World Bank Report Highlights Growing Momentum to Price Carbon
28 May 2014: The World Bank and Ecofys have released a report, titled ‘State and Trends of Carbon Pricing 2014,' which states that momentum for carbon-pricing initiatives is building and initiatives such as emission trading schemes (ETS) and carbon taxes have increased significantly over the past year. The report describes key developments of existing and emerging carbon pricing instruments; domestic initiatives being implemented in California, Kazakhstan, Mexico, Quebec and six Chinese provinces; and carbon pricing initiatives scheduled for implementation in the Republic of Korea and South Africa.
With eight new carbon markets launched in 2013 alone, global ETS are worth about US$30 billion. To date, about 40 national and 23 sub-national jurisdictions – accounting for almost 25% of global emissions – have implemented or are scheduled to implement ETS or carbon taxes.
Alexandre Kossoy, Senior Financial Specialist, World Bank, said, “it is remarkable that the world's two largest emitters [US and China] are now home to carbon pricing instruments” and that China now houses the second largest carbon market in the world, behind the EU ETS. In the run up to the UN Secretary-General's Climate Summit in September, the World Bank and its partners are encouraging countries, sub-national jurisdictions and companies to put a price on carbon.
The report examines in detail the different approaches to carbon pricing and where each approach is used. While carbon taxes guarantee a carbon price in the economic system and ETS provide certainty about environmental impacts through an emissions cap, both internalize the cost of climate change and help raise revenues that may provide incentives to invest in low-carbon growth, according to the report. It also notes a robust global climate solution and greater use of carbon pricing could strengthen private sector confidence to invest in low-carbon solutions and technology.
The report argues that a full range of carbon pricing policies and instruments at all levels will be required to reduce emissions. For example, the report suggests domestic action has the potential to bypass the international regulatory gap by fostering targeted, low-carbon investments.