The price of carbon needs to average at least $75 a tonne globally by the end of the decade for global climate targets to be successful. That's what IMF Managing Director Kristalina Georgieva told Reuters on the sidelines of COP27 last November.
Recognizing that "The problem is that in many countries, not only in poor countries, across the world, the acceptance of pricing pollution is still low" - a situation made worse by the current high cost of living environment - she believes that "Unless we price carbon predictably on a trajectory that gets us at least to [a] $75 average price per ton of carbon in 2030, we simply don't create the incentive for businesses and consumers to shift"
Countries have and can follow different carbon pricing routes: the European Union already prices carbon above this level, around 76 euros a ton, in the United States California sells carbon allowances for just under US$ 30 per ton, while some are priceless at all.
In order to have some kind of convergence of carbon prices, there is the proposal of the International Floor of Carbon Prices (ICPF) of the IMF and the idea of the G7 that circulated in Germany 2022, of a 'carbon club' of the biggest economies of the world.
You can read here the G7 Climate Club Statement which states that the "club" would coordinate how members measure and price carbon emissions and enable cooperation on reducing emissions across major industrial sectors.
About the ICPF proposal, the IMF Blog "Why countries must cooperate on carbon prices" indicates that minimum prices per ton of carbon should be set at US$25 for low-income countries, US$50 for middle-income countries and US$75 for high-income countries. According to the IMF, this would be fairer than a uniform global carbon price and there would be less need for additional transfers between countries, something that has proved politically problematic in the past.
The IMF Blog article includes links to two other interesting documents: Economic and Environmental Benefits from International Cooperation on Climate Policies (2022) and Proposal for an International Carbon Price Floor Among Large Emitters (2021)
Click on the graphics below (IMF) to read more in the Reuters article.
