Most people who have given climate change policy any thought agree that it is important to put a price on greenhouse gas emissions. They are a form of harmful waste; those producing the waste should pay for the harms. (There’s plenty of debate over just how central pricing is to a serious climate strategy, but very little debate that it should play some role.)
That policy consensus has been in place for quite a while. It seems the political world is beginning to catch up.
The sustainability think tank Sightline has just updated its map of carbon pricing systems across the world. Things have gotten quite lively. Here’s an animated version:
Carbon pricing through 2018
The big recent news is China, of course. In July, its carbon cap-and-trade system — which has been tested in nine provinces for several years — will go national, effectively doubling the world’s priced carbon. (That’s the giant bubble on the map above.) At that point, fully a quarter of the world’s carbon emissions will be priced at one level or another. A quarter!
Action in the past few years has been fast and furious. Sightline’s Kristin Eberhard summarizes:
In 2015, Portugal launched a carbon tax, and South Korea implemented a cap-and-trade program. California expanded its cap-and-trade program, initially launched in 2012, to cover 85 percent of it GHG emissions.
After abolishing its carbon price in 2014, Australia launched a new “safeguard mechanism”—a modified form of cap-and-trade—in 2016. In addition to its carbon tax, which has been in place since 2008, in 2016, British Columbia put a limit and price on pollution from industrial facilities (especially targeting coal-fired power plants and liquefied natural gas facilities). In 2018, BC will expand its carbon tax to cover fugitive emissions and forest slash-pile burning and raise the tax by $5 per year.
The United States-shaped hole in the fight against climate change is increasingly conspicuous. In 2017, Ontario, Canada, launched a cap-and-trade program, and Alberta, Canada, launched a new carbon tax for transportation and heating fuel emissions. Canada’s federalist experiment around carbon pricing paid off: four different provinces are running four different programs, and now the federal government is ready to implement a national price in 2018. But the federal requirements leave plenty of room for each province to tailor its own solution. Mexico will also launch a national carbon price in 2018.
Chile’s carbon tax, in the works since 2014, took effect in 2017. South Africa expected to launch a carbon tax in 2017, but delayed the implementation.
And of course, there’s China. That’s a lot of bubbles, and they’re adding up.
Carbon pricing in the US
As Eberhard notes, Canada is leaving the US in the dust, and Mexico is about to do the same. That leaves the US isolated in North America (not to say the world).
But California is currently working to extend and expand its system to meet its ambitious new goals. The states participating in the Regional Greenhouse Gas Initiative (RGGI) are in the midst of a program review, which could involve boosting its ambition.
And Trump’s evident disdain for climate change has galvanized a range of states to speak up and vow action. At least five states have bills in play that would implement some form of carbon tax or fee. Gov. Terry McAuliffe is talking about a carbon cap in Virginia. Hawaii just passed a law committing to the Paris climate targets. Some 34 states now have climate action plans. (More on states rallying in a subsequent post.)
The point is, while Trump and the GOP have taken the US federal government out of the carbon pricing game (not that it was ever in the game), the policy is still very much alive in the US, buzzing around in states and cities, finally getting some varied real-world testing. Even grid operators and utilities are talking about it.
Carbon pricing in the future
The Paris climate agreement — which Trump intends to pull the US out of, but which 194 countries remain committed to — contains (somewhat miraculously, in Article 6) explicit provision for countries to meet their emission targets (NDCs) by cooperating in cross-border carbon markets, through a common cap-and-trade program or carbon tax.
Almost 100 countries have indicated in their NDCs that they are interested in joining up with an international carbon pricing system as a way to meet their targets. If all those countries actually take steps to price carbon — a huge if, obviously! — the map starts to look quite interesting:
It is early days yet, and carbon prices remain too low even in places where they exist. But if you squint just right, you can see the fuzzy outlines of a truly global response to climate change beginning to come into focus. That’s why the Paris process was so important.
One other thing about the map above.
It’s notable that three of the biggest remaining blank areas are the US, Russia, and the Middle East. Call it the Axis of Unpriced Carbon. Perhaps, in the 2020 presidential election, the question of whether and how long America intends to remain in that club might finally become a salient political issue.