Significant Policy Challenges
If climate change is the greatest market failure the world has ever seen,
then it may also represent the largest scope for government intervention
that has ever existed. It is one thing to suggest a role for government
policy but quite another to design a set of policies that achieves the
objectives in an effective manner. Our brief discussion of climate-change
policy examines separately the complexity of international negotiations,
the outlines of coherent policy, and the current state of policy in Canada.
International Tensions
As we said earlier, meeting through the UN-sponsored process, over 175
countries have signed the Paris Agreement, committing themselves to
establish and achieve emissions-reductions targets which, collectively, are
consistent with keeping the average global temperature rise to Celsius
above pre-industrial levels. As industrial countries determine their own
national targets, however, there is a powerful tension between the
developed and developing countries.
The developed countries argue that in order for their domestic voters to
accept stringent emissions-reductions policies, the developing countries
must be seen to be equally committed to slowing and eventually reducing
their own GHG emissions. The rich-country voters do not want the
developing countries to be “free riding” on their costly actions.
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