Staff Climate Notes

Proposal for an International Carbon Price Floor Among Large Emitters

By Ian W.H. Parry, Simon Black, James Roaf

June 18, 2021

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Ian W.H. Parry, Simon Black, and James Roaf. "Proposal for an International Carbon Price Floor Among Large Emitters", Staff Climate Notes 2021, 001 (2021), accessed December 26, 2024, https://doi.org/10.5089/9781513583204.066

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Summary

Countries are increasingly committing to midcentury ‘net-zero’ emissions targets under the Paris Agreement, but limiting global warming to 1.5 to 2°C requires cutting emissions by a quarter to a half in this decade. Making sufficient progress to stabilizing the climate therefore requires ratcheting up near-term mitigation action but doing so among 195 parties simultaneously is proving challenging. Reinforcing the Paris Agreement with an international carbon price floor (ICPF) could jump-start emissions reductions through substantive policy action, while circumventing emerging pressure for border carbon adjustments. The ICPF has two elements: (1) a small number of key large-emitting countries, and (2) the minimum carbon price each commits to implement. The arrangement can be pragmatically designed to accommodate equity considerations and emissions-equivalent alternatives to carbon pricing. The paper discusses the rationale for an ICPF, considers design issues, compares it with alternative global regimes, and quantifies its impacts.

Subject: Carbon tax, Climate change, Environment, Greenhouse gas emissions, Taxes

Keywords: Alternatives to carbon pricing, Carbon tax, Climate change, Climate change, Design issues, Emissions target, Emissions-equivalent alternative, Equity consideration, Global, Greenhouse gas emissions, IMF staff climate note, International carbon price floor, Large emitters, Mitigation, Paris Agreement

Publication Details

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