Climate change: Low CO2 emissions tax possible if clean technology is also implemented

Researchers from the Potsdam Institute for Climate Impact Research (PIK) in Germany say cheaper global pricing of greenhouse gas emissions is possible if countries are willing to implement clean technology policies at the same time.

The World Climate Summit will take place in Paris in December, where policymakers and business leaders will work towards striking a legally binding global climate agreement on curbing carbon emissions, which will take effect in 2020.

The Bulletin of the Atomic Scientists (BAS) recently announced the Doomsday Clock now reads three minutes to midnight due to rising nuclear tensions as well as unchecked climate change, which could lead to profound changes in the Earth's climate by the end of the century.

"The world will be between 3-8 degrees Celsius warmer by the end of the century. Global emissions rates are now 50% higher than in 1990," said Richard Somerville, a member of the BAS' Science and Security Board and a distinguished professor emeritus at Scripps Institution of Oceanography, University of California San Diego.

Would a strict carbon dioxide tax work?

One of the policies being discussed is a ban on new coal-fired power plants, as well as a global tax set on how much carbon dioxide each country produces, so countries that produce a lot of carbon emissions would have to pay more.

However, in order to make this policy work so there can be a tangible reduction in carbon emissions, countries would need to be charged a lot of money.

"Economic theory suggests that we'd need a global price on greenhouse-gas emissions to keep warming below the 2 degrees Celsius threshold, and this price would probably have to be more than $30 per ton of CO2, previous studies showed," said Christoph Bertram of the Potsdam Institute for Climate Impact Research (PIK), the lead author on the study.

"This seems rather unrealistic, given the track record of policies so far enacted."

So the researchers have come up with another policy – reward countries by charging them only $7 (£5) per ton for greenhouse gas emissions until 2030, if they implement clean technologies.

"Successful climate policies not only require reducing emissions in the short term, but also to pave the way for deep decarbonisation in the long term," says project leader Gunnar Luderer of PIK.

"To this end, cleverly designed technology policies can bring essential green technologies to the market and avoid further build-up of emissions-intensive infrastructure."

Combining several policies could work better

The researchers created a computer model of the global energy economy, comparing the performance of a variety of different pricing policies in different scenarios.

"So far, it seems clear that most countries will make heavy use of technology policies in their efforts to limit emissions. It is therefore crucial for them to know how much they could gain by combining these with a predictable CO2 price, even a moderate one," said study co-author Ottmar Edenhofer, chief economist of PIK.

"If we want to contain the impacts of climate change, it is essential to start comprehensive and meaningful mitigation policies between 2015 and 2020. Otherwise, both risks and costs increase substantially."

Their study is published in the journal Nature Climate Change.