Effective Carbon Prices

This publication synthesises a number of case studies of effective carbon prices in selected countries and sectors.

- Foreword - Executive Summary - Introduction - Carbon pricing trends - Reasons to be cheerful - Carbon pricing in 2015 - Detailed analysis - Description of emissions trading systems and results

This report presents the first comprehensive analysis of the extent to which countries use carbon prices. It measures effective carbon rates, the price of carbon emissions resulting from taxes and emissions trading systems, in 41 OECD and G20 countries, accounting for 80% of global energy use and of CO2 emissions. For each country, the analysis shows the distribution of effective carbon rates across all energy use and their composition by six economic sectors.

This open access book evaluates, from an economic perspective, various measures introduced in Japan to prevent climate change. Although various countries have implemented such policies in response to the pressing issue of climate change, the effectiveness of those programs has not been sufficiently compared. In particular, policy evaluations in the Asian region are far behind those in North America and Europe due to data limitations and political reasons. The first part of the book summarizes measures in different sectors in Japan to prevent climate change, such as emissions trading and carbon tax, and assesses their impact. The second part shows how those policies have changed the behavior of firms and households. In addition, it presents macro-economic simulations that consider the potential of renewable energy. Lastly, based on these comprehensive assessments, it compares the effectiveness of measures to prevent climate change in Japan and Western countries. Providing valuable insights, this book will appeal to both academic researchers and policymakers seeking cost-effective measures against climate change.

Shows readers how we can all help solve the climate crisis by focusing on a few key, achievable actions.

Decarbonisation keeps climate change in check and contributes to cleaner air and water. Countries can price CO2-emissions to decarbonise their economies and steer them along a carbon-neutral growth path. Are countries using this tool to its full potential?

Climate change : what's the big deal? -- Business as usual : what are the costs? -- Why do economists like a carbon tax? -- Isn't there a better way? (No, there isn't) -- Cap and trade : the other way to price pollution -- What to do with $200 billion : give it back -- So you want a carbon tax : how do you design it? -- Objections to a carbon tax -- Enacting a carbon tax: how do we get there? -- Afterword : what next? -- References -- Notes

Why the traditional “pledge and review” climate agreements have failed, and how carbon pricing, based on trust and reciprocity, could succeed. After twenty-five years of failure, climate negotiations continue to use a “pledge and review” approach: countries pledge (almost anything), subject to (unenforced) review. This approach ignores everything we know about human cooperation. In this book, leading economists describe an alternate model for climate agreements, drawing on the work of the late Nobel laureate Elinor Ostrom and others. They show that a “common commitment” scheme is more effective than an “individual commitment” scheme; the latter depends on altruism while the former involves reciprocity (“we will if you will”). The contributors propose that global carbon pricing is the best candidate for a reciprocal common commitment in climate negotiations. Each country would commit to placing charges on carbon emissions sufficient to match an agreed global price formula. The contributors show that carbon pricing would facilitate negotiations and enforcement, improve efficiency and flexibility, and make other climate policies more effective. Additionally, they analyze the failings of the 2015 Paris climate conference. Contributors Richard N. Cooper, Peter Cramton, Ottmar Edenhofer, Christian Gollier, Éloi Laurent, David JC MacKay, William Nordhaus, Axel Ockenfels, Joseph E. Stiglitz, Steven Stoft, Jean Tirole, Martin L. Weitzman