What Is Carbon Pricing And How It Is Implemented Around The World

 

What Is Carbon Pricing?

The phrase put a price on carbon has now become well known with momentum growing among countries and business to put a price on carbon pollution as a means of bringing down emissions and drive investment into cleaner options.

So what does it mean to put a price on carbon, and why do many government and business leaders support it?

There are several paths governments can take to price carbon, all leading to the same result. They begin to capture what are known as the external costs of carbon emissions – costs that the public pays for in other ways, such as damage to crops and health care costs from heat waves and droughts or to property from flooding and sea level rise – and tie them to their sources through a price on carbon.

A price on carbon helps shift the burden for the damage back to those who are responsible for it, and who can reduce it. Instead of dictating who should reduce emissions where and how, a carbon price gives an economic signal and polluters decide for themselves whether to discontinue their polluting activity, reduce emissions, or continue polluting and pay for it. In this way, the overall environmental goal is achieved in the most flexible and least-cost way to society. The carbon price also stimulates clean technology and market innovation, fuelling new, low-carbon drivers of economic growth.

There are two main types of carbon pricing: Emissions Trading Systems (ETS) and Carbon Taxes.

ETS 

sometimes referred to as a cap-and-trade system – caps the total level of greenhouse gas emissions and allows those industries with low emissions to sell their extra allowances to larger emitters. By creating supply and demand for emissions allowances, an ETS establishes a market price for greenhouse gas emissions. The cap helps ensure that the required emission reductions will take place to keep the emitters (in aggregate) within their pre-allocated carbon budget.

Faced with the challenge of converting pledges to slash planet-warming emissions into policies, some of the world's biggest economies are turning to the same tool: a carbon price.

Globally, about 22% of global emissions are covered by the 46 national and 32 sub-national carbon pricing schemes operating today or in the planning stage, according to the World Bank.

Carbon pricing can come in the form of a tax or under a an emissions-trading, or cap-and-trade, scheme where companies or countries face a carbon limit

Below are some of the major carbon emissions trading systems (ETS) around the world.

China

A national ETS could be launched in 2021 following pilot schemes in provinces and cities including Beijing, Chongqing, Guangdong, Hunan, Shanghai, Shenzhen and Tianjin. They cover energy production and various energy-intensive industries.

European Union

The world's largest ETS, which started out 15 years ago, is mandatory for all 27 EU members, plus Iceland, Liechtenstein and Norway, covering power plants, aviation, energy intensive industries.

Kazakhstan

Its scheme, started in 2013. It was suspended 2016 and relaunched in 2018 after under going reforms. It covers the energy sector, mining and chemical industries.

Mexico

A three-year pilot scheme was launched in 2020 covering the power, oil and gas, and industrial sectors.

New Zealand

Its ETS, which began in 2008, covers electricity generators, manufacturers liquid fossil fuels including petrol and diesel. Some forest owners are given free permits, others can voluntarily join the scheme.

Quebec

Scheme was launched in 2012 and covers electricity, energy intensive industries.

South Korea

ETS started in 2015. It covers around 600 of the biggest emitters, collectively responsible for almost 70% of the country's annual emissions.

United States

The United States does not have a national ETS, but many regions and states use carbon pricing, such as California and states covered by the Regional Greenhouse Gas Initiative (RGGI) - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.

Carbon Tax 

A carbon tax is imposed by a government and is defined by per-tonne tax on the carbon emissions embedded in fossil fuels or other products. It puts a direct price on greenhouse gas (GHG) emissions and creates a financial incentive to lower emissions by switching to more efficient processes or cleaner fuels. A national carbon tax is currently implemented in 25 countries around the world.

Below are some of the major countries who have implemented carbon tax as part of their carbon pricing strategy. 

Finland

The carbon tax was implemented in Finland in January 1990, where only 0.3 percent of global greenhouse gasses were emitted. Initially, this tax was based on the carbon amount of fossil fuels, and when it first began, it was 1.12 euros per ton of carbon dioxide equivalent

Sweden

Sweden levies the highest carbon tax rate at €108.81 (US $119) per ton of carbon emissions

Ukraine & Poland

Poland & Ukraine have a carbon taxes that range from less than €1 per metric ton of carbon emissions. 

Switzerland & Liechtenstein

Switzerland and Liechtenstein levies second the highest carbon tax rate at (€90.53, $99) per ton of carbon emissions.

UK

The Carbon Price Support was introduced in England, Scotland and Wales at a rate of £4.94 per tonne of carbon dioxide-equivalent and is now capped at £18 until 2021. The tax is one part of the Total Carbon Price, which also includes the price of EU Emissions Trading System permits.

How countries choose?

The choice of the instrument will depend on national and economic circumstances. There are also more indirect ways of more accurately pricing carbon, such as through fuel taxes, the removal of fossil fuel subsidies, and regulations that may incorporate a “social cost of carbon.” Greenhouse gas emissions can also be priced through payments for emission reductions. Private entities or sovereigns can purchase emission reductions to compensate for their own emissions (so-called offsets) or to support mitigation activities through results-based finance.

Some 40 countries and more than 20 cities, states and provinces already use carbon pricing mechanisms, with more planning to implement them in the future.  Together the carbon pricing schemes now in place cover about half their emissions, which translates to about 13 percent of annual global greenhouse gas emissions. 

Comments

Post a Comment

Popular posts from this blog

Thackeray Family Runs The Underworld

Image
  The Thackeray Family have been in Maharashtra, using Shiv Sena to carry out all their orders and creating fear and agitation amongst the public. They use fear as a tool to gain wealth, power and fame.  But how do they manage to do this? Do they run the underworld?  We've got evidence to prove that they do have ties with the underworld and that they are mafias of Maharashtra, who destroy anyone in their way.  The Evidence Sanjay Raut, the political advisor to Shiv Sena and Thackeray family, has opened Pandora’s Box on the relationship of politicians with Mumbai underworld. One after other statement is being made by descendants of the underworld families; about the connection between politicians of the Congress and Shiv Sena with the Mumbai underworld, which is on the verge of extinction. Sundar Shekhar, the adopted son of Haji Mastan- another infamous criminal from Mumbai underworld, has confirmed that, Indira Gandhi used to meet karim Lala. “Sanjay Raut is right. Indira Gandhi us
Read more

How Have Countries Around The World Responded To Climate Change

Image
  In 2016, nearly 200 countries signed up to the Paris climate accord, which set individual targets aimed at preventing global temperatures from rising above 2C this century – and to pursue efforts to limit the temperature increase even further to 1.5C or less. Despite such promises, many countries are still not on track. Some of the globe’s biggest emitters – the US and Russia – have either left or not yet ratified the treaty. As mass strikes united the globe in its fight against our climate crisis, we look at what some of the countries with the largest stake in our environment are either doing – or not doing – to save our planet. The US Since Donald Trump’s administration took office, the US president – who famously called climate change a “hoax” – has done plenty to reverse his predecessor Barack Obama’s pro-environmental policies. Mr Trump has often pursued the interests of industries such as coal and car manufacturing at the expense of the environment in his pursuit of jobs growth
Read more

Why Should Everyone Take Climate Change Seriously And Plan For It

Image
The global warming that’s changing our climate is already having dire consequences. In just the past few decades: Rising temperatures have worsened extreme weather events. Chunks of ice in the Antarctic have broken apart. Wildfire seasons are months longer. Coral reefs have been bleached of their colors. Mosquitoes are expanding their territory, able to spread disease. What’s causing these harmful changes? It’s mainly us. We humans are the ones who burn fossil fuels and chop down forests, causing average temperatures to rise worldwide. That global warming trend is increasingly disrupting our climate — the average weather over many years. Earth has already warmed by about 1 degree Celsius, or 1.8 degrees Fahrenheit, since the 19th century, before industry started to boom. While we experience the effects, we’re on our way toward 1.5 degrees C (2.7 F) by as early as 2030. Why a half-degree more is such a big deal A warmer world — even by a half-degree Celsius — has more evaporation, leadi
Read more