Preview of the State and Trends of Carbon Pricing 2017 LAC Carbon Forum October 18, 2017 - Mexico City, Mexico Celine Ramstein Carbon Pricing Intelligence Program Coordinator World Bank Group

International Context We have seen continued progress on carbon pricing in 2016- 2017, despite headwinds that have constrained climate action in some countries Great potential with the implementation of NDCs, with 81 parties mentioning carbon pricing in their NDCs (77% of LAC NDCs, of which 85% refer only to carbon pricing at the international level) The negotiations on the implementation of the Paris Agreement are key, especially the guidelines governing the operationalization of Article 6, but making slow progress Important milestones to come with COP23, December Paris Climate Summit and new initiatives expected for the next months and years.  

State of Carbon Pricing initiatives in 2016-2017 47 Carbon Pricing initiatives implemented or scheduled for implementation These initiatives cover 15% of global GHG emissions In 2016, governments raised about US$22 billion in carbon pricing revenues  

State of Carbon Pricing initiatives around the world  

New carbon pricing initiatives since early 2016 3/4 of them in the Americas Australia ERF safeguard mechanism Alberta carbon tax Colombia carbon tax South Africa carbon tax Washington CAR Chile carbon tax Massachu-setts ETS 16% Ontario CaT Fujian pilot ETS BC GGIRCA 14% Newcomers 12% Existing initiatives 10% Share of global GHG covered by carbon pricing initiatives 8% 6% Let’s now focus on the newest initiatives in 2016: Since 2016, eight new carbon pricing initiatives have been implemented, highlighting the continued momentum for carbon pricing: In 2016: The Greenhouse Gas Industrial Reporting and Control Act (GGIRCA) in British Columbia, establishing a baseline-and-credit system in addition to the province’s revenue neutral carbon tax. The GGIRCA applies to industrial facilities exceeding a specific GHG emissions limit as set in regulation. The Emissions Reduction Fund (ERF) Safeguard Mechanism in Australia, launching a baseline-and-offset system. A pilot ETS in Fujian which covers GHG emissions in 2016, in preparation for the introduction of the Chinese national ETS later in 2017. In 2017: A carbon tax in Alberta, covering all GHG emissions from combustion that are not covered by its existing carbon pricing initiative for large emitters. A carbon tax in Chile, which applies to CO2 emissions from large emitters from the power and industrial sector. An economy-wide carbon tax in Colombia on all liquid and gaseous fossil fuels used for combustion. An ETS in Ontario, covering GHG emissions from industry, electricity generators and importers, natural gas distributors and fuel suppliers. The Clean Air Rule in Washington State, establishing a baseline-and-credit system which initially covers fuel distributors and industrial companies that are not considered to be energy intensive nor trade exposed. Looking forward: Massachusetts is implementing its ETS next year, which will operate alongside RGGI China is gearing up for the commencement of its national ETS, which is planned for the second half of 2017. This will be the largest carbon pricing initiative in the world, surpassing the European Union ETS (EU ETS). Already, the eight Chinese ETS pilots collectively cover 1.3 GtCO2e, or about ten percent of the country’s GHG emissions. The number of carbon pricing initiatives will continue to grow, with several new initiatives under consideration: Canada, a national framework was put forward by the government in 2016, requiring all jurisdictions to implement a carbon price by 2018. Mexico started a one-year ETS simulation to create domestic awareness and prepare for the launch of an ETS in 2018 While Colombia and Chile continue to consider setting up an ETS following the introduction of their carbon taxes. Also, Kazakhstan is intending to re-launch its ETS in 2018, following a two-year suspension Singapore has announced that it intends to implement a carbon pricing initiative in 2019. Despite these positive international developments, prospects for climate action and carbon pricing in other jurisdictions have slowed or remain uncertain: the new US administration is moving to rescind or review several federal energy- and climate-related policies such as the Clean Power Plan. In addition, the launch of the carbon tax in South Africa has been delayed again; a new start date is expected to be announced by the Minister of Finance. 4% 2% 0% 2016 2017 2018 Starting year

Latest developments in 2016-2017 The number of carbon pricing initiatives in the Americas has doubled to 12 initiatives over 2016–2017: In LAC: carbon tax in Chile and Colombia In Canada: new instruments in British Columbia, Alberta and Ontario and national framework put forward by the government. Positive developments at the US subnational level: Washington State’s ETS in 2016, Massachusetts ETS in 2018 and extension of the California ETS until 2030. Prospects for carbon pricing in other jurisdictions have slowed or remain uncertain (South Africa, US federal level) Encouraging prospects ahead: China, Mexico, Kazakhstan, Vietnam, Singapore, Colombia, Chile, …  

Prices in implemented Carbon Pricing initiatives   Prices span a wide range, from less than US$1 up to US$140/tCO2e. Only 1% of covered emissions are currently priced at a level consistent with the High-level Commission on Carbon prices range for 2020.

More efforts are needed Despite these important positive steps, further action is necessary Key priorities for action include: Expanding coverage through the development of new initiatives and the broadening of GHG coverage in existing initiatives; Deepening impact by raising carbon prices, which will send a stronger price signal, triggering more investments in low-carbon technologies;  Aligning carbon pricing with complementary and enabling policies; Progressing on the guidelines of the Paris Agreement to pave the way towards linking domestic pricing schemes and enabling usage of international market mechanisms.  

Sources http://carbonpricingdashboard.worldbank.org/ TO BE RELEASED http://carbonpricingdashboard.worldbank.org/   2016-10 TO BE RELEASED