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  The Geopolitical Externality of Climate Policy

Beaufils, T., Conyngham, K., de Vries, M., Jakob, M., Kalkuhl, M., Richter, P. M., Spiro, D., Stern, L., Wanner, J. (2025): The Geopolitical Externality of Climate Policy, (Kiel Working Paper ; 2283), Kiel : Kiel Institute for the World Economy, 34 p.

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 ???ViewItemFull_lblCreators???:
Beaufils, Timothé1, ???ENUM_CREATORROLE_AUTHOR???                 
Conyngham, Kilian1, ???ENUM_CREATORROLE_AUTHOR???           
de Vries, Marlene1, ???ENUM_CREATORROLE_AUTHOR???           
Jakob, Michael 2, ???ENUM_CREATORROLE_AUTHOR???
Kalkuhl, Matthias1, ???ENUM_CREATORROLE_AUTHOR???                 
Richter, Philipp M.2, ???ENUM_CREATORROLE_AUTHOR???
Spiro, Daniel 2, ???ENUM_CREATORROLE_AUTHOR???
Stern, Lennart1, ???ENUM_CREATORROLE_AUTHOR???           
Wanner, Joschka 2, ???ENUM_CREATORROLE_AUTHOR???
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1Potsdam Institute for Climate Impact Research, Potsdam, ou_persistent13              
2External Organizations, ou_persistent22              

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???ViewItemFull_lblSubject???: geopolitical externality; climate policy; co-benefit; EU climate policy; Russia’s invasion of Ukraine
 ???ViewItemFull_lblAbstract???: This paper formalizes the geopolitical externality of climate policy and estimates its plausible magnitudes. Specifically, domestic reductions in fossil fuel demand depress global prices, thereby lowering export revenues for resource-rich autocracies – many of which allocate substantial resources to military spending. As a result, climate policy reduces geopolitical and security burdens on Western democracies, offering a “peace dividend” as a co-benefit. Using the European Union’s oil consumption and its support to Ukraine as a case study, we highlight the relevance of this externality. We estimate that each euro spent on oil in the EU generates geopolitical costs of 0.37 [0.01 - 4.7] euros related to Russia’s war on Ukraine. Based on our central estimate, a carbon price of 62 euros per ton of CO2 would be required to internalize these costs. Even under conservative assumptions, our analysis highlights that the geopolitical externality offers a compelling argument for strong unilateral efforts to reduce fossil fuel demand in the EU.

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???ViewItemFull_lblLanguages???: eng - English
 ???ViewItemFull_lblDates???: 2025-032025-03
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 ???ViewItemFull_lblPages???: 34
 ???ViewItemFull_lblPublishingInfo???: Kiel : Kiel Institute for the World Economy
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???ENUM_IDENTIFIERTYPE_REGIONALK???: Europe
???ENUM_IDENTIFIERTYPE_PIKDOMAIN???: RD5 - Climate Economics and Policy - MCC Berlin
???ENUM_IDENTIFIERTYPE_ORGANISATIONALK???: RD5 - Climate Economics and Policy - MCC Berlin
???ENUM_IDENTIFIERTYPE_WORKINGGROUP???: Welfare and Policy Design
???ENUM_IDENTIFIERTYPE_RESEARCHTK???: Climate Policy
???ENUM_IDENTIFIERTYPE_RESEARCHTK???: Decarbonization
???ENUM_IDENTIFIERTYPE_RESEARCHTK???: Economics
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???ViewItemFull_lblSourceTitle???: Kiel Working Paper
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