Tipping the balance

In Germany, the introduction of carbon pricing is currently the subject of intense discussion. In some countries and regions of the world it is already being used as an effective instrument for climate change mitigation, in others its introduction is being prepared or, as in Germany, is still being examined and critically discussed by parts of the public. How effective carbon pricing can be depends on many factors that are explored in the "Tipping the Balance" study.

The introduction of carbon prices is currently the subject of intensive debates. On the one hand, it is a good way to shift the actual cost of climate change to those who are responsible for it and to create incentives for companies and consumers to cut emissions. On the other hand, there is a lot of resistance, as the yellow vests in France show. The way in which carbon pricing is designed varies, and so does the way in which it is communicated. However, both the design and communications is crucial for a successful policy instrument.

Six examples show what it needs to introduce a carbon pricing approach

The comparative analysis in "Tipping the balance" focuses on case studies from Australia, British Columbia (Canada), Colombia, France, Sweden and Switzerland. These countries have each introduced carbon taxes or other mechanisms for pricing greenhouse gases. The policy design – including scope of coverage, price level and trajectory, and revenue usage – and the way of communication with interest groups and how their concerns are included, are the subject of the study.

What factors contribute to the success of CO2 taxes? Which aspects are more of an obstacle? And what can we learn from this for the future? According to the study, there is no general recipe for success, but the realisation that the introduction imperatively needs to be accompanied by open and targeted communication. Above all, the term "tax" often has a negative connotation, which is why the emphasis should be placed on the positive environmental effects that CO2 pricing is basically aimed at.

The six case studies were commissioned by the BMU and examined by experts from adelphi, Climate Focus and Perspectives Climate Group.