4,149
edits
🛢💸 The real deal about Carbon Pricing: Difference between revisions
🛢💸 The real deal about Carbon Pricing (view source)
Revision as of 20:42, 13 March 2020
, 13 March 2020→“Everything has a cost, but not everything is paid.”
| Line 9: | Line 9: | ||
https://www.c2es.org/content/international-emissions/</ref> of industries worldwide by giving a room and a price to carbon on public markets around the world. The economic theory behind this idea is that we should consider “externalities” in our economic system: the unexpected effects of any human activity should be taken into account in the value they create/destroy, despite the fact that it has no “direct” positive or negative impact on the activity: for example, an hotel or a coal-fired power plant opening next to a small town would have different effects on the baker’s like and business in this town; and this externality would be economically taken into account or not, depending on the political choices made in this town’s government. As carbon emissions would be considered as a negative externality that has a cost, in the long run to society, the emitter is levied from an amount of value that is indexed and proportionate to his emissions. To lower emissions with hope to mitigate global warming; carbon emissions cost never ceases to increase while permits to emit are gradually limited. | https://www.c2es.org/content/international-emissions/</ref> of industries worldwide by giving a room and a price to carbon on public markets around the world. The economic theory behind this idea is that we should consider “externalities” in our economic system: the unexpected effects of any human activity should be taken into account in the value they create/destroy, despite the fact that it has no “direct” positive or negative impact on the activity: for example, an hotel or a coal-fired power plant opening next to a small town would have different effects on the baker’s like and business in this town; and this externality would be economically taken into account or not, depending on the political choices made in this town’s government. As carbon emissions would be considered as a negative externality that has a cost, in the long run to society, the emitter is levied from an amount of value that is indexed and proportionate to his emissions. To lower emissions with hope to mitigate global warming; carbon emissions cost never ceases to increase while permits to emit are gradually limited. | ||
You can get from the last sentence that there are 2 ways to monetize carbon: the <u>carbon tax system</u> and the <u>carbon trading system</u>. | You can get from the last sentence that there are 2 ways to monetize carbon: the <u>carbon tax system</u> and the <u>carbon trading system</u>. | ||
# | #====The carbon tax==== is as simple as it gets: you usually levy this tax on the carbon content of fuels<ref>In 2019, carbon taxes on fuel were of the following amount for those countries: | ||
*124$/tCO2 in Sweden. | *124$/tCO2 in Sweden. | ||
*51$/tCO2 in France. | *51$/tCO2 in France. | ||
| Line 15: | Line 15: | ||
source: <i>Global Carbon Account 2019</i>,Institute for Climate Economics (I4CE), 2019. | source: <i>Global Carbon Account 2019</i>,Institute for Climate Economics (I4CE), 2019. | ||
https://www.i4ce.org/wp-core/wp-content/uploads/2019/05/i4ce-PrixCarbon-VA.pdf</ref>, meaning that citizens and companies running cars, trucks, machines, etc. on fossil fuels would get it at an increasing price<ref>Only if the ressource price of extraction from the soil doesn’t drop for some reason: the price could stagnate or even decrease, regardless of taxes.</ref> — the same way it was done for tobacco in numerous countries. It will discourage fossil fuel use in favour of less emitting energy sources such as wind, solar, geothermal or nuclear fission; by making them more competitive. | https://www.i4ce.org/wp-core/wp-content/uploads/2019/05/i4ce-PrixCarbon-VA.pdf</ref>, meaning that citizens and companies running cars, trucks, machines, etc. on fossil fuels would get it at an increasing price<ref>Only if the ressource price of extraction from the soil doesn’t drop for some reason: the price could stagnate or even decrease, regardless of taxes.</ref> — the same way it was done for tobacco in numerous countries. It will discourage fossil fuel use in favour of less emitting energy sources such as wind, solar, geothermal or nuclear fission; by making them more competitive. | ||
# | #====The carbon emission trading system====, on the other hand, is trickier to get: a given government will first estimate the carbon emissions (in tons) of the whole emitting industries active in its territory during a given time (a year). Based on those datas, the government can create an Emissions Trading Scheme (ETS) by 2 ways: | ||
:: - The government allocates each company with an annual emissions permit, where the sum of all permits account for less carbon emissions than the previous year, in order to reach their decreasing goals, year after year. In that case, what is call an allowance (permit to emit) would be freely distributed to companies, depending on their previous year emissions. If they decide to emit more that they were allowed to, they can buy allowances on the carbon market. Those allowances will be traded with companies who managed to lower emissions even more than the government expected.<ref>But not only: the asset system makes it possible to create allowances that were not distributed by the government. We will come back to it later.</ref> | :: - The government allocates each company with an annual emissions permit, where the sum of all permits account for less carbon emissions than the previous year, in order to reach their decreasing goals, year after year. In that case, what is call an allowance (permit to emit) would be freely distributed to companies, depending on their previous year emissions. If they decide to emit more that they were allowed to, they can buy allowances on the carbon market. Those allowances will be traded with companies who managed to lower emissions even more than the government expected.<ref>But not only: the asset system makes it possible to create allowances that were not distributed by the government. We will come back to it later.</ref> | ||
:: - We start with this same system of an allowance market which “size” is decided every year by the government, depending on its emissions decrease goals. However, the allowances are auctioned every year on a given platform. Allowances prices varies greatly depending on the market<ref>In 2019, the price of a ton of carbon traded was of the following amount for those countries: | :: - We start with this same system of an allowance market which “size” is decided every year by the government, depending on its emissions decrease goals. However, the allowances are auctioned every year on a given platform. Allowances prices varies greatly depending on the market<ref>In 2019, the price of a ton of carbon traded was of the following amount for those countries: | ||