Open research questions in Climate Change Policy and Economics

What the literature leaves open

• Carbon tariffs and carbon cap-and-trade regulation have emerged as two important instruments for carbon governance, yet their independent and combined effects on supply chain operations remain insufficiently discussed, which delivers supplementary analytical space for cross-border remanufacturing supply chain research.

  Operations of a Cross-Border Remanufacturing Supply Chain Under Carbon Tariffs and Cap-and-Trade Regulation · 2026 · DOI

• Based on the empirical findings, several policy recommendations can be offered. First, Germany should gradually reduce fossil energy R&D incentives and avoid projects that deepen fossil-based production structures. Second, a greater share of public resources should be directed toward REN and NUC energy R&D in order to support cleaner and more sustainable energy production. Third, economic growth strategies should be redesigned within a stronger green industrial policy framework so that output expansion does not continue to generate disproportionate ecological pressure. Finally, demographic ageing should be integrated into sustainability planning, especially through health, care, and infrastructure policies based on energy and resource efficiency. These measures would help Germany align its economic, social, and environmental objectives more effectively.

  Reassessing Germany’s energy transition: The role of energy R&D and population ageing in shaping the load capacity factor · 2026 · DOI

• Although this study contributes valuable insights, it has several limitations that should be considered when interpreting the results. First, the analysis relies on aggregated Eurostat data, which, while ensuring comparability across countries and over time, does not capture differences in the design and implementation of individual tax instruments. Consequently, the study cannot fully account for variations in tax structures, exemptions, or behavioral responses that may affect the effectiveness of environmental taxation. Second, the methodological approach, based on General Linear Models and repeated-measures analysis, identifies statistically significant differences and patterns but does not establish causality. While the findings strongly suggest divergence, they do not directly explain the causal mechanisms behind these differences, such as political economy factors, institutional reforms, or sector-specific dynamics. Third, the study focuses on the European Union, particularly the V4 countries, Slovakia, and Romania. Although this allows for a detailed, context-specific analysis, it may limit the generalizability of the findings to other regions with different institutional, economic, and regulatory environments. Future research could broaden this framework to include non-EU regions to assess the wider applicability of the region-specific environmental taxation approach. Taken together, the findings of this study challenge the common assumption that environmental taxation will align through policy harmonization alone. Instead, they show that environmental tax systems follow diverse paths influenced by fiscal integration, institutional capacity, and political feasibility. This suggests that effective environmental taxation cannot be a one-size-fits-all policy but must be understood as a context-specific framework requiring coordinated yet tailored implementation. By proposing a region-sensitive environmental taxation approach, this study offers a more realistic foundation for both academic research and policymaking, highlighting that achieving sustainability goals depends not only on the existence of environmental taxes but also on their structural design, institutional integration, and strategic alignment with broader economic systems. 128 Equilibrium.

  Why environmental taxation fails to converge in the European Union: Evidence of structural divergence across the EU 27 · 2026 · DOI

• In contrast, the standalone effect of the ETS price is relatively weak and marginally significant, suggesting that carbon pricing alone is insufficient to drive meaningful decarbonization unless it is embedded within a broader and well-coordinated policy framework.

  Development of the carbon market and the green certificate market: Romania, Poland, and Germany · 2026 · DOI

• The results presented in this paper demonstrate the benefits of using surrogate climate models within climate-economic MARL settings, however, there are several limitations and directions for future research. Refinement of MARL experiment. Future work should refine mitigation levers and agent heterogeneity based on latest climate science. The MARL setup should include cooperation mechanisms and heterogeneous damage functions, preferably via surrogates of local high fidelity simulators. This would enable large scale comparative studies in the climate community and help analyze emerging behaviors under different policy designs. Uncertainty-aware surrogates. We did not perturb the structural (calibration) parameters of CICERO-SCM’s differential-equation core when training the RNN surrogates. Conditioning the surrogate on these parameters would propagate structural uncertainty through the MARL loop and enable distributional or risk-sensitive objectives, which are especially relevant under tipping-point and tail-risk scenarios. Policy consistency. While we propose an empirical method to test policy consistency, a formal proof of equations (42)–(43) would further substantiate the claim. Our conclusions do not depend on such a proof, and we leave it for future work. 6 CONCLUSION We introduced a framework for integrating high-fidelity climate dynamics into scalable multi-agent reinforcement learning by replacing the climate module with a learned surrogate. We developed an RNN-based emulator of the CICERO-SCM climate model trained on 20,000 multi-gas emission trajectories. The surrogate achieves global-mean temperature RMSE of < 0.0004K and approximately 1000× faster one-step inference, translating into end-to-end MARL training speed-ups > 100× relative to CICERO-SCM. We show that, by using the surrogate within a MARL framework, we converge to the same set of policies in a computationally tractable experiment. When complexity precludes direct validation of policy consistency, we propose a methodology that replays policy-induced emission trajectories through the simulator, providing a tractable validation path when simulator-based convergence is infeasible. Together, these results demonstrate that high-fidelity, multi-gas climate response models can be faithfully approximated and deployed as components of reinforcement learning environments - removing a major computational barrier to scalable research on cooperative climate-policy design and uncertainty propagation. ACKNOWLEDGMENTS The work presented in this article is supported by Novo Nordisk Foundation grant NNF23OC0085356. REFERENCES Romero-Prieto Alejandro, Mathison Camilla, and Smith Chris. 2025. Review of climate simulation by simple climate models. EGUsphere 2025 (2025), 1–80. doi:10.5194/egusphere-2025-2691 Marc G. Bellemare, Will Dabney, and Rémi Munos. 2017. A Distributional Perspective on Reinforcement Learning. arXiv:1707.06887 [cs.LG] https://arxiv.

  Climate Surrogates for Scalable Multi-Agent Reinforcement Learning: A Case Study with CICERO-SCM · 2026 · DOI

• So far, little is known regarding the roles of export diversification and the composite risk index in the abatement of carbon dioxide (CO2) emissions for the RCEP countries.

  The roles of export diversification and composite country risks in carbon emissions abatement: evidence from the signatories of the regional comprehensive economic partnership agreement · 2021 · DOI

• Although the Commission has outlined its vision for a green recovery,6 it remains to be seen what the short- and medium-term impacts of the twin health and economic crises will be on the EU’s climate ambitions and actions.

  Editorial: Governing the EU's climate and energy transition through the 2030 Framework · 2020 · DOI

• In reviewing the history and recent policy within the UNFCCC, the paper makes the case that demands for greater accountability through the Loss and Damage Mechanism have been frustrated by a lack of consensus about the rights of poor countries to pursue carbon‐intensive development pathways, the obligations of current and future generations to the actions and decisions of their forebears, and the obligations of national governments to their own citizens and the UNFCCC.

  Holding Polluting Countries to Account for Climate Change: Is “Loss and Damage” Up to the Task? · 2016 · DOI

• The major open issues concerning the SCC continue to be the appropriate discount rate, the potential for catastrophic damages, the impact of incomplete harmonization of abatement policies, and the effects of distortionary taxes.

  Estimates of the Social Cost of Carbon: Concepts and Results from the DICE-2013R Model and Alternative Approaches · 2014 · DOI

• This proposal raises a crucial but insufficiently explored question: How should such permits be allocated? It is tempting to suggest that in principle, a cap-and-trade system should allocate permits on a per capita basis, with the idea that each person should begin with the same entitlement, regardless of place of birth.

  Should Greenhouse Gas Permits be Allocated on a Per Capita Basis · 2009 · DOI

• Future research could address these limitations by incorporating additional control threshold models, and exploring cross-country variables, employing non-linear or heterogeneity through interaction terms or multi-level modeling.

  Energy Price and Greenflation in the European Union. Facts and Challenges · 2026 · DOI

• Despite the possibilities to calculate emissions and concerns about climate change and reduction of emissions, there is a knowledge gap in understanding the trade-offs related to specific resources and taking specific actions.

  Managing Resources and Reducing Greenhouse Gas Emissions Through Game-Based Learning to Achieve Zero Emission Farms · 2025 · DOI

• Our insights on effective but rarely studied policy combinations highlight the important role of price-based instruments in well-designed policy mixes and the policy efforts necessary for closing the emissions gap.

  Climate policies that achieved major emission reductions: Global evidence from two decades · 2024 · DOI

• Unless standards are adopted, the likelihood of combatting climate change effectively, in the context of the danger of greenwashing and the ongoing pandemic, remains uncertain.

  COP26 and a Framework for Future Global Agreements on Carbon Market Integrity · 2022 · DOI

• We derive the best equilibrium, that is, the Pareto-optimal subgame-perfect equilibrium, when countries are insufficiently patient for folk theorems to be relevant.

  Compliance Technology and Self-enforcing Agreements · 2019 · DOI

• Future research should examine this issue more closely, as this dynamic is likely to continue since the Paris Agreement gave prominence to adaptation.

  Legislative Dynamics of Mitigation and Adaptation Framework Policies in the EU · 2017 · DOI

• Economic analyses of climate change policy may not appear to be presented in moral terms, but they typically rest on the premise that climate policy is warranted when it advances the moral/ethical objective of maximizing social net benefits or aggregate well-being.

  On Morals, Markets, and Climate Change: Exploring Pope Francis' Challenge · 2017

• A dearth of thorough evaluations has meant that, to date, there is limited evidence supporting the cost advantages of market-based instruments identified by economic theory.

  Experiences with market-based instruments for environmental management · 2008 · DOI

Most-cited papers in Climate Change Policy and Economics

• Global Pricing of Carbon‐Transition Risk · The Journal of Finance · 2023 · 821 citations
• RETRACTED ARTICLE: The economic commitment of climate change · Nature · 2024 · 306 citations
• Economic complexity and greenhouse gas emissions · World Development · 2020 · 297 citations
• Climate policies that achieved major emission reductions: Global evidence from two decades · Science · 2024 · 275 citations
• Estimates of the Social Cost of Carbon: Concepts and Results from the DICE-2013R Model and Alternative Approaches · Journal of the Association of Environmental and Resource Economists · 2014 · 252 citations
• The European Green Deal — More Than Climate Neutrality · Intereconomics · 2021 · 242 citations
• Rethinking the choice of carbon tax and carbon trading in China · Technological Forecasting and Social Change · 2020 · 228 citations
• Lessons from COVID-19 can prepare global tourism for the economic transformation needed to combat climate change · Tourism Geographies · 2020 · 227 citations
• A review of tourism and climate change mitigation: The scales, scopes, stakeholders and strategies of carbon management · Tourism Management · 2022 · 209 citations
• Bridging the gap between circular economy and climate change mitigation policies through eco-innovations and Quintuple Helix Model · Technological Forecasting and Social Change · 2020 · 198 citations

Most recent work

• Decoupling economic growth and CO2 emissions: a geopolitical comparison of the EU and GCC energy transitions · Quality & Quantity · 2026
• Resilience Starts with Revenue: Does Domestic Taxation Outperforms Climate Funds in Reducing Climate Vulnerability? · Comparative Economic Studies · 2026
• Global inequalities in ownership-based carbon footprints · Nature Climate Change · 2026
• Markov-Perfect Equilibria in Differential Games — with an Application to Climate Policy · The Review of Economic Studies · 2026
• Paying for carbon: CO₂-based pricing mechanisms and pro-environmental behavior in tourism · Annals of Tourism Research · 2026
• The Climate-Induced Trade Dilemma: Trade Imbalances, The Ecological Transition, and the Case For Implementing a European Bancor · Review of Radical Political Economics · 2026
• Development of the carbon market and the green certificate market: Romania, Poland, and Germany · Ekonomika · 2026
• Why environmental taxation fails to converge in the European Union: Evidence of structural divergence across the EU 27 · Equilibrium Quarterly Journal of Economics and Economic Policy · 2026
• Designing an effective carbon pricing roadmap for Indonesia: policy insights from EU and ASEAN · Environment Systems & Decisions · 2026
• Risk Measurement of Chinese Carbon Emissions Trading Market Based on DCS-Type Models · Mathematics · 2026

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