Green policies have traditionally been seen as costly to countries who implement them, while other nations can do nothing and “free-ride” – leading to global inaction on the climate crisis.
However, the research team – led by The Open University and the universities of Exeter, Cambridge, and Cambridge Econometrics – say this is a “poor description” of today’s reality. Instead, they say the transition is already happening and, for many countries, embracing it is the best strategy to reduce costs.
As the world economy transforms, free-riding may now be the risky approach – not only environmentally but also economically.
According to the new study, the risks and opportunities vary dramatically between countries, depending on their degree of competitiveness in fossil fuel markets. Countries fall into one of three categories – each with different incentives driven by the green transition.
Large fossil fuel importers like the EU and China will gain multiple benefits from decarbonizing.
Meanwhile, “large competitive fossil fuel exporters” like Saudi Arabia may avoid economic decline by flooding global markets with cut-price fossil fuels.