If Countries Are To Meet Paris Climate Change Pledges, Cost Of Emitting Carbon Must Rise To $50–$100 Per Tonne By 2030

If the countries involved are to meet the pledges made as part of the Paris Climate Change agreement, then the cost of emitting carbon dioxide must rise to $50–$100 per tonne by 2030, according to a new study from The Commission on Carbon Prices — which is a group of 13 “leading economists” being backed by the World Bank.

The current price of emitting a tonne of carbon dioxide in Europe is under $6.

The report argues that prices of $40–$80 per tonne by 2020 are needed, it should be realized — which simply isn’t going to happen on the global level. The 2030 goals discussed in the report are themselves unlikely to be met, but they are at least possible. The 2020 goals are probably only useful as a means of showing how fast the clock is ticking away.

As noted by commission member Columbia University Professor Joseph E Stiglitz: “If we are going to meet the commitments of Paris, we will have to have prices (at those levels) … The costs of not doing it will be much higher.”

No doubt true, but clear long-term thinking is something that people don’t seem to be capable of, most of the time even on the personal level, much less the collective, so it doesn’t seem likely that real action will be taken until harsh impacts begin arriving globally and the scapegoating frenzy has also had time to die down. Literally. (You’ll have to excuse my dry sense of humor.)

Reuters provides more on the new study: “For now, 40 countries, more than 20 cities and some other areas price carbon emissions using taxes or emissions trading systems (ETS). But the schemes only cover about 15% of global heat-trapping greenhouse gases, and the businesses say pricing systems need to be extended to the rest of the world. … Under the Paris deal, more than 190 countries pledged to keep planet-warming well below 2° Celsius (3.6° Fahrenheit) to stave off the worst effects of climate change. Prices in Europe’s ETS, the world’s largest carbon market, now trade around €5 ($5.60) a tonne and are forecast to average just over €16 a tonne from 2021-2030.

“Stiglitz said it was reasonable to expect global carbon prices to rise much higher and many firms based investment decision on much higher prices than now. Shell and BP work out the feasibility of projects based on a carbon price of $40.”

The report noted that carbon pricing will of course have to be combined with policies supporting rapid renewable energy and energy efficiency development if the approach is to be effective.

Also noted was the fact that some poorer countries may need to pay a lower carbon price than wealthier ones if major problems aren’t to occur, which is of course a sticking point for some countries.

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