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© 2022 International Monetary Fund
WP/22/254
IMF Working Paper
Fiscal Affairs Department
A Framework for Comparing Climate Mitigation Policies Across Countries Prepared by Simon Black, Danielle Minnett, Ian Parry, James Roaf, and Karlygash Zhunussova
Authorized for distribution by James Roaf December 2022
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
ABSTRACT: There is growing interest in international coordination over climate mitigation policy. Climate clubs or international carbon price floors could complement the Paris Agreement by helping to deliver the near-term cuts in global greenhouse gas emissions needed to contain global warming to 1.5 to 2°C. To ensure inclusivity, these arrangements need to account for varying mitigation policies across countries, including carbon pricing, fuel taxes, subsidy reform, and non-pricing approaches like regulations. A transparent methodology is needed to compare and monitor mitigation effort by countries implementing diverse policy packages. This paper presents and illustrates a methodology for converting climate mitigation policies and targets into their carbon price equivalents and applies it to the Group of Twenty (G20) countries.
RECOMMENDED CITATION: Black, Simon, Danielle Minnett, Ian Parry, James Roaf, and Karlygash Zhunussova, 2022. “A Framework for Comparing Climate Mitigation Effort Across Countries .” Working paper 22/254, International Monetary Fund, Washington, DC.
| JEL Classification Numbers: | Q31; Q35; Q38; Q48; H23 |
| Keywords: | Emissions reductions; carbon price equivalence; G20; non-pricing instrument; sectoral target; fuel taxes; temperature aligned mitgation. |
| Author’s E-Mail Address: | sblack@imf.org; dminnett@imf.org; iparry@imf.org; jroaf@imf.org; kzhunussova@imf.org |
| JEL Classification Numbers: | Q31; Q35; Q38; Q48; H23 |
| Keywords: | Emissions reductions; carbon price equivalence; G20; non-pricing instrument; sectoral target; fuel taxes; temperature aligned mitgation. |
| Author’s E-Mail Address: | sblack@imf.org; dminnett@imf.org; iparry@imf.org; jroaf@imf.org; kzhunussova@imf.org |
Title Page
WORKING PAPERS
A Framework for Comparing Alternative Climate Mitigation Policies Across Countries
Prepared by Simon Black, Danielle Minnett, Ian Parry, James Roaf, and Karlygash Zhunussova
Contents
Introduction
Methodology
Explicit Carbon Pricing
Non-Pricing Sectoral Policies
A. Power
B. Industry
C. Transportation
D. Buildings
Fuel Taxes and Subsidies
Combined Effects of Mitigation Policies
Conclusions
Annex A. Background Information on Mitigation Targets and Policies
Annex B. Policy Equivalence from the Perspective of Implementing Border Carbon Adjustments
Annex C. The IMF-WB Climate Policy Assessment Tool (CPAT)
References
BOXES
1. The CPAT Model
FIGURES
1. BAU CO2 Emissions Projections, 2021–2030
2. CO2 Emissions by Sector,2030
3. Carbon Pricing Instruments as of April 2022
4.Explicit Carbon Pricing, 2030
5. Power Sector Targets, 2030
6. Industry Sector Targets, 2030
7. CO2 Emissions Rates Standards for Light-Duty Vehicle Sales for G20 Countries
8. Transport Sector Targets, 2030
9. Buildings Sector Targets, 2030
10. CO2 Reductions and Economywide Carbon Price Equivalence of Existing Energy Taxes and Subsidies
11. CO2 Emissions Reductions from Policites and Setoral Targets Combined
TABLES
1. Excise Taxes by Fuel and Sector in 2020, G20 Countries