1. The spread of carbon pricing and other climate legislation

The spread of carbon pricing around the world in the last 10 years or so has been remarkable.  In the early 2000s carbon pricing was in place in just a few jurisdictions, mainly in northern Europe, accounting for less that 1 % of world emissions.  The first major increase in the coverage of carbon pricing was the introduction of the EUETS in 2005.  Since then several countries and provinces have introduced pricing, with large additional volumes from the pilot pricing schemes in China, and the California and Quebec scheme.  Around a quarter of CO2 emissions from energy and industry are now in jurisdictions with pricing.

This trend towards carbon pricing is now set to go much further as limits on carbon emissions spread nationally in China and the USA.  A national emissions trading scheme in China is expected to be introduced soon, beginning in 2017 and consolidating over the remainder of this decade.  EPA regulation in the USA will introduce caps on emissions per MWh from the power sector to take effect no later than 2022.  These measures will mean that jurisdictions accounting for around two thirds of emissions will have some sort of cap or pricing in place.  (EPA regulation will be implemented at a state level.  It is likely to involve carbon pricing in some cases, although some states may pursue a more direct regulatory approach.  In either case emissions intensity will be capped.  ).   In this context the repeal of legislation in Australia is very much and exception to the broad trend.

This will have been achieved in only about a decade and a half.  This is illustrated in the chart below, which shows the proportion of emissions in jurisdictions with carbon pricing, and the proportion of these emissions that are priced.

The proportion of world energy and industrial carbon dioxide emissions that are from jurisdictions with carbon pricing is increasing rapidly …

 Blue line October 2015 update 

Notes:  The  line on the graph shows the percentages on the emissions covered, and includes the total energy and industry CO2 emissions for each jurisdiction with carbon pricing.  Thus, if all jurisdictions in the world  had carbon pricing in place the total coverage would be shown as 100%. For clarity the proportions are fixed at 2013 levels, although they change over time in practice.

The amount of emissions priced is shown in the chart below.  This represents a smaller fraction of world emissions than in the above chart, as not all emissions in jurisdictions are priced – typically carbon pricing only covers about half of total energy and industry CO2 emissions, although it is more in some cases (e.g.California) and less in others (e.g. RGGI).

Amount of emissions priced …

Green line October 2015 update

For clarity the proportions are fixed at 2013 levels, although they change over time in practice.

With measures in place across the EU, the USA, and China, carbon caps and pricing will have become the norm rather than the exception.  This is likely to put pressure on other jurisdictions without such measures to act.  This trend is likely to be reinforced by agreement at the forthcoming  UNFCCC conference in Paris, even if, as expected, any agreement there stops short of legally binding emissions reduction targets and makes only limited mention of the role of market mechanisms.

Looking at broader climate legislation, including not just carbon pricing but also other measures aimed at emissions reduction or adaptation to climate change, a similar pattern of rapid growth is evident.  The number of pieces of climate legislation introduced in the last ten years was nearly four times that in the previous ten years.  And legislation has been introduced in both developed and developing countries.

Globe data on legislation

Source:  GLOBE study of climate change legislation (see notes)

There are, of course, many reasons to remain cautious about progress.  The outlook national scheme in China remains uncertain in the timing of its roll-out, its stringency and its effectiveness.  US EPA regulation remains subject to legal challenge, although it seems likely to survive this, and potentially to the result of the forthcoming presidential election.  Prices in the EUETS remain low.  And, even with all the present and prospective schemes in place, emissions reductions goals still fall short of what’s necessary to have a good chance of meeting the international commitment to limit the rise in average temperatures to 2 degrees.

But there has been tremendous progress in a relatively short space of time.  Discussions on climate policy needs to recognise this context.  Any claims along the lines that either that “no-one’s doing anything” or “we’re the only ones doing something” are no longer valid.  There remains a pressing need to enhance this world-wide momentum, so that global emissions can begin their ever more necessary downward track.  But acknowledging that should not obscure the remarkable progress that has been made.

Updated 23rd October 2015

Notes

Data: Emissions data is for 2012, from the EDGAR database, with no adjustment for changes in relative volumes over time.  Shares at subnational level are estimated based on a range of data.  Data sources include  http://edgar.jrc.ec.europa.eu/  and Zhao et. al., China’s CO2 emissions estimated from the bottom up: Recent trends, spatial distributions, and quantification of uncertainties  Atmospheric Environment, Volume 59.

The spread of caps across the USA is shown as a single step on the above chart.  However the form of implementation of limits will in practice vary between states.  The caps under section 111(d) of the clean air act proposed by the EPA in the US are currently intensity based, with the conversion to mass based standards a matter of continuing discussion.  Implementation as the state level will vary, and it is likely that it will include pricing in some cases by not others.  Some states may join the Regional Greenhouse Gas Imitative (RGGI), others may include some kind of flexibility that in effect creates a carbon price in one state, or in a group, while others may pursue a more direct regulation of individual plants.

The raw data for the chart showing the number of laws is here (see p.27):

http://www.academia.edu/6214974/The_GLOBE_Climate_Legislation_Study_A_Review_of_Climate_Change_Legislation_in_66_Countries._4th_Ed._Nachmany_Michal_Fankhauser_Sam_Townshend_Terry_Collins_Murray_Landesman_Tucker_Matthews_Adam_Pavese_Carolina_Rietig_Katharina_Schleifer_Philip_and_Setzer_Joana_  (see p.27)

5 thoughts on “1. The spread of carbon pricing and other climate legislation

  1. Tim Buckley

    Any chance you can update this chart to reflect the Chinese government decision to pull forward their National ETS to 2016? While the details are still to be confirmed, this will have a huge impact on the global emissions covered by new commitments.

    Reply
    1. adamwhitmore Post author

      Tim,

      A good point. I recently posted on this issue, see https://onclimatechangepolicydotorg.wordpress.com/2014/09/30/carbon-regulation-becomes-the-norm/ I have the China national scheme starting in 2018 to allow for some delay – which seems quite likely with such a complex undertaking, especially in view of the delays to the trial schemes. I’ve also included US EPA regulation which is likely to include some pricing (explicit or implicit), which takes you to about 67% coverage. I have now updated this page to reflect these.

      Regards,

      Adam

      Reply
  2. Pingback: Carbon prices around the world are consistently too low | On Climate Change Policy

  3. Pingback: Carbon Prices Around the World are Consistently Too Low - Arc Flash Studies

  4. Pingback: Revenue from carbon pricing | On Climate Change Policy

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s