Carbon Pricing Options Adriana Mugnatto-Hamu [email protected] 416-273-8247 Climate Change Conference 2010 2010 August 14
Jan 15, 2016
Carbon Pricing Options
Adriana Mugnatto-Hamu
Climate Change Conference 20102010 August 14
Carbon Pricing Options
Forget everything you know.
Carbon Pricing Options
1. Cap or tax
2. Protect high-emitters or not
3. Targeted oreconomy-wide
4. Auctioned or distributed
5. Revenue-neutral or funding source
6. Distribution options
7. Border adjustment options
8. At source or emission point
9. Offsets
10. Appropriate levels
11. Hybrids
12. A global deal
1. Cap or tax
Supply and demand curve
Cap or tax
Cap or tax
Good times and bad
2. Protect high emitters or not
Protect high emitters or not
Grandparenting
• What it is
• Why it's done
Protect high emmitters or not
Problems with grandparenting
• Emissions rise in evaluation period
• Perverse incentives
• Long time to implement
• Inaccurate market signal
Protect high emmitters or not
• Cap doesn't imply grandparenting
• Taxes can have similar problems
Protect high emmitters or not
Sweden's carbon tax at introduction
• $100 per tonne of CO2
• Industrial rate: 25%
• High-energy industry exempt
Protect high emmitters or not
• Prevent off-shoring
• Purpose of carbon tax
3. Targeted or economy-wide
Targeted or economy-wide
Advantages of economy-wide mechanism
• Cheaper
• More elegant, less bureaucratic
• Appropriate related market signals
4. Auctioned or distributed
Auctioned or distributed
Advantages of auctioning
• Faster
• Industrial emmissions don't go upin the evaluation period
• Appropriate rewards and punishments
• Accurate market signals
5. Revenue-neutralor funding source
Revenue-neutralor funding source
Reasons to avoid spending the revenue
• Tax grab
• Creating industry lobbies
• No reason to
6. Distribution options
Distribution options
• Income tax
• Dividend
• Quota
7. Border adjustments
Border adjustments
Border adjustments
Objectives
• Protecting Canadian market from imports
• Protecting market for Canadian exports
8. At source oremmission point
9. Offsets
10. Appropriate levels
11. Hybrids
12. A global deal
Carbon Pricing Options
1. Cap or tax
2. Protect high-emitters or not
3. Targeted oreconomy-wide
4. Auctioned or distributed
5. Revenue-neutral or funding source
6. Distribution options
7. Border adjustment options
8. At source or emission point
9. Offsets
10. Appropriate levels
11. Hybrids
12. A global deal