世界银行-2017年碳定价的现状和趋势.pdf

State and Trends of Carbon Pricing 2017 Washington DC November 2017 每日免费获取报告 1、每日微信群内分享5+最新重磅报告； 2、每日分享当日华尔街日报、金融时报； 3、每周分享经济学人 4、每月汇总500+份当月重磅报告 （增值服务） 扫一扫二维码 关注公号 回复：研究报告 加入“起点财经”微信群。 State and Trends of Carbon Pricing 2017 Washington DC November 2017 This report was prepared jointly by the World Bank, Ecofys and Vivid Economics. The World Bank team included Richard Zechter, Alexandre Kossoy, Klaus Oppermann, and Céline Ramstein. The Ecofys team included Long Lam, Noémie Klein, Lindee Wong, Jialiang Zhang, Maurice Quant, Maarten Neelis, and Sam Nierop. The Vivid Economics team included John Ward, Thomas Kansy, Stuart Evans, and Alex Child. © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 20 19 18 17 This work is a product of the staff of The World Bank with external contributions. 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All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. ISBN (electronic): 978-1-4648-1218-7 DOI: 10.1596/ 978-1-4648-1218-7 Picture credits: title: n_eri / fotolia.com; page 17: marvellousworld / thinkstock.com; page 21: eskaylim / thinkstock.com; page 59: hxdbzxy / thinkstock.com Cover and interior design: Meike Naumann Visuelle Kommunikation Reflecting the growing momentum for carbon pricing worldwide, the 2017 edition of the State and Trends of Carbon Pricing targets the wide audience of public and private stakeholders engaged in carbon pricing design and implementation. This report also provides critical input for negotiators involved in the implementation of the Paris Agreement, particularly for the meeting of the Conference of the Parties (COP) 23 to be held in Bonn in November 2017. As in the previous editions, the report provides an up-to-date overview of existing and emerging carbon pricing initiatives around the world, including national and subnational initiatives. Furthermore, it gives an overview of current corporate carbon pricing initiatives. Another key focus of the report is on the importance of an integrated approach to climate finance and climate markets, together with domestic policies. The analysis shows how such an integrated approach can be used to mobilize the scale of low-carbon investments needed to achieve the below 2°C temperature target and outlines a transition scenario and the possible role of resultsbased climate financing to catalyze climate markets. In May 2017, the World Bank launched the Carbon Pricing Dashboard website, adding an interactive dimension to the annual State and Trends of Carbon Pricing reports. This resource provides an up-to-date overview of carbon pricing initiatives and allows users to navigate through the visuals and data of the report. Please visit: http://carbonpricingdashboard.worldbank.org/. The task team responsible for this report intends to select new relevant topics to be explored in future editions or as part of the World Bank’s expanded Carbon Pricing Intelligence program. For example, work is currently underway on an analysis of the interaction of carbon taxes and fiscal policy. The report benefited greatly from the valuable contributions and perspectives of our colleagues in the climate and carbon finance community, ensuring the quality and clarity of this report: Joaquim Barris, Conor Barry, Nicolette Bartlett, Carter Brandon, Karan Capoor, Marcos Castro Rodrigues, Climatic Change Division of the Ministry of Environment and Sustainable Development of Colombia, David Coney, Hannah Cushing, Angelique dePlaa, Nathan Engle, Eduardo Ferreira, Greenhouse Gas Inventory and Research Center of Korea, Government of Alberta, Phillip Hannam, Kelley Hamrick, Huang Xiaochen, Dirk Heine, Sharlin Hemraj, Junki Kawamura, Thomas Kerr, Lai Han, Lisa Lang, Alan Lee, Paige Leuschner, Liu Ying, Frank Melum, Aya Naito, Norwegian Ministry of Finance, Kiyoshi Okumura, Qian Guoqiang, Ulrika Raab, Isabel Saldarriaga Arango, Rajinder Sahota, Herman Sips, William Space, Thailand Greenhouse Gas Management Organization, Massamba Thioye, Michael Toman, Johannes Trueby, Xiaodong Wang, Tom Witt, and Peter Zapfel. Oversight and guidance on drafting was provided respectively by Alexandre Kossoy for Section 2 on carbon pricing initiatives around the world and Klaus Oppermann for Section 3 on climate finance and climate markets, and by Richard Zechter and Céline Ramstein for the whole report. We also acknowledge the support from the Partnership for Market Readiness for the preparation of this report, and from the Carbon Pricing Leadership Coalition for the preparation of the Carbon Pricing Dashboard. 4 List of abbreviations and acronyms °C C E G CAR CCER Clean Air Rule Chinese Certified Emission Reduction CPP Clean Power Plan CDM Clean Development Mechanism CER Certified Emission Reduction Ci-Dev Carbon Initiative for Development CMA Conference of the Parties serving as the Meeting of the Parties to the Paris Agreement CO2 Carbon dioxide CO2e Carbon dioxide equivalent COP Conference of the Parties CORSIA Carbon Offset and Reduction Scheme for International Aviation CP1 First Commitment Period under the Kyoto Protocol EIB ERPA ERU ETS EU EU ETS F Degrees Celsius FSB European Investment Bank Emissions Reduction Purchase Agreement Emission Reduction Unit Emissions Trading System European Union European Union Emissions Trading System Financial Stability Board GCF Green Climate Fund GDP Gross Domestic Product GGIRCA Greenhouse Gas Industrial Reporting and Control Act GHG Greenhouse gas GtCO2e Gigaton of carbon dioxide equivalent I ICAO IEA IFC IMO INDC IPCC ITMO International Civil Aviation Organization International Energy Agency International Finance Corporation International Maritime Organization Intended Nationally Determined Contribution Intergovernmental Panel on Climate Change Internationally Transferred Mitigation Outcome J JCM K ktCO2e Kiloton of carbon dioxide equivalent Joint Crediting Mechanism 5 M MRV Monitoring, Reporting and Verification Megaton Mt MtCO2e Megaton of carbon dioxide S SBSTA Subsidiary Body for Scientific and Technological Advice T t Ton (note that, unless specified otherwise, ton in this report refers to a metric ton = 1,000 kg) Transformative Carbon Asset Facility Task Force on Climate-related Financial Disclosures tons of standard coal equivalent equivalent N NDC NDRC O P ODA OECD PAF PMR ppm R RBCF REDD REDD+ RGGI TCAF Nationally Determined Contribution China’s National Development and Reform Commission TCFD tce tCO2 Official Development Assistance Organisation for Economic ­ Co-operation and Development tCO2e U UK United Kingdom UNFCCC United Nations Framework Convention on Climate Change US United States Y y Pilot Auction Facility for Methane and Climate Change Mitigation Partnership for Market Readiness Parts per million Results-Based Climate Finance Reducing Emissions from Deforestation and Forest Degradation Extends REDD by including sustainable forest management, conservation of forests, and enhancement of carbon sinks Regional Greenhouse Gas Initiative Ton of carbon dioxide Ton of carbon dioxide equivalent Year 6 Table of contents 4 List of abbreviations and acronyms 10 Executive summary 17 1. Introduction 21 2. Existing and emerging carbon pricing initiatives around the world 22 2.1. Overview, recent developments, and emerging trends 22 2.1.1 Global overview of carbon pricing initiatives 31 2.1.2 Recent developments and ­ emerging trends 36 2.2. International carbon pricing initiatives 2.3. Regional, national, and subnational carbon pricing initiatives 43 55 2.4. Internal carbon pricing initiatives 7 59 62 3. Climate finance and climate markets: toward an integrated approach 3.1. An integrated approach to climate finance and international climate markets 62 3.1.1 Roles for climate finance 64 3.1.2 Roles for international climate markets 64 3.1.3 Combining climate finance and international climate markets 68 3.2. Results-Based Climate Finance to support the creation of climate markets and transition to an inter-­ national carbon market 68 3.2.1 Transitioning from climate finance to climate markets 70 3.2.2 Defining RBCF 72 3.2.3 How RBCF can support building climate markets and help the transition to an international carbon market 75 3.2.4 RBCF and resource mobilization 77 3.3. Illustration - An integrated approach to accelerating the transition to clean energy 82 Annex I 83 Annex II 89 Annex III 91 Annex IV 91 Concepts 91 Incremental investment required 92 Gross investment required 93 The economic cost of climate change impacts 94 Conversion rates Analysis of NDCs Summary of Parties’ views on the operationalization of Articles 6.2 and 6.4 of the Paris Agreement Cost and investment concepts Glossary 8 Figures 12 1 13 2 14 26 3 4 27 5 28 29 30 6 7 8 37 44 9 10 57 61 72 75 77 78 11 12 13 14 15 16 Summary map of regional, national and subnational carbon pricing initiatives implemented, scheduled for implementation and under consideration (ETS and carbon tax) Regional, national and subnational carbon pricing initiatives: share of global annual GHG emissions covered Prices in implemented carbon pricing initiatives Summary map of regional, national and subnational carbon pricing initiatives implemented, scheduled for implementation and under consideration (ETS and carbon tax) Regional, national and subnational carbon pricing initiatives: share of global annual GHG emissions covered Prices in implemented carbon pricing initiatives Carbon price and emissions coverage of implemented carbon pricing initiatives Carbon price, share of emissions covered and carbon pricing revenues of implemented carbon pricing initiatives Status of NDC submissions Carbon pricing initiatives implemented or scheduled for implementation, with sectoral coverage and GHG emissions covered Internal carbon prices of utilities publicly disclosed to CDP compared to Paris-compatible An integrated policy approach Channels through which RBCF supports prerequisites for climate markets Absolute and relative crediting of CERs in the first commitment period of the Kyoto Protocol (CP1) Estimated disbursements from the 12 largest RBCF funds A policy mix consistent with the reduction of coal-fired power generation Table of contents Tables 40 46 48 82 83 1 2 3 4 5 89 6 Market update of mechanisms under the Kyoto Protocol Key carbon pricing developments in the Canadian provinces and territories Key developments in the Chinese pilot ETSs Currency conversion rates, as of August 1, 2017 Unconditional and conditional targets and intended use of carbon pricing and/or market instruments stated in NDCs Summary of Parties‘ views on the operationalization of Articles 6.2 and 6.4 of the Paris Agreement Boxes 25 54 58 65 69 71 1 2 3 4 5 6 80 7 Carbon pricing in numbers Summary of selected changes in regional, national and subnational carbon pricing initiatives Use of internal carbon pricing by multilateral banks in project evaluations Elements for integrating climate finance and international climate markets The maturing of technology markets enables a shift to market-based finance A stylized RBCF program to reduce emissions by increasing the uptake of residential solar power systems RBCF to support the development of regional climate markets 9 10 Executive summary T here has been continued progress on carbon pricing initiatives over the last year at the regional, national and subnational levels. Despite these important positive steps, further action is necessary for carbon pricing to make a substantial contribution to the Paris Agreement pledge, which aims to keep the global average temperature increase to well below 2°C and pursue efforts to hold the increase to 1.5°C. The key priorities for action are: −− Expanding coverage through the development of new initiatives and the broadening of greenhouse gas (GHG) emissions coverage in existing initiatives; −− Deepening impact by raising carbon prices, which will send a stronger price signal, triggering more investments in low-carbon technologies; −− Aligning carbon pricing with complementary and enabling policies at the domestic level to ensure coherence with the broader policy framework; −− Progressing the guidelines of the Paris Agreement to pave the way towards linking domestic pricing schemes and enabling usage of international market mechanisms; and −− Using climate finance in a more strategic and integrated way to catalyze climate markets that support transformative climate change mitigation policies and investments. Accelerating the pace of action on these priorities in the coming years will be important for achieving a reduction in GHG emissions in line with the 2°C objective. The Paris Agreement entered into force on November 4, 2016, less than one year after it was adopted. Negotiations are now underway to develop the Paris Agreement guidelines. Countrylevel pledges to reduce GHG emissions under the Paris Agreement are formalized through Nationally Determined Contributions (NDCs). Carbon pricing plays a prominent role in many of these NDCs, with 81 Parties planning or considering its use to drive GHG mitigation. Among other functions, the Paris Agreement guidelines will provide operational guidance on cooperative approaches to emissions mitigation under Article 6, thereby shaping the way forward for international market mechanisms and the linking of domestic carbon pricing initiatives under the new international climate accord. However, negotiations to date have yielded little progress; there is substantial pressure to move rapidly toward consensus, given that the provisions of the Paris Agreement are scheduled to finalize at the end of 2018. In parallel to these international developments, regional, national and subnational jurisdictions continue to implement new initiatives. Since 2016, eight new initiatives have been launched and two more initiatives are scheduled for implementation in 2018. This brings the total number of carbon pricing initiatives implemented or scheduled for implementation to 47. Overall, 67 jurisdictions—representing about half of the global economy and more than a quarter of global GHG emissions—are putting a price on carbon, as shown in Figure 1. Carbon pricing initiatives cover about half of these jurisdictions’ GHG emissions on average, which translates to about 8 gigatons of carbon dioxide 11 equivalent (GtCO2e) or 15 percent of global GHG emissions as shown in Figure 2. Once the Chinese national ETS is implemented—it is currently planned to launch at the end of 2017—this will expand the emissions covered by carbon pricing to between 20 to 25 percent of global GHG emissions. Developments in the Americas have been particularly notable. In Canada, the government put forward a pan-Canadian approach to carbon pricing in 2016, requiring all provinces and territories to have a carbon price initiative in place by 2018 that meets a set of federal criteria. British Columbia had already launched a baseline-and-credit emissions trading system (ETS) in 2016, in addition to its preexisting carbon tax. Alberta and Ontario followed a year later, implementing a carbon tax and an ETS, respectively. Jurisdictions that do not already have existing carbon pricing initiatives have taken steps to implement the national carbon pricing requirement. A national carbon pricing system—currently under development—will apply to provinces and territories that do not meet the federal criteria. Furthermore, Mexico will start an ETS simulation in preparation for its pilot ETS launch in 2018, while Colombia and Chile are both investigating the introduction of ETSs. These ETS developments follow the carbon taxes that were implemented in these jurisdictions over the past three years. While climate action in the United States (US) at the federal level has been set back, there have been positive developments at the subnational level. The intended withdrawal of the US from the Paris Agreement and its review of energy- and climate-related policies, including the Climate Action Plan and the Clean Power Plan, dampens the ambition of the federal government’s policies on climate change mitigation. In response to these national developments, the America’s Pledge initiative is bringing together states, cities, companies, universities and other actors to highlight the continued support of the Paris Agreement goals by compiling and quantifying their efforts to reduce GHG emissions. These actions are reinforced by state 1 2 level actions, including Washington State’s launch of a baseline-and-credit ETS in 2017 and the extension of the California ETS until 2030. In addition, RGGI is looking to strengthen its ETS after 2020, Massachusetts is scheduled to launch its own state-level ETS which will operate alongside RGGI in 2018, and Oregon and Virginia are working to introduce carbon pricing. Companies are also taking climate action by setting internal carbon prices. The number of companies that have reported that they are doing so has grown by 11 percent since 2016. Further adoption of internal carbon pricing is anticipated following the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. These recommendations advise companies and investors to disclose climate-related financial risks and opportunities, and report the internal carbon prices used. While these developments highlight the growth of carbon pricing in recent years, several indicators demonstrate that significant strides are needed to align these initiatives with the ambition of the Paris Agreement. As shown in Figure 3, the observed carbon prices range from less than US$1 up to U ­ S$140/tCO2e. About three quarters of emissions covered by carbon pricing are priced at less than US$10/tCO2e. This is substantially lower than the price levels that are consistent with achieving the temperature goal of the Paris Agreement, in the range of US$40–80/tCO2e in 2020.1 Currently, only 1 percent of emissions covered by a carbon pricing initiative are priced within that range. Additionally, the vast majority of emissions are not covered by carbon pricing. Coverage is still far from the global target identified by the High-Level Panel on Carbon Pricing2 of 50 percent within the next decade. While it is clear that very low carbon prices have little immediate impact, it is encouraging to see that even moderate price levels can have a significant impact; the United Kingdom’s consumption of coal for electricity generation decreased by 76 percent in 2016 compared to 2013, when the Carbon Price Floor was introduced—the lowest level since 1934. Source: High-Level Commission on Carbon Prices, Report of the High-Level Commission on Carbon Prices, 2017, Washington, DC: World Bank. Source: World Bank, Leaders Set Landmark Global Goals for Pricing Carbon Pollution, April 21, 2016, http://www.worldbank.org/en/news/pressrelease/2016/04/21/leaders-set-landmark-global-goals-for-pricing-carbon-pollution. 12 Figure 1 / Summary map of regional, national and subnational carbon pricing initiatives implemented, scheduled for implementation and under consideration (ETS and carbon tax) Manitoba Northwest Territories Alberta Ontario Canada Québec British Columbia Washington Oregon Iceland Newfoundland and labrador Eu Kazakhstan Republic of Korea Ukraine Prince Edward Island RGGI California Virginia Mexico Japan Nova Scotia New ­Brunswick Turkey China Massachusetts Vietnam Thailand Colombia Brazil Rio de Janeiro São Paulo Chile Norway South Africa New Zealand Australia Sweden Finland Denmark Beijing UK Estonia Latvia Ireland Poland Saitama Tokyo Tianjin Hubei Shanghai Fujian Chongqing Taiwan Guangdong Portugal Shenzhen France Slovenia Liechtenstein Switzerland Tally of carbon pricing initiatives implemented or scheduled for implementation ETS implemented or scheduled for implementation ETS and carbon tax implemented or scheduled Carbon tax implemented or scheduled for implementation Carbon tax implemented or scheduled, ETS under consideration ETS or carbon tax under consideration The circles represent subnational jurisdictions. The circles are not r­ epresentative of the size of the carbon pricing instrument, but show the subnational regions (large circles) and cities (small circles). 15 6 Singapore 42 21 National level 2 23 25 Subnational level Note: Carbon pricing initiatives are considered “scheduled for implementation” once they have been formally adopted through legislation and have an official, planned start date. Carbon pricing initiatives are considered “under consideration” if the government has announced its intention to work towards the implementation of a carbon pricing initiative and this has been formally confirmed by official government sources. The carbon pricing initiatives have been classified in ETSs and carbon taxes according to how they operate technically. ETS does not only refer to cap-and-trade systems, but also baseline-and-credit systems such as in British Columbia and baseline-and-offset systems such as in Australia. The authors recognize that other classifications are possible. Due to the dynamic approach to continuously improve data quality, changes to the map do not only reflect new developments, but also corrections following new information from official government sources, resulting in changes for Liechtenstein, Ukraine and Kyoto. Executive summary 13 Share of global annual GHG emissions Figure 2 / Regional, national and subnational carbon pricing initiatives: share of global annual GHG emissions covered 25% 20% 15% 47 45 40 37 36 32 10% 24 5% 9 21 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 8 2001 2000 1999 1998 7 1997 1992 1996 1991 6 1995 5 1994 4 1993 2 1990 Number of implemented initiatives 0% 16 19 10 15 Finland carbon tax (1990 ) Iceland carbon tax (2010 ) France carbon tax (2014 ) Poland carbon tax (1990 ) Tokyo CaT (2010 ) Mexico carbon tax (2014 ) Norway carbon tax (1991 ) Ireland carbon tax (2010 ) Hubei pilot ETS (2014 ) Sweden carbon tax (1991 ) Ukraine carbon tax (2011 ) Chongqing pilot ETS (2014 ) Denmark carbon tax (1992 ) Saitama ETS (2011 ) Korea ETS (2015 ) Slovenia carbon tax (1996 ) California CaT (2012 ) Portugal carbon tax (2015 ) Estonia carbon tax (2000 ) Japan carbon tax (2012 ) BC GGIRCA (2016 ) Latvia carbon tax (2004 ) Australia CPM (2012 - 2014) Australia ERF Safeguard Mechanism (2016 ) EU ETS (2005 ) Québec CaT (2013 ) Fujian pilot ETS (2016 ) Alberta SGER (2007 ) Kazakhstan ETS (2013 ) Washington CAR (2017 ) Switzerland ETS (2008 ) UK carbon price floor (2013 ) Ontario CaT (2017 ) New Zealand ETS (2008 ) Shenzhen pilot ETS (2013 ) Alberta carbon tax (2017 ) Switzerland carbon tax (2008 ) Shanghai pilot ETS (2013 ) Chile carbon tax (2017 ) Liechtenstein carbon tax (2008 ) Beijing pilot ETS (2013 ) Colombia carbon tax (2017 ) BC carbon tax (2008 ) Guangdong pilot ETS (2013 ) Massachusetts ETS (2018 ) RGGI (2009 ) Tianjin pilot ETS (2013 ) South Africa carbon tax (2018 ) China national ETS (2017 ) Note: Only the introduction or removal of an ETS or carbon tax is shown. Emissions are presented as a share of global GHG emissions in 2012. Annual changes in global, regional, national, and subnational GHG emissions are not shown in the graph. Due to the dynamic approach to continuously improve data quality using official government sources, the carbon pricing initiatives in Liechtenstein and Ukraine were added, the city-level Kyoto ETS was removed, and the start date of the Latvia carbon tax was corrected. The information on the Chinese national ETS represents early unofficial estimates based on the Chinese President’s announcement in September 2015. The National Treasury of South Africa will submit a revised carbon tax bill to Parliament later this year and the new implementation date of the carbon tax will be determined by the Minister of Finance. 14 Figure 3 / Prices in implemented carbon pricing initiatives US$ 140/ tCO2e 140 Sweden carbon tax Note: Nominal prices on August 1, 2017, shown for illustrative purpose only. The Australia ERF Safeguard Mechanism, British Columbia GGIRCA, Kazakhstan ETS and Washington CAR are not shown in this graph as price information is not available for those initiatives. Prices are not necessarily comparable between carbon pricing initiatives because of differences in the sectors covered and allocation methods applied, specific exemptions, and different compensation methods. US$ 130/ tCO2e US$ 120/ tCO2e US$ 110/ tCO2e US$ 100/ tCO2e US$ 90/ tCO2e US$/tCO2e Alberta SGER, BC carbon tax, UK carbon price floor, 24 Ireland carbon tax 87 Switzerland carbon tax, Liechtenstein carbon tax 73 Finland carbon tax (Liquid transport fuels) 69 Finland carbon tax (Other fossil fuels) US$ 80/ tCO2e US$ 70/ tCO2e 20 Slovenia carbon tax Korea ETS 18 US$ 60/ tCO2e 16 Alberta carbon tax 56 Norway carbon tax (upper) Québec CaT, California CaT, Ontario CaT 15 14 Saitama ETS, Tokyo CaT US$ 50/ tCO2e New Zealand ETS 13 12 Iceland carbon tax US$ 40/ tCO2e 36 US$ 30/ tCO2e US$ 20/ tCO2e 27 France carbon tax Denmark carbon tax Portugal carbon tax, Beijing pilot ETS EU ETS, Shenzhen pilot ETS RGGI, Norway carbon tax (lower) US$ 10/ tCO2e US$ 0/ tCO2e Estonia carbon tax, Guangdong pilot ETS, Hubei pilot ETS 8 7 Switzerland ETS 5 Latvia carbon tax, Fujian pilot ETS, Colombia carbon tax, Chile carbon tax, Shanghai pilot ETS 3 Mexico carbon tax (upper), Japan carbon tax 1 Tianjin pilot ETS 6 4 2 Mexico carbon tax (lower), Chongqing pilot ETS, <1 Poland carbon tax, Ukraine carbon tax Executive summary Several common issues need to be overcome to expand, deepen and accelerate carbon pricing initiatives. −− Domestically, one key concern is the potential impact of carbon pricing on the international competitiveness of some domestic industrial sectors, as discussed in the 2015 edition of the State and Trends of Carbon Pricing.3 Related to this issue is the persisting focus on costs to regulated companies and consumers in the carbon pricing discourse. Equal consideration of the potential benefits of carbon pricing, such as the identification of investments that could benefit from the low-carbon transition and the number of jobs that could be created, would yield a more balanced debate.4 −− Carbon pricing is also held back by the uncertain standing of climate policy and carbon pricing initiatives in the long term, due to policy changes such as those witnessed in the US. More broadly, carbon pricing can be most effective and acceptable to the public when it is well aligned with the broader context in a country.5 This challenges policymakers to balance multiple objectives, of which GHG emissions mitigation is just one. This issue is examined in the 2016 edition of the State and Trends of Carbon Pricing.6 −− At the international level, cooperation through international market mechanisms and linking of domestic carbon pricing initiatives will require the development of trust between parties.7 Accordingly, accounting rules (such as avoidance of “double counting”) will need to ensure that the generated mitigation outcomes correspond to mitigation actions.8 In the absence of such trust, trading and crediting would likely stall. Overcoming the issues that impede the implementation of carbon pricing is important to achieve a low-carbon development path that delivers the mitigation targets of the 3 4 5 6 7 8 Paris Agreement together with substantial economic benefits. This “win-win” development path is possible when well-designed domestic policies are supported by international cooperation. It is important that an integrated policy response be developed that combines domestic carbon prices, other domestic policies, climate finance and international market approaches. To reach this low-carbon development path, an annual level of incremental low-carbon investments on the order of US$700 billion will be required by 2030. These incremental investments will have to be mobilized through a combination of policy reforms, climate markets and climate finance. In addition, planned investment will need to be shifted from high-carbon technologies to a range of low-carbon alternatives. This amount is substantially lower than the long-run environmental and economic benefits that can be achieved; however, mobilizing these resources is a major challenge. Domestic resource mobilization will need to make the largest contribution. This can be enabled by domestic policies and measures, including carbon pricing, to catalyze private sector investment. Revenues from carbon pricing could also generate significant fiscal benefits. These domestic actions must be complemented by effective and efficient international cooperation. Following the analysis provided in the 2016 edition of the State and Trends of Carbon Pricing, an international carbon market implemented by 2030 has the potential to mobilize annual resource flows of US$220 billion, corresponding to about one third of the incremental investment needs of US$700 billion. International cooperation will also reduce the costs of achieving emission reduction targets. Source: World Bank and Ecofys, State and Trends of Carbon Pricing 2015, September 2015. Source: WRI, Putting a Price on Carbon: A Handbook for U.S. Policymakers, April 2015. Source: Baranzini et al., Carbon pricing in climate policy: seven reasons, complementary instruments, and political economy considerations, March 31, 2017. Source: World Bank, Ecofys and Vivid Economics, State and Trends of Carbon Pricing 2016, October 2016. Source: Fuessler et al., Market Mechanisms: Incentives and Integration in the Post-2020 World, November 2015. Source: World Bank, Networking Carbon Markets— Key Elements of the Process, July 2016. 15 16 Climate finance can play a crucial role in global resource mobilization to achieve a lowcarbon development path by complementing and catalyzing domestic policies and climate markets. In order to do so climate finance needs to be seen in a broader context of policy support, market building and leveraging private sector engagement. This calls for an integrated approach to climate finance and climate markets, in which climate finance helps catalyze the development of climate markets, and as climate markets develop they play a larger role in the mobilization of resources for low-carbon investments. Policy makers can optimize the use of climate finance in this transition by ensuring 1) that climate finance is provided on concessional terms only to the extent required to deliver the intervention; 2) that climate finance and climate markets become compatible through the use of common standards and definitions; 3) that climate markets are efficient and environmentally robust; and 4) as climate markets become more developed, they are utilized ahead of climate finance to mobilize low-carbon investments, so that public resources are used efficiently. Results-based climate finance (RBCF) can support such an integrated approach to climate finance and markets. RBCF is a form of climate finance where funds are disbursed by the provider of climate finance to the recipient upon achievement of a pre-agreed set of climate results. These results are typically defined as an output—for example, per unit of installed renewable capacity—or as an outcome— for example, per unit of emission reduction. RBCF can support building climate markets and help the transition to an international carbon market by: facilitating a private sector response to carbon pricing, including encouraging the ecosystem of business services required for climate markets, supporting domestic policy processes and building targeted implementation capacity; developing monitoring, reporting and verification systems that are needed in both RBCF and market designs; and piloting programs based on the principles of Article 6 of the Paris Agreement. While RBCF is already delivered through various facilities, it would have to be deployed at a larger scale than at present to enable transformative impacts in a broad range of economic sectors. 1 / Introduction 1 Introduction 17 18 1 Introduction “I nstead of pitting the environment versus the economy, let’s consider market principles and economic growth. … We believe that by changing the way we think and talk about climate change, we can lower the temperature of the debate—and accomplish a whole lot more,” asserted Michael Bloomberg and Carl Pope.9 Carbon pricing plays an important role in such response to tackling climate change as it requires the cost of greenhouse gas (GHG) emissions to be considered in financial decisions. This levels the playing field between emission-intensive and low-carbon economic activities, triggering more investments in lowcarbon technologies. Carbon pricing is therefore key to mobilizing the US$700 billion of incremental investments needed annually by 2030 to transition to a low-carbon economy.10 Carbon pricing initiatives continue to spread, despite the headwinds hampering more ambitious climate action in some jurisdictions. Substantial progress has been made over the past two years, including the entry into force of the Paris 9 10 Agreement and the eight new carbon pricing initiatives that have been implemented in national and subnational jurisdictions. Developments in the Americas have been particularly prominent; of the eight new carbon pricing initiatives launched since the beginning of 2016, six came from this region. These advances in the region represent a significant achievement, especially given the political opposition to carbon pricing initiatives at the national level in some of these jurisdictions. Despite these carbon pricing developments, substantial progress is needed on three key dimensions to reach the goal of the Paris Agreement: the coverage of GHG emissions must expand, deeper impacts on emission reductions need to be triggered by raising carbon prices, and the speed of these actions should accelerate in line with Paris Agreement compatible pathways. The current level of carbon prices is substantially lower than the level that the High-Level Commission on Carbon Prices found to be consistent with the temperature goal of the Paris Agreement. In Source: Bloomberg M. and Pope C., Climate of Hope: How Cities, Businesses, and Citizens Can Save the Planet, St. Martin’s Press, April 18, 2017, See Section 3 of this report. 19 addition, while 15 percent of global GHG emissions are covered by an emissions trading system (ETS) or carbon tax, a much higher coverage combined with international cooperation on climate markets is essential to mobilizing the large volume of resources required to finance the transition to a decarbonized economy and bring down the costs of low-carbon technology through economies of scale. Issues that may be holding back further progress include concerns about the impact of carbon pricing on international competitiveness, and costs to regulated companies and consumers. Uncertainty surrounding climate policy and the challenge of aligning carbon pricing with a country’s broader policy objectives are other possible constraints to more accelerated action. The report takes stock of the latest trends and developments in carbon pricing initiatives. It covers initiatives that explicitly apply a price on a unit of GHG emission, including ETSs—both cap-and-trade and baseline-and-credit systems, carbon taxes, offset mechanisms and results-based climate finance (RBCF). These initiatives are examined in Section 2 of this report on subnational, national, regional and international levels, the latter of which includes the existing Kyoto mechanisms and new approaches under Article 6 of the Paris Agreement, as well as initiatives outside of the United Nations Framework Convention on Climate Change (UNFCCC). In addition, this section reports on the internal carbon prices set by public and private organizations to price carbon for decision making purposes. Section 3 of this report explores how the two main modalities of international cooperation – climate finance and climate markets – can be used in an integrated approach to enable, support and complement domestic policies to mobilize the flow of resources needed to meet the temperature goal of the Paris Agreement. The section further discusses what role RBCF can play in transitioning towards such an integrated approach. The integrated approach and the role of RBCF will then be illustrated in using the example of accelerating the transition to clean energy. 20 » More and more politicians, policy makers and business actors are calling for a carbon price as the green economy’s missing link. Putting a price on carbon at a global scale could unleash innovation and provide the incentives that industries and consumers need to make sustainable choices. « António Guterres, Secretary-General of the United Nations » Carbon pricing reinforces the full realization of the nationally determined contributions and is an essential key for a strong, real, useful implementation of the Paris Agreement. « Patricia Espinosa, Executive Secretary of the United Nations Framework Convention on Climate Change 2 / Existing and emerging carbon pricing initiatives around the world 2 Existing and emerging carbon pricing initiatives around the world 21 22 2 Existing and emerging carbon pricing initiatives around the world 2.1 Overview, recent developments, and emerging trends 2.1.1 Global overview of carbon pricing initiatives At the international level, 81 of the 155 Parties that have submitted their Nationally Determined Contributions (NDCs) to date have stated that they are planning or considering the use of carbon pricing as a tool to meet their commitments,11 as shown in Box 1 and detailed further in Section 2.2. These Parties account for 55 percent of global GHG emissions. Among the Parties planning or considering the use of carbon pricing are three of the world’s five largest economies: China, Japan and India.12 11 12 13 14 15 The International Civil Aviation Organization’s (ICAO) adoption of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) in 2016 marked the first instance of a global sectoral carbon pricing initiative. CORSIA will cap GHG emissions from international aviation at 2020 levels. The pilot phase is planned to start in 2021. Efforts are now also being made to develop a GHG reduction strategy for the international shipping sector through the International Maritime Organization (IMO). At the national and subnational levels, new initiatives can build on substantial progress and experience with carbon pricing over the last 25 years.13 As of 2017, 42 national and 25 subnational jurisdictions14 are putting a price on carbon, as shown in Figure 4. Over the past decade, the number of jurisdictions with carbon pricing initiatives has doubled. These jurisdictions account for about half of the global economy15 and more than a quarter of global GHG emissions. On average, carbon For the purpose of this report, carbon pricing includes all market mechanisms. The authors recognize that different interpretations are possible since references to market mechanisms in NDCs are not always presented in a clear and consistent manner. These are different from the 101 INDCs planning or considering the use of carbon pricing reported in the 2016 edition of the State and Trends of Carbon Pricing as an INDC only becomes their first NDC upon ratification of the Paris Agreement, unless the Party decides to revise it. As of September 1, 2017, five Parties which have ratified the Paris Agreement indicated that they do not want their INDC to become their NDC and still have to submit their first NDC. The other two Parties, the United States (US) and the EU, did not state the use of carbon pricing in their NDCs, despite carbon pricing initiatives already being implemented in those jurisdictions at a regional, national and/or subnational level. The number of Parties planning or considering the use of carbon pricing in their NDCs is therefore not comparable with the jurisdictions with carbon pricing initiatives implemented, scheduled or under consideration. The authors have kept the format of presenting this information consistent with the previous editions of the State and Trends of Carbon Pricing for comparison purposes. Cities, states, and subnational regions. Authors’ calculations based on the 2014 gross domestic product of the national and subnational jurisdictions putting a price on carbon. 23 pricing initiatives implemented and scheduled for implementation cover about half of the emissions in these jurisdictions. These numbers translate to a total coverage of about 8 gigatons of carbon dioxide equivalent (GtCO2e) or about 15 percent of global GHG emissions, as displayed in Figure 5. As a result of the growth in the number of initiatives as well as expanded coverage of existing initiatives, the emissions covered by carbon pricing have increased almost fourfold over the past decade. Figure 5 shows that the number of carbon pricing initiatives implemented or scheduled for implementation has quadrupled in the past decade and almost doubled over the last five years, reaching 47 in 2017.16 Half of the new initiatives implemented or scheduled for implementation in the last five years were in upper-middle-income economies, while prior to 2013, carbon pricing initiatives were implemented almost exclusively in high-income economies.17 In the past two years, the Americas have been the main contributor to growth in the number of carbon pricing initiatives implemented or scheduled for implementation, with three quarters of the newly implemented initiatives—six out of eight—coming from this region. The number of carbon pricing initiatives in the Americas has doubled to 12 initiatives over 2016–2017, and this number will double again if all initiatives scheduled for implementation and under consideration are implemented. » As of 2017, 42 national and 25 subnational jurisdictions are putting a price on carbon. These jurisdictions account for about half of the global economy. « 16 17 18 19 In addition, once the Chinese national ETS is launched—currently planned for the end of 2017— it will be the largest carbon pricing initiative in the world, surpassing the European Union ETS (EU ETS). Already, the eight Chinese ETS pilots collectively cover 1.3 GtCO2e. While this coverage represents only about ten percent of the country’s annual GHG emissions, it nonetheless constitutes a substantial volume of GHG emissions; for example, this coverage is greater than the total GHG emissions from Canada. Following the launch of the Chinese national ETS, the emissions coverage of the world’s largest GHG emitter could increase fourfold.18 While the Chinese government has stepped up on the world stage to become a climate leader, Chinese companies continue to drive the expansion of coal-fired power plants both domestically and abroad. Realization of their expansion plans would see the world’s coal power capacity increase by 43 percent.19 These developments emphasize the need to level the playing field between emissionintensive and low-carbon technology. Carbon pricing can help to achieve this by making emissionintensive investments more expensive. Carbon pricing revenues can be used to finance low-carbon technology and lower their costs through developing economies of scale. In 2016, governments raised about US$22 billion in carbon pricing revenues from allowance auctions, direct payments to meet compliance obligations and carbon tax receipts, a decrease compared to the US$26 billion raised in 2015. This drop is largely due to the lower carbon prices in the EU ETS and Regional Greenhouse Gas Initiative (RGGI) and a large amount of unsold allowances in California and Québec. The decline in revenues can also be partially attributed to a reduction in revenues from some carbon taxes, in particular In 2007, 10 carbon pricing initiatives were implemented or scheduled for implementation, increasing to 24 in 2012 and 47 in 2017. Since 2013, 12 of the 24 new carbon pricing initiatives were implemented or scheduled for implementation in upper-middle-income economies. Source: Authors’ calculations based on the World Bank Country and Lending Groups Country Classifications as of September 1, 2017. The emissions to be covered under the Chinese national ETS are estimated to be about half of China’s national GHG emissions, based on the sector scope, as stated in the “US-China Joint Presidential Statement on Climate Change”, and public emissions data from the International Energy Agency. This estimate has not been validated by Chinese authorities. Informed researchers have judged that the GHG emissions coverage could potentially be about 40 percent of China’s total GHG emissions. Source: Coalswarm, Sierra Club and Greenpeace, Boom and Bust 2017, March 2017. 24 the United Kingdom (UK) Carbon Price Floor, which was lower than in the previous years due to large GHG emission reductions in the power sector. The UK’s consumption of coal for electricity generation decreased by 76 percent in 2016 compared to 2013 when the Carbon Price Floor was introduced—the lowest level since 1934.20 Thus, despite a decrease in total revenues, this trend highlights the positive contribution of carbon pricing in changing the energy mix, especially when supported by appropriate complementary policies. The EU ETS remains the largest source of carbon pricing revenues due to its size, followed by the carbon taxes in France, Sweden and Japan as illustrated in Figure 8. This figure also shows that many initiatives could increase their revenues by raising carbon prices or expanding their coverage. The total value of ETSs and carbon taxes in 2017 is US$52 billion,21 an increase of seven percent compared to the 2016 value of US$49 billion. This growth is primarily due to the launch of several carbon pricing initiatives at the end of 2016 and in 2017. Part of the increase is offset by lower carbon prices and declining caps in some ETSs. The observed carbon prices span a wide range, from less than US$1 to up to US$140/tCO2e, as shown in Figure 7. Price levels have increased in some newer initiatives such as in the France carbon 20 21 22 23 24 tax, which has risen from €22/tCO2e (US$26/tCO2e) to €31/tCO2e (US$37/tCO2e) over 2016-2017, and in the Republic of Korea ETS, where allowance prices have increased from KRW17,000/tCO2e (US$15/tCO2e) to KRW20,350/tCO2e (US$18/tCO2e) over the same period. Momentum is also building for carbon pricing in the private sector, where an increasing number of companies are using internal carbon pricing to actively manage climate-related risks. The number of companies that reported to CDP that they are currently using an internal price on carbon in 2017 or planning to do so within two years has increased by 11 percent compared to 2016.22 The number of carbon pricing initiatives and their global coverage has grown significantly over the past few years, with increasing support from both the public and private sector. However, the pace of these developments needs to accelerate. To help meet the temperature goal of the Paris Agreement, the High-Level Commission on Carbon Prices identified that prices will have to be in the range of US$40–80/tCO2e in 2020 and US$50–100/tCO2e by 2030.23 In the same context, the High-Level Panel on Carbon Pricing24 set a global target to achieve 50 percent coverage of emissions under carbon pricing initiatives within the next decade, which entails a much higher coverage than today’s level. Source: UK government, Energy Trends: solid fuels and derived gases – Coal consumption and coal stocks, accessed March 15, 2017. The total value of ETS markets was estimated by multiplying each ETS’ annual allowance or credit volume for 2017, or the most recent yearly volume data, with the price of the emission unit on April 1, 2017. The total value for carbon taxes was derived from official government budgets for 2017. Where the allowance or credit volume (for an ETS) or budget information (for a carbon tax) was unavailable, the value of the carbon pricing initiative was calculated by multiplying the GHG emissions covered with the nominal carbon price on April 1, 2017. No information was available on the amount of emission reduction credits which could be generated by facilities under the Washington State Clean Air Rule or offsets under the Australian safeguard mechanism. Also, the Chinese national ETS is yet to be implemented. Therefore, these were not included in the value calculation: The values presented in the Carbon Pricing Watch 2017 were not updated to August 1, 2017, because no other new carbon pricing initiatives were implemented nor have any changes occurred in the existing initiatives since the release of that brief in May 2017. Moreover, daily changes in prices and exchange rates over a 5-month period cannot be used as an indicator of the evolution of global carbon pricing initiatives. Source: CDP, Putting a price on carbon - Integrating climate risk into business, October 2017. The Commission recognizes that the target carbon price may differ across countries. It considers that achieving the Paris objectives will require all countries to implement climate policy packages. These policy packages include complementary policies to carbon pricing to tackle other market failures beyond the GHG externality that take into account: knowledge spillovers (and research & development), network effects, imperfect capital markets and unpriced co-benefits such as reduced pollution. Source: World Bank, Leaders Set Landmark Global Goals for Pricing Carbon Pollution, April 21, 2016, http://www.worldbank.org/en/news/pressrelease/2016/04/21/leaders-set-landmark-global-goals-for-pricing-carbon-pollution. 2 / Existing and emerging carbon pricing initiatives around the world Box 1 / Carbon pricing in numbers INTERNATIONAL CARBON PRICING INITIATIVES 81 NDCs include carbon pricing (domestic and/or international) 55% of global GHG emissions are covered by these NDCs REGIONAL, NATIONAL AND SUBNATIONAL CARBON PRICING INITIATIVES 42 NATIONAL 25 SUBNATIONAL jurisdictions with carbon pricing initiatives 47 CARBON PRICING INITIATIVES implemented or scheduled for implementation COVERING ANNUAL GLOBAL GHG EMISSIONS OF 8 GtCO2e = 15% PRICES IN THE IMPLEMENTED INITIATIVES US$1-140/tCO2e Three quarters of the emissions covered are priced