ABSTRACT
The historic Paris Agreement on climate change provides the world’s first tangible roadmap to a low-carbon, climate-resilient economy. As governments now move to realise the ambition of the Paris Agreement, carbon pricing is likely to feature prominently. As of April 2018, 45 countries and 25 cities, states and provinces use carbon pricing mechanisms. A total of 88 national climate plans include plans or consultations on carbon pricing and/or market mechanisms. In addition, close to 1,400 companies are disclosing their plans or current practice of putting a price on carbon emissions. Well-designed carbon pricing can incentivise low-carbon investment, production and consumption patterns, stimulate development of clean technology, raise government revenues and drive down greenhouse gas emissions. Poorly designed carbon prices can have little impact on emissions, distort markets, be difficult to administer, result in political damage for the governments who introduce them and have significant negative impacts on poor, marginalised and vulnerable groups if the social costs of carbon pricing are not properly managed. This chapter provides a set of design elements for carbon pricing, informed by climate justice, and with the goal of ensuring effective, efficient and equitable greenhouse gas emissions reductions in a Paris-compliant world.
