Climate policy architecture for the Cancun paradigm shift: building on the lessons from history

  • Jean-Charles Hourcade
  • P.-R. Shukla
  • Christophe CassenEmail author
Original Paper


The economics of climate policy after Rio led to a climate centric paradigm which departs from the original UNFCCC’s cooperative framework for designing climate policies from the perspective of sustainable development. This resulted in a cap-and-trade approach which aims to mitigate the adverse effects on development through appropriate transfers to achieve fair burden sharing. However, the continuation of this paradigm cannot untie the development-climate Gordian knot. (The Gordian Knot refers to a seemingly intractable problem. According to a Greek legend, Gordios arrived in Phrygia in an ox cart, was made King and dedicated his cart to Zeus, tying it up with an intricate knot. The person who would untie the knot would rule Asia. Alexander the Great found a solution by cutting it with his sword. Hourcade et al. (The design of climate policy. MIT Press, Cambridge, p 408, 2008) explain that, after Rio Earth Summit (1992), the climate negotiations remained disengaged from the debates on development pathways, thus tying up a new Gordian knot of misunderstandings.) Instead one loses sight of the benefits of cooperation in a global agreement to abate GHGs emissions. The challenge is now to align the development and climate objectives taking into consideration the changing context since the 1990s which includes a re-equilibrium of the world economic balance and the adverse context created by the 2008 financial crisis. This paper proposes that carbon finance should be considered as part of a general reform of the financial system. The adoption of a carbon value as a notional price could trigger a wave of low-carbon investments in the world thereby redirecting some global savings towards low-carbon investments, thus providing a lever for equitable access to development.


Climate regime Finance Equity Social cost of carbon Carbon assets Policy instruments 



Common but Differentiated Responsibilities


Carbon Certificates


Clean Development Mechanism


Conference of the Parties


Equitable Access to Sustainable Development


Green Climate Fund


Gross Domestic Product


Greenhouse Gases


Intended Nationally Determined Contribution


Kyoto Protocol


Low-Carbon Projects


Measuring, Reporting, Verifying


Nationally Appropriate Mitigation Actions


Policies and Measures


United Nations Framework Convention on Climate Change



The authors acknowledge funding by the Chair ‘Modeling for sustainable development’ (led by Ecole des Ponts ParisTech and Mines ParisTech).


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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  • Jean-Charles Hourcade
    • 1
    • 2
  • P.-R. Shukla
    • 3
  • Christophe Cassen
    • 1
    • 2
    Email author
  1. 1.CIRED, Centre International de Recherche sur l’Environnement et le Développement (CNRS, Agro ParisTech, EHESS, CIRAD)Nogent-Sur-MarneFrance
  2. 2.Centre National de La Recherche Scientifique, Délégation Paris Michel-AngeParis Cedex 16France
  3. 3.Indian Institute of ManagementVastrapur, AhmedabadIndia

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