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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The IMF noted that if this recovery is to be sustainable the fight against the climate crisis must be part ov the effort. To that end, "when governments provide financial lifelines to carbon-intensive companies, they should mandate commitments to reduce carbon emissions" should be part of the agreement. Additionally, financial firms should be required to better disclose climate risks in their lending and investment portfolios, the IMF notes/
The IMF also noted better ways of pricing in climate risk should be found and a substantially higher carbon price is needed to encourage climate-smart investment and to accelerate the shift to cleaner fuels and more energy efficiency.
IMF also notes the current global carbon price is only $2 per ton, way below the levels needed to keep global warming under 2 degrees Celsius, which the IMF estimated to be $75 per ton.
(Source: IMF, The Nation, 30 April, 2020) Contact: IMF, Kristalina Georgieva, Dir., www.imf.org
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IMF's economists show that a $75-a-ton carbon tax would also lead to an average 214 pct increase in the cost of coal and a 68 pct increase in natural gas. For the UK, the increases would be 157 pct for coal, 51 pct for natural gas, 43 pct for electricity and 8 pct for gasoline.
The IMF said it was calling for a substantially higher carbon tax because the CO2 from fossil fuels accounted for almost two-thirds of global greenhouse gas emissions and was the most immediately practical to control. (Source: International Monetary Fund, Various Media, Guardian, Oct., 2019) Contact: International Monetary Fund, www.imf.org
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