Mobilizing domestic resources for the Agenda 2030 via carbon pricing

Abstract

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. Our analysis identifies countries where domestic revenues from carbon pricing consistent with the 2 °C target could contribute substantially to financing the Sustainable Development Goals.

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Fig. 1: Per-capita annual costs of countries’ respective SDG agenda.
Fig. 2: Fraction of the national SDG financing needs covered by public sources.
Fig. 3: Fraction of the national public investment need for the SDG agenda that could be financed by freeing up funds that are used at present for subsidizing fossil fuels.
Fig. 4: Fraction of the national public investment need for the SDG agenda that could be financed by replacing negative by positive national carbon prices consistent with the 2 °C target.

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Acknowledgements

We thank U. Weddige and A. Marxen for support with visualizing data, G. Schmidt-Traub, B. Wils, G. Hutton and J. Lim for support with the data, T. Hausotter of the German Federal Enterprise for International Cooperation (GIZ) for comments on an early draft of the paper, and A. Churiakova for research assistance. M.F. gratefully acknowledges funding by the German Federal Enterprise for International Cooperation (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) for the initial phase of this study under the project CAPRI-SD. K.L. gratefully acknowledges funding from the German Federal Ministry of Education and Research (BMBF) as part of grant 01LN1703A.

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Authors

Contributions

All authors conceived the project. M.F. constructed the dataset with input from M.J. and K.L. M.F. and K.L. analysed the data, with input from M.J. and J.C.S. M.F., K.L., M.J. and J.C.S. wrote the paper with input from O.E.

Corresponding author

Correspondence to Max Franks.

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Supplementary information

Supplementary Information

Supplementary Methods, Supplementary Table 1, Supplementary Figures 1–4, Supplementary References 1–21

Dataset 1

A data set that unifies: (a) the country-level data on SDG investment needs (based on the analytical framework introduced by Schmidt-Traub, 2015); (b) the country-level data on potential public revenues from climate policies (carbon pricing consistent with the 2 °C target and subsidy removal); and (c) the country-level data on total tax revenues as a fraction of GDP.

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Franks, M., Lessmann, K., Jakob, M. et al. Mobilizing domestic resources for the Agenda 2030 via carbon pricing. Nat Sustain 1, 350–357 (2018). https://doi.org/10.1038/s41893-018-0083-3

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