EU Climate Mitigation Policy
Departmental Papers, September 16, 2020
Source details
- Canonical URL
- EU Climate Mitigation Policy
Other formats
Bibliographic details
- Authors: Jiaqian Chen, Maksym Chepeliev, Daniel Garcia-Macia, Dora M Iakova, James Roaf, Anna Shabunina, Dominique van der Mensbrugghe, Philippe Wingender
- Published: September 16, 2020
- Series: Departmental Papers
Summary
- Paper aims to contribute to the debate on the choice of policies to reach the more ambitious 2030 emission reduction goals currently under consideration.
- Provides an analysis of the macroeconomic and distributional impacts of different options to scale up the mitigation effort, and proposes enhancements to the existing EU policies.
- Key finding: a well-designed package would allow the EU to reach the emission goals with practically no effects on aggregate income.
Major findings and quantitative details
- Well-designed policy package elements:
- More extensive carbon pricing across EU countries and sectors.
- Cuts in distortionary taxes.
- Targeted green investment support.
- Distributional considerations:
- Part of the revenue from carbon pricing should be used to compensate the most vulnerable households.
- Revenue should also support the transition of workers to greener jobs.
- Complementary measures:
- A carbon border adjustment mechanism could complement the package to avoid an increase in emissions outside the EU due to higher carbon prices in the EU (“carbon leakage”).
- Welfare and risk assessment:
- From a risk-reward perspective, the benefits of reducing the risk of extreme life-threatening climate events and the health benefits from lower air pollution clearly outweigh the costs of mitigation policies.
Policy recommendations
- Implement more extensive carbon pricing across EU countries and sectors.
- Use carbon pricing revenues to:
- Compensate the most vulnerable households.
- Support worker transitions to greener jobs.
- Cut distortionary taxes to offset economic impacts.
- Provide targeted green investment support to scale up mitigation.
- Consider a carbon border adjustment mechanism to prevent carbon leakage.
Scope and metadata (selected)
- Pages: 67
- Volume: 2020
- Issue: 013
- Series: Departmental Paper No. 2020/013
- Stock No: EUCMPEA
- ISBN: 9781513552569
- ISSN: 2616-5333
- Authors: Jiaqian Chen, Maksym Chepeliev, Daniel Garcia-Macia, Dora M Iakova, James Roaf, Anna Shabunina, Dominique van der Mensbrugghe, Philippe Wingender
- Date: September 16, 2020
- Subject keywords: Carbon tax, Economic growth, Emissions trading, Environment, Greenhouse gas emissions, Income, National accounts, Sustainable growth, Taxes
- Keywords: carbon price signal, Carbon tax, DP, DPPP, Eastern Europe, Emissions trading, ETS price, EU climate adaptation, EU directive, EU effort, EU emission, EU export, EU GHG emission, EU mitigation Policy framework, EU Policy framework, EU production emission, EU recovery, EU taxonomy, Global, Greenhouse gas emissions, Income, price volatility, Sustainable growth, trading partner
EU Climate Mitigation Policy — Departmental Papers 2020/013 (September 16, 2020) by Jiaqian Chen; Maksym Chepeliev; Daniel Garcia-Macia; Dora M Iakova; James Roaf; Anna Shabunina; Dominique van der Mensbrugghe; Philippe Wingender.
Content in this bundle
- EU Climate Mitigation Policy; IMF Departmental Paper No. DP/20/13; September 2020