At the COP28 climate summit, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), emphasized the importance of carbon pricing.
She believes that this strategy effectively incentivizes rapid decarbonization by imposing a cost on planet-warming emissions. Carbon pricing is viewed as a flexible and cost-effective way to reduce pollution.
Georgieva highlighted that the IMF has updated its forecast for carbon prices, predicting an average of $85 per ton by the decade’s end, up from $75. Currently, the average is around $20 per ton. She stressed the urgency of adopting carbon pricing to accelerate decarbonization, noting that without it, progress would be too slow.
COP28 highlights the need for carbon pricing as oil and gas diversify investmentsThe COP28 conference, ongoing in Dubai, is seen as a crucial moment for reassessing policies related to fossil fuels. Georgieva pointed out that government subsidies for coal, oil, and gas totaled $1.3 trillion last year. She advocates for gradually reducing these subsidies and replacing them with carbon pricing.
Successful examples include the EU’s Emissions Trading System, which has led to significant emission reductions and generated substantial revenue, with the EU collecting €175 billion from carbon pricing.
Georgieva also discussed the potential for carbon pricing to be equitable. She noted that it ensures that higher polluters pay more, while less polluters pay less, and the revenue can be used to support vulnerable populations.
Addressing the oil and gas sector, Georgieva noted that industry trends suggest peak oil and gas consumption will occur this decade, with gradual declines thereafter.
She also highlighted a commitment from COP28 to triple renewable energy use in the coming years and observed that oil-producing nations are diversifying and investing in renewable energy.