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Meeting the Paris Agreement targets requires deep emissions reductions supported by a scale-up in carbon dioxide removal. However, current country-reported mitigation pledges are off track to meet carbon dioxide removal needs, unless countries dramatically reduce emissions consistent with low-energy-demand scenarios.
Current model-based financial regulations favour carbon-intensive investments. This is likely to disincentivize banks from investing in new low-carbon assets, impairing the transition to net zero. Financial regulators and policymakers should consider how this bias may impact financial system stability and broader societal objectives.
The worldwide trend of decreasing corporate tax in recent years has contributed to an increase in global carbon emissions, but implementing a global minimum tax rate of 15% could partially mitigate this impact. Policymakers should coordinate corporate tax policies with climate regulations.
