The power of markets to increase ambition
Publication Date:
Oct 28, 2023
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Carbon pricing policies are a promising tool to combat climate change, as they can lower the costs of achieving a given target emissions level. These cost savings can translate into deeper cuts in climate pollution. By helping achieve emissions targets more inexpensively than expected, carbon pricing policies could lower political barriers to more ambitious goal-setting.
EDF modeling results have found that reinvesting the cost savings from a global emissions trading system over the period 2020-2035 would nearly double the emissions reductions under current national Paris Agreement pledges (“NDCs”), at no added cost.
EDF's economic analysis indicates that:
- Employing global emissions trading to meet Paris Agreement pledges could reduce total mitigation cost by up to 79%.
- Reinvesting these cost savings into greater emissions reductions would nearly double the cumulative emissions reductions from 2020-2035 relative to current NDCs.
- Including forest credits, such as REDD+, enabled large ambition gains in international trading simulations (38 billion tons of added reductions, out of 70 billion tons of total ambition gains).
- Even cases of partial regional coverage saw sizable ambition increases at no added cost.
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