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

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Scientists can lead the fight against fake news

ECB: Growth measures even before the German elections

You’ve heard of 5G, but what about the quantum internet?

How a possible EU budget deficit affects the migration crisis

EU out to conquer African Union summit

The new Kiev rulers ask $35 billion from the West

What UK and EU risk if Brexit “wins” these elections

Eurogroup: IMF proposes Germany disposes

From UN Assembly podium, Central African Republic leader appeals for lifting arms embargo

UN chief welcomes start of Church-mediated national dialogue in Nicaragua

Colombia: Santos thanks the EU for its support to the peace process

Resisting EU budget cuts

Unemployment and exclusion brings EU cities to boiling point

Eurozone’s central bank leadership prepares for shoddier prospects

Draghi: printing a full extra trillion non negotiable to help all borrow cheaply

Harnessing the power of nature in the fight against climate change

PM May fosters chauvinism, declares trade war on Europe

“Who do I call if I want to call Europe?” Finally a name and a number to answer Henry Kissinger’s question

The true EU unemployment rate may have soared to 21.9%

Does the West play the Syrian game in Egypt?

Open, inclusive and diverse cities are better for business and economic growth

China confirms anti-state-subsidy investigation on EU wine imports

A rapid deterioration of the humanitarian situation in the war-torn Yemen

168 hours left for MEPs – ECOFIN Council to deliver a Banking Union

EU signs with Canada historic trade agreement, others to follow

EU finally agreed to cut roaming charges in 2017 but criticism is always there

MWC 2016 Live: Roshan CEO opens up on Afghanistan challenges

Eurozone: Economic Sentiment Indicator recovering losses

Time is running out to protect Africa’s forests

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

After swallowing effortlessly the right to be forgotten time for Google Ads now to behave

Learn from the margin, not the center: digital innovation with social impact as transformative force bridging digital divide

Community Manager – 1289

These are the cities where people work the longest hours

Inflation keeps falling in Eurozone

The way to entrepreneurship in the developing world

UN member states express their will to tackle global migration but specific actions are still missing

Bangladesh: Head of UN refugee agency calls on Asia-Pacific leaders to show ‘solidarity’ with Rohingya refugees

4 things President Trump could learn from Jimmy Carter

EU and China to do more in common if the global scene gets worse

Global Citizen-Volunteer Internships

Canada has high levels of well-being and solid growth but trade tensions and housing market pose risks while inclusiveness could be improved

COP21 Breaking News_05 December: Ban Ki-Moon Closing Address at COP21 Action Day Innovation, Imagination, Faster Climate Action

A Sting Exclusive: “Climate change and youth inaction: oblivion or nonchalance?”, AIESEC wonders from Brussels

This Chinese tech giant’s latest gadget is… a bus

EU should promote immigration as a humanitarian issue in order to provide a more permanent solution

UN chief condemns suspected Boko Haram attacks targeting Eid al-Fitr celebrations in Nigeria

Security Council imposes arms embargo on South Sudan

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

Will the French let Macron destroy their party political system?

Stricter rules and tougher sanctions for market manipulation and financial fraud

Why and how Germany had it again its own way in Cyprus

Can a Bavarian Oktoberfest beer indulger bring down the Berlin government?

Obese people more likely to smoke, says new gene research: WHO

EUREKA @ European Business Summit 2014: A European patent system can help European businesses lead industrial research and innovation on a global scale

TTIP fight round 6: last chance for the negotiators to finally open up as they touch the Brussels ring

3 reasons why AI won’t replace human translators… yet

How we can work together in the fight against NCDs

More hiring freedom can reduce teacher shortages in disadvantaged areas

Skeptic France about Trump-Juncker trade deal favoring German cars; EU’s unity in peril

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