Putting a price on carbon dioxide and other greenhouse gases to curb emissions must be
the centrepiece of any comprehensive climate-change policy. We know it works: pricing carbon creates broad incentives to cut emissions. Yet current price of carbon remains much too low relative to the hidden environmental, health and societal costs of burning a tonne of coal or a barrel of oil¹. The global average price is below zero, once half a trillion dollars of fossil-fuel subsidies are factored in….current inadequacy of carbon pricing stems from a catch-22. Policymakers are more likely to price carbon appropriately if it is cheaper to move onto a low-carbon path…policies to drive down the cost of renewable power sources even further and faster than in the past five years. The cost of crystalline silicon photovoltaic (PV) modules has fallen by 99% since 1978 and by 80% since 2008; installation costs for wind power have also dropped, and solar and wind capacity has grown² Prices will continue to fall, but — without more help — the decrease will not be fast enough to make a dent in the climate problem…We’re in the middle of a low-carbon-energy revolution. Germany has proved an early driving force on the demand side and China has been strong on the supply side. Germany’s Renewable Energy Sources Act, adopted in 2000, guaranteed 20 years of grid access and fixed prices for its solar- and wind-power producers. German electricity consumers are subsidizing the expensive early stages of the development, deployment and integration of renewables to the tune of more than $20 billion a year. In 2014, despite the country exporting more electricity than ever to its neighbours and phasing out nuclear power, carbon emissions from the German power sector were the second lowest since 1990.

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