(Bloomberg) -- Carbon prices would have to be raised “much higher and much earlier” to achieve an orderly transition to net zero, Singapore’s outgoing central bank chief Ravi Menon said at the COP28 conference in Dubai. 

Menon, who also chairs the Network for Greening the Financial System, said NGFS models suggest shadow carbon prices would need to be around $200 per tonne of CO2 in the next decade, and increase further in the decades to come — much higher than current prices.  

“Reaching net zero by 2050 will entail significant economic transformation and financial investments against much higher carbon prices than today,” Menon said Monday, warning that the world will “incur substantial economic costs if we fail to successfully transition.”

NGFS will look to develop new short-term climate scenarios to inform stress tests, as well as macroeconomic assessments for monetary policy formulation, Menon said. The group will also work to better understand climate change implications on monetary policy. 

Read more: Singapore’s MAS Sets Framework to Improve Transition Financing

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