Introduction: To achieve the ambitious goal of limiting global warming to 1.5°C as outlined in the Paris Agreement, transformative changes in greenhouse gas (GHG) emission pathways are imperative. Despite progress in national climate policies, existing measures are insufficient. Carbon pricing emerges as a potential tool, but its efficacy remains limited.
Challenges and Opportunities
- Insufficient Action: Despite the proliferation of carbon pricing schemes globally, they cover only 23% of GHG emissions, with prices often below effective levels.
- Demand-Side Shifts: Comprehensive policies addressing both supply and demand sides are crucial. Carbon pricing can incentivize shifts in consumption patterns towards low-carbon alternatives.
- Sectoral Impacts: Carbon pricing alone hasn't driven sufficient emission reductions, but evidence shows positive impacts when combined with other policies, especially in the electricity sector.
- Just Transition: Transitioning to net zero emissions may have short-term social impacts. Proactive measures are necessary to support affected communities and workers.
Policy Recommendations
- Comprehensive Policy Packages: Integrate carbon pricing with other measures to address both supply and demand sides, ensuring a just transition.
- Sequenced Deployment: Deploy supportive policies before carbon pricing to facilitate the adoption of low-carbon alternatives, then introduce carbon pricing to discourage high-emission activities.
- International Collaboration: Foster cooperation to enhance the effectiveness and efficiency of carbon pricing schemes globally.
- Emissions Pricing in Food Systems: Explore the potential of emissions pricing to reduce GHG emissions in food systems, considering methodological, technical, and political challenges.
