A new UN report suggests that carbon pricing could serve as a powerful catalyst for sustainable growth in small island developing states (SIDS), provided it is adapted to their specific economic conditions and integrated into broader national strategies for resilience and low-carbon development.
A top-down satellite view of Caribbean SIDS. AI generated picture.
According to the report, carbon pricing should not be seen as a goal in itself but as part of a comprehensive policy framework that ‘supports resilience, fosters low-carbon development, and advances the climate and sustainable development objectives of SIDS.’
The findings stem from the Regional Dialogue on Carbon Pricing (REDiCAP) for SIDS, part of the Collaborative Instruments for Ambitious Climate Action initiative launched in 2016 at COP22. The initiative assists countries in designing carbon pricing mechanisms to help meet their Paris Agreement commitments through Nationally Determined Contributions.
The report emphasises that effective carbon pricing will require international collaboration, technical expertise, and strong national institutions. It describes capacity building as both ‘a prerequisite and a co-benefit of engaging with carbon pricing’, highlighting that many SIDS still lack reliable greenhouse gas inventories and robust monitoring, reporting, and verification systems.
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‘Addressing these gaps will require sustained and hands-on approaches to capacity building, rather than short-term interventions, with a strong emphasis on national ownership and continuity’, the report noted.
The study also highlights the potential of Article 6 of the Paris Agreement, which allows countries to cooperate on emission reductions through international carbon markets. For SIDS, this mechanism could act as ‘a catalyst for domestic capacity strengthening’ while creating new revenue opportunities. However, the report warns that such cooperation must ensure ‘environmental integrity, equitable benefit-sharing, and alignment with national climate and development priorities.’
Finally, the report calls for stronger regional cooperation, suggesting that knowledge sharing and coalition-building among SIDS could help reduce costs and amplify their collective influence in global environmental negotiations.
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As small island nations explore carbon pricing as a path to resilience and sustainable growth, the world is moving toward stronger, more accountable environmental initiatives. The message is clear: every nation, sector, and business must contribute to building low-carbon economies that protect both people and nature. At Green Earth, we turn this vision into action through verified, nature-based carbon projects that restore ecosystems and generate measurable impact. By supporting high-quality carbon credits, companies can align with emerging global frameworks—and take a meaningful step toward a cleaner, more resilient future.
