Reframing the Role of Ministries of Finance

C3A’s Co-Director, Etienne Espagne, co-moderated a session dedicated to the role of policy mixes in decarbonized and resilient development. Alongside Sebastian Valdecantos, professor at Aalborg University and also consultant at the World Bank for the C3A Program, the discussion was framed around a key tension between analytical frameworks and real-world policy implementation. While economic theory and modeling have long emphasized single instrument policies, such as carbon pricing, as the most efficient instrument to address climate change, endorsed by institutions such as the IPCC or the Network for Greening the Financial System, in practice, governments are turning increasingly to complex combinations of regulations, fiscal incentives, and investment programs to achieve their climate goals.
This divergence was clearly reflected in C3A’s work over the past year. Since its launch at the Paris Summit for a New Global Financing Pact in 2023, the initiative has engaged Ministries of Finance in Latin America and the Caribbean, Africa, and Central Asia. Across regions, a common challenge emerged: while Ministries are often tasked with implementing ambitious decarbonization strategies, they lack access to impact assessments of the multidimensional policy mixes they are deploying. From the United States’ Inflation Reduction Act to Brazil’s Ecological Transformation Plan or the European Union’s Green Deal, today’s climate strategies depend on more than carbon pricing, they require coherent packages that align incentives, address political realities, and unlock investment at scale.
In his opening remarks, Etienne Espagne posed a fundamental question: how can we design policy packages that generate synergies and reinforce one another, while avoiding combinations that undermine climate objectives? A classic example of a counterproductive approach is combining emissions trading schemes with continued fossil fuel subsidies, one cancels out the incentives created by the other. Conversely, when pricing mechanisms are backed by targeted financing for clean technologies or regulations that mandate low-carbon alternatives, virtuous cycles can emerge. But designing and assessing such interactions requires integrating fiscal, financial, and regulatory instruments into unified analytical frameworks.

From Theory to Practice: Perspectives from Policymakers and Leading Institutions

The session also gave voice to policymakers grappling with these issues in real time. Carlo Orecchia from Italy’s Ministry of Finance, Jan Nill from the European Commission, and Minghong Jin from NDRC, China offered candid reflections on where current macroeconomic tools fall short. Ministries often need to understand not only the emissions impacts of a policy, but also its implications for employment, inflation, investment flows, and household welfare. 
Following these interventions, Jean Chateau of the OECD presented the Aiming High framework, which integrates multiple models to estimate the macroeconomic effects of ambitious climate action. The IMF’s ENV model, explained by Sneha Thube and Hugo Rojas-Romagosa, offers a global CGE-based framework that includes non-pricing mitigation policies. Brazil’s experience was showcased by Claudio Amitrano, who is working to assess the macroeconomic impacts of the country’s ecological transformation efforts. Additional perspectives from WRI-India and the OECD added depth to the analytical landscape, highlighting both progress and persistent limitations—particularly around policy timing, equity analysis, and model transparency.

Looking Ahead: Toward Collaborative Modeling

The session closed with a poll inviting participants to reflect on the way forward. Suggestions ranged from building open-source modeling platforms to fostering international consortia that could support Ministries of Finance in developing country-specific tools. A recurring theme was the importance of regional coordination—just as policy packages must be coherent within countries, joint climate scenarios across countries could help align strategies and amplify positive spillovers.
C3A’s participation in the Forum underscored the vital need for greater collaboration between modelers and policymakers. Green and resilient transitions cannot be built on generic, one-size-fits-all prescriptions. They require context-specific solutions informed by rigorous analysis, political realism, and sustained capacity building. By connecting Ministries of Finance with leading experts and fostering a shared understanding of the tools and metrics that matter most, C3A is helping to ensure that climate policy is not only ambitious, but also analytically grounded and practically feasible.
We are grateful to the Bezos Earth Fund for convening this timely and necessary discussion, and to our partners and peers for their valuable contributions. As the global transition accelerates, forums like this one play a crucial role in shaping the tools we need to make it succeed.