Could the International Monetary Fund become a strong voice for carbon pricing? Yes, if the statement of its managing director, Christine Lagarde, on the occasion of Rio+20 is to be included in the IMF’s main financial and monetary policy agenda.
“Getting the prices right means using fiscal policy to make sure that the harm we do is reflected in the prices we pay. I am thinking about environmental taxes or emissions trading systems under which governments issue—and preferably sell—pollution rights. It is basically a variation of the old mantra: “you break it, you buy it””, she said.
In a speech hosted by the Center for Global Development in Washington DC, Christine Lagarde explicitly endorsed charges in carbon policy for international aviation and shipping. “Charges on international aviation and maritime emissions would raise about a quarter of the $100 billion needed for climate adaptation and mitigation in developing countries—resources that developed countries have committed to mobilize by 2020”, Lagarde said.
In terms of getting words to action on the part of the IMF, Lagarde promised an “active role”. “I have asked my staff, in collaboration with others, to put principle into practice—by coming up with actionable guidance for both developed and developing countries on precisely how to get these prices right, or at least much better. I expect interim results by the end of this year, with a final report within twelve months.”, the IMF’s chief concluded. The IMF also launched an e-book on carbon pricing, as guide for policy makers.