Post Paris momentum builds for carbon pricing
COLOGNE, May 25, 2016—Early efforts by governments to put a price on carbon pollution point to a growing role for emissions mitigation as a source of revenue. In 2015, governments raised about US$26b from charging for carbon emissions, up 60 percent from the previous year, according to the World Bank Group’s latest Carbon Pricing Watch 2016 report.
Four new carbon pricing initiatives in Korea, Portugal, Canada’s British Columbia province, and Australia were launched, or have been in the works, since 2015.
The year also saw China announce plans to launch a national emissions trading scheme (ETS) in 2017. Early estimates in the report suggest that if the national market is implemented, the global value of carbon pricing initiatives could potentially double to US$100b. Mexico, which generated almost US$1b in revenue in 2014 through a carbon tax, announced it will build a national emissions registry, which with other policies will allow for the implementation of a national carbon market that could come in 2018. Canada is exploring options for carbon pricing on a national level.
As of today, 40 countries and over 20 cities, states and regions accounting for a quarter of all greenhouse gas emissions have put a price on carbon. This includes seven of the ten largest economies. Collectively, carbon pricing mechanisms account for about seven gigatons, or 13 percent, of global CO2 equivalent emissions – tantamount to closing down over 1,800 coal-fired power plants for a year. The total value of existing pricing mechanisms amounts to about US$50b.
“Putting a price on carbon pollution is essential to help countries deliver on their promises for the Paris climate change agreement, as it’s an efficient and effective way to help cut emissions and send a clear signal to the private sector to invest in cleaner, greener growth, “ said John Roome, Senior Director for Climate Change at the World Bank Group, speaking from the Carbon Expo in Cologne, Germany. “As more countries move to put a price on carbon pollution, we’ll see the benefits to people’s health, the environment and more investments towards a low carbon future.”
More than 90 countries mentioned emission trading systems, carbon taxes, and other carbon pricing in their national plans submitted for the Paris climate change agreement.
“Pricing carbon can send an important signal to the market,” added Vikram Widge, Head of Climate and Carbon Finance at the World Bank Group. “As more countries move to price emissions, we will begin to realize the considerable potential to shift global financing flows away from carbon emissions and into much needed climate smart investments.”
Carbon Pricing Watch 2016 is a preview of a longer report on the State and Trends of Carbon Pricing 2016, which will be launched later in the year.