Carbon Club Europe : Global implications of the European Green Deal and governance strategies for a ‘de facto climate club’

The EU has long been hailed as a global climate champion. That was particularly true in the run-up to and the aftermath of the 2009 Copenhagen Summit. However, at that time, the UE tried to lead by example. The hope was that Europe’s ambitious posture would push others to act. That strategy has largely failed, as did the 2009 COP. Since then, there has been a growing sentiment that Europe is losing its lead, and is overtaken in many areas by China and others. While the Paris Agreement brings new hopes, it shares many of the deficiencies of the earlier approach in its overreliance of a global framework, one to which all states should in principle agree. However, there are also alternative approaches, and many scholars point to, for instance, sub-national dynamics or polycentric climate governance. The question is whether these can be scaled up and developed in time. In the meantime, a very different form of climate governance is worked out theoretically and might soon become reality – climate clubs. The climate club concept and literature has been forged at an abstract conceptual level on the frontier of climate economics and rational choice political science. Little has been said about how to actually kick-start one in the dirty world of real politics, and even less about how to govern one after it has been created. This paper aims to make an early contribution in the second question and mobilize the literature to start dealing with such questions. The extant literature, although operating in the abstract, is taking a climate club as something that is consciously put in place to be a club. But what if a climate club emerges as a result of a spill over process on the basis of an existing institutional framework, such as the European Union? The proposed European Green Deal and Climate Law contain carbon border adjustment taxes – menaing that whatever is importad into the EU is subject to payment of a carbon tax no matter where it was produced. Since the EU remains the wordls largest market for manufactured goods (in terms of joint import/export volume), other global trade players will have an incentive to adjust to the EU climate regulation. This will most likely lead to a situation where the EU becomes a de facto climate club – it will have ambitious climate regulation designed internally, and will use its regulatory, market (largest global market for manufactured goods) and soft power (climate diplomacy) to make its trade partners adjust to this regulation. The climate club literature only takes us so far – EU’s partners can pay border adjustment fees or can change their regulation to gain access to the EU market. But what happens then? The EU is a complex supranational organization with a multi level governance system, taking its legitimacy from member states. How can it be governed as a ‘de facto climate club’?