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State and Trends of Carbon Pricing 2016

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State and Trends of Carbon Pricing 2016 report

Objective

To support the growing momentum for

carbon pricing initiatives worldwide, the

report will target the public and private

stakeholders engaged in their design

and implementation. The report will

focus on latest developments at both

regional and international levels.

Key Components

1. Status of Carbon pricing. Updated

overview of existing and emerging

carbon pricing initiatives around the

world—including national, sub-national

and corporate activities.

2. Analytical issue focus: carbon pricing

alignment with other climate policies. A

focused analysis of policy alignment

and its relevance in the development of

national and sub-national initiatives.

3. A forward-looking assessment of the

advantages of international cooperation

in reaching global targets. Some

modeling work provides an assessment

of cost saving potentials with focus on

INDCs submitted before COP21.

Internationally a historic step forward

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Photo by Arnaud Bouissou, December 12, 2015 Source: www.cop21.gouv.fr

Article 2: Hold the global temperature increase well below 2°C and pursue efforts to limit it below 1.5°C

Article 6: Pursue voluntary cooperation in the implementation of the NDCs

Paragraph 136 of the COP21 Decision: important role for tools such as carbon pricing

PARIS AGREEMENT

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Carbon pricing in INDCs

58% of the global GHG emissions

covered by these INDCs

29%

5%

24%

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87

Domestic

Domestic and international

International

101 INDCs plan or consider using

carbon pricing

This includes 3 of the 5 world’s largest emitters

New carbon pricing initiatives since early 2015 Share

of glo

bal G

HG

covere

d b

y

carb

on p

ricin

g initia

tives

Starting year

Korea ETS

2015 2016 2017

South Africa carbon tax Portugal

carbon tax Chile carbon tax

0%

2%

4%

6%

8%

10%

12%

14%

California and Québec coverage increase from 35% / 30% to 85%

Four new carbon pricing initiatives implemented since 2015

BC GGIRCA

Australia safeguard

mechanism

Newcomers

Existing initiatives

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Ontario CaT Alberta

carbon tax

Summary of Carbon Pricing Initiatives

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1 Denmark ETS + tax 1 Chile tax 1 California ETS 1 Ontario ETS

2 Estonia ETS + tax 2 South Africa tax 2 Québec WCI ETS 2 Alberta tax

3 Finland ETS + tax 3 British Columbia ETS + tax

4 France ETS + tax 4 Alberta ETS

5 Ireland ETS + tax 5 Connecticut ETS

6 Latvia ETS + tax 6 Delaware ETS

7 Poland ETS + tax 7 Maine ETS

8 Portugal ETS + tax 8 Maryland ETS

9 Slovenia ETS + tax 9 Massachusetts RGGI ETS

10 Sweden ETS + tax 10 New Hampshire ETS

11 United Kingdom ETS + tax 11 New York ETS

12 Austria ETS 12 Rhode Island ETS

13 Belgium ETS 13 Vermont ETS

14 Bulgaria ETS 14 Beijing ETS

15 Croatia ETS 15 Chongqing ETS

16 Cyprus EU-28 EU ETS ETS 16 Guangdong China ETS

17 Czech Republic ETS 17 Hubei ETS

18 Germany ETS 18 Shanghai ETS

19 Greece ETS 19 Shenzhen ETS

20 Hungary ETS 20 Tianjin ETS

21 Italy ETS 21 Kyoto ETS

22 Lithuania ETS 22 Saitama Japan ETS

23 Luxembourg ETS 23 Tokyo ETS

24 Malta ETS

25 Netherlands ETS

26 Romania ETS

27 Slovakia ETS

28 Spain ETS

29 Iceland ETS + tax

30 Norway ETS + tax

31 Liechtenstein ETS

32 Switzerland ETS + tax

33 Australia ETS

34 Kazakhstan ETS

35 New Zealand ETS

36 Republic of Korea ETS

37 Japan tax

38 Mexico tax

SUB-NATIONAL

Implemented Scheduled Implemented Scheduled

NATIONAL

Growing global GHG emissions being priced

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Threefold increase of carbon pricing initiatives

in the past decade

Expansion of national and subnational jurisdictions

putting a price on carbon

7 out of the largest 10 global economies put a price on carbon

Carbon pricing instruments

currently value US$50 billion

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A Chinese national ETS in the horizon

The Chinese ETS could cover 4-6

GtCO2e, overtaking the EU ETS as the largest carbon

pricing initiative

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Carbon price in the private sector

Businesses and Long-term investors:

Carbon price is an intrinsic park of risk management strategy

To evaluate impact of mandatory carbon price in their operations

To identify cost saving opportunities in low-carbon investments

2015: 437 companies in all sectors using internal carbon price, up

from 150 in 2014, and 100 in 2013

Prices range from $1 to $357 / tCO2e, much higher than market prices

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Climate Change will impact financial gains in portfolios: prudent investors

reallocate capital from carbon-intensive toward climate-smart technologies

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Aligning carbon pricing policies

Successful carbon pricing needs to be

aligned with the broader policy landscape

serving multiple public objectives, of which

climate mitigation is just one.

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An international carbon market can significantly

reduce mitigation costs

2030

Continuing the carbon pricing momentum

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Implementation of the Paris Agreement and NDCs will require

increased cooperation between countries

Cooperation and linking initiatives in regional discussions on

potential future carbon pricing pathways

The High Level Carbon Pricing Panel: double carbon pricing

coverage to 25% by 2020; double this again in the next decade

Carbon Pricing Leadership Coalition to support: expanding,

deepening, converging

CPLC High-Level Assembly, Washington D.C., April 15, 2016

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Thank you!

Alexandre Kossoy

http://documents.worldbank.org/curated/en/26379305

https://openknowledge.worldbank.org/handle/10986/24288

http://www.carbonpricingleadership.org/

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BACK UP SLIDES

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An international carbon market can significantly

reduce mitigation costs

2050

Costs savings from international cooperation

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2050 mitigation costs US$ billion % of global GDP 2050

Without international carbon market

7,243 3.1

With international carbon market

3,302 1.4

Cost savings from international cooperation

3,940 (54% reduction)

1.7

Cost of meeting 2030 INDCs US$ billion % of global GDP 2050

Without international carbon market

354 0.25

With international carbon market

239 0.17

Cost savings from international cooperation

115 (32% reduction)

0.08

An international carbon market plays a critical role in:

Achieving a below two degree target

Huge cost saving potential

However, it also faces barriers and uncertainties:

Can countries afford to sell mitigation outcomes if they also have

NDC targets to reach and if they have complex packages of domestic

mitigation policies in place?

Can others countries afford to buy such mitigation outcomes if

facing risks on environmental integrity, comparability off efforts, and

international recognition?

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Barriers to an international carbon market

New political, technical and financial solutions are

required to overcome these barriers

A IEC é o movimento brasileiro dedicado ao contexto global da mudança do clima.

Nossa missão é fortalecer a liderança do Brasil na reação à mudança do clima e na

transição para uma economia de baixo carbono por meio da participação

empresarial.

A IEC é formada pela coalizão de organizações empresariais com reconhecimento internacional:

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Engage Brazilian companies in the debate about a comprehensive and

robust market approach aiming to reduce corporate GHG emissions

Emission Trading System Simulation of Business for

Climate Platform | EPC ETS

Ob

jeti

ve

s

28 companies participating in 2016

Co-create with business sector and deliver to the Brazilian

Government propositions for the design of possible national or

subnational ETS in Brazil

Growing global GHG emissions being priced

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Threefold increase of carbon pricing initiatives

in the past decade

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Continuing the carbon pricing momentum

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Implementation of the Paris Agreement and

NDCs will require increased cooperation

between countries

Cooperation and linking initiatives are gaining

momentum with discussions on potential future

carbon pricing pathways

The High Level Carbon Pricing Panel set forward

a global target: double carbon pricing

coverage to 25% by 2020, and double this again

in the next decade

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