{
  "title": "Carbon Taxes or Emissions Trading Systems?: Instrument Choice and Design",
  "publication": "Staff Climate Notes, July 21, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/staff-climate-notes/issues/2022/07/14/carbon-taxes-or-emissions-trading-systems-instrument-choice-and-design-519101",
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  "summary": "Carbon pricing should be a central element of climate mitigation strategies, helping countries transition to ‘net zero’ greenhouse gas emissions over the next three decades.",
  "sections": [
    {
      "heading": "Central finding and framing",
      "content": "- Carbon pricing should be a central element of climate mitigation strategies to help countries transition to ‘net zero’ greenhouse gas emissions over the next three decades.\n- Policymakers choosing to introduce or scale up carbon pricing face technical and political choices between carbon taxes and emissions trading systems (ETSs), as well as detailed design decisions."
    },
    {
      "heading": "Comparative assessment: carbon taxes versus ETSs",
      "content": "- Carbon taxes have significant practical advantages over ETSs, especially for developing countries:\n  - Ease of administration.\n  - Price certainty to promote investment.\n  - Potential to raise significant revenues.\n  - Coverage of broader emissions sources.\n- Emissions trading systems (ETSs) can have significant political economy advantages that may make them preferable in some settings."
    },
    {
      "heading": "Design issues and policy choices discussed",
      "content": "- Administration arrangements for implementing carbon taxes or ETSs.\n- Price levels and mechanisms to ensure predictable incentives for low-carbon investment.\n- Relation to other mitigation instruments (interaction and complementarities).\n- Use of revenues to address efficiency and distributional objectives.\n- Supporting measures to address competitiveness concerns for exposed industries.\n- Extension strategies to cover broader emissions sources over time.\n- Coordination at the global level to reduce leakage and harmonize efforts.\n- Political economy considerations influencing instrument choice and detailed design."
    },
    {
      "heading": "Guidance and analysis provided",
      "content": "- The paper provides guidance, broader considerations, and quantitative analyses on choice and design between carbon taxes and ETSs.\n- Emphasis on matching instrument choice to country circumstances, administrative capacity, revenue needs, and political feasibility."
    },
    {
      "heading": "Publication and metadata (key facts)",
      "content": "- Authors: Ian W.H. Parry, Simon Black, Karlygash Zhunussova\n- Publication date: July 21, 2022\n- Series: Staff Climate Note No 2022/006\n- Pages: 25\n- DOI: https://doi.org/10.5089/9798400212307.066\n- ISBN: 9798400212307\n\nParry, Ian W.H.; Black, Simon; Zhunussova, Karlygash — \"Carbon Taxes or Emissions Trading Systems?: Instrument Choice and Design\", Staff Climate Notes 2022, 006 (July 21, 2022).\n\n---\n\n Content in this bundle\n\n- Clnea2022006\n  - Clnea2022006 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Clnea2022006 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/staff-climate-notes/issues/2022/07/14/carbon-taxes-or-emissions-trading-systems-instrument-choice-and-design-519101"
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    "Authors: Ian W.H. Parry, Simon Black, Karlygash Zhunussova",
    "Published: July 21, 2022",
    "Series: Staff Climate Notes",
    "DOI: https://doi.org/10.5089/9798400212307.066",
    "Carbon pricing should be a central element of climate mitigation strategies to help countries transition to ‘net zero’ greenhouse gas emissions over the next three decades.",
    "Policymakers choosing to introduce or scale up carbon pricing face technical and political choices between carbon taxes and emissions trading systems (ETSs), as well as detailed design decisions.",
    "Carbon taxes have significant practical advantages over ETSs, especially for developing countries:",
    "Emissions trading systems (ETSs) can have significant political economy advantages that may make them preferable in some settings.",
    "Administration arrangements for implementing carbon taxes or ETSs.",
    "Price levels and mechanisms to ensure predictable incentives for low-carbon investment.",
    "Relation to other mitigation instruments (interaction and complementarities).",
    "Use of revenues to address efficiency and distributional objectives.",
    "Supporting measures to address competitiveness concerns for exposed industries.",
    "Extension strategies to cover broader emissions sources over time.",
    "Coordination at the global level to reduce leakage and harmonize efforts.",
    "Political economy considerations influencing instrument choice and detailed design.",
    "The paper provides guidance, broader considerations, and quantitative analyses on choice and design between carbon taxes and ETSs.",
    "Emphasis on matching instrument choice to country circumstances, administrative capacity, revenue needs, and political feasibility.",
    "Authors: Ian W.H. Parry, Simon Black, Karlygash Zhunussova",
    "Publication date: July 21, 2022",
    "Series: Staff Climate Note No 2022/006",
    "Pages: 25",
    "DOI: https://doi.org/10.5089/9798400212307.066",
    "ISBN: 9798400212307",
    "**Clnea2022006**"
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