Project SyndicateProject Syndicate

The high cost of carbon pricing

By Jayati Ghosh

16 Mar 2023 · 4 min read

Editor's Note

Unless developed countries share knowledge and foster equitable climate finance, carbon pricing policies will burden developing countries and worsen global inequality, notes economist Jayati Ghosh.

NEW DELHI – Carbon pricing is all the rage these days, at least in the developed world. But while global leaders and experts – most of them from rich countries – increasingly embrace the idea of putting the “right price” on carbon, the concept remains vague and ill-defined. Worse, its growing acceptance and increasingly protectionist bent may have the perverse effect of impeding efforts to decarbonize the global economy.

The idea of carbon pricing seems like a no-brainer. Meeting even the least ambitious climate goals requires decarbonizing developed and developing economies alike. Changing the relative prices of carbon-intensive activities would encourage investors to finance renewable sources of energy and the technological innovation needed to achieve net-zero emissions.

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