Experience with Carbon Taxes and Greenhouse Gas Emissions Trading Systems

Carbon taxes and emissions trading systems (ETSs) to limit emissions of greenhouse gases (GHGs) are increasingly common. At the end of 2015, 17 GHG ETSs were operational in 55 jurisdictions, and 18 jurisdictions collected at least one carbon tax. This paper assesses the performance of carbon taxes and ETSs with respect to environmental effectiveness (reduction of emissions regulated by the instrument), cost-effectiveness (marginal abatement cost), economic efficiency, public finance, and administrative issues. Data on emissions subject to carbon taxes are rarely reported. We estimate the taxed emissions for 17 taxes in 12 jurisdictions from 1991 through the end of 2015. All 17 taxes have reduced emissions relative to business-as-usual. Six of the jurisdictions actually reduced emissions, although in at least three of those jurisdictions the reductions appear to be due to other policies. The small sizes of reduction in almost all 17 cases are partially due to the low tax rates; the modest and uncertain changes in tax rates over time; and the limited response of taxed sources, such as fossil fuels, to price changes. Actual emissions declined for at least six of 10 ETSs. Other policies and developments, such as the 2009 recession, contributed to the reductions, but estimates of the share of the reduction attributable to the instrument are rare. All of the ETSs have accumulated banks of surplus allowances and most have implemented measures to reduce these banks. On average, the marginal cost of compliance is substantially lower for ETSs than carbon taxes. ETS experience has been shared bilaterally and via dedicated institutions. As a result, most ETSs have increased the share of allowances auctioned; adopted declining emissions caps; specified future caps and floor prices several years into the future; shifted to benchmarking for free allowance allocations to emissions-intensive, trade-exposed (EITE) sources; reduced accessibility to foreign offset credits; and established market stability reserves. By contrast, there is little evidence of shared learning and virtually no change to the design of carbon taxes. We found no jurisdiction that routinely tracks the taxed emissions. Very few jurisdictions regularly assess the effectiveness of the tax in achieving emission reductions. Additionally, adjustments to the tax rate often are unpredictable after an introductory period of three to five years. Both instruments reduce emissions, but ETSs have performed better than carbon taxes on the principal criteria of environmental effectiveness and cost-effectiveness. Many jurisdictions have implemented both a carbon tax and a GHG ETS, and every jurisdiction that has adopted either instrument has also implemented other policies. More research is needed to improve the design of both instruments and their interaction with non-market-based carbon policies because the use of multiple instruments produces complex interactive and distributional effects. While economically inefficient, market-based policies should be supplemented by non-market-based policies to ensure sustained political support

Multistep Dissociation of Fluorine Molecules under Extreme Compression.

All elements that form diatomic molecules, such as H_{2}, N_{2}, O_{2}, Cl_{2}, Br_{2}, and I_{2}, are destined to become atomic solids under sufficiently high pressure. However, as revealed by many experimental and theoretical studies, these elements show very different propensity and transition paths due to the balance of reduced volume, lone pair electrons, and interatomic bonds. The study of F under pressure can illuminate this intricate behavior since F, owing to its unique position on the periodic table, can be compared with H, with N and O, and also with other halogens. Nevertheless, F remains the only element whose solid structure evolution under pressure has not been thoroughly studied. Using a large-scale crystal structure search method based on first principles calculations, we find that, before reaching an atomic phase, F solid transforms first into a structure consisting of F_{2} molecules and F polymer chains and then into a structure consisting of F polymer chains and F atoms, a distinctive evolution with pressure that has not been seen in any other elements. Both intermediate structures are found to be metallic and become superconducting, a result that adds F to the elemental superconductors

Report of the High-Level Commission on Carbon Prices

The purpose of this Commission is to explore explicit carbon-pricing options and levels that would induce the change in behaviors— particularly in those driving the investments in infrastructure, technology, and equipment—needed to deliver on the temperature objective of the Paris Agreement, in a way that fosters economic growth and development, as expressed in the Sustainable Development Goals (SDGs). This report does not focus on the estimation and evaluation of the climate change impacts that would be avoided by reducing carbon emissions. While the Commission also covers other policies relevant and important to carbon-pricing design and delivery on the Paris agreement, its primary focus is on pricing. This report has been prepared based on the Commission’s assessment of the available evidence and literature as well as on its members’ judgment, developed through their extensive international policy experience. While the commissioners are in broad agreement on the overall thrust of the arguments presented in the report, they may not necessarily support every single assertion and conclusion

China’s Development of ETS as a GHG Mitigating Policy Tool: A Case of Policy Diffusion or Domestic Drivers?

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EU, China and US on their way to carbon neutrality : will their implementation strategies converge?

This contribution was delivered online on 6 May 2021 on the occasion of the hybrid 2021 edition of EUI State of the Union on ‘Europe in a Changing World '.Part of the #SoU2021 Fringe Events, this panel, organised by SoU’s Partners and Stakeholders [EUI European University Institute, EAERE European Association of Environmental and Resource Economics], contributed with an alternative intellectually independent perspective to the overarching theme ‘Europe in a Changing World’.The European Union (EU) committed to reach climate neutrality by 2050. This ambitious target remains a top priority for the Commission despite the COVID-19 crisis and is shared by other jurisdictions, such as USA and China (the latter by 2060). The EU intends to play a key role in the global climate challenge. While a unilateral action will not be sufficient to stop global warming (as EU emits only a small part of world emissions), the EU can lead the world by example in adopting stringent climate regulations and hence influencing the others’ climate policies. However, alternative climate policies might emerge in the world challenging the EU leadership in the fight against climate change. For instance, the EU Emission Trading System (ETS) was a prototype for most ETSs in the world. But ETSs might diverge over time rather than converge towards a unique model to account for the different institutional frameworks. The same applies to other climate policies that might or not fit other institutional contexts.The panel session will discuss how the EU and other countries can learn from their own experiences to coordinate climate policies, focusing on how cooperation between ETSs can support a coherent global climate policy.The event continues the policy dialogue between academia and the policy world carried out by FSR Climate at State of the Union since 2018, together with the Policy Outreach Committee of EAERE and the STG. It is organised under the LIFE DICET project, which focuses on international carbon market cooperation

China’s Carbon Market: Potential for Success?

What lessons emerged during the development of China’s national emissions trading scheme (ETS)? It was launched in late 2017 and started operation in July 2021, beginning with online trading of emissions permits. The preceding decade was used for preparing and testing, including seven pilot markets. It was decided to start with the power sector, the largest‐emitting sector, and initially cover coal‐ and gas‐fired power plants. This article offers theory‐oriented and empirical contributions to domestic‐level learning, and asks what happens after a policy has “landed.” We employ an analytical concept originating from diffusion theory—learning—and view internal learning as a key mechanism. We argue that having a slow and well‐prepared start contributes to the potential success of the ETS; further, that the lengthy preparatory period enabled China to address various obstacles, providing a strong basis for success, singly and as part of the national mitigation policy complex. Internal learning has proven crucial to the development of the ETS in China, with the learning process continuing as the national ETS becomes operative. We also discuss the possibilities for linking China’s carbon market with other markets, which should heed China’s ETS experience and emphasize learning

China's Carbon Market: Potential for Success?

What lessons emerged during the development of China's national emissions trading scheme (ETS)? It was launched in late 2017 and started operation in July 2021, beginning with online trading of emissions permits. The preceding decade was used for preparing and testing, including seven pilot markets. It was decided to start with the power sector, the largest-emitting sector, and initially cover coal- and gas-fired power plants. This article offers theory-oriented and empirical contributions to domestic-level learning, and asks what happens after a policy has "landed". We employ an analytical concept originating from diffusion theory-learning - and view internal learning as a key mechanism. We argue that having a slow and well-prepared start contributes to the potential success of the ETS; further, that the lengthy preparatory period enabled China to address various obstacles, providing a strong basis for success, singly and as part of the national mitigation policy complex. Internal learning has proven crucial to the development of the ETS in China, with the learning process continuing as the national ETS becomes operative. We also discuss the possibilities for linking China's carbon market with other markets, which should heed China's ETS experience and emphasize learning

The Periodic Characteristics of China’s Economic Carbon Intensity Change and the Impacts of Economic Transformation

Understanding the pathway of carbon emissions is an important basis for establishing a national climate strategy. In this paper, the change in China’s economic carbon intensity since its accession to the World Trade Organization has been analyzed with a time series decomposition analysis method. Four phases with distinctive features are defined, and the significant fluctuations in China’s economic carbon intensity after 2001 are explained in detail. From the phase-average perspective, the contributions of major factors to the economic carbon intensity change have evolved steadily, instead of through highly volatile change on a yearly basis, and the gradual changes have been caused mainly by the development of the industrial sectors. Induced by the new normal in economic development, the change of China’s economic carbon intensity has entered a new phase driven by multiple factors with economic structural improvement being the most important contributor, as well as the continuingly, though decreasingly, important factor of energy efficiency