Research-based
policy recommendations
for the G7

THE NEW INSTITUTE

THE NEW INSTITUTE strives to develop powerful visions to fundamentally reshape society and practical solutions to turn those visions into a reality.

It will work in strategic partnerships with a variety of institutional and individual stakeholders – changemakers who share a common set of values and objectives. it will bring together a community of globally concerned thinkers and practitioners from academia, the arts, activism, media, business, and politics. Care, courage, creativity and commitment are its core values that guide its vision and mission.

THE NEW INSTITUTE is an Institute of Advanced Study and a platform for change. Its mission is to imagine and develop visions for fundamentally reconfigured societies. It seeks to close the gap between insight and action, by bringing together academics and practitioners from different disciplines, united in the quest to analyse what needs acting upon, and to act upon analysis. It combines academic rigour and innovative practice to inspire, promote and implement societal change. It provides a caring, committed and creative environment and serve as a facilitator for the hopeful.

Publications

Towards Economic and Social Prosperity Measurement Beyond GDP

To overcome the major challenges the world is facing today – from recovering from the pandemic to mitigating climate change – the global community will need concerted, transformative policy efforts, aligned with collective values and societal goals. Economic recovery must be equitable and not come at the cost of social cohesion. To achieve this, a new conception and goalpost indicators of prosperity are needed. Productivity growth and material gain, measured in terms of GDP, is insufficient as a key performance indicator and as a yardstick for social progress. It treats as a derivate the things we actually value, including not only economic wealth and the distribution of income, but also other dimensions of prosperity: social solidarity and participation, personal agency and opportunities, and environmental sustainability. In this Policy Brief, we propose ways to rethink and design new measures of economic and social prosperity for the G7 and beyond, encompassing not only material wealth and economic performance, but also the social and environmental dimensions of prosperity. We present concrete recommendations on necessary steps to achieve a policy-reorientation anchored in what we actually value – towards economic and social prosperity measurement beyond GDP.

 

Towards an Inclusive Climate Alliance With a Balance of Carrots and Sticks

As G7 countries generate 25% of world greenhouse gas emissions, an open and cooperative G7 climate alliance can accelerate international climate policy in a transformative and inclusive manner. Building upon a proposal of the German Government (2021), we propose the following design elements for such an alliance:

  1. Membership conditions that benefit all members and are sufficiently ambitious to enable a pathway to genuine ‘net zero’

Reaching ‘net zero’ emissions globally by mid-century is key to enable limiting global warming to 1.5°C – the core objective of the Paris Agreement. The alliance must adopt membership conditions that keep the aim of 1.5°C alive. These include:

  • a differentiated carbon price with a common floor, e., an effective price set in accordance with criteria that reflect different economic capacities, with a floor at 50 € in 2025 and 100 € in 2030.
  • common energy sector policies consistent with a pathway to genuine net zero, including a 2024 removal of fossil fuel subsidies, a 2030 phase-out date for coal-fired electricity generation for OECD members that join the alliance and a commitment to immediately end the new development of upstream coal, oil and gas supply infrastructure;
  • a joint effort sharing mechanism to achieve emission reductions based on Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC).

 

  1. Apply a ‘carrot and stick’ approach based on Article 6 and a differentiated CBAM to encourage alliance participation

‘Carrots’ should be designed as an open means to incentivize decarbonization outside of the alliance and encourage participation in the alliance. We recommend using international carbon markets under Article 6 of the Paris Agreement as a carrot, providing an additional financial incentive to non-members of the alliance for low carbon development. A differentiated carbon-border adjustment mechanism (CBAM) is the crucial ‘stick’ to avoid carbon leakage, with differentiation based on development status and clear exemptions for Least Developed Countries (LDCs). Additional carrots should include differentiated carbon border levy refunds as well as targeted industry and energy partnerships.

  1. Use a ratcheting mechanism to raise ambition

A roadmap to ratchet-up the ambition of measures within and beyond the alliance is essential. Such roadmap should align with five-year NDC update cycles under the Paris Agreement, adjustable to align with national and global net zero targets and set clear milestones for expansion regarding sectors (from heavy industry and energy to land use) as well as countries (from G7 to G20 and beyond). Ensuring institutional continuity of the alliance requires a legally binding agreement that is independent from annually changing G7 presidencies and governed by a secretariat hosted by one or more volunteering member states, with a slim administration and explicit inclusion of a wide range of civil society representatives.

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