“Credible and consistent” carbon pricing should form the cornerstone of climate policy according a new report by the OECD.
Policies which put a price on carbon emissions have come under heavy fire from businesses around the world for being too much of a burden – and in Australia have arguably led to the downfall of a government.
But the influential organisation for the world’s high-income economies has suggested they are essential – and recommended fossil fuel subsidies should be trimmed.
Its latest report states: “Without a clear policy signal that there is a rising cost of CO2 emissions over time there will be little incentive for societies to undertake the needed shift away from fossil fuels.”
Angel Gurria, OECD Secretary-General said: “Whatever policy mix we put in place it has to lead to the complete elimination of emissions to the atmosphere from fossil fuels in the second half of the century.”
He added: “Cherry-picking a few easy policy measures is not enough. There has to be progress on every front but notably with respect to carbon pricing and we don’t have any time to waste. Unlike the financial crisis, we do not have a ‘climate bailout’ option up our sleeves.”
The report highlights the surprising amount of subsidies still in place for extracting and producing fossil fuels. Such subsidies are estimated to be worth $55-90 billion (£34.5-56.5 billion) a year in OECD countries.
That figure rockets to $523 billion (£328 billion) a year in developing ones.
Diesel taxes are also picked on by the OECD report: despite producing 18% more CO2 emissions, taxes on diesel are lower than for petrol in most countries around the world.