IMF backs carbon price

A climate change policy guide by the International Monetary Fund has broadly backed the federal government’s starting point, recommending a minimum initial carbon price of about $20 a tonne.

In a report released to guide policymakers, the IMF said there were two basic ways to assess where carbon pricing should start. One aimed to set a path to stabilise the climate at a given level of warming, the other to impose a price that directly reflected the damage caused by a tonne of carbon dioxide. Both suggested a starting price of about $US20 - slightly less than Australia’s July 1 starting rate of $23 a tonne.

”A reasonable minimum price to aim for seems to be around $US20 per tonne, under either least-cost climate stabilisation or damage valuation approaches,” the report said.

”Establishing a credible time path for progressively rising carbon prices is also important to create stable incentives for long-term, clean energy investments.”

The IMF report Fiscal Policy to Mitigate Climate Change was released last week as its managing director Christine Lagarde gave a speech arguing emissions trading schemes and carbon taxes on airlines and shipping were needed to tackle economic, environmental and social crises.

Meanwhile, the consumer watchdog has set up a hotline for suspected false carbon tax price rises and urged businesses to hold off lifting prices until they know precisely what extra costs they would need to pass on to consumers.

Australian Competition and Consumer Commission chairman Rod Sims said businesses could raise prices, but must not falsely blame the carbon tax.

The watchdog has already received about 200 complaints, with suspect rises ranging from a slab of beer to the construction of a swimming pool.

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