The IMF wants major carbon taxes to fight climate change
The International Monetary Fund is calling on major greenhouse gas-emitting countries to implement carbon taxes that reach $75-per-ton by 2030 to bolster today's "inadequate" responses to climate change.
Why it matters: Their new report says the window for keeping temperature rise to manageable levels is "closing rapidly" and that "limiting global warming to 2°C or less requires policy measures on an ambitious scale."
What they found: IMF analysts measured the cost-benefit of CO2 taxes in the $25–$75 range and found carbon pricing would produce substantial emissions cuts and health benefits despite economic tradeoffs.
- Taxes could be structured to mitigate burdens from higher energy costs, such as redistributing money to poor households, and to support workers "disproportionally affected" by the move to climate-friendly energy.
The big picture: The IMF is calling for carbon prices that are far higher than what has proven politically feasible thus far — something the authors acknowledge.
- "About 50 countries have a carbon pricing scheme in some form. But the global average carbon price is currently only $2 a ton, far below what the planet needs. The challenge is for more countries to adopt one and for them to raise the price," the report authors note in a blog post.
The intrigue: It's not lost on the IMF that countries are hesitant to act unilaterally for fear of hurting domestic industries.
- The report proposes an "international carbon price floor" to tackle this, and say that even a floor well below $75 would yield big gains.
- A $50 floor for advanced nations in the G20 and $25 for the group's developing economies would cut emissions 100% more than those nations' current pledges under the Paris agreement, the blog post states.
Go deeper: The world needs a massive carbon tax in just 10 years to limit climate change, IMF says (The Washington Post)