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Sven Rudolph and Takeshi Kawakatsu

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Takeshi Kawakatsu and Sven Rudolph

The Paris Agreement urgently needs underpinning by ambitious domestic policies. Greenhouse gas (GHG) pricing is still promising and has been spreading, but implementation barriers are still high. The US and Canada have shown that sub-national pricing is a viable alternative to national action. But, with the politics remaining unpredictable, Canada might rise to be the new leader in market-based climate policy from the bottom up. Against this background we analyze Canadian provinces’ approaches to GHG pricing. We use Sustainability Economics, Public Choice, New Environmental Federalism, and Polycentrism arguments as a basis and then study the British Columbia Carbon Tax and the Québec and Ontario Cap-and-Trade Programs. We mainly show that tailor-made sub-national GHG pricing is a viable strategy and that province programs are comparatively well designed and might even trigger national level action.

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Elena Aydos and Sven Rudolph

In Australia political battles about carbon pricing have been almost as fiercely fought as the duels in the 1985 Mad Max movie. While a ‘life beyond the Thunderdome’ could be facilitated by the Paris Agreement, political barriers in Australia, one of the biggest per capita emitters of greenhouse gases and the world’s leading coal exporter, remain high. Australia’s political stakeholders still struggle with this legacy of several only temporarily successful attempts to implement carbon pricing. Against this background, we evaluate Australia’s former carbon pricing initiatives based on ambitious sustainability economics criteria. Using Public Choice theory and empirical data from spring 2017, we then analyse the reasons for the political failure of earlier carbon pricing schemes, before exploring current chances of reviving the idea. We mainly argue that a growing openness of the business community and policy learning could make ‘life beyond the Thunderdome’ possible for carbon pricing in Australia.

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Sven Rudolph, Takeshi Kawakatsu and Achim Lerch

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Sven Rudolph, Takeshi Kawakatsu and Achim Lerch

While the Paris agreement certainly gives hope for effective global climate protection, it has to be substantiated by concrete policy programs. Regional or local market-based mitigation measures provide a promising supplement to national policies. Some regions and municipalities have already successfully implemented carbon taxes and carbon cap-and-trade such as the US North East, British Columbia and Tokyo. While national carbon markets have remained politically deadlocked in the US and Canada, particularly promising regional schemes have appeared, an international linkage has been established between California and Québec, and more programs and linkages are under way. Despite of some criticism, ambitious carbon markets promise to minimize compliance costs and achieve pre-set targets accurately. In addition, linkages between sub-national schemes can increase the economic efficiency and environmental effectiveness, and help in developing national or even international carbon markets from the bottom-up. But, effectiveness and efficiency alone do not suffice. Social justice was one of the founding principles of sustainability; it has become an increasingly important issue in climate policy, and recent policy debates have been forced to reconsider questions such as electricity price effects and the use of carbon pricing revenues. As research on the sustainability of regional carbon market linkages in North America is virtually non-existent, in our chapter we ask if and how these linkages can foster efficient, effective and fair climate policy in the US and Canada. We do so by, first, reviewing the arguments on efficient and effective carbon market design and linking and then adding a social justice component. Second, we give an overview of established and upcoming carbon markets in Canada and the US and identify the chances and barriers of linking. Third, we evaluate the programs based on sustainability criteria and analyze the prospects for linking. We show that North America has a new historic chance to act as a role model for sustainable climate policy developed from the bottom-up by linking sub-national carbon markets.