Climate Change Impact on India and World – International Reports, Key Observations, etc.

Carbon Pricing: The Way For Decarbonization


From UPSC perspective, the following things are important :

Prelims level: GHG's, carbon tax,

Mains level: Carbon pricing mechanism, global efforts


Central Idea

  • Environmental destruction has been a consequence of boosting GDP growth in every country due to the absence of a price for natural resources like air and forests. To combat this, the biggest economies of the G-20 must agree on valuing nature, including by pricing carbon effluents. As president of the G-20 this year, India can take the lead in carbon pricing, which will open unexpected avenues of decarbonization.

Pricing Carbon at present

  • Three ways of pricing carbon: carbon tax, emissions trading system (ETS), and import tariff on the carbon content
  • GHG emission: 46 countries price carbon, covering only 30% of global greenhouse gas (GHG) emissions
  • IMF’s proposed price: International Monetary Fund (IMF) proposed price floors of $75, $50, and $25 a ton of carbon for the United States, China, and India, respectively
  • Benefits: Economy-wide benefits of carbon pricing in terms of damages avoided generally outweighed the cost it imposed on individual industries in EU, British Columbia, Canada, and Sweden
  • Boost to renewables: Carbon pricing makes investment in renewable energy such as solar and wind more attractive.

Facts for prelims

Carbon Pricing Method Description
Carbon Tax A domestic tax imposed on carbon emissions, directly discouraging the use of fossil fuels and raising revenue for investment in cleaner sources of energy or protection of vulnerable consumers. Example: Korea and Singapore.
Emissions Trading System (ETS) A system that allows entities with excess emissions allowances to sell them to those that are emitting more than their allotted limit. Example: European Union and China.
Import Tariff on Carbon Content A tax on imported goods based on the amount of carbon emissions produced during their manufacturing process, designed to discourage importing high-emissions products. Example: Proposed by the European Union.
Carbon Offsets A voluntary mechanism in which companies or individuals pay for projects that reduce greenhouse gas emissions. These projects may include reforestation, renewable energy, or energy efficiency initiatives. The amount of emissions reduced by the project can then be used to offset the emissions of the buyer.

Carbon pricing for India

  • Among the three ways of pricing, India could find a carbon tax appealing as it can directly discourage fossil fuels, while raising revenues which can be invested in cleaner sources of energy or used to protect vulnerable consumers
  • IMF proposed $25 a ton as a starting point for India
  • The main obstacle is the argument by industrial firms about losing their competitive advantage to exporters from countries with a lower carbon price
  • All high, middle, and low-income countries should set the same rate within each bracket


Way ahead: Need for Global Carbon Pricing

  • The first movers will be the most competitive: High enough carbon tax across China, the US, India, Russia, and Japan alone (more than 60% of global effluents), with complementary actions, could have a notable effect on global effluents and warming. The first movers will be the most competitive
  • India’s leadership: India can play a lead role by tabling global carbon pricing in the existential fight against climate change as president of the G-20 summit this September
  • Communication is important: Any type of carbon pricing faces stiff political opposition therefore communicating the idea of wins at the societal level is vital.

Back to Basics: GHG’s

Greenhouse Gas

Properties Major Sources


Carbon Dioxide (CO2) -Long-lived in atmosphere.

-Traps heat from the sun

– Burning of fossil fuels (coal, oil, gas)


– Accounts for 76% of global GHG emissions – Primary cause of climate change
Methane (CH4) – Short-lived in atmosphere

– Traps more heat than CO2

– Agriculture (livestock digestion, manure management)

– Energy production

– Landfills

– Accounts for 16% of global GHG emissions – Contributes to both climate change and air pollution
Nitrous Oxide (N2O) – Long-lived in atmosphere

– Traps more heat than CO2

– Agriculture (fertilizer use, manure management)

– Industrial processes

– Combustion of fossil fuels

– Accounts for 6% of global GHG emissions

– Contributes to both climate change and air pollution

Fluorinated Gases (HFCs, PFCs, SF6) – Can have high global warming potential – Industrial processes (refrigeration, air conditioning)

– Semiconductors

– Electrical transmission equipment

– Accounts for less than 3% of global GHG emissions

– Can have very high global warming potential

Ozone (O3) – Not a GHG, but plays a role in climate change – Human-made chemicals that release ozone into the atmosphere – Contributes to climate change by trapping heat
Chlorofluorocarbons (CFCs) – Human-made chemicals that destroy ozone in the atmosphere – Used in refrigeration, air conditioning, and aerosol sprays – Contributes to climate change by destroying ozone, which leads to greater heat-trapping



  • India can take the lead in carbon pricing as president of the G-20 this year. By pricing carbon effluents, India can promote investment in renewable energy, protect vulnerable consumers, and contribute to the global fight against climate change. However, there is a need for effective communication to ensure that the idea of carbon pricing is understood at the societal level, and any type of carbon pricing faces stiff political opposition.

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