Abstract
Carbon pricing is a policy that involves the imposition of charges on carbon dioxide emissions, thereby increasing the price of fossil fuels1. Although meeting the ambitious global greenhouse gas emissions reduction target outlined in the Paris Climate Agreement brings numerous environmental benefits, it also incurs significant implementation costs and may impact various dimensions of human well-being, including welfare, poverty, and poverty distributional aspects. To ensure climate stabilization, it is crucial to exercise supply restraint and de facto carbon pricing, which would result in higher fossil fuel prices. However, predicting the carbon price trend needed to achieve the Paris target is challenging. Nonetheless, it is imperative to establish a hard limit on total fossil carbon consumption to achieve a Paris-consistent emissions reduction trajectory, with permits exclusively available to fossil fuel companies. While a carbon price that varies over time may aid in reducing emissions, a hard cap with auctioned permits is a more direct and proven approach to accomplishing this objective2. Therefore, it is crucial to examine the poverty and distributional effects of various carbon pricing methods that would be compatible with achieving the Paris Agreement targets. However, implementing the Paris Agreement goal of limiting temperature rise to less than 2°C would require a substantial increase in current policy initiatives. Despite providing several environmental benefits, meeting the strict global GHG emissions reduction target entails considerable implementation costs and may adversely affect various aspects of human well-being, as well as have distributional implications for households.
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
Carbon pricing policy greenhouse gas emissions reduction
