Highlights 

•  The carbon pricing method may vary depending on its purpose and use. Currently, there are three types of carbon pricing methods adopted by some countries and international financial institutions: "social cost of carbon" converting damages to be caused by 1 tCO₂ of greenhouse gases into monetary value, "marginal abatement cost" to reduce additional 1 tCO₂ of greenhouse gases, and "potential carbon price" to incentivize economic actors to reduce greenhouse gas emissions to Nationally Determined Contributions (NDC).

•  The carbon price outlook for different scenarios published by the Network for Greening the Financial System (NGFS) in 2021 provides the shadow price of carbon as a normative carbon price to be set to achieve reduction goals, which is referenced by many research institutes and financial institutions in Korea and abroad.

•  The U.S., UK, and French governments define their carbon prices, taking into account their unique greenhouse gas reduction goals, reduction technology levels, and climate change damages, and reflect the prices in cost-benefit analysis when introducing public projects or policies.

•  While the function of carbon pricing is expected to be reinforced to enhance the Korean economy's resilience to respond to climate change, it is time to examine carbon prices that reflect the level of Korea’s reduction technologies and the uniqueness of policy goals.