Carbon pricing has been one of the main policy instruments in Europe to reduce greenhouse gas emissions for nearly two decades now. With all the world signed up to the Paris Agreement and much of the world’s largest economies committed to net-zero and carbon/climate neutrality targets, the role of carbon pricing is evolving as part of a more extensive, comprehensive climate policy mix.
As more and more countries look to reducing the emissions from energy-intensive industries, the spectre of carbon leakage risk and industrial competitiveness may present itself in domestic climate policy discussions beyond Europe. The EU meanwhile, is moving ahead with its carbon border adjustment mechanism as a new way to respond to the challenge of carbon leakage risk, but also to incentivise other countries to adopt carbon pricing.
This raises the question of global cooperation on both climate policy and industrial decarbonisation in general, but carbon pricing and responses to carbon leakage risk in particular. Climate clubs have been discussed as a broader structure of cooperation and climate diplomacy, but what these clubs (or alliances) should pursue is still to open for discussion.
We will discuss the prospects for international cooperation to enhance climate action and industrial decarbonisation during a launch event of a new CEPS report on carbon pricing and international cooperation.