Towards Global Carbon Pricing

This chapter examines ways in which a global carbon price can be built up gradually to achieve broad-based international pricing of carbon. Important steps include removal of environmentally harmful fossil fuel energy subsidies and increasing the use of emissions trading schemes while linking them together. The chapter investigates the global and regional gains from linking regional emissions trading schemes, and the harmonisation issues that need to be addressed in the case of direct linking. It examines indirect linking, for instance through the Clean Development Mechanism (CDM) or possible sectoral crediting approaches. It concludes with a discussion of market regulatory issues and the role of financial markets.