Building a Scalable Climate Coalition for Heavy Industry: A Policy Analysis in Science

International climate policy often struggles with a cooperation problem: unilateral action is often rather ineffective and politically and economically risky, while effective international agreements are difficult to align. In a policy analysis in Science, Director Axel Ockenfels and a global team of co-authors coordinated by Catherine Wolfram (MIT) present a pragmatic solution: a "Climate Coalition" specifically targeting four heavy industries—steel, aluminum, cement, and nitrogen fertilizers.

These sectors account for roughly 20% of global greenhouse gas emissions. The proposed coalition would require member countries to price covered emissions and apply border carbon adjustments to covered imports from non-members. These measures are designed to limit leakage and encourage carbon pricing.

Using plant-level data and trade modeling, the authors’ model suggests that a "first-wave" coalition could reduce global greenhouse gas emissions by approximately 1.5% relative to 2023 levels, while generating about USD 186 billion in annual domestic carbon-pricing revenue and limited production effects. The study highlights that by focusing on sectoral emissions rather than national totals, the world can replace fragmentation with reciprocity and accelerate the transition to a clean industrial future.