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Climate change is the consequence of a market failure, with private actors' incentives misaligned on a global scale and across multiple generations. Government policies to address climate change remain inadequate and the near term prospects are suspect. Analysts have turned their attention to finding alternative approaches to reducing greenhouse gas emissions. Green clubs offer a potential institutional mechanism for reducing greenhouse gas emissions, but to be effective they must be designed to fit their circumstances. An effective green club solves a market or quasi-market failure among firms and their stakeholders. Focusing on the market and nonmarket strategic imperatives for green clubs identifies several important considerations for improving the effectiveness of green clubs. Green clubs addressing climate change are more likely to be effective if they provide potential participants with a private benefit they are unable to achieve through other means and when the private benefits participants receive are tightly linked to the environmental benefits the club produces. Analyzing green clubs through this lens suggests that environmental certification club goods are more promising candidates than environmental technology club goods. [ABSTRACT FROM AUTHOR]

In this paper, we make two points about bottom-up approaches to climate policy. First, we argue that it is more productive to work with a small group of countries to establish the basis of a global climate regime than tackling the issue with all countries, as in the United Nations Framework Convention on Climate Change (UNFCCC). Secondly, we argue that negotiators should also work explicitly to encourage the development and deployment of clean technologies as a way to reduce future emissions, and suggest how this might be achieved. [ABSTRACT FROM AUTHOR]