Author: Afra Anam

ABSTRACT

Climate change has become a defining challenge for developing economies striving to expand their energy capacity without worsening environmental degradation. Among the various policy tools available, carbon pricing has emerged as a mechanism designed to internalize the social cost of greenhouse gas emissions and encourage a shift toward cleaner energy sources. This study evaluates whether carbon-pricing policies have influenced renewable energy investment in developing countries between 2015 and 2023.

Using secondary data from the World Bank Carbon Pricing Dashboard and the International Renewable Energy Agency (IRENA), the research compares renewable energy trends in countries with carbon-pricing mechanisms against those without. The analysis relies on descriptive statistics and visual representations to observe investment patterns and identify differences across both groups.

The findings indicate that while carbon pricing is associated with higher renewable energy investment, its effectiveness varies based on governance quality, policy design, and financial capacity. The study underscores that carbon pricing alone is insufficient—it performs best when supported by broader institutional and financial frameworks.