This article by Ian Parry (Principal Environmental Fiscal Policy Expert, IMF Fiscal Affairs Department) examines how putting a price on carbon should be at the centre of policies to reduce greenhouse gas emissions and sets out three key design features to get right – maximise the coverage of emissions, set the correct price and make efficient use of revenues. It also discusses how domestic concerns relating to the impacts of higher energy prices can be addressed through a wider policy package and a carbon price floor agreement among willing countries. The article appeared in the December 2015 edition of the Finance & Development magazine.
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