1 KLIMASCHUTZ IN ZAHLEN |

Economic incentives are one way of reducing greenhouse gas emissions By pricing the emissions the costs of damage are internalised according to the polluter pays principle Market participants have to pay additional costs when using emission-intensive energy sources and therefore have a financial incentive to avoid emissions and switch to

climate-neutral technologies There are two main instru-ments for pricing greenhouse gas emissions emissions trading systems and carbon taxes

Companies and governments are increasingly advocating for emissions trading systems and carbon taxes as

Global overview of introduced carbon pricing mechanisms

Sources ICAP (2019) World Bank (2018b) BMU

USA

Mexico

Colombia

Chile Australia

Argentina

Japan China

KazakhstanSouth Korea

New Zealand

CanadaIceland

Ukraine

EstoniaLatviaPoland

Emissions trading system introduced

USA Eleven states (California Connecticut Delaware Maine Maryland Massachusetts New Hampshire New York Rhode Island Vermont Washington) have introduced emissions trading systems

China Six provinces (Chongqing Fujian Guangdong Hubei Shanghai Tianjin) and the cities of Beijing and Shenzhen have in-troduced pilot projects for emissions trading systems

Canada In addition to the CO2 pricing mechanisms on the national level three provinces (Alberta British Columbia New-foundland and Labrador) have introduced a carbon tax and six provinces (Alberta British Columbia Nova Scotia Quebec Sas-katchewan Newfoundland and Labrador) have introduced emissions trading systems

Japan Tokyo and Saitama have intro-duced emissions trading systems

Singapore

Liechtenstein

Carbon tax introduced Emissions trading system and carbon tax introduced

Climate Action in Figures Carbon pricing Carbon pricing is becoming increasingly important worldwide for the cost-effective reduction of greenhouse gas emissions The two main instruments for carbon pricing are emissions trading systems and carbon taxes

CLIMATE ACTION IN FIGURES 2019 | CARBON PRICING

ldquoClimate Action in Figuresrdquo is a publication that provides a wealth of information and diagrams on international European and national climate action You can find the full English version on the BMU website wwwbmudeenpublications

Last update May 2019

2 KLIMASCHUTZ IN ZAHLEN |

Climate Action in Figures Carbon pricing

CLIMATE ACTION IN FIGURES 2019 | CARBON PRICING

ldquoClimate Action in Figuresrdquo is a publication that provides a wealth of information and diagrams on international European and national climate action You can find the full English version on the BMU website wwwbmudeenpublications

instruments for reducing greenhouse gases At the begin-ning of 2019 there were initiatives to price greenhouse gas emissions in 46 countries which together cover 195 per cent of global emissions1 The prices for the emission of one tonne of CO2 equivalent vary drastically worldwide In April 2018 prices reached up to 122 euros per tonne of CO2 equivalent

A carbon tax puts a certain tax rate on the emission of greenhouse gases The basis for calculating a carbon tax is the greenhouse gas emissions resulting from the combus-tion of fossil fuels For the emission-intensive use of coal or heating oil a comparatively high carbon tax must be paid whereas the climate-neutral use of renewable energies is not taxed In contrast to emissions trading the price for greenhouse gas emissions is set by the carbon tax directly and usually increased successively at certain intervals A carbon tax can be used as an alternative or complementary instrument to emissions trading The United Kingdom Estonia Latvia Portugal Slovenia Spain Ireland France Finland Sweden Denmark Poland Norway Switzerland Ukraine Iceland Liechtenstein Colombia Mexico Chile Japan Canada India Argentina and Singapore and indivi-dual regional governments in Canada have implemented a carbon tax2 Concepts for the introduction of a carbon tax are also being discussed in Germany

Emission trading systems function according to the ldquocap and traderdquo principle The total quantity for the emission of certain greenhouse gases is limited (cap) and issued in the form of tradable emission allowances (trade) Market participants obliged to trade emissions must surrender such an allowance for every tonne of greenhouse gas they emit The price of an emission allowance is market-based

and varies depending on the supply of allowances and the demand of market participants In contrast to a carbon tax the amount of greenhouse gas emissions that can be emitted is predetermined and the price is formed through the market The European Union (EU-ETS) Switzerland Norway Liechtenstein New Zealand Australia Canada and some regional governments in China the United States Canada and Japan have implemented emissions trading systems or started pilot projects3

The EU Emissions Trading System (EU-ETS) is the worldrsquos largest carbon market to date and the EUrsquos key climate action instrument It covers over 40 per cent of the EUrsquos total emissions The sectors covered by the EU-ETS (energy energy-intensive industry intra-European aviation) must reduce their emissions by 43 per cent by 2030 compared to 2005 Due to low allowance prices the EU Emissions Trading Systemrsquos incentives to reduce emissions are far from achieving the desired economic effect Following the decision to reform the emissions trading system in April 2018 the price of emission allowances has tripled from an average of 5 euros per tonne of CO2 in 2017 to 15 euros in 20184 At the beginning of 2019 the price continued to rise and ranged between 20 and 25 euros per tonne of CO2

5 Due to higher CO2 prices modern and low-emission gas and steam power plants have in many cases become more competitive than old coal-fired power plants since 20176 In 2018 emission allowances for around 173 million tonnes of CO2 with a total value of 258 billion euros were issued in Germany7

More than half of the proceeds from the sale of the EU-ETS is invested into climate protection and energy efficiency measures

1 World Bank (2018) Carbon Pricing Dashboard wwwcarbonpricingdashboardworldbankorg Current and historical information on pricing of global emissions trading systems is available online at wwwicapcarbonactioncomenets-prices

2 World Bank (2018) States and Trends of Carbon Pricing www openknowledgeworldbankorghandle10986296873 ICAP (2019) ETS Map wwwicapcarbonactioncomenets-map4 Agora Energiewende (2019) Die Energiewende im Stromsektor - Stand der Dinge wwwagora-energiewendedefileadmin2Projekte2018Jahres-

auswertung_2018125_Agora-JAW-2018_WEBpdf5 EEX (2019) EU Emission Allowances wwweexcomenmarket-dataenvironmental-marketsspot-marketeuropean-emission-allowances

20190115 6 Agora Energiewende (2019) Die Energiewende im Stromsektor - Stand der Dinge wwwagora-energiewendedefileadmin2Projekte2018

Jahresauswertung_2018125_Agora-JAW-2018_WEBpdf 7 DEHSt (2018) Auktionierung Deutsche Versteigerungen von Emissionsberechtigungen Periodischer Bericht Viertes Quartal 2018 wwwdehstde

SharedDocsdownloadsDEversteigerung20182018_Quartal_04pdf__blob=publicationFileampv=2

2 KLIMASCHUTZ IN ZAHLEN |

Climate Action in Figures Carbon pricing

CLIMATE ACTION IN FIGURES 2019 | CARBON PRICING

ldquoClimate Action in Figuresrdquo is a publication that provides a wealth of information and diagrams on international European and national climate action You can find the full English version on the BMU website wwwbmudeenpublications

instruments for reducing greenhouse gases At the begin-ning of 2019 there were initiatives to price greenhouse gas emissions in 46 countries which together cover 195 per cent of global emissions1 The prices for the emission of one tonne of CO2 equivalent vary drastically worldwide In April 2018 prices reached up to 122 euros per tonne of CO2 equivalent

A carbon tax puts a certain tax rate on the emission of greenhouse gases The basis for calculating a carbon tax is the greenhouse gas emissions resulting from the combus-tion of fossil fuels For the emission-intensive use of coal or heating oil a comparatively high carbon tax must be paid whereas the climate-neutral use of renewable energies is not taxed In contrast to emissions trading the price for greenhouse gas emissions is set by the carbon tax directly and usually increased successively at certain intervals A carbon tax can be used as an alternative or complementary instrument to emissions trading The United Kingdom Estonia Latvia Portugal Slovenia Spain Ireland France Finland Sweden Denmark Poland Norway Switzerland Ukraine Iceland Liechtenstein Colombia Mexico Chile Japan Canada India Argentina and Singapore and indivi-dual regional governments in Canada have implemented a carbon tax2 Concepts for the introduction of a carbon tax are also being discussed in Germany

Emission trading systems function according to the ldquocap and traderdquo principle The total quantity for the emission of certain greenhouse gases is limited (cap) and issued in the form of tradable emission allowances (trade) Market participants obliged to trade emissions must surrender such an allowance for every tonne of greenhouse gas they emit The price of an emission allowance is market-based

and varies depending on the supply of allowances and the demand of market participants In contrast to a carbon tax the amount of greenhouse gas emissions that can be emitted is predetermined and the price is formed through the market The European Union (EU-ETS) Switzerland Norway Liechtenstein New Zealand Australia Canada and some regional governments in China the United States Canada and Japan have implemented emissions trading systems or started pilot projects3

The EU Emissions Trading System (EU-ETS) is the worldrsquos largest carbon market to date and the EUrsquos key climate action instrument It covers over 40 per cent of the EUrsquos total emissions The sectors covered by the EU-ETS (energy energy-intensive industry intra-European aviation) must reduce their emissions by 43 per cent by 2030 compared to 2005 Due to low allowance prices the EU Emissions Trading Systemrsquos incentives to reduce emissions are far from achieving the desired economic effect Following the decision to reform the emissions trading system in April 2018 the price of emission allowances has tripled from an average of 5 euros per tonne of CO2 in 2017 to 15 euros in 20184 At the beginning of 2019 the price continued to rise and ranged between 20 and 25 euros per tonne of CO2

5 Due to higher CO2 prices modern and low-emission gas and steam power plants have in many cases become more competitive than old coal-fired power plants since 20176 In 2018 emission allowances for around 173 million tonnes of CO2 with a total value of 258 billion euros were issued in Germany7

More than half of the proceeds from the sale of the EU-ETS is invested into climate protection and energy efficiency measures

1 World Bank (2018) Carbon Pricing Dashboard wwwcarbonpricingdashboardworldbankorg Current and historical information on pricing of global emissions trading systems is available online at wwwicapcarbonactioncomenets-prices

2 World Bank (2018) States and Trends of Carbon Pricing www openknowledgeworldbankorghandle10986296873 ICAP (2019) ETS Map wwwicapcarbonactioncomenets-map4 Agora Energiewende (2019) Die Energiewende im Stromsektor - Stand der Dinge wwwagora-energiewendedefileadmin2Projekte2018Jahres-

auswertung_2018125_Agora-JAW-2018_WEBpdf5 EEX (2019) EU Emission Allowances wwweexcomenmarket-dataenvironmental-marketsspot-marketeuropean-emission-allowances

20190115 6 Agora Energiewende (2019) Die Energiewende im Stromsektor - Stand der Dinge wwwagora-energiewendedefileadmin2Projekte2018

Jahresauswertung_2018125_Agora-JAW-2018_WEBpdf 7 DEHSt (2018) Auktionierung Deutsche Versteigerungen von Emissionsberechtigungen Periodischer Bericht Viertes Quartal 2018 wwwdehstde

SharedDocsdownloadsDEversteigerung20182018_Quartal_04pdf__blob=publicationFileampv=2