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1、MeasuringTota1CarbonPricing*Thisworkingpaperfeaturesthetechnica1appendixfortheforthcomingversionintheWor1dBa/tkResearchObserver.tWor1dBankDeve1opmentEconomicsProspectsGroup;UniversityCo11ege1ondon,InstituteforSustainab1cResourcesWor1dBankDeve1opmentEconomicsResearchGroupSWor1dBankMacroeconomics,Trad
2、eandInvestmentG1oba1Practice*Internationa1MonctanrFund,GermanInstituteforEconomicResearchttWor1dBankC1imateChangeGroup#Wor1dBankSustainab1cDeve1opmentVicePrcsidencyrPao1oAgno1ucci,tCaro1ynFiSCherjDirkHeine,MarizaMontesdeOca1eon,*3cJosephPryor上Kath1eenPatroni,ttandStephaneHa11egatteAbstractWhi1ecount
3、riesincreasing1ycommittopricinggreenhousegasesdirect1ythroughcarbontaxesoremissionstradingsystems,indirectformsofcarbonpricing-suchasfue1excisetaxesandfue1subsidyreformsremainimportantfactorsaffectingthemitigationincentivesinaneconomy.Takentogether,howcanpo1icymakersthinkabouttheovera11pricesigna1fo
4、rcarbonemissionsandtheincentiveitcreates?Thispaperdeve1opsamethodo1ogyforca1cu1atingatota1carbonpriceapp1iedtocarbonemissionsinasector,fue1,orthewho1eeconomy.Itrecognizesthatrare1yisasing1ecarbonpriceapp1iedacrossaneconomy;manydirectcarbonpricinginstrumentstargetspecificsectorsorevenfue1s,much1ikein
5、directtaxesonfossi1fue1s;andcarbonandfue1taxescanbesubstitutedoneforanother.Trackingprogressoncarbonpricingthusrequiresfo11owingbothkindsofpriceinterventions,theircoverage,andspecificexemptions.Thisinc1usivetota1carbonpricingmeasurecanfaci1itateprogressindiscussionsonminimumcarbonpricecommitmentsand
6、informassessmentsofthepricingofcarbonembodiedintradedgoods.Ca1cu1ationsacross142countriesfrom1991to2023indicatethata1thoughdirectcarbonpricingnowcoversrough1yaquarterofg1oba1emissions,theg1oba1tota1carbonpriceisnotthatmuchhigherthanitwasin1994whentheUnitedNationsFrameworkConventiononC1imateChangeent
7、eredintoforce.Indirectcarbonpricingsti11comprisesthe1ion,sshareoftheg1oba1tota1carbonprice,andithasstagnated.Takingthesepo1icymeasuresintoaccountrevea1sthatmanydeve1opingcountriesparticu1ar1ynetfue1importers-contributesubstantia11ytog1oba1carbonpricing.Tack1ingfue1subsidyreformandpricingcoa1andnatur
8、a1gasemissionsmorefu11ywou1dhaveaprofoundeffectona1igningcarbonpricesacrosscountriesandsectorsandwiththeirc1imatecosts.Keywords:c1imatechange,emissionstrading,carbontax,fisca1instruments,fue1subsidiesJE1codes:H23,Q58,D621. Introduction12. C1imatepo1icyinstrumentsandtota1carbonpricing43. Tota1carbonp
9、ricingindicator94. Dataandcurrenttota1carbonprice(TCP)imp1ementation104.1. Fue1consumptionandemissionsdata114.2. Directcarbonpricingdata114.3. Indirectcarbonpricingdata124.4. Exchangeratedata145. Trendsintota1carbonpricing145.1. G1oba1trends145.2. TCPacrossfue1sandsectors175.3. Howfarhavewecomesince
10、theFrameworkConvention?186. Sensitivitytoassumptionsanddirectionsforimprovement196.1. Exchangerates196.2. Data1imitationsandtrade-offs206.3. Pricingmargina1versusaveragecarbon216.4. Effectiveness-weightedtota1carbonpricing226.5. Othergreenhousegasemissions236.6. Otherpricinginstruments237. Conc1usio
11、ns248. Acknow1edgments259. References26Appendix A. Methodo1ogyr30A1.Estimatingemissionscoverageofpo1iciesbyfue1andsector30A2.Determinethepointofregu1ationforeachfue1-subsector-mechanism31Appendix B. Ana1ytica1representation3281. Tota1carbonprice(TCP)andfirmincentives3282. Sector-specifictota1carbonp
12、rice(TCP)3383. Fue1-specifictota1carbonprice(TCP)3384. Countryr-Ieve1tota1carbonprice(TCP)34Appendix C. Groupingofeconomiesbytype351. IntroductionCarbonpricingisanessentia1po1icyformitigatingc1imatechange(Sterneta1.2023).Itsigna1stomarketsthesocieta1costofemittinggreenhousegases(GHGs),creatingfinanc
13、ia1incentivestoabateemissions,reducefossi1fue1consumption,andinnovate1ow-carbonproductsandprocesses.Carbonpricingisfundamenta1towardimp1ementingthepo11uterpaysprincip1etheeconomicprincip1eenshrinedinPrincip1e16oftheRioDec1arationonEnvironmentandDeve1opmentof1992thatthecostsofpo11utionanditsabatement
14、shou1dbebornebythoseemittingit.However,thereisnosing1eformofcarbonpricing:designsdiffersignificant1yacrossspace,ref1ectingjurisdiction-specificcharacteristicsandpo1icyobjectives.Thisheterogeneityposescha11engesforpo1icycomparisonand,therefore,requirescomprehensivemetricsforstandardizing,aggregating,
15、andcontrastingcarbonpricingefforts.Tohe1povercomethesecha11enges,thispaperproposesanewmethodo1ogyforca1cu1atingcarbonprices,theTota1CarbonPrice(TCP),whichcanbeusedtounderstandthefu11po1icy-re1atedpricesigna1affectingthecombustionofCO2-emittingfue1s.Todate,mostofthefocusoncarbonpricinghasfo11owedanar
16、rowsetofpo1icyinstruments,name1ycarbontaxesandemissionstradingsystems(ETSs)(WOHdBank2023,ICAP2023).TheTCPisdesignedtorecognizethemu1tip1ebui1dingb1ocksfora1igningthefinancia1costsoffossi1fue1combustionandcarbon-intensiveprocesseswiththeirc1imatecosts.Thesecomponentsinc1udenoton1ythesewe11-trackeddirectcarbonpricingpo1icies,buta1soindirectcarbonpricingpo1iciessuchase