a voluntary coalition of countries coordinating carbon prices could slash global emissions and raise billions for mitigation and adaptation, while avoiding a patchwork of unilateral border carbon measures.
The report, titled “Building a Climate Coalition: Aligning Carbon Pricing, Trade, and Development,” was developed with insights from a working group that included thought leaders and academics from many of the world’s major emitting countries.
Prepared for release in the run-up to the 30th United Nations climate conference (COP30), the report sketches a pathway to decarbonize heavy industry regardless of the pace of global consensus in the UN Framework Convention on Climate (UNFCCC) process and without sidelining developing-economy priorities.
COP30 host Brazil has placed the report’s proposal on its agenda and is convening allied countries for technical sessions ahead of and during the summit.
Many countries have begun introducing carbon pricing for heavy industry. Building on this momentum, the report includes modeling scenarios to quantify emissions, revenue, and trade effects under multiple coalition designs (different carbon prices, border measures). It also spells out an incentive package for low- and middle-income countries that would not undermine domestic production or spark trade conflicts.
The models predicted several promising outcomes. Key finding included:
Seven-fold emissions reduction: Coalition members cut emissions roughly seven times more than the current policy trajectory.
Nearly $200 billion in projected annual revenues: Most of those funds were raised domestically — rather than through carbon border adjustments — providing coalition members with resources for clean-energy investment and social programs.
Manageable price impacts: Commodity prices rose moderately in target industries, with negligible output loss for coalition producers.
“Our modeling shows that a well-designed carbon-pricing coalition can deliver large-scale climate action and prevent a chaotic patchwork of border levies,” said Catherine Wolfram, William Barton Rogers Professor in Energy and a professor of applied economics at the MIT Sloan School of Management. “At the same time, it could offer incentives for low- and middle-income countries to join the coalition and raise their climate ambitions.”
In addition, the report presents concrete options and guidelines for coalition design and implementation. The aim is to help governments and other stakeholders identify practical ways in which multilateral coordination around carbon pricing could enable a range of countries to advance widely held goals for climate mitigation, economic development, and trade.
“By aligning climate ambition with economic incentives, the coalition gives both developed and developing countries a clear, cooperative pathway toward a safer climate future,” said Arathi Rao, director of the Global Climate Policy Project at Harvard and MIT.
The Global Climate Policy Project at Harvard and MIT is based at The Salata Institute for Climate and Sustainability at Harvard and at the Center for Energy and Environmental Policy Research (CEEPR) at MIT. The report is available in the Working Papers section of the CEEPR site and on the website of the Salata Institute.
Contributors will discuss the paper this month at:
Harvard Climate Action Week – Sept. 19-20 (Boston and online), featuring officials from Indonesia and Brazil
Climate Week NYC – Sept. 23 (New York), featuring officials from the EU and Brazil
Media Contacts: The Salata Institute for Climate and Sustainability at Harvard: David Trilling, david_trilling@harvard.edu; Sloan School of Management at MIT: Casey Bayer, bayerc@mit.edu
