International Monetary Fund staff proposed a carbon-price floor to slow global warming over the next decade, saying that climate change presents huge risks to the functioning of the world’s economies.
In a paper published on Friday and still under discussion by the IMF executive board and members, fund staff proposed as one option different minimum carbon-price levels for countries based on their stage of development. The proposal parallels the debate on a minimum global corporate-tax rate.
Implementing a three-tier price floor among the U.S., China, the European Union, India, U.K. and Canada, with prices of $75, $50 and $25 a ton for advanced, high- and low-income emerging markets, respectively, could help cut global emissions 23% from baseline levels by 2030, the fund staff wrote. That would greatly enhance the effectiveness of the Paris Agreement goal of keeping temperature increase to below 2 degrees Celsius, the IMF staff said.