This chapter discusses the role that fiscal policy can play in the transition to a carbon-neutral economy. In other words, it discusses how to design fiscal policy, both on the revenue and on the expenditure side, to reach net zero emissions by mid-century in a credible, growth- and distribution-friendly way. Furthermore, the chapter discusses how decarbonisation is likely to impact public finances, shedding light on what change might be required in tax revenues/expenditures, and if debt sustainability risks might arise from the green transition.

This chapter explains the consequences on the labour market of the structural changes induced by decarbonisation policies. These policies are indeed likely going to have consequences on labour income distribution given existing rigidities in the labour markets and their different impacts on sectors and job categories. The chapter notably discusses whether decarbonisation can be a net job creator or destroyer, illustrating how job losses can be managed in a fair manner and how green jobs creation can be incentivised.

This chapter first illustrates the risk of decarbonisation impacting low-income households more than high-income ones, as they devote a larger share of their income to energy consumption and as they face more difficulties in switching to green alternatives. It then discusses which kind of policies can be adopted in order to avoid such risks and to ensure a fair transition with no social and political backlash.

The Conclusion closes the book by going back to the opening question: given all the complexities entailed in the process, is it realistic to expect the world to be able to decouple economic growth from GHG emissions in time to save the planet, and by avoiding negative repercussions on our economies and societies? The Conclusion first discusses how the economic literature has so far tackled this question – namely presenting degrowth and green growth theories – and then illustrates the authors’ views on this.

This chapter illustrates how decarbonisation is likely to have implications for the business cycle. In this context, it discusses how decarbonisation can change the effectiveness of monetary policy. It also discusses what is the scope for monetary policy to be more actively engaged in the decarbonisation effort, both from an economic but also from an institutional perspective.

The Introduction opens the book by presenting the key issues at stake and explaining the structure of the book. The purpose of this book is to advance the understanding on the macroeconomic fundamentals of decarbonisation. It identifies the major economic transformations and the roadblocks requiring policy intervention. It develops a macroeconomic policy agenda for decarbonisation that would achieve the climate goals of the international community.

This chapter illustrates how economists have traditionally thought about decarbonisation. It notably provides an overview of the structure and key assumptions of Integrated Assessment Models, the main tool used by economists to model climate–economic interactions, with the aim of discussing their main policy lessons with regard to the macroeconomic implications of decarbonisation.

This chapter discusses how decarbonisation will affect capital markets and how capital markets can support decarbonisation. One notable focus is on the risk of ‘stranded assets’, that is assets that lose value because of decarbonisation, and the potential implications for financial stability. The chapter also analyses how capital markets can become a key enabler of decarbonisation, also thanks to new sustainable finance instruments such as green bonds.

This chapter discusses the importance of technological progress for achieving climate goals and how innovation, industrial and competition policies can work as powerful engines to spur decarbonisation and what it would take to ensure that the decoupling of economic growth from greenhouse gas emissions occurs at the speed necessary to reach climate neutrality by 2050.

This chapter discusses a different analytical framework used by economists to understand the short-run effects of climate policy: Dynamic Stochastic General Equilibrium models. It presents recent empirical findings in this area and describes the main lessons learned from these models.

Since Karl Marx and Friedrich Engels’ derogatory description of Robert Owen and his followers as ‘utopian socialists’ in the Communist Manifesto, they have traditionally been classed among those who denied that proletarian revolution was the chief means of achieving socialism, and whimsically imagined instead that mere spinning ‘duodecimo editions of the New Jerusalem’ would suffice to persuade the bourgeoisie to abolish capitalism. The Owenites were certainly ‘utopians’ in the sense of aiming at an ideal or model society where behaviour has substantially improved and ‘enhanced sociability’ exists.