Jakob, M.

Can carbon pricing jointly promote climate change mitigation and human development in Peru?

in Energy for Sustainable Development, 10.04.2018

Peer Review

We assess whether carbon pricing in combination with targeted use of the associated revenues could jointly advance Peru's long-term climate change mitigation targets and short-term socio-economic development goals. Based on expert interviews and detailed document analysis, we draw parallels to extractive industries, where revenues that are earmarked for public investment have often been found to be used ineffectively. Based on these experiences, we identify five key areas that could help to establish carbon pricing as a cross-cutting issue in the context of sustainable development: First, emphasizing the co-benefits of carbon pricing. Second, reforming the power sector to increase the use of low-cost renewable sources. Third, assessing the equity aspects of such policies and designing appropriate compensation systems. Fourth, increasing the government's capacity to effectively carry out public investment. Fifth, using results-based payments to establish a shadow price on land-use emissions and build up institutions and trust.