This study examines the efficacy of carbon pricing instruments in practice. The resulting discussion paper reviews the existing evidence on how carbon pricing mechanisms work in practice, highlights similarities between the different mechanisms, details several design implementation issues with a carbon tax and a cap-and-trade mechanism, provides brief overviews of select national (EU, Ireland, Norway, Mexico, Chile, Japan, India, Republic of Korea, and China) and sub-national (California, British Columbia, Quebec) policies, and finally, concludes with a discussion of real world policy implementation issues. The results are being used to inform the Bank’s Carbon Pricing Leadership Coalition. As part of this project, the CPL is also working with the Mexican government to support the Latin American Carbon Forum and Summit of the Americas, as well as advising the governments of Mexico and Chile on carbon pricing.
Project Lead: Kelly Sims Gallagher
Research Fellow: Easwaran Narassimhan
Research Assistants: Stefan Koester and Julio Rivera Alejo
BP International, Energy Foundation-China, Hewlett Foundation