11. Consumption-Based Climate Policy in Practice: Abatement Potentials Difficult to Exploit

Based on the results of the literature review and the model-based analysis, this chapter develops proposals for the practical design of consumption-based approaches in international climate policy. First, a number of criteria are proposed that a unilateral consumption-orientated policy should meet: it should promote environmental effectiveness or cost-effectiveness, should not impose additional economic burdens on developing and emerging economies, should be perceived as fair, should stand a chance of conforming to WTO rules, and its implementation should be practicable. From these criteria recommendations for practical policy design are deduced: border tax revenues should be allocated to developing and emerging economies; “green” technology transfer to this group of countries should be fostered; the application of export rebates in addition to import tariffs is an option, but it does not have large effects on policy effectiveness; and the adoption of “green” technologies by developing and emerging economies should be incentivized. This chapter argues that the last of these recommendations is extremely important for the environmental effectiveness of the policy; this recommendation will however be difficult to implement if the policy—as typically recommended for reasons of practicability—is based on carbon benchmarks or if at least a certain measure of cooperation by the countries affected by the policy cannot be guaranteed.