Carbon pricing world wide

Abstract

The article deals with the features of existing carbon pricing policies in different countries. While some countries have only a carbon tax and others a cap-and-trade system, there are jurisdictions that combine them. The differences in the existing cap-and-trade systems and carbon taxes in selected countries — both in terms of sectors and emissions covered, as well as carbon prices are shown. As it appeared to be at least 70 different carbon pricing initiatives at the national and subnational levels, they cover less than ¼ of global GHG emissions. Examples of fuel excise tax — still most common indirect carbon pricing mechanism in the world — are highlighted. The assessment by international organizations and national agencies of effective carbon rates are given, which vary by countries and potential effects for the global decarbonization. According to the working assumption, effective climate change policies must include a mix of regulatory actions combining restrictions and control over emissions as well as economic incentives. This article describes mechanisms of bilateral and international cooperation on emission pricing and provides examples of voluntary standards for verification and validation of climate change projects. Despite proposals of different international organizations, there has been no agreement so far on an international carbon price floor. However, in 2021, negotiators closed a deal setting global rules for carbon markets, allowing countries that have emission units to trade them. The world’s first major carbon border tax — a Carbon Border Adjustment Mechanism (CBAM) will introduce a carbon price on certain products imported into the EU.