From The Age
A GLOBAL agreement binding all significant countries, rich and poor, offers the best hope for tackling climate change, and could halve the cost of countries trying to tackle it alone, the International Monetary Fund advises.
In its latest World Economic Outlook, to be released today, the IMF calls on national leaders to draft a global agreement quickly that establishes either a common tax rate on carbon, or an emissions trading scheme in which permits can be traded internationally, so emissions can be reduced where it is cheapest to do so.
The global financial watchdog endorses concerns over global warming from an economic standpoint, warning that the risk of potential damage, especially in poor countries, "could be large and even catastrophic if global warming is unchecked".
The IMF presents modelling suggesting that a global carbon tax or emissions trading scheme could stabilise greenhouse gas levels at 550 parts per million (roughly equivalent to a warming of three degrees) while still more than doubling the world’s output by 2040.
With the cost of emission permits starting low and rising gradually to $US86 a tonne by 2040, this can be done while reducing consumption by just 0.6%, the IMF study finds.
But it will be crucial to make the scheme inclusive, because the cheapest place to reduce emissions is in China, where the use of clean technology will see huge emission cuts, allowing it to sell surplus permits to the West.
The IMF also suggests higher petrol taxes and tougher vehicle emission standards in some countries, noting that China now has higher emission standards than Australia or the US.
"Climate change can be addressed without imposing heavy damages either on the global economy or on individual countries," the IMF concludes.
But it emphasises two points: First, it is crucial to include the main developing countries, because they will produce 70% of emissions in the next 50 years. Second, the cost of reducing emissions will be halved if permits can be traded internationally.
The study finds that the global costs of action will be least if emissions levels are set on the basis of population, rather than current entitlements. Rich countries, it says, are far better able to adjust to higher energy prices, and should provide cheap clean technology to poor countries.
"Poor countries will be hit earlier and harder, owing to their geography, heavier reliance on agriculture, and more limited capacity to adapt," it says.
"Their health and water systems may come under stress from more frequent natural disasters, coasts may be flooded, and populations may migrate."
The study points out three potentially catastrophic impacts of climate change:
■The melting of the west Antarctic ice shelf could cause sea levels to rise over coastal cities such as New York, Shanghai and Melbourne.
■The reversal of the Gulf Stream in the Atlantic could make northern Europe far colder.
■More extreme monsoons in South Asia could cause serious destruction and loss of life.