Addressing frequently asked questions by emerging and developing countries on carbon pricing

Context

An increasing number of jurisdictions have been considering, developing and implementing carbon pricing in recent years, particularly in emerging and developing economies. The latest State and Trends of Carbon Pricing report identified 75 carbon taxes and emission trading schemes currently in operation worldwide and promising signs of uptake in middle-income countries. Notably, Brazil, India, and Türkiye have made progress towards carbon pricing implementation, and others may follow partly influenced by the implementation of the Carbon Border Adjustment Mechanism (CBAM) of the European Union (EU).

A large number of resources are currently available for these jurisdictions to get insight on specific policy considerations pertaining the design and implementation of carbon pricing, but these can be difficult to navigate. Reports exists on a wide array of topics, starting with those addressing broad aspects to consider when deciding on the type of carbon pricing that is best suited for a given context and all the way to more context specific socio-economic concerns. Compiling and reviewing all these inputs is a task for which policymakers and government officials generally have little time for.

To get answers to specific questions, driven by interest on CBAM and more broadly on the experience of the EU on the implementation of emission trading systems (ETS), several jurisdictions have sought to engage with the European Commission. During these exchanges, some questions are often raised. In this context, the newly established DG CLIMA Task Force on International Carbon Pricing and Markets Diplomacy (CLIMA.TF) has identified some of these frequently asked questions and the need to count with a curated set of questions and answers (Q&A) to support these jurisdictions and facilitate dialogue and engagement.

Objectives

To provide a carefully curated companion tool with questions and answers to inform and foster dialogue and engagement on carbon pricing, with a focus on specific challenges and policy considerations pertaining the design and implementation of compliance schemes in emerging and developing economies.

Timeline and deliverables

• Draft report – December 2024
• Final report release – February 2025

Partners

This activity is part of the European Union Climate Dialogues Project (EUCDs).