WEMO24-Compiled Report-Interactive compressed (002) 4154-7882-8116 v.1 - Flipbook - Page 27
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ETS
USD 95
Carbon Tax
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112 IPCC: Intergovernmental Panel on Climate Change
113 https://www.homaio.com/post/eu-ets-revenues-what-do-the-member-states-use-the-proceeds-for#:~:text=The%20rules%20on%20EU%20ETS%20revenues%20use,-The%20European%20
Law&text=Yet%2C%20most%20countries%20are%20using,for%20climate%20and%20energy%20purposes.
114 In 2017, a report by the High-Level Commission indicated carbon prices need to be in the $50-100 per ton range by 2030 to keep a rise in global temperatures below 2C. Adjusted for inflation those
prices would now need to be in a $63-127 per ton , the World Bank report said.
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Source: https://www.ciat.org/wp-content/uploads/2023/08/Grap03.png
In 2024 there were worldwide 75 carbon pricing instruments
(Emission Trading Systems-ETSs- or carbon taxes) in operation
in 89 jurisdictions covering around 24% of global greenhouse
gas emissions.113 The prices ranged between 0.46 to 167$/tCO2e.
These taxes generated $104 billion in government’s revenues.
However, only 1% of global GHG emissions were covered by a
direct carbon price.114
WEMO 2024
They are important levers to implement energy transition
policies. Stable and predictable regulations are key for investors
in sustained energy installations to decrease their risks and
increase their return on investments.
Carbon pricing coverage should be extended, and prices increased:
As stated by IPCC112 researchers, our planet temperature
increase is directly linked to anthropogenic GHG emissions.
Carbon taxes aimed at GHG emitters is a virtuous measure.
However the range of sector covered needs to be large enough,
the prices high enough and the revenues generate need to be
invested only in climate transition projects.
Evolution of global revenues by type of carbon price: ETS
and Carbon tax". Graphs source: World Bank
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Sound and predictable regulations:
FIGURE 8
2006
• Cross border CO₂ transport and storage (i.e., London
Protocol) should be enabled to allow emitters to access
ideal storage locations, as well as to promote competition
among developers and mitigate storage underutilisation risks
through access to a wider pool of emitters.
Before looking into details into some legislations, let’s note that
too many regulations are slowing down the energy transition.
For example, many Western countries have passed laws to
remove their numerous regulatory obstacles to the installation
of wind farms. The objective is to decrease the permitting
duration, by lowering the number of local consultations and
their duration while preserving a democratic process.
Also, some regulations have negative secondary effects.
For example, in France there are costly regulations on
refurbishing flats to increase isolation and decrease their energy
consumption. This seems good, however, some flat owners,
that cannot afford these refurbishing costs, prefer not to rent
their flats thus reducing the offerings for rent in a market that
is already tense.
Billion $
subsidies under the IRA 2 and IIJA 3 (Infrastructure Investment
and Jobs Act) are aimed at meeting the potential demand.
While the first CCS projects are receiving significant
government subsidies, scaling up the next wave will require
private investments.
The UK has designed an investable CCS business model by
implementing the Regulated Asset Base (RAB) approach on
the whole infrastructure. Emitters in the UK, Netherlands and
Denmark receive local subsidies to cover the gap between
CO2 capture costs and the EU ETS price.
To enable CCS development, more Contracts for Difference
or subsidies should be introduced across Europe to support
the emitter business cases.
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