–There are a few rays of hope; this is definitely **not another entirely depressing climate-policy story
By Mathew Carr — reaction to data presented by the World Bank and others
May 25-26, 2021 — (LONDON): A majority of carbon prices still remain far below the US$40–80/ton range needed in 2020 to meet the 2°C temperature goal of the Paris Agreement, according to the World Bank’s latest survey of carbon markets.
The survey, the State & Trends of Carbon Pricing, found only 3.8% of global emissions are covered by a carbon price within or above this range — essentially in Europe.
Even higher prices will be needed over the next decade to reach the 1.5°C target — about $160/ton, according to energy consultancy Wood Mackenzie (see link below).
No national carbon prices exceed that level (see World Bank chart below), signalling that particular target is now out of reach, which places enormous physical and financial risks on the world’s people, its taxpayers — particularly those residing anywhere near the equator and those living in poverty.
What’s surprising is that so many of the world’s taxpayers are missing out on the revenue they would get if politicians made polluters of heat-trapping gas pay for the right to emit.
Taxpayers are being failed once because their climate is being ruined and a second time because they are not getting the carbon revenue, while owners of fossil fuel companies make supernormal profits (some are changing, it has to be said, and they are starting to assume carbon prices voluntarily — see below).
Europe made almost $23 billion from selling carbon allowances last year, with global revenue reaching $53 billion, the World Bank said. The global figure was up 18% on 2019, as EU allowance prices rose. See this:
European nations are set to reap even more. Check out how well the EU price has done since dropping at the start of the global pandemic. It’s trading at more than 55 euros/ton today (Wednesday). That’s about $67 a ton:
**And many companies are now taking things into their own hands. They are pretending carbon prices are there, even when politicians haven’t bothered to impose them.
See this on so called shadow carbon prices, or assumed/internal prices from the World Bank report using data from CDP (formerly Carbon Disclosure Project — see link and chart below). Some internal prices are as high as $1,800 a ton in the manufacturing sector:
See this section of the World Bank report on the voluntary internal carbon prices: ” … 16.1% of the companies publicly reporting to CDP use prices that fall within this ($40-$80/ton) range, and 9.8% use higher prices. Reported internal carbon price valuation ranges from USD 6 to USD 918, showing a high rate of variability depending on the sector within which a company operates. Reported internal carbon price valuation ranges from USD 6 to USD 918, showing a high rate of variability depending on the sector within which a company operates (see figure 4.2). Companies may also use more than one internal carbon price or sliding scale of carbon prices to reflect different and/or increasing carbon prices, as well as regulatory environments. In terms of geographic trends, the lowest median pricing is observed with companies operating in Africa. One explanation for this may be the low prevalence of regulatory pricing, reducing the ur- gency of companies to apply internal pricing as a strategy to anticipate carbon pricing. The highest median pricing can be observed in Europe and Asia, with existing or upcoming regulation being one explanation for the uptake of higher internal carbon prices. While median prices are still not at the levels that are required to align with the temperature goals of the Paris Agreement, in many cases they exceed the level of regulatory prices that were recorded over the past year.“
Because countries are failing to impose the carbon prices, the companies get to send the money they would have sent to taxpayers to their shareholders instead.
Here’s a breakdown on why carbon prices around $160/ton, as well as other policies, are needed for Woodmac’s 1.5C accelerated energy transition (AET) scenario:
Nation-imposed carbon pricing is still becoming more common, with China’s delayed national market getting underway this year. That takes total global coverage to more than 20% of total emissions, (Still, more than three quarters of the world’s emissions are being given away completely for free, the World Bank data shows.):
‘In 2020, initiatives around the world generated US$53 billion in revenue and covered 21.5% of global GHG emissions‘
The United States still does not have national carbon pricing and there’s surprisingly little discussion about it so far under the Biden-Harris administration. The U.S., with only 4% of the world’s population, is the country most to blame for the climate crisis.
Here is the bank’s cool map:
(Updates EU carbon price, adds Woodmac chart; earlier improves headline; clarifies to say more than a fifth of carbon emissions now covered by carbon pricing rather than almost a quarter — precise figure is 21.5% — the chart showing the impact of China’s market exaggerates it a bit)
This year’s Carbon State & Trends report link: https://openknowledge.worldbank.org/handle/10986/35620
Last year’s report: https://openknowledge.worldbank.org/bitstream/handle/10986/33809/9781464815867.pdf?sequence=4&isAllowed=y
CDP:
https://www.cdp.net/en/research/global-reports/putting-a-price-on-carbon