The discourse around climate clubs, alliances, and partnerships shows a need for durable international cooperation structures to achieve industry transformation. For instance, the EU introduced the Carbon Border Adjustment Mechanism with the aim of implementing CO2 prices without causing production and emission shifts. The CBAM also aims to provide incentives for stronger climate policies in countries beyond the EU (European Commission, 2022). Another goal by the G7 is strengthening multilateral climate cooperation by establishing a climate club with other ambitious countries, thus achieving a common approach on mitigation ambition, building partnerships, and achieving transnational cooperation on industrial decarbonization with emerging economies (G7, 2022). Concurrently, bilateral sector-specific climate partnerships with global south countries are discussed in the context of official development cooperation (ODA) by, for instance, Germany (Weischer et al., 2021). International climate finance is to be increased for the purpose of implementing the partnerships. Yet there is uncertainty on which type of international cooperative instrument might achieve the climate and development goals that countries have set for themselves. This is the background against which we conduct our analysis of existing cooperation proposals: we assess how these initiatives can contribute to raising ambition levels, how they could support transitions to climate neutrality, and how they address EU policy concerns of carbon leakage.

The aim of the paper is to discuss three real-world design options for international climate cooperation and less to contribute theorizing on related institutional design. There is a significant body of literature on the issue of institutional design, to which we can only refer to; see for instance, regarding general overviews contained in Mitchell (2013) or more specifically on discussions of neoliberal institutional theory and domestic policy factors (Purdon, 2015). We present however a concrete analysis of existing degrees of institutionalization of global north and south cooperation on climate cooperation to assess, in how far gaps exist, which could potentially be filled by such forms of cooperation structures which we discuss in the paper.

The methods applied to conduct the analysis of international cooperation structures, consisted of an extensive literature review, which covered keywords related to the three cooperation types and their various iterations, theories of international climate cooperation, and the factors, institutions and objectives driving it. We developed an analytical framework for the three cooperation structures, which contains the assessment elements presented in Sect. 3. Lastly, we used a focus group discussion with key experts in the field to test the analytical framework and findings.

The paper is structured as follows. Section 1 of this paper describes the current developments and institutional structures for international climate cooperation, then introduces the three main functions of climate cooperation structures. Section 2 evaluates the capability of existing institutions for fulfilling required functions of climate cooperation. Section 3 provides a critical assessment of the structures based on their objectives, processes, and principles as well as with regard to essential elements of the discussions on a carbon price and cooperation mechanisms. We finish with conclusions and recommendations for further research.

1 Current developments: institutional structures for international climate cooperation

In international climate policy discourses, there is an on-going discussion on how climate cooperation can be supported and advanced through minilateral or multilateral institutions. However, little attention has been paid to what values, norms, and underlying principles drive climate cooperation and how these could best be institutionalized. We aim to contribute to the discussion around climate clubs, alliances and partnerships by presenting three main strands of literature on climate cooperation and highlighting their underlying assumptions. We use a definition for cooperation (Chan, 2016), as actions by concerned actors such as governments and sectoral stakeholders to deliver on common goals of the Paris Agreement in line with equity and fairness principles. These actions to achieve more cooperation by individual governments do not happen in isolation, but are catalyzed by international factors and processes as will be explained in the following section.

1.1 State of research on international climate cooperation

One body of literature has its origins in the field of economics. International, centralized provision of economic incentives and fines are central assumptions for cooperation in the form of minilaterally designed climate clubs (Nordhaus, 2015). These theories rely on the assumptions that prospective member countries are motivated to join such clubs because of the expected gain from club goods (such as access to markets for green industrial products) and to avoid disadvantages (no access to markets, facing trade barriers) (Hovi et al., 2019). Frequently, this string of theories also puts the idea of carbon pricing systems at its center, i.e., the idea that like-minded countries introduce carbon pricing policies and penalize countries that do not implement such policies (Falkner et al., 2022; Tagliapietra & Wolff, 2021; Victor, 2011). The principal assumption is that political actors in climate policy are prone to free-riding (Paroussos et al., 2019). This means that, in voluntary agreements, the national mitigation contributions hinge on the implementation of mitigation actions by other states and it is assumed that while other countries do their part, some countries would continue to emit GHGs, evade the (costly) restructuring of their economies, and, thereby, achieve economic gains. Accordingly, reciprocity is central to this theory: it is assumed that countries will only fully engage in mitigation actions if they can be sure that all participating countries do the same (Leal-Arcas, 2022; Nordhaus, 2017).Footnote 1

A second strand of literature emphasizes factors that lead to unilateral climate action by national governments. It is argued that policymakers take actions relatively independently from other countries (McGrath & Bernauer, 2017). Instead, scholars such as Aklin and Mildenberger (2020) argue that domestic costs of transforming economic sectors, as well as distributive conflicts, are most significant.

According to such arguments, international cooperation for global climate protection cannot be framed as a collective action problem, in which reciprocity and avoidance of free riding would be central elements. It rather builds on simultaneous efforts by individual countries to transform their economies toward climate neutrality, which are driven by policymakers’ responses to new emerging norms, claims by local constituencies, policy diffusion processes, and, importantly, the existence of catalytic institutions (Hale, 2020). In particular, the emerging international norm of climate neutrality is considered to be an increasingly important factor for global climate cooperation (Blondeel et al., 2019; Gach, 2019). Hence, international initiatives, such as financial and technical support, should be understood as a component of such catalytic cooperation: it provides means of implementation for transformational change processes by countries. However, these are initially and primarily driven by domestic concerns (Hale, 2020).

A third body of literature conceptualizes international climate cooperation as support flows from industrialized countries to developing countries in order for them to achieve climate and development targets (Zou and Ockenden 2016). Much of this literature takes the existence of institutional structures and principles of official development assistance (ODA) as a basis for the implementation of international climate finance and support (Selin, 2016). Central claims for the success of ODA-based climate finance are that recipient countries demonstrate ownership over the proposed support measures and that an alignment of funders and recipients’ instruments takes place (Fourth high level forum on aid effectiveness, 2011). The character of cooperation can be described as a unilateral flow of support and related resources from industrialized to developing countries, which needs reform to enable more mutual partnerships and deep collaboration among participating countries (Weischer et al., 2021).

To summarize, three points can be made. First, these different literature strings do not necessarily stand in opposition – for instance, governments may be inclined to adjust domestic policies due to expectations of economic gains, and if this aligns with domestic reform agendas. Secondly, relying solely on carbon pricing incentives to trigger international cooperation is unrealistic and might lead to time delays in climate action. Thirdly, climate finance implemented on established ODA institutions may not meet the current reality of relationships between emerging economies and industrialized countries.

Our contribution consists in an identification, discussion, and assessment of the values, norms, and underlying principles of the various forms of cooperation, in order to support policymakers in their efforts to shape an institutionalized format for effective climate cooperation. In the following, the aforementioned structures of cooperation are summarized in three groups (Fig. 1): (i) Cross-sectoral multilateral; (ii) Sectoral multilateral; and (iii) Climate and development partnerships.Footnote 2

Fig. 1
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Illustration of different structures of international climate cooperation Source: Authors’ own illustration

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1.2 Cross-sectoral multilateral cooperation

Drawing largely on the first (economic) literature type above, climate clubs were originally built on the hypothesis that asymmetric costs and a consequent shift of production and emissions (i.e., carbon leakage) are mainly prevented through an internationally coordinated approach. In a climate club, a uniform CO2 pricing system is established for this purpose, with participating countries benefiting from club benefits, such as access to markets for green industrial products. It is assumed that countries will similar climate policy ambitions will participate in the club (Nordhaus, 2015).

However, there are also a variety of other aspects that a climate club can include (Martini & Görlach, 2022). The development of the original proposal of the German government (August 2021Footnote 3 to create an international climate club might illustrate this: Originally aiming at a uniform minimum CO2 price and a common CO2 border adjustment, it later emphasized much stronger the role of a club for industry decarbonization and cooperative elements with the Global South (G7 2022).

The aim is to establish lead markets, technology cooperation in industry, for example, and offers for capacity building and financial support to developing and newly industrializing countries. Thus, a joint approach in terms of content and timing for industrial cooperation as well as the preparation and implementation of CO2 pricing schemes are essential components of the German proposalFootnote 4 – which overlaps with our second cooperation type, sector-specific multilateral cooperation. This also means that designing a climate club raises a similar set of questions about the feasibility of industrial cooperation beyond CO2 prices with emerging economies as in the case of the sector-specific multilateral and bilateral partnership approaches.

1.3 Sector-specific multilateral cooperation

Sector-specific alliances and partnerships in various industries mostly focus on the common goal of climate neutrality.Footnote 5 The Glasgow Breakthrough Agenda (GBA) deserves particular attention. Forty-two countries have joined forces to drive forward the halving of global emissions by 2030 and the transformation to climate neutrality by 2050 in five sectors: steel, energy, agriculture, hydrogen, and transport. This approach is illustrated here by the example of the steel industry (Fig. 2).

Fig. 2
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Representation of sector-specific alliances, example steel sector Source: Authors’ own illustration

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Aligned with the second literature strand (catalytic cooperation), it is assumed that participating countries set up individual policy mixes in accordance with domestic prerequisites and preferences. However, participants agree on an overarching goal that ensures support for emerging economies and should lead to more cooperation in technology, production, and trade. The GBA relies on political leadership by participating countries, in close cooperation with the private and financial sectors, thereby supporting and coordinating existing sector-specific initiatives. It is planned to conduct an annual progress report, the so-called Global Checkpoint Process. The approach is based on a shared understanding of goals but is otherwise driven primarily by dynamics at the national level. It is also based on the assumption that creating jobs, economic growth, and securing human life will create incentives that motivate governments to achieve the agenda's goals.

Research conducted on how international cooperation can be organized to advance decarbonization transitions highlights the need to work and design sector-specific cooperation in accordance with individual national circumstances. Sector-specific cooperation can build on, for instance, specific structures of steel producing industries in India. It necessitates international finance to cover substantial investment needs on plant levels and courses of action towards the creation of lead markets by introducing green public procurement for example (Singh et al., 2020). Individuality of countries manifests also in the specific political priorities and processes, that guide transition processes, and which are an important factor for the design of cooperation, as the example of the Just energy transition partnership with South Africa shows (Boulle, 2023). These findings hint towards targeted, individual cooperation in order to enable deep cooperation on decarbonization and move beyond shallow coordination (see Keohane & Victor, 2016), which is likely the result of an increasing number of countries and sectors participating in a cross-sectoral, multilateral structure. Hence, we argue that factoring in the specific sectoral and individual political conditions are necessary to structure cooperation. We argue that cooperation is likely to take place in the case of limited amounts of participating countries. We propose that coordination would be increasingly difficult in a case, where a cross-sectoral, plurilateral climate club assembles more members with diverse political and sectoral interests. Currently observed diverging interests and positions of China, EU and US in the context of the 2021 “Global Arrangement on Sustainable Steel and Aluminum” may illustrate this point (Reuters, 2023).

1.4 Climate and development partnerships

The G7 foreign ministers’ communiqué of 2022 proposes climate partnerships with individual emerging economies, aiming at a “true paradigm shift, by demonstrating that ambitious climate action is conducive to strong and sustainable growth for all economies” (item 31). Such partnerships may implicitly include theoretical assumptions about transitions of the industrial and the energy sectors toward net-zero pathways. Another important feature is the inclusion of development policy, along with the provision of financial, technological, and capacity support. Thus, in order to support transformative change and the achievement of sustainability goals, partnerships are to be established on an equal footing between industrialized countries, developing countries and emerging economies.Footnote 6 It is argued that the ambition of current international development and climate policy should also be raised (Germanwatch, 2021; Speck, 2021).

In this context, partnerships like the Just energy transition partnership between South Africa, as a recipient, and France, Germany, the UK, the US, and the EU, on the funder side, were developed. This specific partnership aims at enabling a phase-out of coal to renewable energy in South Africa and focuses on the role of just structural change.Footnote 7 In doing so, the initiative can build on a number of tried and tested structures, institutions, and experiences of previous climate policy cooperation—including on the existing programs of implementation of climate finance and support for developing countries and emerging economies.

1.5 Three main functions of climate cooperation structures

The literature review and focus group discussion with experts on international climate policy resulted in the identification of three core functions of international climate cooperation.Footnote 8 These are as follows:

  1. 1.

    Introducing a pricing mechanism or giving access to benefits shall directly incentivize the shift to a cleaner production.

  2. 2.

    Improving international coordination by linking and strengthening sectoral alliances and partnerships.

  3. 3.

    Providing support for emerging economies through partnerships and international financial institutions.

In the current policy discourse, these functions are connected to different types of proposals – pricing mechanisms and access to benefits, for instance, are typically associated with the concept of climate clubs, while providing support is mostly related to climate partnerships. Here we argue that choosing the right design elements and strategies for setting up the individual initiatives and implementing them are crucial. In other words, it is rather the political strategy and approach to involve partners and negotiating for the specific design (values, norms, goals, instruments, legal nature, governance, and decision-making processes) that is of crucial for the success of any cooperation initiative.

Before we critically assess the potential of the three proposed cooperation structures to fulfil the above functions, we first evaluate already existing institutions according to their suitability to implement those very functions. If we assume that one of these three cooperative structures need institutionalization to allow for effective implementation, and if a proliferation and further fragmentation is to be avoided, a first look into the range of existing institutions is useful. In the following section we show a mapping of existing institutionalized cooperation structures between industrialized countries and emerging economies.

2 Assessment of existing institutions for required functions of climate cooperation

A mapping of already existing institutions related to international climate policy that bridge emerging economies and industrialized countries is given in Table 1. Institutions with potential relevance for international climate action were selected. The mapping shows that several of the three main functions defined in Sect. 1.5 for climate clubs, sectoral alliances, and partnerships are supported through various institutions, but are highly fragmented. For instance, information management, political venues, assistance to standard setting and benchmarking, as well finance and support could be delivered through, for instance, existing UN-specialized agencies, informal governance structures (G20, APEC), and ODA-based institutions. However, significant gaps exist with regards to governance structures, such as decision-making mechanisms, joint agenda setting, and conflict resolution procedures. These are particularly important for more formal structures, like climate clubs, but also for bilateral partnerships.

Table 1 Institutions related to climate policy in industry sectors to link emerging economies and industrialized countries
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None of the existing institutional settings outlined in Table 1 can fulfil the three functions identified: They do not provide a conducive and durable setting to introduce, negotiate, and litigate conflicts in relation to a pricing mechanism or access to benefits that directly incentivize the shift to a cleaner production. Furthermore, questions arise in relation to the legitimacy of existing institutions to provide a forum that handles issues connected to just transitions, such as politically sensitive topics like policy and sectoral reforms. Although some existing institutions provide support for emerging economies through partnerships and international financial institutions, they can only provide limited support to improve international coordination by linking and strengthening sectoral alliances and partnerships.

3 Assessment of the proposed structures of cooperation

In the previous section, we assess whether the existing institutions could fulfil the three functions we identified in Sect. 1.5. As we conclude that this is not possible, below we assess the general structures for international climate cooperation, clubs, partnerships, and sectoral alliances, in terms of implementation feasibility and effectiveness.

To structure this discussion, we place them in the context of the UNFCC and of the Paris Agreement, thereby focusing on theoretical assumptions about the factors that lead to the achievement of objectives. In our discussion, we focus on whether the existing processes can be complemented by the three cooperation structures or whether the latter will be perceived as a parallel process, ultimately contradicting the goals of the UNFCCC. The architecture of international climate action and compatibility with the Paris Agreement is of high relevance due to legitimacy concerns as well as to the fact that the history of international climate negotiations is partly characterized by mistrust between parties (Falkner et al., 2022).

3.1 Shared norms and understanding of cooperation

Shared norms are a starting point for cooperation and for strengthening public and political support domestically. Norms are a factor, among others such as trust, communication, fairness, and transparency, which drives global cooperation in the climate commons (Högl, 2018). We select shared international norms as a main factor for cooperation because it can result in the institutionalization of rules-in-use. This is because the behavior of decision makers is influenced by certain norms, which can exert influence across international borders and influence the understanding of issue by actors in climate policy (Gach, 2019). Norms can be a powerful factor that can lead to sustained cooperative outcomes if the stakeholders involved display mutual trust. In turn, this trust relies on the sanctioning of norm violators (Ostrom, 1990).

This shared understanding of cooperation and the associated internalization of global norms enhances the credibility of a low-carbon investment framework by improving the stability of policy decisions and increasing the likelihood of implementing standards that preclude further use of carbon- intensive goods and services (Carattini et al., 2019). The comprehensive multilateral framework of the Paris Agreement set the stage for climate neutrality commitments both by countries and companies.

A cross-sectoral, multilateral climate club among Western countries could be perceived as a rival to the Paris Agreement. This may especially be the case if the nucleus of such a club consists of G7 countries and the EU, which would imply that prospective member countries from the group of emerging economies would have to attain member status by adopting standards developed by industrialized countries.

The rocky history of negotiations for an inclusive global agreement on climate change shows that overcoming the dichotomy between industrialized and developing countries is by no means trivial. In contrast to scholars who identify potential synergies between a minilateral climate club and the UNFCCC (Falkner, 2016; Vihma, 2009), we argue that a climate club would be met with domestic legitimization challenges and that countries would display a lack of motivation to enter it, as is found to be the case for emerging economies.Footnote 9 This danger might be less pronounced when different countries join together in sector-specific climate partnerships. Such partnerships, which respond to similar challenges with concrete climate protection measures, could create a frame of reference for the actors involved in which the norm of climate neutrality is strengthenedFootnote 10.

3.2 Motivation to increase ambition

The UNFCCC framework, along with the Paris Agreement, provides an institutional setting with climate conferences, review processes, and high visibility worldwide. This institutional structure enables respective governments to commit and encourage each other to increase ambition (Morgan & Northrop, 2017) (see article 4.3. of the Paris Agreement). Thus, it reflects a legitimized, decentralized system with the architecture for countries to commit to raising ambition according to individual perceptions of equity and fairness. At the same time, it is criticized that the Paris Agreement’s pledge and review system of collective upscale mitigation contributions by all countries comes at the expense of vagueness and potential leeway for delivering less GHG emission reductions (Keohane & Oppenheimer, 2016). Hence, the question is, what motivates countries to commit to higher climate ambition? We argue that sector-specific cooperation, such as the aforementioned Breakthrough Alliances, allow a group of countries to jointly formulate more ambitious goals for a specific sector – such as the coal phase-out or the shift to electric mobility. In this sense, leverage over laggards can also be a potential goal or outcome of a partnership. It may be implicit in emerging product standards for climate neutrality and related product standards needed for new markets.

The idea of climate clubs is to put more emphasis on club benefits, so as to provide incentives for joining by setting higher ambitions or to economically penalize third countries that do not meet targets through a common CBAM. Before the Ukraine war, this approach was still supported, especially by economists (Wissenschaftlicher Beirat 2021; see also literature in Sect. 1.1). However, this has changed. Neither China, India, Indonesia, South Africa, Brazil, or Mexico joined the West’s economic sanctions against Russia. If a climate club comprising the use of trade instruments to influence third countries’ domestic policies is indeed initiated within the framework of the G7, then the rejection of trade policy instruments could also lead to resistance in this context.

It can be argued that economic incentives and transfer of support measures can encourage countries to take up higher climate ambitions because this might influence domestic policy decisions in favor of climate action (see also Keohane & Oppenheimer, 2016). Yet, important questions regarding the legitimacy and political feasibility of a climate club must be raised. For instance, whether domestic legislators could legitimize such cooperation approaches in parallel to the UNFCCC and Paris Agreement. At that level, it is imaginable that ambition raising of national climate policy takes place within the Paris Agreement, but not simultaneously in the context of a climate club, which would then require legitimization as well. Nonetheless, incentives, such as access to markets for climate neutral products, might be effective in triggering more ambitious climate policy.

3.3 Support for sectoral transformation

Support for sectoral transformation can take place through the delivery of capacity-building measures, policy dialogues, and technology/financial cooperation. The commitment by industrialized countries, established in the Paris Agreement, to provide US$ 100 billion annually to support developing countries and emerging economies in their efforts to address climate change defines an important framework and goal for sectoral transformations. To date, implementation has largely taken place within bilateral cooperation structures and through multilateral organizations, such as the World Bank. The conceptualization of dedicated climate partnerships allows for focused cooperation to support just transitions and deep collaboration. This may then gradually evolve from the coordination of activities toward frequent interactions between actors involved in the partnership, leading to trust development and collaboration based on a deep understanding of the transition challenges at hand (see also Keohane & Victor, 2016). However, such deep collaboration might bring another set of challenges, as experience with ODA-based implementation of climate finance and support measures shows: there are frequently voiced concerns over sovereignty infringements by international actors involved in international cooperation, particularly in the form of influence seeking in policy processes, superimposition of external policy ideas, and the promotion of economic interests through an international backdoor (Stichelmans, 2016; Winkler & Dubash, 2016). To counteract such negative influences on cooperation, dialogues between funders and recipients of support are recommended (Winkler & Dubash, 2016).

It is questionable whether structures sufficiently strong for handling financial and technical cooperation will be developed in the case of cross-sectoral climate clubs or in multilateral cooperation at the sector level. However, such structures could provide an important framework for the coordination and joint implementation of such collaborations.

3.4 Common markets of industrialized countries and emerging economies

Shared markets prove relevant for entrepreneurial business decisions, especially for multinational companies, and the likelihood of successful innovation and decarbonization. The more successful a global transition to climate neutrality is, the more opportunities there are for new business models and technologies for the climate neutral provision of transport, housing, and food. International coordination of reporting requirements and standards, product standards, or even CO2 costs to be priced into internationally traded products can accelerate this process for the respective sectors.

For the technical issues, new sector-specific collaborations, such as the Clean Energy Ministerial Industrial Deep Decarbonization Initiative (IDDI) in the industrial sector or the Task Force on Climate- related Financial Disclosures (TCFD) in the financial sector, could be helpful forums for the further development of common reporting and product standards.

One specific proposal is a cross-sectoral climate club that establishes a common minimum CO2 price. The example of the EU shows that such a common approach to CO2 pricing for internationally traded goods, like steel or even electricity, in the EU emissions trading system has its advantages and is possible, at least within the EU, while a new European emissions trading system for building heat and transport is currently under discussion. Against this background, it should be considered in the future whether a coordination of CO2 costs in products can also be established within sector-specific forums. For this to be possible, however, the share of climate-neutral products would first have to be large enough to justify the inclusion of CO2 costs in internationally traded products. In other words, the additional costs should reflect the additional effort involved in producing climate-neutral products—and not just additional CO2 revenues for the exporting countries.

3.5 Avoiding carbon leakage

There is a risk that CO2 costs, if implemented by only a handful of countries, can lead to the relocation of production facilities and, thus, of emissions. This risk increases proportionally to the CO2intensity and, thus, to the CO2cost intensity of the production processes – so it is primarily and almost exclusively an issue in the production of basic materials like steel, cement, plastics, fertilizers, and aluminum (Baccianti and Schenker 2022; Martin et al., 2014). For this reason, countries largely exempt heavy industry exemptions from energy taxation as well as from CO2 pricing, for example, through the free allocation of emission certificates in the EU Emission Trading System. However, this removes the incentives for the transition to climate neutrality with a switch to climate-neutral production processes, material efficiency, and recycling, especially in those sectors that react particularly strongly to prices and require them for investment decisions (Source).

In principle, a border adjustment mechanism can remedy this by equalizing CO2costs between countries rather than continuing to avoid effective pricing of CO2costs (Babiker & Rutherford, 2005; Mehling et al., 2019; Monjon & Quirion, 2011). The EU Commission proposes that importers should pay for CO2 costs symmetrically to EU producers, based on the CO2 emissions incurred by their production and CO2 prices in third countries (EU 2021). However, this approach is prone to three main challenges. First, the reimbursement of CO2 costs for exports is highly uncertain as it could be challenged on the grounds of trade law incompatibility and, second, value chains cannot be covered due to administrative feasibility constraints. Third, the mechanism creates incentives to shift trade flows to already existing climate- friendly production instead of mitigating emissions (so called “resource shuffling”). For these reasons, the proposed border adjustment mechanism is expected to be only effective to a very limited extent.

3.6 Summary of assessment

Table 2 summarizes the results of the discussion and shows the importance of cross-sectoral cooperation under the Paris Agreement for the formulation of standards and ambition enhancement, which should be supported by sectoral coalitions.

Table 2 Comparison of different forms of organization for international climate cooperation
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Cross-sectoral climate clubs. Especially after geopolitical upheavals, such as the Ukrainian invasion, there is an increased risk that a cross-sectoral climate club with a focus on carbon pricing and border adjustments will lead to polarization and, thus, the loss of community norms of climate neutrality and the credibility of processes to increase ambition.

The EU's previously planned border adjustment was originally intended to provide incentives in the steel, cement, fertilizer, and raw materials sectors, especially for Russia, Ukraine, and Turkey, to switch to climate-neutral production processes.Footnote 11 As the geopolitical situation has changed drastically in recent months due to the war in Ukraine, this function of a border adjustment is now largely obsolete. At the same time Europe is dedicating more attention to strategic partnerships for long-term security of, e.g., energy imports. In the political process, for example the G7 statement on climate clubsFootnote 12 carbon pricing and border adjustments are no longer mentioned.

Sector-specific, multilateral cooperation can help develop appropriate reporting requirements, norms, and standards—as envisioned, for example, in the IDDI work program. Of course, existing multilateral organizations, like the IEA or OECD, can also contribute to this. At the same time, common standards and increasing ambitions – for example in the transition to electromobility – can be established. From the assessment, we conclude that climate partnerships could be coupled with sectoral alliances, like the Glasgow Break Throughs, as these facilitate in-depth cooperation, which is needed to support just industry transitions. Reform needs of existing ODA-based approaches might arise due to the aforementioned sovereignty infringement concerns regarding national policy processes and to revise outdated narratives of unilateral support-channeling mechanisms from the Global North to the Global South.

Climate & development partnerships offer the opportunity to accompany ambitious policy projects, for example South Africa's coal phase-out, and to support them financially with sufficient resources. Such cooperation in sectors like energy or industry can also strengthen private-sector cooperation.

In sum, no existing cooperation approach is perfect, but the following three recommendations might go a long way toward more effective climate cooperation:

  • Reforms of the CBAM in combination with EU climate contributions bear significant potential to address leakage;

  • Complementing sectoral alliances with climate partnerships would allow coupling international sectoral goals with support for just transitions in emerging economies; and

  • Designing climate partnerships on basis of realistic expectations of emerging economies and industrialized countries relations can counteract fears of political influence seeking and superimposition of foreign agendas.

4 Conclusions and suggestions

This paper aims to provide new reflections on the institutionalization of climate cooperation for industry transformation. We assess three prominently-discussed approaches: cross-sectoral multilateral (climate clubs); sector-specific alliances (Glasgow Breakthrough alliances); and sectoral climate partnerships. The following section contains conclusions from our analysis and suggestions for the way forward, directed towards proponents and decision-makers of the three cooperation structures. In the political reality of these processes, each of the three options have specific opportunities for suggesting the following points, so policy advocacy actors and policy advisors find specific levers in each of these processes at the time of writing in 2023.

4.1 Targeted, sectoral cooperation in climate partnerships most promising to achieve transitions to climate neutrality

We find that international climate policy should focus more on partnership-based cooperation, especially with emerging economies. These partnerships in Germany and the EU should be embedded in sector-specific mechanisms. The G7 could commit to strengthening the necessary institution. Further exploration of how a G7-initiated cross-sector climate club could contribute to strengthening the necessary institutions while supporting cooperation under the Paris Agreement is required.

4.2 Climate clubs need to evolve further from a sole focus on club goods and carbon pricing agreements

In order to capture interest by countries not prioritizing internationally-coordinated carbon prices, in-depth sectoral cooperation is required. This removes the option of using a climate club to ensure trading partners implement similar effective CO2 prices in the industrial sector. This means it is even more important to have a CBAM that makes effective CO2 prices possible within the EU without the risk of relocating production and emissions to other countries. With a climate contribution based on standardized emission intensity values, incentives for material efficiency and recycling can be created and revenues for climate protection generated without exposing non-EU countries to such incentives. It would also support a successful transition to climate neutrality within the EU, with proceeds supporting partnership-based and multilateral international cooperation.

4.3 Renewed case for rules-in-use for international cooperation

The three types of initiatives would be implemented in a setting that is characterized by a lack of strong institutions. For instance, the G20 forum provides for the exchanging political views and collaboration through working groups, but it is not enough to implement an initiative large enough to be meaningful for any of the three initiatives. If institutionalization is conceptualized as the development of rules of the game, then it also becomes clear that these initiatives cannot be installed through a top-down political style, as the history of negotiating nation states under the UNFCCC has shown. Instead, these require the involvement of actors who will be affected by the initiatives and who will be tasked with their implementation. Furthermore, any attempt to cooperate internationally must bridge seemingly-independent states by agreeing on rules-in-use for cooperation instruments. In light of recent geopolitical tensions and disruptions, but also of historically strained relationships between industrialized and developing countries, a re-thinking about rules-in-use seems more appropriate than ever. Discussions and negotiations around institutionalization and targeted rules-in-use should be based on an understanding that traditional power relationships and spheres of influence may have to be overcome to obtain more non-hierarchical cooperation modes between countries.

5 Future research

Our paper indicates significant gaps within existing institutions which appear to hinder the development of climate cooperation structures. The factors and conditions which influence institutional arrangement development should be addressed in future research. This refers to the discussion on shared norms in Sect. 3.1. The research could focus on how norms, principles, and values of actors in cooperation structures should be reflected in the design of institutions and which norms, principles, and values matter for climate policy cooperation. Specifically, with regards to cooperation between industrialized countries, emerging economies, and developing countries.