Carbon pricing instruments including emissions trading schemes and carbon taxes currently cover around 12% of the world’s annual GHG emissions and are valued at around $48 billion, according to a report published Tuesday by the World Bank and consultants Ecofys.
Emissions trading schemes, excluding secondary market turnover, have grown in value to $34 billion currently from $32 billion in 2014 thanks to the launch of South Korea’s ETS earlier this year and the expansion of California’s and Quebec’s joint market to cover transport fuels, the Carbon Pricing Watch report found.
GHG tax schemes, in terms of collectable revenues, are worth some $14 billion, it added.
“Carbon pricing is clearly gaining traction … It’s no longer a matter of if or when,” said Rachel Kyte, the World Bank’s vice president and special envoy for climate change.
The report identified some 39 countries and 23 sub-national jurisdictions including cities, states and regions – which collectively account for 23% of global GHG emissions – that have now put a price on CO2 emissions.
Those pricing schemes cover around 7 billion tonnes of CO2e in these economies, or some 12% of global emissions, but they vary drastically in price and scope, with Sweden’s tax of around $130 per tonne at one end of the spectrum and Poland’s levy of €0.065/tonne for industrial sectors outside the EU ETS at the other.
The report noted carbon taxes implemented over the past year in France, Portugal and Mexico, tax legislation passed in Chile that will come into force in 2018, and two new pilot trading schemes launched in China’s Hubei and Chongqing.
It identified some of the steps the private sector has taken, with more than 150 major corporations now putting an internal price on their carbon emissions.
“For many businesses, this is part of a risk management strategy to evaluate the current or potential impact of a mandated carbon price on their operations. It is also used as a means to identify and value cost savings and revenue opportunities in low-carbon investments,” the brief said.
The paper also observes the growing calls from shareholders for companies to recognise the increasing threat climate change poses to their asset portfolios and, subsequently, investor returns.
The Carbon Pricing Watch 2015 brief, released to kick off this week’s Carbon Expo conference in Barcelona, is a preview of a longer State and Trends of Carbon Pricing 2015 report that will be launched at the World Bank’s annual meeting in Lima in October.
By Mike Szabo – firstname.lastname@example.org