Even if Australia raises a climate tax, it won’t meet Paris targets: IMF

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Even with the rollout of a steep climate tax Australia would fail to meet its Paris emission reduction commitments, the International Monetary Fund has warned.  

The global body is urging ‘urgent policy action’ to guard against the threat posed by climate change but says this action would still see some countries fall short of emissions targets.

The Morrison government has continually defended its response to climate change, saying it is on track to meet its Kyoto and Paris commitments.

But IMF projections comparing the impact of placing a carbon tax ranging from US$25 per ton to US$50 and US$75 on nations around the world have cast doubt on this pledge.

“Whereas a US$25 a ton price would be more than enough for some countries (for example, China, India, and Russia) to meet their Paris Agreement pledges, in other cases (for example, Australia and Canada) even the US$75 a ton carbon tax falls short,” the IMF reported.

The International Monetary Fund has compared nations current Paris pledges and with carbon tax scenarios.

The International Monetary Fund has compared nations current Paris pledges and with carbon tax scenarios.

International Monetary Fund

The Washington-based fund’s findings suggest that even with direct action to push Australia away from its reliance on coal the nation would fail to meet its commitments.

But the International Monetary Fund is advocating for the policy measure on a global scale calling it the ‘most powerful and efficient’ means to shift nations away from their reliance on coal.

A carbon tax is designed to push countries towards alternative fuel sources by making fossil fuel generated power less economically appealing. 

The IMF said ‘ambitious’ policy action is needed to limit global warming to 2°C or less – the level considered safe by scientists

When asked if Australia would accept a global climate tax, Treasurer Josh Frydenberg delivered a blunt response.

“No,” he told ABC Radio.

Treasurer Josh Frydenberg.

Treasurer Josh Frydenberg.


Prime Minister Scott Morrison has said Australia is “balancing” its global responsibilities with “practical policies” to secure climate action without adverse economic impacts.

Meanwhile, Labor has become caught up in an internal debate over the way forward on emission with some within the party calling for less ambitious action.

Australia’s Paris target is to reduce emissions to 26-28 per cent on 2005 levels by 2030.

Labor went to the federal election this year with a 45 per cent emissions reduction target, while the Liberals kept the 26-28 per cent goal.

Liddell power station in Muswellbrook, in the NSW Hunter Valley region.

Liddell power station in Muswellbrook, in the NSW Hunter Valley region.


The International Monetary Fund explained that a climate tax could force the price of coal up by 263 per cent in Australia and see a 75 per cent increase in energy prices.

“The longer that policy action is delayed, the more emissions will accumulate in the atmosphere and the greater the cost of stabilising global temperatures,” the IMF said.

It said nations would need to design the policy response in an ‘equitable and socially and politically acceptable’ manner that diverted revenues from the tax to support those vulnerable to ‘higher energy prices’.

A carbon tax implemented by the Labor government was repealed by the Coalition in 2014.

Since then Australia’s greenhouse gas emissions have shown year on year increases.

Australia is responsible for around 1.3 per cent of global carbon emissions and is ranked 15th among the world’s biggest emitting nations.

While, on a per capita basis its emissions (16.2 metric tonnes) are ranked only second behind Saudi Arabia (16.3 metric tonnes), and well ahead of the United States (15 metric tonnes) and China (6.4 metric tonnes).

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