The Carbon Pricing Leadership Coalition collects and facilitates access to up-to-date information that is tailored for policy makers, business leaders and practitioners on current and emerging practices related to the design and implementation of carbon pricing initiatives, market trends, opportunities and trade-offs.
In September 2017, I4CE updated its database on carbon pricing policies. This panorama presents key trends regarding the implementation of explicit carbon pricing policies at the regional and national level in 2017. A timeline, a world map, a detailed table and a graph provide comprehensive information on the jurisdictions that have implemented or plan to implement explicit carbon pricing policies, the type of instrument chosen, the sectors covered, the pricing levels and the use of revenues.
This new study coming out Yale University's Program on Climate Change Communication provide evidence from a nationally representative survey on Americans' willingness to pay (WTP) for a carbon tax, and public preferences for how potential carbon-tax revenue should be spent. The average WTP for a tax on fossil fuels that increases household energy bills is US$177 per year. This translates into an average WTP of 14% more on average for households across the United States, where energy costs differ significantly across states. Regarding the tax revenues, Americans are most in support of using the money to invest in clean energy and infrastructure. There is relatively less support for reducing income or payroll taxes, returning dividends to households, and other expenditure categories. Finally, Americans support using the tax revenues to assist displaced workers in the coal industry enough to compensate each miner nearly US$146 000 upon passage of a carbon tax.
Over the past few years, CDP has been tracking a steady increase in the number of companies embedding an internal carbon price into their business strategies. The first publication of this information was in 2014, showing 150 global companies using internal carbon pricing to assess and manage carbon-related risks. Today, that number has grown to over 1,300 companies--including more than 100 Fortune Global 500 companies with collective annual revenues of US$7 trillion--disclosing in 2017 that they are currently using an internal carbon price or are planning to do so within the next two years.
Increasingly, companies across sectors and geographies are turning to an internal carbon price as one tool to help them reduce carbon emissions, mitigate climate-related business risks, and identify opportunities in the transition to a low-carbon economy. Establishing a carbon price across a company can help internalize the cost of greenhouse gas emissions by assigning a monetary value to each ton emitted. The brief describes the business case for internal carbon pricing, the different internal carbon pricing approaches used by companies, and key lessons learned, including: the multiple business benefits of an internal carbon price, the importance of embedding the price in a company’s business strategy, and the benefits and challenges of different types of pricing strategies.
The PMR China Carbon Market Monitor provides quarterly updates across the eight Chinese pilot carbon markets. The Monitor also provides analysis of climate policy and market developments at the national level. This issue covers market activity from April to June 2017. In Q2 2017, the secondary carbon market for China’s ETS pilots and the Fujian market accumulated a trading volume of 37.89 million tons, representing a trading value of US$63.41 million, and an average price of US$1.67/ton. Compared with Q1 2017, all ETS pilots saw a significant increase in their trading volumes in Q2. This was primarily driven by the need to meet compliance requirements.
Meeting the world’s agreed climate goals in the most cost-effective way while fostering growth requires countries to set a strong carbon price, with the goal of reaching $40-$80 per tonne of CO2 by 2020 and $50-100 per tonne by 2030. That’s the key conclusion of the High-Level Commission on Carbon Prices, led by Nobel Laureate Joseph Stiglitz and Lord Nicholas Stern.
Convened by the Carbon Pricing Leadership Coalition (CPLC) at Marrakesh in 2016 and supported by the Government of France and the World Bank Group, the Commission brought together 13 leading economists from nine developing and developed countries to identify the range of carbon prices that, together with other supportive policies, would deliver on the Paris climate targets agreed by nearly 200 countries in December 2015.
The report is a one stop shop for learning about key developments and prospects of existing and emerging carbon initiatives. There is a continued momentum for carbon pricing. As of 2017, over 40 national and 25 sub-national jurisdictions representing almost a quarter of global greenhouse gas emissions are putting a price on carbon. Over the past decade the number of jurisdictions with carbon pricing initiatives have doubled. On average, carbon pricing initiatives cover about half of the emissions in these jurisdictions, which translates to a total coverage of about 8 Gigatons of carbon dioxide or about 15% of global emissions (a fourfold increase over the past decade).
Greater cooperation through carbon trading could reduce the cost of climate change mitigation by 32 percent by 2030. New modelling analysis undertaken for the State and Trends of Carbon Pricing 2016 report shows that increased international carbon trading could enable large-scale emissions reductions at much lower cost than at present, based on the carbon mitigation goals spelled out in countries’ national climate plans under the Paris Agreement - the Nationally Determined Contributions, or NDCs. By the middle of the century, an international market has the potential to reduce global mitigation costs by more than 50 percent.
The “FASTER” principles presented in this report lay out an approach that focuses on the emerging design features for successful and cost-effective carbon pricing policies drawn from initial and growing experience around the world. By maintaining a focus on fairness, alignment with existing policies, stability, transparency, efficiency, and reliability, the FASTER principles show that a well-designed carbon pricing instrument can provide the flexibility, and certainty for a thriving business, and investment climate, while effectively reducing emissions. Case studies provide concrete examples of how the principles are being implemented in practice. (Spanish version)
Impacts Of A Global Carbon Price On Consumption And Value Creation
Implications For Carbon Pricing Design
For carbon pricing to cost-effectively support decarbonisation, it is essential to incentivize higher GHG productivity throughout global value chains. This is one of the findings presented by Ecofys and The Generation Foundation during the COP 22 in Marrakech. The study is the first released under the Carbon Pricing Unlocked partnership.
The TERI Council for Business Sustainability (a consortium of Indian industries) undertook a study on ‘Valuation of Energy Costs in the Indian Context’ along with CPLC and the World Bank Group, with the objective of gauging corporate sector’s preparedness in undertaking internal carbon pricing. The three phase project included extensive corporate consultations and deliberations, with 100+ business leaders on internal carbon pricing, its challenges, opportunities and possible methods of introducing carbon pricing among Indian businesses. These companies represented cement, oil and gas, chemical, automobile, textile, construction, IT, banking, power, manufacturing and mining sectors. A questionnaire was circulated among the industries and it was interesting to find that about 17% were already pricing carbon internally and another 40% were planning to do so in the next 1-2 years. A status report detailing this enormous opportunity in India was tabled at the first edition of the World Sustainable Development Summit, in New Delhi, on Oct 5, 2016. The momentum on internal carbon pricing is rising among Indian Inc as they see it as a good tool to make their investments future proof; yet there is a need for hand-holding for improved technical understanding in arriving at the ‘right price’ of carbon emissions and adoption of the carbon pricing process.
Competitiveness and Carbon Leakage
What is the Impact of Carbon Pricing on Competitiveness?
Japanese, Spanish version (Carbon Pricing Leadership Coalition, 2016)
Carbon Pricing & Addressing Competitiveness
Use of Revenues
What are the Options for Using Carbon-Pricing Revenues
Japanese Spanish version (Carbon Pricing Leadership Coalition, 2016)
The Investment of RGGI Proceeds through 2014 Regional Greenhouse Gas Initiative (RGGI, 2016)
Carbon pricing: how best to use the revenue?
(Grantham Institute, GGGI, 2015)
Two World Views on Carbon Revenues
(Resources for the Future, 2013)
Carbon Fee and Dividend Explained (Citizens Climate Lobby, 2016)
How to Use Carbon Tax Revenues
(Tax Policy Center, 2016)
Choose Wisely: Options and Trade-Offs in Recycling Carbon Pricing Revenue
(Canada Eco-Fiscal Commission)
British Columbia’s Revenue-Neutral Carbon Tax: A Review of the Latest “Grand Experiment"
(Nicholas Institute and University of Ottawa Institute of the Environment, 2015)
Carbon Pricing Revenues
How can Carbon Prices and Policies be effectively aligned? Spanish version (Carbon Pricing Leadership Coalition, 2016)
Climate and Carbon: Aligning prices and Policies
Aligning Policies for a Low-carbon Economy
The FASTER Principles for Successful Carbon Pricing: An approach based on initial experience
(OECD/World Bank Group, 2015)
A Win-Win Solution to Abate Aviation CO2 Emissions (Joint Program on the Science and Policy of Global Change, MIT, 2017)
Carbon Market Readiness Training Guide (IETA, B-PMR, 2017)
Internal Carbon Pricing, A Growing Corporate Practice (English and French, EpE, I4CE, 2016)
Carbon Pricing: what the business sector needs to know to position itself (CEBDS and CDP, 2016)
Embedding a Carbon Price Into Business Strategy (CDP, 2016)
Executive Guide to Carbon Pricing Leadership
(UN Global Compact, WRI, 2015)
Emerging Practices in Internal Carbon Pricing
Investing in a Time of Climate Change
Preparing for Carbon Pricing: Case Studies from Company Experience - Royal Dutch Shell, Rio Tinto, and Pacific Gas and Electric Company
(Partnership for Market Readiness, 2015)
Markets Matter: Greenhouse Gas Markets 2014
Caring for Climate Business Leadership Criteria on Carbon Pricing
(UN Global Compact, 2014)
Carbon Market Clubs and the New Paris Regime
(Climate Strategies, 2016)
Networking Carbon Markets – Key Elements of the Process
(World Bank, 2016)
Toward a club of carbon markets
Creating a club of carbon markets: Implications of the trade system
(ICTSD, WEF, 2015)
Addressing Climate Change: A WTO Exception to Incorporate Climate Clubs
(ICTSD, WEF, 2015)
Towards A Global Carbon Market Prospects for Linking the EU ETS to Other Carbon Markets
(Carbon Market Watch, 2015)
The Sustainable Infrastructure Imperative: Financing for Better Growth and Development. (The New Climate Economy , 2016)
Galvanising low-carbon innovation (The New Climate Economy , 2016)
As countries construct their 2030, 2040, and 2050 greenhouse gas mitigation scenarios, they have increasingly identified cost-efficient policies, including carbon pricing instruments, as essential elements of proposed climate action. Countries’ activities in this regard differ based on their unique circumstances, and range from improving “carbon pricing readiness” to designing and piloting various carbon pricing instruments. This note provides updates on countries' activities.
Companies in a diverse range of sectors see carbon pricing as the most efficient and cost-effective means of tackling the climate challenge. Many companies are voicing support for government action to put a price on carbon. Many also assign a price on carbon internally.
An ETS is an explicit carbon pricing instrument that limits or caps the allowed amount of greenhouse gas emissions and lets market forces disclose the carbon price through emitters trading emissions allowances.
Emissions Trading 101 Library