Enel Foundation has provided research guidance and scientific contributions for an extensive comparative study conducted by the Earth Institute’s Research Program on Sustainability Policy and Management at Columbia University on the suitability of different carbon pricing mechanisms as policy instruments to mitigate climate change.
The study, presented in a recent paper titled Carbon Pricing as a Policy Instrument to Decarbonize Economies looks at carbon pricing policy applicability in different economic and institutional contexts.
This analysis covers 37 countries where carbon pricing mechanisms – both carbon taxes and cap-and-trade schemes – have been implemented or proposed as a means to support decarbonisation while balancing economic growth objectives with greenhouse gas emission targets.
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“This study provides a useful fact-based overview and a sort of template which can facilitate governments in designing effective carbon pricing policies,” said Giuseppe Montesano, deputy director at Enel Foundation.
The evidence shows that the effectiveness of these mechanisms in reducing emissions and their applicability are affected by regulatory stability, distributional effects, interactions with other policies and the impact on global trade.
Carbon pricing mechanisms
To provide an overall and comprehensive picture, the study proceeds by developing three content sections.
After analysing the stylistic facts correlated with the adoption of carbon pricing mechanisms, the second section revisits the historical experience of 11 national and two sub-national jurisdictions, which have implemented carbon pricing or have tried in vain to do so.
Finally, Chile and Colombia, which are in the process of implementing carbon pricing policies, were analysed as case studies. They both present characteristics which could favor effective and stable implementation.
Steve Cohen, Columbia University professor and director of the Research Program on Sustainability Policy and Management, said: “This analysis identifies and assesses the key drivers influencing the adoption of carbon pricing mechanisms by governments, and more importantly, how to overcome the many barriers to successful policy implementation.
“Carbon pricing may never be politically feasible, but there are ways to structure pricing and subsidies that make adoption more likely; this work is significant in identifying how carbon pricing might be effectively structured.”