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Home > Oil and Gas >  Current Status of Carbon Pricing Worldwide

Current Status of Carbon Pricing Worldwide

Carbon pricing mechanisms include include emissions trading systems (ETS), carbon taxes, carbon credits, and internal carbon pricing. Carbon prices around the world rose during 2021, in large part due to net zero targets and tightening pollution restrictions related to COP26. Other contributing factors have been greater use of coal due to higher natural gas prices, a price floor push from Germany, and upcoming deadlines for options trading. Just 22% of global GHG emissions are priced, and only 4% are priced at Paris-compatible levels. Most ETS’s are focused on heavy industry and power sectors, while carbon taxes sometimes include all sectors. Generally, the taxes are applied to the highest level of the value chain (i.e. producers and importers), and in a minority of cases applied directly to users. In the US, a methane fee is under consideration in Congress. It would apply a tax of $900/ton to oil & gas operations in 2023, increasing to $1500/ton in 2025. Europe has the most mature ETS, with other carbon pricing leaders being Canada and, South Korea, and New Zealand.

Scope

Introduce the mechanics of carbon pricing schemes

Examine the effectiveness of carbon pricing in reducing emissions

Review the current price of carbon and sectoral coverage globally

Learn where carbon pricing is currently applied or under consideration

Reasons to Buy

Learn what factors have led to record-high carbon prices in 2021

Understand what pricing levels are needed to meet Paris targets

See which oil & gas companies are using carbon pricing

Understand where carbon pricing is likely to be implemented

Companies Mentioned

Repsol, Equinor, Shell, ExxonMobil, TotalEnergies, BP, Chevron

Table of Contents

What is Carbon Pricing?

Carbon Pricing Effectiveness

Emissions Trading Schemes

Carbon Taxes

Carbon Crediting

Internal Carbon Pricing

Carbon Prices on the Rise

Coverage of Global Emissions

Sectors Applied and Tax/Fee Imposition

Price Necessary to Achieve Paris Climate Targets

Effective Carbon Rates

Carbon Crediting Under Article 6 of the Paris Agreement

EU ETS Case Study

Active and Planned Pricing Schemes: US and Canada; Latin America; Middle East, Asia, and Oceania; Europe; Africa

List of Figures

Figure 1: US Emissions Scenarios and Paris Targets

Figure 2: Cap-and-Trade and Baseline-and-Credit Examples

Figure 3: Carbon Tax Rates, April 2021

Figure 4: National and Sub-national Crediting Systems

Figure 5: Internal Carbon Prices Among Oil & Gas Majors

Figure 6: EU and UK ETS Allowance Prices, 2021

Figure 7: Carbon Prices in 2021

Figure 8: Carbon Price Coverage of Global Greenhouse Gas Emissions

Figure 9: Allocation of Sector Coverage and Payment Responsibility in Active ETS and Carbon Tax Systems, Worldwide

Figure 10: Percentage of Emissions Priced at Paris-Compatible Level, 2018

    Pricing

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