Don’t think twice, set a carbon price!

To date, more than 40 countries in the world have introduced a carbon pricing mechanism, either in the form of a carbon tax or an emissions trading scheme. 75% of these countries’ emissions are priced at less than €8 per tonne of CO2 eq. However, achieving carbon neutrality in the near future requires raising this price to at least €62/tonne of CO2 eq. ($75), as estimated by the International Monetary Fund. On the other hand, the prospect of an increase in the price of carbon involves the risk of carbon leakage, i.e. a relocation of emitting activities to regions with less strict legislation. In addition, the great majority of the emissions trading schemes cover only the energy and industry sector, thus raising the question of the applicability of such schemes to other sectors. 

This session aims at exchanging lessons learnt on CO2 pricing mechanisms across the world and discussing how to extend their scope. It addresses endeavours such as the planned European Carbon Border Adjustment Mechanism (CBAM) and the introduction of emissions certificates in the German heating and transport sector. In short, it tackles the question of how to make trade sustainably climate neutral.