The Portfolio of Economic Policies Needed to Fight Climate Change
39 Pages Posted: 15 Nov 2022 Last revised: 18 Nov 2022
Date Written: November 14, 2022
Abstract
Climate change poses an existential threat. The authors argue that carbon pricing and green research and development (R&D) support are good economics, but their implementation can be improved. Even if carbon prices are generalized and given more substance, green R&D is still likely to be smaller than needed. Much more money must be spent on it than is now the case, and this money must be properly allocated in order to have an impact. Moreover, done well, other policies, such as standards, bans, and targeted subsidies, can be good economics. But they have often been incoherent and their implementation is delicate. The authors also argue that domestic and international compensation is key to the acceptability of efficient policies. Finally, although a country’s emissions will not materially alter the course of climate change, individual countries can still show the way ahead: They can develop technologies that can be used by other, poorer, countries. They can provide leadership/momentum on global agreements and on the need to fund climate change policies in developing economies.
Keywords: Climate change, carbon price, green R&D, carbon border adjustment, climate finance
JEL Classification: D61, F18, H23, Q37, Q54
Suggested Citation: Suggested Citation