Why we need a carbon price of $100 ... or more

Carbon prices of $100 a tonne - and possibly as high as $225 – are being foreshadowed in a new report. Wellington company Concept Consulting was commissioned by NZ’s Parliamentary Commissioner for the Environment Dr Jan Wright to analyse potential to cut greenhouse gas emissions from the energy sector.

Emissions from the energy sector are responsible for about 40 per cent of New Zealand's total greenhouse gas emissions, and rose 36.7 per cent between 1990 and 2015, according to New Zealand's latest Greenhouse Gas Inventory.

A sixth of those emissions come from electricity generation, but the two areas in which emissions are growing are transport and industrial heat. In the report, Concept says that current carbon prices do not reflect the cost of global warming.

“It is our view that current carbon prices in New Zealand (approximately NZ$18/tCO2, but reduced to NZ$9/tCO2 with the one-for-two arrangement under the ETS) are significantly lower than that which would reflect the cost to New Zealand society from global warming. Concept has used a carbon price of up to $100 a tonne in its report, but says others are looking much higher.

“We note a growing number of international studies which indicate that global carbon prices will need to be significantly higher in order to prevent global temperatures rising above 2deg – the level at which some of the significant adverse impacts mentioned above have been identified as starting to become particularly significant,” it says. “For example, the International Energy Agency’s scenario for limiting global temperature rise to 2deg has carbon prices rising to NZ$225/tCO2 by 2050.”

Source: Carbon News 2017

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