#carbonpricing involves assigning a cost to #greenhousegasemissions (GHG) through taxes or emissions trading schemes (ETS)
There are currently 75 carbon taxes and ETS in the world covering 24% of GHG emissions. With other schemes that will be in operation in the coming years, up to 30% of GHG emissions will be covered.
CARBON PRICING
#carbonpricing involves assigning a cost to #greenhousegasemissions (GHG) through taxes or emissions trading schemes (ETS). It is the most effective way to reduce emissions because it assigns the cost of emissions directly to the emitting agent, encouraging efficiencies in production processes and the adoption of #cleantechnologies.
There are currently 75 carbon taxes and ETS in the world covering 24% of GHG emissions. With other schemes that will be in operation in the coming years, up to 30% of GHG emissions will be covered.
WHAT SHOULD BE THE PRICE OF CO2 EMISSIONS?
In 2017, the Carbon Pricing Leadership Coalition concluded that carbon prices shall range between $50 and $100/tCO2 in 2030 to meet the Paris Climate Agreement's temperature target.
Only 1% of CO2 emissions are priced at that level: Uruguay, Switzerland, Liechtenstein, Sweden, Norway, Finland, Netherlands, EU, Canada, Luxembourg, Austria and the UK.
In 2024, the global average carbon price is $32/tCO2, $18 below the minimum needed in six years.
The carbon price varies significantly between regions. Europe and Central Asia have the highest number of pricing initiatives of any region globally, with an average price of $50/tCO2.
In the United States and Canada, the average price is slightly lower, at $48/tCO2, with 16 initiatives in place. North America is characterized by federal and state/provincial systems, most notably Canada's federal carbon pricing system and the EU's Regional Greenhouse Gas Program.
Perhaps the most notable case for carbon pricing is Mexico. In 2014, Mexico became the first country to establish a carbon tax in Latin America and began the design of an Emissions Trading System that should have come into operation last year.
But also, subnational governments in Mexico found in carbon taxes an effective instrument for fiscal revenue collection and to incentivize the reduction of CO2 emissions. Today Mexico is the country with the highest number of carbon taxes at the subnational level.
Zacatecas, Baja California, Tamaulipas, Querétaro, Guanajuato, Estado de México and Yucatán have established state carbon taxes, and Jalisco, Durango, San Luis Potosà and Colima are in the process of adopting them. Most of these taxes apply to stationary source emissions of various greenhouse gases and rates range from $2.38 per ton in the State of Mexico to $29 per ton in Querétaro.
At the national level, Mexico's average carbon tax does not exceed $3 per ton.
#climateaction #greengrowth #climatefinance #carbonmarkets #netzero
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