Working paper

Improving economic efficiency and climate mitigation outcomes through international co-ordination on carbon pricing

Carbon pricing Climate change mitigation Carbon emissions Prices International cooperation Economics

This paper presents the potential benefits and challenges of enhanced international co-ordination on carbon pricing and outlines the different types and levels of co-ordination that are available for national and sub-national governments. These levels include, inter alia, facilitating new pricing schemes, phasing out inefficient fossil fuel subsidies, sectoral approaches, co-ordination on minimum carbon prices and carbon pricing clubs. Jurisdictions may want to adopt several of these options simultaneously and may co-ordinate at multiple levels of government or across countries and sectors. This creates a bottom-up ‘web of carbon pricing schemes’, which can be an important element in delivering the Nationally Determined Contributions of the Paris Agreement and which has the potential to support greater levels of climate action and ambition.

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OECD Environment Working Papers No. 147