Ethics of carbon pricing – a review of the literature

Abstract

ABSTRACT This article contributes a systematically approached, up-to-date synthesis of the current literature on ethics and carbon pricing. This is the first study on this topic performed using PRISMA methodology. We identify 210 sources discussing the ethical arguments for and against a variety of carbon pricing instruments. By analyzing the primary arguments within the debate, we offer insights for policymakers regarding the selection and design of emissions abatement policy instruments. The review indicates that carbon pricing remains divisive in the debate about ethical policy choices to reduce greenhouse gas (GHG) emissions. However, for most price instruments, many ethical objections can be resolved with careful attention to the instrument design. Although careful policy design may not fully resolve all justice concerns raised, this is not necessarily a strong argument against carbon pricing as alternative mitigation instruments may also leave some justice-related concerns unresolved. The key exception is offsets, for which the literature does not offer a solid ethical defense. This result has two main implications. First, research on the ethics of carbon pricing speaks against relying on offsets to close the gap between the developing countries’ needs and current climate finance flows. Instead, less controversial forms of carbon pricing – such as a carefully designed international carbon tax – may provide new and innovative sources of climate finance. Second, while many critiques of carbon pricing are focussed on the shortcomings of carbon pricing as a policy used in isolation from other tools, we call for further research on how to incorporate both pricing and non-pricing instruments into a more comprehensive climate policy.