A study by Australian National University has found some trends into why certain countries are keener than others on an international carbon price.
Perhaps unsurprisingly, countries which are more carbon emissions intensive, and typically with low energy prices, do not like the idea of a common international carbon price, although these countries often have the cheapest marginal cost of reducing carbon emissions.
But if these countries had to cut emissions to the point where the marginal cost of cutting further was the same as the carbon price, they would pay more, because of the bigger gap between its low initial marginal cost and any common international price.
“A common global carbon price results in the EU having lower total costs as a percentage of GDP than the other more emissions-intensive regions,” researchers found.
However if countries set a common target for emissions intensity (or emissions per unit of GDP), China and India would have the lowest total costs because their emissions intensity is currently very low.
“This helps to explain why different countries favour different climate policies, as, for example, shown by the different types of emission pledges made by key countries after the 2009 UN climate conference in Copenhagen,” researchers said.
Research was by Dr Jack Pezzey from the Fenner School of Environment and Society in the ANU College of Medicine, Biology and Environment, and Professor David Stern and Mr Ross Lambie, both from the Crawford School of Public Policy in the ANU College of Asia and the Pacific.