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International Monetary Fund. Western Hemisphere Dept.

rapid reductions to emissions neutrality thereafter. Due to the pandemic-induced crisis, global emissions projections for 2020 are about 8 percent below 2019 levels. However, without strong mitigation policies, global emissions are likely to start rising again in 2021 as economies recover ( Figure 1 ). With governments bringing forward investment plans to boost their economies, the pandemic has added to the urgency of ensuring this new investment is efficiently allocated to low-carbon technologies. This, in turn, requires strengthening carbon pricing or equivalent

International Monetary Fund. Asia and Pacific Dept

International Perspectives E. Summary of Recommendations References FIGURES 1. Global Fossil Fuel CO2 Emissions Trends 2. Breakdown of GHG Emissions 3. Fossil Fuel CO2 Emissions Trends 4. Current Prices, Supply, and non-Carbon Environmental Costs, Selected Fuels and Countries, 2015 5. Korea: ETS Emissions Caps under Pathways to Emissions Neutrality 6. History of Prices in ETSs 7. United States: Efficiency Costs of $50 Carbon Tax or Equivalent Instruments, 2030 8. CO 2 Emissions Reductions for Mitigation Pledges and from Carbon Pricing 9. CO 2

International Monetary Fund. Asia and Pacific Dept

carbon price floor (ICPF) among large emitters. Korea might usefully contribute to the international dialogue on an ICPF and other complementary mechanisms. A. Introduction 1. The window of opportunity for containing global climate change to manageable levels is closing rapidly. Global carbon dioxide (CO 2 ) and other greenhouse gas (GHG) emissions must be cut 25–50 percent below 2018 levels by 2030 to be on track with containing projected warming to 1.5o–2oC above preindustrial levels with rapid reductions to emissions neutrality thereafter. Due to the

Ian Parry, Mr. Simon Black, and Mr. James Roaf
Countries are increasingly committing to midcentury ‘net-zero’ emissions targets under the Paris Agreement, but limiting global warming to 1.5 to 2°C requires cutting emissions by a quarter to a half in this decade. Making sufficient progress to stabilizing the climate therefore requires ratcheting up near-term mitigation action but doing so among 195 parties simultaneously is proving challenging. Reinforcing the Paris Agreement with an international carbon price floor (ICPF) could jump-start emissions reductions through substantive policy action, while circumventing emerging pressure for border carbon adjustments. The ICPF has two elements: (1) a small number of key large-emitting countries, and (2) the minimum carbon price each commits to implement. The arrangement can be pragmatically designed to accommodate equity considerations and emissions-equivalent alternatives to carbon pricing. The paper discusses the rationale for an ICPF, considers design issues, compares it with alternative global regimes, and quantifies its impacts.
Ian W.H. Parry and Mr. James Roaf

I. Introduction The window of opportunity for containing global climate change to manageable levels is closing rapidly . Global carbon dioxide (CO2) and other greenhouse gas (GHG) emissions must be cut 25-50 percent below 2018 levels by 2030 to be on track with containing projected warming to 1.5°-2oC above preindustrial levels with rapid reductions to emissions neutrality thereafter. Due to the pandemic-induced crisis, projected global emissions in 2020 are about 7 percent below 2019 levels, but without strong mitigation policies emissions are likely to

Mr. Nicolas Arregui, Ian W.H. Parry, and Ms. Dora M Iakova

, with future carbon budgets, and with fiscal opportunities fully exploited. The UK will also need to better align future carbon budgets with the emissions neutrality target for 2050 and phase in sectoral measures providing strong additional incentives to deploy clean technologies, particularly in transport, industry and buildings—this paper emphasizes the potential attraction of feebates in this regard. At the international level, pledged mitigation effort falls well short of what is needed for climate stabilization goals, and countries acting unilaterally may lack

Ian Parry
The United States has pledged to become carbon neutral by 2050, meet sectoral objectives (e.g., for carbon free power, electric vehicles) and encourage greater mitigation among large emitting countries and of international transportation emissions. Fiscal policies at the national, sectoral, and international level could play a critical role in implementing these objectives, along with investment, regulatory, and technology policies. Fiscal instruments are cost-effective, can enhance political acceptability, and do not worsen, or could help alleviate, budgetary pressures. Domestically, a fiscal policy package could contain a mix of economy-wide carbon pricing and revenue-neutral feebates (i.e., tax-subsidy schemes) with the latter reinforcing mitigation in the transport, power, industrial, building, forestry, and agricultural sectors. Internationally, a carbon price floor among large emitters (with flexibility to implement equivalent measures) could effectively scale up global mitigation, while levies/feebates offer a practical approach for reducing maritime and aviation emissions.
Mr. Nicolas Arregui and Ian Parry
The UK has pledged to cut greenhouse gases 57 percent below 1990 levels by 2030, to be emisisons neutral by 2050, and to phase out internal combustion engine vehicles by 2030. Much progress has been made, but fully achieving these ambitious objectives with the current policy framework will be challenging as it involves multiple and overlapping pricing schemes with significant sectoral differences in carbon prices and may be difficult to scale up on political and administrative grounds. This paper discusses an alternative framework consisting of: (i) a comprehensive carbon price (ideally a tax) rising to at least £60 (US $75) per ton by 2030; and (ii) reinforcing sectoral policies, most importantly feebates for the transport, industrial, and building sectors. This framework could implement mitigation targets, while limiting burdens on households and firms to enhance acceptability, and still raise revenues of 0.8 percent of GDP in 2030. The UK could also leverage its COP26 presidency to promote dialogue on international carbon price floors and pricing of international transport emissions.