Does Carbon Pricing work? A qualitative review of Carbon Pricing’s ex-post results, and policy-design suggestions for improving its efficacy.

University essay from Lunds universitet/LUCSUS

Abstract: The world is currently heading for 3°C of global warming due to global excessive carbon emissions, and while science is producing the knowledge necessary to combat it, the radical change needed is not coming fast enough. Current political and economic paradigms hail carbon pricing as either the, or part of the solution to our carbon emissions problem. This thesis looks at the available (although limited) ex-post research on carbon pricing and sorts the results into several themes. The evidence shows that carbon pricing is Marginal, Ambiguous, Uncertain, Non-transformative, Insufficient, Uneven and Superficial. This thesis then tries to offer solutions to the problems presented, these include pricing, dealing with carbon leakage, and revenue spending. However, serious questions surround carbon pricing’s efficiency and ability to radically reduce emissions within the timeframe necessary. This thesis argues that carbon pricing should not be seen as a silver bullet, but as an important tool in the climate policy toolbox.

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