A Proposal to Scale Up Global Carbon Pricing

Between one quarter and one half. That’s how much carbon dioxide (CO2) and other greenhouse gases must fall over the next decade to keep alive the goal of restricting global warming to below 2°C. The fastest and most practical way to achieve this is by creating an international carbon price floor arrangement.

This matters to the IMF because climate change presents huge risks to the functioning of the world’s economies. The right climate policies can address these risks and also bring tremendous opportunities for transformative investments, economic growth, and green jobs—so much so that our Board recently approved proposals to include climate change in our regular country economic surveillance and our financial stability assessment program.

At the heart of our policy discussions with member countries is carbon pricing—now widely accepted as the most important policy tool to achieve the drastic cuts to emissions we need. By making polluting energy sources more expensive than clean sources, carbon pricing provides incentives to improve energy efficiency and to re-direct innovation efforts towards green technologies. Carbon pricing needs to be supported by a broader package of measures to enhance its effectiveness and acceptability including public investment in clean technology networks (like grid upgrades to accommodate renewables) and measures to assist vulnerable households, workers, and regions. Nonetheless, at the global level, additional measures equivalent to a carbon price of $75 per ton or more are required by 2030.

Ahead of the United Nations’ 26th annual climate change conference (COP26) in November—the most important climate conference since Paris 2015—we see promising signs of growing climate ambition. Many countries have stated new climate objectives—60 countries have already pledged to be emissions-neutral by midcentury and some, including the European Union and United States, have offered stronger near-term pledges. Importantly, carbon pricing schemes are proliferating—more than 60 have been implemented globally, including key initiatives this year in China and Germany.

Yet stronger and more coordinated action in the decade ahead is critical.

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Πηγή: blogs.imf.org

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