The economic and environmental benefits from international co-ordination on carbon
pricing
Insights from economic modelling studies
This paper assesses quantitative estimates based on economic modelling studies of
the economic and environmental benefits from different forms of international co-ordination
on carbon pricing. Forms of international co-ordination include: harmonising carbon
prices (e.g. through linking carbon markets), extending the coverage of pricing schemes,
phasing out fossil fuel subsidies, developing international sectoral agreements, and
establishing co-ordination mechanisms to mitigate carbon leakage. All forms of international
co-operation on carbon pricing can deliver benefits, both economic (e.g. lower mitigation
costs) and/or environmental (e.g. reducing GHG emissions and carbon leakage). Benefits
tend to be higher with broader participation of countries, broader coverage of emissions
and sectors and more ambitious policy goals. Most, but not all, countries gain economic
benefits from international co-operation, and these benefits vary significantly across
countries and regions. Complementary measures outside co-operation on carbon pricing
(e.g. technology transfers) could ensure that co-operation provides economic benefits
for all countries.
Published on April 01, 2021
In series:OECD Environment Working Papersview more titles