Pricing carbon to achieve the Paris goals

The document assesses the current state of global carbon pricing, noting that most prices are below USD 10, far below the USD 40-100/tCO2 levels recommended by the High-Level Commission on Carbon Prices to meet Paris Agreement goals. It advocates for a 'climate policy portfolio' that combines carbon taxes or cap-and-trade systems with complementary measures to address non-price barriers and avoid 'waterbed effects' through price floors. The brief also calls for the abolition of counterproductive policies like fossil fuel subsidies and the use of carbon revenues to fund a just transition and fight energy poverty.

• To meet the Paris Agreement temperature targets, the High-Level Commission on Carbon Prices suggests a carbon price of at least USD 40-80/tCO2 by 2020 and USD 50-100/tCO2 by 2030.
• Current global carbon prices are generally insufficient; the International Monetary Fund reports that most jurisdictions with carbon pricing have rates below USD 10 per tonne.
• Carbon pricing should not be a standalone tool but part of a 'climate policy portfolio' to address barriers that price signals alone cannot overcome, such as split incentives for energy efficiency or high costs for long-term R&D in renewable energy and public infrastructure.
• Cap and trade systems are susceptible to the 'waterbed effect,' where successful sectoral climate policies reduce permit demand and lower the overall carbon price; this can be mitigated by implementing a robust minimum auction floor price.
• Several policy measures actively undermine carbon pricing signals, including fossil fuel subsidies—estimated by Oil Change International to be between USD 775 billion and 1 trillion annually—as well as tax exemptions, rebates, free allocation of permits, and carbon offsets.
• Revenues from carbon pricing can create a 'double dividend' of economic growth and be used for climate finance, supporting a 'just transition' for workers in carbon-intensive industries, and addressing energy poverty for low-income households.

APA

Carbon Market Watch (2017). Pricing carbon to achieve the Paris goals. https://carbonmarketwatch.org/wp-content/uploads/2017/09/CMW-PRICING-CARBON-TO-ACHIEVE-THE-PARIS-GOALS_Web_spread_FINAL.pdf

Chicago

Carbon Market Watch. Pricing carbon to achieve the Paris goals. 2017. https://carbonmarketwatch.org/wp-content/uploads/2017/09/CMW-PRICING-CARBON-TO-ACHIEVE-THE-PARIS-GOALS_Web_spread_FINAL.pdf.

Wikipedia

{{cite report |author=Carbon Market Watch |title=Pricing carbon to achieve the Paris goals |date=September 2017 |url=https://carbonmarketwatch.org/wp-content/uploads/2017/09/CMW-PRICING-CARBON-TO-ACHIEVE-THE-PARIS-GOALS_Web_spread_FINAL.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{carbonmarketwatch2017pricing, author = {{Carbon Market Watch}}, title = {{Pricing carbon to achieve the Paris goals}}, institution = {Carbon Market Watch}, year = {2017}, month = sep, url = {https://carbonmarketwatch.org/wp-content/uploads/2017/09/CMW-PRICING-CARBON-TO-ACHIEVE-THE-PARIS-GOALS_Web_spread_FINAL.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }