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Fiscal Policy to Mitigate Climate Change

Fiscal Policy to Mitigate Climate Change. A Guide for Policymakers. Shane Thompstone - 13051083. Climate Change. Global Warming Greenhouse gases (GHGs) General rise in temperature, rise in sea level Not just a scientific problem How? . Carbon Tax.

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Fiscal Policy to Mitigate Climate Change

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  1. Fiscal Policy to Mitigate Climate Change A Guide for Policymakers Shane Thompstone - 13051083

  2. Climate Change • Global Warming • Greenhouse gases (GHGs) • General rise in temperature, rise in sea level • Not just a scientific problem • How?

  3. Carbon Tax • Energy switching to cleaner fuels in major industries • Carbon capture technology – refunds • If clean technology falls subject to “market failures” or slow deployment, further incentives may be introduced

  4. Carbon Tax • A floor price for the higher-emitting countries • Higher tax if they do not conform over a 10 year period • Important to exclude developing countries

  5. Pricing • UN Convention on Climate Change aim to limit global warming at 2°C • IMF do not see it as feasible and suggest 2.9°C or 3.6°C to be reasonable goals • Studies show US$20 per tonne of CO₂ by 2020 is a reasonable price for high-emitting countries • US study showed initial tax of $21.4 per tonne with an increase of 2% or 3% per year is consistent with 3.6°C warming

  6. Example Example of $22 per tonne tax on carbon dioxide input into 2009 data (IMF 2012)

  7. Conclusion • Implementing these taxes on high-emitting countries as soon as possible • Adjustment can be made later • Indicating clearly the direction taxing is going, to maintain trust and stability • Thank you • Any Questions?

  8. References • [1] R. de Mooij, I. W. H. Parry and M. Keen. Fiscal Policy to Mitigate Climate Change: A Guide for Policymakers. IMF: International Monetary Fund. 2012.

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