The EU must reduce its greenhouse gas emissions by 90% by 2040 relative to 1990—of which 5 percentage points can be achieved through climate action elsewhere, according to the 2025 law. A study by the Potsdam Institute for Climate Impact Research (PIK) now proposes a novel instrument for this external component: performance-based Jurisdictional Reward Funds. This avoids perverse incentives, strengthens international and thus also European climate action, and costs just 5 billion euros annually.
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