How does decarbonization change the fiscal equation?

This paper explores the fiscal implications for countries of global climate mitigation in the medium term. If climate action is unilateral, it might be limited in scope and rely more on subsidies and spending to avert political constraints. This can put fiscal sustainability at risk. Coordinated carbon pricing or other mitigation policy can more effectively put the world on a path to 1.5 to 2°C above pre-industrial temperatures, as agreed in Paris in 2015, while helping manage fiscal and politic