Inclusion of Consumption of Carbon Intensive Commodities in Carbon Pricing Mechanisms

Climate protection is a global challenge that all countries have a common but differentiated responsibility to address. However, not all governments are willing to commit to targets of equal stringency. Moreover, countries may have different views on the choice of policy mix. Some countries may put a stronger emphasis on the carbon price and see a higher carbon price in the policy mix whereas other countries may make more use of other regulatory instruments. Carbon prices may thus continue to differ over longer time horizons. Without additional measures, this difference in the carbon price risks a shift in production of carbon intensive materials to regions with lower carbon prices, so called carbon leakage.

Author: K.Neuhoff, W. Acworth, J. Barrett, A. Owen, C. Fischer, C. Munnings, R. Ismer, Y. G. Kim, S. Pauliuk, R. Wood, O. Sartor, T. Sterner, Z. Xiliang, L. Zetterberg and S. Roth
Year: 2015
Type: Policy briefs