Introduction

In line with the timing of the sixty-second session of the Subsidiary Bodies (SB 62) in Bonn, Germany (16-26 June 2025), the United Nations Framework Convention on Climate Change (UNFCCC) Secretariat has convened the Regional Dialogue on Carbon Pricing (REDiCAP) for Small Island Developing States (SIDS) on 16 June 2025. This event was part of the Collaborative Instruments for Ambitious Climate Action (CiACA) initiative, supported by the German Government through the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUKN). It brought together national governments from SIDS, international organizations, and technical partners. While the adoption of carbon pricing instruments in SIDS remains limited, there is growing interest in exploring how these tools can support sustainable development, climate finance access and alignment with nationally determined contributions (NDCs) and long-term low greenhouse gas emission development strategies (LT-LEDS). The REDiCAP aimed to support policymakers in SIDS explore carbon pricing instruments and foster cooperation, taking into account the particular challenges faced by SIDS.

Specific Objectives

• To provide an overview of the status and recent developments in carbon pricing instruments globally and in SIDS, including carbon taxes, emissions trading systems (ETS), and hybrid approaches.
• To explore the interplay between carbon pricing mechanisms—such as carbon taxes and ETS—and carbon markets, including Article 6 cooperation, and how they align with national climate policies, such as NDCs, especially NDCs 3.0 to be submitted in 2025, and LT-LEDS.
• To identify and discuss opportunities to expand, link, or enhance the effectiveness of carbon pricing instruments in the SIDS context. Emphasis will be placed on tailoring carbon pricing policies to the unique challenges and climate policy goals, considering economic conditions, social equity, and institutional capacities.
• To collectively identify and define the technical, political, and institutional challenges to implementing and scaling up carbon pricing instruments in SIDS, considering their specific vulnerabilities and limited resources.

Credit: UN Climate Change

Credit: UN Climate Change

Credit: UN Climate Change

Credit: UN Climate Change