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ICPF could reduce greenhouse gas emissions by 12%, says PwC

The report suggests ‘significant revenues’ generated by an ICPF could be used to support those most disadvantaged, raising up to 3% of GDP in revenues in some countries

An international carbon price floor (ICPF) could reduce global GHG emissions by 12%, with the cost of implementation less than 1% of GDP, according to a new report by PwC and the World Economic Forum, ‘Climate Ambition: Analysis of an International Carbon Price Floor’.

It revealed the cost of implementation could be offset by “avoided economic losses” associated with global warming and potential productive uses of carbon revenues. 

PwC UK said the world needs a “five-fold increase” in the pace of GHG reduction to be on a path to limit global warming below 1.5 degrees and avoid the risks of “catastrophic” climate change.

The report suggests “significant revenues” generated by an ICPF could be used to support those most disadvantaged, raising up to 3% of GDP in revenues in some countries, which could be redistributed to lower-income households and help deliver a just transition.

It added that an ICPF would reduce emissions by up to 12.3% and when combined with countries’ existing pledges for emission reductions in their nationally determined contributions (NDCs), this would help limit global warming to 2 degrees above pre-industrial levels.

Bob Moritz, global chairman of PwC said: “Introducing an ICPF could make a significant contribution to tackling global warming by accelerating emissions reductions. We found this could be done without severe economic damage to livelihoods and business, although the effects would be somewhat uneven across the world. 

“The political and technical challenges remain very significant, but we hope the research will encourage countries to consider pricing carbon in such a way that it scales up effort to reach net zero in time to limit the worst effects of climate change on people and our planet.”

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