Deterring the use of fossil fuels—such as coal, fuel oil, petrol and diesel—is crucial to reducing the buildup of heat-trapping greenhouse gases in the atmosphere.
Carbon pricing provides across-the-board incentives to reduce energy use and shift to cleaner fuels and is an essential price signal for redirecting new investment to clean technologies.
A new paper from the International Monetary Fund explains why, and lays out five key things to know about carbon pricing. Well, there's actually tons of reasons to implement carbon pricing, but the IMF classifies them under five broad headings.
- Carbon pricing can be readily implemented
- Carbon pricing is gaining momentum
- Carbon pricing should be part of a comprehensive mitigation strategy
- Carbon pricing must be coordinated internationally through a carbon price floor
- A pragmatically designed price floor is more promising than other regimes