Governments Could Raise $22 Billion From Carbon Pricing
[Edit: The original title stated $22 Million, which was a typo, and has now been corrected to read $22 Billion.]
A growing number of governments around the world are implementing carbon pricing schemes, and the resulting carbon pricing revenues are beginning to be substantial, with one recent estimate predicting a cumulative total of about $22 billion for 2015. This figure comes from a recent paper published by the Climate Markets & Investment Association (CMIA), which also highlights the “significantly higher” revenue this year than last, which was about $15 billion globally.
According to the paper, Carbon Pricing Revenues, these monies come from an array of different mechanisms, from a carbon tax to emissions trading schemes, and the majority of it is generated in Europe. However, the figures used for the paper don’t include those from New Zealand, South Korea, or China, as there is no auctioning or allowances in those countries, and Mexico’s carbon tax was excluded for this paper, as it doesn’t price emissions from natural gas, “so more resembles an energy tax on some fuels.”
The increase from last year’s $15 billion to this year’s estimated $22 billion “mainly reflects increases in” a handful of factors, namely the level of carbon price support in the UK, the level and coverage of France’s carbon tax, the volumes and prices of EUAs auctioned, and the recently expanded coverage of both California’s and Quebec’s emissions trading schemes. The level of carbon pricing revenue could “increase greatly” in the near future due to an expansion of coverage in existing schemes, a rise in carbon prices in major schemes, or the implementation of new programs, such as the one in the works in South Africa, which could bring in more than $1 billion annually, or China’s, which could effectively double the current global total even at today’s prices.
$22 billion is a substantial amount of money, and the countries receiving this carbon bounty are spending in a variety of ways, which the CMIA paper puts in seven main categories, only a few of which are actually focused on climate change solutions. According to Carbon Pricing Revenues, under some schemes, governments are providing financial support for “vulnerable groups” (lower income residents), reducing other taxes as a result of additional carbon revenue, retaining the revenues for deficit reduction or other general expenses, or returning it equally to all citizens (a “cap-and-dividend” system).
On the other hand, three other categories of spending for carbon pricing revenues have potential to develop climate solutions, such as being used for financial support for emissions reduction research, energy efficiency measures, and low-carbon energy R&D, as is currently done in California, Canada, and the EU. The other two categories, spending on adaptation measures and distributing funds to those affected by climate change, while appropriate, aren’t getting any concrete traction in current schemes, but may in the future as carbon revenues increase and the discussion of how best to use them comes more to the forefront.
The paper can be downloaded at CMIA (PDF).
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Ahem…22 ‘billion’ not 22 million as it says in the headline. Please correct.
should have been 22 Trillion, the cost of fixing the planet now!
They’re not the first to make that mistake. See https://www.youtube.com/watch?v=cKKHSAE1gIs
“will raise about $22B in 2015” not could raise. They could raise much much more in 2016-2020.
Yes I think that number is a bit incorrect (do not mean the 22 million that should read billion).
What I mean BC, Canada has about 3.5- 4 million people, our carbon tax brings in over one billion per year,
North America is what, about 400 million people, Europe 400 to 500 million people, Japan 80- 100 million people, all those would amount to about $ 22 billion per year.
But what about the 4 billion people on the planet, one billion + in India and one billion + in China.
Now our BC carbon tax is only $ 30 per ton, increase that to 50 – 100 per ton over a few years and now we are talking some real money.
That tax would be up to $ 100 billion per year, enough to change our FF energy use to RE energy on a worldwide scale!
About $ 2 trillion over 20 years!
That’s serious oil war money like we spent on Iraqistan. If we had only spent $1 trillion on killing Bin Laden and $2 trillion on RE, rather than all on huge carbon foot print war, then we could have effected real change in the Mideast.
Actually my number were of by a factor of 10, so 1 trillion per year and 20 trillion over 20 years.
And as Michael Berndtson points out on his post, FF pay a lot less for their damage than the so called sin taxes.
Eyeballing the graph above, it looks like Japan is bringing in $1 billion. US CO2 emissions are roughly 5 times that of Japan. In theory the US could bring in about $5 billion assuming a Japanese carbon tax.
That’s not enough. Here’s 2014 actual CBO numbers: revenue, $3.021 trillion; outlays, $3.506 trillion; and deficit, $485 billion. US public debt is $12.78 trillion compared to GDP of $17.251 trillion.
So $5 billion in carbon taxation, based on US revenue, is 0.17%. To put this into perspective, US tax revenues from cigarettes is just under $16 billion. US (state and local) tax revenue on alcohol is around $6 billion.
So smokers are asked to do more than carbon emitters. US fed taxes smokes at $1.01 per pack. There’s 20 cigarettes in a pack or 20 grams of tobacco/paper. Let’s assume that all gets burned perfectly (no H20, I’m too lazy) so CO2 emissions per pack is 20 grams. With a one pack a day habit, that’s 7300 grams or 7.3 kilograms of CO2 per year. This is equal to 0.007 metric tons of CO2. That’s $137/ton CO2
So if we tax carbon the same as cigarettes that’s $137/metric ton CO2. US emits 5,270 x 10^6 metric tons CO2 per year. So we’d collect $722 billion per year on the Michael Berndtson carbon tax (per smokers tax). This would put our $485 deficit into surplus territory of around $237 billion.
The carbon pricing in BC, Canada has a number of benefits, reduced emissions (for a while), raised revenue for the government, lowered taxes for people and bussines and created tax rebates for lower income people.
Here’s the data from BC from which you speak:
http://bcbudget.gov.bc.ca/2014/bfp/2014_budget_and_fiscal_plan.pdf#page=74
It looks like it’s not totally revenue neutral, but close. We’re talking one Canadian province here. A province that doesn’t rely on fossil fuel like say Alberta. And we all know Canadians are nice and honest. In the US (not nice and highly dishonest when it comes to taxation) we should tax the living bejesus out of financialization products (trades) and the idle rich AND apply a carbon emissions tax. We’re way in the hole here. China may not be picking up our deficit much longer.
The one carbon tax that proved politically vulnerable was the one that came closest to the wonk’s ideal of revenue neutrality: Australia’s. It’s sounder to defend carbon taxes just as a good way of raising money. The question whether public spending and therefore taxes are too high or too low is a different one, and not many are in the Goldilocks zone of “just right”.
The problem (as I see it) with BC carbon tax is used to reduce taxes but very little of it goes to increase RE energy system, reduce FF use.
BC hydro used to have grants for solar, wind etc there used to be grants for energy efficiency (some of those are still here, but very minimal).
There are incentive for EV’s, but those are over 3 years for a total of about 3000 units, new registrations are maybe 50.000 per year or so.
You’re right. I thought the exact same thing, too. It looks like Canada has the same “let no good deed go unpunished” policy as the US. The the carbon tax proposal went through the meat grinder of politics and came out short in the end. Once one interest group gets a break in the US, every other interest group and their cousins get a break. So this carbon tax was chiefly set out to cut breaks, with some left over to move renewables forward.
Yes the ‘liberal’ government in BC is in name only, it is conservative as you can get, policy wise, but Quebec and Ontario are doing much better supporting RE energy than BC.
But now that we do have a new PM, thank goodness Harper is gone, I hope to see major changes on the federal level abd with the added benefit of reducing CO 2 and the jobs tha RE brings.
22 billion? I think we need to raise it by another magnitude. Make it a 220 billion a year tax! Still it would be nothing compared to all the money we spend on our war mongering. I wonder if our government would just spend this new tax money on more war?
Make fossil fuels pay for ALL the costs associated with burning them.