LASER TALK: Carbon Pricing Around the World

Map of carbon prices around the world in 2017. Number inside square or circle is the carbon price in Euros.
Source: Institute for Climate Economics.

According to the Institute for Climate Economics, as of September 1st, 2017, more than 40 countries and 25 provinces or cities have adopted carbon pricing policies. These jurisdictions — including the European Union, China, Japan, Mexico, and California — account for around 25% of global greenhouse gas emissions. Additionally, India has a coal tax which is not captured in this report.

A recent OECD report on climate and pro-growth reforms shows how the scale of future damage from climate change poses a significant risk for economic growth. We can turn this risk into an economic opportunity if we implement the right policy measures. Carbon pricing is one such measure. The World Bank’s 2017 report State and Trends of Carbon Pricing shows that the number of jurisdictions in the world that are pricing carbon is increasing rapidly.

Carbon pricing “shifts the social costs of climate change to the source of the pollution, encouraging polluters to reduce emissions and invest in clean energy and low-carbon growth,” according to the Carbon Pricing Leadership Coalition.  Our federal government, Ontario, Alberta, Quebec, BC, and over 20 large Canadian businesses, including banks, oil companies, and the Cement Association of Canada, are members of the Carbon Pricing Leadership Coalition, initiated by the World Bank. Of note, Citizens’ Climate Lobby was a founding member of the Carbon Pricing Leadership Coalition in September 2015.

It is important to note that oil and gas companies and the Mining Association of Canada have been among groups urging the government to price carbon: ”Putting a price on carbon, to reflect the real environmental costs, is the most cost-effective way to reduce emissions, stimulate innovation and drive energy efficiency.”

There are two mechanisms for pricing carbon: a carbon tax (fee/levy), which sets a direct price; and an Emissions Trading Scheme (a.ka. cap and trade), which establishes a cap in emissions and involves trading permits to meet pollution goals. Citizens’ Climate Lobby (CCL) prefers a revenue neutral and steadily rising carbon tax, called carbon-fee-and-dividend. This approach is simpler and more transparent than cap and trade and thus lends itself better to coordinating carbon prices globally, which will be needed as carbon prices rise.

Currently, no country has implemented border carbon adjustments. As the carbon price rises, CCL thinks that border carbon adjustments are the best policy for ensuring a level playing field.

 

Learn more here:
The Carbon Pricing Leadership Coalition’s FASTER Principles

 

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This Laser talk is a collaboration of members of CCL Nelson, CCL Toronto North, and CCL Sudbury.