Summary The Long Road to Carbon Pricing
Assigning a cost to CO2 and other greenhouse gas emissions by "putting a price on carbon" is recognized as one of the most effective means of combating climate change. Several mechanisms can be used to do this, including carbon trading markets and taxation (See Close-Up: "Mechanisms for "Putting a Price on Carbon"). The Kyoto Protocol, signed in December 1997, was the first international mechanism designed to reduce greenhouse gas emissions by putting a price on carbon. Over the past few years, a variety of initiatives launched by regions, major cities, large companies and associations have built on this original intergovernmental approach (See Close-Up: "From the Kyoto Protocol to National and Regional Commitments"). In 2005, the European Union put in place a carbon trading market that was the first – and is still the largest – of its kind in the world. But the price of carbon has so far failed to reach sufficient levels to send a meaningful signal to greenhouse gas emitters (See Close-Up: The European Emissions Trading Market).