Carbon markets are more than 16 times cheaper at cutting greenhouse gases than renewable subsidies paid to power producers, according to the Organization for Economic Cooperation and Development.
The cost of reducing carbon dioxide in the electricity generating industry using emissions trading systems is 10 euros ($13.56) a metric ton on average, compared with 169 euros for feed-in tariffs, the OECD said today in a report. Some feed-in tariffs can cost more than 700 euros a ton, the Paris-based OECD said in the study based on data from 15 countries, including China and the U.S.
The OECD called on countries to assess the cost-effectiveness of climate-protection rules by taking an inventory of policies that price carbon directly, such as markets, and implicit systems such as capital subsidies and feed-in tariffs. The group is making its recommendations as China, the biggest emitter, considers carbon markets and taxes.
“Every government must review its policy portfolio and rigorously assess if its overall impact is in favor or against climate action,” Angel Gurria, OECD’s secretary general, said in the report.