Carbon price a necessity, says OECD

The head of the OECD has challenged world leaders to put a price on carbon, arguing that fossil fuel 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 Co-operation and Development has warned that 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.

The strong endorsement could prove inconvenient for the Abbott government, which is in the process of abolishing Labor's carbon pricing laws.

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.

"This is a blinding backdrop against which Australia may be the first country in the world to dismantle a carbon tax and an explicit carbon price."