Blanchard, Olivier, Gollier, Christian and Tirole, Jean (2023) The Portfolio of Economic Policies Needed to Fight Climate Change. Annual Review of Economics, vol.15. pp. 689-722.

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Abstract

Climate change poses an existential threat. We argue that carbon pricing and green R&D support are good economics, but their implementation can be improved. Even if carbon prices are generalized and given more substance, green R&D is still likely to be smaller than needed. Much more money must be spent on it than is now the case, and this money must be properly allocated in order to have an impact. Moreover, done well, other policies, such as standards, bans, and targeted subsidies, can be good economics. But they have often been incoherent and their implementation is delicate. We also argue that domestic and international compensation is key to the acceptability of efficient policies. Finally, although a country’s emissions will not materially alter the course of climate change, yet individual countries can show the way ahead: They can develop technologies that can be used by other, poorer countries. They can provide leadership/momentum on global agreements and on the need to fund climate change policies in developing countries.