Ambitious carbon pricing won't hurt recovery, says IMF

WASHINGTON Fri Dec 4, 2009 12:38pm EST

Smoke billows from the chimneys of Belchatow Power Station, Europe's largest thermal power plant December 3, 2009. REUTERS/Peter Andrews

Smoke billows from the chimneys of Belchatow Power Station, Europe's largest thermal power plant December 3, 2009.

Credit: Reuters/Peter Andrews

WASHINGTON (Reuters) - Governments can adopt more ambitious carbon pricing schemes to address the effects of climate change without harming the global economic recovery, the International Monetary Fund said on Friday.

In a staff position paper ahead of crucial climate change in Copenhagen, the IMF said the slow recovery underway should not distract countries from introducing measures to reduce emissions that cause climate change.

"The economic crisis does not change the basic climate challenge," the IMF said. "A cautious shift toward more aggressive carbon pricing (through taxation or tradable emission permits) need not impede recovery," it added.

It advised countries against giving away the carbon trading permits to companies as envisioned in pending U.S. legislation that would ease the initial cost of carbon pricing.

At the same time, the IMF said governments should proceed with caution not to disrupt the economic recovery through excessively large or unexpected increases in carbon pricing.

(Reporting by Lesley Wroughton; Editing by James Dalgleish)

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