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On October 29th 2020, the 19th Central Committee of the China Communist Party concluded its semi-annual plenum. The issue of discussion was to review the outline for the country’s 14th Five-Year Plan (FYP), the state’s vision of economic and social policy over the next five years. The 14th FYP, which will be released in March 2021, aims to improve market efficiency and self-reliance, and emphasise R&D and technological innovation. Perhaps most importantly, however, the plan will radically expand the pilot programmes of China ’s ambitious carbon trading scheme to a national level.

Since October 2011, carbon trading schemes have been implemented in eight jurisdictions across China. The pilot programmes were intended to test how these schemes would work under different conditions. Locations of pilot programmes include the political and business hubs of Beijing and Shanghai, the heartland of China’s manufacturing industry in Guangdong province and the densely populated industrial municipalities of Tianjin and Chongqing.

 The pilot programmes appear to have been successful in reducing China’s carbon intensity, a measure of emission reductions calculated relative to economic growth and GDP, which fell by 48.1% in 2019 compared to a 2005 baseline. By the end of August 2020, China’s pilot carbon trading markets had a total carbon emission trading quota of 406 million tonnes of carbon dioxide equivalent, equal to around 9.28 trillion Chinese RMB

China has therefore moved towards adapting the scheme to a national level, where it would become the world’s largest carbon trading market. The emphasis on the scheme in the 14th FYP indicates that it will be rolled out nationally within the next five years, although the specific dates and targets will not be known until the final draft of the plan is approved next March. As the US retreats from international commitments to mitigate climate change, China continues to position itself as a global leader in this regard.

You might also like: Climate Financing for Developing Countries Rose 11% in 2018- Report

china national carbon scheme
Figure 1: Financial Times, 2017, Emissions Trading Systems (metric tonne CO2 equivalent): the largest circle refers to the emissions output that would be covered by a national carbon trading scheme in China; FT, Beijing

There have been some challenges in implementing the national scheme, including multiple delays, bureaucratic reshuffling and concerns over transparency and accuracy of emission data.

The national implementation of the scheme represents the efficient strengths of the collectivist and growth-driven perspective on policy shared by China’s leaders, as well as the Chinese state’s shift towards adopting market-based solutions to combat climate change. The scheme’s implementation has, however, encountered resistance in the shape of China’s intricate bureaucracy, and policymakers will have to evaluate how to integrate its tried and tested top-down economic planning mechanisms with the national scheme’s market-based approach.

What are China’s Plans to Mitigate Emissions?

China has pledged to reach peak emissions by 2030, potentially as early as 2027, and will source 20% of its energy from low-carbon sources in 2030. To achieve these targets, China will reduce its carbon intensity rates by 60-65% by 2030, and will increasingly limit its reliance on coal-derived energy, which in 2019 accounted for a heavy 57.7% of its energy mix. 

Discussing the national carbon trading scheme’s role in these targets, Ma Jun, director of the Institute for Public and Environmental Affairs, stated that: “The actions of rolling out the national carbon trading scheme cannot be postponed, otherwise, China will be unable to meet the goals of carbon reduction,” underlining the scheme’s importance to the country’s leaders. With a view towards adopting more market-oriented solutions to climate change such as carbon trading, Chinese economic policymakers have shifted from a command-and-control administrative style to adopting market-oriented solutions to tackle climate change.

Authorities will rely on market dynamics to regulate the scheme. A free market environment occasionally regulated by the state should ensure that rates of emission reduction will occur in the most cost-effective manner possible, as emitting entities can be more flexible in deciding when to lower emissions and when to trade emission allowances. Market forces will also take charge in establishing the allocation of resources and allowances.

Chinese policymakers have cooperated with advisors from jurisdictions where carbon trading systems have already been implemented, specifically the EU, Australia and California. There are some similarities between China’s scheme and the models operating in Western countries; for instance, the Chinese scheme’s MRV (monitoring, reporting and verification) strategies, certain target determination procedures and a preliminary focus on mitigating energy sector emissions are similar to existing policies in the EU trading scheme. 

Once China’s national scheme becomes operational, 25% of the world’s emissions and nearly 50% of global GDP will be covered by a carbon market.

China has set up its national carbon trading scheme to operate in incremental stages, gradually unfolding to involve more sectors, and focusing on carbon intensity reduction targets. The pilot programmes have been useful in evaluating how a carbon trading scheme functions across diverse sectors. Overall, the scheme will cover emitting firms operating within eight sectors: oil, chemicals, construction materials, steel, nonferrous metals, papermaking, electric power and shipping. The first stage will tackle the energy sector, specifically aiming to use market forces to wean the country off power derived from inefficient coal-fired plants.

While the energy sector phase of the national scheme had most recently been slated to roll out by the end of 2020, it appears that the Covid-19 pandemic and its economic impact have pushed the programme back indefinitely, due to pauses in economic activity and difficulties in collecting and verifying emissions data. However, the scheme’s prominent inclusion in the 14th FYP indicates it remains a priority and that the energy sector phase will be rolled out over the next five years.

Carbon Trading in China’s Energy Sector

Tackling energy sector emissions will be critical to the scheme’s long-term feasibility. Coal continues to dominate China’s energy mix, and successful implementation of a national trading scheme in the coal sector will pave the way for future transitions.

china national carbon scheme
Figure 2: IEA, 2020, CO2 emissions from fossil-fuel combustion, China compared to the rest of the world, 2000-2018; IEA, Paris 

For the first phase of the national scheme, policymakers do not appear to be imposing a hard cap on emission rates, as the focus remains on carbon intensity reductions rather than reducing absolute emissions. Each power company will have an individual carbon intensity benchmark based on their emissions relative to the electricity they produce. If a company outperforms their benchmark, they will be allocated tradable credits. Critics have pointed out the risks of this approach, as the lack of a hard cap and absolute emission reduction targets does not incentivise a transition away from coal, only to a more efficient use of coal. Chinese policymakers do, however, intend to gradually minimise the presence of coal in the country’s energy mix, by lowering price ceilings and cutting back on the credits that can be allocated.

Given the focus on carbon intensity reduction, and in the name of remaining cost-efficient and reliant on market dynamics, the Chinese government does not wish to phase out coal entirely. The goal, rather, is to retire inefficient plants before the end of their expected lifetimes, and retrofit existing plants for carbon capture, storage and reutilisation systems. The credit system has been designed to redirect investments into new and more efficient plants, expediting the transition of capital and human resources away from aging, inefficient plants. 

In the short term, a national carbon trading scheme in China will incentivise coal-fired plants to improve plant efficiency or burn higher quality fuel. In the long-term, as alternative energy sources become more widespread and affordable, the aim will be to phase out inefficient and outdated plants altogether.

China’s Bureaucracy and Environmental Policy

The Chinese government has generally viewed the impacts of climate change through a macroeconomic lens. Historically, climate change policy in China has been devised by the National Development and Reform Commission (NDRC), an institutional body for macroeconomic management, tasked with devising economic and social development policy. The NDRC is a massively influential body in Chinese politics, and climate activists have largely been in favour of having an important and relevant body tasked with combating climate change.

 The NDRC played a significant role in devising China’s first carbon trading pilot programmes in 2011, by framing the relevant policy and selecting the participating localities. In 2014, the NDRC issued a set of measures that established a preliminary legal framework for a national carbon trading system. Over subsequent years, NDRC officials continued to tout the eventuality of a national system, and the body was viewed as playing a critical role in the system’s planning.

In 2018, however, as part of a major governmental reshuffle, duties related to climate change policy were stripped from the NDRC, and passed on to a newly formed cabinet body, the Ministry of Ecology and Environment (MEE). Under the jurisdiction of the NDRC, climate change had become categorised as a strictly economic and developmental issue, dispersing environmental policymaking duties and causing serious bureaucratic inefficiencies and difficulties in coordinating environmental policy.

As Zhou Shengxian, China’s former Environment Minister, stated in 2013: “We take care of carbon monoxide, while carbon dioxide falls under the National Development and Reform Commission.”

The reform policies streamlined a very fragmented approach to drafting environmental policy in China. When the NDRC formulated policy on issues pertaining to climate change, other key inputs to the environmental policymaking process were dispersed throughout Chinese politics’ bureaucracy, requiring the NDRC to coordinate exhaustively with multiple other agencies and institutions of China’s intricate machinery of state. The government hopes to improve efficiency by assigning all duties related to environmental policy to the MEE.  

china national carbon scheme
Figure 3: China Water Risk, 2018: Before and after visualisation of 2018 ministry reform; China Water Risk, Hong Kong 

The multiple delays in formalising the national carbon trading scheme in China, which had at first been ambitiously slated to begin in 2017, were in large part due to bureaucratic inefficiencies at the policymaking level. One of the major challenges was organising an efficient and reliable data collection system that could indicate baseline emission rates across multiple sectors. This was necessary to establish targets and to efficiently allocate allowances. A more streamlined and coordinated approach to environmental policy through the MEE may reduce the latencies of China’s prior environmental policymaking model.

There remain some concerns over the MEE and its future role. Critics believe that moving climate change-related responsibilities from a massively influential policymaking body such as the NDRC to a smaller and newly formed ministry organism may limit climate change and other environmental issues’ visibility at national policymaking discussions. So far, the national scheme does not appear to have suffered significantly from the governmental reshuffle, other than being delayed. The Chinese state will need to ensure that climate policy remains a priority for legislators in future socio-economic planning.

Systemic Obstacles to a Market-Based Approach

A major difference between China ’s approach to implementing a national carbon trading scheme and those in Western countries lies in the nature of respective structural impediments. For systems established in the EU, for instance, action was challenged by the opposition of industry actors and other stakeholders. Adjusting the market to account for carbon trading was not an insurmountable challenge when compared to the political resistance of powerful lobbyists and industry representatives.

The Chinese government will presumably not encounter substantial political resistance, given the collectivist view on policy that the country’s leaders share. Additionally, many of the highest emitting industries in China, particularly in the power and steel sectors, are state-owned enterprises, virtually eliminating the risks and delays to legislation caused by industry lobbying.

The Chinese government however, faces an altogether different type of challenge. How can a country, which has prided its growth over 40 years on the virtues of a planned and top-down system of economic governance, introduce market-based incentives as the driving factor behind policy outcomes in the span of just a few years?

Despite trends that indicate movement towards a mature market economy, this transition has not been completed, nor do the country’s leaders express any desire to do so. At its core, China remains a socialist market economy, in which free markets and private property only exist within the ubiquitous reach of dominating state-owned enterprises and government actors. This is true in certain sectors more than others, and especially so in the power sector which is largely controlled by firms closely affiliated with the state.

Larry Goulder, a Stanford University economist who has worked on establishing carbon markets in California and Guangdong, said in 2017:

“In China, it’s not explicit political challenges that one faces as much as institutional. That is to say, the country doesn’t have as much of an apparatus for monitoring and keeping track of emissions. In addition, much of the economy is still not a market economy, but rather state-run in terms of the way prices are set, and that’s particularly true of the power sector. One of the key challenges is how to introduce environmental regulations, even market-based regulations, in a world where many of the sectors won’t respond as well because prices are controlled.”

The Chinese government has made it clear that market forces will play a key role in determining the dynamics of a national carbon market, although allowing markets full control over sectors that have historically been dominated by the heavy hand of government presents a significant challenge.

To move towards market-oriented regulating mechanisms, the Chinese state has gradually been enacting relevant reforms. In 2012, the state passed a bill to reform coal pricing. The bill allowed all prices of coal commodities, which had previously been split between state and market determination depending on the buyer and intended use, to be determined by market forces.

Pegging single unit prices to other commodities directed by market dynamics has also been a successful strategy. The case of natural gas is a good example. Historically seen as a lesser fuel source to coal, state agencies have long priced natural gas significantly below production costs, discouraging domestic producers from investing in gas production and restraining imports. Natural gas’ resurgence as a relatively clean alternative to coal, however, led to the introduction of a new pricing mechanism in 2011 by the NDRC, that pegs the per-unit price of natural gas to the price of other alternative fuels that are determined through market forces. This mechanism allows gas prices to be determined according to the market developments of other alternative fuels, gradually decoupling natural gas from years of state price controls and allowing the industry and related infrastructures to grow in China and supplant inefficient coal plants. This pricing mechanism was employed to positive results in some of the pilot trading programmes’ markets.

China has put in motion a series of reforms to decouple prices and resource demand from state interventions, relying increasingly on market forces. For a national carbon market to operate self-sufficiently within a free market environment, these steps are critical. Chinese companies, however, remain in uncharted waters for the most part, and will need to be guided by occasional state intervention. Price floors on carbon trading will be important to implement and adjust when needed, to motivate investor participation and an active market environment. Likewise, price ceilings can limit any single firm or enterprise from gaining disproportionate levels of size and power. Environmental taxes and penalties should not be discounted either, should competition ever need to be balanced out.

The state will need to strike a delicate balance between interventionism and allowing the market to govern itself, between encouraging competition and ensuring a level playing field. China already possesses a wealth of experience from its pilot programmes, as well as important advisory inputs from other carbon trading markets in the world. China’s centralised political system is an advantage, in that the state will not need to worry about combative non-compliance, obstructionist industry lobbying or contesting political priorities. For decades, China’s rapid growth has benefited from coherent policy through command-style economic planning, and the development opportunities afforded by free market capitalism. If the state can balance these two ideologies, it can certainly stake a strong claim as a global leader in market-driven environmental action.

Featured image by: Flickr 

Without external intervention, firms and individuals have little incentive to reduce their carbon emissions, as having liberty to pollute and sustain higher levels of production and consumption would, in the company’s perspective, provide private benefits which outweigh costs incurred by society. To encourage accountability, carbon emissions can be priced through either a carbon tax or carbon trading, (referred to as ‘cap-and-trade’ programs), the latter of which will be discussed here.

‘Cap-and-trade’ is a system where a specified level of total emissions is targeted, followed by allocation of emissions permits across various polluting firms. Companies polluting above their assigned quotas must then purchase additional permits from other firms with excess emission capacity. Theoretically, this imposes hard limits on total pollution within an economy, while providing financial incentives for companies to explore operational processes which are less detrimental to the environment. Such a system is not constrained to carbon emissions alone- in fact, its proponents often cite the historic success of sulphur dioxide trading in the USA. Following the inception of the Clean Air Act in 1990, the emissions trading scheme has reportedly generated USD$122billion of annual benefits by reducing death and illness while improving the health of ecosystems, which greatly outweighs the USD$3billion cost of utilities. Today, carbon trading can be found in over 50 jurisdictions around the globe, including the EU and Australia, with other major economies like China seeking to implement similar programs.

While ‘cap-and-trade’ offers the theoretical certainty of emissions reduction, its practical implementation has achieved mixed results. In the EU, participating institutions managed to reduce their carbon emissions by only 0.4% within 5 years. Major criticisms have arisen over the prevalence of speculative trading and fraud, which fuel extreme fluctuations in carbon prices, making it difficult for affected firms to determine their long-term returns from investments in reducing carbon intensity. Effectiveness of the scheme has been further undermined by plummeting prices of emissions permits, essentially making it cheaper to pollute. Fortunately, neither of these weaknesses are inherent in ‘cap-and-trade’ models. Trading of permits can be directly regulated by central banks, such that only authorised firms can buy and sell them at a minimum specified price, while emissions permits issued are gradually reduced over time based on environmental sustainability targets. This could prevent situations where prices are too low to disincentive pollution, while preserving market stability. Moving forward, carbon trading should encompass more industries, so that its impact can be further amplified. 

You might also like: The EU Climate Law: Europe’s Man on the Moon Moment?

what is carbon trading
Volatility of EU carbon prices (Source: Ember Climate).

Beyond pricing issues alone, carbon trading has several other characteristics which portray it more negatively than taxation. 

Firstly, taxation is more straightforward to implement and sustain, making it less difficult to exploit loopholes in the market. Secondly, being removed from market fluctuations means that carbon can have complete price stability, allowing companies to evaluate their investments in energy-saving technology with greater certainty of its returns. So long as any periodic increases in carbon taxation are announced several years in advance, this advantage over ‘cap-and-trade’ should generally hold true. Finally, unlike its counterpart, carbon trading does not provide the government with revenue, which could be used to subsidise less profitable clean infrastructural projects. 

Despite these seeming drawbacks, the viability of each system is ultimately dependent on prevailing political or economic conditions. Overall, widespread implementation of either carbon pricing method would prove immensely beneficial compared to the current status-quo, hence are worth supporting in the fight against global warming.

The abrupt collapse of tourism due to the coronavirus pandemic has again highlighted the inadequacy of resources for conservation in Africa. Carbon credits have been advanced as one possible source of new funding for Africa, but this market’s real potential to protect biodiversity is yet to be established.

A 2018 study of nearly 300 protected areas across the continent found that 90 percent of parks it looked at were severely underfunded. The parks surveyed have an estimated total spending shortfall of between $1 and $2 billion: there are 8,000 other protected areas in Africa.

Under pressure from governments, corporations, and communities pursuing one or another form of development, inadequately protected parks suffer ecological degradation, losing charismatic large species along with valuable habitat, which reduces the potential to generate tourism income in particular, and completes a vicious cycle.

Despite its high profile, tourism is not a major source of income for most protected areas on the continent, according to Max Graham, the CEO of Space for Giants, which works to make both economic and ecological value tangible for local communities in Africa: the significant in-flows come from philanthropy.

“The impact from [loss of] tourism is only going to be felt, from a conservation perspective, in a select grouping of parks that are either private or state-owned and operated in well-established tourism countries like South Africa and to a certain extent in Kenya,” said Graham.

He observed that conservation will likely continue to depend heavily on philanthropy as a crucial source of income in the future.

But attracting and retaining philanthropic support has its limitations. Donors sometimes insist on funding only narrow aspects of an organization’s overall work, or abruptly shift priorities away from a historic focus, said Graham. “Funding can also be difficult to secure at scale or over long periods,” he said.

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Carbon Credits as an Alternative Solution

Matthew Brown, the Africa director at The Nature Conservancy (TNC) says there is huge potential to fund conservation through the sale of carbon credits. By the end of 2016, $300 million of carbon credits had been sold on voluntary markets; Africa accounted for just $20 million of this global total.

The potential to fund conservation through carbon credits may now be growing. In 2018, there were $172 million worth of voluntary market carbon credit transactions, according to a self-reported survey of carbon traders conducted by Ecosystem Marketplace, an information hub focused on market-based approaches to conservation. Fifty-eight percent of this total went to forestry and land use programmes – though this figure includes an extraordinary increase in REDD+ (reducing emissions from deforestation and forest degradation) credits involving just one country, Peru.

In Africa, TNC has been supporting a REDD project on 32,000 hectares (80,000 acres) in the semi-arid savannah of the Yaeda Valley, in northern Tanzania, for the past five years.

The valley is home to indigenous Hadza hunter-gatherers, as well as Sukuma farmers, and Datoga agro-pastoralists. Working with English conservationists Marc Baker and Jo Anderson, the Hadza secured legal recognition of 20,000 hectares in the heart of the valley as their territory in 2010, and entered a 20-year contract with Baker and Anderson’s company, Carbon Tanzania, to sell offsets from a REDD+ project.

Critics of carbon credits and REDD argue that very few such projects are able to generate significant income for local communities, with carbon prices too low to incentivise people to protect them over time.

Brown counters that these markets are growing fast, fuelled by growing numbers of corporations seeking carbon offsets to fulfill public pledges to become carbon neutral. “Globally, in 2018, the size of the voluntary market doubled and, in 2019, doubled again. In 2020, it was expected to double once more – before Covid-19.”

Last year, the Yaeda Valley project earned $95,000 for Hadza communities. This income was used to train 30 village game scouts, create 100 jobs for locals protecting habitat, pay school fees for 30 children, and improve healthcare in the valley.

REDD has also been challenged for failing to represent additional prevention of greenhouse gas emissions from deforestation. While this is clearly not the case with the Yaeda project, a French research centre examined 120 carbon credit projects in 2015 and found that 37 percent overlapped with already existing protected areas.

Storing Carbon, Protecting Biodiversity

Another important question is whether REDD protects not just carbon stocks, but biodiversity. On this score, the Yaeda Valley is an ambiguous example.

Walking transects were carried out in both REDD+ and less-regulated areas of the valley every year from 2015 to 2018 to monitor mammal species including elephants, cheetahs, wild dogs, and giraffe (Giraffa camelopardalis). Researchers found species richness and the density of wildlife was higher in woodland areas of the valley — REDD+ protected or not.

The researchers credited the project with protecting vital habitat, while pointing to other factors likely contributing to maintaining biodiversity, including multiple habitats within a large study area, and access for wildlife to adjacent protected areas such as the Ngorongoro Conservation Area, allowing animals to move in and out of the area.

They also noted that village game scouts paid for by the REDD programme also patrolled project areas to enforce anti-poaching laws and recommended more formal integration of conservation goals in the design and implementation of REDD+ projects like this one.

While acknowledging the potential of carbon credits to fund conservation in Africa, Graham said the carbon trading sector is very complex and expensive. “There are also questions over state-run parks, which are the majority,” said Graham. “Once a deal is done and money starts flowing, will that flow to the park or to the government agency for wider spending?”

This article was originally published on Mongabay, written by Mantoe Phakathi, and is republished here as part of an editorial partnership with Earth.Org. 

 

Carbon trading has been around for decades, with the EU carbon tax first adopted in 1991. However, there have been questions raised as to whether it is an effective way of reducing carbon emissions or if it is just a way for companies to continue polluting without any consequences, while still profiting.

At first look it may seem that creating markets where companies are able to profit from selling carbon allowances or permits is unwise as global warming has largely risen from capitalist production, however this creates a financial incentive for companies to reduce emissions.

The Intergovernmental Panel on Climate Change (IPCC) was created in 1988; a group of scientists that advises governments and informs them of the scientific understanding behind the climate crisis. They proposed an emissions trading market in order to combat climate change.

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Emissions Trading Systems 

Carbon trading is already happening across the world in Europe and the US. The EU’s emissions trading systems (ETS) is the world’s first and largest international carbon market, operating in all EU countries and covering approximately 40% of atmospheric greenhouse gas (GHG) production in the EU. 

What is carbon trading and how does it work?

Carbon trading uses a cap and trade system; limits or ‘caps’ are imposed on the amount of GHG that can be produced from power stations and industrial plants, as well as aviation. Companies either receive or purchase allowances which would ideally cover their estimated carbon emissions for a whole year, and this essentially gives them the right to pollute to a certain extent. One allowance allows for the emission of 1 tonne of CO2. Companies are then able to trade allowances on the international market– they can buy allowances if they need more, and this can either be from other companies who are selling allowances they no longer require, or auctions held by Member States . This method of trading values cost-efficiency and relies on cutting emissions where it costs the least to do so.

According to the EU, the ETS has been effective in reducing GHG emissions. The EU’s Annual Carbon Market report indicates that total emissions from stationary installations– the emissions covered from power and heat generation- declined by 4.1% between 2017 and 2018, and since it’s introduction in 2005, total emissions have fallen by 29%. Power plant installations have had the biggest reduction in emissions– 5.9% between 2017 and 2018 which has largely been due to the abandoning of coal by many countries.

Downfalls of Carbon Trading

Despite this, the ETS has failed to hold some polluting industries accountable for their emissions. A certain number of what are called ‘free allowances’ are given to industries at risk of relocating production outside the EU, which would create ‘carbon leakage’. These industries receive 100% of their allowances for free, and this is set to continue beyond 2020. 

Free allowances shift the responsibility away from the industries and whilst carbon leakage is a very real problem that may potentially increase carbon emissions elsewhere outside of the EU, there has also been no substantive evidence to support that this would be because of the ETS. In fact, this idea only benefits big polluting companies by using ‘competitiveness’ as a tool for them to continue polluting without any consequences. Some companies have resorted to using offset permits, which are tradeable in the ETS, by reducing emissions elsewhere in developing countries, by investing in reforestation programmes, for example, defeating the purpose of the cap and trade, since the aim is to reduce emissions on a global scale.

The ETS has given companies the opportunity to make profit by passing off the cost of purchasing additional permits on to the customers. For example, German company RWE made 1.8 billion euros in windfall profits between 2005 and 2006 by charging their customers for permits which they had received for free. Utility prices rose from 30 to 47 euros per mega-watthour.

Attention has shifted to the cost efficiency of the ETS scheme instead of its effectiveness, and the truth is, the ETS scheme is ineffective in actually reducing GHG emissions. The scheme alludes to the idea that action is being taken but the reality is that GHG emissions are increasing at a far greater rate than predicted. Unlike other industries that witnessed a decline in ETS emissions over the years, ETS emissions in aviation actually increased between 2017 and 2018 by 4%.

As important as individual lifestyle changes are, the biggest changes must come from governments and companies. Draconian measures will be needed if we are to reach the Paris Agreement target. 

It is estimated that over 40 governments across the globe have begun using some form of cap and trade system or carbon taxation in order to reduce emissions. Australia, China, the US state, California, New Zealand, South Korea and the Canadian province, Quebec have all imposed a cap and trade system. Canada shows to be the most driven towards reducing carbon emissions effectively and has imposed a carbon taxation on coal, oil and gas, starting at $15 per ton of CO2. The majority of the revenue is then refunded to taxpayers. A carbon tax would offer stable carbon prices and a cost-effective and efficient form of reducing carbon emissions in order to mitigate global warming. 

Featured image by: Sebastian Horndasch

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