IMF Staff Country Reports

This Selected Issues paper discusses the potential role of carbon pricing for climate mitigation and revenue diversification strategy in Brunei Darussalam. Carbon pricing schemes are gaining momentum worldwide, including in Asia. The paper provides guidance on the choice between carbon taxes and emissions trading systems and their design. The paper compares the impact of several mitigation policies modelled for illustration in Brunei Darussalam. All policies reduce carbon dioxide emissions below baseline levels by 10-50 percent by 2030, with most of the reductions coming from the power generation and industry sectors. The policies also raise revenues equivalent to 1.6–7.2 percent of gross domestic product above the baseline in 2030. The policy yielding the most of emissions reduction and the most revenues is the combination policy of a carbon tax reaching $50 per tonne by 2030 and the fuel subsidies phase-out. The policy yielding smallest emissions reduction and revenues is feebates.