Why do we need a Climate Policy Assessment Tool (CPAT)?
The world faces the interconnected challenges of accelerating development and reducing poverty while addressing the climate challenge. Current policies, including climate commitments are not yet aligned with the Paris Agreement’s goal to limit temperatures to "well below 2°C above pre-industrial levels" and ideally to 1.5°C. Much more action is needed, despite a backdrop of multiple crises, slow growth, high debt and limited fiscal space.
To stabilize the climate, the world needs to cut global greenhouse gas emissions by 21 to 43 percent by 2030 compared to 2019 (IPCC, AR6, Summary for Policymakers, Table XX). Such an unprecedented rate of decarbonization necessitates climate mitigation policies across countries, such as:
- Carbon Pricing
- Fossil Fuel Subsidy Reform
- Renewable Subsidies
- Feebates
- Emission Rate Regulations
- Green Public Investments
Carbon pricing, in particular, allows countries to raise revenues for development objectives and reap local health benefits while incentivizing emissions cuts. These policies packages, can help countries achieve development, poverty reduction, and climate objectives when combined with appropriate regulations, investments, and energy market reforms.
Governments need tools to assess economic, environmental, fiscal, and social impacts in designing and implementing effective, efficient, and equitable policies.To support this effort, the IMF and World Bank are making their joint Climate Policy Assessment Tool (CPAT) available to governments.
What is CPAT?
The Climate Policy Assessment Tool (CPAT) was developed to help countries provide a rapid evaluation of the potential impacts of climate policy reforms. As a global tool covering more than 200 countries, CPAT can be used as a one-stop-shop by anyone who is interested in a quick diagnostic of the potential benefits of a carbon pricing reform across key dimensions It allows for the rapid quantification of impacts of climate mitigation policies, including on energy demand, prices, emissions, government revenues, welfare, GDP, household and industry incidence, local air pollution and health, as well as many other metrics.
Among the proposed climate policies in the tool, carbon pricing offers an opportunity for countries to enhance their mobilization of domestic resources and improve the efficiency of their tax systems, while creating an incentive for all economic actors – firms, investors, and households – to reduce their carbon emissions and favor greener technologies and behaviors.
Carbon Pricing as a More Efficient Option
Combined with appropriate regulations and investments, carbon pricing is a key policy for countries to align their development and climate objectives. In particular, carbon pricing can offer a more efficient option to raise much-needed government revenues, and generate short-term economic benefits through less distortive tax systems or enhanced investment in government services and infrastructure.It also provides financial resources that can be deployed to protect the poor and vulnerable populations against higher energy and non-energy prices.
Other development benefits include improvements in human health from reductions in local air pollution and reductions in congestion and traffic-related accidents, for example, as a result of a shift from private vehicles to public transit.
What Does CPAT Provide?
The Climate Policy Assessment Tool (CPAT) was developed to help countries provide rapid evaluations of the potential impacts of climate policy reforms.
As a global tool covering more than 200 countries, CPAT can be used as a one-stop-shop by anyone who is interested in a quick diagnostic of the potential benefits of a carbon pricing reform across multiple key dimensions, including not only emissions reductions and macroeconomic aggregates but also air pollution and health, road fatalities and congestion, and distributional impacts on households and industries. It allows for the rapid quantification of impacts of climate mitigation policies, including on energy demand, prices, emissions, government revenues, welfare, GDP, households and industry incidence, local air pollution and health, and many other metrics.
You can request the latest CPAT version and the companion Multiscenario Tool (MT) by sending an email to your country office contact available here.
Last Updated: May 04, 2023
