How to make it “just”: On the way to pricing carbon around the globe

Carbon pricing instruments play an increasingly important role for reaching national and international climate objectives. In low- and middle-income (LMICs) economies, they are also seen as promising tools for mobilizing domestic resources. Properly designed carbon pricing can generate substantial revenue, expanding the tax base and funding sustainable development. These resources can be used to support the transition to a low-carbon economy through investments in renewable energy and energy efficiency.
However, the success of carbon pricing depends on carefully tailoring it to country-specific contexts. The introduction of carbon pricing often raises several concerns, including distributional impacts, competitiveness, and emissions leakage. In developing and emerging economies, it is furthermore crucial that carbon pricing does not interfere with achieving other sustainable development goals. Therefore, the introduction of carbon pricing policies must be tailored to local economic and institutional contexts, taking into accounts factors such as institutional constraints, limited infrastructure, and informal economies.
This event seeks to highlight the opportunities, challenges, associated risk mitigation strategies and good practices of carbon pricing instruments in developing and emerging economies from the perspective of policy makers and academia of the Global North and the Global South. This panel will explore and reflect concrete solutions on the following key questions:
• How can carbon pricing instruments be effective in developing and emerging countries for mobilising domestic resources for climate action?
• What is needed to ensure that distributional effects of various pricing and compensation measures, including co-benefits and trade-offs with other development goals, are taken into account?
• How can carbon pricing instruments be designed to contribute to a just and equitable transition?
• What experience can be drawn from the implementation of effective carbon pricing instruments?