Departmental Papers

Economic and Environmental Benefits from International Cooperation on Climate Policies

By Jean Chateau, Florence Jaumotte, Gregor Schwerhoff

March 17, 2022

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Jean Chateau, Florence Jaumotte, and Gregor Schwerhoff. Economic and Environmental Benefits from International Cooperation on Climate Policies, (USA: International Monetary Fund, 2022) accessed December 1, 2024

Disclaimer: The views expressed herein are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper discusses and analyzes various international mechanisms to scale up global action on climate mitigation and address the policy gap in this area. Despite the new commitments made at COP 26, there is still an ambition and a policy gap at the global level to keep temperature increases below the 2°C agreed in Paris. Avoiding the worst outcomes of climate change requires an urgent scaling up of climate policies. Recent policy proposals include the idea of common minimum carbon prices, which underlie the IMF’s international carbon price proposal (Parry, Black, and Roaf 2021) and the climate club proposal of the German government. While global carbon prices are not a new idea, the new elements are the use of carbon price floors—which allow countries to do more if they wish—and the differentiation of carbon price floors by level of development. In the absence of international coordination, countries with ambitious climate policies are considering introducing a border carbon adjustment mechanism to prevent domestic producers from being at a competitive disadvantage due to more ambitious domestic climate policies. An interesting question from the global perspective is whether border carbon adjustment would deliver substantial additional emissions reductions or incentivize other countries to join a carbon price floor agreement.

Subject: Climate change, Climate policy, Environment, Greenhouse gas emissions, International organization, Political economy

Keywords: Africa, B. policy scenario overview, Baseline emission projection, Border carbon adjustment, Carbon price floor agreement, Caribbean, Climate change, Climate policy, Climate policy, East Asia, GDP cost, Global, Global minimum carbon prices, Greenhouse gas emissions, ICPF scenario, International coordination

Publication Details

  • Pages:

    49

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

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  • Series:

    Departmental Paper No 2022/007

  • Stock No:

    EEBICCPEA

  • ISBN:

    9781616358303

  • ISSN:

    2616-5333