Global emission trading schemes now total US$30 billion, led by China and Europe
- 28 May 2014
BEIJING: Carbon pricing schemes around the world now total US$30 billion with China and Europe boasting the largest markets, according to a new report from the World Bank.
State and Trends of Carbon Pricing 2014 reports that 39 national and 23 sub-national jurisdictions worldwide have launched – or plan to launch – carbon pricing initiatives, such as emission trading schemes and carbon taxes.
The total value of the world’s emission trading schemes is now around US$30 billion, with China home to the second biggest carbon market after Europe, owing to it implementing six carbon markets in the past year. Together these markets cover around 12% of annual global greenhouse gas emissions.
World Bank's findings underscore how the share of greenhouse gas emissions covered by domestic carbon pricing instruments is increasing, proving climate action is underway despite sluggish progress at global climate talks.
Alexandre Kossoy, Report Team Leader and Senior Financial Specialist, World Bank commented in a press statement: “While overall progress at the national level in China and the United States may take some time, it is remarkable that the world’s two largest emitters are now home to carbon pricing instruments.”
Authors report how carbon taxes are also on the rise, with new systems set up in France and Mexico last year. But great headway is being made at the sub-national level too, with the US states of Oregon and Washington planning to follow in the footsteps of California and the Canadian provinces of British Columbia and Québec and introduce carbon pricing mechanisms of their own.
Those regions that were set up earliest are now reaping rewards; indeed California’s cap and trade program which was launched in December 2012, is set to cover 85% of the state’s greenhouse gas emissions by 2015.
The report further highlights the potential for regions to link their markets, stating “cooperation between California and Québec demonstrates that carbon markets can grow through linking. In the future a variety of cooperative approaches could strengthen carbon pricing, and wider climate change policy, even further.”
Chinese carbon markets
China though, is where some of the biggest impacts through carbon pricing could be made – the world’s biggest carbon emitter is now the world’s second largest carbon market. The country has six pilot emission trading systems in Beijing, Guangdong, Hubei, Shenzhen, Shanghai and Tianjin in operation and is expected to launch a national trading system before 2020.
Changhua Wu, Greater China Director, The Climate Group, said: “Carbon market have been recognized as important policy instruments to drive efficiency and emissions reduction in China. Now with its six of the seven carbon trading local piloting schemes up and running, the Chinese carbon market follows Europe in size - though it is still at its very early stage. It is encouraging to see that China's carbon markets are now becoming worth so much. And I believe that the learning process of the piloting schemes will lay a solid foundation for a strong national carbon market in the coming decade.
“Last year, China’s first carbon market the Shenzhen Exchange, set an example of how to put a price on carbon with its success in overtaking the EU-ETS price by 20%. While there are still challenges ahead for China, Chinese decision-makers seem determined to get adept at employing market-based instruments to transform its economy more efficiently towards low carbon prosperity. "
Image: World Bank 2014, State and Trends of Carbon Pricing 2014. Washington, DC: World Bank.
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By Clare Saxon