Growth, convergence, and the limits of a fair climate budget
Galina Hale, Michael Halling, Nora Alice. Paulus, and Han H.G. Pham, in this paper, ask whether an equitable, historically-grounded allocation of the world’s remaining carbon budget can be reconciled with the economic growth and income convergence that developing and emerging economies still need to achieve.
Methodology:
- The authors use an empirical cross-country panel covering 162 countries from 1950–2023 to estimate historical income-emissions elasticities.
- They calculate each country’s “fair share” of the remaining global carbon budget using an equal-cumulative-per-capita (ECPC) allocation principle.
- They simulate forward to 2050 whether emerging and developing economies can converge to advanced-economy income levels while staying within their fair-share carbon allocation.
- Finally, they test a best-case scenario where advanced-economy clean technology is transferred to all countries
Findings
- ECPC allocations imply strongly negative remaining budgets for most advanced economies given their historical emissions, while lower-income countries retain only small positive allocations.
- Developing countries are likely to exceed their fair carbon shares as they grow, based on historically observed income-emissions elasticities.
- Even after netting unused allocations from countries staying under budget, only 17% of the resulting shortfall is offset — rising to just 38% even with full advanced-economy technology transfer.
Climate Fairness and Growth: Allocating the Remaining Carbon Budget
Authors: Galina Hale, Michael Halling, Nora Alice. Paulus, Han H.G. Pham
From: University of California, Santa Cruz, University of Luxembourg
How the two papers relate
Both papers wrestle with whether continued economic growth is compatible with credible climate constraints, but they approach the question from opposite ends and reach complementary conclusions.
The Bilal-Ingrand-Känzig paper is fundamentally a top-down, aggregate-efficiency argument: it shows that under sufficiently severe damage assumptions, tight climate policy is not a brake on growth but an accelerant of it, because it prevents escalating climate losses from compounding over time.
Hale et al. complicate this picture by showing that even if an efficient global carbon price exists in aggregate, translating it into a fair allocation across countries at different income levels runs into a hard constraint: today’s poor countries need substantial further emissions to develop, but the physical carbon budget consistent with 1.5°C simply may not have room for that growth unless rich countries absorb negative allocations or transfer technology at scale.
