Carbon Emissions Not Priced at True Cost to Climate: OECD

Ninety percent of carbon dioxide emissions by major advanced economies is not priced at a level that truly reflects the actual cost to the climate, the Organization for Economic Cooperation and Development (OECD) said in a report on Monday.

A price on carbon is considered an effective tool in curbing greenhouse gases by making polluters pay for emissions blamed for causing global warming.  But worldwide, carbon prices are very low, or even zero.

"New evidence presented...shows that 90 percent of carbon emissions are not priced at a level reflecting even a conservative estimate of their climate cost," the Paris-based OECD said in its first comprehensive analysis of the extent to which countries use carbon prices to tackle emissions.

The OECD said 30 euros (34 dollars) per tonne of emissions represented a conservative minimum estimate of the damage that results from emitting one tonne of carbon dioxide.
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The OECD said an effective price on carbon is essential if the Paris Agreement target of curbing emission, limiting global warming and decarbonizing the global economy by the second half of the century is to be reached.

"Pricing carbon can lead to substitution towards less carbon-intensive forms of energy and to lower demand for energy overall."

"Carbon pricing can be strengthened through both taxes and emissions trading... even modest action taken by all countries can translate into strong progress," it said. 

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