Using revenues of carbon pricing policies

Analyzing the use of revenues from carbon pricing policies

Moving towards low-carbon development trajectories involves sending appropriate signals to guide public and private action. In order to meet commitments under the Paris Agreement (NDC for Nationally Determined Contributions), more and more countries are interested in carbon pricing policies to encourage their transition to a mode of Low-carbon development.

A major issue in the implementation of carbon pricing policies, regardless of instrument, is the use of revenues generated to facilitate the low-carbon transition. 

The use of carbon revenues is a key issue for building a political and social consensus on carbon pricing. According to the World Bank, the various carbon pricing policies have generated more than $ 26 billion in government revenues in 2015, helping to correct fiscal distortions, protect the most fragile communities, boost the competitiveness of industrial sectors, or to finance public support for specific components of the low-carbon transition, while ensuring citizen support for the tariff mechanism itself.

I4CE projects:

• 2017 – 2018: Report on “Use of carbon policy revenues: a lever to promote acceptability in developing countries” in partnership with AFD and World Bank;

• 2016: Policy brief on “Overview of recycling revenues from carbon pricing policies: turning costs into opportunities”;

• 2016: Event at COP22 in partnership with Ecofys and the World Bank;

• 2015: Study “The use of carbon revenues generated by a system of exchange of allowances: analysis of the case of EU ETS”