Solving the Climate Crisis: Carbon Pricing 101 Basics of Carbon Pricing Dr. Linda Dismore (Diz) Swift ©

Costs of fossil fuel use are not included in the current price Hurricanes (Sandy $65b), drought, health costs, sea level rise Social Cost of Carbon estimates from $37 to >$400/ton CO 2 e Fossil fuels are artificially inexpensive Put a price on carbon emissions so users pay the fair price Fossil fuel use will decrease; CO 2 emissions will decrease Alternatives become more affordable and grow The economy can also grow Carbon Pricing 101 Putting the Market to Work PriceonCarbon.org ©

Pricing Carbon is not a new idea Figure from World Bank report, 2014 ©

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Emissions Included Revenue Use

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Emissions Included Revenue Use

Pricing Mechanism © Both mechanisms have been tried; both can be effective.

Linda Swift © 2015 Declining Cap Set by Government Maximum Emissions Allowed Cap Year 1 Year 2Year 3Year 4 Company A Cap and Trade ©

Linda Swift © 2015 Permits Auctioned by Government Company A emits above cap, needs more permits Company B buys more permits than needed Company B Cap Company A EmissionsPermits EmissionsPermits © Cap and Trade

Company B sells permits to Company A Company B Company A EmissionsPermits EmissionsPermits © Cap and Trade

Linda Swift © 2015 Company B sells permits to Company A Company B Company A EmissionsPermits EmissionsPermits © Cap and Trade

Allocations Allowances (permits) can be given by government to select companies or industries “Free permits” May decrease with time Emissions Permits Cap Allocations “Free Permits” Company A © Complications

Offsets Projects which sequester carbon can offset some emissions/permits Emissions Permits Cap Offset Company A © Complications

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Emissions Included Electricity generation Transportation Industrial Revenue Use

Emissions Included © EIA

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Emissions Included Electricity generation Transportation Industrial Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes California

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes Van Hollen Bill

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes CCL

How Do You Price Carbon? © Carbon Pricing Elements Pricing Mechanism Carbon Tax or Fee Cap and Trade Revenue Use Government Programs Mitigate/adapt Reduce deficit Infrastructure, etc Revenue Neutral Return to people Reduce other taxes British Columbia

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