Global Carbon Price Research Articles

Short term policies to keep the door open for Paris climate goals

Climate policy needs to account for political and social acceptance. Current national climate policy plans proposed under the Paris Agreement lead to higher emissions until 2030 than cost-effective pathways towards the Agreements’ long-term temperature goals would imply. Therefore, the current plans would require highly disruptive changes, prohibitive transition speeds, and large long-term deployment of risky mitigation measures for achieving the agreement’s temperature goals after 2030. Since the prospects of introducing the cost-effective policy instrument, a global comprehensive carbon price in the near-term, are negligible, we study how a strengthening of existing plans by a global roll-out of regional policies can ease the implementation challenge of reaching the Paris temperature goals. The regional policies comprise a bundle of regulatory policies in energy supply, transport, buildings, industry, and land use and moderate, regionally differentiated carbon pricing. We find that a global roll-out of these policies could reduce global CO2 emissions by an additional 10 GtCO2eq in 2030 compared to current plans. It would lead to emissions pathways close to the levels of cost-effective likely below 2 °C scenarios until 2030, thereby reducing implementation challenges post 2030. Even though a gradual phase-in of a portfolio of regulatory policies might be less disruptive than immediate cost-effective carbon pricing, it would perform worse in other dimensions. In particular, it leads to higher economic impacts that could become major obstacles in the long-term. Hence, such policy packages should not be viewed as alternatives to carbon pricing, but rather as complements that provide entry points to achieve the Paris climate goals.

Targeted policies can compensate most of the increased sustainability risks in 1.5 °C mitigation scenarios

Meeting the 1.5 °C goal will require a rapid scale-up of zero-carbon energy supply, fuel switching to electricity, efficiency and demand-reduction in all sectors, and the replenishment of natural carbon sinks. These transformations will have immediate impacts on various of the sustainable development goals. As goals such as affordable and clean energy and zero hunger are more immediate to great parts of global population, these impacts are central for societal acceptability of climate policies. Yet, little is known about how the achievement of other social and environmental sustainability objectives can be directly managed through emission reduction policies. In addition, the integrated assessment literature has so far emphasized a single, global (cost-minimizing) carbon price as the optimal mechanism to achieve emissions reductions. In this paper we introduce a broader suite of policies—including direct sector-level regulation, early mitigation action, and lifestyle changes—into the integrated energy-economy-land-use modeling system REMIND-MAgPIE. We examine their impact on non-climate sustainability issues when mean warming is to be kept well below 2 °C or 1.5 °C. We find that a combination of these policies can alleviate air pollution, water extraction, uranium extraction, food and energy price hikes, and dependence on negative emissions technologies, thus resulting in substantially reduced sustainability risks associated with mitigating climate change. Importantly, we find that these targeted policies can more than compensate for most sustainability risks of increasing climate ambition from 2 °C to 1.5 °C.

Building Robust Housing Sector Policy Using the Ecological Footprint

The vulnerability of the urban residential sector is likely to increase without the mitigation of growing household Ecological Footprints (energy demand, CO2 emissions, and demand for land). Analysis comparing the effectiveness and robustness of policy to mitigate the size of the housing Ecological Footprint has been limited. Here, we investigate three mitigation options: (1) reducing housing floor area, (2) improving the building envelope efficiency, and (3) reducing the carbon intensity of the electricity sector. We model the urban residential Ecological Footprint for a sub-national case study in Australia but analyse the results in the global context. We find that all three mitigation options reduce the Ecological Footprint. The success of policy to reduce household energy demand and land requirements is somewhat dependent on uncertain trajectories of future global population, affluence, and technological progress (together, global uncertainty). Carbon emissions reductions, however, are robust to such global uncertainty. By reducing the Ecological Footprint of the urban residential housing sector we see a reduction in its vulnerability to future global uncertainty, global carbon price, urban sprawl, and future energy shortages. Over the long term, such policy implementation can also be highly cost effective.

‘Slippery slope’ or ‘uphill struggle’? Broadening out expert scenarios of climate engineering research and development

It is increasingly recognised that meeting the obligations set out in the Paris Agreement on climate change will not be physically possible without deploying large-scale techniques for either removing greenhouse gases already in the atmosphere or reflecting sunlight away from the Earth. In this article we report on the findings of a scenarios method designed to interrogate how far these ‘climate engineering’ ideas may develop in the future and under what governance arrangements. Unlike previous studies in climate engineering foresight that have narrowly focussed on academic perspectives, a single climate engineering idea and a restricted range of issues, our approach sought to respond to theoretical imperatives for ‘broadening out’ and ‘opening up’ research methods applied to highly uncertain and ambiguous topics. We convened a one-day event with experts in climate change and climate engineering from across the sectors of government, industry, civil society and academia in the UK, with additional experts from Brazil, Germany and India. The participants were invited to develop scenarios for four climate engineering ideas: bioenergy with carbon capture and storage, direct air capture and storage, stratospheric aerosol injection and marine cloud brightening. Manifold challenges for future research were identified, placing the scenarios in sharp contrast with early portrayals of climate engineering research as threatening a ‘slippery slope’ of possible entrenchments, lock-ins and path dependencies that would inexorably lead to deployment. We suggest that the governance challenges for climate engineering should therefore today be thought of as less of a slippery slope than an ‘uphill struggle’ and that there is an increasingly apparent need for governance that responsibly incentivises, rather than constrains, research. We find that affecting market processes by introducing an effective global carbon price and direct government expenditure on research and development are incentives with broad potential applications to climate engineering. Responsibly incentivising research will involve a pluralistic architecture of governance arrangements and policy instruments that attends to collective ambitions as well as national differences and emerges from an inclusive and reflexive process.

Distributions of carbon pricing on extraction, combustion and consumption of fossil fuels in the global supply-chain

Pricing carbon is one of the most important tools to reduce emissions and mitigate climate change. Already, about 40 nations have implemented explicit or implicit carbon prices, and a carbon price was explicitly stated as a mitigation strategy by many nations in their emission pledges submitted to the Paris Agreement. The coverage of carbon prices varies significantly between nations though, often only covering a subset of sectors in the economy. We investigate the propagation of carbon prices along the global supply-chain when the carbon price is applied at the point where carbon is removed from the ground (extraction), is combusted (production), or where goods and services are consumed (consumption). We consider both the regional and sectoral effects, and compare the carbon price income and costs relative to economic output. We find that implementation using different accounting systems makes a significant difference to revenues and increased expenditure, and that domestic and global trade plays a significant role in spreading the carbon price between sectors and countries. A few single sectors experience the largest relative price increases (especially electricity and transport), but most of the carbon price is ultimately paid by households for goods and services due to the large expenditure and indirect supply chain impacts. We finally show that a global carbon price will generate a larger share of revenue relative to GDP in non-OECD nations than OECD nations, independent on the point of implementation.

Reducing greenhouse gas emissions in agriculture without compromising food security?

To keep global warming possibly below 1.5 °C and mitigate adverse effects of climate change, agriculture, like all other sectors, will have to contribute to efforts in achieving net negative emissions by the end of the century. Cost-efficient distribution of mitigation across regions and economic sectors is typically calculated using a global uniform carbon price in climate stabilization scenarios. However, in reality such a carbon price would substantially affect food availability. Here, we assess the implications of climate change mitigation in the land use sector for agricultural production and food security using an integrated partial equilibrium modelling framework and explore ways of relaxing the competition between mitigation in agriculture and food availability. Using a scenario that limits global warming cost-efficiently across sectors to 1.5 °C, results indicate global food calorie losses ranging from 110–285 kcal per capita per day in 2050 depending on the applied demand elasticities. This could translate into a rise in undernourishment of 80–300 million people in 2050. Less ambitious greenhouse gas (GHG) mitigation in the land use sector reduces the associated food security impact significantly, however the 1.5 °C target would not be achieved without additional reductions outside the land use sector. Efficiency of GHG mitigation will also depend on the level of participation globally. Our results show that if non-Annex-I countries decide not to contribute to mitigation action while other parties pursue their mitigation efforts to reach the global climate target, food security impacts in these non-Annex-I countries will be higher than if they participate in a global agreement, as inefficient mitigation increases agricultural production costs and therefore food prices. Land-rich countries with a high proportion of emissions from land use change, such as Brazil, could reduce emissions with only a marginal effect on food availability. In contrast, agricultural mitigation in high population (density) countries, such as China and India, would lead to substantial food calorie loss without a major contribution to global GHG mitigation. Increasing soil carbon sequestration on agricultural land would allow reducing the implied calorie loss by 65% when sticking to the initially estimated land use mitigation requirements, thereby limiting the impact on undernourishment to 20–75 million people, and storing significant amounts of carbon in soils.

Carbon pricing in climate policy: seven reasons, complementary instruments, and political economy considerations

Carbon pricing is a recurrent theme in debates on climate policy. Discarded at the 2009COPin Copenhagen, it remained part of deliberations for a climate agreement in subsequent years. As there is still much misunderstanding about the many reasons to implement a global carbon price, ideological resistance against it prospers. Here, we present the main arguments for carbon pricing, to stimulate a fair and well‐informed discussion about it. These include considerations that have received little attention so far. We stress that a main reason to use carbon pricing is environmental effectiveness at a relatively low cost, which in turn contributes to enhance social and political acceptability of climate policy. This includes the property that corrected prices stimulate rapid environmental innovations. These arguments are underappreciated in the public debate, where pricing is frequently downplayed and the erroneous view that innovation policies are sufficient is widespread. Carbon pricing and technology policies are, though, largely complementary and thus are both needed for effective climate policy. We also comment on the complementarity of other instruments to carbon pricing. We further discuss distributional consequences of carbon pricing and present suggestions on how to address these. Other political economy issues that receive attention are lobbying, co‐benefits, international policy coordination, motivational crowding in/out, and long‐term commitment. The overview ends with reflections on implementing a global carbon price, whether through a carbon tax or emissions trading. The discussion goes beyond traditional arguments from environmental economics by including relevant insights from energy research and innovation studies as well.WIREs Clim Change2017, 8:e462. doi: 10.1002/wcc.462This article is categorized under:Climate Economics > Economics of Mitigation

Including Forestry in an Emissions Trading Scheme: Lessons from New Zealand

New Zealand is the first, and still the only, country to include forest landowners as full and, in some cases, mandatory participants in a greenhouse gas (GHG) emissions trading scheme (ETS), the NZ ETS. Carbon sequestration by forestry continues to be an important part of New Zealand’s contribution to its global obligations to reduce emissions. This paper describes the policy changes to the NZ ETS since 2008 that directly affect forestry; assesses the effectiveness of the scheme; explores who is benefiting from it; and outlines issues facing forestry in the NZ ETS moving forward. We find that forest owners have responded to the financial incentives from the NZ ETS in a rational way. Both afforestation and deforestation decisions appear to have been influenced by the emissions price and/or expectations about the emissions price in the future. However, the scheme has been beset by challenges. The collapse in the global carbon price and, associated with this, the proliferation of international Kyoto credits of questionable environmental integrity, combined with the government decision to delay New Zealand’s delink from international markets until 2015, greatly reduced the price signal for forestry from the NZ ETS from 2012 to 2015. A weak price signal, coupled with ongoing policy uncertainty surrounding the NZ ETS, has limited the effectiveness of the scheme in achieving its forestry goals. Prospects going forward are more positive particularly if the current reform of the ETS can create clear predictable price signals and better manage the complexity of forestry rewards and liabilities, particularly as faced by smaller landowners who are not professional foresters but could potentially participate and reforest.

Temporal and spatial distribution of global mitigation cost: INDCs and equity

Each country’s Intended Nationally Determined Contribution (INDC) pledges an emission target for 2025 or 2030. Here, we evaluated the INDC inter-generational and inter-regional equity by comparing scenarios with INDC emissions target in 2030 and with an immediate emission reduction associated with a global uniform carbon price using Asian-Pacific Integrated Model/Computable General Equilibrium. Both scenarios eventually achieve 2 °C target. The results showed that, as compared with an immediate emission reduction scenario, the inter-generational equity status is not favorable for INDC scenario and the future generation suffers more from delayed mitigation. Moreover, this conclusion was robust to the wide range of inequality aversion parameter that determines discount rate. On the other hand, the INDC scenario has better inter-regional equity in the early part of the century than does the immediate emission reduction scenario in which we assume a global carbon price during the period up to 2030. However, inter-regional equity worsens later in the century. The additional emissions reduction to the INDC in 2030 would improve both inter- and inter-regional equity as compared to the current INDC. We also suggest that countries should commit to more emissions reductions in the follow-up INDC communications and that continuous consideration for low-income countries is needed for global climate change cooperation after 2030.

Electric vehicles and India's low carbon passenger transport: a long-term co-benefits assessment

Electric vehicles have attracted the attention of India's policy makers as clean technology alternatives due to their multiple advantages like higher efficiency and lower air pollution in short to medium term and reduced CO2 emissions as electricity gets decarbonized in the long-run under low carbon scenarios. This paper uses an energy system model ANSWER-MARKAL to analyse the role of electric vehicles (EV) in India. The modelling assessment spans the period 2010 to 2050 and analyses future EV demand in India under three scenarios: i) a ‘Reference’ scenario which includes the continuation of existing EV policies as outlined in India's Intended Nationally Determined Contribution (INDC); ii) a ‘EV policy’ scenario which, in line with India's INDCs, follows targeted supply-side push policies for EVs, but without the budget constraints; and iii) a ‘low carbon’ scenario which uses an exogenous price for CO2 in line with the global target of 2 °C temperature stabilization. The scenarios analysis delineates penetration of EVs and their co-benefits as well as co-costs. The co-benefits relate to local air quality, national energy security and CO2 emissions in India whereas the co-costs (risks) are related to sourcing of raw materials for batteries and battery reprocessing and disposal.The findings show that: i) in the reference scenario, the EVs 2-wheelers will achieve a significant share by 2050. Electric 4-wheelers though would have a small share even in 2050; ii) EV push policies though lead to significant diffusion of electric 2- wheelers in India by 2030. These policies enhance diffusion of electric 4-wheelers only if financial incentives are sustained in the long-term, iii) the application of global carbon price on the Indian economy in the 2° C stabilization scenario increases competitiveness of EVs and results in near total share of electric 2-wheelers by 2030 and a sizable share of electric 4-wheelers by 2050. The high and rising carbon price in low carbon scenario cause deep decarbonisation of electricity and enables EVs to deliver deep cut in CO2 emissions. The results show asymmetry in the impacts of national and global policies on co-benefits from EV. The EV supply-push policies deliver moderate benefits vis-à-vis air pollution and energy security indicators but make insignificant contribution CO2 emissions reduction. On the other hand, the global carbon price in the global 2° C stabilization scenario delivers sizable co-benefits vis-à-vis all three indicators. This asymmetry reveal important policy insights: i) the policy sequencing is vital to gain co-benefits, ii) EV technology push policies are good for creating early domestic market for a clean vehicle technology but they may not deliver sizable co-benefits vis-à-vis CO2 emissions which are global externalities, and iii) implementing strong climate policies early would lead to EVs delivering high co-benefits, in case of India, vis-à-vis all three indicators.

Managing carbon-intensive materials in a decarbonizing world without a global price on carbon

Emissions from the production of iron and steel could constitute a significant share of a 2°C global emissions budget (around 19% under the IEA 2DS scenario). They need to be reduced, and this could be difficult under nationally based climate policy approaches. We compare a new set of nationally based modelling (the Deep Decarbonization Pathways Project) with best practice and technical limit benchmarks for iron and steel and cement emissions. We find that 2050 emissions from iron and steel and cement production represent an average 0.28 tCO2 per capita in nationally based modelling results, very close to the technical limit benchmark of 0.21 tCO2 per capita, and over 2.5 times lower than the best practice benchmark of 0.72 tCO2 per capita. This suggests that national projections may be overly optimistic about achievable emissions reductions in the absence of global carbon pricing and an international research and development effort to develop low emissions technologies for emissions-intensive products. We also find that equal per capita emissions targets, often the basis of proposals for how global emissions budgets should be allocated, would be inadequate without global emissions trading. These results show that a nationally based global climate policy framework, as has been confirmed in the Paris Agreement, could lead to risks of overshooting global emissions targets for some countries and carbon leakage. Tailored approaches such as border taxes, sectoral emissions trading or carbon taxes, and consumption-based carbon pricing can help, but each faces difficulties. Ultimately, global efforts are needed to improve technology and material efficiency in emissions-intensive commodities manufacturing and use. Those efforts could be supported by technology standards and a globally coordinated R&D effort, and strengthened by the adoption of global emissions budgets for emissions-intensive traded goods.Policy relevanceThis article presents new empirical findings on global iron and steel and cement production in a low-carbon world economy, demonstrates the risks associated with a nationally based global climate policy framework as has been confirmed in the Paris Agreement, and analyses policy options to deal with those risks.

Calls for Carbon Markets at COP21: a conference report

A number of leading international industry associations and organizations, representing thousands of companies from around the globe, took part in a side event at the IETA/WBCSD Business Hub in the Blue Zone at Le Bourget on Wednesday, 2 December The Hub was part of the COP21 assembly of the United Nations Framework Convention on Climate Change (UNFCCC) in Paris. In the session, a series of so-called ‘Carbon Markets Statements’ were presented in order to emphasize the importance of including Carbon Market provisions in the Paris Agreement (UNFCCC, 2015) if global warming is to be maintained below 2 °C. While the conference, as expected, did not achieve a global carbon price, the UNFCCC Agreement (2015, p. 19) mentions the role of non-party stakeholders such as civil society, the private sector and financial institutions in addressing climate change and “recognizes the important role of providing incentives for emission reduction activities, including tools such as domestic policies and carbon pricing.” The conference report summarizes the findings of the session, along with the message delivered by industry representatives. Drawing on individual industry statements presented in the session, several themes are identified: (1) the importance of Carbon Markets, (2) benefits of Carbon Markets, (3) competitiveness of organizations and development of low-carbon solutions, and (4) the need for improvements to Carbon Markets. As emphasized by the industry associations, the Paris agreement failed to explicitly address Carbon Markets, albeit the expectations of this being realized were quite low. However, countries have submitted ambitious Intended Nationally Determined Contributions (INDCs) for greenhouse gas emissions reduction, which will demand ambitious reductions in carbon emissions. Therefore, countries will be forced to bring forward policies to meet these targets, and further development of Carbon Markets may materialize in response.

Reviewing the Evidence on the Innovation Impact of the EU Emission Trading System

The Paris Climate Agreement calls for decarbonization of the economy in the second half of this century. This requires a radical redirection and acceleration of technological change towards low- and particularly zero-carbon solutions. Global carbon pricing is seen as a key enabler for such decarbonization, with the European Union’s Emission Trading System (EU ETS) serving as an important pillar. In this paper, I therefore re-view the evidence on the innovation impact of the EU ETS. The review shows a very limited effect of the scheme on technological innovation, but there are clear signs of it having stimulated organizational innovation, with the impact being more pronounced for the electricity sector than for industry. The initially high expectations of the EU ETS regarding technological innovation largely dissipated once the scheme’s lack of strin-gency became apparent and prices collapsed accordingly. Also, for many of the rather incremental innovations that have taken place, the EU ETS was shown to be only one contributing factor among others, with the broader policy mix and long-term targets playing a particularly pivotal role in stimulating innovation. In contrast, there is clear evidence that the EU ETS has been a key driver of various organizational innovations, including making climate change a top management issue. However, so far, these or-ganizational innovations have only had limited effects on shifting corporate strategies towards low-carbon solutions because of low carbon prices, the relatively high share of free allocations in industry, and more pressing business concerns. Despite this, the scheme’s positive impact on organizational innovations should not be underestimated, as these constitute a necessary precondition for future technological innovations. The findings suggest that the Commission’s proposal for the fourth trading period of the EU ETS points in the right direction, but further efforts will be needed to significantly in-crease the scarcity of EU allowances and the share of auctioning in order to fully un-leash the scheme’s transformative power. If the identified shortcomings are not ad-dressed, the EU ETS cannot play its foreseen role in guiding the decarbonization of the European economy, for which innovations in low-carbon solutions are a fundamental requirement.

Decoupling global environmental pressure and economic growth: scenarios for energy use, materials use and carbon emissions

In recent decades economic growth and increased human wellbeing around the globe have come at the cost of fast growing natural resource use (including materials and energy) and carbon emissions, leading to converging pressures of declining resource security, rising and increasingly volatile natural resource prices, and climate change. We ask whether well-designed policies can reduce global material and energy use, and carbon emissions, with only minimal impacts on improvements in living standards. We use a novel approach of combined economic and environmental modelling to assess the potential for decoupling for 13 world regions and globally. We apply a production (territorial) and consumption approach to discuss regional differences in natural resource use and carbon emissions across three stylized policy outlooks: a reference case with no significant changes to environment and climate policies; a ‘high efficiency’ outlook involving a global carbon price rising from $50 to $236 (constant price) per tonne of CO2 between 2010 and 2050 and improvements in resource efficiency (rising from 1.5% historically to between 3.5% and 4.5% in the scenarios); and a ‘medium efficiency’ outlook midway between the ‘no change’ and ‘high’ outlooks. We find that global energy use will continue to grow rapidly under all three scenarios from 17 billion tonnes of oil equivalent (toe) in 2010 to between 30 and 36 billion toe. Carbon emissions would be considerably lower with a global carbon price, less than half the level of the reference case (29–37 billion tonnes of CO2 instead of 74 billion tonnes) and also material use would grow much more slowly under a carbon price and significant investment to increase resource efficiency (95 instead of 180 billion tonnes of materials). We find that OECD economies have significant potential to reduce their material throughput and carbon emissions with little impact on economic growth, and that developing economies such as China could expand their economies at much lower environmental cost. Globally, the effects of very strong abatement and resource efficiency policies on economic growth and employment until 2050 are negligible. Our study suggests that decarbonization and dematerialization are possible with well-designed policy settings and would not contradict efforts to raise human wellbeing and standards of living. The research demonstrates the usefulness of scenarios for unpacking environmental and economic outcomes of policy alternatives. The findings have important implications for future economic opportunities in a highly resource efficient and low carbon global economy to set human development and achieving the sustainable development goals on a more resilient path.

Agglomeration, Urban Growth and Infrastructure in Global Climate Policy: A Dynamic CGE Approach

This paper presents an integrated model of urban agglomeration economies within a computable general equilibrium (CGE) model of global economic activity, energy use and carbon emissions to explore the theoretical and empirical nature of the interdependence of cities and the world economy in a climate policy context. Based on calibration data for 74 major OECD agglomerations, the integrated model is used to gauge the long-term impact of: i) global carbon pricing on urban systems and the economic activity; ii) urban infrastructure development on the economic costs of curbing carbon emissions. Importantly, it is found that combining urban infrastructure and carbon pricing allows for stringent emissions reduction targets, while still avoiding the economic and welfare costs of the carbon price only.

Global carbon pricing and the “Common But Differentiated Responsibilities”: the case of China

This paper analyzes whether using carbon pricing as the major mitigation policy instrument is compatible with the implementation of the “common but differentiated responsibility” principle in a global climate agreement. We focus more specifically on China, a key player in climate negotiations. This is done by adopting the Imaclim-R model to assess the economic effect of carbon pricing on the Chinese economy in different climate architectures which, despite aiming at the same stabilization target, differ in terms of the temporal profile of emission reductions and the regional distribution of efforts (different quota allocation schemes). Model outcomes prove that neither temporal nor regional flexibilities provides a satisfactory answer since the Chinese economy remains significantly hurt at certain time periods. This suggests the recourse to complementary measures to carbon pricing in order to help smoothing the necessary shift toward a low-carbon society. This means in particular that, to build a climate policy architecture that could be compatible with the “common but differentiated responsibility” principle, climate negotiations must go beyond global top-down systems relying on cap-and-trade to include bottom-up measures likely to complement the carbon price and make carbon mitigation acceptable in countries like China.

Implementing REDD+ at the local level: Assessing the key enablers for credible mitigation and sustainable livelihood outcomes

Achieving cost-effective mitigation and sustainable livelihoods through reducing emissions from deforestation and forest degradation (REDD+) depends heavily on the local context within which REDD+ projects are implemented. Studies have focused on how REDD+ can benefit or harm local people, with little attention paid to how people, their assets and institutions can promote or impede REDD+. This paper examines the key local assets necessary for REDD+ to protect forests and support local livelihoods based on evidence from a globally-linked REDD+ project in Kenya. Household interviews (n = 100), focus group discussions (n = 6) and in-depth interviews with government (n = 8) and project stakeholders (n = 14) were undertaken to rank and explain how local assets interact with the project's efforts to protect forests, and the role of State institutions in shaping project–asset interactions. Locally, pro-poor assets such as land tenure and water access had most influence on the project's ability to protect forests. Inclusion of communal forests as part of the REDD+ project entitled local poor peasant farmers to participate in and benefit from the project and so dissuaded them from using protected forests for charcoal production. Water access determined agricultural productivity and intensity of forest use for livelihoods and coping. Even though carbon revenues were distributed equally between social groups and support directed to pro-poor livelihood initiatives, efforts were impeded by State decisions on land that interfered with communal approaches to forest conservation, by strict carbon standards that limited trade-offs between livelihoods and forest protection and by fluctuating carbon prices and buyers that limited funds needed for project operations and local livelihoods. Equitable and pro-poor benefit sharing are necessary but not sufficient for effective REDD+ implementation unless national institutions are reformed and global carbon pricing harmonized with local livelihood needs.

Seven Reasons to Use Carbon Pricing in Climate Policy

The idea of a global carbon price has been a recurrent theme in debates on international climate policy. Discarded at the Conference of Parties (COP) of Copenhagen in 2009, it remained part of deliberations for a climate agreement in subsequent years. Unfortunately, there is still much misunderstanding about the reasons for implementing a global carbon price. As a result, ideological and political resistance against it prospers. Here we present the main arguments in favor of a carbon price to stimulate a fair and well-informed discussion about climate policy instruments. This includes arguments that have received surprisingly little attention so far. It is stressed that a main reason to use carbon pricing is environmental effectiveness, so not only economic efficiency (including the special case of cost-effectiveness). In addition, we provide ideas on how to implement a uniform global carbon price, whether using a carbon tax or emissions trading.

Prices vs. Equity in International Climate Policy: A Broad Perspective

Effective climate policy can be achieved by implementing either a global uniform carbon price or a global cap and trade system. But depending on the allocation of tax revenues and initial pollution permits, the instruments have very different wealth implications for the individual countries. The paper highlights the distributional effects of climate policies by calculating and comparing emission budget allocations under three different schemes that are in line with a 2◦C warming target. We calculate implicit carbon budgets up to 2050 under a globally uniform CO2 price, a design proposed by Weitzman (2014). We then compare the allocation with the budget derived from equity principles by Bretschger (2013) and with emission budgets under egalitarian emission rights as proposed by BASIC (2011). Our results show that implicit burden sharing across countries varies substantially with the different policy regimes. Wealthy countries with low energy prices tend to obtain the highest emission budget under a price scheme while poor low-emission countries receive the highest budget under egalitarian emission rights. The budget positions of India and the US are illustrative for the conflicting country interests.

India's CO2 emissions pathways to 2050: Energy system, economic and fossil fuel impacts with and without carbon permit trading

Fast-emerging (yet still relatively less developed) economies such as India are understandably cautious about committing to emissions reduction targets that could be economically costly. The tensions between continuing short-term economic growth whilst investing in low-carbon technologies for long-term decarbonisation could be eased if there were significant financial and non-climate potential benefits of decarbonisation for these economies. This study explores some of the potential benefits for India, by analysing its long-term mitigation options in the context of global action towards a 2 °C target, using an energy systems model (The University College London TIMES Integrated Assessment Model, or TIAM–UCL) which represents India explicitly, as one of 16 global regions. The study finds that India could significantly over-achieve against a 2050 low-carbon target based on equal per capita emissions by 2050, at mitigation costs below the global carbon price, implying that it could earn significant revenues through selling international carbon credits, thereby offsetting some of the costs of decarbonisation. In addition, India would see much lower levels of fossil fuel consumption in a low-carbon scenario, thereby alleviating potential economic difficulties in securing access to adequate supplies of these fuels.