Global carbon prices should increase to meet Paris climate goal

30/05/2017 16:31 CO2


The cost of releasing carbon dioxide should increase to $50-$100 per tonne by 2030, much higher than the current price in Europe of less than $6, if countries want to meet climate pledges made under the Paris Agreement, according to economists on Monday.

It follows a call this month by a group of more than 200 businesses and governments, comprising oil majors Shell and BP, for a global carbon pricing system to prevent risky levels of global warming.

At present, 40 countries, over 20 cities and several other areas price carbon emissions using taxes or emissions trading systems (ETS). But the schemes only cover approximately 15 percent of global heat-trapping greenhouse gases, and the businesses declare that pricing systems have to be extended to the rest of the world.

The Commission on Carbon Prices, a group of 13 leading economists sustained by the World Bank, mentioned in their report that carbon dioxide prices should be $40-$80 per tonne by 2020, increasing to $50-$100 per tonne in the next decade.

Under the Paris agreement, over 190 nations promised to preserve planet-warming well below 2 degrees Celsius (3.6 degrees Fahrenheit) to fend off the worst effects of climate change.

Prices in Europe's ETS, the world's biggest carbon market, now trade at approximately 5 euros ($5.60) a tonne and are likely to average merely over 16 euros a tonne from 2021-2030. 

The commission announced that carbon pricing required to be combined with policies to encourage energy efficiency, renewable energy and innovation.

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