IMF Working Papers

Implementing the United States’ Domestic and International Climate Mitigation Goals: A Supportive Fiscal Policy Approach

By Ian W.H. Parry

March 3, 2021

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Ian W.H. Parry Implementing the United States’ Domestic and International Climate Mitigation Goals: A Supportive Fiscal Policy Approach, (USA: International Monetary Fund, 2021) accessed September 20, 2024

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

The United States has pledged to become carbon neutral by 2050, meet sectoral objectives (e.g., for carbon free power, electric vehicles) and encourage greater mitigation among large emitting countries and of international transportation emissions. Fiscal policies at the national, sectoral, and international level could play a critical role in implementing these objectives, along with investment, regulatory, and technology policies. Fiscal instruments are cost-effective, can enhance political acceptability, and do not worsen, or could help alleviate, budgetary pressures. Domestically, a fiscal policy package could contain a mix of economy-wide carbon pricing and revenue-neutral feebates (i.e., tax-subsidy schemes) with the latter reinforcing mitigation in the transport, power, industrial, building, forestry, and agricultural sectors. Internationally, a carbon price floor among large emitters (with flexibility to implement equivalent measures) could effectively scale up global mitigation, while levies/feebates offer a practical approach for reducing maritime and aviation emissions.

Subject: Carbon tax, Economic sectors, Environment, Fuel prices, Greenhouse gas emissions, Natural gas sector, Non-renewable resources, Prices, Taxes

Keywords: Africa, Carbon neutrality, Carbon price floor, Carbon pricing, Carbon tax, Climate change, Cost increase, Efficiency cost o n, Emission rate, Feebate scheme, Feebate variant, Feebates, Fuel economy, Fuel prices, Global, Greenhouse gas emissions, International aviation and maritime, International aviation and maritime., Mitigation cost, Natural gas sector, Non-renewable resources, Sliding scale, US climate mitigation, WP

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2021/057

  • Stock No:

    WPIEA2021057

  • ISBN:

    9781513571003

  • ISSN:

    1018-5941

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