The carbon price landscape in 2019

World - May 29 2019
  • #carbon
  • #carbon/climate change

The carbon price landscape in 2019

In the UN report entitled "World Economic Situation and Prospects as of mid-2019", the international organization states that carbon pricing is a key element in the fight against climate change. To date, the most common carbon pricing initiatives are carbon taxes, royalties on the carbon content of fossil fuels, and emissions trading systems (ETS), where emitters can trade government-issued emission allowances to cover their emission levels. Funding programs focused on the results of verified GHG emission reductions and internal carbon pricing are other initiatives.

The choice between different pricing systems necessarily depends on national priorities, circumstances and the political context. Thus, pricing can vary considerably in terms of the approach (tax, ETS or other initiatives), the objectives to be set or the way revenue is used. In 2019, 45 countries and 25 sub-national jurisdictions (cities, states and regions) implemented carbon pricing initiatives. Below we can see the different carbon tax prices of countries, on the one hand, and the different carbon prices of the different ETSs and other carbon pricing initiatives, on the other hand.

Nominal prices per ton of CO2 emissions on 01 February 2019*

Source: UN/DESA, « World Economic Situation and Prospects as of mid-2019 »,

It should be noted that the carbon tax prices per tonne of CO2 equivalent vary, from one initiative to another, from less than $1 for Poland to $139 for Sweden. It can be added that the amounts that have been set to date, whether for the tax or for other initiatives, remain below the tutelary values generally estimated to be close to an effective carbon pricing for the ecological transition, which is around $200 to $300.  Even if the values remain below the expected prices, the report points out that $33 billion was collected as revenue from carbon pricing by governments in 2017. It should also be added that, in the absence of a more generalized market-based carbon pricing, many companies are already using a theoretical carbon price as a risk assessment tool to guide their business strategy in anticipation of future carbon constraints. In 2017, more than 1,300 companies were using some form of internal carbon price to inform their decisions or were planning to do so over the next two years. For example, Total uses a price range of $30-$40/tCO2e to evaluate investments in anticipation of future taxes implementation. This range would put the company at the average level of carbon pricing proposed by governments.

Félix Fouret, Carbon/Climate Analyst
Source
 : Beyond Ratings, UN

 

* Note: Prices are not necessarily comparable because of methodical differences and other factors. ETS - emissions trading system; CPF - carbon price floor; RGGI - Regional Greenhouse Gas Initiative; CaT - Cap-and-Trade, CCIR - Carbon Competitiveness Incentive Regulation; * Newfoundland and Labrador.

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