Global Impacts of Climate Policy and Trade Agreements on Greenhouse Gas Emissions

Abstract

To limit increasing air pollution and fossil- energy production, several environmental and climate agreements have been established globally. In addition, trade agreements could also serve to achieve climate-mitigation goals, through a trade policy with environmental regulation. By removing tariffs and harmonizing standards on environmentally friendly products and eliminating distortionary subsidies on fossil-energy production, climate change can be mitigated. The objective of the research is to explore the effects of economic growth, international trade agreements and climate conventions on greenhouse gas emissions between 1990 and 2019, at the global level. As an econometric method, an air-pollution function is estimated by panel-regression models. The results confirm that global climate agreements have a significant, but only small, mitigating impact on global greenhouse-gas emissions. The results supported the inverted-U-shaped environmental Kuznets curve. In contrast, the environmental impacts of free-trade agreements had ambiguous results on emissions, as the members of the World Trade Organization contributed to the decrease in air pollution, while countries that signed the regional trade agreements were unable to limit emissions.