BAKU: Carbon pricing is becoming a powerful tool, the International Monetary Fund (IMF) representative Margaret Cotton said at an international forum on carbon pricing taking place in Baku, Trend reports.

‘We often hear about the design of tax and climate policies, but as we know, even the best design is meaningless without proper administration. I hope that during the forum we can discuss the many practicalities of implementing these initiatives. Climate risks have macroeconomic impacts. They hit economies, communities, and households hard, contribute to financial instability, and increase inequality. The transition to a new climate economy offers unique opportunities for growth and job creation. Each of us must do our part,’ she noted.

According to her, the IMF supports accelerating decarbonization through a package of measures including carbon pricing, elimination of harmful subsidies, targeted policy support, and active cooperation.

‘First, on carbon pricing, we can see that it is working. There are no
w about 70 initiatives in 40 countries, and progress is clear. Carbon pricing is becoming a powerful tool because it not only generates revenue but also fairly incentivizes a shift to low-carbon investment and consumption. Hundreds of millions of euros have already been raised in Europe through compliance measures, and these funds can be used to address inequalities and stimulate green growth,’ she emphasized.

Cotton mentioned that one of the key advantages of a carbon tax is its flexibility and the ability to adapt to local realities with gradual increases in rates.

‘While the IMF generally does not support subsidies and insists on eliminating harmful subsidies, it has been noted that carbon tax revenues can be directed to justifiable subsidies, such as research and infrastructure development that promote rapid decarbonization,’ she added.

Source: Trend News Agency