Carbon taxes not sufficient to meet the targets set out by the Paris Agreement, according to a new study published on 4 September in the journal Joule (1). Putting a price on carbon is usually done at the emissions level. Proponents of the approach suggest this allows market forces to produce a low-carbon economy since low-carbon energy sources become more economically favourable. However, the authors instead suggest that “Early incentives [on carbon removal strategies] could both reduce the cost of delivering the Paris Agreement and satisfy our long-term need for negative emissions.”
The Paris Climate Agreement stipulates that to prevent catastrophic climate change nations must collectively limit global warming to well below 1–2°C above pre-industrial temperatures by 2100. But to achieve this, human-produced carbon dioxide (CO2) emissions must reach zero by 2070, and become negative thereafter. Proposed strategies for reducing CO2 emissions include carbon capture technologies, planting more trees, and of course, shifting to renewable energy sources. And the use of carbon taxes is, indeed, one important approach.
How effective is carbon pricing?
The researchers from Imperial College London investigated whether carbon taxes — currently, the favoured system for reaching global warming targets — can, in fact, prove useful. To do this, they modelled the future UK energy system using several different scenarios favouring either carbon taxation or incentives for carbon removal. While this study focused on the UK, the researchers are planning to apply the same case study to developing countries, such as rapidly developing economies like Nigeria.
Their findings show that carbon taxes will have to be much higher than at present to effectively push companies towards low-carbon technologies or order to meet the emissions goals. But even so, this would only work in the short-term. Therefore, developing and implementing carbon removal technologies will be necessary to reach long-term goals. But according to the authors, carbons taxes alone are not enough to incentivise this. Moreover, carbon removal technologies may actually prolong the unabated use of fossil fuels, therefore, disincentives must be implemented to prevent this “moral hazard” from happening.
The authors write that “increasing prices to the social cost of carbon is sufficient to achieve a decarbonized system in the medium-term but not maintain it in the long-term”. Instead, they propose incentivising strategies for CO2 removal from the atmosphere on a commercial scale.
Lead author Miss Habiba Daggash from the Centre for Environmental Policy at Imperial says “The current system of penalising greenhouse gas emissions through carbon taxes is not sufficient to avoid catastrophic climate change, even if very high taxes are enforced. Therefore, using this strategy alone, the Paris Agreement that most countries have committed to could not be delivered.”
Adding that “the system needs to be adapted to recognise that not only do emissions need to be penalised, but actions that result in permanent removal of greenhouse gases from the atmosphere must also be credited.”
(1) Daggash, H.A. and Mac Dowell, N. Higher Carbon Prices on Emissions Alone Will Not Deliver the Paris Agreement. Joule (2019) DOI: 10.1016/j.joule.2019.08.008