policies , regulations , and measures to incentivise bold climate action and stimulate learning and innovation to deliver on the ambition of the Paris Agreement and support the achievement of the Sustainable Development Goals . a . Tackling climate change is an urgent and fundamental challenge . At COP21 in Paris in December 2015 , nearly 200 countries agreed to hold “ the increase in the global average temperature to well below 2 ° C above preindustrial levels and to pursue efforts to limit the temperature increase to 1.5 ° C .” The goal of stabilising the temperature increase to well under 2 ° C is largely motivated by concerns over the immense potential scale of economic , social , and ecological damages that could result from the failure to manage climate change effectively . These temperature targets require a large-scale transformation in the structure of economic activity — including a major change in energy systems ( especially power generation ); industrial processes ; space heating and cooling systems ; transport and public transportation systems ; urban forms ; land use ( including forests , grasslands , and agricultural land ); and the behaviours of households . However , climate policies , if well designed and implemented , are consistent with growth , development , and poverty reduction . The transition to a lowcarbon economy is potentially a powerful , attractive , and sustainable growth story , marked by higher resilience , more innovation , more liveable cities , robust agriculture , and stronger ecosystems . To succeed , that is , to deliver efficiently and fully realise the potential benefits of climate policies , careful policy design is essential . b . A well-designed carbon price is an indispensable part of a strategy for reducing emissions in an efficient way . Carbon prices are intended to incentivise the changes needed in investment , production , and consumption patterns , and to induce the kind of technological progress that can bring down future abatement costs . There are different ways to introduce a carbon price . Greenhouse gas ( GHG ) emissions can be priced explicitly through a carbon tax or a cap-and-trade system . c . Achieving the Paris Agreement objectives will require all countries to implement climate policy packages . These packages can include policies that complement carbon pricing and tackle market failures other than the GHG externality . d . The Commission explored multiple lines of evidence on the level of carbon pricing that would be consistent with achieving the temperature objective of the Paris Agreement , including technological roadmaps , analyses of national mitigation and development pathways , and global integrated assessment models , taking into account the strengths and limitations of these various information sources . e . Explicit carbon-pricing instruments can raise revenue efficiently because they help overcome a key market failure : the climate externality . f . Carbon pricing by itself may not be sufficient to induce change at the pace and on the scale required for the Paris Agreement target to be met , and may need to be complemented by other well-designed policies tackling various market and Government failures , as well as other imperfections .
A combination of policies is likely to be more dynamically efficient and attractive than a single policy . These policies could include investing in public transportation infrastructure and urban planning ; laying the groundwork for renewablebased power generation ; introducing or raising efficiency standards , adapting city design , and land and forest management ; investing in relevant R & D initiatives ; and developing financial devices to reduce the risk-weighted capital costs of low-carbon technologies and projects . Adopting other cost-effective policies can mean that a given emission reduction may be induced with lower carbon prices than if those policies were absent .
Countries may choose different instruments to implement their climate policies , depending on national and local circumstances and on the support they receive . Based on industry and
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