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The newest IPCC report has so much to say about carbon charge and dividend

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The latest IPCC report has a lot to say about carbon fee and dividend

Posted on 13 April 2022 by dana1981

This can be a re-post from the Citizens’ Climate Lobby Blog

Within the third installment of its Sixth Evaluation Report (the primary two volumes lined local weather change causes and impacts), the Intergovernmental Panel on Local weather Change (IPCC) has summarized the newest scientific analysis referring to local weather change mitigation. Whereas the second quantity launched simply over a month in the past touched a bit on carbon fee and dividend, that was merely the local weather coverage hors d’oeuvre to the third installment’s predominant course, which is essentially the most related quantity to CCL. I summarized this newest report’s findings over at Yale Climate Connections.

Some information tales in regards to the report framed its message as signaling “now or by no means” on local weather motion. Whereas it’s true that the extra bold 1.5°C Paris goal is quickly slipping out of attain, it’s necessary to know that it’s going to by no means be too late to minimize the impacts of local weather change. The local weather of a 1.8°C world is extra livable than a 2°C world, which might be higher than a 2.2°C world, and so forth. Whereas it’s true that local weather coverage is maximally pressing, there will probably be no level in any of our lifetimes when it’s going to turn into too late to go away the world a greater place for future generations than that which is able to outcome if we surrender. Because of this, many scientists are pushing back against counterproductive climate doom talk

However the IPCC report does clarify how necessary it’s that Congress move the strongest local weather package deal potential via reconciliation this 12 months, ideally together with a worth on carbon. Right here’s what the IPCC needed to say about carbon charge and dividend among the many report’s 680 mentions of carbon pricing insurance policies, with the chapter numbers offered in brackets.

Carbon pricing is efficient at chopping carbon air pollution

As CCL volunteers are effectively conscious, a major carbon worth can be the one simplest coverage to scale back emissions. The IPCC knowledgeable authors agree that carbon pricing is efficient and environment friendly each in idea:

“Financial idea means that carbon pricing insurance policies are on the entire more economical than rules or subsidies at lowering emissions” [13.6.3.3]

“There’s excessive settlement that carbon taxes can [be] efficient in lowering CO2 emissions” [9.9.3.1]

“…there are causes to imagine that carbon pricing is essentially the most environment friendly solution to scale back emissions…” [5.6.3]

And in observe:

“There’s ample proof that carbon pricing insurance policies scale back emissions. Statistical research of emissions developments in jurisdictions with and with out carbon pricing discover a vital influence after controlling for different insurance policies and structural elements. Quite a few assessments of particular insurance policies, particularly the EU ETS and the British Columbia carbon tax, conclude that almost all have lowered emissions” [13.6.3.3]

“Among the many wide selection of local weather coverage devices, pricing carbon reminiscent of a carbon tax or an emissions buying and selling system has been one of the crucial extensively used and efficient choices to scale back GHG emissions … international locations with a carbon worth present an annual CO2 emission development charges [sic] of two proportion factors decrease than international locations with out such insurance policies. A extra complete analysis of carbon costs reveals that international locations with a decrease carbon pricing hole (the next carbon worth) are usually extra carbon-efficient” [2.8.2]

The IPCC report additionally notes {that a} carbon pricing coverage can yield quite a few different co-benefits, together with improved health through cleaner air and improved energy security and price stability by lowering reliance on unstable fossil fuels (emphasis added):

“The place carbon pricing insurance policies are efficient in lowering GHG emissions, they normally additionally generate co-benefits together with higher air high quality. For instance, a Chinese language research of air high quality advantages from decrease fossil gasoline use beneath carbon pricing means that potential well being co-benefits would partially or totally offset the price of the carbon coverage. Relying upon the jurisdiction (for instance, if there are fossil gasoline subsidies) carbon pricing may additionally scale back the financial distortions of fossil gasoline subsidies, enhance vitality safety via better reliance on native vitality sources and scale back publicity to fossil gasoline market volatility. Substantial carbon costs can be within the home self-interest of many international locations if co-benefits have been totally factored in” [13.6.3.3]

Dividends are necessary

The report additionally discusses the significance of coupling carbon pricing with money again in an effort to make sure that low-income households aren’t unduly burdened by efforts to deal with the local weather disaster, to make sure the coverage stays common, and to understand different advantages like alleviating poverty:

“Redistribution of tax income is important to deal with the adversarial impacts on low earnings teams” [13.6.3.3]

“Fairness and distributional impacts of such carbon pricing devices might be addressed by utilizing income from carbon taxes or emissions buying and selling to help low-income households, amongst different approaches” [E.4.2]

“Mitigation pathways wherein nationwide redistribution of carbon pricing revenues is mixed with worldwide local weather finance, obtain poverty discount globally” [3.7.1.1]

“Carbon pricing is simplest if revenues are redistributed or used impartially. A carbon levy earmarked for inexperienced infrastructures or saliently returned to taxpayers similar to extensively accepted notions of equity will increase the political acceptability of carbon pricing” [5 – Executive Summary]

“returning the revenues to people in a salient method could improve public help and alleviate equity proposals, given enough data. Perceived equity is likely one of the strongest predictors of coverage help” [5.6.3]

Border changes are additionally necessary to couple with carbon pricing

The IPCC discusses a number of necessary causes to pair carbon border adjustment mechanisms (CBAMs) with carbon pricing. One concern is named “carbon leakage,” the place an organization transfers its manufacturing from a rustic with a carbon worth to 1 with out in an effort to scale back prices, dodging the monetary incentive to chop emissions within the course of. On this topic, the report notes:

“[Carbon pricing] hurts the competitiveness of sectors that face imports from international locations with decrease carbon costs, resulting in “carbon leakage” if carbon-intensive manufacturing (and associated jobs) migrates from international locations with comparatively excessive carbon costs. Analysis confirms {that a} border carbon tax (or adjustment), set on the premise of the carbon content material of the import, together with a downward adjustment on the premise of any carbon funds (taxes or different) already made earlier than entry, may scale back carbon leakage whereas additionally elevating extra income and inspiring carbon pricing within the exporting nation” [4.4.1.8]

“with uneven rising carbon costs, discussions about particular coverage mechanisms to deal with carbon leakage like carbon border changes have been amplified” [6.3]

“[CBAMs] are more and more being thought of by coverage makers to deal with carbon leakage and create a degree enjoying subject for merchandise produced in jurisdiction with no, or decrease, carbon worth.  On 14 July 2021, the European Fee adopted a proposal for a CBAM that requires importers of aluminium, cement, iron and metal, electrical energy and fertiliser to purchase certificates on the ETS worth for the emissions embedded within the imported merchandise” [11.6.1]

Carbon pricing spurs innovation

New know-how improvements may help speed up carbon emissions cuts at decrease prices. As such, spurring innovation is amongst conservatives’ favourite approaches to sort out local weather change. Actually, Republican Home Minority Chief Kevin McCarthy unveiled an ‘Energy Innovation Agenda’ final 12 months that was advertised as the party’s climate change platform. On this matter, the IPCC reviews that carbon pricing supplies a key monetary incentive to spur innovation:

“a carbon tax that incentivises clear technological change will increase the competitiveness of fresh applied sciences not solely regionally, but additionally overseas” [16.2.2.2]

“a worth on carbon that corrects the emission externality is enough to induce optimum degree of inexperienced technological change.” [16.2.3.4]

“Together with different insurance policies, reminiscent of subsidies, public R&Ds on resource-saving applied sciences, correctly designed carbon taxes can facilitate the shift in direction of low-carbon, resource-efficient investments” [15.6.2]

There isn’t any silver bullet; complementary insurance policies can grease the carbon pricing skids

Though a major carbon worth can be the one simplest coverage to scale back emissions, as CCL has lengthy acknowledged, it might not be enough to unravel the local weather disaster alone. There isn’t any silver bullet, however the IPCC reviews that different insurance policies can function key enhances to a carbon worth:

“research of carbon pricing discover that extra insurance policies are sometimes wanted to stimulate enough emissions reductions in transportation” [2.8.3.2]

“profitable help would require a mixture of insurance policies which transcend carbon pricing, and embrace subsidies, mandates and feebates” [3.8.4]

“many researchers acknowledge that complementary insurance policies have to be developed to set present manufacturing and consumption patterns towards a path in line with attaining the Paris settlement objectives as cap and commerce or carbon taxes aren’t sufficient” [11.6.1]

As one good instance, the IPCC authors notice that carbon pricing can encourage individuals to decrease their carbon footprints by shifting into cities, however excessive city housing prices could make that an unaffordable selection for many individuals [4.4.1.9]. Implementing sensible housing insurance policies can complement carbon pricing to beat this barrier. Different insurance policies like clear know-how subsidies (e.g. for electrical autos and warmth pumps) can even decrease boundaries to their adoption, thus making a carbon worth extra palatable. Research has indicated that in the actual world, these types of insurance policies have usually greased the skids in international locations which have subsequently adopted carbon pricing.

Carbon pricing has been carried out too occasionally and ineffectively

Even though carbon pricing is a good local weather coverage answer, the IPCC notes that there are far too few examples of its implementation all over the world. And in lots of locations the place the coverage has been carried out, the carbon worth has been set too low to successfully lower emissions:

“Whereas the protection of emissions buying and selling and carbon taxes has risen to over 20 % of world CO2 emissions, each protection and worth are decrease than is required for deep reductions” [13 – Executive Summary]

“Tax charges are usually too low in lots of instances and the size and frequency of the speed adjustments has not been enough to stimulate additional emissions reductions“ [2.3.8.1]

“The Excessive Stage Fee on carbon pricing estimated an applicable vary as USD40-80/tCO2 in 2020, rising steadily thereafter. In observe the extent and degree of carbon pricing carried out thus far is much decrease than this or than most financial analyses now suggest” [1.8.2]

Now’s the time!

Lastly, the IPCC report notes that now could be the time to unravel that downside by implementing main local weather insurance policies like carbon charge and dividend. Not solely is time operating out to fulfill the Paris targets, however with Congress contemplating severe local weather options and the world dealing with the main fossil-fueled issues of inflation and war in Ukraine, we now have a key window of alternative:

“The timing of carbon pricing reforms can be necessary: they’re extra more likely to succeed in the event that they exploit home windows of alternative offered by occasions that increase consciousness of the prices of carbon emissions (like bouts of elevated native air air pollution or reviews in regards to the position of emissions in inflicting international warming), in addition to momentum from local weather actions by different international locations and worldwide local weather agreements” [4.4.1.8]

“a research of 66 carried out carbon pricing insurance policies present necessary results … seizing political home windows of alternative” [1.8.2]

Seize this chance by contacting your representatives!

If you happen to’d like extra data, Dana will probably be giving a CCL University talk about all three volumes of the newest IPCC report on April 21 at 8 PM ET.

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