Economic and environmental impacts of raising revenues for climate finance from public sources

Summary

In response to anthropogenic climate change, developed countries have committed themselves to raising 100 billion USD a year from 2020 onwards to address the needs of developing countries. In this paper, we investigate the economic consequences and CO2 emission impacts of three options for raising climate funds from public sources in developed countries: (i) CO2 emissions pricing, (ii) an electricity consumption tax, and (iii) the removal of fossil fuel subsidies. Using computable general equilibrium analysis, we find that these three options not only induce very different global costs to raise given amounts of climate funds, but also have quite diverging implications for the cost incidence between developed and developing countries. Likewise, the global CO2 emission impacts of alternative