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IMF Chief calls for $75 per ton global carbon tax standard to reach 2030 climate goals

November 7, 2022 at 5:41 pm

IMF Managing Director Kristalina Georgieva participates in a town hall discussion with civil society organizations at IMF headquarters on October 10, 2022 in Washington, DC [Drew Angerer/Getty Images]

The Head of the International Monetary Fund (IMF) has called for a global standard on carbon pricing, emphasising the goal to reach stated climate goals by the year 2030.

Talking to the news agency Reuters on the side-lines of the COP27 climate talks in the Egyptian resort town of Sharm El-Sheikh, IMF Managing Director, Kristalina Georgieva, stated that “Unless we price carbon predictably on a trajectory that gets us at least to [a] $75 average price per ton of carbon in 2030, we simply don’t create the incentive for businesses and consumers to shift”.

While acknowledging that the financial situations and increasingly high cost of living in many countries – mainly developing nations, but also some developed ones – makes it difficult for governments and populations to abide by strict standards and a price on carbon emissions, she said that a global standard can take a multitude of different forms, depending on each region or country.

As it stands, for example, regions such as the European Union (EU) have a benchmark carbon price of around 76 Euros per tonne, while the US State of California has carbon selling for under $30 per ton and other regions have no price for it at all.

“The problem is that in many countries, not only in poor countries, across the world, the acceptance of pricing pollution is still low,” Georgieva stressed. A nation like the US is unlikely to establish a national price on carbon due to widespread opposition to notions of a carbon tax and policies contradicting free market principles, making “equivalency” to the $75 per ton standard the priority.

“Whether the US opts to impose a carbon cost through regulation and rebates rather than through tax or trade, that should not matter,” she said. “What should matter is the price equivalent.”

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Georgieva’s call follows recent analysis by the IMF that indicates current global national commitments on reducing such emissions will only result in a fall of 11 per cent by the middle of this century, far below the Paris Agreement’s aim to reduce them by 45 per cent by 2030 and, eventually, net-zero by 2050.

The IMF Chief reiterated her organisation’s proposal for a carbon price floor and Germany’s idea of a ‘carbon club’ made up of the world’s largest economies, which would coordinate how member States measure and price carbon emissions in order to drastically cut them down.

Currently, however, the pace of change in the real economy is still “way too slow”, according to her. “Whether there would be a breakthrough at this COP or after, it has to be soon because we are virtually running out of time to be successful in this transition.”

That transition to net-zero emissions has been criticised by some as being too drastic of a change that would see populations worldwide impacted by policies such as the decreased use of fossil fuels, the reduction in farming and agriculture, the limiting of livestock as a food source and implementation of other ‘green’ policies throughout nations and their urban centres.

The results of those policies, according to critics, would include rolling blackouts, the inability to adequately heat homes in winter, and significant shortages of food supplies and essentials, all of which could reportedly threaten the health and lives of populations. The implementation of a ‘carbon tax’, too, has been a key concern of many of those critics, who insist it will infringe upon human rights and the free market.

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