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Political Science > Environmental Policy

You are looking at 1 - 6 of 6 items for :

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Cover IMF Working Papers
Following the Money: Who is Keeping Coal Alive?
Gregor Schwerhoff and Mouhamadou Sy
The 2023 United Nations Climate Change Conference reinforced already existing pressure to transition away from fossil fuels, in particular for the most polluting source, coal. We use a comprehensive dataset on bank loans for coal projects to shed light on which type of banks continue to finance coal and how coal phase-out commitments affect coal financing. We find that coal financing is becoming increasingly concentrated, partly in banks with a very high coal exposure. We also find that many coal loans have maturities much shorter than the remaining lifetime of coal assets, thus exposing equity holders of coal assets to the risk of a more difficult loan rollover. An econometric analysis shows that countries with a strong commitment to coal phase-out, fixed in national law for example, receive less coal financing. Using an instrumental variable, we identify this effect as causal.
Keywords:
Coal; climate change; stranded assets; coal; divestment; United Nations climate change conference; Coal financing; phase-out commitment; coal financing; financing to the coal sector; Non-renewable resources; Financial sector development; Climate policy; Foreign direct investment; Asia and Pacific; Global; Europe; Middle East; Sub-Saharan Africa
Cover IMF Working Papers
Cross-Border Impacts of Climate Policy Packages in North America
Jean-Marc Fournier, Tannous Kass-Hanna, Liam Masterson, Anne-Charlotte Paret, and Sneha D Thube
We quantify cross-border effects of the recent climate mitigation policies introduced in Canada and the U.S., using the global general equilibrium model IMF-ENV. Notably, with the substantial emission reductions from Canada’s carbon tax-led mitigation policies and the U.S.’ Inflation Reduction Act, these two countries would bridge two-thirds of the gap toward their Nationally Determined Contribution (NDC) goals. While the broadly divergent policies are believed to elicit competitiveness concerns, we find the aggregate cross-border effects within North America to be very limited and restricted to the energy intensive and trade exposed industries. Potential carbon leakages are also found to be negligible. A more meaningful difference triggered by policy heterogeneity is rather domestic, especially with U.S. subsidies increasing energy output while the Canada model with a carbon tax would marginally decrease it. This analysis is complemented by a stylized model illustrating how such divergence can affect the terms of trade, but also how these effects can be countered by exchange rate flexibility, border adjustments or domestic taxation.
Keywords:
Climate Policy; Climate Change Policy; Nationally Determined Contributions (NDCs); Mitigation; Climate subsidies; Carbon Tax; Carbon pricing; Spillovers; North America; Global; IMF-ENV model; Computable General Equilibrium (CGE) models; Competitiveness; Greenhouse Gas Emissions (GHG); Revenue Recycling; Inflation Reduction Act (IRA); Power; Electricity; climate policy package; mitigation policy; green subsidy; Canada's Carbon pricing policy; divergent policy
Cover IMF Working Papers
Climate Change Mitigation and Policy Spillovers in the EU’s Immediate Neighborhood
Mr. Serhan Cevik, Mr. Nadeem Ilahi, Mr. Krzysztof Krogulski, Ms. Grace B Li, Sabiha Mohona, and Yueshu Zhao
EU’s neighborhood countries (EUN) have lagged the EU on emissions mitigation; coal-heavy power generation and industrial sectors are a key factor. They have also trailed EU countries in emissions mitigation policies since 2000, with little use of market-based instruments, and they still have substantial fossil fuel subsidies. Increasingly stringent EU mitigation policies are asociated with lower emissions in EUN. Overall output effects of the CBAM, in its current form, would be limited, though exports and emissions-intensive industries could be heavily impacted. A unilaterally adopted economywide carbon tax of $75 per ton would significantly lower emissions by 2030, with minimal consequences for output or household welfare, though a safety net for the affected workers may be necessary. To become competitive today by attracting green FDI and technology, overcoming infrastructure constraints and integrating into EU’s supply chains, EUN countries would be well served to front load decarbonization, rather than postpone it for later.
Keywords:
Climate change; carbon emissions; climate change mitigation; carbon tax; Europe; EU mitigation policy; EUN country; policy spillover; neighborhood country; Greenhouse gas emissions; Climate policy; Global
Cover IMF Working Papers
Do Banks Price Environmental Transition Risks? Evidence from a Quasi-Natural Experiment in a Chinese Province
Bihong Huang, Maria Teresa Punzi, and Yu Wu
This paper assesses the financial risks arising from transition toward a low-emission economy. The environmental DSGE model shows tightening environmental regulation impairs firms’ balance sheets, and consequently threatens financial stability in the short term. The empirical analysis indicates that following the implmentation of Clean Air Action Plan, the default rates of high-polluting firms in a Chinese province rose by around 80 percent. Joint equity commercial banks with higher level of independence were able to appropriately price in their exposure to transition risks, while the Big Five commercial banks failed to factor in such risks.
Keywords:
E-DSGE Model; Financial stability; Clean Air Action Plan; transition risk; baseline analysis; default rate; data source; capital market department; Loans; Environmental policy; Commercial banks; Self-employment; Global
Cover IMF Working Papers
The Long-Run Decoupling of Emissions and Output: Evidence from the Largest Emitters
Gail Cohen, João Tovar Jalles, Mr. Prakash Loungani, and Ricardo Marto
For the world's 20 largest emitters, we use a simple trend/cycle decomposition to provide evidence of decoupling between greenhouse gas emissions and output in richer nations, particularly in European countries, but not yet in emerging markets. If consumption-based emissions—measures that account for countries' net emissions embodied in cross-border trade—are used, the evidence for decoupling in the richer economies gets weaker. Countries with underlying policy frameworks more supportive of renewable energy and climate change mitigation efforts tend to show greater decoupling between trend emissions and trend GDP, and for both production- and consumption-based emissions. The relationship between trend emissions and trend GDP has also become much weaker in the last two decades than in preceding decades.
Keywords:
WP; trend elasticity; Emissions; Environmental Okun’s Law; Environmental Kuznets Curve; coefficient estimate; GHG emitter; elasticity estimate; consumption pattern; Greenhouse gas emissions; Emerging and frontier financial markets; Climate change; Environmental policy; Climate policy; Global
Cover IMF Staff Position Notes
Climate Policy and the Recovery
Mr. Michael Keen and Benjamin Jones
Negotiations toward a successor to the Kyoto Protocol on climate change have come to a critical point, and domestic climate policies are being developed, as the world seeks to recover from the deepest economic crisis for decades and looks for new sources of sustainable growth. This position paper considers the challenge posed by these two policy imperatives: how to exit from the crisis while developing an effective response to climate change. Blending the objectives of a sustained recovery and effective climate policies presents both challenges and opportunities. Although there are potential “win-win” spending measures conducive to both, the more fundamental linkages and synergies lie in the broader strategies adopted toward each other. Greater climate resilience can promote macroeconomic stability and alleviate poverty; and carbon pricing, essential for mitigation, can contribute to the strengthening of fiscal positions that is expected to be needed in many countries. There are, nevertheless, also difficult trade-offs to face, notably in the somewhat greater caution now warranted in moving to more aggressive emissions pricing. However, the simple policy guidelines for addressing climate issues remain fundamentally unchanged; the need to deploy a range of regulatory, spending, and emissions pricing measures.
Keywords:
SPN; pricing; carbon pricing; public spending; policy; price; C. pricing carbon; emissions pricing; opportunity cost; shadow pricing; output price; mitigation cost; country support; policy objective; further policy development; policy guideline; price shock; Carbon tax; Emissions trading; Greenhouse gas emissions; Climate policy; Global