Carbon pricing is an instrument that captures the external costs of greenhouse gas (GHG) emissions—the

costs of emissions that the public pays for, such as damage to crops, health care costs from heat waves and
droughts, and loss of property from flooding and sea level rise—and ties them to their sources through a
price, usually in the form of a price on the carbon dioxide (CO2) emitted. A price on carbon helps shift the
burden for the damage from GHG emissions back to those who are responsible for it and who can avoid it.
Instead of dictating who should reduce emissions where and how, a carbon price provides an economic
signal to emitters, and allows them to decide to either transform their activities and lower their emissions,
or continue emitting and paying for their emissions. In this way, the overall environmental goal is achieved
in the most flexible and least-cost way to society. Placing an adequate price on GHG emissions is of
fundamental relevance to internalize the external cost of climate change in the broadest possible range of
economic decision making and in setting economic incentives for clean development. It can help to mobilize
the financial investments required to stimulate clean technology and market innovation, fueling new, low-
carbon drivers of economic growth.

There is a growing consensus among both governments and businesses on the fundamental role of carbon
pricing in the transition to a decarbonized economy. For governments, carbon pricing is one of the
instruments of the climate policy package needed to reduce emissions. In most cases, it is also be a source
of revenue, which is particularly important in an economic environment of budgetary constraints.
Businesses use internal carbon pricing to evaluate the impact of mandatory carbon prices on their
operations and as a tool to identify potential climate risks and revenue opportunities. Finally, long-term
investors use carbon pricing to analyze the potential impact of climate change policies on their investment
portfolios, allowing them to reassess investment strategies and reallocate capital toward low-carbon or
climate-resilient activities.

Carbon pricing can take different forms and shapes. In the State and Trends of Carbon Pricing series and on
this website, carbon pricing refers to initiatives that put an explicit price on GHG emissions, i.e. a price
expressed as a value per ton of carbon dioxide equivalent (tCO2e). Considering different carbon pricing
approaches, an emissions trading system (ETS), on the one hand, provides certainty about the
environmental impact, but the price remains flexible. A carbon tax, on the one hand, guarantees the carbon
price in the economic system against an uncertain environmental outcome. Other main types of carbon
pricing offset mechanisms, results-based climate finance (RBCF) and internal carbon prices set by
organizations. Scaling up GHG emission reductions and lowering the cost of mitigation is crucial to
decarbonize economies. Given the size and urgency imposed by the climate challenge, a full range of
carbon pricing approaches will be required, alongside other supporting policies and regulations.
MAIN TYPES OF CARBON PRICING

An emissions trading system (ETS) is a system where emitters can trade emission units to meet their
emission targets. To comply with their emission targets at least cost, regulated entities can either
implement internal abatement measures or acquire emission units in the carbon market, depending on the
relative costs of these options. By creating supply and demand for emissions units, an ETS establishes a
market price for GHG emissions. The two main types of ETSs are cap-and-trade and baseline-and-credit:

 Cap-and-trade systems, which apply a cap or absolute limit on the emissions within the ETS and
emissions allowances are distributed, usually for free or through auctions, for the amount of
emissions equivalent to the cap.
 Baseline-and-credit systems, where baseline emissions levels are defined for individual regulated
entities and credits are issued to entities that have reduced their emissions below this level. These
credits can be sold to other entities exceeding their baseline emission levels.

A carbon tax directly sets a price on carbon by defining an explicit tax rate on GHG emissions or—more
commonly—on the carbon content of fossil fuels, i.e. a price per tCO2e. It is different from an ETS in that
the emission reduction outcome of a carbon tax is not pre-defined but the carbon price is.

An offset mechanism designates the GHG emission reductions from project- or program-based activities,
which can be sold either domestically or in other countries. Offset programs issue carbon credits according
to an accounting protocol and have their own registry. These credits can be used to meet compliance under
an international agreement, domestic policies or corporate citizenship objectives related to GHG mitigation.

RBCF is a funding approach where payments are made after pre-defined outputs or outcomes related to
managing climate change, such as emission reductions, are delivered and verified. Many RBCF programs
aim to purchase verified reductions in GHG emissions while at the same time reduce poverty, improve
access to clean energy and offer health and community benefits.
Internal carbon pricing is a tool an organization uses internally to guide its decision-making process in
relation to climate change impacts, risks and opportunities.

For governments, the choice of carbon pricing type is based on national circumstances and political
realities. In the context of mandatory carbon pricing initiatives, ETSs and carbon taxes are the most
common types. As of 2017, 42 countries and 25 subnational jurisdictions (cities, states and regions), already
have carbon pricing initiatives, with more planning to implement carbon pricing in the future. The most
suitable initiative type depends on the specific circumstances and context of a given jurisdiction, and the
instrument’s policy objectives should be aligned with the broader national economic priorities and
institutional capacities. ETSs and carbon taxes are increasingly being used in complementary ways, with
features of both types often combined to form hybrid approaches to carbon pricing. Some initiatives also
allow the use of credits from offset mechanisms as flexibility for compliance.

Many companies use the carbon price they face in mandatory initiatives as a basis for their internal carbon
price. Some companies adopt a range of carbon prices internally to take into account different prices across
jurisdictions and/or to factor in future increases in mandatory carbon prices.

GHG emissions can also be implicitly priced through other policy instruments such as the removal of fossil
fuel subsidies, energy taxation, support for renewable energy, and energy efficiency certificate trading.
Implicit carbon pricing initiatives are not covered in the State and Trends of Carbon Pricing series and on
this website.
International carbon pricing refers to carbon pricing initiatives that have the potential to cover the whole
world. This includes:

Initiatives under the United Nations Framework Convention on Climate Change (UNFCCC):

 International Emissions Trading (IET),

Initiatives outside of the UNFCCC:

 The voluntary carbon market

International carbon pricing took off with the introduction of the flexibility mechanisms under the Kyoto
Protocol. Adopted at the third Conference of the Parties (COP) to the UNFCCC held in Kyoto, Japan, in
December 1997, the Kyoto Protocol committed industrialized country signatories (so-called “Annex I”
countries) to collectively reduce their GHG emissions by at least 5.2 percent below 1990 levels on average
over 2008–2012. Annex I countries could fulfil their commitments through domestic actions or the use of
three flexibility mechanisms IET, JI and CDM. The amendment adopted in Doha, Qatar, in December 2012
provided a basis for the three Kyoto mechanisms to continue for 2013–2020. The IET, JI and CDM were of
significant relevance in the creation of cross-boundary carbon markets.

Looking ahead, carbon pricing can play a pivotal role to realizing the ambitions of the Paris Agreement and
implement the Nationally Determined Contributions (NDCs). Article 6 of the Paris Agreement provides a
basis for facilitating international recognition of cooperative carbon pricing approaches and identifies new
concepts that may pave the way for this cooperation to be pursued. Paragraph 136 of the first COP 21
Decision (Adoption of the Paris Agreement) recognizes the important role of providing incentives for
emission reduction activities, including tools such as domestic policies and carbon pricing. Many of the
plans submitted to the UNFCCC recognize the important role of carbon pricing, with about 100 countries
planning or considering carbon pricing mechanisms in their intended NDCs.

International Emissions Trading (IET) is an international ETS set up with the intention to allow Annex I
countries to achieve emission reductions at least cost. However, individual countries made policy decisions
related to other priorities, and their national context, and did not necessarily optimize their emission
reduction efforts on carbon price alone. This heterogeneity of national policies meant that the IET did not
achieve a least-cost outcome as originally intended. IET was also hindered by a lack of clarity about
environmental outcomes, impacting its attractiveness for sovereign buyers.
The Joint Implementation (JI) and Clean Development Mechanism (CDM) are offset mechanisms under the
Kyoto Protocol under which entities from Annex I Parties could participate in low-carbon projects and
obtain credits in return.

 The CDM is the market-based mechanism that has involved the largest number of countries—both
developed and developing—in efforts to reduce GHG emissions. It grew to a scale that enabled
significant emission reductions and financial flows to developing countries. Developing countries can
take no-regret actions and participate voluntarily in emission reductions and removal activities
through the CDM. The emission reductions are then transferred to Annex I countries to meet their
targets. By the end of 2014, the CDM supported investments worth approximately US$90 billion in
GHG emission reduction projects in developing countries. The CDM has confirmed that offset
mechanisms have the capacity to mobilize capital efficiently toward cost-effective low-carbon
investments.
 The JI has been less successful than the CDM in terms of emission reduction achievements as it faces
a dual challenge of the lack of countries’ ambition and the uncertainty over the future regulatory
infrastructure to issue credits. Most of the credits were issued without the supervision of the Joint
Implementation Supervisory Committee, triggering some speculation on the level of rigor applied.

By 2012, the demand for Kyoto credits—Certified Emission Reductions (CERs) from CDM and Emission
Reduction Units (ERUs) from JI—started to get saturated. It became clear that the Kyoto credits already
issued were enough to fulfill most of the demand, including from the EU, which was the biggest source of
demand historically. As no other substantial source of demand for Kyoto credits currently exists, this has led
to sustained low prices for CERs and ERUs. Some carbon pricing initiatives at the national level provide the
possibility of demand for CERs, such as in Colombia, Korea, Mexico and South Africa, although only certain
types of CERs are accepted in these initiatives and the demand is limited. The upcoming Carbon Offsetting
and Reduction Scheme for International Aviation (CORSIA) could represent a significant new source of
demand for CERs.
The voluntary market caters to the needs of those entities that voluntarily decide to reduce their carbon
footprint using offsets. In 2016, the volume of credits traded on the voluntary markets totaled 63 MtCO2e
with a value of US$191 million, representing a 24 percent fall compared to the 84 MtCO2e of credits traded
in 2015. The decline in traded volume is partially attributed to the conversion of certain types of voluntary
credits into compliance offsets in mandatory carbon pricing initiatives such as the California Cap-and-Trade
program.

Results-based Climate Finance (RBCF) is a form of climate fnance where funds are disbursed by the
provider of climate fnance to the recipient upon achievement of a pre-agreed set of climate-related results.
These results are typically defned at the output or outcome level, which means that RBCF can support the
development of specifc low-emission technologies or the underlying climate outcomes, such as emission
reductions. Various RBCF initiatives build on existing carbon market mechanisms and prepare for new
instruments. Some RBCF programs purchase compliance emission reduction units, including CERs and ERUs,
helping bridge the current lack of demand for these units. Some of these programs include the World
Bank’s Carbon Initiative for Development (Ci-Dev) and the Pilot Auction Facility for Methane and Climate
Change Mitigation (PAF), and the German government’s Nitric Acid Climate Action Group. Elements of the
existing carbon market infrastructure, such as the CDM monitoring, reporting and verification (MRV)
requirements, have been incorporated into these programs. Other programs not specifically designed for
compliance markets use RBCF as a direct funding mechanism and were built from the ground up. Such
programs include the Performance Based Climate Finance Facility (PBC) in Latin America financed by the
European Commission, KfW and CAF, and the World Bank’s Transformative Carbon Asset Facility (TCAF).
These programs focus on the implementation of large scale sectoral or policy-level emission reduction
programs.

Member States of the International Civil Aviation Organization (ICAO) adopted the first global sectoral
carbon pricing initiative—the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)
—on October 7, 2016. This is a global carbon offsetting initiative that aims to stabilize net emissions from
international aviation at 2020 levels; any additional emissions above 2020 levels will have to be offset.
According to researchers and analysts, the CORSIA has the potential to generate demand for carbon assets
of around 2.5 GtCO2e between 2021 and 2035, which is comparable to the cumulative volume of Kyoto
credits issued so far. Demand will be shaped by rules on the type of credits that will be eligible for airlines
to purchase to comply with the CORSIA. ICAO’s Committee on Aviation Environmental Protection will
recommend a set of rules for eligible credits; adoption of these rules by the ICAO Council is expected by
2018.

Article 6 of the Paris Agreement recognizes that Parties can voluntarily cooperate in the implementation of
their NDCs to allow for higher ambition in mitigation and adaptation actions:

Articles 6.2–6.3 of the Paris Agreement cover cooperative approaches where Parties could opt to meet their
NDCs by using internationally transferred mitigation outcomes (ITMOs). ITMOs aim to provide a basis for
facilitating international recognition of cross-border applications of subnational, national, regional and
international carbon pricing initiatives.
Articles 6.4 establishes a mechanism for countries to contribute to GHG emissions mitigation and
sustainable development. This mechanism is under the authority and guidance of the COP serving as the
meeting of the Parties to the Paris Agreement (CMA). It is open to all countries and the emission reductions
can be used to meet the NDC of either the host country or another country. The mechanism is intended to
incentivize mitigation activities by both public and private entities.
The precise nature of ITMOs and the architecture of the Article 6.4 mechanism are both still under
discussion. The operationalization of the new mechanisms under Article 6 is one of the challenges which
needs to be overcome to enable carbon pricing to deliver on its potential for cost-effective decarbonization
and adaptation. There is substantial pressure to move rapidly toward consensus, given that the Paris
Agreement guidelines, including the modalities for operationalizing cooperative approaches to reduce
emissions under Article 6, are scheduled to be fnalized by December 2018.

Regional, national and subnational carbon pricing

As of 2017, 42 countries and 25 subnational jurisdictions (cities, states, and regions) are putting a price on
carbon through an ETS or a carbon tax. This consists of 24 ETSs, mostly in subnational jurisdictions, and 23
carbon taxes primarily implemented on a national level. Over the past decade, the number of jurisdictions
with carbon pricing initiatives has doubled. These jurisdictions, which include seven out of the world’s ten
largest economies, are responsible for about a quarter of global GHG emissions The number of carbon
pricing initiatives implemented or scheduled for implementation has quadrupled in the past decade and
almost doubled over the last five years, reaching 47 in 2017. Half of the new initiatives implemented or
scheduled for implementation in the last five years were in upper-middle-income economies, while prior to
2013, carbon pricing initiatives were implemented almost exclusively in high-income economies. For more
details on the initiatives in these jurisdictions, check out the interactive map.

On average, the emissions covered by carbon pricing initiatives implemented and scheduled for
implementation is about half of the GHG emissions of jurisdictions with an ETS and/or a carbon tax. This
translates to a total coverage of about 8 GtCO2e or about 15 percent of global GHG emissions. Emissions
covered by carbon pricing have increased almost fourfold over the past decade. In April 2016, the High
Level Panel on Carbon Pricing, a group of government leaders and international organizations, set forward a
global target to double he emissions covered by carbon pricing initiatives to 25 percent by 2020 and to
double this coverage again within a decade. For more details on the initiatives’ GHG emissions coverage,
check out the interactive graph.

The observed carbon prices span a wide range, from less than US$1 up to US$140/tCO2e. About three
quarters of covered emissions remain priced at less than US$10/tCO2e, which is substantially lower than
the price levels that are consistent with achieving the temperature goal of the Paris Agreement, identifed
by the High-Level Commission on Carbon Prices to be in the range of US$40–80/tCO2e in 2020 and US$50–
100/tCO2e by 2030. Also, the Carbon Pricing Corridors initiative, which is led by CDP and We Mean
Business, projects that price levels of US$30–100/tCO2e by 2030 are needed to decarbonize the power
sector. Currently, only the carbon taxes in Finland, Liechtenstein, Sweden and Switzerland have carbon
price rates that are consistent with the 2020 price range recommended by the High-Level Commission on
Carbon Prices. If all existing carbon pricing initiatives adopted carbon prices that are in line with the
temperature goal of the Paris Agreement, the government revenues raised would increase from US$22
billion in 2016 to more than US$100 billion per year. For more details on the initiatives’ prices, check out
the interactive graph.

The total value of ETSs and carbon taxes in 2017 is US$52 billion, an increase of seven percent compared to
2016. This increase is primarily due to the launch of several carbon pricing initiatives at the end of 2016 and
in 2017. Part of this increase is offset by lower carbon prices and declining caps in some ETSs. For more
details on the initiatives’ value, check out the interactive graph.
Jurisdictions implementing regional, national and subnational carbon pricing initiatives have been exploring
modalities for cooperation and knowledge sharing, which could lead to further regional carbon pricing
convergence, alignment and linking. For example, California, Mexico, Ontario and Québec have signed
Memorandums of Understanding to explore options to cooperate on carbon markets. In addition, dialogues
have been taking place in the context of the Pacific Alliance with a view to identify possible voluntary
market mechanisms in the region. Furthermore, China, Japan and Korea inaugurated an annual conference
to exchange experiences on carbon pricing and explore areas for cooperation, and New Zealand started
discussing potential collaboration on carbon markets with China and Korea. Japan also continues to work
with other countries to reduce GHG emissions through its Joint Crediting Mechanism. Such cooperative
developments will support the cost-effective achievement of a 2°C or lower climate target, as demonstrated
by modeling that shows that an international carbon market could deliver a 30 percent reduction in global
mitigation costs by 2030 and more than 50 percent reduction by the middle of the century.
Internal carbon pricing
An increasing number of organizations are using internal carbon pricing to guide its decision-making
process:

Corporate applications of internal carbon pricing include supporting corporate strategic investment decision
making and helping companies shift to lower-carbon business models.
Some governments are using internal carbon pricing as a tool for in their procurement process, project
appraisals and policy design in relation to climate change impacts.
Financial institutions have also begun using internal carbon pricing to assess their project portfolio.

Over 1,300 companies—including more than 100 Fortune Global 500 companies with a total annual
revenue of about US$7 trillion— reported to CDP in 2017 that they are currently using an internal price on
carbon or plan to do so within the next two years.This represents an 11 percent increase compared to 2016.
Of these companies, 607 reported to CDP that they are using an internal price on carbon—a fourfold
increase compared to 2014. An additional 782 companies stated that they are planning to implement
internal carbon pricing over the course of 2018–2019. About two thirds of the companies currently use
internal carbon pricing as a risk management tool. The current coverage and expected growth of mandatory
carbon pricing initiatives have contributed to these developments: of the companies that have publicly
disclosed that they are using an internal price on carbon or plan to do so within the next two years, 83
percent are headquartered in countries where mandatory carbon pricing is in place or scheduled for
implementation at a national or subnational level.

The reported corporate carbon prices in use are diverse, ranging from US$0.01/tCO2e to US$909/tCO2e.
Some companies adopt a range of carbon prices to take into account different prices across jurisdictions
and/or to factor in future increases in mandatory carbon prices. All regions have witnessed growth in the
number of companies disclosing implemented or planned internal carbon pricing. The broad internal carbon
price range reported also indicates that some companies are moving beyond the use of internal carbon
pricing as a strategic risk management tool to evaluate the potential impact of carbon pricing initiatives on
their operations. These companies are also using it to explore cost savings and revenue opportunities
through innovation. The United Nations Global Compact has called for businesses to adopt an internal
carbon price of at least US$100/tCO2e by 2020, which will be needed to keep GHG emissions consistent
with a 1.5–2°C pathway.

An increase in the adoption of internal carbon pricing is anticipated following the final recommendations of
the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) published on June
29, 2017. The TCFD considers climate-related risks to be material and advises businesses to disclose their
climate-related fnancial risks and opportunities under existing fnancial disclosure obligations, including in a
scenario that limits global warming to 2°C or below. As part of this disclosure, the TCFD recommends
companies and investors to report the internal carbon prices that are used to manage these risks and
opportunities. In particular, organizations are encouraged to disclose the parameters used for scenario
analysis of climate-related risks and opportunities and explain their assumptions, including the internal
carbon price scenarios used.

Investors and businesses are supported in their response to the TCFD recommendations through the
Carbon Pricing Corridor Initiative. The initiative aims to identify the carbon prices needed to achieve the
ambitions of the Paris Agreement from a private sector perspective. For the power sector, the initiative
found that carbon prices in the range of US$24–39/tCO2e by 2020 and US$30–100/tCO2e by 2030 are
needed to decarbonize the sector by 2050.
Governments are also using internal carbon price for decision making purposes, such as assessing the
climate impact of investments on infrastructure in project appraisals. Governments generally use three
different approaches to set the internal carbon price:

1. Estimates of the social cost of carbon: the social cost of carbon reflects the value of global damages
caused by a ton of GHG emissions. This approach is subject to a high level of uncertainty as it relies
on forecasts of the state of the economy, demographic changes and the cost of adaptation
measures.
2. Estimates of the marginal abatement cost: the internal carbon price can be derived from the
marginal abatement cost of meeting a national emission reduction target. Estimates of this cost are
based on expectations of the cost of emission reduction technologies.
3. The current and estimated future market values of emissions allowances: internal carbon prices can
also be based on the market prices of emissions allowances. In all three cases, costs increase over
time as the stock of GHGs is increasing. In the first case, costs increase as future emissions are
expected to cause greater damages for each ton of GHG emitted. In the latter two cases, costs are
higher as marginal abatement becomes more expensive over time.

Half of the ten Organisation for Economic Co-operation and Development (OECD) countries with the highest
GHG emissions reported the use of internal carbon prices. Internal carbon prices used ranged from
US$5/tCO2e to over US$400/tCO2e depending on the country, year and sector for which a decision is to be
made.

Financial institutions increasingly use internal carbon pricing as a tool to evaluate their investments by
including the cost of carbon in economic analyses of new projects. Reasons include to better understand
and measure their carbon footprint, and to systematically integrate the negative externality of CO2
emissions into project appraisal as part of commitments to support low-carbon solutions through their
lending portfolio.
How to do carbon pricing right

Carbon pricing initiatives continue to be fine-tuned, adapting to new circumstances and incorporating
lessons learned. Existing carbon pricing initiatives are evolving based on past experiences and upcoming
initiatives try to learn from these experiences in their design.

Various organizations have published studies to help governments and businesses develop efficient and
cost-effective instruments to put a price on the social costs of emissions, including:

 The World Bank Group, together with the OECD and with input from the IMF, set up the FASTER
Principles. The FASTER principles are: F for fairness, A for alignment of policies and objectives, S for
stability and predictability, T for transparency, E for efficiency and cost-effectiveness, and R for
reliability and environmental integrity. The research draws on over a decade of experiences with
carbon pricing initiatives around the world. It points to what has been learned to date: a well-
designed carbon pricing initiative is a powerful and flexible tool that can cut GHG emissions, and if
adequately designed and implemented, it can play a key role in enhancing innovation and
smoothing the transition to a prosperous, low-carbon global economy.

 The World Bank’s Partnership for Market Readiness (PMR)—jointly with the International Carbon
Action Partnership (ICAP)—published the Emissions Trading in Practice: Handbook on Design and
Implementation, a new guide for policymakers that distills best practices and key lessons from more
than a decade of practical experience with emissions trading worldwide. This Handbook is intended
to help decision makers, policy practitioners, and stakeholders achieve this goal. It explains the
rationale for an ETS, and sets out a 10-step process for designing an ETS—each step involves a series
of decisions or actions that will shape major features of the policy.

 The World Bank’s Partnership for Market Readiness (PMR) published the Carbon Tax Guide : A
Handbook for Policy Makers. This guide has two main objectives. First, it serves as practical tool to
help policymakers determine whether a carbon tax is the right instrument to achieve national policy
goals. Second, it is a resource to support the design and implementation of a tax that is best suited
to the specific needs, circumstances, and objectives of national policy. The guide provides both
conceptual analysis and important practical lessons learned from implementing carbon taxes around
the world.

 The World Bank’s Partnership for Market Readiness (PMR) published A Guide to Greenhouse Gas
Benchmarking for Climate Policy Instruments. The guide is intended to provide policymakers with
structured guidance on the development of benchmarks and draws on over a decade of global
experiences in benchmark development, covering practices in 16 jurisdictions that are already using
or are in the process of developing a benchmarking approach.

 The European Commission published the EU ETS handbook, which provides detailed information
about the EU Emissions Trading System (EU ETS), including information about how the system was
designed and how it operates.
  The UN Global Compact and World Resources Institute, together with Caring for Climate partners,
published the Executive Guide to Carbon Pricing Leadership. The guide outlines what different
internal carbon pricing approaches mean and features company case examples illustrating how
businesses have put them into practice.

 The European Bank for Reconstruction and Development (EBRD) and the Grantham Research
Institute on Climate Change and the Environment published the Special Report on Climate Change -
The Low-Carbon Transition. The report maps out the policies needed to reduce carbon emissions in
central and eastern Europe and Central Asia, including carbon pricing. The report highlights the
challenges and opportunities of carbon pricing in the context of the transition countries’
involvement in the global climate change mitigation efforts.

 The Asian Development Bank published the Emissions Trading Schemes and Their Linking:
Challenges and Opportunities in Asia and the Pacific report. This knowledge product summarizes
some of the most significant learning experiences to date on linking of ETSs and discusses some of
the solutions to alleviate challenges that have been faced. It also examines the possibilities for
future linked carbon markets in Asia and the Pacific region.

 Ecofys, The Generation Foundation and CDP have developed a guide on best practice approaches to
internal carbon pricing in businesses to support further adoption of internal carbon pricing. Using a
new four-dimensional framework, the guide explains how a best-practice internal carbon pricing
approach can be established to optimize decarbonization in a company’s value chain.

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