Estimating effective carbon prices
Vivid Economics and the Overseas Development Institute (ODI) were commissioned by the Children’s Investment Fund Foundation to develop an improved methodology for calculating effective carbon prices accounting for fossil fuel subsidies. This methodology builds on existing approaches by the OECD and others by including a wider range of policy interventions in the calculation of effective carbon prices using two approaches. These approaches were these applied to the UK and demonstrate the high dispersion of effective carbon prices, with net subsidies applying to the use of fossil fuels in some sectors. The methodology was presented at the World Bank Carbon Pricing Leadership Coalition’s inaugural international conference on carbon pricing.
Date: August 2019