Carbon Pricing Schemes Not Effective Enough

Global warming protestors in Chicago 2008

Published Sep 20, 2015 5:08 PM by Reuters

The number of carbon pricing schemes worldwide has almost doubled since 2012, but most taxes or markets have prices too low to prevent damaging global warming, the World Bank said on Sunday.

Carbon pricing, including emissions trading schemes from California to China, now covers about 12 percent of all greenhouse gas emissions in a sign of momentum before a U.N. summit on climate change in Paris in December, it said.

The number of carbon pricing instruments, both implemented or planned, has risen to 38 from 20 since 2012. South Korea began carbon trading this year, for instance, and both Chile and South Africa plan taxes on carbon emissions.

“There is a growing sense of inevitability ... that there will be a price on carbon" for governments and businesses,” Rachel Kyte, a vice president and special envoy for climate change at the World Bank, told a telephone news conference.

The study showed that prices, meant to shift investments from fossil fuels towards cleaner energies such as wind or solar power, ranged from less than a dollar a ton of carbon dioxide in Mexico to $130 a ton in Sweden.

In more than 85 percent of cases the price was less than $10, "considerably lower", the report said, than levels needed to help limit temperature rises to a U.N. goal of two degrees Celsius (3.6 Fahrenheit) above pre-industrial times.

The World Bank did not suggest a target price.

The combined value of the carbon pricing instruments was estimated at $50 billion a year worldwide, with $34 billion from markets and the other $16 billion in taxes.

A year ago, 73 countries and more than 1,000 companies and investors called for a price on carbon. Kyte said the group was becoming a "powerful coalition" that would make announcements before Paris. She gave no details.

A parallel report by the World Bank and the Organisation for Economic Cooperation and Development (OECD), with input from the International Monetary Fund, also laid out new principles for carbon pricing that it called FASTER.

"Carbon pricing is central to the quest for a cost-effective transition towards zero net emissions in the second half of the century," said Angel Gurría, Secretary-General of the OECD.

FASTER stands for Fairness, Alignment of policies and objectives, Stability and predictability, Transparency, Efficiency and cost effectiveness and Reliability and environmental integrity.