On 30 March 2023, the Inter-American Development Bank (IDB) and UN Climate Change's RCC Latin America and RCC Caribbean hosted a workshop to provide an overview of current carbon pricing mechanisms in the Latin American and the Caribbean region.

Ministries of finance of the region are working to better understand carbon pricing as an effective instrument for reducing emissions and financing a better future. The workshop opened space for discussion on fiscal and financial incentives in climate policy and how carbon pricing can help achieve national climate change commitments in the Paris Agreement. The March workshop was held as part of the Regional Platform for Climate Change of the Ministries of Finance, Economy and Finance of Latin America and the Caribbean.
 

Launched in August 2022, the platform supports efforts to integrate climate considerations into economic and fiscal planning through collaboration and coordination. Carbon pricing generates considerable interest among decision-makers in the region and is a priority for the Platform’s work.
 

The workshop explored the economic and fiscal implications of climate change and how to mainstream climate change in economic and fiscal policies. Experiences were shared from Colombia, Chile, Uruguay, and Mexico, all LAC-region countries that have already developed carbon taxes. Lessons learned highlight that carbon pricing can funnel resources to climate action, which is promising. Yet only a small amount has been raised so far from carbon taxes in countries like Mexico and Colombia due to low tax revenue from fossil fuels in those countries. Finance ministry representatives also discussed other instruments such as compensation mechanisms, adjusting NDCs under Article 6 and opportunities that may arise from implementation of Article 6 of the Paris Agreement. These wide-ranging and robust discussions explored how financial instruments can contribute to climate action, positive fiscal results and national climate change goals.
 

Climate action can accelerate by identifying needed transformations, planning a path forward and promoting policies to achieve those transformations. The IDB supports cooperation towards Achieving Net-Zero Prosperity: How Governments Can Unlock 15 Essential Transformations. Ideally suited to lead workshop discussions, IDB advances climate policy in the region by providing a practical and realistic view of what carbon price mechanisms can deliver. This allows ministries of finance to make informed decisions with the greatest potential for positive action on climate change. 
 

RCC Latin America and RCC Caribbean, the two UN Climate Change Regional Collaboration Centres serving the LAC region, remain committed to work with the IDB and regional policymakers. The Regional Platform for Climate Change opens the opportunity to stay connected to ministries of finance and ongoing collaboration is poised to bring more voices to the conversation. 
 

To stay up to date on more from the region, sign up to the RCC Latin America newsletter or the RCC Caribbean newsletter.