effectiveness of different carbon pricing schemes

May 16, 2024

Today, more than 70 carbon pricing schemes have been implemented around the globe, but their contributions to emissions reductions remains a subject of heated debate in science and policy.

In a new paper published in Nature Communication, a group of researcher assesses the effectiveness of carbon pricing in reducing emissions using a rigorous, machine-learning assisted systematic review and meta-analysis.

Based on 483 effect sizes extracted from 80 causal ex-post evaluations across 21 carbon pricing schemes, they find that introducing a carbon price has yielded immediate and substantial emission reductions for at least 17 of these policies, despite the low level of prices in most instances. Statistically significant emissions reductions range between –5% to –21% across the schemes (–4% to –15% after correcting for publication bias).

The study highlights critical evidence gaps with regard to dozens of unevaluated carbon pricing schemes and the price elasticity of emissions reductions. More rigorous synthesis of carbon pricing and other climate policies is required across a range of outcomes to advance our understanding of “what works” and accelerate learning on climate solutions in science and policy.

Read the paper

Döbbeling-Hildebrandt, N., Miersch, K., Khanna, T.M. et al. Systematic review and meta-analysis of ex-post evaluations on the effectiveness of carbon pricing. Nat Commun 15, 4147 (2024). https://doi.org/10.1038/s41467-024-48512-w

OVERVIEW OF MAIN RESULTS

Panel (a, d, g) present weighted mean effect sizes together with their 95% confidence intervals based on multilevel random and mixed effects models and represent the effect of the policy observed in each period after its introduction in comparison to the counterfactual emissions without the policy. The estimates are ordered according to the number of studies they comprise (depicted on the left). The average treatment effect for the Chinese ETS pilots comprises the effects of all eight regional pilot schemes. Cross-country collects the evidence from studies assessing countries with and without carbon pricing, not focusing on a specific carbon pricing scheme. Panel (a, d, g) comprise, respectively n = 470, n = 253, and n = 142 effect sizes clustered on the study level. Panels (b, e, h) show the distribution of assigned risks of bias (RoB). Panel (c, f, i) show the distribution of statistical power. Power above 80% is considered adequate. For synthetic control designs no statistical power was derived, thus presented as “NA”

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