The increasing frequency and magnitude of climate-induced disasters and their devastating socioeconomic impacts call for urgent action to achieve climatic targets.
The World Bank’s Climate Change Action Plan, aligned with the historic Paris Climate Agreement, emphasizes the need to mitigate climate change by accelerating climate action through carbon markets and pricing.
Carbon pricing is an integral element of the broader climate policy architecture that can be used to reduce emissions cost-effectively. The basic premise behind carbon pricing instruments is that when well-designed, they can effectively “internalize” the external cost of damage caused by climate change, partly or in full, thereby providing such an incentive.
