Carbon pricing can help and hinder the path to net-zero

Carbon pricing can have very different effects on investment, inflation and price volatility depending on how they are applied.

Carbon pricing is increasingly touted as a key decarbonisation tool for policymakers, but it can have very different effects on investment, inflation and price volatility depending on how they are applied. The BloombergNEF report takes as an example the most common reference scenarios of the International Energy Agency (IEA) and the Network for Greening the Financial System (NGFS) to achieve net zero emissions and keep global warming within 1.5ºC. The agencies draw two opposite worlds, one with skyrocketing carbon prices and another with lower prices that complement specific policy measures.

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