A white paper released through the Global Commission on the Economy and Climate says that placing a price on carbon dioxide (CO2) emissions doesn’t necessarily harm the economy.
The document also suggests that a carbon price in 2030 of US $75 per metric ton of CO2e in developed countries and US $35 per metric ton of CO2e in developing countries, on average, would make a big impact on global greenhouse gas emissions.
The paper, “Implementing Effective Carbon Pricing,” from the New Climate Economy says that carbon pricing works and doesn’t harm the economy. It urges developed and emerging economies, with the G-20 major economies in the lead, to commit to introducing carbon prices of roughly comparable levels by 2020.
The report includes a look at existing, emerging and proposed carbon pricing instruments and taxes around the world.
For example, in the United States, the nine states in the Regional Greenhouse Gas Initiative (RGGI) performed better than other states economically, growing 0.4% more from 2009-2013, while reducing their emissions significantly. The RGGI itself has contributed a net US$1.3bn to their states’ economies, according to the report.
In addition, Ireland’s carbon tax, introduced in 2010, raised much-needed revenues and avoided even harsher fiscal tightening measures during the global financial crisis, according to the white paper.
The New Climate Economy report also says that in its first five years, British Columbia’s carbon tax helped reduced emissions by 10%, while economic growth held up better than that of the rest of Canada.
“The time is right to introduce carbon prices around the world, as well as to pursue complementary measures like reform for fossil fuel subsidies, which act like negative carbon prices,” said Lord Nicholas Stern, Co-Chair of the Global Commission on the Economy and Climate. “The world economy is undergoing a remarkable period of transition, and we need to act now to avoid locking ourselves into unsustainable development patterns,” Stern said in a statement accompanying the report.
As a first step to expanding and strengthening carbon prices, the paper recommends the G20 should commit to establishing clear, credible and rising explicit carbon prices across their economies, at their summit in Turkey in November 2015.
The New Climate report says governments should also prioritize the use of resulting revenues to offset impacts on low-income households. The exact approach can be developed under the Chinese G20 Presidency in 2016. Other countries can start by mandating monitoring, reporting and verification (MRV) of emissions for businesses and industry.
This New Climate Economy Working Paper was written as a supporting document for the 2015 report of the Global Commission on the Economy and Climate, Seizing the Global Opportunity: Partnerships for Better Growth and a Better Climate.
The document is part of a series of 10 working papers. It reflects the recommendations made by the Global Commission.