Now Is the Time for a Carbon Tax, IMF Chief Says

Have we reached a tipping point towards putting a price on carbon?

The head of the International Monetary Fund (IMF) called for a carbon tax late Wednesday at the IMF/World Bank annual meeting in Lima, Peru.  Meanwhile, reports show that more and more places are adopting carbon taxes, in largely successful efforts to use market forces to increase clean energy development.

Climate change is now a “macro-critical” issue, IMF managing director Christine Lagarde said. The wording there is important, because the IMF defines macro-critical issues as “either critical to the achievement of macroeconomic program goals or necessary for the implementation of specific provisions under the IMF’s Articles of Agreement,” the Sierra Club noted Thursday.

“The IMF has correctly recognized, after taking a sober look at major threats to the long term stability of all countries, that a changing climate poses threats to the stability and vitality of the world’s economies,” Steve Herz, a senior attorney with Sierra Club’s International Climate Program, said in a statement emailed to ThinkProgress.

This is just the latest in the IMF’s commentary on the economic damage caused by systems that support fossil fuels.  The IMF — whose “primary purpose is to ensure the stability of the international monetary system” — made headlines earlier this year when it reported that governments spend $5.3 trillion in fossil fuel subsidies annually.

“Lagarde’s comprehensive climate change agenda for the IMF is historic both for its content, and for its timing ahead of international climate negotiations this summer in Paris,” Herz said.

Lagarde referred to the problem of energy subsidies again Wednesday during the organization’s Conversation on Climate Change.  “Now is the time to phase out energy subsidies,” she said.

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