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

Ian Parry

No 2021/057, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Climate change; carbon neutrality; US climate mitigation; carbon pricing; feebates; carbon price floor; international aviation and maritime.; WP; efficiency cost o n; feebate variant; fuel economy; mitigation cost; international aviation and maritime; emission rate; sliding scale; cost increase; feebate scheme; Carbon tax; Greenhouse gas emissions; Non-renewable resources; Natural gas sector; Fuel prices; Global; Africa (search for similar items in EconPapers)
Pages: 39
Date: 2021-03-03
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-tre
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