Carbon pricing can be a key policy tool to help countries move their energy sectors onto a cleaner development path. One important issue to consider when introducing carbon pricing is how it will integrate with other energy policies that also reduce greenhouse gas emissions, including policies to support low-carbon technologies (such as renewable energy) and energy efficiency programmes.
Poor policy integration can undermine energy security and affordability, and affect the performance of renewable energy policies and energy markets. Climate objectives can also be undermined, through low and uncertain carbon prices and the risk of stop-start policy.
Understanding how to manage policy interactions can improve the climate and energy policy package, reducing the trade-offs and advancing the synergies between energy and climate objectives. This will benefit the country in terms of a more effective and lower-cost low-carbon development path, as well as supporting a more energy-secure future.