The price of carbon must average at least $75 a tonne globally by the end of the decade for global climate goals to succeed, the head of the International Monetary Fund told Reuters.
Speaking on the sidelines of the COP27 climate talks in Egypt’s coastal resort town of Sharm el-Sheikh, IMF Managing Director Kristalina Georgieva said the pace of change in the real economy was still “too slow”.
Recent analysis by the World Bank-affiliated body suggests that the sum total of global national commitments to cut climate-damaging emissions would see them fall just 11% by mid-century.
“Unless we predictably price carbon on a trajectory that leads to at least (an) average price of $75 per ton of carbon in 2030, we simply don’t create the incentive for businesses and consumers to switch.” , said.
While some regions, such as the European Union, already set carbon prices above that level – the EU reference price is around €76 per tonne – in other regions, such as the US state of California , carbon emission allowances are sold for just under $30 per tonne, while some have no price set.
“The problem is that in many countries, not just poor countries, around the world, the acceptance of putting a price on pollution is still low,” he said, a situation made worse by today’s environment of high cost of pollution. life.
However, Georgieva said there were different routes a country could take. The world’s second largest emitter, the United States, for example, is unlikely to set a national price for carbon given strong political opposition to carbon taxes and emissions trading systems.
“Look only at equivalence. If the US chooses to impose a carbon cost through regulation and rebates rather than taxes or trade, that shouldn’t matter. What should matter is the equivalent price.”
Georgieva pointed to the IMF’s proposal for a carbon price floor and Germany’s proposal for a ‘carbon club’ of the world’s largest economies, which would coordinate how members measure and price carbon emissions and allow cooperation to reduce emissions in the largest industrial sectors.
“Whether there is a breakthrough at this COP or later, it has to be soon because we are practically running out of time to succeed in this transition.”