🛢💸 The real deal about Carbon Pricing: Difference between revisions

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.

#<u>The carbon emission trading system</u>, 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 offset system makes it possible to create allowances that were not distributed by the government. We will come back to it later.</ref>

https://www.i4ce.org/wp-core/wp-content/uploads/2019/05/i4ce-PrixCarbon-VA.pdf</ref>, but no extra permit to emit is given for free. This method gains more trust than free allowances, as it “puts into practice the principle that the polluter should pay”<ref>Quote from EU ETS web page. It states the shifting for a bigger share of auctioned allowances, following scandals and market stabilisation.

source: https://ec.europa.eu/clima/policies/ets/auctioning_en</ref> Both options are now used by some governments, as free allowance is now seen by newcomers as a soft transition towards auctioned allowances.  

Carbon pricing continues to grow with new countries joining: as of 2019, 25 carbon taxes and 26 Emissions Trading Schemes were operating worldwide, generating $45B in revenues with respectively 52% from carbon taxes and 48% from ETS.<ref>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> It is still considered today that one of the main efforts to mitigate climate change would come from finance mechanisms. “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”<ref>Adoption of the Paris Agreement, Article 02, (c), UNFCC, 2015.