Comparisons of the effective price put on carbon by policies in different sectors and countries provide valuable insights into the cost-effectiveness of alternative policies to reduce greenhouse emissions (GHGs), and their potential impacts on competiveness. The value of this type of analysis was demonstrated by a report, published in May 2011 by the Australian Productivity Commission, entitled Carbon Emission Policies in Key Economies. The analysis presented in that report had a major impact on that country’s decision to introduce an explicit carbon pricing system on 1 July 2012.

Comparisons of the effective price put on carbon by policies in difference sectors and countries provide valuable insights into the cost-effectiveness of alternative policies to reduce greenhouse emissions (GHGs), and their potential impacts on competiveness. The value of this type of analysis was demonstrated by a report by the Australian Productivity Commission, Carbon Emission Policies in Key Economies,** See www.pc.gov.au/projects/study/carbon-prices/report. which had a major impact on that country’s decision to introduce an explicit carbon pricing system on 1 July 2012.

Comparisons of the effective price put on carbon by policies in different sectors and countries provide valuable insights into the cost-effectiveness of alternative policies to reduce greenhouse emissions (GHGs), and their potential impacts on competiveness. The carbon prices can be explicit, such as carbon taxes or prices of emission allowances in GHG emission trading systems, or they can be implicit, reflecting the cost to society per tonne of CO2eq abated as a result of any type of policy measure that have an impact on GHG emissions. This chapter discusses various methodologies for estimating such carbon prices.

Comparisons of the effective price put on carbon by policies in difference sectors and countries provide valuable insights into the cost-effectiveness of alternative policies to reduce greenhouse emissions (GHGs), and their potential impacts on competiveness. The carbon prices can be explicit, such as carbon taxes or prices of emission allowances in GHG emission trading systems, or they can be implicit, reflecting the cost to society per tonne of CO2eq abated as a result of any type of policy measure that have an impact on GHG emissions. This chapter provides further information about the specific methodology used to estimate effective carbon prices in this project, explains the selection of policies for inclusion in the study, and discusses strengths and weaknesses of the approach used.

Comparisons of the effective price put on carbon by policies in difference sectors and countries provide valuable insights into the cost-effectiveness of alternative policies to reduce greenhouse emissions (GHGs), and their potential impacts on competiveness. The carbon prices can be explicit, such as carbon taxes or prices of emission allowances in GHG emission trading systems, or they can be implicit, reflecting the cost to society per tonne of CO2eq abated as a result of any type of policy measure that have an impact on GHG emissions. This chapter presents the estimates that have been elaborated in the project, covering electricity generation, road transport, pulp and paper and cement production and households’ domestic energy use. The chapter compares the estimates across countries, across sectors of the economy and across different types of policy instruments, finding large variations in each case.