The head of the International Monetary Fund on Thursday urged the Group of 20 major economies to adopt an international carbon price floor to help reach agreement on carbon pricing, which she said was essential to combating climate change.
Managing Director Kristalina Georgieva told a virtual two-day summit that climate change posed huge risks to economic development, but also offered "incredible opportunities for transformative investments and green jobs."
A robust price on carbon was needed to ensure that global carbon emissions were reduced in line with the goals of the 2015 Paris climate accord, she said, noting that over 60 pricing schemes had already been implemented.
But the average global carbon price, now at just $2 a ton, needed to reach $75 a ton by 2030 to curb emissions in line with those goals, she said.
"Because of the urgency to act, we propose an international carbon price floor among large emitters, such as the G20. Focus on a minimum carbon price among a small group of large emitters could facilitate an agreement, covering up to 80 percent of global emissions," she said in a prepared remarks.
A carbon price floor should include differentiated pricing for countries at different levels of economic development, and could be implemented through carbon taxes, carbon trading systems, or other measures, Georgieva said.
Setting a price floor could avoid less efficient and contentious border carbon adjustments if some countries moved ahead with robust pricing and others did not.
Georgieva also called for green taxonomy and standardized reporting of climate-related financial risks to unlock trillions of dollars of needed private investments.
Support to developing countries was also critical, she said, to make it possible to decouple growth and carbon emissions.