IMF calls for carbon pricing to support energy transition

On May 31, First Deputy Managing Director of the International Monetary Fund (IMF), Ms. Gita Gopinath, emphasized that countries need to establish a carbon pricing mechanism to generate revenue to finance the transition to renewable energy.

Speaking at a conference in Washington (USA), Ms. Gopinath pointed out that current debates on energy transition often focus on subsidies rather than determining the price of emissions. She said that subsidies cannot replace carbon tax policies, so countries need to have carbon pricing mechanisms regardless of the political controversy surrounding this issue.

Photo: REUTERS/TTXVN

According to Ms. Gopinath, the revenue from carbon pricing will support households and businesses towards energy transition, reduce debt, as well as link investment efficiency and energy innovation. Carbon pricing is equivalent to buying “pollution permits” to emit CO2 today.

Ms. Gopinath highly appreciated the recent efforts of the European Union (EU) in adopting many measures to drastically reduce greenhouse gas emissions, including the application of carbon tax. This is the basis for promoting innovation in the energy sector in the coming time.

In addition, Ms. Gopinath emphasized that the world needs to avoid falling into a “price subsidy race”, where developed countries have more financial capacity than small countries, which risks leading to costly and unnecessary subsidies.

The IMF official made the above statement in the context that European countries previously expressed concerns about the environmental plan of the US President Joe Biden administration to subsidize the development and use of electric vehicles in the country.

According to VNA/Tin Tuc Newspaper

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