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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The study offers preliminary research into how finance can help mitigate climate change and sheds light on the debate about which type of corporate structure is better for reducing the "tragedy of the commons" when each entity consumes or spoils too much of a public good and harms society, rather than coordinating to use the resource wisely. The study finds no differences between private, sponsor-backed firms and public firms, controlling for industry, time, location and a host of firm characteristics. Within public firms, it identified a negative association between emissions and mutual fund ownership and board size, suggesting that increased oversight may decrease pollution.
Shive's research has been cited in national news outlets, including the Wall Street Journal. She has taught Introductory Finance, Investment Theory and Private Equity.
A former economist at the International Monetary Fund, faculty at Ohio State University, and principal at Wanger Asset Management LLP, Forster teaches courses in investments, international finance and financial institutions. (Source: University of Notre Dame, 22 July, 2019) Contact: University of Notre Dame, Sophie Shive, 574-631-1477, firstname.lastname@example.org, www.nd.edu
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According to the International Monetary Fund, carbon tax is the best way to cut greenhouse gas emissions as it allows for a reduction in energy consumption.
(Source: Southern Courier, 18 July, 2019)
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