While the largest and most fundamental building blocks of a free-market international climate agreement have been explored in practical and policy sense, one question that remains unanswered is the political one. How do we get countries on board with expensive climate policy?

The answer, in its most basic form, is to make it cheaper. Top-end estimates of the cost of delivering net-zero in the United States by 2050 are up to $11,300 USD per person per year. High in the US, these costs are unimaginable for a developing nation. Yet the reason the costs are so high is that the approach, characterised by high tax and subsidy, is fundamentally wrong. Instead, free market climate policy reduces these costs through several mechanisms. These include, but are not limited to, full capital expensing (and ‘covictory’ bonds and loans), reciprocal tax cuts, increasing returns to R&D and thereby accelerating the development of green technologies.

Cheaper, until it becomes cheaper than dirty tech (or second hand dirty capital fleeing from the West), is still too expensive for a developing economy. Only cheapest will do. The environmental Kuznets Curve shows we only really start valuing the climate once our basic needs for sustenance, housing and economic stability are met. So climate policy must also deliver i) an international agreement that drives development and prosperity of poorer nations, ii) one that leaves even the poorest nations better off in than out. As I posed to our breakout group: “how do we get a country like Venezuela, which hates free markets and trashes the environment, to engage with free market climate policy?”.

One key approach is free trade. Countries love to export (even if imports are still unpopular due to the mercantilist instincts of almost all voters). We can offer reciprocal tariff cuts, market access, and more to those who engage with this international agreement. We can also offer that any Carbon Border Adjustment Mechanism (CBAM) which does exist must not be levied against fellow members of the agreement. We must also, the breakout group argues, offer two tiers of membership that allows developing economies a foot in the door. How we balance the goal of the deepest possible engagement with policies like full expensing, free trade, covictory bonds, with the maximum possible membership, becomes an art rather than a science.

Ideas discussed included waste management and recycling clauses to bind all entry-level members. In exchange for this, minimum levels of property rights being guaranteed, and no industrial subsidy, reciprocal tax cuts and the removal of CBAM taxes can be achieved. At a higher level of engagement with the international agreement, Sanitary and Phytosanitary rules must be made scientifically sound, no tariff barriers (nor national security exemptions can be made), as well as schemes for the mutual recognition of standards in trade, but in exchange Covictory bond funding to accelerate investment is available.

Two observations can be made, even with this very high-level overview from the group. First, that climate policy can be used to accelerate the adoption of free trade policy and address some of the key failings of the WTO. Second, that moving into the higher tier will be a key objective for developing nations. For them, without any commitment to fiscally supporting climate policy, they can attract enormous investment and export market access in exchange for welcoming greater freedom. It’s a win-win.