OECD Environment Policy Papers
Designed for a wide readership, the OECD Environment Policy Papers distil many of today’s environment-related policy issues based on a wide range of OECD work. In the form of country case studies or thematic reviews across countries, the Papers highlight practical implementation experience. They are available in either English or French, with a summary in the other language when possible.
- ISSN: 23097841 (online)
- https://doi.org/10.1787/23097841
Climate and Carbon
Aligning Prices and Policies
The international community has agreed to limit the average global temperature increase to
no more than 2ºC above pre-industrial levels. This will require a gradual phase-out of fossil
fuel emissions by the second half of this century. This report brings together lessons learned
from OECD analysis on carbon pricing and climate policies. It recommends that
governments ensure coherent policies surrounding the gradual phase-out of fossil fuel
emissions and consistent signals to consumers, producers and investors alike. A key
component of this approach is putting an explicit price on every tonne of CO2 emitted.
Explicit pricing instruments, however, may not cover all sources of emissions and will often
need to be complemented by other policies that effectively put an implicit price on
emissions. But the policies must be mutually supportive and as cost-effective as possible,
both on their own and as a package. In addition, tax exemptions and fossil-fuel subsidies
that undermine the transition towards zero carbon solutions must be reformed. Finally, the
report highlights the issues of competitiveness, distributional impacts and communication
as key elements in implementing climate policy reform.
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