The December 2015 Paris Agreement laid the foundation for meaningful progress on addressing climate change, now the focus must turn to the practical policy implementation issues, states the report, After Paris: Fiscal, Macroeconomic, and Financial Implications of Climate Change.
“At the heart of the climate change problem is an externality: firms and households are not charged for the environmental consequences of their greenhouse gases from fossil fuels and other sources. This means that establishing a proper charge on emissions—that is, removing the implicit subsidy from the failure to charge for environmental costs—has a central role.”
For reducing carbon emissions (mitigation), carbon pricing (through taxes or trading systems designed to behave like taxes) should be front and center, continues the report.
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