Page 8 - AsiaElec Week 02 2023

AsiaElec COMMENTARY AsiaElec

expected to price carbon anytime soon. For these happen without a high enough carbon price.
countries, technical, administrative and political Current carbon prices are too low and limited
barriers remain, said the researchers. in scope.
Carbon prices should not have a notable Finland introduced the first tax on carbon in
impact on inflation and competitiveness, said 1990, followed by a few European countries such
the authors. The literature on the impact of car- as Poland, Norway and Sweden. The EU emis-
bon prices is mixed, with inflation from higher sions trading scheme (ETS) was not introduced
prices potentially mitigated by policy design until 2005, and it was followed by other devel-
and targeted fiscal spending. Furthermore, oping countries like New Zealand, Australia and
pricing carbon provides an incentive to switch Japan. Initiatives from emerging markets did not
to low-carbon energy sources, which should start until the early 2010s, and Africa just had
reduce the price impact over time. its first carbon tax introduced in 2019 in South
Carbon prices will be necessary to reduce Africa.
carbon emissions, they state. A carbon price sets Despite their introduction decades ago,
a signal to market players to either reduce their prices have been too low. For example, carbon
emissions or pay to pollute. This then allows the in the EU ETS was priced below €20/tCO2e
market to internalise the costs carbon imposes ($21/tCO2e) between 2009 to 2018. To put this
on the environment – such as air pollution and in perspective, the Report of the High-Level
extreme weather events – shifting the burden of Commission on Carbon Prices wrote that the
responsibility and increasing accountability for carbon price needs to be within the $50-$100/
large emitters. tCO2e range by 2030 for warming to stay below
Decarbonisation at scale and pace will not 2 degrees Celsius.™

P8 www. NEWSBASE .com Week 02 10•January•2023