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Cover Departmental Papers
EU Climate Mitigation Policy
Mr. Jiaqian Chen, Maksym Chepeliev, Mr. Daniel Garcia-Macia, Ms. Dora M Iakova, Mr. James Roaf, Ms. Anna Shabunina, Dominique van der Mensbrugghe, and Mr. Philippe Wingender
This paper aims to contribute to the debate on the choice of policies to reach the more ambitious 2030 emission reduction goals currently under consideration. It provides an analysis of the macroeconomic and distributional impacts of different options to scale up the mitigation effort, and proposes enhancements to the existing EU policies. A key finding is that a well-designed package, consisting of more extensive carbon pricing across EU countries and sectors, combined with cuts in distortionary taxes and targeted green investment support, would allow the EU to reach the emission goals with practically no effects on aggregate income. To enhance the social and political acceptance of climate policies, part of the revenue from carbon pricing should be used to compensate the most vulnerable households and to support the transition of workers to greener jobs. A carbon border adjustment mechanism could complement the package to avoid an increase in emissions outside the EU due to higher carbon prices in the EU (“carbon leakage”). From a risk-reward perspective, the benefits of reducing the risk of extreme life-threatening climate events and the health benefits from lower air pollution clearly outweigh the costs of mitigation policies.
Keywords:
DPPP; DP; EU emission; EU mitigation Policy framework; trading partner; ETS price; EU climate adaptation; EU effort; EU GHG emission; EU Policy framework; EU production emission; EU taxonomy; EU directive; EU recovery; price volatility; Carbon tax; Greenhouse gas emissions; Sustainable growth; Income; Emissions trading; Global; Eastern Europe; EU export; carbon price signal
Cover IMF Staff Country Reports
Luxembourg: 2022 Article IV Consultation-Press Release; and Staff Report for Luxembourg
International Monetary Fund. European Dept.
Real GDP surpassed its pre-pandemic trend in early 2021, and the labor market is tight. Inflation is increasing, mainly driven by energy prices, but core inflation is also edging up. The fiscal position strengthened and the financial sector has remained resilient. Rapidly growing housing prices raise concerns about affordability and could pose risks for financial stability and the country’s attractiveness in the medium term. Following the outbreak of war in Ukraine, inflation pressures have intensified and financial market volatility has risen.
Keywords:
money market rate; IMF staff calculation; Luxembourg's currency; executive board assessment; liability positions vis-a-vis nonresident; Labor markets; Housing; Housing prices; Loans; Income; Global; Europe
Cover IMF Working Papers
Climate Action to Unlock the Inclusive Growth Story of the 21st Century
Amar Bhattacharya, Maksym Ivanyna, William Oman, and Nicholas Stern
Climate change is a major threat to the sustainability and inclusiveness of our societies, and to the planet’s habitability. A just transition to a low-carbon economy is the only viable way forward. This paper reviews the climate change challenge. It stresses the criticality of systems changes (energy, transport, urban, land use, water) in a climate-challenged world, and the importance of infrastructure investment geared toward such systems changes. The key policies to enable the transition are: public spending on and investment frameworks for sustainable infrastructure, pricing carbon, regulations, promoting sustainable use of natural resources, scaling up and aligning finance with climate objectives, low-carbon industrial and innovation policies, building resilience and adaptation, better measurement of well-being and sustainability, and providing information and education on climate risks. Implemented well, climate action would unlock the inclusive growth story of the 21st century, making our societies more sustainable, inclusive, and prosperous.
Keywords:
climate change challenge; climate change mitigation; low-carbon economy; climate action; challenge of climate change; Climate change; Natural disasters; Greenhouse gas emissions; Global; South Asia
Cover IMF Working Papers
A Comprehensive Greenhouse Gas Mitigation Strategy for The Netherlands
Nicoletta Batini, Mr. Simon Black, Ms. Oana Luca, and Ian W.H. Parry
The Netherlands has ambitious greenhouse gas emission reduction targets for the future - to cut them by 49 percent below 1990 levels by 2030 and 95 percent by 2050. These targets and the likely new EU-wide targets under the recent EU Green Deal entail a rapid acceleration in decarbonization. This paper discusses the government’s mitigation strategy and advances several recommendations to complement and reinforce that strategy and to achieve better alignement of the effective carbon prices across sectors. The paper discusses alternatives to make the recently-introduced industry carbon levy more effcient and recomends the use of revenue-neutral feebate schemes in industry, transportation, buildings, and agriculture. For power generation, it recommends eliminating taxes on residential and industrial electricity, supplementing the coal phaseout plan with an increase in the CO2 emissions floor price. The impacts of these reforms on consumption would be low and relatively evenly split across the income distribution.
Keywords:
government's mitigation strategy; reduction target; climate mitigation; emission rate; natural gas; Greenhouse gas emissions; Carbon tax; Agricultural sector; Global
Cover IMF Working Papers
A Comprehensive Package of Macroeconomic Policy Measures for Implementing China’s Climate Mitigation Strategy
Jean Chateau, Ms. Wenjie Chen, Ms. Florence Jaumotte, and Karlygash Zhunussova
This paper presents ways for China to achieve its climate goals while also attain high-quality growth—growth that is balanced, inclusive, and green. Using a dynamic computable general equilibrium model that is calibrated to China, multiple scenarios are considered that incorporate a sequence of layered policies: (i) frontloading mitigation with an earlier emissions peak, (ii) power market reforms, and (iii) economic rebalancing. The results highlight that these policies can significantly contribute to the success of the climate strategy overall, including by lowering the shadow price of carbon as well as the associated mitigation costs. Distribution analysis offers proposals to lessen the impact on vulnerable households.
Keywords:
Chinese economy; climate policy; carbon neutrality; rebalancing; Computable General Equilibrium model; mitigation strategy; E. Policy simulation; climate strategy; power market; climate mitigation initiative; Greenhouse gas emissions; Non-renewable resources; Consumption; Global; ETS trading price; carbon pricing scheme
Cover IMF Staff Country Reports
Spain: Selected Issues
International Monetary Fund. European Dept.
Selected Issues
Keywords:
transport sector emission; C. policy framework; carbon pricing scenario; climate change mitigation policy; employment incentive; Greenhouse gas emissions; Employment; Climate policy; Carbon tax; Global; Europe
Cover IMF Staff Country Reports
Singapore: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Singapore
International Monetary Fund. Asia and Pacific Dept
The 2019 Article IV Consultation with Singapore analyses that Singapore’s growth is expected to continue to moderate as export momentum slows and growth drivers shift back to domestic demand. Risks to the near-term outlook are tilted to the downside and arise mainly from external sources. Over the medium term, modern services are expected to become increasingly important in driving growth. The report highlights that policies should be geared toward addressing the challenges to growth and inequality posed by shifts in the global economy, aging, and technological change, which could also promote external rebalancing. Policies have been aimed at boosting growth while promoting greater equity. The authorities are implementing measures to turn Singapore into a global innovation hub, redoubling efforts to boost labor productivity through investment in human, physical and organizational capital, and digitalization. Singapore is also emerging as a regional leader in fintech, supported by Monetary Authority of Singapore. Meanwhile, social policies are being updated, with the aim of raising wages and standards of living for lower-skilled Singaporeans.
Keywords:
ISCR; CR; core inflation; Singapore; mas core inflation; Singapore dollar; Singapore economy; resolution framework; macroeconomic performance; resolution unit; Inflation; Fiscal stance; Labor markets; Global
Cover IMF Staff Country Reports
People’s Republic of China: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the People’s Republic of China
International Monetary Fund. Asia and Pacific Dept
China’s recovery is well advanced—but it lacks balance and momentum has slowed, reflecting the rapid withdrawal of fiscal support, lagging consumption amid recurrent COVID-19 outbreaks despite a successful vaccination campaign, and slowing real estate investment following policy efforts to reduce leverage in the property sector. Regulatory measures targeting the technology sector, intended to enhance competition, consumer privacy, and data governance, have increased policy uncertainty. China’s climate strategy has begun to take shape with the release of detailed action plans. Productivity growth is declining as decoupling pressures are increasing, while a stalling of key structural reforms and rebalancing are delaying the transition to “high-quality”—balanced, inclusive and green—growth.
Keywords:
outbound direct investments; policy effort; macro leverage ratio; shifting Policy; policy uncertainty; climate strategy; Climate finance; Greenhouse gas emissions; Global
Cover IMF Staff Country Reports
Front Matter
International Monetary Fund. European Dept.

public infrastructure, including transportation and e-mobility. Recycle revenue to promote behavioral change for cross-border commuters. Enhance carbon price signaling and continue compensating low-income households. Strengthen resilience to extreme climate risk events. Accelerate implementation of environmental, social, and governance (ESG) taxonomies and disclosure requirements and strengthen climate stress-test capacity. Digitalization and the labor market . Given that digitalization could increase the polarization of the labor market and skill mismatches

Keywords:
housing imbalance; labor market participation; B. addressing housing Imbalances; participation of senior; housing policy; Labor markets; Housing; Housing prices; Climate change; Global
Cover IMF Staff Country Reports
Spain: Selected Issues
International Monetary Fund. European Dept.

cooling), will be important to ensure that power demand peaks are manageable and enable maximum use of renewable generation 71 Beyond the electricity sector, the government plans to expand self-consumption of renewables and distributed generation, as well as promote the use of renewables in the industry and heating sectors. 72 A Market Stability Reserve (MSR) was introduced in January 2019 to reduce the volatility of ETS prices. A large accumulated surplus of allowances weakens the carbon price signal. The MSR puts a fraction of surplus allowances into a

Keywords:
ALMP resource; employment service; training delivery; employment program; ALMP regulation; Active labor market policies; Labor markets; Job creation; Job training