In order to limit global warming, governments will need to implement numerous different policies and actions, which must be designed according to the specificities and priorities of each country. Setting a carbon price will be one such policy, but cannot replace other actions such as support for innovation or standards and regulations.

This was demonstrated by Chris Bataille12, Céline Guivarch3, Stéphane Hallegatte4, Joeri Rogelj5678 and Henri Waisman1 in an article published in the renowned scientific journal Nature Climate Change.

To effectively meet the targets of the Paris Climate Agreement, prices must be set for carbon emissions and need to increase over the course of the 21st century: by increasing the price of products that generate carbon emissions, the carbon price creates a “price signal” that encourages the adoption of low-carbon production techniques and fosters the consumption of products and services that produce fewer emissions.

This article shows that the idea of setting a single price for carbon at the global level is neither realistic nor desirable. In order to be effective and realistic, the carbon price must instead depend on the countries, according to their ambitions, their socio-economic and political context, their capacities to reduce greenhouse gas emissions and the strategies envisaged to do so. Indeed, the Paris Agreement assumes that climate action is planned according to a strategy that is adapted to the national context and targeted not only at the climate, but also at other fields of public action (poverty reduction, development, health, education, energy supply, transport, land use, etc.). Packages of measures must then be developed in order to implement this strategy, which will include carbon pricing, but also complementary measures of different types. Carbon prices will therefore vary according to the geographical, economic or social context. They will depend on the policy packages to which they belong and the development issues specific to the national context in question.

in order to implement realistic, effective climate policies, these must be adapted to local contexts and consistent with the political and economic objectives of the different countries

Stéphane Hallegatte, an economist in the World Bank climate group

 

States cannot dispense with a vast background study aimed at defining a real strategy, indicating the changes they want to implement in order to meet their commitments made under the Paris Agreement. This is the condition under which the “right” carbon prices will be determined, those that will support a just and effective transition

Henri Waisman (Iddri) 

 

The article is available following this link.

This analysis is part of research that informed the High-level Commission on Carbon Prices, co-chaired by Nicholas Stern and Joseph Stiglitz, supported by the French government and the World Bank. It is based in particular on the studies conducted as part of the Deep Decarbonization Pathways Project (DDPP), a collaborative project coordinated by IDDRI to map specific deep decarbonisation pathways in 16 major countries. This research and the report by the Stern-Stiglitz Commission inform public and private policymakers about the options available to reduce greenhouse gas emissions while fostering economic development and poverty reduction.

 

  • 1. a. b. Institute for Sustainable Development and International Relations (IDDRI), Paris- France
  • 2. School of Resource and Environmental Management, Faculty of the Environment, Simon Fraser University. Burnaby - Canada
  • 3. Centre International de Recherche sur l'Environnement et le Développement (CIRED), Nogent-sur-Marne - France
  • 4. Corresponding author, The World Bank, Climate Change Group, Washington – United States
  • 5. . Grantham Institute, Imperial College London – United Kingdom
  • 6. Energy Program, International Institute for Applied Systems Analysis (IIASA), Laxenburg - Austria
  • 7. Institute for Atmospheric and Climate Science, ETH Zurich - Switzerland
  • 8. Environmental Change Institute, School of Geography and the Environment, University of Oxford – United Kingdom