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Pricing Carbon is not a new idea Figure from World Bank report, 2014 ©

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Page 1: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Solving the Climate Crisis: Carbon Pricing 101

Basics of Carbon Pricing

Dr. Linda Dismore (Diz) Swift

© http://PriceonCarbon.org

http://priceoncarbon.org/
Page 2: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Costs of fossil fuel use are not included in the current price • Hurricanes (Sandy $65b), drought, health costs, sea level rise

• Social Cost of Carbon estimates from $37 to >$400/ton CO2e

• Fossil fuels are artificially inexpensive

Put a price on carbon emissions so users pay the fair price • Fossil fuel use will decrease; CO2 emissions will decrease

• Alternatives become more affordable and grow • The economy can also grow

Carbon Pricing 101Putting the Market to Work PriceonCarbon.org

© http://PriceonCarbon.org

http://priceoncarbon.org/
Page 3: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Pricing Carbon is not a new idea

Figure from World Bank report, 2014

© http://PriceonCarbon.org

http://priceoncarbon.org/
Page 4: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Emissions Included

Revenue Use

http://priceoncarbon.org/
Page 5: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Emissions Included

Revenue Use

http://priceoncarbon.org/
Page 6: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Pricing Mechanism

© http://PriceonCarbon.org

Both mechanisms have been tried; both can be effective.

Cap and Trade Carbon Tax

Emissions Declining emissions cap set by government

Emissions volume based on market

Price Price based on marketRising price set by

government

http://priceoncarbon.org/
Page 7: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Linda Swift © 2015

Declining Cap Set by Government

MaximumEmissionsAllowed

Cap

Year 1 Year 2 Year 3 Year 4

Company A

Cap and Trade

© http://PriceonCarbon.org

http://priceoncarbon.org/
Page 8: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Linda Swift © 2015

Permits Auctioned by Government

Company A emits above cap, needs more permits

Company B buys more permits than neededCompany B

Cap

Cap

Company AEmissions Permits

Emissions Permits

© http://PriceonCarbon.org

Cap and Trade

http://priceoncarbon.org/
Page 9: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Company B sells permits to Company A

Company B

Company AEmissions Permits

Emissions Permits

© http://PriceonCarbon.org

Cap and Trade

http://priceoncarbon.org/
Page 10: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Linda Swift © 2015

Company B sells permits to Company A

Company B

Company AEmissions Permits

Emissions Permits

© http://PriceonCarbon.org

Cap and Trade

http://priceoncarbon.org/
Page 11: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Allocations

Allowances (permits) can be given by government to select companies or industries“Free permits”

May decrease with timeEmissions

Permits

Cap

Allocations“Free Permits”

Company A

© http://PriceonCarbon.org

Complications

http://priceoncarbon.org/
Page 12: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Offsets

Projects which sequester carbon can offset some emissions/permits

Emissions

Permits

Cap

Offset

Company A

© http://PriceonCarbon.org

Complications

http://priceoncarbon.org/
Page 13: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Emissions Included

Electricity generationTransportationIndustrial

Revenue Use

http://priceoncarbon.org/
Page 14: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Emissions Included

© http://PriceonCarbon.org

EIA

http://priceoncarbon.org/
Page 15: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Emissions Included

Electricity generationTransportationIndustrial

Revenue Use

Government ProgramsMitigate/adaptReduce deficitInfrastructure, etc

Revenue NeutralReturn to peopleReduce other taxes

http://priceoncarbon.org/
Page 16: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Revenue Use

Government ProgramsMitigate/adaptReduce deficitInfrastructure, etc

Revenue NeutralReturn to peopleReduce other taxes

California

http://priceoncarbon.org/
Page 17: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Revenue Use

Government ProgramsMitigate/adaptReduce deficitInfrastructure, etc

Revenue NeutralReturn to peopleReduce other taxes

Van Hollen Bill

http://priceoncarbon.org/
Page 18: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Revenue Use

Government ProgramsMitigate/adaptReduce deficitInfrastructure, etc

Revenue NeutralReturn to peopleReduce other taxes

CCL

http://priceoncarbon.org/
Page 19: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

How Do You Price Carbon?

© http://PriceonCarbon.org

Carbon Pricing Elements

Pricing Mechanism

Carbon Tax or FeeCap and Trade

Revenue Use

Government ProgramsMitigate/adaptReduce deficitInfrastructure, etc

Revenue NeutralReturn to peopleReduce other taxes

British Columbia

http://priceoncarbon.org/
Page 20: Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

For more information…

© http://PriceonCarbon.org

http://PriceonCarbon.org

http://priceoncarbon.org/
http://priceoncarbon.org/

Carbon Pricing Watch 2015

2020 CHINA CARBON PRICING SURVEY

The future of UK carbon pricing · global centre of carbon trading. Carbon pricing schemes are being established around the world: as of 1 April 2019, 57 carbon pricing initiatives

Carbon pricing-in-the-corporate-world

Solving the Climate Crisis: Carbon Pricing 101 Policy and Legislation Dr. Linda Dismore (Diz) Swift ©

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Carbon Pricing Options for Oregon

State and Trends of Carbon Pricing 2017 - Ecofys … the growing momentum for carbon pricing worldwide, the 2017 edition of the State and Trends of Carbon Pricing targets the wide

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Dismore Mezuzah Leaflet 2016

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Energy Econ Carbon Charge Report FINALv2 Econ Carbon Pricing Report.pdfNot all carbon pricing schemes are alike, and the implementation of a carbon pricing policy requires decisions

Carbon Pricing Watch 2017 - clgchile.clclgchile.cl/wp-content/uploads/2017/06/Carbon-Pricing-Watch-Advance... · d In 2007, 10 carbon pricing initiatives were implemented or scheduled

Carbon Pricing - Global context...Source: CDP, Global corporate use of carbon pricing, September 2014 Source: World Bank Group, State & Trends of Carbon Pricing (September 2015). Prices

Carbon pricing, Competitiveness and Carbon Leakage...Carbon pricing, Competitiveness and Carbon Leakage: THEORY, EVIDENCE AND POLICY DESIGN Grzegorz Peszko, the World Bank 9 Nov 2015

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Carbon Pricing Policy in Canada - lop.parl.caIn Canada, carbon pricing policy is in development. On 15 January 2018, the federal ... carbon pricing charges those who emit GHGs for

Implementing Effective Carbon Pricing - New Climate …newclimateeconomy.report/.../Implementing-Effective-Carbon-Pricing.pdfImplementing Effective Carbon Pricing 3 The Global Commission

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ECONOMICS CARBON PRICING AND ELECTRICITY MARKET REFORMS … · economics . carbon pricing and electricity market ... carbon pricing and electricity market reforms in china . ... the

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Global Carbon Pricing - OAPEN...Pricing 13 Ian W. H. Parry Nine Perspectives on Cooperation and Global Carbon Pricing 4 Global Carbon Pricing 31 Peter Cramton, Axel Ockenfels, and

THE BUSINESS OF PRICING CARBON

Carbon Pricing Report

Global Carbon Pricingcarbon-price.com/.../Global-Carbon-Pricing-June-2017.pdf · 2020. 1. 24. · Pricing 13 Ian W. H. Parry Nine Perspectives on Cooperation and Global Carbon Pricing

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State and Trends of Carbon Pricing May 2014 … and...2.1 Global overview of carbon pricing instruments 25 2.2 Emerging trends in carbon pricing instruments 27 2.3 Policy design lessons