Carbon Pricing: Coalition On Wrong Side Of World Bank, IMF


This morning, the New York Times reported that the World Bank and International Monetary Fund are planning to campaign on carbon pricing, and push countries into adopting it as the most sensible economic response to climate change.

That’s bad new for the Federal Government, which is preparing to campaign against it at the election.

And it must be bittersweet news to Prime Minister Malcolm Turnbull, who was knocked off by Tony Abbott in 2009 largely because he supported Kevin Rudd’s proposal to establish an Emissions Trading Scheme.

Not to put too fine a point on it, World Bank President Jim Yong Kim this morning said there is an “obvious consensus that putting a price on carbon pollution is by far the most powerful and efficient way to reduce emissions”. The World Bank, he said, “strongly urge people to prepare for the carbon pricing that is to come”.

For its part, the IMF said it can’t make a loan conditional on carbon pricing. Notwithstanding that, principal environmental fiscal policy expert Ian Parry said that “for a country facing a large deficit, we could recommend that they use carbon pricing as a way to simultaneously meet their pledges in Paris and close their deficit”. (‘Debt and deficit disaster’, anyone?)

There are already 40 countries which are pricing carbon in some way, and China is developing a national scheme. Even sections of the fossil fuel industry, including the Chief Executive of Royal Dutch Shell, are calling for carbon to be priced.

Despite the wounds inflicted by the so-called ‘carbon tax’, Opposition Leader Bill Shorten announced last year that Labor would seek to introduce an emissions trading scheme if it’s elected in 2016. At the time, Environment Minister Greg Hunt ridiculed the idea, saying “an emissions trading scheme is just a carbon tax with a different name”.

Call it what you will. The mood around the need to attach a negative price signal to carbon is called consensus, and it’s clear the LNP have backed themselves into a lonely and dim-witted corner which they’ll find it hard to craw out of.

Thom Mitchell is New Matilda's Environment Reporter.