GCPC Workshop No. 6: “Carbon pricing in the Power Sector”
On 27 February 2025, the GCPC held its 6th online workshop on the topic of carbon pricing in the power sector. Experts from GCPC Network members and countries interested in the GCPC shared their experiences and project work on the role of carbon pricing in the power sector. The workshop was attended by more than 20 participants from government, international organizations, and research institutions.
The majority of carbon pricing instruments implemented by jurisdictions around the world cover the power sector as it is responsible for a large share of their total emissions. What is more, the price signal imposed by a carbon pricing instrument is particularly effective in incentivizing power producers to increase efficiency and switch to less emission-intensive fuels. In this workshop, experts from the World Bank and Vietnamshared their research and experience with carbon pricing policies covering the power sector.
Presentations
1. Carbon pricing in the power sector: Role and design for transitioning toward net-zero carbon development (report presentation)
Harikumar Gadde & Christophe de Gouvello, World Bank
Harikumar Gadde introduced the World Bank’s Partnership for Market Implementation (PMI), which supports countries in developing and implementing domestic carbon pricing mechanisms. He highlighted the importance of carbon pricing in the power sector, emphasizing its role in incentivizing efficiency and transitioning to cleaner energy sources, and detailed how the PMI program is demand-driven, responding to specific requests from countries to tailor carbon pricing solutions to their unique contexts. Gadde also discussed the importance of political commitment in the successful adoption of carbon pricing instruments and shared insights from the PMI's engagement with over 30 countries, focusing on building capacity and readiness for carbon markets.
Christophe de Gouvello followed with a discussion on the complexities of implementing carbon pricing in emerging economies. He pointed out the differences between developed and developing countries, such as the latter’s growing electricity demand and diverse power sector structures. De Gouvello introduced the concept of the value chain in the power sector as a necessary concept to navigate this complexity, explaining how carbon pricing can influence decisions at various stages (generation, dispatch, distribution, and consumption). He stressed the need for a nuanced approach that considers national circumstances and regulatory frameworks, using case studies from China, Kazakhstan, South Africa, and Colombia to illustrate the challenges and opportunities in designing effective carbon pricing instruments.
You can find the full report on carbon pricing in the power sector here.
2. Carbon pricing in regulated electricity markets: insights from Vietnam
Toan Do, Vietnam Country Coordinator at the UNOPS Energy Transition Partnership
Toan Do provided insights on the topic from Vietnam's perspective, discussing the challenges of balancing energy security and affordability while implementing carbon pricing. He underscored the challenges faced by countries like Vietnam in balancing energy security and affordability while transitioning to a low-carbon economy. Do also discussed the potential of carbon pricing to drive investments in renewable energy and industrial decarbonization. He concluded with emphasizing the importance of collaboration with policymakers and stakeholders to develop effective carbon market mechanisms.