By Abbas Nazil
A new book by researchers from the Potsdam Institute for Climate Impact Research has set out to correct widespread misconceptions about carbon pricing as a key climate policy tool.
The publication explains how gradually increasing the cost of fossil fuels can effectively reduce carbon emissions when combined with strong government regulation and social safeguards.
PIK Director Ottmar Edenhofer, who co-authored the book with Cecilia Kilimann and Christopher Leisinger, said the goal is to bridge divisions between supporters of climate action who remain skeptical about market-based approaches.
He stressed that carbon pricing is not about abandoning government responsibility but requires strong public institutions and complementary policies to work effectively.
The book draws on recent research from leading scientific journals and findings from PIK and the Mercator Research Institute on Global Commons and Climate Change.
It presents complex economic evidence in accessible language for professionals and the general public.
One major misconception addressed is the belief that carbon pricing has no real impact on consumer behavior.
The authors argue that rising fuel prices alone are insufficient without supportive measures such as standards, subsidies and regulations that guide cleaner choices.
Another common claim challenged in the book is that carbon pricing is politically unrealistic.
The researchers note that about 28 percent of global carbon emissions are already priced, with the European Union expected to reach 75 percent coverage by 2028.
They explain that flexible systems such as taxes, emissions trading and hybrid models allow countries to adapt carbon pricing to local political realities.
The book also confronts concerns that carbon pricing is socially unfair.
While acknowledging that low-income households can be disproportionately affected, the authors highlight that revenue from carbon pricing can fund compensation schemes and reduce energy costs.
Proposed solutions include direct payments to citizens, targeted support for buildings, lower electricity prices and hardship assistance.
The researchers further reject the idea that carbon pricing will become obsolete in a climate-neutral future.
They argue that it will remain crucial for managing remaining emissions and financing carbon removal technologies for decades.
Another misconception explored is that carbon pricing only works under a global system.
The book shows that even fragmented regional efforts can drive emissions reductions while protecting industries from unfair competition.
Edenhofer added that the European Union’s climate tariff system launching in 2026 will further strengthen carbon pricing globally.
He noted that reducing fossil fuel demand could also weaken revenues of authoritarian regimes dependent on oil and gas exports.
The authors conclude that carbon pricing is only beginning to play its full role in climate action and remains essential for a sustainable future.