Meeting South Africa’s ambitious climate objectives will require a comprehensive strategy that includes a more effective use of carbon pricing policy, reducing inefficient government subsidies that have delayed the green transition, well-targeted support to affected industries and households, and other green financial and sectoral measures. Implemented well, the mitigation policy package would promote low-carbon investments, raise government revenues, and support economic growth.
Climate change poses challenging policy tradeoffs for India. The country faces the challenge of raising living standards for a population of 1.4 billion while at the same time needing to be a critical contributor to reducing global GHG emissions. The government has implemented numerous policies to promote the manufacturing and use of renewable energy and shift away from coal, but much still needs to be done to reach India’s 2070 net zero goal. Reducing GHG emissions will almost certainly have a negative impact on growth in the short run and have important distributional consequences for individuals and communities who today rely on coal. But with the right policies, these costs—which are non-negligible but dwarfed by the cost of climate change over the next decade if no action is taken—can be significantly curtailed. This paper provides an in depth review of the current climate policy landscape in India and models emissions trajectories under different policy options to reduce GHG emissions.
We quantify cross-border effects of the recent climate mitigation policies introduced in Canada and the U.S., using the global general equilibrium model IMF-ENV. Notably, with the substantial emission reductions from Canada’s carbon tax-led mitigation policies and the U.S.’ Inflation Reduction Act, these two countries would bridge two-thirds of the gap toward their Nationally Determined Contribution (NDC) goals. While the broadly divergent policies are believed to elicit competitiveness concerns, we find the aggregate cross-border effects within North America to be very limited and restricted to the energy intensive and trade exposed industries. Potential carbon leakages are also found to be negligible. A more meaningful difference triggered by policy heterogeneity is rather domestic, especially with U.S. subsidies increasing energy output while the Canada model with a carbon tax would marginally decrease it. This analysis is complemented by a stylized model illustrating how such divergence can affect the terms of trade, but also how these effects can be countered by exchange rate flexibility, border adjustments or domestic taxation.
Climate change poses challenging policy tradeoffs for India. The country faces the challenge of raising living standards for a population of 1.4 billion while at the same time needing to be a critical contributor to reducing global GHG emissions. The government has implemented numerous policies to promote the manufacturing and use of renewable energy and shift away from coal, but much still needs to be done to reach India’s 2070 net zero goal. Reducing GHG emissions will almost certainly have a negative impact on growth in the short run and have important distributional consequences for individuals and communities who today rely on coal. But with the right policies, these costs—which are non-negligible but dwarfed by the cost of climate change over the next decade if no action is taken—can be significantly curtailed. This paper provides an in depth review of the current climate policy landscape in India and models emissions trajectories under different policy options to reduce GHG emissions.
Meeting South Africa’s ambitious climate objectives will require a comprehensive strategy that includes a more effective use of carbon pricing policy, reducing inefficient government subsidies that have delayed the green transition, well-targeted support to affected industries and households, and other green financial and sectoral measures. Implemented well, the mitigation policy package would promote low-carbon investments, raise government revenues, and support economic growth.
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