Search Results

You are looking at 1 - 5 of 5 items for :

  • "climate compensation" x
Clear All
Mr. Johannes Wiegand
Climate financing and compensation have emerged as key themes in the international climate mitigation debate. According to one argument in support of compensation, advanced economies (AEs) have used up much of the atmosphere’s absorptive capacity, thus causing global warming and blocking a similar, fossil-fuel driven development path for emerging markets and developing economies (EMDEs). This paper develops a simple model of a sequential, fossil-fuel driven development process to discuss these issues systematically. The results suggest: (i) AEs have typically a stronger interest in climate change mitigation than EMDEs, (ii) from an equity perspective, compensation is called for only if EMDEs are relatively small; (iii) there can also be an efficiency case for compensation, however, with AEs buying EMDEs out of some of their GHG emissions; (iv) ultimately, a superior option—for both the world’s climate and growth prospects—is the development of clean energy technologies by AEs and their transfer to EMDEs. The latter requires strong mitigation efforts by AEs even if EMDEs fail to play along initially.
Mr. Johannes Wiegand

fail to play along initially. JEL Classification Numbers: D62, F64, O13, Q54 Keywords: Development, Climate Change, Climate Change Mitigation, Climate Financing Author’s E-Mail Address: jwiegand@imf.org Table of Contents Abstract I. Introduction II. The Basic Model III. Climate Compensation: Equity vs. Efficiency IV. Variations A. EMDEs are Large B. Some EMDEs are Disproportionately Vulnerable to Climate Change V. Energy Efficiency, Clean Energy Technologies and Technology Transfers VI. Summary and Conclusions Annex: Altruistic

Mr. Johannes Wiegand

often coupled with policy objectives: AEs extend transfers in exchange for emerging markets and developing economies (EMDEs) adopting specific climate measures. Climate compensation can be delivered through various mechanisms that include grants, debt relief, or grant elements in concessional lending. 3 This paper seeks to analyze the links between development, climate change mitigation policies, and compensation for EMDEs in a systematic manner—hence the paper is not about financing in a narrow sense. It argues along a simple model in which two country blocks

Mr. Tobias Adrian, Mr. Patrick Bolton, and Alissa M. Kleinnijenhuis

and efficiency considerations that are relevant for the provision of climate compensation. 52 Developed world and emerging-market GDP in 2020 are 50.8 and 30.7 trillion US dollars, respectively, according to the World Bank, and using the IMF World Economic Outlook classification of country development level. 53 See Bolton et al. (2022) for a discussion of ways in which sovereign debt of countries with a weak existing fiscal position can be restructured to create sufficient fiscal space to take on additional debt for the purposes of climate

Mr. Tobias Adrian, Mr. Patrick Bolton, and Alissa M. Kleinnijenhuis
We measure the gains from phasing out coal as the social cost of carbon times the quantity of avoided emissions. By comparing the present value of the benefits from avoided emissions against the present value of costs of ending coal plus the costs of replacing it with renewable energy, our baseline estimate is that the world can realize a net gain of 77.89 trillion USD. This represents around 1.2% of current world GDP every year until 2100. The net benefits from ending coal are so large that renewed efforts, carbon pricing, and other financing policies we discuss, should be pursued.