Prerana Bahat

BENGALURU, Reuters – It is urgent to set the average global price for carbon per tonne at $100 or higher to encourage net zero emission by 2050 according to a Reuters poll.

    Carbon pricing has come to the forefront of policy measures seen as ways to reduce emissions to a level consistent with the Paris Agreement target of less than 1.5-2 degrees Celsius of warming.

This year, at the Venice meeting of the G20 Group of Large Economies (Italy), carbon pricing was recognized by this group as a potential tool.

To fund net zero emission by 2050, a higher carbon price is essential. This is approximately $44 trillion. It is 2% to 3% of global annual GDP.

International Monetary Fund recommends a global carbon price average of $75 per ton by the end the next decade.

This figure needs to be $100 and should happen immediately to attain net zero emission by 2050. According to the consensus view of around 30 climate economists worldwide, the poll was conducted between Sept. 16th to Oct. 20 in advance of the COP26 conference in Glasgow.

This is significantly more than the current price set by most countries, even high-carbon emitters.

Nearly 75% of respondents (19 of 28) said that carbon per ton should cost more than $75. Of those, 17 recommended $100. Although six of the respondents agreed to the IMF recommendation for carbon per tonne, three said it should not be below $75. There were a range of recommendations from $50 up to $250.

According to Patrick Saner (OTC), head of macro strategy for Swiss Re, “Current carbon price in G20 countries is between $3-60 per tonne carbon emissions.”

We also have to realize that carbon pricing is not a panacea.

The United States, India and China are the three biggest emitters of carbon dioxide today.

According to International Energy Agency, governments’ current carbon promises are inadequate to achieve targets. Closing the gap will require a global average carbon price to exceed what is recommended by the IMF.

Julien Holtz (strategier at Pictet Wealth Management) argues that the world’s average carbon price per kg is actually only $2. This is because only approximately 20% of all global emissions are currently being covered by current carbon pricing schemes.

China is the largest carbon emitter and launched its emissions trading system in July with an opening price at 48 Yuan ($7.51) per ton. India and the United States do not yet have any national carbon pricing market.

Even though the European Union is at the forefront in reducing carbon emissions it has not set the price for carbon at half of the recommended poll. The EU Emission Trading System’s benchmark carbon prices, which were the first, was last traded at 57.78 Euros ($67.26).

According to a separate Reuters poll, the EU price will average at 55.88 euro ($65.07), and 69.87 Euro ($81.36) each tonne next year.

Large economic differences make it difficult for countries to agree on a global carbon price that is uniformly high. That partly explains some of the recommendations made by climate economists to get to net zero in 2050.

A high carbon price is difficult to sustain, given the continued dependence of many developed and emerging countries on fossil fuel-based energy resources to supply their energy needs.

Charles Kolstad from Stanford University, Professor of Economics, said that while it should be modest in its beginning, “it (should) suffice to push out coal within the electricity merit order at least partially.”

Experts say that although carbon pricing can be crucial in fighting climate change, it isn’t enough.

Jon Stenning (associate director and chief of environment at Cambridge Econometrics) stated that carbon prices in major economies around the world are essential, but they do not alone provide net zero economics by 2050.

“The main issue is that governments must support fiscal and regulatory policies, as well as carbon pricing in order to decarbonize at the required pace.”

(Refer to this article for more information about the global economic impact of climate changes:

For more info on climate change’s economic consequences, please visit:

($1 = 6.3925 Renminbi; 0.8590 Euros)