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Significant benefits from setting an International Coal Minimum

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Significant benefits from setting an International Coal Minimum

Establishing an International Minimum Carbon Value (ICPF) for carbon dioxide and other greenhouse gas emissions could lead to a greater reduction in emissions, helping to tackle the global climate crisis. To what extent could the introduction of a minimum price reduce emissions and what would be the impact on the global economy?

A new report by the PwC and the World Economic Forum entitled “Climate Ambition: Analysis of an International Carbon Price Floor” concludes that the definition of a DKTA could reduce global greenhouse gas emissions by 12%. The cost of implementation would be less than 1% of GDP and could be offset by the avoided economic losses associated with global warming and the productive exploitation of coal sales revenues. The report examines the impact of the IMF, on the basis of the relevant proposal of the International Monetary Fund (IMF).

According to research by PwC UK, in order to ensure a path that leads to reducing global warming and reducing its temperature below 1.5 degrees Celsius, we must avoid the catastrophic risks of climate change [1] and in addition to require a fivefold increase in the rate of reduction of greenhouse gases.

The main findings of the report:

Reimbursement of the cost of a DKTA . Assuming that the relevant income is returned to households, GDP would fall by even less than 1% in all the scenarios studied. In the long run, most of the loss of GDP – if not in its entirety – would be offset by the reduction in economic costs due to global warming: rising sea levels, losses related to labor and agricultural productivity, and effects on human health.

The significant revenue that would result from the establishment of a DKTA could be used to support vulnerable groups. A DKTA could generate, in some countries, revenues of up to 3% of GDP, which could be distributed to lower-income households, thus contributing to a fair transition.

An international minimum price for coal would reduce emissions by up to 12.3%. Taking into account the existing commitments of countries to reduce emissions based on their National Defined Contributions (ESCs), it would help reduce global warming by 2 degrees Celsius. In combination with the strengthening of the ambition and the undertaking of relevant action, the chances of achieving the goal of limiting the future increase of the temperature by 1.5 degrees Celsius would increase.

Limiting “carbon leakage” (shifting emissions from one jurisdiction to another due to lower carbon prices). The modeling concludes that broad participation in a DKTA regime – even with a reduced threshold in the case of low- and middle-income countries – would minimize the relocation of processing plants that produce carbon emissions to countries with lower carbon prices.

Today, the price of coal ranges from US $ 0 to over US $ 130 per tonne of carbon dioxide, in various geographical regions. This creates inequalities and limits the climate ambition of those countries that fear they will lose their international competitiveness. In June, the IMF unveiled the framework for defining an IFRS, which proposes different emission price scales, depending on the stage of development of each economy, with the aim of a wider involvement in the effort to reduce emissions.

Bob Moritz, President of PwC Global Network, says: “The findings of our analysis are very encouraging. The introduction of a DKTA could make a significant contribution to tackling global warming by accelerating emission reductions. We have found that this could be achieved without significant economic losses on household and business incomes, despite any heterogeneity in the global impact. The cost of not taking action in society and business is much higher. We continue to face political and technical challenges, but we hope that the research will encourage countries to approach carbon pricing in a way that strengthens efforts to achieve a zero-emission balance in a timely manner, in order to reduce the worst effects on climate change. on our planet. “

For his part, Børge Brende, President of the World Economic Forum , said: “The results of the DKTA analysis are very positive. “Cooperation between the public and private sectors will be the key to the next steps and the acceleration of efforts for a more sustainable and inclusive recovery.”

[1] Net Zero Economy Index 2021, PwC UK, October 2021

Source: www.philenews.com

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