THE International Monetary Fund (IMF) has called for carbon taxes to be introduced for both shipping and aviation to help reduce global greenhouse gas emissions.
The IMF says there is an "immediate" need to recognise that fiscal policies will help reduce emissions, as at the "heart of the climate change problem" is the fact that firms and households are not charged for the environmental damage caused by burning fossil fuels.
The staff discussion note, 'After Paris: Fiscal, Macroeconomic and Financial Implications of Climate Change', also says that carbon pricing - which is already in use in Ireland - should be "front and centre" in helping to drive reductions in carbon output.
"Substantial amounts could also be raised from charges on international aviation and maritime fuels," it says.
"These fuels are a growing source of emissions, are underpriced and charges would exploit a tax base not naturally belonging to national governments."
It says that as much as $25bn could be raised from a tax on aviation and shipping fuels, which would help developing countries adapt to climate change.
The paper comes after the Paris Agreement on climate change struck last month, where 186 governments agreed to reduce emissions in an attempt to keep average global temperature rises to no more than 1.5C.