A funny thing happened on the way to the Paris Agreement. On September 18, 2015, just six weeks before the most anticipated UN climate negotiations since Kyoto were slated to begin, the world’s most powerful environmental regulatory agency threw down the gauntlet to the world’s largest automaker. In a scathing Notice of Violation made immediately public, the US EPA detailed shocking allegations of blatant impropriety by Volkswagen, a company that had finally begun flourishing in the lucrative US market under the guise of being “green.” Just as 195 countries were finalizing their individualized commitments to address climate change by reducing emissions, the VW emissions scandal exploded. Environmentalists cheered as the sins of their chief nemesis, multinational corporations, were exposed. Free market proponents huddled up, ready to prove that inconsistent regulatory schemes were all that stood in the way of the innovations that would bring about global prosperity. The stage was set for an epic battle, and Paris was going to be one side’s Waterloo.
But as we mentioned, a funny thing happened. Globalization, environmentalism’s worst enemy, became the planet’s best hope.
Those of us who work at the intersection of environmental and economic policy have long tried to counter the perception that integrated capital markets and global trade are anathema to protecting Earth’s natural resources. Despite overwhelming evidence that interdependence leads to increased efficiencies, hyperbole and anecdotes have framed the debate, causing collaboration and compromise to be seen as Faustian deceptions. But Paris opened the door by linking the goals of environmentalism to international cooperation, and the VW scandal unexpectedly provided the blueprint.
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