Full Title: Insight Briefing: Carbon Pricing
Author(s): The Climate Group
Publisher(s): The Climate Group
Publication Date: July 1, 2013
Full Text: Download Resource
Economists have long argued that putting a price on carbon, either through a carbon market or a carbon tax, is the most economically efficient way to reduce emissions.
But setbacks in the EU ETS – including the recent rejection of the European Commission’s “backloading” proposal and the subsequent price crash – have caused some to question the effectiveness of carbon pricing in practice.
While the EU ETS is indeed in need of fundamental reform, the world’s largest carbon market is likely to recover in the long term. And emerging carbon markets in major economies such as Australia and California have adopted safeguards against the price volatility and fraud that has beset the EU ETS to date, making them less likely to experience the same problems.
Broadening the perspective beyond the EU ETS, the story of carbon pricing over the past decade has been one of growth. More than 20 new carbon pricing policies have been adopted around the world and many more are under consideration, which suggests that the coming years will teach us more about the viability of carbon pricing than the past has.