WHY IS EVERYONE TALKING ABOUT CARBON PRICING?
SHIFTING 'TAKING ACTION' TO 'CLIMATE AMBITION'
"To meet the objective of the Paris Agreement, we need to get to... scale. None of the critical investments will be possible unless we get the policies right. That means creating incentives for change - removing fossil fuels subsidies, introducing carbon pricing, increasing energy efficiency standards, and implementing auctions for lowest cost renewable energy.”
World Bank President, Jim Yong Kim, at the One Planet Summit, December 2017.
What is a Carbon Price?
The phrase “put a price on carbon” is becoming increasingly common in corporate and government conversation as discussions of how to address climate change move from concern to action. The World Bank Group, business groups, and investors have called on governments and corporations around the world to support carbon pricing to bring down emissions and drive cleaner investments in cleaner technologies.
A price on carbon helps shift the burden for the damage back to those who are responsible for it, and who can reduce it. Instead of dictating who should reduce emissions where and how, a carbon price gives an economic signal and polluters decide for themselves whether to discontinue their polluting activity, reduce emissions, or continue polluting and pay for it. In this way, the overall environmental goal is achieved in the most flexible and least-cost way to society. The carbon price also stimulates clean technology and market innovation, fueling new, low-carbon drivers of economic growth.
There are two main ways
Both options push companies to cut their emissions
Everyone pays tax on the fossil fuels they use, based on the carbon content. Taxes can be established for governments and/or companies.
CAP AND TRADE
A Government or Region sets an emissions cap. They give away or auction permits that allow emissions up to that total. Companies can then buy and sell their permits.
Carbon Pricing is already used all over the world.