By Mike S Payton, Contributing Reporter
MIAMI BEACH, FLORIDA – The International Monetary Fund (IMF) published their October 2019 edition of the Fiscal Monitor, which suggests a global tax of $75 per ton by the year 2030 could limit the planet’s warming to 2 degrees Celsius (3.6 degrees Fahrenheit), the Paris Agreement target.
“If you compare the average level of the carbon tax today, which is $2 [a ton], to where we need to be, it’s a quantum leap,” said Paolo Mauro, deputy director of the fiscal affairs department at the IMF.
The IMF explains that global warming is threatening our planet and living standards around the world, and the window of opportunity for containing climate change to manageable levels is closing rapidly. Financial analysts are increasingly alarmed at the economic impacts in the not so distant horizon.
In August the U.S. National Bureau of Economic Research (NBER) reported that on average the world’s GDP per capita would suffer a decline of more than seven percent by 2100, due to sea level rise and climate related disasters.
Carbon dioxide (CO2) emissions are a key driver of this alarming trend in global temperature. The IMF report breaks down the environmental, fiscal, economic, and administrative case for using carbon taxes to implement climate mitigation strategies.
In the United States, a $75 tax would cut emissions by nearly thirty percent but would cause on average a 53 percent increase in electricity costs and a twenty percent rise for gasoline at projected 2030 prices, the analysis in the IMF’s Fiscal Monitor found.
“No environmental economist should disagree with the main argument of the paper,” Marc Hafstead, a climate policy expert with Resources for the Future, told the Washington Post.
Explaining, “Carbon pricing is the single most powerful tool we have for reducing CO2 emissions from burning fossil fuels, and our current set of policies leaves us nowhere close to meeting our climate goals.”
However there are many that feel this rate of tax and reduction is not enough. “The climate crisis is so dire, and public/popular determination to attack it is suddenly so strong and unquenchable, that even $75/ton by 2030 seems far too moderate a target,” wrote Charles Komanoff, director of the Carbon Tax Center.
The Paris Agreement, signed in 2016, for the first time brought all nations together to combat climate change and adapt to its effects. The central aim is keep a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.
In 2017, President Trump pulled the U.S. out of the Paris climate accord, stating that the agreement ‘punished the United States, […] world’s leader in environmental protection while imposing no meaningful obligations on the world’s leading polluters’.
Created in 1945, the IMF is an organization of 189 countries, with the stated goal of fostering global monetary cooperation, securing financial stability, international trade, sustainable economic growth, and reducing poverty around the world.