The International Monetary (IMF) to limit the effects of climate change have proposed to set up a worldwide carbon price floor. Such monetary sanctions according to the IMF would substantially accelerate and help achieve the Paris climate agreement’s goal of reducing global gas emissions and maintain temperature increase under 2 degrees Celsius (35.6 Fahrenheit).
As per the IMF report’s calculations, China (34%), the United States (14%), India (9%) and the European Union (7%) account for almost two-thirds of the projected worldwide global gas emissions until 2030. The proposed plan currently focuses on this small group of large greenhouse gas emitting nations with the sole purpose of facilitating negotiations as quickly as possible while still cutting down on a significant percentage of global emissions. If successful, the IMF further expects to include all G20 nations, which are together responsible for almost 85% of projected emissions in the coming decade.
The yet-to-be-launched policy as per the IMF report aims to be flexible, pragmatic and equitable by being considerate of the development levels and historical emissions of the present nations. They intend to do so by implementing a three-tier price floor of $75, $50 and $25 a ton as per the measures of a county’s development. Overall the scheme could reduce global emissions by 23%, a figure well below the agreed-upon baseline for the 2030 deadline.
The IMF has praised the Canadian model of carbon pricing, suggesting it to be a “good” prototype for how the price floor ought to translate on the international level. This model enforces a minimal carbon rate which keeps rising progressively. Although, nations are will be given the ultimate authority over the matter to meet this requirement either through taxes on fuel usage to carbon trading systems i.e. the need for permits to produce carbon dioxide.
Kristalina Georgieva-Kinova, Managing Director of the IMF, in her speech at the Brookings Institution Event, on the carbon price floor proposal said, “To help save the planet we must work together to prevent a climate crisis turning into a catastrophe. A robust price on carbon can play a hugely important role—and even more so when it is a product of an international agreement. We see an international carbon price floor as a viable option to reach such an agreement and will continue our work on it”.
Few nations, upon the implementation of carbon floor prices, have been successful in curtailing emissions and moving away from fossil fuels entirely. Therefore, a well-designed agreement could potentially heal the world by stabilising the global climate system.