The IMF notes carbon pricing has a wide environmental and social aim of encouraging producers and companies to reduce their carbon footprint in a bid to combat climate change, which is linked to greenhouse gas emissions.
According to IMF, 80 pct of global emissions are currently un-priced and the average price for global emissions is only $3 a tonne. "As a knock-on effect, some countries and regions with high or rising carbon prices are considering placing charges on the carbon content of imports from places without similar schemes," the IMF said. But the IMF notes that the "charges on carbon content are insufficient instruments (to fight climate change) as carbon embodied in trade flows is typically less than 10 pct of a countries' total emissions."
According to the IMF, a minimum carbon price "is an efficient, concrete, and easily understood policy instrument. Simultaneous action among large emitters to scale up carbon pricing would deliver collective action against climate change while decisively addressing competitiveness concerns. The focus on a minimum carbon price parallels the current discussion on a minimum for the tax rate in international corporate taxation."
(Source: IMF, Daily Maverick 168, 24 June, 2021) Contact: IMF, Kristalina Georgieva, Dir., www.imf.org
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