A well-designed carbon-pricing system is an indispensable part of a strategy for reducing emissions in an efficient way. Many have argued that the transition to a low-carbon economy is a powerful growth story. In the medium term, it can be a strong driver of discovery, innovation, and investment (Stern 2015b); in the shorter term, the necessary investments in sustainable infrastructure could be a key driver of growth (Abiad, Furceri, and Topalova 2014; IMF 2014). And in the longer term, any extended attempt at high-carbon development could create an environment hostile to global growth, threatening to undermine future development gains or even reverse past ones. There are strong arguments supporting the assertion that some of the key features of low-carbon growth (such as less pollution, less congestion, greater ef ciency, and more robust ecosystems) are in and of themselves very attractive (NCE 2014; World Bank 2012).
The purpose of this Commission is to explore explicit carbon-pricing options and levels that would induce the change in behaviors—particularly in those driving the investments in infrastructure, technology, plants, and equipment—needed to deliver on the temperature objectives of the Paris Agreement, in a way that fosters economic growth and development, as expressed in the Sustainable Development Goals, among others. This report does not focus on the estimation and evaluation of the climate change impacts that would be avoided by reducing carbon emissions. While the Commission, unavoidably, also covers other policies relevant and important to carbon-pricing design and delivery on the Paris Agreement, its primary focus is on pricing. As was the case of the Paris Agreement of December 2015, the analysis is set in the context of the multiple objectives of the international community, including those related to economic growth and to development and poverty reduction, particularly the Sustainable Development Goals agreed at the United Nations in September 2015.
This report’s conclusions represent a judgment on the relevant evidence critically reviewed and assessed by the Commission as a whole. The analysis and conclusions are based on the Commission’s assessment of the information and literature available as well as on its members’ judgment, developed through their extensive international policy experience. While the commissioners are in broad agreement with the overall thrust of the arguments presented in the report, they do not necessarily support every individual element or formulation.
Read the full report here.