Publication: Carbon Pricing for Climate Action
Date
2021-07-28
ISSN
Published
2021-07-28
Author(s)
World Bank Group
Abstract
Carbon prices are needed to incorporate
climate change costs into economic decision making. Carbon
pricing should be included as part of a broader arsenal of
tools to achieve domestic climate targets, but it is not a
silver bullet: other policy instruments and investments (for
example, public transport, power transmission
infrastructure) are needed to complement carbon pricing and
to enable consumers to respond to higher prices by switching
to lower emission alternatives. A carbon tax can be
effective in smaller economies with human capacity
constraints and in jurisdictions with well-established and
transparent tax frameworks. Emission trading systems may be
chosen by larger, more established, and market-linked
economies with political economy barriers to tax reform.
Successful carbon pricing reforms require integrating many
stakeholders’ considerations and increasing the capacity of
governments and domestic businesses. The World Bank Group,
through its climate change action plan, is well positioned
to leverage its convening power, knowledge and research, and
country program support to help countries make informed
decisions on carbon pricing policies, their design, and implementation.
Citation
“World Bank Group. 2021. Carbon Pricing for Climate Action. © World Bank, Washington, DC. http://hdl.handle.net/10986/36080 License: CC BY 3.0 IGO.”