What is a fair carbon price?

The author advocates for a global carbon pricing strategy based on IMF recommendations to 'price it right, tax it smart, and do it now.' The proposal suggests incorporating carbon charges into existing fuel taxes to reflect true environmental costs, including air pollution and climate change. Implementing a carbon price of $30 per ton of CO2 in large emitting countries could generate revenues equal to approximately 1% of their GDP, which could then be used to reduce labor and capital taxes or lower deficits. The text emphasizes a gradual phase-in to protect low-income households and workers in energy-intensive industries, particularly in developing economies. Beyond taxation, the author calls for the use of financial instruments like catastrophe bonds and green bonds to manage climate risks and reallocate investment toward sustainable growth.

• The author supports a three-part carbon fuel strategy recommended by IMF staff: pricing fossil fuels correctly, implementing smart taxes, and acting immediately.
• A fair carbon price must incorporate the full environmental costs of fossil fuels, including damage from climate change and air pollution, to encourage energy savings and greener investments.
• The most efficient method for price adjustment is integrating a carbon charge into existing fuel taxes for petroleum products, natural gas, and coal.
• Large emitting countries could generate fiscal revenues of about 1% of their GDP by imposing carbon prices of $30 per ton of CO2, which could be used to finance tax cuts on capital and labor or reduce deficits.
• Carbon taxes should be phased in gradually to allow firms and households to adjust, with a specific focus on developing economies to ensure the existence of social safety nets and worker retraining programs.
• Predictable and high carbon prices are necessary to guide the use of financial instruments, such as green bonds, green stock indices, and catastrophe bonds, toward sustainable growth and disaster risk insurance.

APA

Lagarde, C. (2015). What is a fair carbon price? World Economic Forum. https://www.weforum.org/stories/energy-transition/what-is-a-fair-carbon-price/

Chicago

Lagarde, Christine. What is a fair carbon price? World Economic Forum, 2015. https://www.weforum.org/stories/energy-transition/what-is-a-fair-carbon-price/.

Wikipedia

{{cite press release |last1=Lagarde |first1=Christine |title=What is a fair carbon price? |publisher=World Economic Forum |date=1 December 2015 |url=https://www.weforum.org/stories/energy-transition/what-is-a-fair-carbon-price/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{lagarde2015what, author = {Lagarde, Christine}, title = {{What is a fair carbon price?}}, publisher = {World Economic Forum}, year = {2015}, month = dec, url = {https://www.weforum.org/stories/energy-transition/what-is-a-fair-carbon-price/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }