Professor Mendelzon: "Carbon Pricing Should Be Applied Equally to All Countries"

(Photo by Bank of Korea)

It has been argued that applying carbon pricing uniformly across all countries is essential for effectively addressing global warming.

The Sustainability Growth Office of the Bank of Korea announced on the 20th that it held a seminar inviting foreign scholars on the theme of "Macroeconomic Impacts of Climate Change and Policy Issues." The seminar was attended by Professor Robert Mendelsohn from Yale University in the United States and Professor Massimo Tavoni from Politecnico di Milano in Italy.

At the seminar, Professor Mendelsohn argued, "From the perspective of the GSCC, carbon pricing should be applied equally to all countries." GSCC (Global Social Cost of Carbon) refers to the SCC from a global perspective. SCC is the estimated monetary value of the environmental, economic, and social damages caused by emitting one ton of carbon.

Professor Mendelsohn explained, "When individual countries set their own carbon prices, there is an incentive to free-ride on the carbon reductions of other countries, leading to prices being set lower than the appropriate level," adding, "This will ultimately result in a failure to achieve the appropriate reduction targets at the global level."

As a solution, he proposed the formation of regional blocs. This involves grouping countries with strong regional and trade ties and applying the same carbon price among them. Europe is currently implementing this through the Carbon Border Adjustment Mechanism, and it is expected that the North American region will follow suit. The Carbon Border Adjustment Mechanism is a system that imposes additional costs on companies importing products that emit more carbon than those produced within the EU region.

Professor Mendelsohn stated, "If the Asian region, which will account for 60% of global carbon emissions in the future, adopts a similar system, it will greatly aid global greenhouse gas reduction," and added, "In particular, if Korea takes the lead and fosters cooperation within the Asian region on this matter, it is expected to make a significant contribution to the global response to the climate crisis."

(Photo by Bank of Korea)

The seminar also raised the necessity of proactive climate change response. Professor Tavoni explained, "To achieve the Paris Agreement goal of limiting the global average temperature rise to within 1.5℃ to 2℃, it is estimated that green investments worldwide need to increase by 3 to 6 times by 2030 compared to current levels," adding, "Although transitioning to a carbon economy will require large-scale eco-friendly investments and other costs, the total benefits?including reduced climate change damages and technological innovations driven by competition in eco-friendly energy development?will outweigh the costs (implementation risks)."

This content was produced with the assistance of AI translation services.