The Role of Carbon Pricing Mechanisms in Synergizing Green Technology Innovation and Regional Climate Governance

Abstract:

Carbon pricing has emerged as a key policy tool for mitigating greenhouse gas emissions, but its effectiveness in driving green technology innovation and coordinating regional climate governance remains contested. This paper examines the interplay between carbon pricing mechanisms, technological innovation, and cross-border climate cooperation, using case studies from the European Union Emissions Trading System (EU ETS), Japan’s carbon tax, and the Western African Carbon Market Initiative (WACMI). It identifies three critical factors shaping synergies: price signal stability, revenue recycling strategies, and institutional alignment across jurisdictions. The analysis reveals that carbon pricing can catalyze innovation when combined with targeted R&D investments and supportive regulatory frameworks, while regional coordination enhances cost-effectiveness and reduces carbon leakage. Findings highlight the need for differentiated pricing designs that account for economic development gaps and institutional capacities in global climate action.