Few countries are pricing carbon high enough to meet climate targets

Gutteres 2018 UN

Video screen capture Secretary-General António Guterres addresses the UN Climate Conference (COP23) in Bonn, Germany (UN, 2017)

This article is brought to you in association with OECD.

Governments need to raise carbon prices much faster if they are to meet their commitments on cutting emissions and slowing the pace of climate change under the Paris Agreement, according to a new OECD report.

Effective Carbon Rates 2018: Pricing Carbon Emissions through Taxes and Emissions Trading presents new data on taxes and tradeable permits for carbon emissions in 42 OECD and G20 countries accounting for around 80% of global emissions. It finds that today’s carbon prices – while slowly rising – are still too low to have a significant impact on curbing climate change.

The report shows that the carbon pricing gap – which compares actual carbon prices and real climate costs, estimated at EUR 30 per tonne of CO2 – was 76.5% in 2018. This compares favourably with the 83% carbon gap reported in 2012 and the 79.5% gap in 2015, but it is still insufficient. At the current pace of decline, carbon prices will only meet real costs in 2095. Much faster action is needed to incentivise companies to innovate and compete to bring about a low-carbon economy and to stimulate households to adopt low-carbon lifestyles.

“The gulf between today’s carbon prices and the actual cost of emissions to our planet is unacceptable,” said OECD Secretary-General Angel Gurría. “Pricing carbon correctly is a concrete and cost-effective way to slow climate change. We are wasting an opportunity to steer our economies along a low-carbon growth path and losing precious time with every day that passes.”

The report measures carbon prices using the Effective Carbon Rate, which is the sum of three components: specific taxes on fossil fuels, carbon taxes and prices of tradeable emission permits. All three instruments increase the price of high-carbon relative to low- and zero-carbon fuels, encouraging energy users to go for low- or zero-carbon options.

The vast majority of emissions in industry and in the residential and commercial sector are entirely unpriced, the report finds. The carbon pricing gap is lowest for road transport (21% against the EUR 30 benchmark) and highest for industry (91%). The gap is over 80% in the electricity and the residential and commercial sectors.

Country analysis on 2015 carbon prices shows large variations, with carbon pricing gaps ranging from as low as 27% in Switzerland to above 90% in some emerging economies. France, India, Korea, Mexico and the United Kingdom substantially reduced their carbon pricing gaps between 2012 and 2015. Yet, still only 12 of the 42 countries studied had pricing gaps of below 50% in 2015.

New carbon pricing initiatives in some countries, such as China’s emissions trading scheme and renewed efforts in Canada and France to price carbon, could significantly reduce these gaps. The carbon-intensity of GDP is usually lower in countries with lower carbon pricing gaps.

The report rates emission trading as an effective way to price emissions, providing permit prices are stable at realistically high levels. Taxes have the advantage of simple administration, especially if grafted onto existing tax regimes. Revenue-neutral reforms can enable other taxes to be cut or carbon pricing can facilitate domestic revenue mobilisation.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

EU countries invested €5 trillion abroad

4 bold new ways New York is going clean and green

MEPs urge EU states to ensure better care of transported animals

EU agrees on Ukraine – Georgia visa-free travel amid veto risks and populist fears

UN rights expert calls for end to ‘purgatory’ of ‘international inaction’ facing Myanmar’s remaining Rohingya

More state aid to big firms, no special provisions for the SMEs

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

10 Downing street: Another desperate attempt to unite Britain on Brexit

Do all you can to resolve climate change ‘sticking points’ UN chief urges South-East Asian leaders, in Bali

US and China in painstaking efforts to conclude trade talks

Afghanistan: Bring ‘architects’ of latest ‘appalling’ suicide bombing to justice, says deputy UN mission chief

European Parliament speaks out against “killer robots”

Alexandre in Czech Republic

China Unlimited Special Report: The trip to China

Sustainable development demands a broader vision, says new OECD Development Centre report

A Europe that protects: EU customs seized over 31 million fake goods at EU borders in 2017

Security Council urges countries to factor child protection into conflict prevention efforts

Post-Brexit muddled times: the resignation of UK’s top ambassador and Theresa May’s vague plans

European Youth Capital 2019 announced: Novi Sad, Serbia

We could be sleepwalking into a new crisis. How should the business world prepare?

An economist explains why women are paid less

Erdogan vies to become Middle East Sultan over Khashoggi’s killing

UN postal agency ‘regrets’ US withdrawal

EU invests in green projects and bans single-use plastics while climate change requires more to be done

The West and Russia accomplished the dismembering and the economic destruction of Ukraine

Four lessons from Africa on building effective business ecosystems

Tax revenues continue increasing as the tax mix shifts further towards corporate and consumption taxes

A young European voice on Grexit: too high a bill and too big a deal!

Czech Babis, Austrian Kurz and others threaten Europe with nationalist populism

What is the IMF telling Eurozone about fiscal and banking unification?

Climate Change: a challenge yet to be tackled in medical schools

MWC 2016 LIVE: T-Mobile US reveals 5G trial plans

Quicker freezing and confiscation of criminal assets in the EU

Human rights: breaches in Russia, the Rakhine State and Bahrain

The ECB still protects the banks at the expense of the EU taxpayers

3 vital steps to a new gender equality playbook

Main results of Foreign Affairs EU Council, 16/07/2018

Two States ‘side-by-side’ is the ‘peaceful and just solution’ for Israel-Palestine conflict: Guterres

6 young leaders who are improving the state of the world on International Youth Day

EU budget: Boosting cooperation between tax and customs authorities for a safer and more prosperous EU

Why feeding the planet doesn’t have to mean sacrificing our forests

Brexit uncertainty keeps shaking the world’s financial markets

Is there a chance for the West to win the war on terror?

The future of international election observation missions

In polarized America, a new divide looms

Our poisonous air is harming our children’s brains

Sponsored content: when QUALITY meets OPEX in manufacturing

Why cities hold the key to safe, orderly migration

Employment MEPs want to ensure more flexibility and clarity for EU mobile workers

Britain offers more money for an orderly Brexit but the Irish question resurges

A ‘charismatic leader’ dedicated to making the world a better place for all: officials bid farewell to former UN chief Kofi Annan

How cultural understanding can help in the cultural shock

The EU Commission lets money market funds continue the unholy game of banks

EU’s judicial cooperation arm, Eurojust, to become more effective with new rules

Who will win the AI race? If countries work together, then the answer could be all of us

UN calls for funds to ease ‘deteriorating’ humanitarian situation in Gaza and West Bank

How leaders can use ‘agile governance’ to drive tech and win trust

VW diesel scandal and climate change: can increased independent car checks lead to cleaner mobility?

From low-earth orbit, ‘envoys’ of humanity join UN space forum

UN envoy ‘encouraged’ by latest talks on avoiding ‘worst-case scenario’ in Syria’s Idlib

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s