World Bank Urges CO2 Price
World Bank President Jim Yong Kim has urged the world’s environmental ministers to combat climate change by implementing a five-point plan that includes putting a price on carbon dioxide emissions, improving agricultural practices and ending fossil fuel subsidies.
Kim urged more countries to roll out price mechanisms either through a tax on carbon, indirect taxation, regulation or creation of a carbon market, Reuters reports.
The plan also includes building low-carbon cities and sharing new technology that will save energy, Kim told about 30 of the world’s energy and environment ministers gathered in Berlin for informal talks on a new global climate deal to take effect in 2020.
The Berlin gathering follows a meeting in Bonn last week of more than 600 government officials and NGOs who met t0 discuss a new global climate deal due to be signed in 2015 to succeed the current Kyoto Protocol, according to Reuters. US negotiators pushed nations to scrap coal, gas and oil subsidies by 2020, a step they said could cut emissions 10 percent under business-as-usual levels by mid-century.
The European Union Emissions Trading Scheme, the largest global carbon market, has struggled over the past year suffering from record low prices that analysts say could inch closer to zero unless policymakers take action, either through backloading or some form of long-term structural change. Carbon prices hit their lowest point April 16 after the European Parliament rejected an emergency plan to boost the ailing EU carbon market.
European carbon prices did rebound last week after German Chancellor Angela Merkel said the EU should take action on a plan to postpone the supply of permits.
California’s carbon auction has fared better. Earlier this year, California raised about $176 million selling GHG emissions permits in its second carbon auction, with businesses paying $13.62 per metric ton of carbon, exceeding analysts’ expectations and selling at $2.91 above the reserve price. The Feb. 19 auction sold a little over half as many allowances with a reserve price set 71 cents higher. The price increase is in line with California cap-and-trade regulations, which say that the auction reserve should increase annually by 5 percent plus the rate of inflation.
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