Cambodia: Carbon Pricing Options

Cambodia requested technical assistance from the Fiscal Affairs Department regarding the design and implementation of carbon pricing. This is a summary of the technical assistance report and the recommendations provided to the authorities. It first explores the appropriate choice of carbon pricing instrument for Cambodia given key country characteristics, determining a tax to be the favored option, before delving into key design and implementation considerations for such a carbon tax. It undertakes an economic analysis of reform options using the Climate Policy Assessment Tool (CPAT) to estimate impacts of carbon pricing on emission reductions, fossil fuel use and energy prices, fiscal revenue, economic welfare, and distributional impacts on households as well as energy-intensive, trade exposed firms.