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.
In simple terms, carbon pricing works because there is a financial incentive for people and businesses to pollute less. A price on carbon is transparent, and sends a clear signal that carbon-intensive products and activities are costly. Industry and households can decide how best to cut their emissions at the lowest cost, and are encouraged to adopt these changes or solutions into their business operations and lifestyles.
Carbon pricing is most effective when more countries adopt it, as broader coverage means more opportunities to find clean solutions. Through international cooperation, countries are raising the bar on climate ambition and signaling that it can no longer be free to pollute.
In order to reduce emissions, adopting carbon pricing can:
- Align economic incentives with low-carbon objectives
- Drive investment in clean innovation and technology
- Encourage consumers and industries to become more efficient
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 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 challenges they face in addressing climate change. The Challenge's commitment to inclusivity ensures that the benefits of global collaboration extend across diverse economies and circumstances, fostering cooperation towards accelerating the transition to a low-carbon future.
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 complements existing international initiatives on carbon pricing:
- It provides a leader-level forum for dialogue to help spur action and raise the profile of a policy tool that drives least-cost emissions reductions
- It sets a concrete target for emissions coverage – no other initiative does this for carbon pricing. The overarching GCPC goal will help contextualize international pricing initiatives, encourage greater ambition, and allow us to track progress over time
- It serves to spotlight and amplify other complementary initiatives, including those led by key international organizations such as the World Bank, International Carbon Action Partnership (ICAP), the International Energy Agency (IEA), and the Organisation for Economic Co-operation and Development (OECD). By joining the GCPC, countries will have the opportunity to link into these initiatives
- It establishes an avenue to discuss international considerations related to carbon pricing, such as leveling the playing field internationally in terms of carbon costs, mitigating carbon leakage, and driving increased climate ambition
How to join the Challenge
Jurisdictions with carbon pricing systems assessed by the World Bank to be “implemented” or “scheduled for implementation” are invited to join as Partners.
Partners to the GCPC are also asked to:
- Commit to the collective goal of increasing explicit carbon pricing globally
- Offer to share technical support and lessons learned with jurisdictions looking to adopt and implement carbon pricing systems; and
- Identify opportunities to strengthen their own domestic pricing systems, and work to increase the coverage, effectiveness, and stringency of those systems over time
After joining the Challenge, the nature of Partners’ participation is flexible, and could include:
- sending representatives to the Technical Working Group, and/or the Advisory Committee
- showcasing progress on carbon pricing at major international conferences
- further outreach on carbon pricing through existing or new networks
- sharing experience and technical expertise on carbon pricing through country-to-country partnerships to support countries implementing carbon pricing systems
Any country or jurisdiction with a clear interest in carbon pricing may join as Friends to the initiative. Friends of the GCPC 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.
The World Bank carbon pricing dashboard provides an overview of all carbon pricing systems around the world. Of the 73 carbon pricing initiatives currently in place across the globe, there are 39 national systems and 33 subnational systems. Together these initiatives cover 23% of global greenhouse gas emissions.
These countries have joined Canada as partners to the Global Carbon Pricing Challenge: Chile, the Republic of Korea, New Zealand, the United Kingdom and Germany.
In July 2023, officials from GCPC Partner jurisdictions held the inaugural meeting of the Advisory Committee. Participants discussed the structure of the GCPC Network and endorsed the establishment of a Secretariat to support its work going forward.
In April 2023, the inaugural meeting of the GCPC Technical Working Group was held at the World Bank. The meeting improved linkages across initiatives, worked to develop a framework to amplify technical support, and proposed milestones and metrics.
In May 2023, Canada welcomed South Korea’s agreement to join the Global Carbon Pricing Challenge.
Canada reiterated the Global Carbon Pricing Challenge in a commentary in the Carbon Pricing Leadership Coalition's 2022 Annual Leadership Report, calling on countries around the world to come forward with new carbon pricing commitments at COP27 in Egypt.
In June 2022, Canada and Chile made a joint statement in support of the Global Carbon Pricing Challenge and committed to convening a high-level event at COP27 to showcase the role of carbon pricing in the global response to climate change.
In November 2022, Canada welcomed the United Kingdom, Chile, Germany, and New Zealand as partners to the Global Carbon Pricing Challenge.
At the United Nations Climate Change Conference (COP26) in Glasgow, Canada co-hosted an event with the Carbon Pricing Leadership Coalition. At the event, Canada issued a challenge to all countries to triple the global coverage of carbon pricing from around 20 percent of global emissions today to 60 percent by 2030 as an important step toward advancing global carbon pricing and achieving net-zero by 2050.
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
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