G20 Examines ‘Economic Value of Carbon’ as Tool to Tighten Paris Climate Targets

The G7 nations have invited G20 countries to join a “climate club” that it’s forming by the end of the year.

CarrZee: this study “f” may be part of the G20 countries’ consideration of the invitation. I’m not sure exactly what the “economic value of carbon” is … but in theory, at least some investors and pension funds favor countries where the risks of big fossil-fuel-asset-value decline is lower. So the higher the carbon price today, the more attractive the region, because there’s less financial risk, less downside. This is not how carbon pricing has been seen in the past — as a cost.

See “f” in this Annex published yesterday by the G20 presidency, Indonesia:

Link above

Climate talks have not been going well in the G20, according to Climate Home.

OECD background:

Carbon pricing encourages the required shift of production and consumption decisions towards low and zero carbon options very effectively.

Based on data from earlier OECD publications on Taxing Energy Use and Effective Carbon Rates a well-published academic paper finds that an increase of the ECR by EUR 10 per tonne CO2 reduces emission by 7.3% on average over time.

Recent increases in the ECR in the United Kingdom´s electricity sector, as well as in the European Union Emissions Trading System (EU ETS) were also accompanied by a strong decline in emissions.

There are also other policy instruments, but carbon pricing is very important, because it creates strong incentives by itself and because it increases coherence across climate policy packages.

This study highlights how 44 OECD and G20 countries, which together account for about 80% of global carbon emissions from energy use, price carbon emissions from energy use.

Specifically, it describes Effective carbon rates (ECRs), which summarise how countries price carbon through fuel excise taxes, carbon taxes and emissions trading systems.

In each of the 44 countries, the ECRs are measured for six economic sectors: industry, electricity generation, residential and commercial energy use, road transport, off-road transport, and agriculture and fisheries.

The report highlights the structure of effective carbon rates across countries and sectors in 2018 and discusses change compared to 2012 and 2015.

Detailed information on ECRs by country and sector for the years 2018, 2015 and 2012 is available on OECD.STAT.

The report also provides an assessment of major developments since 2018, namely the impact of more ambitious emissions trading in China and the EU.

See full pdf here:

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