According to the report captioned ‘Decarbonizing Development: Three Steps to a Zero Carbon Future', "Carbon pricing is necessary for an efficient transition toward decarbonization. It is also an efficient way to raise revenue, which can be used to support poverty reduction and development or to reduce other taxes. And a carbon tax can be designed to be administratively simple yet harder to evade than taxes on income or capital. But carbon pricing alone cannot solve the climate change problem, given the many market failures and behavioral biases that distort economies."

The Report points out that in Sweden, which has had a carbon tax since 1992, tax evasion is less than 1 percent for carbon, much less than for the value added tax. In the United Kingdom, evasion on energy taxes is about 2 percent, much lower than the 17 percent for income tax. That is a substantial advantage for the many developing countries that struggle with tax evasion - and the wedge it introduces between the formal and informal sectors.

It notes that stabilizing climate change entails reducing net emissions of carbon dioxide (CO2) to zero.

The three steps or principles advocated by the Report to guide countries in their efforts to create a zero-carbon future:

(a) planning ahead with an eye on the end goal;

(b) going beyond carbon pricing with a policy package that triggers changes in investment patterns, technology, and behaviors; and

(c) protecting poor people and avoiding concentrated losses. Although countries at different levels of income and with different endowments will adopt different strategies, all have a role to play.

The actions necessary to make the transition to zero net emissions are affordable if governments start today. It, however, cautions the countries that the costs of climate change management will grow if action is delayed.

As put by a World Bank release, "Waiting until 2030 would increase the global cost by 50 percent."

The report has indicated that building of public transport and other infrastructure should ideally precede introduction of energy pricing and taxation initiatives.

It says: "Providing the needed infrastructure is critical for both the effectiveness of low-carbon strategies and the political acceptability of carbon pricing. For example, imposing significant fuel taxes has proved a lot more difficult in the United States than in Europe, in part because a much larger share of U.S. voters live in places unserved by easy, convenient public transportation. Infrastructure also makes a carbon price more effective by making demand more elastic to price changes. A modeling exercise for Paris shows that public transport reduces by half the carbon tax needed to achieve a given emission reduction."

This report explores the types of climate policy packages needed to achieve a complete decarbonization of our economies by 2100, taking into account the many market failures, imperfections, risks, undesired distributional effects, and political economy obstacles that such a deep transition entails. It also offers a possible road map for countries that are planning their transition toward full decarbonization.

As to whether prices are an effective instrument to trigger the desired change, the Report says: "The answer depends on such factors as the availability of low-carbon alternatives or the need for long-term credibility. For instance, a carbon tax is sufficient to trigger fuel shifts in the energy sector (maybe from coal to gas) but may not be enough to generate frontier innovation in the energy or automobile industry."