Building a scalable climate coalition for heavy industry

Summary

Steel, cement, aluminum and nitrogen fertilizer account for roughly 20% of global greenhouse gas emissions but less than 5% of economic output. Catherine Wolfram (MIT Sloan) and 22 co-authors propose an international carbon price floor coalition for these four sectors: instead of a uniform $50/ton, a tiered $25/50/75 by income group. The tiered design cuts the cost for low-income members from 2.2% to 0.6% of output while leaving abatement almost unchanged — about 830 million tons per year. Nearly all of the ~$200 billion in annual revenue comes from domestic carbon pricing, with under $1 billion from border adjustment. Proposed coalition: the EU and its trade partners, Australia, Brazil, Canada, China, India, Indonesia, Thailand, and ten African countries with below-average industrial emissions.

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