Canada Showed How to Make a Carbon Club Work

Last year’s United Nations Climate Change Conference—known as COP26—closed with a new climate agreement: the Glasgow Climate Pact. The pact reaffirms the global community’s commitment to limiting warming to 1.5 degrees Celsius above pre-industrial levels and includes commitments to reduce methane, end deforestation, and support the countries most impacted by climate change.

But like most international agreements, the pact lacks an enforcement mechanism. States are strongly encouraged to reduce emissions, but they can’t be forced to do so, and if they fall short of targets, there will be few repercussions—if any. As a result, some experts are putting their money on economic rather than political solutions to the climate crisis.

One of them is “club theory,” popularized by the Nobel-winning economist William Nordhaus. The “club” is a group of countries wherein members adhere to a common carbon tax. Nonmember countries are subjected to a 3 percent tariff on products they sell to members, incentivizing them to join. More than 3,600 economists have signed a statement