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  • 2016

    Washington DC October 2016

    State and Trends of Carbon Pricing

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  • 2016

    State and Trends of Carbon Pricing Washington DC October 2016

    This report was prepared jointly by the World Bank, Ecofys and Vivid Economics.

    The World Bank team included Richard Zechter, Thomas Kerr, Alexandre Kossoy, Grzegorz Peszko, Klaus Oppermann, Celine Ramstein and Nicolai Prytz.

    The Ecofys team included Noémie Klein, Long Lam, Lindee Wong, Kornelis Blok, Maarten Neelis, Yannick Monschauer, Sam Nierop and Tom Berg.

    The Vivid Economics team included John Ward, Thomas Kansy, Luke Kemp, Bryan Vadheim and Nick Kingsmill.

  • © 2016 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 17 16 15

    This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

    Rights and Permissions

    This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/ licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions:

    Attribution—Please cite the work as follows: World Bank, Ecofys and Vivid Economics. 2016. State and Trends of Carbon Pricing 2016 (October), by World Bank, Washington, DC.

    Doi: 10.1596/978-1-4648-1001-5 License: Creative Commons Attribution CC BY 3.0 IGO

    Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation.

    Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution: This is an adaptation of an original work by The World Bank. Responsibility for the views and opinions expressed in the adaptation rests solely with the author or authors of the adaptation and are not endorsed by The World Bank.

    Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or images.

    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): 978-1-4648-1001-5 DOI: 10.1596/978-1-4648-1001-5

    Photo credits: page 17: dioxin / photocase.de; page 21: peych_p / fotolia.com; page 57: zettberlin / photocase.de; page 79: assistant / fotolia.com

    Cover and interior design: Meike Naumann Visuelle Kommunikation

    2

  • Reflecting the growing momentum for carbon pricing worldwide, the 2016 edition of the State and Trends of Carbon Pricing report 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 implementation of the Paris Agreement at the meeting of the Conference of the Parties (COP) in Marrakesh.

    As in the previous editions, the report provides an up-to-date overview of existing and emerging carbon pricing instruments 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 aligning carbon pricing with the broader policy landscape. The analysis provides lessons for policymakers on how to maximize synergies between climate mitigation and other related policies, while managing potential tensions and tradeoffs.

    This year’s report provides new modelling analysis to demonstrate the crucial benefits that an international carbon market established under Article 6 of the Paris Agreement could provide in reducing the costs to countries of achieving their emission reduction targets. An international carbon market could thus enable greater ambition in taking steps to reduce greenhouse gas emissions to a level consistent with the 2°C climate stabilization goal.

    The task team responsible for this report intends to select new relevant topics to be explored in future editions. These topics could include, for example, the interaction of carbon taxes and fiscal policy. As part of the World Bank’s expanded carbon pricing intelligence program, additional analytical topics such as the effectiveness of carbon pricing may also be explored.

    The report benefited greatly from the valuable written contributions and perspectives of our colleagues in the climate and carbon finance community, ensuring the quality and clarity of this report: Conor Barry, Carter Brandon, Karan Capoor, Hannah Cushing, Kurt van Dender, Shari Friedman, Dafei Huang, Ying Liu, Blanca Moreno-Dodson, Guoqiang Qian, Nigel Topping, and Peter Zapfel. Section 4 strongly benefited from the contribution of Ajay Gambir and Adam Hawkes of Imperial College London.

    We wish to extend our gratitude to those who offered their cooperation and insights during the development of this report: Emilie Alberola, Pedro Barata, Richard Baron, Joaquim Barris, Nicolette Bartlett, Adrien de Bassompierre, Garo Batmanian, Stefanie Bradtner, Derik Broekhoff, Cyril Cassisa, Marcos Castro Rodrigues, Zhibin Chen, Gerald Crane, Todd Croad, Neydi Sagnite Cruz García, Oscar Diamond, Charlie Dixon, Michael Döring, Maxime Durande, Beth Elliott, Etienne Espagne, Jasmin Faller, Christine Fedigan, Alexis Gazzo, Cécile Goubet, Katharina Grave, Duncan Gray, Greenhouse Gas Inventory and Research Center of Korea, Kelley Hamrick, Andries Hof, Xiaochen Huang, Aurélie Jardin, Frank Jotzo, Junki Kawamura, Alex Kazaglis, Pauline Maree Kennedy, Susanna Laaksonen-Craig, Sara Law, Franck Lecocq, Benoît Leguet, Lina Li, Rob Macquarie, Binzhang Meng, Cecil Morden, Aya Naito, Meike Naumann, Norwegian Ministry of Finance, Julien Perez, Annie Petsonk, Rodrigo Pizarro Gariazzo, Ulrika Raab, Isabel Saldarriaga Arango, Misato Sato, Igor Shishlov, Gerardo Spatuzzi, Gemma Toop, Ian Trim, Mariëlle Vosbeek, and Emilio Wills Valderrama.

    Oversight and guidance on drafting was provided respectively by Alexandre Kossoy for Section 2 on carbon pricing initiatives around the world, Grzegorz Peszko for Section 3 on aligning carbon pricing with the broader policy landscape, and Klaus Oppermann for Section 4 on building an international carbon market after Paris.

    We also acknowledge the support from the Partnership for Market Readiness.

    3

  • °C Degrees Celsius

    A AAU Assigned Amount Unit

    C CCER Chinese Certified Emission Reduction 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 CP2 Second Commitment Period under the Kyoto Protocol CPP Clean Power Plan

    D DRC Development and Reform Commission

    E EBRD European Bank for Reconstruction and Development ERF Emissions Reduction Fund ERU Emission Reduction Unit ETS Emissions Trading System EU European Union EU ETS European Union Emissions Trading System

    G GDP Gross Domestic Product GGIRCA Greenhouse Gas Industrial Reporting and Control Act GHG Greenhouse gas Gt Gigaton GtCO2e Gigaton of carbon dioxide equivalent

    I ICAO International Civil Aviation Organization IEA International Energy Agency IET International Emissions Trading IFC International Finance Corporation INDC Intended Nationally Determined Contribution IPCC Intergovernmental Panel on Climate Change ITMO Internationally Transferred M

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