One of the ways to reduce greenhouse gas emissions (GHGs) would be to put a price on carbon emissions across the globe, suggests a new report prepared jointly by the World Economic Forum (WEF) and PricewaterhouseCoopers (PwC).
The study suggests that by doing so, GHG emissions can be cut by 12% at a cost of less than 1% of global GDP. Effectively, setting a price on pollution would greatly reduce economic losses triggered by the fallout of a runaway climate crisis.
The revenue collected by way of carbon cost can be used to subsidise households affected by climate change or to finance ‘green’ industries. By doing so, the governments can cut down on emissions while generating jobs and keeping economic growth intact, the report stated.
Some months back, the International Monetary Fund (IMF) laid out its plan to accelerate carbon emission cuts by 2030 and limiting global temperature rise to 1.5C to 2C of global heating compared with pre-industrialised levels.
The IMF-PwC report borrowed from the IMF study to say that it is possible to limit global warming without affecting livelihoods and business interests. Industries in developed countries that emit higher proportion of greenhouse gases would be required to pay a carbon price of $75 for every tonne of carbon dioxide emitted. For middle-income countries, the cost would be $50 a tonne and $25 a tonne for low-income countries, the IMF-PwC report proposes.
At present, CO2 emissions are charged anywhere between 0$ and 130$ with some counties not charging emissions at all. Carbon-intensive industries tend to take advantage of this loophole by moving their manufacturing units to countries that do not have carbon tax schemes so that they do not have to pay a price for creating pollution. The World Economic Forum and PricewaterhouseCoopers joint report says that setting different carbon costs for high-income, middle-income and low-income countries would leave very little scope for “carbon leakage” and ensure companies pay for carbon emission, irrespective of the country they operate from.
Børge Brende, the president of World Economic Forum, said although the findings of the report are “extremely positive”, a huge amount of cooperation between governments and private sector companies would be key for carbon pricing to move ahead and accelerate efforts for a more sustainable and inclusive recovery.