IMF Says Carbon Tax Is Most Powerful Way to Fight Climate Crisis
The International Monetary Fund (IMF) released a report that says action is needed urgently to tackle the climate crisis. It said that countries around the world need to drastically reduce their carbon emissions immediately and the most effective way is through a carbon tax and with global cooperation, as Reuters reported.
The report did not mince words when it came to the threat the climate crisis poses. "Global warming causes major damage to the global economy and the natural world and engenders risks of catastrophic and irreversible outcomes," the IMF said in its semi-annual fiscal monitor report released ahead of next week's IMF and World Bank fall meetings of finance leaders and policymakers, according to Reuters.
The IMF's report said a meaningful carbon tax is the "single most powerful way" to hand the climate crisis, since it allow businesses and households to find the lowest-cost ways of reducing energy use and transitioning towards cleaner alternatives.
"We view fiscal policy as a crucial way of combating climate change," said Paolo Mauro, deputy director of Fiscal Affairs Department at the IMF, as CNBC reported. "You can reshape the tax system and you can reshape fiscal policy more generally in order to discourage carbon emissions."
However, there is sure to be backlash to the IMF's proposal since it calls for a drastic rise in energy bills.
"To limit global warming to 2C or less – the level deemed safe by science – large emitting countries need to take ambitious action," IMF economists said, as The Guardian reported. "For example, they should introduce a carbon tax set to rise quickly to $75 a ton in 2030. This would mean household electric bills would go up by 43 percent cumulatively over the next decade on average – more in countries that still rely heavily on coal in electricity generation, less elsewhere. Gasoline would cost 14 percent more on average."
While more than 40 governments around the world have implemented some form of carbon pricing, the global average carbon price is $2 a ton — a small fraction of the $75 a ton price in 2030 that the IMF insists is necessary to keep a 2 degrees Celsius warming target, according to the report.
The idea is that a sharp spike in prices will force businesses and consumers to seek more affordable options provided by cleaner, renewable energy.
The report noted that while the 2015 Paris climate agreement set a target of keeping warming at just 2 degrees Celsius above pre-industrial times, the current global commitments ignore that target and are consistent with 3 degrees Celsius warming.
The report also noted that many of the world's wealthiest and most industrialized nations will miss their own targets.
"Implementation of existing commitments is therefore a first-step priority, but mechanisms to boost action at a global level are urgently needed," the report said, as Reuters reported.
A hefty carbon tax is already in place in some countries. Great Britain has seen coal use plummet after a 2013 carbon tax. Canada has a carbon tax that will hit $38 per ton of carbon in 2022. Even China will start a cap-and-trade program next year, as CNBC reported.
"The cost of achieving emissions reductions through these approaches would be lower than the costs to people and the planet from climate change," the report said.
"Finance ministers in all countries are central to designing and implementing policies to meet emissions reductions in the most efficient, equitable, and socially and politically acceptable way."
The IMF pointed to Sweden as an example of a country that has smoothly implemented a steep carbon tax. Sweden introduced a carbon tax of $28 per ton in 1991 that has since risen to $127 a ton. It made sure to protect its citizens by coupling the carbon tax with an income tax cut for low and middle-income households.
That stands in stark contrast to the lessons from France where President Macron's clumsy effort to usher in a $50 per ton of carbon tax led to the Yellow Vest riots. The IMF report noted "the perceived unfairness of the tax, which was introduced at the same time as broader tax reductions seen as benefiting the wealthy," according to Reuters.
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From Greta Thunberg to Sir David Attenborough, the headline-grabbing climate change activists and environmentalists of today are predominantly white. But like many areas of society, those whose voices are heard most often are not necessarily representative of the whole.
1. Wangari Maathai<p>In 2004, Professor Maathai made history as the <a href="https://www.nobelpeaceprize.org/Prize-winners/Prizewinner-documentation/Wangari-Maathai" target="_blank" rel="noopener noreferrer">first African woman to be awarded the Nobel Peace Prize</a> for her dedication to sustainable development, democracy and peace. She started the <a href="http://www.greenbeltmovement.org/" target="_blank" rel="noopener noreferrer">Green Belt Movement</a>, a community-based tree planting initiative that aims to reduce poverty and encourage conservation, in 1977. More than 51 million trees have been planted helping build climate resilience and empower communities, especially women and girls. Her environmental work is celebrated every year on <a href="http://www.greenbeltmovement.org/node/955" target="_blank" rel="noopener noreferrer">Wangari Maathai Day on 3 March</a>.</p>
2. Robert Bullard<p>Known as the 'father of environmental justice,' Dr Bullard has <a href="https://www.unep.org/championsofearth/laureates/2020/robert-bullard" target="_blank">campaigned against harmful waste</a> being dumped in predominantly Black neighborhoods in the southern states of the U.S. since the 1970s. His first book, Dumping in Dixie, highlighted the link between systemic racism and environmental oppression, showing how the descendants of slaves were exposed to higher-than-average levels of pollutants. In 1994, his work led to the signing of the <a href="https://www.nrdc.org/experts/albert-huang/20th-anniversary-president-clintons-executive-order-12898-environmental-justice" target="_blank">Executive Order on Environmental Justice</a>, which the <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/" target="_blank">Biden administration is building on</a>.<br></p>
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Pollution has a race problem. Elizabethwarren.com
3. John Francis<p>Helping the clean-up operation after an oil spill in San Francisco Bay in January 1971 inspired Francis to <a href="https://planetwalk.org/about-john/" target="_blank" rel="noopener noreferrer">stop taking motorized transport</a>. Instead, for 22 years, he walked everywhere. He also took a vow of silence that lasted 17 years, so he could listen to others. He has walked the width of the U.S. and sailed and walked through South America, earning the nickname "Planetwalker," and raising awareness of how interconnected people are with the environment.</p>
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4. Dr. Warren Washington<p>A meteorology and climate pioneer, Dr. Washington was one of the first people to develop atmospheric computer models in the 1960s, which have helped scientists understand climate change. These models now also incorporate the oceans and sea ice, surface water and vegetation. In 2007, the <a href="https://www.cgd.ucar.edu/pcm/" target="_blank" rel="noopener noreferrer">Parallel Climate Model (PCM)</a> and <a href="https://www.cesm.ucar.edu/" target="_blank" rel="noopener noreferrer">Community Earth System Model (CESM)</a>, earned Dr. Washington and his colleagues the <a href="https://www.nobelprize.org/prizes/peace/2007/summary/" target="_blank" rel="noopener noreferrer">Nobel Peace Prize</a>, as part of the <a href="https://www.ipcc.ch/" target="_blank" rel="noopener noreferrer">Intergovernmental Panel on Climate Change</a>.</p>
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5. Angelou Ezeilo<p>Huge trees and hikes to pick berries during her childhood in upstate New York inspired Ezeilo to become an environmentalist and set up the <a href="https://gyfoundation.org/staff/Angelou-Ezeilo" target="_blank" rel="noopener noreferrer">Greening Youth Foundation</a>, to educate future generations about the importance of preservation. Through its schools program and Youth Conservation Corps, the social enterprise provides access to nature to disadvantaged children and young people in the U.S. and West Africa. In 2019, Ezeilo published her book <em>Engage, Connect, Protect: Empowering Diverse Youth as Environmental Leaders</em>, co-written by her Pulitzer Prize-winning brother Nick Chiles.</p>
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