Paris Climate Agreement Carbon Tax

As a precursor to Paris, the Kyoto Protocol laid the groundwork for countries to reduce greenhouse gas emissions through CO2 emissions trading, and the 2015 agreement aims to widen the scope for carbon prices worldwide. But this is not a one-off approach for its signatories. This short text contains three distinct mechanisms of “voluntary cooperation” within the framework of climate targets: two on the basis of markets and a third on “non-market-related approaches”. The text describes the requirements for the parties involved, but leaves the details – the “regulatory framework” provided for in Article 6 – undecided. Although Article 6.7 stipulates that the annual COP adopts rules, modalities and procedures for the carbon market in accordance with Article 6.4, there is disagreement over the extent of national control over its activities and the UN supervisory body signs each draft or methodology. The carbon tax is now used in many countries around the world to combat climate change. For more than a decade, several countries in northern Europe have had CO2 taxes. In Canada, Prime Minister Justin Trudeau has just introduced a minimum carbon tax of $10 per tonne of CO2, and now China is introducing co2 taxes. (The UK`s official climate advisers have recommended achieving the country`s net zero target without international trade, although this option has not been clearly ruled out.) This is particularly relevant for nations considered to be most vulnerable to the effects of climate change, which have spoken loud and clear in the negotiations on the risks of weak Article 6 rules. The alliance of small island states and least developed countries, whose economies and livelihoods are most affected by the negative effects of climate change, has taken the initiative to address losses and damage as a particular theme of the Paris Agreement. [33] However, developed countries were concerned that looking at the issue as a separate issue that goes beyond adaptation would create additional climate funding or imply legal responsibility for catastrophic climate events.

If the rules of Article 6 are not strict enough, nations may face “perverse incentives” to avoid increasing their climate ambitions. They could voluntarily exclude part of their economy from their NDCs in order to be able to sell all the resulting emission reductions on the world market. The IETA report, which models up to $250 billion in reduced costs to meet current climate targets, says targets could be raised by 50% if Eastern European countries were “inspired to invest these economies in enhanced ambitions.”