Carbon pricing works and does not damage the economy, according to the New Climate Economy (NCE) in a report published today.
The NCE, which is led by climate economics expert Lord Nicholas Stern, urged both developed and emerging economies to commit to introducing carbon pricing by 2020.
The report highlights examples of carbon pricing that have raised revenue without harming the economy. These include the nine states in the US regional greenhouse-gas initiative (RGGI), which grew 0.4% more between 2009 and 2013 than states outside the RGGI, while reducing their combined emissions by 18%, compared with 4% in other states. At the same time, the RGGI has raised states' revenue by a combined US1.3 billion, the report notes.
In Canada, British Columbia's carbon tax reduced emissions by 10% between 2008 and 2011, compared with 1% in the rest of the country, while not damaging GDP, the report states.
The 20 major economies known as the G20 are holding a summit in Turkey in November and the authors of the NCE report have urged leaders to create clear, credible and rising carbon prices in their countries. They said the resulting revenues should be used to offset impacts on households, while other countries should make monitoring, reporting and verification of emissions for business and industry mandatory.
Use of carbon pricing is growing around the world, the authors found. Around 40 national jurisdictions and 20 cities, states and regions have adopted, or are planning, carbon prices. These cover 12% of global emissions, which is triple the coverage of a decade ago, the report says.
Over 1,000 major companies and investors have endorsed carbon pricing, with an increase from 150 to 437 using a carbon price internally, and several hundred more are planning to introduce internal carbon pricing in the next two years, it states.
Fears for industrial competitiveness have been used an excuse for keeping carbon prices low and limiting the effectiveness of carbon pricing, but these have not materialised in practice, the report says.
"The time is right to introduce carbon prices around the world, as well as to pursue complementary measures like reform for fossil fuel subsidies, which act like negative carbon prices," said Stern.
Earlier this week, the International Emissions Trading Association (IETA) criticised the UNFCCC's draft negotiating text for sidelining carbon pricing.
