Carbon Pricing for Green Recovery and Growth

By Asian Development Bank

Carbon pricing is a key element of the broader climate policy architecture that can help countries reduce their greenhouse gas (GHG) emissions cost-effectively, while mobilizing fiscal resources to foster green recovery and growth. This publication introduces carbon pricing instruments and provides insights on how they can be designed to stimulate and not constrain economic activity in the context of recovery from the coronavirus disease (COVID-19) pandemic. It aims to help countries design and implement an efficient climate change response. The publication underscores the important role of carbon pricing in achieving nationally determined contributions and developing road maps for longer-term net-zero GHG emission targets.

• Language: English
• Publisher: Asian Development Bank
• Release date: Nov 1, 2021
• ISBN: 9789292691004

Book preview

CARBON PRICING FOR GREEN RECOVERY AND GROWTH

NOVEMBER 2021

Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO)

© 2021 Asian Development Bank

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Some rights reserved. Published in 2021.

ISBN 978-92-9269-099-1 (print); 978-92-9269-100-4 (electronic); 978-92-9269-101-1 (ebook)

Publication Stock No. TCS210403-2

DOI: http://dx.doi.org/10.22617/TCS210403-2

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Notes:

In this publication, $ refers to United States dollars.

ADB recognizes China as the People’s Republic of China, Korea as the Republic of Korea, and Vietnam as Viet Nam.

On the cover: Implementing carbon pricing policies can incentivize and facilitate the transition from fossil fuels to renewable energy technologies while fostering green recovery and growth (photos by Al Benavente and Patarapol Tularak for ADB)

Cover design by Edith Creus.

Contents

Table, Figures, and Boxes

Foreword

Climate change continues to affect many aspects of our day-to-day life as we experience a sharp increase in climate shocks and stress. The Asia and Pacific region is particularly vulnerable to the impacts of climate change and is facing more intense and frequent extreme weather events affecting livelihoods, food and water security, and the health of millions of people. More than 60% of the people in the Asia and Pacific region work in sectors highly susceptible to changing weather patterns, and the situation is likely to worsen.

The Sixth Assessment Report of the Intergovernmental Panel on Climate Change published in August 2021 reiterates the scale of the climate change challenge. If the global community takes aggressive action and brings about transformational change at present, temperature rise can be limited to 1.5°C by mid-century. But if current trends continue, the Earth is on course to reach 1.5°C of warming within the next 2 decades. Despite the decrease in global greenhouse gas (GHG) emissions due to the economic downturn resulting from the coronavirus disease (COVID-19) pandemic, emissions are rising again. We are now dangerously close to the point where action will be too little and too late.

The battle against climate change will be won or lost in Asia and the Pacific: the region is currently responsible for over 50% of global GHG emissions. Alongside the urgent need to decarbonize and reduce GHG emissions, Asia and the Pacific faces the need to recover economically from the COVID-19 pandemic. The Asian Development Bank (ADB) recognizes that the need to meet these twin challenges requires us to not see them in competition with each other for scarce resources, but rather as synergistic, together creating an opportunity and a motivation to pursue green, resilient, inclusive, and sustainable economic growth.

Doing so will require both domestic and international sources of finance. Carbon pricing can play a major role in mobilizing both and,