GS Paper - 3 Environment

A carbon price that starts low and rises steadily could help Asian countries reach their targets under the Paris climate accord over the next decade, the head of the International Monetary Fund said on 15 April 2021, citing new IMF research. IMF Managing Director Kristalina Georgieva told an event hosted by the People's Bank of China that there was a growing consensus that carbon pricing was the most efficient and cost-effective way to curbing emissions.

What

  1. By raising energy prices overall, carbon pricing creates incentives for households and firms to shift toward greener options, while promoting energy efficiency, boosting green investments and spurring innovation.
  2. The IMF is urging the world's largest emitters to adopt carbon price floors to ensure more substantial climate change mitigation.
  3. London-based climate data provider TransitionZero on 15 April 2021 said China needs to halve carbon dioxide emissions from its coal-fired power plants by the end of the decade if it is to remain on course to become carbon neutral by 2060.
  4. The Asia-Pacific region is already experiencing faster-rising temperatures and more weather-related natural disasters than anywhere else, and climate change is a key driver of rising poverty and worsening food insecurity.
  5. Carbon taxes could also generate substantial revenues, but countries could use other instruments, such as China's coal tax, which could eventually be scaled up to curb CO2 emissions.