Carbon pricing plays an important role in tackling climate change as it requires the cost of greenhouse gas (GHG) emissions to be considered in financial decisions. This levels the playing field between emission-intensive and low-carbon economic activities, triggering more investments in low carbon technologies. Carbon pricing is therefore key to mobilizing the United States (U.S.) 700 billion dollars of incremental investments needed annually by 2030 to transition to a low-carbon economy.
The current level of carbon prices is substantially lower than the level that the high-level commission on carbon prices found to be consistent with the temperature goal of the Paris Agreement. The report takes stock of the latest trends and developments in carbon pricing initiatives. It covers initiatives that explicitly apply a price on a unit of GHG emission, including emissions trading system (ETSs) – both cap-and-trade and baseline-and-credit systems, carbon taxes, offset mechanisms, and results-based climate finance (RBCF).
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