Joachim Wenning, Chief Executive Officer (CEO) at reinsurer Munich Re, has urged European policymakers to increase the cost of emitting carbon, according to reports from the Financial Times.
Wenning believes that such a move would create financial incentives to accelerate the switch from fossil fuels to renewables, thereby helping to limit the effects of global warming.
“On the current trajectory of carbon emissions, we have to expect an increase of global temperatures by 3.5C by the end of the century,” the FT quoted Wenning as saying.
“The property damage is [already] bad enough, but the toll of human victims would rise significantly,” he added, warning of the impact on areas vulnerable to drought and coastal flooding.
Wenning explained that the introduction of a meaningful price on carbon emission could be done either by emissions trading or by a tax on carbon.
He pointed to the example of Sweden’s regime, which puts a tax of €115 on every tonne of carbon dioxide emitted, compared with the European system that charges €24 per tonne.
“The CO2 price needs to be high,” Wenning said, remarking that the use of fossil energy needs to become economically unviable for some of the largest consumers.
The Munich Re boss also acknowledged that a higher price on carbon could cause some carbon-reliant companies to go out of business. “A responsible government needs to keep these effects in mind,” he noted.