Methodologies for estimating effective carbon prices

Comparisons of the effective price put on carbon by policies in different sectors and countries provide valuable insights into the cost-effectiveness of alternative policies to reduce greenhouse emissions (GHGs), and their potential impacts on competiveness. The carbon prices can be explicit, such as carbon taxes or prices of emission allowances in GHG emission trading systems, or they can be implicit, reflecting the cost to society per tonne of CO2eq abated as a result of any type of policy measure that have an impact on GHG emissions. This chapter discusses various methodologies for estimating such carbon prices.