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Proposal for an International Carbon Price Floor Among Large Emitters
Author:
Ian Parry null

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Mr. Simon Black
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Mr. James Roaf
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Series:
Staff Climate Notes
Volume/Issue:
Volume 2021: Issue 001
Language:
English
Publication Date:
18 Jun 2021
DOI:
https://doi.org/10.5089/9781513583204.066
ISBN:
9781513584256
Pages:
18
Keywords:
Climate change, international carbon price floor, large emitters, Paris Agreement, design issues, mitigation; IMF staff climate note; emissions target; emissions-equivalent alternative; equity consideration; alternatives to carbon pricing; Greenhouse gas emissions; Climate change; Carbon tax; Global
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Countries are increasingly committing to midcentury ‘net-zero’ emissions targets under the Paris Agreement, but limiting global warming to 1.5 to 2°C requires cutting emissions by a quarter to a half in this decade. Making sufficient progress to stabilizing the climate therefore requires ratcheting up near-term mitigation action but doing so among 195 parties simultaneously is proving challenging. Reinforcing the Paris Agreement with an international carbon price floor (ICPF) could jump-start emissions reductions through substantive policy action, while circumventing emerging pressure for border carbon adjustments. The ICPF has two elements: (1) a small number of key large-emitting countries, and (2) the minimum carbon price each commits to implement. The arrangement can be pragmatically designed to accommodate equity considerations and emissions-equivalent alternatives to carbon pricing. The paper discusses the rationale for an ICPF, considers design issues, compares it with alternative global regimes, and quantifies its impacts.
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Cover Staff Climate Notes
Staff Climate Notes
Publisher:
International Monetary Fund