A few days before the Glasgow Climate Summit last year, a section of climate economists proposed a global carbon price of $100/tonne as the threshold lever that would push the world to net zero emissions by 2050. The pitch for setting a worldwide price for carbon has not died down since then. Rather, it appears to have gained renewed traction in recent months.
What is not realised in these debates is that a global carbon price cannot be arbitrarily laid down from above. Nor is a unified global carbon price attainable. Apart from the well-stated Common but Differentiated Principle (CBDR), there is an implicit subsidiarity maxim underlying Para 5 of the Paris Agreement on Climate Change, wherein the importance of recognising the special situation of developing countries in climate action is clearly stated. It follows that carbon pricing needs to be initiated at the national level. The marginal abatement costs of carbon emissions vary from country to country. So do carbon prices. By harmonising and interconnecting different country/regional level carbon prices, and developing a composite carbon price index, one could arrive at a dynamic, global carbon price indicator which is not the same as a unified carbon price.
[This article has been published with permission from IIM Bangalore. www.iimb.ac.in Views expressed are personal.]