In response to a challenge from membersof the Carbon Pricing Panel for the world to expand carbonpricing to cover 25 percent of global emissions by 2020,Ethiopia commissioned a carbon pricing study to obtainrecommendations on the role and possible forms of carbonpricing policies in Ethiopia. The study summarized in thisreport is a collaborative effort by the Government ofEthiopia, the Ethiopian Development Research Institute(EDRI), and the World Bank to better understand thepotential benefits and costs for Ethiopia with use of carbonpricing to reduce greenhouse gas (GHG) emissions. The studyalso investigates distributional impacts of carbon pricingand measures that can help address unwanted distributionalimpacts. The specific aims include supporting the Governmentof Ethiopia (GoE) in identifying policy actions, includingcarbon pricing, to achieve its GHG emission reductiontargets; facilitating a dialogue among Ethiopianstakeholders on related policy instruments; and buildinganalytical and technical capacity for GoE's futurepolicy planning.Lessons from this analysis may also beuseful for other low-income countries.