MARKET PRICE FOR CARBON
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PlanetSolar is a rare animal, a zero carbon boat that contributes to zero emission objectives, but attracts no carbon credits. Similar projects with higher commercial expectations in reducing fleet emissions, also fall at the first hurdle in UN certificate terms. But projects to plant trees or change from coal to solar or wind generation pass with flying colours.
- First, it will provide signals to consumers about what goods and services are high-carbon ones and should therefore be used more sparingly.
- Second, it will provide signals to producers about which inputs use more carbon (such as coal and oil) and which use less or none (such as natural gas or nuclear power), thereby inducing firms to substitute low-carbon inputs.
- Third, it will give market incentives for inventors and innovators to develop and introduce low-carbon products and processes that can replace the current generation of technologies.
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Fourth, and most important, a high carbon price will economize on the information that is required to do all three of these tasks. Through the market mechanism, a high carbon price will raise the price of products according to their carbon content. Ethical consumers today, hoping to minimize their “carbon footprint,” have little chance of making an accurate calculation of the relative carbon use in, say, driving 250 miles as compared with flying 250 miles.
If 0.01 of a ton of
carbon emissions results from the wheat growing and the milling and the trucking and the baking of a loaf of bread, then a tax of $30 per ton carbon will raise the price of bread by $0.30. The
“carbon
footprint” is automatically calculated by the price system. Consumers would still not know how much of the price is due to carbon emissions, but they could make their decisions confident that they are paying for the social cost of their carbon footprint.
... [I]f a country wished to impose a carbon tax of $30 per ton of carbon, this would involve a tax on gasoline of about 9 cents per gallon. Similarly, the tax on coal-generated electricity would be about 1 cent per kWh, or 10 percent of the current retail price. At current levels of carbon emissions in the United States, a tax of $30 per ton of carbon would generate $50 billion of revenue per year.
HOW TO VALUE AIR POLLUTION
EMISSION MARKETS
Currently there are five exchanges trading in carbon allowances:
1. The European Climate Exchange, 2. NASDAQ OMX Commodities Europe, 3. PowerNext, 4. Commodity Exchange Bratislava and 5. The European Energy Exchange.
NASDAQ OMX Commodities Europe listed a contract to trade offsets generated by a CDM carbon project called Certified Emission Reductions (CERs). Many companies now engage in emissions abatement, offsetting, and sequestration programs to generate credits that can be sold on one of the exchanges. At least one private electronic market has been established in 2008: CantorCO2e.
Louis Redshaw, head of environmental markets at Barclays Capital predicts that "Carbon will be the world's biggest commodity market, and it could become the world's biggest market overall."
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CONTACTS
... CARBON
TRADING OFFSETS IMO
MARINE ENVIRONMENT PROTECTION
LINKS & REFERENCE
https://ec.europa.eu/clima/policies/ets/registry_en
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