A global coalition of businesspeople and academics has released the ground-breaking Real Carbon Price Index to track the progress the world is making towards reducing greenhouse gas emissions.
“Our ambition is to make the Real Carbon Price Index the global benchmark for carbon pricing. This will shine a spotlight on global decarbonisation efforts, showing whether real action is being taken, and who is taking it,” says Dr Roger Cohen, founder and CEO of Sydney based start-up C2Zero.
The High Level Commission on Carbon Pricing has established that if polluters paid US$50-$100 per tonne for their carbon emissions by 2030, this would be enough to trigger action through direct emissions reduction plus innovation, which would allow the goals of the Paris Agreement to be met.
“If the price is low, as it currently is, there is little reason for polluters to take action. Our Index shows the blunt truth: greenhouse gas emissions are still far too cheap,” Dr Cohen adds.
Dr Ummul Ruthbah, Senior Research Fellow with Monash Centre for Financial Studies (MCFS), says the Real Carbon Price Index shows the cost of carbon emissions globally has risen from zero in the 1980s to the current level of just US$4.42 per tonne.
“This is far below where it needs to be in order to force both individual companies and entire business sectors with heavy carbon emissions to meaningfully reduce their pollution levels. In fact, the index reveals that about 75 per cent of carbon emitters are paying absolutely nothing.
“While accounting for 1 per cent of global emissions, Australia is not even included in the Real Carbon Price Index as it does not have a carbon emissions trading scheme, although it does have an offsets trading system administered by the Clean Energy Regulator,” Dr Ruthbah says.
“This inaction stands against the damage done by emitting greenhouse gases. A recent European study found that the social cost of emitting one tonne of CO2 could actually be well above $3,000 if we don’t take action,” adds fellow MCFS researcher, Dr Bei Cui.
Some economies, including the EU, USA, and China, are making polluters pay for their greenhouse gases, yet most countries, including Australia, have placed very little or no price on greenhouse gas emissions.
“The Real Carbon Price Index lets everyone see how seriously the world is taking climate change. It scrutinises which countries or regions are paying their way or contributing to addressing this crisis,” says Jan Ahrens, head of research at SparkChange, a provider of specialist carbon investment products and data.
“The index can be used to highlight the differences between regions and countries, show how historical decisions (like Brexit) affect carbon pricing and provide guidance for policy makers when setting carbon prices. Sadly, it also illustrates the significant gap between our current levels of ambition and the science-based targets we must achieve to limit global warming,” Mr Ahrens adds.
Related article: It’s the vibe… Govt’s net-zero plan panned for lack of detail
At around US$70, the European Union (US$66) along with Finland (US$72.5), Norway (US$65.5) and the UK (US$65.06), have reached or exceeded the lower range of the 2030 target: with Switzerland (US$104.67) and Sweden (US$136.34) leading the world. At the other end of the spectrum, the worst performers include India (7 per cent of global emissions), Russia (5 per cent), Iran (2 per cent), Indonesia (2 per cent), Saudi Arabia (2 per cent) as well as Australia (1 per cent), who collectively account for 19 per cent of global emissions and pay zero. Somewhere in the middle are New Zealand (US$33.5), California (US$21.96) and China (US$8.20).
“What is heartening is that the carbon price and the scope of emissions covered are both increasing steadily. This trend needs greater momentum if we are to get to the target of US$50-$100 and alter the path of climate change,” Dr Cohen says.