The pros and cons of a global carbon tax at a single rate.

This article examines the concept of implementing a Global Carbon Tax (GCT) as a mechanism to effectively address climate change by placing a uniform price on carbon emissions worldwide. It discusses the benefits of a single-rate GCT, including reducing carbon leakage, replacing the Paris Agreement’s bottom-up approach, and revising the principle of Common But Differentiated Responsibilities and Respective Capabilities (CBDR-RC). The article also analyzes the International Monetary Fund’s (IMF) proposal for an International Carbon Price Floor (ICPF), which suggests multiple carbon price minima based on countries’ development levels to enhance feasibility and equity. Key challenges to implementing a single-rate GCT in the short term include accounting for the overall effective carbon rate (ECR), differing economic capacities among countries, and the growing role of compliance and voluntary carbon markets. The IMF’s ICPF is presented as a potential intermediate step that addresses some but not all of these complexities.