EDF, ORF report explores G20 carbon pricing experience, Global South prospects

New Delhi [India], March 12 : The Environmental Defense Fund (EDF) and Observer Research Foundation (ORF) on Tuesday unveiled their collaborative report, titled "Navigating Carbon Pricing: The G20 Experience and Global South Prospects," to highlight the "complex landscape" of carbon pricing.
This comprehensive analysis explored its application within the G20 nations and potential implications for emerging economies in the Global South.
"Carbon pricing mechanisms are evolving as a prominent instrument in the fiscal policy toolkit of governments to reduce emissions as well as augment government revenues. This growth in its wider usage, from its early adoption within European climate policy, mirrors the increasing commitment from major economies, particularly in developing mitigation instruments that can be supportive of domestic mitigation," stated the release from EDF and ORF.
The report also reviewed existing evidence, which indicates that the social impacts of existing carbon pricing regimes have largely been overstated and that, where such impacts are evident, there are design elements that can mitigate and reverse any negative social and income effects of the proposed carbon pricing instruments.
In a significant analysis, the report provides a thorough examination of various carbon pricing instruments globally, offering valuable insights into their socio-economic challenges. It emphasizes the need for effective strategies for climate change mitigation across industrialized and emerging economies.
Drawing from the experiences of G20 nations, the report highlighted diverse approaches to carbon pricing. It identifies crucial lessons that can inform policy development in regions worldwide, emphasizing the importance of tailored strategies for different economic contexts.
The report addressed ongoing capacity-building initiatives, discussing best practices and opportunities for collaboration to enhance the effectiveness and equity of carbon pricing frameworks. It emphasizes the need for coordinated efforts and sharing lessons across the Global South.
The report also acknowledged India's commitment to carbon pricing with the 2023 amendment to the Energy Conservation Act and explored the potential impact of the domestic carbon credit Trading Scheme.
Additionally, the report suggested effective capacity-building efforts, emphasizing the importance of a champion entity within each country for developing a successful carbon pricing instrument. It also provides insights into addressing the social and economic challenges associated with carbon pricing policies.
Speaking about the report, Pedro Martins Barata, AVP, Carbon Markets and Private Sector Decarbonisation at EDF and lead author of the report, highlighted the need for understanding and protecting vulnerable communities during the adoption of carbon pricing instruments.
"Within this context, the report provides an overview of the experience of carbon pricing across the world. It focuses on the benefits of these instruments, the challenges that impede wider adoption, and the solutions that can lead to the faster uptake of these tools by emerging economies. In particular, two sets of issues can slow down the implementation or impact of carbon taxes or emissions trading systems, lack of capacity to design and implement the instruments, and the need to understand and protect vulnerable communities for potentially negative social impacts of their adoption," Pedro Martins Barata said.
Hisham Mundol, EDF's Chief Advisor in India, emphasized the report's focus on existing capacity building efforts, calling for more coordination and sharing of lessons across the Global South.
"The report looks at existing capacity building efforts and initiatives and argues for more coordination across initiatives and a focus on sharing lessons across the Global South. This is particularly important given the growing interest and momentum in Latin America, Africa, and Asia on carbon taxes, emissions trading, and crediting mechanisms," Hisham Mundol said.
Moreover, Mannat Jaspal, Associate Fellow at ORF, highlighted the report's significance in the context of India's evolving carbon pricing landscape.
"Carbon pricing mechanisms are increasingly becoming a prominent tool in the fiscal policy toolkit of governments worldwide, serving to mitigate emissions and bolster government revenues. Within the Indian context, the significance of this report on carbon pricing and the ensuing discussions is particularly noteworthy, especially in light of the Government of India's 2023 amendment to the Energy Conservation Act, which lays the groundwork for the implementation of a domestic Carbon Credit Trading Scheme," Mannat Jaspal said.
While lessons from Global North regarding the social and economic dimensions of carbon pricing are valuable, there is an exciting prospect of South-South engagement in mutual learning and sharing of experience, the report states. Global South will have both challenges and advantages in accelerating their move in the carbon markets space.
It added, "At one hand these countries will have to overcome the lack of resources, data poverty, issue of incipient electricity and overall energy market liberalisation, lack of access to capital, and focus on universal energy access, while on the other hand Global South economies are growth engines and as they build out their economy and infrastructure, they have the opportunity to do so in low-carbon fashion and break the link between emissions and growth, including through leapfrogging technologies."