Expansion of Carbon Pricing Promises to Alleviate PovertyWith an estimated value of between $16 and $54 trillion, the services provided by natural resources are an asset worth protecting. It is widely recognized that carbon dioxide from fossil fuel emissions threatens the environment and that reducing carbon emissions is a global necessity. A dominant strategy to reduce carbon is to make it more expensive which incentivizes individuals, companies and nations to use it more efficiently or switch to alternatives. Roughly 40 countries and over 20 subnational governments are either doing or planning to do so through legal mechanisms that increase carbon pricing. A recent analysis by the World Bank estimates that the value of these initiatives grew to nearly $50 billion this year.

There are two ways in which these efforts will be working to lighten the burden of poverty across the globe.

The first focuses on the role that a stable climate and healthy ecosystems have in providing a solid footing for economic development. Clean air and water, fire, flood and erosion control, mitigation from tsunamis and prevention of landslides are all services that intact ecosystems provide. These protect human populations and provide the foundation of productive agricultural systems.

Excessive use of carbon is leading to rising sea levels, increased desertification, stronger storms and less predictable weather, which will subvert the progress made on ending poverty and may create large groups of climate refugees, up to 200 million by 2050. In short, robust ecosystems offer goods and services and climate change undermines the provision of these goods and endangers massive economic, social and political costs.

The second way in which the expanding carbon market may reduce poverty depends on the design of the regulation. Currently, the two main strategies that reign supreme are cap and trade schemes and carbon taxes. The first sets a limit, the cap, on the amount of carbon that can be emitted and allows firms to trade permits to pollute. If one firm does not need to pollute, they may sell their permit to a polluter. Over time the cap is lowered and so are the emissions. Carbon taxes simply add a tax to carbon to make it more expensive and less attractive to use, though how the tax is applied and what is to be done with the revenue is flexible.

While both forms work to end poverty through protecting the environment, the cap and trade scheme contains an added component, termed carbon offsetting, which funds emissions-reduction projects in the developing world. Rather than buying permits to pollute, a firm can invest in an emissions-reduction project that otherwise would not have been financially feasible. These projects introduce clean technology and increase the level of investment in the developing world while protecting the environment.

Examples of U.N. certified emissions-reduction projects range from a soil conservation project in Moldova to reforestation of degraded croplands in Paraguay and generating power from rice husks in India. In 2013, total investment from certified projects was estimated to be over $315 billion. As carbon pricing expands, poverty reduction and sustainable development will follow.

– John Wachter

Sources: National Geographic, Oakridge National Laboratory, The Nature Conservancy, United Nations Framework Convention on Climate Change, United Nations Framework Convention on Climate Change, United Nations Framework Convention on Climate Change, World Bank
Photo: Eco Talk

Countries should make carbon pricing the cornerstone of climate policy, said The Organization for Economic Cooperation and Development on Oct. 10. Carbon markets are about 94 percent cheaper at cutting greenhouse gases than renewable subsidies paid to power producers, according to a new OECD.

OECD Secretary-General Angel Gurria said that global energy systems need to transform if countries hope to limit climate change to the agreed-upon 2ºC temperature increase. Gurria urged for a coherent approach to carbon pricing, to facilitate the gradual phase-out of fossil fuel emissions.

“Whatever policy mix we put in place, it has to lead to the complete elimination of emissions to the atmosphere from fossil fuels in the second half of the century,” Gurría said. “We don’t need to see zero net emissions tomorrow, but we will need to be on the pathway.”

According to Bloomberg, the OECD said that countries need to assess the cost-effectiveness of their climate-protection plans, and take an inventory of policies that price carbon directly.

“What we are describing here is a growth story,” Gurria said. “Going down the high-carbon route will destroy growth.”

The OECD’s report said that governments need to “ensure that carbon pricing is sufficient to achieve climate goals and that other policies are well-aligned with these goals.”

According to Renew Economy, this 94 percent price cut is about 17 times cheaper than paying power generators renewable energy subsidies. The OECD conducted an analysis of 15 countries that showed once again that carbon markets have the power to fight climate change and fund clean energy.

The report analyzed the following countries:  Australia, Brazil, Chile, China, Denmark, Estonia, France, Germany, Japan, Korea, New Zealand, South Africa, Spain, the United Kingdom, and the United States.

Renew Economy said this list “covers nearly every potential energy market” – there are countries on that list that have high renewables, are fossil fuel dependent, have developed economies, have struggling economies, as well as those with experience in the carbon market and those who are just beginning to learn.

The OECD said that reducing fossil fuel emissions isn’t enough. We must strive to eliminate them as completely as possible, Gurria said in a blog post on Oct. 9.

“Carbon dioxide is a long-lived gas: almost half the CO2 emitted this year will still be around 100 years from now,” Gurria said. “Carbon dioxide concentration, and its warming potential, will therefore increase over time, unless the rate of accumulation falls to zero.”

Renew Economy writer Silvio Marcacci said that carbon markets are “pouring money into energy efficiency, climate mitigation, and renewable energy products across the world.”

About 60 carbon pricing systems are currently being used or being developed.

– Alycia Rock

Sources: Clean Technica, OECD, Bloomberg, Renew Economy

Smog From China is Crossing BordersSmog in China is an ongoing issue. China’s ongoing process of industrialization has resulted in extreme amounts of pollution in many of its cities. Because of the national dependence on particularly dirty fossil fuels, millions of citizens wear surgical masks when venturing outside because the air is just too dirty to breathe safely.

Until recently, the problem has been largely confined to China itself. Those afraid of global climate change, however, have been calling attention to the issue for years. Now, smog from China is crossing borders and affecting its Japanese neighbors. This presents another challenge to test Chinese-Japanese already strained relations.

Associate Professor Toshihiko Takemura of Kyushu University, who studies pollution for the University, explained that in Kyushu, “the level of air pollution has been detectable in everyday lives since a few years ago.”

China is notorious for quashing public dissent on sensitive issues like government shortcomings. However, in recent weeks, there have been uncanny amounts of focus put on environmental shortcomings by both state television and party officials.

Hopefully, the new Chinese Premier will work hard to drastically reduce China’s levels of pollution, bettering the health of the country’s citizens while improving relations with China’s estranged neighbor.

Jake Simon

Photo: Japan Times