Climate clubs, namely subgroups of countries implementing more
ambitious  and effective climate policies than others, may be the only
practical approach  to address the lack of incentives to reduce GHG
emissions on the part of  most, if not all, countries. In  climate
clubs,  incentives  to  undertake  ambitious  GHG  emission   reduction
efforts may come from adopting R&D and financial policies that
provide benefits exclusively to club members. R&D and financial
policies are beneficial because they provide innovation  to  reduce
the  costs  of  a  unit  of  abated  carbon  and  financial  or
insurance   schemes to reduce the costs of investing in mitigation.
These cost reductions can be designed to favor club members only.
Unlike  trade-related  policies  intended  to  favor  club  members,
R&D  and   climate-finance  policies  do  not  have  negative
“side  effects”  for  member   countries. Indeed, they have positive
co-benefits in addition to the primary  environmental  benefits—a
“double  dividend”  for  club  members,  and  a  single dividend (GHG
emission reduction) for the world.