The head of the OECD has challenged world leaders to put a price on carbon, arguing that fossil fuels emissions must become more expensive if they're to be phased out over the second half of the century.
In a clarion call to industrialised nations, the Organisation for Economic Cooperation and Development (OECD) has warned climate change poses a very real risk that doesn't come with a "bailout option" like financial crises.
Outlining a new climate agenda from the Paris-based economic club, OECD secretary general Angel Gurria said there was "strong consensus" that carbon pricing - either through a tax or emissions trading scheme (ETS) - should be at the cornerstone of all global efforts to tackle climate change.
"If they are serious about climate change, they can leave no stone unturned. All avenues to price carbon in a cost-effective way need to be explored and all conflicting policy signals eliminated," he said in a speech in London on Wednesday.
He said politicians favoured "almost anything other than a tax", which is why ETS' had emerged in Australia, New Zealand, Quebec, nine US states including California and seven Chinese cities.
Governments - including those of OECD nations that produce two thirds of the world's goods and services - needed to send a clear long-term signal that the cost of emissions was only going up.
Mr Gurria said energy efficiency programs and other strategies were important but "cherry-picking a few easy policy measures" would not be enough.
"Without placing a clear and explicit price on emissions we are, as they say, just pushing at a piece of string when it comes to changing consumer, producer and investor behaviour," he said.
The strong endorsement could prove inconvenient for the Abbott government, which is in the process of abolishing Labor's carbon pricing laws.
Comment has been sought from Environment Minister Greg Hunt, but his colleague Finance Minister Mathias Cormann on Thursday repeated the government's desire to repeal the legislation by July 2014.
The Climate Institute's John Connor said the OECD report was significant given the heads of two other major economic bodies - the IMF and World Bank - had called for similar action just one day earlier.
"We have this rising chorus of conservative, economic global leaders calling for carbon pricing, and reflecting that there is emerging carbon prices and carbon markets," he told AAP on Thursday.
"This is a blinding backdrop against which Australia may be the first country in the world to dismantle a carbon and an explicit carbon price."
The OECD also warned governments would need to end their reliance on coal and start favouring clean energy if the world was to achieve zero net emissions from fossil fuels by 2100.
This would involve a rethink of the subsidies paid to the fossil fuel industry, and an understanding that new coal-fired power plants risked becoming stranded or "unburnable" assets.
Mr Connor said the idea of setting a physical limit, or carbon budget, on emissions was becoming more mainstream, with the Climate Change Authority due to deliver a report on this later this month.
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