More than half of the nations that made climate change mitigation commitments under the Paris Agreement stated an intention to use some form of carbon price to meet those pledges. If they cooperate the cost of carbon mitigation could be reduced by 32 percent, the World Bank said in a report Tuesday.
Development of an international carbon market would allow “those seeking emission reductions to source these where it is cheapest to do so, rather than only within national/regional borders. The results of the modeling undertaken for this study suggest that making this flexibility available from 2020 might reduce the costs associated with meeting the [intended nationally determined contributions] in 2030 by about 32 percent,” the report says.
Essentially, the development of an international carbon market would make it possible for one country to benefit from mitigation activities that reduce emissions in another country. “The more we cooperate through carbon trading, the larger the savings and the greater the potential to increase ambition by countries in the short term,” John Roome, World Bank senior director for climate change, said in a press release. “To be effective, carbon pricing policies must be coordinated with other energy and environmental policies –this will require collaboration within and between countries.”
