Pricing carbon during the economic recovery from the COVID-19 pandemic
Careful implementation of carbon pricing with reductions in fossil fuel subsidies can raise revenues to support the COVID-19 recovery and make society less vulnerable to future climate, ecological or public health risks, according to a new policy brief published today (May 15th) by the Grantham Research Institute on Climate Change and Environment at the London School of Economics and Political Science (LSE). While the immediate focus of rescue packages has rightly been on the public health emergency, the ‘carbon pricing’ policy brief presents the case for the role of carbon pricing in the post-rescue phase, and has been developed in response to increasing calls to focus on the importance of clean investment in stimulating a sustainable economic recovery. While businesses require government assistance during the economic crisis caused by COVID-19, the brief argues that it is the wrong moment to slow down the global progress in carbon pricing or to delay the removal of fossil fuel subsidies. Carbon pricing removes the implicit subsidy for greenhouse gas emissions, yet less than 5 per cent of global emissions covered under carbon pricing initiatives are priced at a level consistent with achieving the goals of the Paris Agreement and global fossil fuel subsidies remain large.