Clean Prosperity’s Post

US unveils policy to boost carbon offset market integrity. US unveils policy to boost carbon offset market integrity https://lnkd.in/gArPsdd3

Tricky balance pricing carbon without stifling trade as can be seen in the attached infographic. But the real question is how serous are we in meeting our Net Zero target if our own carbon price is below the target range!

Simon Mundy from the Financial Times wrote about my latest paper from the Harvard Kennedy School. As Simon points out, carbon markets need rethinking. Our proposal is one route, where firms can deduct what they pay for "carbon tax assets" from their carbon tax liabilities, for example obligations under CBAM. Denominating credits in euros or dollars, rather than tons of CO2, could realign incentives so firms no longer optimize for the cheapest offset. Allowing such payments to count as an effective carbon price could also scale the carbon markets by orders of magnitude. https://lnkd.in/dhmfNXZC Our Harvard's Belfer Center paper: https://lnkd.in/dSAcjGE2 Additional coverage of our paper this week in Carbon Pulse: https://lnkd.in/dj3gf4Ez

White House issues 7 new ‘principles’ to restore integrity to carbon markets: 1️⃣ Carbon credits should meet credible standards and represent “real” decarbonization. 2️⃣ Activity funded by credits should avoid environmental and social “harm.” 3️⃣ Companies should focus on CO2 reductions in their own value chains. 4️⃣ Companies should publicly report purchased and retired credits. 5️⃣ Credits “should accurately reflect the climate impact of retired credits and should only rely on credits that meet high integrity standards.” 6️⃣ Buyers should continue to “improve market integrity.” 7️⃣ In the longer run, buyers and policymakers should “seek to lower [market] transaction costs.” Read the full article by Heather Clancy.

First reports from the Commission on Carbon Competitiveness are out today! They include recommendations to governments on how to help Canadian industry build its competitive edge while reducing emissions. Learn more: https://lnkd.in/grnAEPpT Join a webinar at 10 AM (ET) today to hear top experts share insights from the new reports: https://lnkd.in/gqruNH9y

Carbon taxes or emissions trading systems? I found this visualization of the two schemes to be fascinating. Which scheme do you prefer? The chart of course doesn't tell the full story such as are carbon pricing schemes fully responsible for the carbon reductions that have occurred, do country emission reductions reflect true reductions or are emissions exported to another country, and what price of carbon can be supported by the economy while incentivizing change. https://lnkd.in/gDcVbmMZ

The future of carbon pricing in the U.S.: #Carbon pricing, introduced in the 1970s, incentivizes #emissions #reductions through carbon #taxes and tradable #credits. Currently, 75 carbon pricing schemes cover 24% of global emissions, generating over $100 billion annually, half of which funds climate programs. However, prices remain far below the levels needed to meet #Paris #Agreement targets, according to The World Bank and #IPCC. In the U.S., the Inflation Reduction Act (#IRA) allocates $370 billion for #clean #energy #subsidies, but it omits carbon pricing. Experts argue that carbon pricing is essential for significant emissions reductions and criticize the U.S. for continuing $1.3 trillion in fossil fuel subsidies. Efforts to introduce mechanisms like the EU’s Carbon Border Adjustment Mechanism #CBAM face resistance, with Republicans and Democrats prioritizing tariffs to protect jobs rather than cut emissions. Despite challenges, experts remain optimistic about future adoption of carbon pricing in the U.S., given its #economic and #environmental benefits. https://lnkd.in/dXjQsafp

An important study, dissecting and refuting common carbon market wisdom. The authors document that #CarbonMarkets may not be the most effective tool to accelerate #decarbonization. Main conclusion: #CarbonPrice volatility, as seen specifically in the #EUETS, is likely to delay investments in decarbonization and #NetZeroCarbon. Unfortunately, plausible alternatives, e.g., predictable fossil fuel phase-out schedules and penalties for overconsumption that would correlate with actual #CarbonRemoval costs, are not discussed. https://lnkd.in/dnrPp6Aj.

Large reductions in global #emissions are needed for the world to be on track to meet global temperature goals. Asia-Pacific countries have a critical role in emissions reduction given their large and rising share in global emissions. This International Monetary Fund Working Paper discusses the main opportunities and behavioral responses for reducing emissions, and commonly used mitigation instruments. It then considers key design issues for #carbon pricing, with a focus on emissions trading schemes #ETS, describes measures to overcome the obstacles to carbon pricing, and discusses experiences with carbon pricing relevant for Asia-Pacific economies. Lastly, the paper covers complementary policy reforms, including reinforcing mitigation instruments, public investment, fuel tax reform, green industrial policies, and supporting reforms to the energy sector. Carbon pricing, including ETSs can be the centerpiece of climate mitigation strategies for most countries, particularly if ETSs are designed to mimic some of the administrative and economic attractions of carbon taxes and implemented appropriately.

Today the Australian government released the second consultation paper for the Carbon Leakage Review. The paper and other information is available here: https://lnkd.in/gVhD3Cbg As lead reviewer, I’ll anchor the consultations, together with the Review team at the Department for Climate Change, Energy, Environment and Water (DCCEEW). We warmly welcome input from stakeholders in Australia, and internationally. Consultation is open until 3 December. In a recorded webinar on 6 Nov, 11.30 AEST we’ll run through our analysis and preliminary findings. The Review will make its recommendations to government by the end of 2024. Government has not yet considered the findings. The paper describes our analysis and sets out our preliminary findings. The Review has ·     analysed potential future carbon leakage risks including materiality of such risk for individual commodities, on the basis of quantitative and qualitative analysis; ·     assessed different possible policy approaches to address leakage risks; and ·     investigated the feasibility and potential impacts of border carbon adjustments. The Review’s work is guided by the following principles. One, the overall goal is to promote economically efficient low and zero emissions industrial production towards net-zero trajectories. A durable market-based system to incentivise investments in low and zero emissions industries is important to this. The Review focuses on carbon leakage solely in terms of shifts in industrial production due to differences in climate change policy between countries, not on other policy objectives. Two, the Review places emphasis on Australia’s opportunity to become a major producer and exporter of clean energy and industrial commodities in a net zero world economy. Policy frameworks that provide market premiums for low emissions products, including for traded goods, can contribute to this goal. Addressing carbon leakage means helping create the preconditions for investment in new low emissions industrial structures in the most suitable locations, rather than shielding existing high emissions processes from change. Three, the Review places importance on the international rules-based trading system and on maintaining open and liberal trade relationships, especially in Australia’s region. Our economic prosperity has been enhanced by open trade, and strong trade relations will be vital to achieve net zero emissions in Australia and globally. The Review seeks to identify ways in which any potential future measures, especially potential border carbon adjustments, respect international trade rules and obligations, facilitate trade that is consistent with climate change policy objectives, and could be collaboratively implemented with Australia’s trade partners. We also seek to identify opportunities to support progress in multilateral and plurilateral forums. We look forward to your reactions and input to the process.