Carbon Pricing now covering 13% of global GHG emissions; Canadian and U.S. developments

The World Bank released  the State and Trends of Carbon Pricing 2016 report on October 18,  which  measures the growing momentum of carbon markets: in 2016, 40 national jurisdictions and over 20 cities, states, and regions are putting a price on carbon, including seven out of 10 of the world’s largest economies.  About 13 percent of global GHG emissions are now covered by carbon pricing initiatives.  Drawing on new economic modelling, the report also predicts that this coverage could increase by the largest leap ever in 2017, to between 20 – 25 percent,  if the Chinese national Emissions Trading System (ETS) is implemented in 2017 as planned .

Carbon pricing in Canada continues to draw opinion and reaction, including  from Toby Sanger, a Senior Economist at CUPE and  a member of the Federal Sustainable Development Advisory Council, who reiterates a call for Just Transition and equity considerations in “How to offset the hardship of carbon pricing”  in the Ottawa Citizen (Oct. 6) . Andrew Gage at West Coast Environmental Law (Oct. 17) asks important questions about the price levels, scope, and timing of the national carbon price proposals currently under consideration  in “Will Canada’s national carbon price clean up our climate mess?” . His blog includes consideration of the impact  on B.C., and sends a message for  Saskatchewan: “So suck it up, Mr. Wall – it’s time to pay the carbon price and get on board with a national plan to deal with Canada’s climate mess”.   And a blog from Keith Brooks at Environmental Defence takes issue from an Ontario viewpoint with a recent Fraser Institute criticism of the Trudeau carbon pricing proposal in “Stupid or Just Lying? What’s up with the Fraser Institute?” (Oct. 13).

In the U.S., all eyes are on the State of Washington, where a ballot question in the November 8 election will decide whether Washington becomes the first state in the U.S. with a  carbon tax.   The Washington Carbon Emission Tax and Sales Tax Reduction question, known as Initiative 732 (I-732)  is modelled after B.C.’s carbon tax, but has divided traditional left and environmental allies, with the Alliance for Clean Jobs and Energy and the Washington District Labor Council opposed to the initiative, and the Sierra Club and others taking a “do not support” position.   For background, see the excellent overview (with links) at Ballotpedia, or “How a tax on carbon has divided Northwest climate activists” in the Los Angeles Times (Oct. 13) .

Proposals for carbon pricing designs:    A new policy brief released by the Centre for International Governance Innovation (CIGI)  in Waterloo, Ontario  proposes  a carbon-fee-and-dividend (CFD) program , which has been advocated by the Citizens’ Climate Lobby.  How the United States Can Do Much More on Climate and Jobs  envisions a federal program which would  collect a carbon fee from coal, oil and natural gas producers and importers, and distribute  all the revenue (after administrative costs) directly to American households in equal per capita monthly dividends.   To address fears of carbon leakage, the  program would include a border adjustment,  authorizing  a special duty on imports from countries lacking equivalent carbon pricing.   The paper concludes with arguments as to why this is the most likely- to- succeed political option.

Another U.S. discussion paper, from Resources for the Future,  Adding Quantity Certainty to a Carbon Tax, defines and discusses  the multitude of design elements for a Tax Adjustment Mechanism for Policy Pre-Commitment (TAMPP) –  which would adjust the tax rate of a carbon tax  at intermediate benchmark points if emissions reductions deviate sufficiently to threaten the long-term targets . The paper argues that the approach should be rule-based with a clear and transparent adjustment process to reduce unnecessary uncertainty for investment.

 

 

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