numbers, not adjectives — D. J. C. MacKay
4 The Themis Mechanism: A Quantitative Examination
Carl Edward Rasmussen, May 29 2026 [4 minute read]
Climate change is a collective action problem. Every nation benefits from a stable climate, yet each has an incentive to let others bear the cost of mitigation. Decades of negotiation have not resolved this. The Themis Mechanism proposes a way through.
4.1 The Idea
The Themis Mechanism is a climate coalition. It works on an annual cycle. Nations are free to join or not. Members commit to two things:
- to enforce a minimum nationally retained global carbon price p, and
- to pay (or receive) an international transfer t proportional to the margin by which the national per capita emissions ei exceed the world average e*. That means: nations who emit more than their fair (equal per capita) share pay, nations who emit less get paid.
The main incentive to join is that the mechanism creates economic pressures to reduce emissions thereby reducing climate change, it is based on conditional common commitments; a secondary incentive is immediate transfers to small emitters.
The Themis Mechanism balances economically, it requires no external budget, no aid bureaucracy and no voluntary discretionary monetary pledges.
4.2 Seven Archetypes
In order to simplify our exposition, instead of considering all 197 nations, we classified them into 7 archetype groups, based on their circumstances. Archetypes are hypothetical, in reality every nation interacts independently with Themis.
Of primary importance is whether nations emit above or below the world average of e* = 6.4 tCO2e per person per year. Archetypes A1-A5 sit above this line and are contributors under Themis. A6 and A7 sit below it and are beneficiaries.
| Archetype | Pop (M) | % world pop | % world GHG | GHG/cap (tCO₂eq) | GDP/cap (k€) |
|---|---|---|---|---|---|
| A1 · EU27 bloc | 453 | 5.6% | 6.2% | 7.2 | 39.7 |
| A2 · Other high-income | 404 | 5.0% | 8.3% | 10.7 | 40.7 |
| A3 · United States | 349 | 4.3% | 11.6% | 17.2 | 78.0 |
| A4 · China | 1,427 | 17.5% | 29.6% | 10.8 | 12.4 |
| A5 · Fossil exporters | 470 | 5.8% | 13.2% | 14.6 | 12.2 |
| A6 · India & developing | 3,723 | 45.7% | 26.3% | 3.7 | 4.0 |
| A7 · Less wealthy | 1,326 | 16.3% | 4.8% | 1.9 | 2.2 |
4.3 A Feasible Operating Point
The Themis coalition conducts an annual elicitation process to determine the governing parameters. The elicitation process will not be described here, instead we examine the consequence of a particular possible elicitation outcome.
We need to address one more complication. Above we spoke of a single transfer rate t, which is an over-simplification. If all nations joined, a single rate would indeed suffice, as the pool would automatically balance. But in the real world some nations may not join, so Themis applies two rates: t+ to contributors and t- to beneficiaries. The relationship between the two rates is determined by the membership.
We examine the mechanism at a deliberately modest initial anchor: p = €20/tCO2e, t+ = €12/tCO2e and t- = €6.27/tCO2e. We guess that at these prices A1, A2, A4, A6 and A7 may join the coalition, and A3 and A5 may not.
| Archetype | Transfer €/cap/yr | Transfer % GDP | % world pop | % world GHG |
|---|---|---|---|---|
| A1 · EU27 bloc | −9 | −0.02% | 5.6% | 6.2% |
| A2 · Other high-income | −51 | −0.13% | 5.0% | 8.3% |
| A3 · United States | ||||
| A4 · China | −53 | −0.43% | 17.5% | 29.6% |
| A5 · Fossil exporters | ||||
| A6 · India & developing | +17 | +0.42% | 45.7% | 26.3% |
| A7 · Less wealthy | +28 | +1.31% | 16.3% | 4.8% |
| Coalition | 90% | 75% |
Positive = net receipt. Negative = net payment.
The headline figures are: the global population based coverage would be 90% and the emissions based coverage 75%. The total annual transfer from A1, A2 and A4 to A6 and A7 would be €100B, coinciding with the much publicised pledge — but it would be based on a mechanism, not discretionary donations.
4.4 What the Numbers Show
A1 EU27 bloc. The EU pays almost nothing — 0.02% of GDP — because per-capita emissions only mildly exceeds the global average. The real incentive is not financial but structural: Themis creates a multilateral framework around exactly the approach the EU has already built domestically. A global carbon price floor plays an identical role to EU’s Carbon Border Adjustment Mechanism (CBAM) and reduces the competitive disadvantage that currently makes ambitious domestic policy politically costly. In the Themis elicitation process, EU27 would likely prefer even higher prices.
A2 Other high-income. At 0.13% of GDP, the cost for this group is real but comfortably manageable. These nations — Japan, South Korea, the UK, Australia, Canada among others — have signed up to climate commitments that currently have limited international enforcement. Themis converts those pledges into a mechanism with teeth, and the relatively modest payment is a direct expression of per-capita emissions that are genuinely above the global average. A2 nations are vulnerable to climate change, and will welcome genuine cooperation.
A3 United States. The US sits outside the coalition in our scenario, but the arithmetic of joining is less forbidding than it appears: only 0.17% of GDP. The question of joining may be more political than economic. A coalition with 90% of world population and 75% of emissions cannot be ignored indefinitely — sanctions may be necessary.
A4 China. China faces the steepest cost of any contributor at 0.43% of GDP. However, China is the world’s dominant manufacturer of solar panels, batteries and electric vehicles. Paying into Themis is partly an investment in the export markets that China’s industrial policy has spent a decade creating — ensuring the world commits to more rapid reduction of fossil fuels will be environmentally and economically advantageous.
A5 Fossil exporters. This group is absent from the coalition. Their state revenues depend structurally on continued fossil fuel demand; Themis is a mechanism designed to reduce that demand. The domestic price commitment p would also require dismantling the large consumer subsidies many of them maintain. Some members — the Gulf states in particular — are making substantial sovereign investments in renewables, which creates a long-run interest in a post-fossil order, but that transition is not yet reflected in their negotiating positions.
A6 · India & developing. This group receives +0.42% of GDP through a reliable, automatic mechanism — not a pledge, not aid, not a loan. At the starting anchor p = €20/tCO2e would be relatively easy to meet. Many A6 nations are highly vulnerable to climate change and their interest in financing a clean energy transition and the common interest in reducing global emissions point in exactly the same direction.
A7 · Less wealthy. The least wealthy nations gain most proportionally: +1.31% of GDP, delivered automatically rather than through the discretionary aid pipelines that have repeatedly fallen short. They also have the most to lose from unchecked climate change — they contribute least to the problem and face the gravest consequences. Themis is the rare mechanism where the group with the strongest moral claim also has the strongest material incentive to participate.
In conclusion, the vast majority of nations would see benefits of coalition membership. The conditional common commitments of Themis help align individual and commit incentives. In practice, the coalition will find it intolerable that nations stand outside, reap the climate benefits but don’t contribute. Sanctions will be necessary.
4.5 A Starting Point
The discussed configuration is a starting point. The prices are too modest to fundamentally change global emission patterns. But it shows that a Themis style cooperation may be possible. Once in place, the annual elicitation process may gradually increase prices, increasing economic pressure to move off fossil fuels and lessen global climate impact.
Themis is not intended to stand on its own — it can coexist with other initiatives. The question is not whether Themis is absolutely fair, but whether it is fairer than not adopting it. Our example shows that climate cooperation based on conditional common pledges — “I will if you will” may be feasible in the real world. It has the properties necessary to solve a collective action problem. Crucially, it relies on behaviour and reciprocity — not discretionary donations.
Data sources: EDGAR 2025 GHG emissions (AR5 GWP100, excl. LULUCF), UN Statistics Division population and GDP (2024), OECD Effective Carbon Rates (2021). All monetary values in EUR at 2024 average exchange rates.