IMF Staff Position Notes

Climate Policy and the Recovery

By Michael Keen, Benjamin Jones

December 4, 2009

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Michael Keen, and Benjamin Jones. Climate Policy and the Recovery, (USA: International Monetary Fund, 2009) accessed November 8, 2024

Summary

Negotiations toward a successor to the Kyoto Protocol on climate change have come to a critical point, and domestic climate policies are being developed, as the world seeks to recover from the deepest economic crisis for decades and looks for new sources of sustainable growth. This position paper considers the challenge posed by these two policy imperatives: how to exit from the crisis while developing an effective response to climate change. Blending the objectives of a sustained recovery and effective climate policies presents both challenges and opportunities. Although there are potential “win-win” spending measures conducive to both, the more fundamental linkages and synergies lie in the broader strategies adopted toward each other. Greater climate resilience can promote macroeconomic stability and alleviate poverty; and carbon pricing, essential for mitigation, can contribute to the strengthening of fiscal positions that is expected to be needed in many countries. There are, nevertheless, also difficult trade-offs to face, notably in the somewhat greater caution now warranted in moving to more aggressive emissions pricing. However, the simple policy guidelines for addressing climate issues remain fundamentally unchanged; the need to deploy a range of regulatory, spending, and emissions pricing measures.

Subject: Carbon tax, Climate policy, Emissions trading, Environment, Expenditure, Greenhouse gas emissions, Taxes

Keywords: C. pricing carbon, Carbon pricing, Carbon tax, Climate policy, Country support, Emissions pricing, Emissions trading, Further policy development, Global, Greenhouse gas emissions, Mitigation cost, Opportunity cost, Output price, Policy, Policy guideline, Policy objective, Price, Price shock, Pricing, Public spending, Shadow pricing, SPN

Publication Details

  • Pages:

    20

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Staff Position Note No. 2009/028

  • Stock No:

    SPNEA2009028

  • ISBN:

    9781455220946

  • ISSN:

    2617-6742

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