The price of carbon needs to average at least $US75 ($115) a tonne globally by the end of the decade for global climate goals to succeed, the head of the International Monetary Fund says.
Speaking on the sidelines of the COP27 climate talks in the Egyptian coastal resort town of Sharm el-Sheikh, IMF managing director Kristalina Georgieva said the pace of change in the real economy was still “way too slow”.
Recent analysis by the World Bank-affiliated group suggests the sum total of global national commitments on reducing climate-damaging emissions would see them fall just 11 per cent by mid-century.
“Unless we price carbon predictably on a trajectory that gets us at least to $US75 average price per tonne of carbon in 2030, we simply don’t create the incentive for businesses and consumers to shift,” she said.
Although some regions such as the European Union already price carbon at above that level – the EU’s benchmark price is about 76 euros a tonne – other regions such as the US state of California see carbon allowances selling for just under $US30 per tonne, while some have no price at all.
“The problem is that in many countries, not only in poor countries, across the world, the acceptance of pricing pollution is still low,” she said, a situation made worse by the current environment of high living costs.