Carbon pricing for municipalities

Developing a European Carbon Pricing Model

If greenhouse gas emissions do not come at a price, we will continue to treat those emissions economically as if they were non-existent. The solution to this problem is a price on CO2 emissions connected to the market. Carbon pricing is an important part of the strategy towards a low carbon economy. Together with its Dutch member Klimaatverbond Nederlands, Climate Alliance now tackles this issue by developing a realistic Carbon pricing model for European municipalities.

Many municipalities in the Netherlands are already using CO2 pricing. Their experiences will be used as basis for the project and the development of a pricing model for municipalities. Within the project a dedicated CO2 pricing working group of interested Klimaatverbond and Climate Alliance members will be set up to discuss and analyse existing experiences and the Carbon Pricing model. Municipalities can apply to become a pilot city, support the development and test the pricing model locally. 

Most of the existing carbon pricing initiatives are falling under three policy areas: green public procurement, policy making and cost/benefit analysis and formation of funds and partnerships. 

  • One of the areas where CO2 pricing leads to an effective climate policy is the procurement sector. By using CO2 pricing in the procurement system municipalities encourage companies to develop and deploy innovative products and services. Companies then compete with each other to emit as little greenhouse gas as possible.
  • Policy makers often struggle with short term and long term priorities in a reality of budget restraints and competing policy goals. Decision making and the setting of priorities can be supported by putting a real price on carbon emissions, reflecting the social/economic impact of the climate crisis.
  • Reducing CO2 emissions to zero all in one go is impossible. A gradual reduction in emissions means that every municipality and every company will still be producing CO2 in the coming years. However, municipalities can calculate the impact of these emissions using the actual CO2 price. The costs of these emissions or part thereof can be set aside into funds to pay sustainable expenditure or to support sustainable organisations and companies.

The project is an internal project of Climate Alliance in cooperation with Klimaatverbond and is set for three years.

Want to learn more? Contact Miguel Morcillo at m.morcillo(at) for more information.

Further Information