Carbon pricing and GHG emissions control

Carbon pricing is at the core of GHG emissions reduction schemes. Undoubtedly, it will be one of the hot topics discussed at COP28 in December. According to the World Bank (State and Trends of Carbon Pricing 2023), there are currently 73 carbon taxes or ETS in operation, either at a regional or country level. They cover about one quarter of global GHG emissions, doubling the width over the last three years. However, other policies to mitigate emissions exist. Below are three interesting examples of measures to control companies’ emissions which were announced or updated recently:

• California Senate passed a first of its kind climate bill on September 12th, requiring major companies to publicly disclose their greenhouse gas emissions, starting 2027. The law will apply to public and private organizations making more than $1 billion a year and operating in California. It includes over 5,300 businesses and targets scope 1, 2 and 3 emissions. The law will most likely find an echo beyond California’s border, with other US states and countries following (as some did on the 2035 thermal car sales ban).
• In 2019, Singapore set a carbon tax rate (first carbon pricing scheme in Southeast Asia) at $5 per tonne. It applies to all industrial facilities with direct GHG emissions greater to 25,000tCO2eq per year. In 2024, the rate will increase five-fold to $25, up again to $45 in 2026. It is viewed to range between $50 - $80 in 2030 to fit in the 2030 Carbon Price Corridor ($61 - $122 per tCO2eq). Singapore and Japan remain the only country in Asia to have a carbon tax, while others like China or New Zealand rely on emissions trading scheme (ETS).
• On October 1st, the EU will start the initial phase of the Carbon Border Adjustment Mechanism (CBAM). It will require importers to report the emissions of products sold to Europe. The plan will first apply to carbon intensive industries such as cement, iron and steel, aluminium, fertilizers, or hydrogen. When fully in place by 2026, imports into the EU will be charged a fee equal to what European companies pay in the EU’s carbon market. The regime aims at protecting EU industries’ competitiveness, avoiding undercut from more polluting foreign competitors.