Summary The IMF and WB have also this year called for the introduction of a universal price on carbon.
PARIS (AFP) - A global carbon price of at least $32 (24 euros) per tonne is needed by 2015 to apply an effective brake on global warming -- almost five times today s European market rate, a study said Monday.
Co-authored by British economist Nicholas Stern, an authority on the costs of climate change, the report reviewed a widely-used model for assessing risk and found it led to a "gross underassessment" of danger.
This beefs up the case for strong cuts in greenhouse gas emissions, helped by a carbon price "in the range of $32-103 per tonne of CO2 (tCO2) in 2015", said the study carried by The Economic Journal.
"Within two decades, the carbon price should rise in real terms to $82-260/tCO2," it added.
Such a price should limit the concentration of greenhouse gases in the atmosphere to 425-500 particles per million, the level required to contain global warming to 1.5-2.0 degrees Celsius (2.7 degrees Fahrenheit), said the report.
The study was co-authored by Stern s colleague, Simon Dietz, at the Grantham Research Institute on Climate Change and the Environment.
It was released a day after the close of UN talks in Bonn on concluding a deal to curb greenhouse gas emissions. The pact is expected to be signed in Paris in December 2015.
In April, the UN s expert Intergovernmental Panel on Climate Change (IPCC) said the world can still limit global warming to relatively safe levels, provided annual emissions are cut by 40-70 percent by 2050.
The panel listed a global carbon price as one option for tackling the challenge. It warned temperatures could rise by up to 4.8 Celsius this century and sea levels by 26-82 centimetres (10-32 inches) on present emissions trends.
The International Monetary Fund and World Bank have also this year called for the introduction of a universal price on carbon -- the most common greenhouse gas blamed for climate change.
For the moment, carbon prices are determined by national or regional systems -- either as a tax on emissions or as a cap-and-trade scheme that allows companies to sell unused allotments.
The European Union Emissions Trading Scheme (ETS), the most ambitious cap-and-trade system in the world, has seen prices drop drastically from a peak of about 30 euros per tonne eight years ago to $7.7 (5.7 euros) today -- partly due to countries issuing too many allowances.
The Stern-Dietz report said the standard DICE model used to calculate economic risks from climate change, also by studies included in the IPCC s latest report, used unrealistic values and underestimated the potential damage.
The updated model, "strengthens the case for strong cuts in emissions of greenhouse gases," Dietz said in a statement.
