Towards Minilateral Climate Governance? Analysing Climate Club Design Options

The multilateral governance frameworks that have been created so far to address climate change—primarily, the United Nations Convention on Climate Change (UNFCCC), Kyoto Protocol and Paris Agreement—have failed to drive the emissions reductions required to halt irreversible climate impacts. However, a range of new and dynamic climate governance arrangements have proliferated, including the so-called ‘climate clubs’.

Climate clubs are generally conceptualised as forums between a subset of countries to tackle climate change outside of the UNFCCC, that can also include non-state actors. By crafting deals in smaller settings, climate clubs arguably allow for higher climate ambition, more effective implementation, and quicker decision-making processes.

Several types of climate clubs have been proposed, differing in key design features such as (1) membership; (2) benefits of participation; (3) legal character; and (4) follow-up, compliance and enforcement. On the one end are arrangements characterised by binding membership rules and sanctioning mechanisms, most prominently expressed in the club proposed by economist William Nordhaus (2015), that requires members to commit to a binding carbon price, and imposes penalties against non-compliant members and non-participants. On the other end are clubs that simply aim to unite, and facilitate a dialogue among, countries with a common climate ambition.

While climate clubs in theory offer a way of moving climate change cooperation forward, they raise some complex questions, including concerns about equity. Equity is mainly expressed in the climate regime through the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC). The principle acknowledges that while all states share a common responsibility to protect the environment, there is a need to consider the differing circumstances of states and their capacity to address the problem.

This research article has sought to offer an examination of how different climate club design options raise implications from the perspective of CBDR-RC, with respect to how the principle has been articulated and operationalised under the climate regime. Concrete examples of three existing club-like arrangements that differ significantly in terms of their key design features are analysed, including the Climate Club launched by the G7, the Clean Energy Ministerial (CEM), and the proposed EU-US Global Arrangement on Sustainable Steel and Aluminium (GASSA).

The Climate Club is characterised by its inclusivity and comprises 36 countries, including both developed and developing nations. Of the three examples, the Climate Club is the least problematic of the design options from the perspective of CBDR-RC. Nonetheless, the overall objective of achieving climate neutrality by or around 2050 and the possible adoption of future trade mechanisms might require differential treatment among its members.

The CEM is representative of a climate club that is invitation-only. In addition, its membership is confined to the world’s major economies and excludes less powerful countries. It has been argued that clubs of this nature have provided powerful developed countries with a strategic platform to contest and evade implementation of the CBDR-RC principle. Here, the most significant risk is that key decisions on international climate policy can be adopted in exclusive clubs that negatively impact developing countries, especially those most vulnerable to the consequences of climate change.

While the GASSA may provide the seedlings for the world’s first Nordhaus-style climate club, its prospective design features raise several tensions from the perspective of CBDR-RC. First, the proposed membership criteria appear to discriminate against China and could potentially exclude other countries. Second, the expectation that developing country members should undertake equivalent commitments to developed country members is questionable. Third, the application of uniform trade tariffs against non-participants also raises concerns around burdening countries, despite their status as developed or developing. Fourth, whether the GASSA will provide any support for developing country members also remains uncertain.

With this analysis in mind, how can we weave differential treatment into the architecture of future climate clubs? With respect to differentiation through membership tiers, several existing club-like arrangements classify their members into clearly defined categories with corresponding commitments such as the Beyond Oil and Gas Alliance and the Partnership for Market Readiness. Some clubs have also pursued differentiation with respect to members’ commitments, including the differentiated timelines for coal phase-out suggested by the Powering Past Coal Alliance.

Alongside membership tiers and commitments, clubs have integrated mechanisms for means of implementation to support developing countries such as the Trust Fund of the Climate and Clean Air Coalition. Last but not least, clubs can embed differentiation into their architecture via compliance mechanisms. On this, the Montreal Protocol and Paris Agreement provide useful lessons learned, including flexible implementation mechanisms, delayed reporting schedules, and assistance to reporting requirements.

It is clear that several implications are posed to existing or prospective minilateral climate clubs with respect to CBDR-RC. However, by embracing differentiation into their design structure, climate clubs can still offer a way to move international climate policy forward, without the risk of contravening, and being misaligned with, the climate regime.