The International Monetary Fund (IMF) has found in a new report that making burning fossil fuels more expensive could help dramatically stave off climate change.
The IMF found that a global tax of $75 per ton of fossil fuel burned by the year 2030 could limit the planet’s warming nearly 3.6 degrees Fahrenheit, or 2 degrees Celsius.
“If you compare the average level of the carbon tax today, which is $2 [a ton], to where we need to be, it’s a quantum leap,” said Paolo Mauro, deputy director of the fiscal affairs department at the IMF, according to The Washington Post.
The IMF report, released Thursday, found that the tax would greatly increase the price of energy based in fossil fuels, especially coal burning.
In the U.S., a $75 tax would cut emissions by nearly 30 percent. However, it would result in an average 53 percent increase in electricity costs and a 20 percent rise in gasoline costs compared to projected 2030 prices, the report found.
Despite the political pitfalls involved in implementing the tax, it would also generate revenue nearly equivalent to 1 percent of the country’s gross domestic product, which could be given back to American consumers.
The proposed tax would also affect countries differently based on their burning or exporting of coal, the report found. In nations such as China, India and South Africa, a $75 carbon tax could reduce emissions by 45 percent.
In South Africa’s case, it could raise as high as 3.5 percent of the country’s GDP, the IMF found.
Among the 20 largest global economies, the tax would raise electricity costs by an average of 43 percent and 14 percent for gasoline.
Marc Hafstead, a climate policy expert with Resources for the Future, told the Post that the tax is “the single most powerful tool we have” for reducing carbon emissions.
“No environmental economist should disagree with the main argument of the paper: Carbon pricing is the single most powerful tool we have for reducing CO2 emissions from burning fossil fuels, and our current set of policies leaves us nowhere close to meeting our climate goals,” Hafstead said.
Many experts called for a higher carbon price. Gernot Wagner, who studies climate policy at New York University, told the Post that the prices should start high and be reduced as experts continue to study the effect of climate change.
Recent results show the world may lose nearly all coral reefs even if warming holds to just under 2 degrees Celsius, the Post reported.