Mitigation Policies for the Paris Agreement: An Assessment for G20 Countries

57 Pages Posted: 1 Oct 2018

See all articles by Ian Parry

Ian Parry

International Monetary Fund (IMF)

Victor Mylonas

International Monetary Fund (IMF)

Nate Vernon

Independent

Date Written: August 2018

Abstract

Following submission of greenhouse gas (GHG) mitigation commitments or pledges (by 190 countries) for the 2015 Paris Agreement, policymakers are considering specific actions for their implementation. To help guide policy, it is helpful to have a quantitative framework for understanding: i) the main impacts (on GHGs, fiscal balances, the domestic environment, economic welfare, and distributional incidence) of emissions pricing; ii) trade-offs between pricing and other (commonly used) mitigation instruments; and iii) why/to what extent needed policies and their impacts differ across countries. This paper provides an illustrative sense of this information for G20 member countries (which account for about 80 percent of global emissions) under plausible (though inevitably uncertain) projections for future fuel use and price responsiveness. Quantitative results underscore the generally strong case for (comprehensive) pricing over other instruments, its small net costs or often net benefits (when domestic environmental gains are considered), but also the potentially wide dispersion (and hence inefficiency) in emissions prices implied by countries' mitigation commitments.

Keywords: Paris Agreement, carbon pricing, G20 countries, instrument choice, air pollution mortality, tax incidence, welfare effects, climate mitigation, Government Policy, Environmental Economics: Government Policy

JEL Classification: Q48, Q54, Q58, H23

Suggested Citation

Parry, Ian and Mylonas, Victor and Vernon, Nate, Mitigation Policies for the Paris Agreement: An Assessment for G20 Countries (August 2018). IMF Working Paper No. 18/193. Available at SSRN: https://ssrn.com/abstract=3257359

Ian Parry (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Victor Mylonas

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Nate Vernon

Independent ( email )

No Address Available

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