"This chapter addresses economic aspects of international actions to combat the threat of climate change. In doing so, the authors first present some key elements of past international climate policy efforts starting in the year 1992 when the United Nations Conference on Environment and Development (UNCED) took place in Rio de Janeiro, Brazil. At this event, participants agreed on the United Nations Framework Convention on Climate Change. After this historical perspective on international climate policy and applied economic instruments like the flexible mechanisms of the Kyoto Protocol, we shed some more light on international strategic aspects of climate policy. This is accomplished by presenting strategic climate policy action of governments in game theoretical settings. The important benefit category of ancillary benefits is taken into account in this modeling of strategic behavior. Thereafter, we take a closer look at European climate policy as it is particularly interesting due to its mix of centralized and decentralized policy approaches. European climate policy targets, the EU Emission Trading System (ETS), policies regarding non-ETS sectors and newer developments (e.g., the launch of the European Green Deal) are addressed in this section. Finally, we highlight a major threat for countries resulting from climate change, namely, induced insecurity of electricity supply resulting in periods of heat and droughts. Such extreme weather event periods tend to become more frequent, and they raise important cooling problems for the electricity sector. Hydropower supply is also threatened by such events as experience in recent years shows. The electricity insecurity problem is one that is pertinent in different world regions but we will focus on the case of Europe."

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