A Multilateral Agreement on Carbon Pricing and Implications for Developing Countries

17 November 2021

Powerpoint slides

Climate change is an urgent issue facing all nations. A carbon pricing measure can be a cost-effective way to address climate change issues. However, a truly effective measure of this sort would need to be implemented on a global scale and at an appropriate price level. This presentation considers options for creating a multilateral carbon pricing framework and implications for developing countries. It analyses three options: a global carbon tax, adoption of emissions trading systems widely with progressive tightening of emissions targets, and a global minimum carbon price framework. It argues that a multilateral agreement on global minimum carbon prices can be an optimal option to the extent that the agreement applies to major carbon emitters and provides differential prices for developing countries. The global minimum carbon price framework could be supplemented with unilateral border carbon adjustments to encourage compliance, but the legality of such adjustments must be considered in light of international trade law and the principle of common but differentiated responsibility. The article concludes that the global minimum carbon price option can help scale up carbon pricing globally with effective prices for emissions reduction and at the same time take into account the interests and needs of developing countries in the implementation of reduction policies.

About the Speaker

Dr Yan Xu is Scientia Associate Professor of Tax Law in the Business School at the University of New South Wales (UNSW) and Adjunct Associate Professor in the Faculty of Law at the University of Hong Kong. Prior to joining UNSW in 2019, she was a tenured associate professor in the Faculty of Law at the Chinese University of Hong Kong (CUHK). She was awarded a Fulbright Senior Research Scholar 2014-15 jointly by the Department of State of the US Government and Hong Kong Research Grants Council and invited as a Visiting Fellow at Columbia Law School in 2014-15 to conduct a research project on tax reform. She has published in a range of international journals, and made presentations on invitation from prominent international bodies, including the Australian Commonwealth Treasury and International Fiscal Association. Her research interests include comparative tax law and policy, international taxation and environment taxation.

Enquiries: Flora Leung at fkleung@hku.hk