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Mr. Simon Black, Ian Parry, Mr. James Roaf, and Karlygash Zhunussova
Achieving the Paris Agreement’s temperature goals requires cutting global CO2 emissions 25 to 50 percent this decade, followed by a rapid transition to net zero emissions. The world is currently not yet on track so there is an urgent need to narrow gaps in climate mitigation ambition and policy. Current mitigation pledges for 2030 would achieve just one to two thirds of the emissions reductions needed for limiting warming to 1.5 to 2oC. And additional measures equivalent to a global carbon price exceeding $75 per ton by 2030 are needed. This IMF Staff Climate Note presents extensive quantitative analyses to inform dialogue on closing mitigation ambition and policy gaps. It shows purely illustrative pathways to achieve the needed global emissions reductions while respecting international equity. The Note also presents country-level analyses of the emissions, fiscal, economic, and distributional impacts of carbon pricing and the trade-offs with other instruments—comprehensive mitigation strategies will be key.
Ian Parry and Karlygash Zhunussova

, shutting down of ocean circulatory systems) rise exponentially with warming above 1.5oC. Delaying mitigation action would increase the risks of a disorderly and costly transition. Indeed, with a BAU scenario to 2030, emissions would then need to fall by an impractical 95 percent from 2030 to 2040 for a 1.5oC pathway. Despite countries variably committing to net zero emissions targets and strengthening 2030 targets, there remains a large near-term gap in mitigation ambition (i.e., emissions pledges) … 58 countries representing 61 percent of global GHGs have announced

Ian Parry and Karlygash Zhunussova

@imf.org iparry@imf.org jroaf@img.org kzhunussova@imf.org Not Yet on Track to Net Zero: The Urgent Need for Greater Ambition and Policy Action to Achieve Paris Temperature Goals Simon Black, Ian Parry, James Roaf, and Karlygash Zhunussova October 2021 Summary Achieving the Paris Agreement’s temperature goals requires cutting global CO 2 emissions 25 to 50 percent this decade, followed by a rapid transition to net zero emissions. The world is currently not yet on track so there is an urgent need to narrow gaps in climate mitigation ambition and policy

Ian Parry

agreeing on ambition and acting simultaneously on the needed policies, helps to address concerns that deter stronger unilateral ambition and policy actions . Countries acting unilaterally under the Paris process may be reluctant to pledge greater mitigation ambition, and scale up mitigation policies, as they would bear the costs while the global climate benefits of their actions mostly accrue to other countries. A “minilateral” approach, where a smaller group of countries agree on the global goal and act simultaneously on the pricing to achieve it, helps to address these

International Monetary Fund. Strategy, Policy, & Review Department

, IMF surveillance should take the following, pragmatic approach to mitigation yardsticks in Article IVs Consultations: The starting point will typically be a country’s National Determined Contribution. 9 Article IV reports will provide relevant context for assessing the ambitiousness of a country’s Paris target. In particular, (i) Article IV reports will stress that NDCs remain, at this stage and in the aggregate, insufficient to achieve the mitigation ambition enshrined in the Paris accord, and (ii) they will compare a country’s Paris target with that of

Mr. Johannes Wiegand

technologies, while Miyamoto and Takeuchi (2019) provide empirical evidence on the link between mitigation ambition in advanced countries and technology diffusion to emerging markets. 24 The model could be refined in many ways that would make for a richer and granular analysis, and potentially help obtain additional insights. One is modeling AEs and EMDEs as coalitions of heterogenous countries rather than monolithic blocks. Another is assuming a staggered development process—with EMDEs starting to emit GHGs before AEs reach their saturation point—rather than

International Monetary Fund. European Dept.

eventually be to stabilize global temperatures ( IMF, 2019a ). 2. In this context, Slovakia, as a member of the European Union (EU), has significantly increased its climate mitigation ambition . Slovakia endorsed the European Green Deal’s objective of net zero GHG emissions in the EU by 2050. This requires significantly faster emissions reductions in the EU as current policies are projected to yield only 60 percent emissions decline relative to 1990 levels by 2050. Intermediate targets have also become more ambitious ( Table 1 ). The 2030 EU target was raised to at least

International Monetary Fund

. For individual countries, scaling up their mitigation policy, including through taxation, can be difficult without international coordination, owing to concerns about competitiveness and uncertainty over trading partners’ policies. There remain critical gaps in both global mitigation ambition and policy . About 140 countries, representing more than 85 percent of greenhouse gas emissions, have now committed to net-zero emissions by around midcentury. But even if mitigation pledges were fully achieved, global carbon dioxide (CO 2 ) would be cut by only one

Ian Parry, Mr. Simon Black, and Mr. James Roaf
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.
International Monetary Fund. Strategy, Policy, & Review Department
While the IMF has been involved in the climate debate since at least 2008, a systematic account of how to integrate climate change into surveillance has been lacking to date. This paper seeks to fill the gap. It argues that domestic policy challenges related to climate change—such as adaptation efforts for climate vulnerable countries, or policies to deliver a country’s Nationally Determined Contribution under the Paris climate accord—are covered by the IMF’s bilateral surveillance mandate and therefore valid topics for Article IV consultations wherever these challenges cross the threshold of macro-criticality. Climate change mitigation is a global policy challenge and therefore falls under multilateral surveillance. The paper proposes a pragmatic approach that focusses especially on the mitigation efforts of the 20 largest emitters of greenhouse gases.