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Cities help boost value of carbon pricing initiatives

27 May 2015

by Richard Forster

The global value of carbon pricing instruments has risen to just under US$50 billion, according to Carbon Pricing Watch 2015, a new publication from the World Bank Group and Ecofys.


In 2015, over 20 cities, 40 countries, states and regions, representing almost a quarter of global greenhouse emissions, are putting a price on carbon. According to the report, these combined carbon pricing instruments cover about half of their emissions, approximately 7 gigatonnes of CO2 emissions, or about 12 percent of annual global greenhouse gas emissions. Emissions trading schemes have grown in value from US$32 billion in 2014 to US$34 billion today, with carbon tax schemes valued at US$14 billion, World Bank officials said at the release of the report during the Carbon Expo in Barcelona.

“Carbon pricing is clearly gaining traction,” said Rachel Kyte, World Bank Group, Vice President and Special Envoy for Climate Change. “In the last year, we’ve seen Chile and Mexico join the ranks of countries, cities and states putting a price on carbon. So it’s no longer a matter of if or when to price carbon.”

Cities recognised for their efforts include Hubei and Chongqing in China which have launched two new cap-and-trade pilots that are assisting China fine-tune its national emissions trading scheme, to be launched in 2016. Other countries are also using cities as test beds although jurisdiction issues and tax revenue powers can restrict some cities wanting to price carbon.

“It’s less a geographic issue and more a matter of whether the national policy environment allows these initiatives to move forward at the city level,” Stephen Hammer, Manager, Climate Policy World Bank Group, told Cities Today. “In Tokyo, the Governor had the policy authority to push this through on his own, while in China, the five city-focused emission trading schemes were established specifically to serve as a test bed for a national strategy.”

To assist cities, the World Bank Group and its carbon pricing coalition partners are preparing briefing materials that will include different implementation models and will point to specific examples that cities can use for inspiration or insight.

“We’ll need to be as smart and savvy as the mayors we’re trying to support in their efforts to combat climate change,” added Hammer. “Going forward, it will be critical to learn from the cities that have implemented these programmes to understand which types of carbon pricing schemes work best under different circumstances. There is no one-size fits all solution, and it’s up to us and our partners to build the evidence base about how to make these programmes succeed in a range of different settings.”

Carbon Pricing Watch 2015 is a preview of a longer report called the State and Trends of Carbon Pricing 2015 to be launched later in the year.

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