The Global Carbon Pricing Challenge

Countries around the world are taking action to reduce greenhouse gas emissions and fight climate change. More and more countries are pricing carbon pollution to cut emissions at low cost and spur clean innovation.

Carbon pricing works because there is a financial incentive for people and businesses to pollute less. A price on carbon sends a clear signal that carbon-intensive products and activities are more costly than low-carbon ones, pushing companies to offer more climate-friendly products and services for consumers to choose from.

Carbon pricing is most effective when more countries adopt it, as broader coverage means more opportunities to find clean solutions. Through international cooperation, countries that price carbon are raising the bar on climate ambition and signaling that it can no longer be free to pollute.

Adopting carbon pricing can reduce emissions in several ways:

• Aligning economic incentives with low-carbon objectives
• Driving investment in clean innovation and technology
• Encouraging consumers and industries to become more efficient

The Challenge

Canada is calling on all countries to adopt carbon pricing as a central part of their climate strategies, toward a collective goal of covering 60 percent of global emissions by 2030.

Launched in 2021 at COP26, the Global Carbon Pricing Challenge calls for a partnership of carbon pricing champions from around the world to expand the use of carbon pricing by strengthening existing systems and supporting emerging ones. The Challenge also creates a forum for dialogue and coordination to better understand policy design choices and to support other countries in adopting carbon pricing.

The Challenge places a special emphasis on supporting developing countries, recognizing the unique circumstances they face in addressing climate change. This commitment to inclusivity ensures that the advantages of global collaboration benefit various economies despite their political, economic and social differences.

In September 2023, Adelphi Consult GmbH, with support from the International Emissions Trading Association, were announced as the organizations that will work together as the GCPC Secretariat. The expertise of these two organizations will play a central role in advancing global cooperation on climate action.

Why join the Challenge?

The Challenge provides an opportunity for partners to build on their strong foundations of carbon pricing leadership in partnership with likeminded jurisdictions.

• It provides a leader-level forum for dialogue to help spur action and raise awareness of a policy tool that drives emissions reductions at the lowest cost.
• It is the first initiative to set a concrete target for carbon pricing and emissions coverage.
• It complements existing international initiatives on carbon pricing.
• It establishes an avenue for cooperation with jurisdictions considering carbon pricing as part of their efforts to tackle climate change.

How to join the Challenge

Jurisdictions with carbon pricing systems, as assessed by the World Bank to be “implemented” or “scheduled for implementation”, are invited to join as Partners.

Any country or jurisdiction with a clear interest in carbon pricing may join as Friends to the initiative. Friends of the Challenge may send representatives to the Technical Working Group and could participate in pilot partnerships to receive tailored support for their efforts to implement or better understand carbon pricing.

Countries that have joined Canada as partners or friends of the Global Carbon Pricing Challenge include Chile, the Republic of Korea, New Zealand, the United Kingdom, Norway, Denmark, Côte d’Ivoire, Germany, the European Union and others.

More on Carbon Pricing

While everyone has a vital role to play in reducing emissions, countries around the world are working hard to expand their economies and improve the lives of their citizens. Revenues from carbon pricing can finance sustainable development and support vulnerable sectors and communities that feel the impact of climate change the most.

• Carbon Pricing: A global opportunity
• Read the Carbon Pricing Leadership Coalition Report
• Explore the World Bank map of carbon pricing initiatives
• The World Bank Partnership for Market Implementation
• The World Bank State and Trends of Carbon Pricing 2022
• The OECD Carbon Market Platform
• Canadian Snapshot: Carbon Pollution Pricing in Canada