The report suggests Australia would need a carbon trading scheme with a price of $US75 per tonne of emissions to achieve the target, but the government has rejected the IMF’s argument.
Mr Taylor said a price on carbon would raise the price of energy and force people to consume less.
This would only be true of energy that produced emissions.
The Energy Minister insisted the $3.5 billion Climate Solutions Fund, which spends money to encourage companies to reduce emissions, would deliver the full 328 million tonnes of abatement needed to reduce emissions by 26 to 28 per cent by 2030.
The report also says the $US75 per tonne needed to achieve Australia’s carbon target could push retail electricity prices up by 70 to 90 per cent in Australia.
“That is not something we are going to do to Australian households and small businesses,” Mr Taylor said.
A section of the IMF Fiscal Monitor, called Mitigating Climate Change, estimated that a $US75 carbon tax would push up coal prices by 200 per cent to promote a switch away from carbon-rich fuels by making them more expensive. The price of natural gas would also rise.
The IMF concluded that retail electricity price hikes would vary according to a country’s reliance on fossil fuels with an increase of less than 30 per cent in Canada and parts of Europe, compared to “between 70 and 90 per cent in Australia” and other countries that rely on coal-fired power.
Mr Butler cited the report as proof of the need for stronger climate change action.
“The IMF has joined a long list of bodies that have confirmed Australia isn’t on track to meet our obligations under the Paris Agreement and we need a comprehensive climate policy that will actually bring down pollution rather than see pollution continue to rise as we’ve seen after six years of Liberal government,” he said.
Labor made no stronger attack on the government after days of internal Labor dissent over the party’s climate change policy, with frontbencher Joel Fitzgibbon urging a retreat on the election pledge to reduce emissions by 45 per cent by 2030.
Labor caucus members have rejected Mr Fitzgibbon’s call to accept the government’s 28 per cent target, while Opposition Leader Anthony Albanese has declared that “strong action” is needed to prevent global warming.
Mr Butler argued this week that the government’s target was too weak to prevent temperatures rising more than 2 degrees Celsius, and that Labor was “unshakeably” committed to action to avoid the 2 degrees increase.
But the Labor division is likely to drag on for months, if not years, while the party waits for a review of its failure at the election and for long policy arguments over the climate target it should take to the next federal election.
The government dismissed the IMF analysis on the grounds it did not factor in the $3.5 billion Climate Solutions Fund, saying this program was outside the scope of “historical fuel consumption data” used in the report.
The IMF acknowledged the action by developed countries including Australia and fiscal policies including spending programs, but argued that a price on carbon was the most effective way to reduce emissions.
David Crowe is chief political correspondent for the Sydney Morning Herald and The Age.
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