World Bank Maps Carbon Pricing Initiatives, Recommends Gradual Development

World Bank29 May 2013: The World Bank has released a report, titled 'Mapping Carbon Pricing Initiatives: Developments and Prospects,' which provides an overview of current and prospective carbon pricing initiatives at the international, regional, national and sub-national levels. The report recommends flexibility in carbon pricing, alignment with national priorities, a staged approach for the introduction of new initiatives, and carefully timing the construction of linkages between emissions trading schemes.

The report finds that initiatives for carbon pricing, such as cap-and-trade systems and carbon taxes, have been developed or have started to develop in over 40 national and 20 sub-national jurisdictions. It calculates that all these initiatives originate in countries that together account for about 20% of global carbon dioxide emissions.

The report highlights that carbon prices in existing carbon markets have plummeted due to the economic crisis and reduced industrial activity. It recommends that carbon pricing should be flexible and in line with national (economic) priorities, and favors a staged and gradual introduction of new initiatives. The report also observes the increased use of carbon price stabilization mechanisms, such as price floors. Further, it notes that several emissions trading schemes have begun to link up to each other, such as those in the EU and Australia, the EU and Switzerland, and California and Québec. The report recommends carefully timing such linkages to ensure new initiatives have time to develop, while arguing that linkages have path dependent effects in that they will make it more difficult for schemes to unilaterally make drastic changes.

The report discusses several of these regional, national, and sub-national carbon pricing approaches, including in: Australia; Brazil; British Columbia, Canada; California, US; Chile; China; Costa Rica; Denmark; the EU; Finland; Ireland; Kazakhstan; Mexico; New Zealand; Norway; Québec, Canada; the Republic of Korea; South Africa; Sweden; Switzerland; Tokyo, Saitama and Kyoto in Japan; Turkey; Ukraine; and the UK.

The report also describes international approaches, including: the market-based initiatives under the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol; the voluntary carbon market; and REDD+. The report underlines the absence of international coordination on carbon pricing and emissions reductions targets, arguing that in order to limit the rise in global temperatures to 2 degrees Celsius or less, a balance needs to be struck between the large number of national carbon pricing initiatives and global coordination on carbon emissions reductions.

The report was presented during the Carbon Expo 2013 in Barcelona, Spain, on 29 May 2013. [Publication: Mapping Carbon Pricing Initiatives: Developments and Prospect] [World Bank Press Release] [Carbon Expo 2013 Press Release]