Climate transition: implications for fiscal policies

Governments must urgently ramp up their efforts, especially through fiscal policies, to meet emissions targets and mitigate the risks related to climate change. This chapter explores the various fiscal tools available to policymakers for driving the climate transition. A mix of these tools may be necessary to facilitate the transition. Moreover, accepting higher levels of public debt temporarily may help achieve long-term debt sustainability. Despite the many challenges, fiscal policy plays a critical role in supporting the shift to a green economy, and this chapter offer some suggestions for effectively driving the transition.