Regulating production rather than consumption? Comparing the challenges of supply-side and demand-side climate agreements

A growing strand of climate policy literature explores the potential for a supply-side treaty—an international agreement among fossil-fuel-producing states to reduce their output. Proponents argue that such a treaty is cost-efficient; that it is easier to enforce than a demand-side treaty; that it encourages investment in low-carbon technology; and that it addresses concerns such as "the green paradox" and "carbon leakage." We contribute to this literature by examining the conditions under which a supply-side climate treaty can be effective and by systematically comparing the prospects for each type of agreement to overcome two major impediments—collective-action problems and distributive conflict issues. Having noted that most large greenhouse gas emitters are also major fossil-fuel producers, we conclude that mitigating anthropogenic climate change would likely be no less challenging for a supply-side treaty than for a demand-side treaty. In particular, distributive conflict remains a significant obstacle to effective climate action regardless of whether it is pursued through a demand-side treaty or a supply-side treaty.