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Green bonds and fossil divestment has emerged as a bottom-up approach to climate action within the business community. Recent pledges by large banks and institutional investors have reached levels that have the potential to contribute markedly to a low carbon transition. This paper traces the impact of green finance in a multiregional global general equilibrium model with non-fossil and non-coal segments of financial flows in addition to the usual unconstrained market for funding. Our high green finance scenario reflects a reasonable upscaling of current level of pledges towards 2030. The study shows that green finance shifts the investments towards industries generating more value added and increasing GDP, future savings and investments. The green finance leads to a lower return on investments and a transfer of income from investors to wage income. Russia and China see the largest cost increase in coal investments due to constraints on finance for fossil industries. The green finance reduces coal consumption by 2.5 per cent below BAU in 2030 and raises the share of non-fossil electricity from 42 to 46 per cent at the global level. Over the whole period towards 2030, the green finance avoids global CO2 emissions corresponding to the total emissions of European Union and Japan in a recent year.

Can norms of distributive fairness serve as pillars of a new and more effective global climate regime? Three general principles – responsibilities, capabilities (capacity), and needs (or rights) – are frequently invoked and rarely disputed. Yet, parties' interpretations often diverge, reflecting conflicts of interests. To determine how much is at stake, we compare – by means of a global integrated assessment model (GRACE) – 15 legitimate interpretations of 'responsibilities' and 'capabilities' in terms of their implications for the mitigation obligations and costs of seven potentially pivotal actors. Most of these interpretations yield similar results for most actors. In a scenario where global emissions in 2030 are reduced by 20% compared to a business-as-usual baseline, mitigation costs vary by less than 1% of GDP for the United States, the European Union, Japan, India, and China. For Brazil and Russia, however, variance is much larger. Moreover, for all actors, mitigation costs rise steeply as ambition levels increase. Under such circumstances, searching for a single 'fairness-optimizing' formula is likely to fail. As negotiators explore systems of voluntary pledges, a more promising approach would conceive of fairness as a multidimensional construct and foster accommodation through mutual recognition of a limited range of legitimate norm interpretations. ; publishedVersion

Can norms of distributive fairness serve as pillars of a new and more effective global climate regime? Three general principles – responsibilities, capabilities (capacity), and needs (or rights) – are frequently invoked and rarely disputed. Yet, parties' interpretations often diverge, reflecting conflicts of interests. To determine how much is at stake, we compare – by means of a global integrated assessment model (GRACE) – 15 legitimate interpretations of 'responsibilities' and 'capabilities' in terms of their implications for the mitigation obligations and costs of seven potentially pivotal actors. Most of these interpretations yield similar results for most actors. In a scenario where global emissions in 2030 are reduced by 20% compared to a business-as-usual baseline, mitigation costs vary by less than 1% of GDP for the United States, the European Union, Japan, India, and China. For Brazil and Russia, however, variance is much larger. Moreover, for all actors, mitigation costs rise steeply as ambition levels increase. Under such circumstances, searching for a single 'fairness-optimizing' formula is likely to fail. As negotiators explore systems of voluntary pledges, a more promising approach would conceive of fairness as a multidimensional construct and foster accommodation through mutual recognition of a limited range of legitimate norm interpretations.