The twenty-first century is characterized by an underprovision of basic public goods, such as public health, education, infrastructure and so on, and an overuse of the atmosphere as disposal space for greenhouse gases. Carbon pricing could address both problems simultaneously: a transition from negative carbon prices (fossil fuel subsidies) to positive levels could generate revenues to finance progress towards the Sustainable Development Goals. Given the scarcity of private sources of finance in many lower-income countries, carbon pricing could be a particularly attractive policy option.

Even though concerns about adverse distributional implications for the poor are one of the most important political challenges for carbon pricing, the existing literature reveals ambiguous results. For this reason, we assess the expected incidence of moderate carbon price increases for different income groups in 87 mostly low- and middle-income countries. Building on a consistent dataset and method, we find that for countries with per capita incomes of below USD 15,000 per year (at PPP-adjusted 2011 USD) carbon pricing has, on average, progressive distributional effects.

A global uniform carbon price would be economically efficient and at the same time avoid ‘carbon-leakage’. Still, it will affect the competitiveness of specific industries, economic activity and employment across countries. This paper assesses short-term economic shocks following the introduction of a global carbon price that would be in line with the Paris Agreement. Based on the World Input-Output Database (WIOD), we trace the carbon content of final output through global supply chains.

Different energy sources have different spillovers on economic development and industrialization. Pathways of economic development based on renewable energy sources might require additional policies to support industrial development.

Energy subsidies cost Ecuador 7% of its public budget, or two thirds of the fiscal deficit. Removing these subsidies would yield local economic and environmental benefits and help implement climate targets set in the Paris Agreement. However, adverse effects on vulnerable households can make subsidy reforms politically difficult. To inform policy design, we assess the distributional impacts of energy subsidy reform using Ecuadorian household data and an augmented input-output table.

Economic development in sub-Saharan Africa has increased carbon emissions and will continue to do so. However, changes in emissions in the past few decades and their underlying drivers are not well understood. Here we use a Kaya decomposition to show that rising carbon intensity has played an increasingly important role in emission growth in sub-Saharan Africa since 2005. These changes have mainly been driven by the increasing use of oil, especially in the transportation sector.

This paper develops a new perspective on stranded assets in climate policy using a partial equilibrium model of the energy sector. Political-economy related aspects are considered in the government's objective function. Lobbying power of firms or fiscal considerations by the government lead to time inconsistency: The government will deviate from a previously announced carbon tax which creates stranded assets.