Sins of Emission and Omission in Durban
IMF Blog, January 9, 2012
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- Authors: Ian Parry
- Published: January 9, 2012
Climate risks and context
- Without serious efforts to reduce greenhouse gases, scientists predict that by the end of this century global temperatures could be "2.5 to 6.0OC higher than a couple of hundred years ago."
- Potential impacts noted: more heatwaves, more droughts, higher sea levels, more violent storms and consequent effects on livelihoods, especially for farmers in poorer countries.
- Durban negotiations: some progress, but two major omissions identified—little progress on carbon pricing and financing for climate action, and insufficient recognition of economic tools to tackle climate problems.
Carbon pricing: rationale and mechanics
- Carbon pricing policies are described as "the sina que non ... of a coherent mitigation policy."
- Effectiveness:
- Carbon pricing is "easily the most effective instruments for reducing CO2 emissions—the pre-dominant greenhouse gas—and providing incentives for the clean technology investments" needed to stabilize climate.
- Over "90 percent of global CO2 emissions are still not covered by pricing schemes."
- Revenue potential example:
- U.S. CO2 emissions currently about "5.5 billion metric tons."
- Pricing U.S. CO2 emissions at "$25 per ton" could raise in just one decade about the same revenue as "the entire aspirational target of the recent United States congressional deficit reduction ‘super committee.’"
- Implementation challenges:
- Consumers face higher energy prices; energy-intensive firms (e.g., steel and aluminum producers) become less competitive.
- Compensatory measures for affected groups, especially the most vulnerable, are likely important for effective implementation.
- Design and offset options:
- Scale back pre-existing energy taxes that become redundant with carbon pricing; in many advanced countries, reducing pre-existing excise taxes on electricity consumption and vehicle purchases could offset most or all of the burden on electricity prices and motorists.
- Adjust broader fiscal systems: example—Australia plans to use revenues from planned carbon pricing to substantially increase personal income tax thresholds (allowing people to earn more before entering the first tax bracket).
- Border tax adjustments: levy fees on imports from non-carbon-taxing countries to address lost competitiveness, noting these need careful design to be consistent with international trade obligations.
Climate change finance: sources and proposals
- Advanced countries committed to raising "$100 billion a year" for climate adaptation and mitigation in developing countries, but the source of these funds is unclear.
- Options evaluated by G20 and IMF include many domestic revenue sources (taxes on electricity, fuels, income, capital, financial transactions).
- Carbon pricing favored:
- Carbon pricing both raises revenue and tackles emissions directly; seen as "the best bet."
- Political/fiscal realism: difficult to imagine governments parting with much revenue from domestic sources in the current fiscal environment.
- International aviation and maritime fuels:
- "Carbon charging for international aviation and maritime fuels might be more promising," since national governments do not yet have a clear claim on this tax base.
- Rationale: about "3 percent of global CO2 emissions result from flying or shipping," and currently there are no excise taxes analogous to those for motor fuels.
- Broader fiscal rationale: international passenger tickets are generally not subject to value added taxes.
- Design issues and equity:
- Charges should be coordinated internationally.
- Developing countries may need compensation to encourage participation.
- Options include letting countries keep revenues they collect from aviation fuel charges or receiving rebates for maritime charges in proportion to trade shares.
Insuring against catastrophe and technological contingencies
- Consideration of "last resort" technologies: filters for sucking CO2 out of the atmosphere, techniques for deflecting incoming sunlight, and similar options.
- These technologies could be useful in the very unlikely event that future warming imperils the planet, but they raise "all sorts of tough issues."
- The longer policy omissions delay emissions pricing, the greater the (albeit described as "very small") increase in the probability of such a catastrophe.
Ian Parry — January 9, 2012 (Sins of Emission and Omission in Durban)
Content in this bundle
- iMFdirect 博客: 德班的排放和疏漏之罪, 2012 年 1 月 9 日
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- IMF content unit 110411b