Sunday, June 26, 2016

Carbon Pricing Becomes a Cause for the World Bank and I.M.F.

Carbon Pricing Becomes a Cause for the World Bank and I.M.F.
New York Times, 23 April 2016, by Coral Davenport

The World Bank and the International Monetary Fund (IMF), two of the largest international lenders, announced their intention to press governments worldwide to impose a price on carbon emissions.  The institutions expressed support for the goals of the Paris climate change agreement, but stated that achieving those goals will only be possible if a price is put on carbon pollution from fossil fuels.  The World Bank’s focus is on global poverty, and they consider climate change a “key driver” of poverty; the IMF, often called the “lender of last resort” for countries, sees carbon pricing as a mechanism for countries to raise revenue without compromising their Paris pledges.  They intend to provide both economic and technical assistance to countries that wish to establish carbon pricing, whether in the form of a tax or a cap-and-trade system (no mention is made of fee-and-dividend), and they are already working with 18 countries including China, with an overall goal of linking national systems into a global carbon trading market.  Joining the World Bank and IMF in a public statement advocating carbon pricing were the leaders of Canada, Chile, Ethiopia, France, Germany, and Mexico – but not the United States.

My take: This is a hugely positive development overall.  The focus on a “carbon market” (which likely means cap-and-trade) is disappointing in some respects, but does introduce the interesting possibility of carbon emission permits being traded internationally, which could be a very powerful way to encourage sustainable development globally while recognizing the unfairness of past emissions and present economic conditions.  The absence of support from Obama is unfortunate but unsurprising, and as the article notes, Hillary Clinton has not stated support for a carbon price, while Donald Trump questions the reality of anthropogenic climate change and has stated his intention to withdraw the U.S. from its Paris commitments.  Progress on carbon pricing in the U.S. has only been at the state and regional level, and that appears likely to continue to be the case for the foreseeable future.  Internationally, however, this announcement gives considerable new weight to the carbon pricing movement.

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