For every game theorist and negotiator, the exploratory talks of the likely coalition partners and the run-up to the climate summit in Glasgow were pure torture. In the climate crisis, German politics acts and thinks almost exclusively nationally, at best still European. Every attempt to agree on binding goals worldwide and to implement them has failed in the past.
It is still doomed to failure if we see German commitments to CO2 reductions in our own country only as an appropriate and fair contribution to global overall goals. From the point of view of a game theorist, German savings targets must above all be a means to an end. The real challenge in the global crisis is to get enough other countries to negotiate to play their part in climate protection over the next few decades.
Against this background, the UN climate summit at the beginning of November once again gives rise to fears of the worst. To put it casually, one could describe what will take place in Glasgow as follows: One tries to finance the goal of “climate protection” by means of a motivationally pumped-up public crowdfunding in which willing altruists try to get the selfish self-optimizers to participate. That didn’t work at the last 25 climate summits and it won’t work at the 26th and the following ones either.
From an economic point of view, negotiations based on the “if-then” principle are the most promising. The advantage of conditional statements is intuitively clear to everyone. An entrepreneur will always achieve more in a negotiation if he makes statements such as “If you improve your quality and your conditions to the following extent, then you will surely get the contract.” Than someone who says: “Better yet again with the quality and the price according to and then I decide. ”and who then places the order with the provider anyway.
Top jobs of the day
Find the best jobs now and
be notified by email.
The Leibniz Prize winner, leading game theorist and behavioral economist Axel Ockenfels gave an interview to the Handelsblatt. One sentence stood out: “Egoism is more contagious than altruism” and that is why reciprocity, i.e. mutual agreement, is crucial. What does that mean?
If we Germans unilaterally commit ourselves to stricter climate targets that go beyond the Paris Agreement, we are not making our contribution to climate protection, but rather we are destroying the only instrument that is really promising for saving the planet: to compare other countries with our own commitments Motivate and commit goals. We then negotiate like the company described above, which awards orders completely independently of the further efforts of the business partner.
Trade policy as an example
If the EU has excelled in one thing in the past, it has been how it represented and enforced Europe’s commercial interests. The idea would never have occurred to unilaterally lower trade barriers without corresponding commitments. She was always ready to accept short-term trade disputes in order to achieve the long-term goal of fair and open trade relations.
It is precisely this recipe for success in climate protection with the self-binding “Fit for 55” program, i.e. the reduction of emissions by 55% compared to 1990 by the end of the decade and the self-commitment to be climate-neutral by 2050, and thus the Paris pledges unilaterally tightened.
Of course, we cannot fall short of obligations under international law. And it is also important and right to have a concrete and credible plan in your pocket as to how you can save even more CO2. But this can only be made binding gradually, in exchange for binding commitments from other countries.
A climate club with bargaining power
For game theorists, the solution lies in a climate club consisting of the USA, EU and their closest allies who also take the climate challenge seriously. When founding such a club, reciprocity and common bargaining power are the key binders.
Instead of negotiating in parallel with all other countries at the same time, this club would then have to get one country after the other on board sequentially like a string of pearls through bilateral negotiations between the club and the respective country. A minimum goal of such sequential, bilateral negotiations would be to gradually introduce relevant CO2 prices or binding CO2 budgets.
Marcus Schreiber is a founding partner and Chief Executive Officer at TWS Partners. He has many years of experience in strategic purchasing and broad industry know-how. His focus is on strategic purchasing, applied industrial economics and market design. He also supports companies in applying game theory knowledge in complex awarding decisions.
As a negotiating lever, the Climate Club would have reciprocity again, i.e. the willingness to “match” savings made by the negotiating partners themselves. That is why you should never commit yourself unconditionally to what is technically feasible. If the Climate Club gets stuck with all of this, tariffs for a CO2 border adjustment or even further trade sanctions are suitable means of negotiation.
When the club represents a relevant part of world trade, the pressure to join its goals becomes enormous. Conversely, with tariffs and sanctions, the club would also ensure that no uncooperative country could gain competitive advantages by free-ridering on the climate issue.
This sequential process would have to begin with the club members’ closer allies such as Japan, South Korea and Australia. Then one would gradually approach emerging and developing countries, which would have to be made binding on the climate issue in exchange for technology and financial aid.
As soon as the club and its partners have become big, powerful and binding enough on the string of pearls, you can tackle the really tough chunks like India, Russia and China, which are already responsible for more than 40 percent of greenhouse gases.
In public opinion it may be perceived as a technical detail whether one negotiates in parallel or sequentially. But this is a fatal error. It is actually about the difference between certain failure and a real chance to solve this human problem. Game theorists who point out that there is no alternative to tackling this challenge are as little heard at the moment as the climate researchers of the 1970s to 1990s. Or as Jack Dorsey, founder of Twitter, put it: “I wish we would have asked game theorists in the past to really understand the implications of the small decisions we make.”
More: The European economy is paying particular attention to these two topics of the climate conference