Chapter 4 focuses on addressing climate change. International action is failing to deliver on slowing greenhouse gas emissions to keep the planet from warming dangerously, yet considerable progress is occurring by some countries, companies, states or provinces, and even cities. The chapter argues that ending the underpricing of fossil fuels is essential to a low-carbon transition. Major economies must lead by removing fossil fuel subsidies and employing carbon taxes and other policies to further reduce the social cost of fossil fuel use, and allocate any resulting revenue to public support for green innovation and key infrastructure investments. Ending the underpricing of fossil fuels in low- and middle-income countries must occur through policies that are compatible with achieving immediate development objectives, such as ending poverty and especially the widespread “energy poverty” in rural areas. Climate policies need also to expand beyond actions by national governments and instead focus on a “bottom-up” strategy that supports and expands initiatives by corporations, local governments and other “subnational” entities that are pushing and innovating low-carbon strategies.