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IMF-CLIMATE-TAXATION-BUDGETS
To save climate, tax carbon at $75 per ton: IMF
WASHINGTON, Oct 11, 2019 (BSS/AFP) – The world’s biggest carbon polluting
nations should jointly agree to tax emissions at $75 per ton in the next
decade to keep climate change at safe levels, the International Monetary Fund
said Thursday.
The global crisis lender’s call for immediate action confronts a policy
dilemma that has left major economies rife with discord in recent years as
they battle to prevent catastrophic warming of the planet.
“Carbon taxes are the most powerful and efficient tools but only if they
are implemented in a fair and growth-friendly way,” IMF researchers said in a
blog post.
After violent protests last year, France suspended plans to raise carbon
taxes beyond $50 per ton. Meanwhile, US President Donald Trump has moved to
withdraw the United States from the 2015 Paris Agreement and some American
lawmakers have advanced a “Green New Deal” to invest in de-carbonizing the
economy.
The report was released ahead of next week’s annual meetings of the IMF
and World Bank at which newly installed IMF Managing Director Kristalina
Georgieva is expected to urge member countries to action.
– A common approach –
Taxing emissions — raising the cost of carbon-intensive energy for
electricity, travel, manufacturing, shipping and food — is the most
efficient way to prevent global average temperatures from rising more than 2
degrees Celsius (3.6 Fahrenheit) above pre-industrial levels, the goal set in
the Paris accord, according to the IMF research published Thursday.
While the current global average cost is $2 per ton, a coordinated
increase to $75 by 2030 among the largest emitters in the Group of 20
economies would be the most likely to succeed.
A common approach would prevent “free-rider” countries from benefiting
from reforms made by other nations and allow industries within countries to
remain competitive with those in other nations, the report said.
But IMF researchers acknowledge the daunting and unequal costs this could
impose.
Coal prices would more than triple. Electricity would shoot up by more
than 30 percent in Canada and by between 70 and 90 percent in Australia.
Gasoline prices would rise by between five and 15 percent in most countries,
according to the report.
But environmental benefits would more than offset such costs — by 2030, a
$75 per ton tax would prevent an estimated 725,000 premature air pollution
deaths, mainly in China, according to the report.
And consumers and firms eager to keep costs will have an immediate
incentive to avoid emissions and invest in cleaner energy.
Tax revenues could be used to make such changes politically acceptable:
targeted assistance to poor and vulnerable households, displaced workers and
regions hit disproportionately by the transition.
Offsetting cuts to payroll and income taxes, combined with dividends to
the public, could make the transition more politically palatable, the report
said.
BSS/AFP/HR/0942