Introductory Remarks DMD Zhang—Virtual High-Level Dialogue of the Carbon Pricing Leadership Coalition (CPLC)
IMF News, June 22, 2020
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- Introductory Remarks DMD Zhang—Virtual High-Level Dialogue of the Carbon Pricing Leadership Coalition (CPLC)
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Bibliographic details
- Published: June 22, 2020
Event and speaker
- Tao Zhang, IMF Deputy Managing Director
- June 22, 2020
Purpose and platform
- The Carbon Pricing Leadership Coalition (CPLC) provides a platform for discussing carbon-neutral transition strategies and for sharing perspectives and experiences across a broad range of countries, industries, and stakeholders.
IMF stance, tools, and advocacy
- The IMF has long advocated measures to support climate-change adaptation and mitigation, including the use of carbon pricing.
- The IMF has developed practical tools to help member countries put carbon pricing into practice.
Urgency tied to the economic crisis and recovery
- The current economic crisis strengthens the urgency of carbon pricing because:
- As economic recoveries get underway, a great deal of investment will be taking place across the world.
- Having the right energy prices—reflecting supply and environmental costs—will be critical to allocating new investment efficiently across green and brown sectors.
- Revenues from carbon pricing can support sustainable fiscal positions and help fund social assistance and public investment for the recovery.
Political difficulties and opportunities
- Carbon pricing is often difficult politically, notably because of higher energy prices.
- Today's low oil prices may provide an opportunity to enhance public support for carbon pricing.
- Close consultations with stakeholders and effective communications are necessary.
- Pricing can be phased in gradually and predictably as economies recover.
- Assistance packages can be tailored to vulnerable groups, such as coal-mining communities and rural households.
Complementary instruments
- Pricing can be complemented with other instruments to improve overall environmental effectiveness while limiting impacts on energy prices.
- Example provided:
- “Feebates” apply a sliding scale of fees to products or activities with above-average emissions rates and rebates to products or activities with below-average emissions rates.
Key numeric findings from CPLC and IMF work
- Measures equivalent to a global carbon price of at least $75 per ton in 2030 are needed to meet climate stabilization goals (from the 2017 CPLC report).
- The world is currently at $2 per ton, on average.
Policy proposal highlighted
- One possibility proposed in the IMF Fiscal Monitor (published last October) is to complement the Paris commitments with a carbon price floor arrangement among major stakeholders.
Closing message
- Acting now is imperative; integrating climate issues into policymaking is essential even amid the pandemic and recovery.
- Quoted lesson: “Don’t mess with Mother Nature.”
Introductory Remarks by Tao Zhang, IMF Deputy Managing Director; June 22, 2020.