Integrated Carbon Policy Design for Achieving Net-Zero Targets

Abhijeet Acharya

doi:10.5539/eer.v12n1p1

Abstract

Several countries have set net-zero targets, and many more will announce in the next few years. Countries have used carbon pricing as an instrument to cut Greenhouse Gas (GHG) emissions and provide a price signal to attract private investments to achieve net-zero targets. However, current carbon policy in countries with net-zero targets remains inadequate and asymmetrical to overcome net-zero challenges; there are visible gaps in the carbon price level, sectoral coverage, and mechanism to reward carbon-neutral initiatives. This paper proposed an integrated carbon policy design covering economic, technical, and social dimensions and discussed how an integrated policy design approach could be effective in helping countries achieve net-zero objectives. The paper makes recommendations for net-zero policymakers. First, a stable and appropriate carbon price must be in place to attract private investments in carbon offset measures and commercialize clean technologies. Second, governments should use an effective revenue recycling mechanism to engage firms and citizens in mitigating the side effects of the carbon price regime and win their trust. Third, countries should promote behavioral changes and carbon footprint reduction measures through citizen participation.&nbsp;

Highlights

1.1 BackgroundScientists and economists agree that climate change resulted from the industrial revolution when firms released Greenhouse Gas (GHG) into the atmosphere without being held responsible for the negative impact on the environment
This paper aims to propose an integrated carbon policy design covering economic, technical, and social dimensions and discuss how an integrated policy design approach could be effective in helping countries achieve net-zero objectives
The literature review helped us develop a conceptual understanding of carbon policy implementation in achieving net-zero targets; we identified key elements of carbon policy design and challenges in implementing the same

Summary

Introduction

1.1 BackgroundScientists and economists agree that climate change resulted from the industrial revolution when firms released GHG into the atmosphere without being held responsible for the negative impact on the environment. Curbing GHG emissions through higher carbon prices can be difficult for political decision-makers; it is possible to design a carbon policy that is effective and acceptable to society (Burke et al, 2019). According to the World Bank (2020), the current level of the carbon price is substantially lower than those needed to be consistent with the Paris Agreement, the estimated carbon Prices of at least US$40–80/tCO2e by 2020 and US$50–100/tCO2e by 2030 are required to reduce emissions in line with the Paris Agreement. According to Barnes (2021), the key elements of effective carbon policy design are a) carbon price level, b) scope and coverage, c) existence of different carbon prices and schemes within a country, d) carbon leakage, and e) credibility of policy design.

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