Today is Thursday, September 21, 2023.
The Platform for Collaboration on Tax (PCT) – a joint initiative of the IMF, OECD, United Nations and World Bank Group – released a new report taking stock of carbon pricing (CP) metrics.
As you know, CP has emerged as a policy strategy to monetize the cost of the emission of CO2 and other greenhouse gases, such as the damage caused by climate change. 68 CP instruments were in operation in 2022, including fuel taxation and carbon pricing schemes. Such variety of metrics, coverages and geographical scope can cause confusion.
The report aims to help understand the different CP metrics and their effectiveness in capturing climate costs to drive effective mitigation policies. In short, to facilitate the comparison of the various metrics, towards unifying concepts.
Its obviously extremly relevant also for the IMF, OECD, United Nations and the World Bank themselves, particularly with regards to subsidies, explicit CP, emissions trading (ETS) and carbon taxes, as you willl extensively see referenced in the report.
Here are the topics coverered:
(1) International CP landscape: metrics, datasets, and publications;
(2) Framework to understand and analyze CP metrics;
(3) Proposed 3 dimensions typology to CP metrics: Coverage, Purpose and Form;
(4) Metric comparison based on technical considerations; and
(5) Country examples.
Country cases brings the following points of attention:
- Sectoral aggregation differs across metrics;
- Metrics are calculated at different levels of disaggregation;
- Fuel definitions differ across metrics.
Click here for the press release. And at the image below for the full 56-pages report, that concludes with a significant joint crucial message by these "Global heavy weights":
"Carbon pricing signals to date are insufficient. Energy prices are poorly aligned with climate, environmental and health costs. Price signals are inconsistent with carbon content, as the most polluting fuels face the lowest carbon price rates".
As a final reference, some prices quoted at the Benchmark chapter:
- OECD: "The 60 Euros per ton CO2 benchmark is a mid-range estimate of current carbon costs. This figure is also a low-end estimate of the climate damage caused by each ton of CO2 emitted in 2030 ... The 120 Euros per ton CO2 benchmark is a mid-range estimate of carbon prices required by 2030.";
- IMF: Price floors of USD 25, USD 50, and USD 75 per ton of CO2 for low-income, emerging market economies and high-income respectively;
- World Bank: "USD 50 to 100 per ton CO2 corridor for 2030";
