Conference Agenda

The prevailing ESG framework is currently based on micro-ESG indicators. Research on national ESG is often limited to theory building and policy analysis. Based on Jiang et al. (2022), this paper constructs a national ESG index framework consisting of 39 indices and updates the national ESG indices for 121 countries worldwide from 1990-2021 using the entropy weight method, aiming to provide a set of instrumental indices that capture the status and evolution of national ESG performance. The research conclusions of the research are presented below: First, the Gini coefficient shows that the gap between national ESG performance has gradually widened over time. Second, the kernel density distribution suggests that global ESG performance is on the rise. High-income countries are placing greater emphasis on ESG growth. Third, the results of the Markov transformation matrix suggest that there is a ‘club convergence’ in ESG performance across countries.

We study clean energy subsidies in a climate-economy model. The subsidies decrease carbon emissions if and only if they lower the marginal product of dirty energy. The constrained-efficient subsidy equals the marginal external cost of emissions multiplied by the marginal impact of clean energy production on dirty energy production. At standard parameter values, subsidies increase emissions and decrease welfare relative to laissez faire. With greater substitutability between clean and dirty energy, the subsidies in the Inflation Reduction Act can generate modest emissions reductions. Even then, subsidies generate large welfare losses relative to a tax on dirty energy.

We study the optimal carbon emissions of a global economy composed of heterogeneous regions in wealth and climate change vulnerability. Carbon emissions from production generate output losses - a negative climate externality - and a technology to absorb and offset these emissions is available to all regions. We investigate how inequality shapes the stance of the global climate policy and the net emissions schedule across regions: emissions net of carbon offsets. We first provide an aggregation result that shows that the model with regional heterogeneity can be cast into a representative region world economy with a different discount factor and damage function. We use this result to show that (i) Requiring all regions to contribute equally to carbon offsets exacerbates inequality and efficiency calls, therefore, for a less aggressive climate policy with more emissions and less carbon offsetting than in a representative agent world; (ii) When carbon offsets are allowed to depend on wealth, a more aggressive climate policy is optimal. Our main result shows that any given global net emissions target is decomposed of positive net emissions for poor regions and negative net emissions for wealthy ones, with the burden on the rich increasing with inequality. These results highlight that carbon offsets play a crucial role in global climate policy because they act as a redistribution tool across unequal nations.

Green preferences are often regarded as crucial factors in facilitating the energy transition. However, it is unclear if they can alone propel an economy towards achieving a net-zero emissions outcome. In this study, we expand the multi-agent integrated assessment model MATRIX by incorporating considerations on implicit emissions in the decision-making process of consumers and firms. To evaluate the efficacy of those green preferences, we construct a range of experiments encompassing varying levels of exogenous green preferences. Those scenarios are then compared to more conventional incentive-based climate policies, such as a carbon tax and a Cap-and-Trade mechanism, with and without a subsidy for abatement technology, each implemented at different stringency. Our findings indicate that only exceptionally high and unrealistic values of green preferences for both firms and consumers can achieve a net-zero outcome in the absence of an active policy. Moreover, the most favorable scenario, accounting for emission reductions, macroeconomic effects, and distributional implications, emerges from a carbon tax accompanied by a moderate subsidy. In scenarios without a subsidy, outcomes exhibit predominantly negative economic consequences as firms transfer the increased costs to consumers.