BAKU, Azerbaijan, November 7. A tax of $4 per ton of carbon emissions is expected to be introduced through the phasing out of fuel subsidies in the Caucasus and Central Asia by 2030, Trend reports via the latest research from the International Monetary Fund (IMF).
At the same time, according to the forecast, a tax of $8 per ton of carbon is expected in the Middle East, North Africa, Afghanistan and Pakistan.
“Some countries are already taking steps in this direction. For example, Kazakhstan introduced an emissions trading scheme, Jordan has been steadily phasing out fuel subsidies, and Saudi Arabia recently established a regional carbon credit market,” the report said.
According to the IMF, increasing the effective price of fossil fuels poses short-term challenges, as it requires that the current generation bear the burden of the energy transition.
Vulnerable populations and businesses that rely on cheap energy will be particularly affected, while additional fiscal resources from tax revenues and subsidy cuts could reduce these side effects, economic growth could temporarily slow down and inflation could rise, the report explained.
“In the long term, however, such a transition will leave future generations an economy that’s cleaner, more energy efficient, and potentially more competitive because it would inherit fewer distortions, stronger public finances, and a more efficient resource allocation,” the IMF noted.
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