Climate Change Mitigation Policies for Developing Countries

Juliette Caucheteux, Sam Fankhauser () and Sugandha Srivastav

Review of Environmental Economics and Policy, 2025, vol. 19, issue 1, 69 - 89

Abstract: Following the Paris Agreement, many low- and middle-income countries (LMICs) have adopted climate change targets. They will need climate policies that are suited to their socioeconomic and institutional contexts. Conventional policy prescriptions are geared toward high-income countries with entrenched high-carbon structures, universal energy access, deep financial markets, formal economies, privatized power markets, a capable public sector, and relative macroeconomic stability. Not all of these assumptions generalize to LMICs. Here, we synthesize what is known about emissions reduction policies in LMICs. We find a strong emphasis on finance interventions and regulatory measures, including the need for power sector reform. Current scholarship focuses heavily on removing existing price distortions, with less emphasis on carbon pricing. Carbon pricing is discussed mostly for middle-income countries, where some pilot schemes exist and institutional capacity constraints are less severe. Prescriptions for skills-related policies focus on capacity building and preparing a young population for a changing labor market rather than reskilling the existing workforce.

Date: 2025
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