(This November 24 story corrects the location of China pilot scheme to Hubei in paragraph 5)
FILE PHOTO: Smoke rises from a coke factory in the village of Lukavac near Tuzla, Bosnia, October 30, 2018. REUTERS/Marko Djurica
LONDON (Reuters) - Faced with the challenge of converting pledges to slash planet-warming emissions into policies, some of the world’s biggest economies are turning to the same tool: a carbon price.
Globally, about 22% of global emissions are covered by the 46 national and 32 sub-national carbon pricing schemes operating today or in the planning stage, according to the World Bank.
Carbon pricing can come in the form of a tax or under a an emissions-trading, or cap-and-trade, scheme where companies or countries face a carbon limit
Ralf Martin, Mirabelle Muûls, Ulrich Wagner
According to the World Wide Fund for Nature (WWF 2020), the momentum around climate change is now positive. Polluting firms must be disincentivised directly for releasing CO2 emissions, so that social costs of carbon are reflected into prices. A policy instrument widely implemented is cap-and-trade (ICAP 2020). Interestingly, a recent debate calls for higher indirect costs through increased loan or bond spreads by banks and other financial institutions to the polluting firms and sectors. Most of the anecdotal evidence suggests that, at least until recently, this has not been the case, with the banking sector continuing to finance heavily polluting activities (e.g. RAN 2020, Financial Times 2020, Guardian 2019).