Despite the new commitments made at the 26th United Nations Climate Change Conference of the Parties, there is still an ambition and a policy gap at the global level to keep temperature increases below the 2 C agreed upon in Paris. Avoiding the worst outcomes of climate change requires an urgent scaling up of climate policies. The current environment of high and volatile energy prices highlights another benefit from a low-carbon energy transition, namely less reliance on volatile fossil fuel markets and greater energy independence. This paper discusses and analyzes various international mechanisms for scaling up global action on climate mitigation and the low-carbon transition and addressing the policy gap in this area.

Recent policy proposals include the idea of common minimum carbon prices. The IMF’s international carbon price proposal (Parry, Black, and Roaf 2021) and the climate club proposal of the German government are based on this idea. While global carbon prices are not a new idea, new elements include the use of carbon price floors—which allow countries to do more if they wish—and the differentiation of carbon price floors by level of development.