Estimating carbon emissions: Key tool, says IMF’s Margaret Cotton at Baku Forum

Estimating carbon emissions is increasingly recognized as a powerful tool.

Margaret Cotton, a representative of the International Monetary Fund (IMF), made this statement at the International Forum on Carbon Emissions Assessment held in Baku, Azernews reports.

"We often hear discussions about tax and climate policy development, but even the best-designed policies are ineffective without proper governance. I hope this forum will provide a platform to explore practical aspects of implementing these initiatives. Climate risks have significant macroeconomic implications, impacting economies, communities, and households, leading to increased financial instability and inequality. Transitioning to a new climate economy presents unique opportunities for growth and job creation," she stated.

Cotton emphasized that the IMF supports the acceleration of the decarbonization process through a comprehensive set of measures, including carbon emissions assessment, elimination of harmful subsidies, policy support, and active cooperation.

"When it comes to carbon pricing, we see it working effectively. Currently, there are around 70 initiatives in 40 countries. Carbon pricing is a powerful tool because it not only generates revenue but also incentivizes the transition to low-carbon investments and consumption. In Europe alone, hundreds of millions of euros have been collected through compliance, and these funds can be used to tackle inequality and stimulate 'green' development," she highlighted.

She also pointed out that one of the main advantages of a carbon tax is its flexibility, allowing it to adapt to local contexts through gradual increases.

"While the IMF generally does not endorse subsidies and advocates for their elimination, revenues from carbon taxes can be allocated to justified subsidies for research and development of infrastructure that facilitates rapid decarbonization," she added.