Response measures and impact assessment by International Organizations

International Monetary Fund (IMF)’s core focus on macro and fiscal policies, its universal membership access, and close collaboration with the finance ministers makes it one of the unique institutions in providing analytical and advisory support to countries on carbon pricing (e.g. carbon taxes and fossil fuel subsidies reforms). The Fund provides policy and administrative advice on various mitigation policies (such as carbon taxes, energy subsidies reforms, feebates), their impacts on energy prices, GDP, revenue generation, households, and industries. Also, it helps countries in designing strategies to enhance the acceptability of such policies. In 2019, the IMF’s Fiscal Affairs department published a technical paper in which a spreadsheet tool has been presented which analyzes ( projects) the impact of different carbon pricings including carbon taxes, emissions trading systems (ETS), fuel taxes and various energy efficiency incentives on emissions and energy use by major energy sectors, local air pollution mortality, fiscal revenues and economic welfare across countries. This tool quantifies the trade-offs among mitigation policies such as carbon taxes, fuel taxes, ETS, energy efficiency incentives, feebates, and regulations. This report provides the results of the assessments of climate mitigation strategies submitted by countries for the 2015 Paris Agreement and projects emissions reductions needed to achieve countries’ Paris mitigation pledges. Also, this paper discusses the voluntary carbon price floor at the regional level or among large-emitting countries. This helps to address concerns about competitiveness without restoring to trade penalties on other countries.

Besides, The Fund and the World Bank jointly have been preparing pilot technical papers for Small Islands (Grenada, Belize, Seychelles, St. Lucia, and Micronesia) on the impact assessment of climate change policies including mitigation policies

The Fund also has several technical papers on quantification of the energy subsidies across countries and the impact of reforming or removing such subsidies.

Minister of Finances can send a request to the Fiscal Affairs Department of the IMF. A team from the Fund can visit the country to prepare the analytical reports and organize workshops. All devices are confidential, and reports will be publicly available only if permitted by the country. There are no direct costs. However, there are some indirect costs for example cost for provision of data and information by local authorities.

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The World Bank Group

The World Bank Group is one of the world’s largest funding and knowledge sources for developing countries. It provides funding, policy and technical advice to developing countries. It is committed to reduce poverty, increase shared prosperity and promote sustainable development. The World Bank Group is owned by its member countries (189 countries) and it has more than 100 offices worldwide. It provides loans with low interest and no to low interest credits to developing countries on various areas such as macroeconomics, trade, poverty, energy, environment, health, education, social protection, water and sanitation, climate change, public administration, finance and private sector. Its financing instruments seeks measurable results and reforms.

1-The World Bank’s Climate Change Group and Macroeconomics, Trade and Investment Global Practices have the technical expertise in assisting countries in assessing the impact of mitigation policies. Climate Action Peer Exchange (CAPE) forum is a peer learning, knowledge sharing, and technical advice platform. Ministers and senior technical experts from finance ministers from different countries with the World Bank discuss the fiscal challenges of implementing their NDCs under the Paris Agreement. CAPE has 6 focus areas: 1) Distribution, Competitiveness and Political Economy, 2) Fiscal Instruments for Climate Policy, 3) Climate Change Fiscal Risk Assessment and Management, 5) Macroeconomics of climate change, 6) Public Financial Management. CAPE as a knowledge center contains publications and online resources on each of the mentioned key areas.

During the COP 22, the World Bank Group proposed a forum on a coalition of finance ministers for climate action. This coalition was established at the November 2016 climate summit in Marrakesh and during the 2017 IMF-WB Spring Meetings the inauguration of the CAPE Partnership Meeting was held in Washington DC. Climate Change Group and Macroeconomics Trade and Investment of the World Bank are leading the CAPE Secretariat and its activities are a part of the WBG’s programmatic technical and advisory support. As of November 2018, more than 40 finance ministers have been active participants in the CAPE knowledge and awareness events.[1] Following activities have been performed:

Making available an online platform where users can access information, and virtual communication systems to connect participants and with technical experts.
Technical workshops and country-focused capacity development programs/exercises to support national governments in developing fiscal policy instruments to implement the NDCs.
A forum for peer-to-peer knowledge-sharing and for discussing common challenges and best practices for developing NDC-aligned climate and fiscal policies.

(1) Albania, Algeria, Angola, Armenia, Bangladesh, Bhutan, Cambodia, Chile, Colombia, Côte d'Ivoire, Croatia, Congo, Dem. Rep., Dominican Republic, Egypt, Fiji, Gabon, Ghana, Georgia, Indonesia, Kenya, Lao PDR, Lebanon, Madagascar, Maldives, Mexico, Mongolia, Morocco, Nepal, Nicaragua, Nigeria, Pakistan, Peru, Philippines, Samoa, Senegal, Seychelles, Singapore, South Africa, Sri Lanka, Tunisia, Turkey, Vietnam, and Zimbabwe.

2- Energy Subsidy Reform Facility (ESRF) of the World Bank is another initiative that seeks to assist countries in understating, designing, and implementing energy subsidies reform policies by providing technical supports. It provides analytical and advisory support in quantifying the amount of existing energy subsidies within the country, poverty and competitiveness impact assessments, social protection measures to assist the affected households, and design of communication strategies. It has several comprehensive guidance notes on energy subsidies reforms. Energy Subsidy Reform Assessment Framework (ESRAF) is a practical guide that assists developing countries in understanding the magnitude of the energy subsidies, its fiscal impact, and the benefits of reforming such subsidies. This Facility has published 10 practical guidance notes which shows how governments can quantify the existing energy subsidies, what the fiscal, distributional, competitiveness of industries and environmental impact of reforms are and how the design of communication strategy

This Facility has helped countries such as Egypt, Morocco, Rwanda, Nepal, Ukraine in assessing the impact of fossil fuel subsidies reforms on the economy and households and to implement their reforms successfully.

3- Carbon Pricing Leadership Coalition (CPLC) which is administrated by the World Bank Group is another voluntary initiative which brings together leaders of the governments, civil citizens, private sector and academia to share their knowledge and experiences related to carbon pricing with the aim of enhancing understanding of the carbon pricing policies. It was launched on the opening day of the UNFCCC 21^st Conference of Parties (COP21) meeting in Paris 2015. As of 2019, 34 nationals and sub'-national governments, 163 private sector organizations from different regions and industries, and more than 80 NGOs, business organizations and universities are part of the Coalition. The Coalition provides a platform for knowledge and experience sharing and performs targeted technical analysis to enhance the understanding of the carbon pricing options and accelerate its implementation. It also administrates the “High level Commission of Carbon Prices “chaired by Joseph Stiglitz, the Nobel Laureate in Economics and Lord Nicholas Stern brings together economists, climate change and energy specialists from all over the world, which would pave the way for successful implementation of the Paris Agreement.

Report of the “High-Level Commission on Carbon Pricing and Competitiveness” published by the Coalition demonstrates the dialogue among business leaders to discover the evidence-based concerns of business and sharing the experiences and lessons learned in the design and implementation of the carbon pricing policies in the context of competitiveness. It has also published a Guide to

Communicating Carbon Pricing which contains several case studies and best practices showing how governments have communicated their carbon pricing policies to create and maintain the support from various stakeholders and citizens.

4- The Partnership for Market Readiness (the PMR) is another initiative administrated by the World Bank Group with the focus on market-based mitigation policies. Its objective is to build countries ‘capacity to understand, develop and implement carbon pricing instruments for GHG emissions reduction and NDC implementation through grant funding. It brings together more than 40 countries, international organizations and technical experts to discuss market-based mitigation policies such as carbon pricing and knowledge sharing and capacity, cooperation and innovation enhancements. This Partnership assist countries to prepare and implement climate change mitigation policies such as carbon pricings.

So far there are 35 national and sub-national jurisdictions and the European Commission are part of the PMR. 19 countries are at implementing phase, 13 countries are contributing to the discussion and there are 9 technical partners. 16 countries have completed road maps for carbon pricing readiness. USD 71.5 million have been allocated to governments to implement readiness activities.

In 2019 South Africa and Argentina accounted a carbon tax law and Chile has a carbon tax on energy sector which could raise USD 300 million in 2018. Cote d’Ivoire and Panama are receiving technical support from the PMR-World Bank to assess the carbon tax and design.

References