As the European Union contributes only less than 12% of worldwide emissions, its action will only marginally change the worldwide climate. This static vision of things can discourage even the best political intentions. Yet we believe that it is erroneous. If the 28 EU governments agreed on a high carbon pricing trajectory, they would need to apply it both to local products and to imports, thus creating a significant "carbon dividend". In this way, the European Union would have a powerful argument to convince its trading partners to follow the same path, thus creating a "climate club", to borrow an idea from Nobel Prize-winning economist William Nordhaus. Today, only the European Union is capable of putting this into action, for it is politically mature and of adequate size to succeed.
This brief will examine how the European Union could change the world’s carbon use by adopting a policy of carbon reduction based on price, without harming its economy, through complete and decentralized redistribution of the carbon dividend, which would make the environmental transition not only effective but also equitable.