Carbon price of at least 40 US dollars compatible with Paris goals

Meeting the climate goals of the Paris Agreement in the most cost-effective way while fostering growth requires countries to set a carbon price of $40-$80 per tonne of CO₂ by 2020 and $50-100 per tonne by 2030. This is the main conclusion of a new report issued by the High Level Commission on Carbon Prices, to be presented this Monday at the T20 summit in Berlin. The authors include Nobel laureate Joseph Stiglitz, Nicholas Stern from the London School of Economics and the climate economist Ottmar Edenhofer.

Statement by Ottmar Edenhofer, Director of the Mercator Research Institute on Global Commons and Climate Change (MCC), who is also Chief Economist of the Potsdam Institute for Climate Impact Research (PIK) and professor at TU Berlin:

“We need to introduce internationally coordinated and sufficiently high prices for greenhouse gas emissions starting as soon as possible. Prices could initially be adapted to countries’ situation and state of development; however, over time they should become more harmonized. Developing and emerging countries could also be given climate finance assistance to offset the costs incurred by higher carbon prices. The G20 should lay the foundation for this.”

“Carbon pricing generates significant government revenue which can then be invested in a clean and climate-friendly infrastructure—this would help to achieve the United Nations Sustainable Development Goals. Even a moderate carbon price of 40 US dollars per tonne in 2020 would enable many countries to finance universal access to clean water, clean electricity or sanitation. This would reduce inequality and poverty. Carbon pricing as an engine for growth is interesting not only for the environment ministers but above all for the finance ministers of the G20 countries.”

You can download the report of the High Level Commission on Carbon Prices here.