Carbon Prices About 80% Too Low to Protect Climate, OECD Says
27 September 2016 | Mitigation
Carbon prices are about 80 percent lower than where they need to be to protect the climate, according to the Organisation for Economic Cooperation & Development.
Emission costs, whether through fuel taxes or trading systems, probably need to rise to at least 30 euros ($34) a metric ton, the OECD said in a report based on an analysis of six industries in 41 countries. If nations were to boost efforts to charge for pollution at the level of the median nation, the carbon price gap would narrow to about 53 percent.
The report is an attempt to show nations they can embark on climate action for the first time or adopt more ambitious measures without hurting their economies more than their peers. Ninety percent of the world’s emissions are taxed or priced below the “conservative” 30-euro benchmark, while 60 percent aren’t priced at all, the OECD said. Climate pledges must be more ambitious as nations need to cut emissions at least 40 percent by 2050 from current levels, it said.
“If everyone could lift their game to the point where they’re matching the middle country, it makes a huge difference,” David Bradbury, the head of the OECD secretariat’s tax policy and statistics unit in Paris, said by phone. The findings limit countries’ ability to argue they don’t want to adopt climate measures because other nations aren’t, he said.
The report covered countries responsible for 80 percent of global energy use and carbon dioxide emissions, spanning China and Brazil to the U.S. and Europe.
EU carbon allowances dropped to 3.87 euros a ton on Sept. 5, their lowest for more than two years, as a glut the size of a full year of supply curbs demand in the secondary market. They were down 0.7 percent to 4.51 euros a ton Monday at 8:17 a.m. in London on ICE Futures Europe.
Globally, carbon markets are failing to provide clear market signals to drive investment toward green technologies, the United Nations Framework Convention on Climate Change secretariat said Friday in a report on its website.