Joe Biden’s presidency of the United States is an opportunity to realize a long-discussed approach to global warming: a climate club. The United States, the European Union and China together emit half of the world’s greenhouse gases. They must come together to cut domestic emissions and levy a carbon tax on imports. That would incentivize all nations to cut their emissions.
Nobel-prizewinning economist William Nordhaus proposed the climate-club idea in 20151. He suggested that a group of countries should agree to manage emissions to a strict level and coordinate tariffs on imports from others. Nations would want to join the club to avoid trade penalties.
And there is a way to do it. World Trade Organization (WTO) rules allow ‘carbon border adjustment’ charges — taxes on carbon emissions that are released during the manufacture of imported goods2.
A carbon tax on imports to the world’s three biggest economic blocs could catalyse tough climate action globally. Without it, free-riding is inevitable — too many countries will wait for others to act rather than push ahead with costly reductions.
The idea should be on the agenda at Biden’s climate summit on 22 April. To support it, researchers need to develop an internationally recognized methodology for measuring the carbon content of complex goods.
For the first time, the EU, the United States and China share a common climate ambition.
The EU aims to become ‘climate neutral’ by 2050. It has committed to tightening its carbon pricing system, strengthening environmental regulations and introducing carbon border adjustments (see go.nature.com/2hnj4ed). These adjustments will stop companies transferring production to nations with laxer laws — a process known as carbon leakage (see ‘Levy lexicon’). Such actions weren’t previously feasible because of fears of a trade war and political clashes with the United States under president Donald Trump.