The Great Carbon Arbitrage

Author/Editor:

Tobias Adrian ; Patrick Bolton ; Alissa M. Kleinnijenhuis

Publication Date:

June 1, 2022

Electronic Access:

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Disclaimer: 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.

Summary:

We measure the gains from phasing out coal as the social cost of carbon times the quantity of avoided emissions. By comparing the present value of the benefits from avoided emissions against the present value of costs of ending coal plus the costs of replacing it with renewable energy, our baseline estimate is that the world can realize a net gain of 77.89 trillion USD. This represents around 1.2% of current world GDP every year until 2100. The net benefits from ending coal are so large that renewed efforts, carbon pricing, and other financing policies we discuss, should be pursued.

Series:

Working Paper No. 2022/107

Subject:

Frequency:

regular

English

Publication Date:

June 1, 2022

ISBN/ISSN:

9798400210532/1018-5941

Stock No:

WPIEA2022107

Pages:

67

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