Environment and Climate Change
Carbon Pricing: A Development and Trade Reality Check
This document focuses on carbon pricing as one policy strand used to tackle global GHG emissions. It gives an overview of implemented and forthcoming domestic and cross-border carbon pricing mechanisms as well as their implications for GHG emissions international trade and development. It lays out the characteristics of various approaches including the potential pitfalls and unintended economic and environmental side effects which need to be addressed for these approaches to work.
Introduction
Climate change is usually associated with the climatic consequences of accumulations of greenhouse gases (GHGs) in the atmosphere. Carbon dioxide (CO2) has been the most prominently emitted GHG since information on emissions started being collected.
Putting a price on carbon: What is at stake?
This chapter briefly reviews the scope and objectives of carbon pricing from a conceptual point of view. It then discusses the framing of carbon pricing principles at the international level and describes their national counterparts.
Non-market-based approaches to carbon pricing
This chapter reviews major non-market approaches to carbon pricing. As discussed in chapter 2 a non-market approach can be any approach provided it does not generate some tradable units of emissions. Non-market mechanisms include fiscal measures such as putting a pre-determined price on carbon or applying taxes to discourage emissions. Non-market approaches can also be implemented in the context of cooperative actions between countries to achieve mitigation and adaptation and possibly other sustainable development objectives such as poverty reduction.
Market-based approaches to carbon pricing: Theoretical assessment
This chapter presents a theoretical assessment of the effects of the two major carbon pricing instruments based on market mechanisms: carbon taxes and emissions trading. Domestic carbon taxes and emissions trading are both expected to negatively affect economic activity. Importantly a negative impact on production is necessarily associated with a reduction in GHG emissions which remains the main objective of carbon pricing. This trade-off between economic activity and environmental conditions would result in an increase in domestic welfare only once the true social cost of carbon is considered. However carbon pricing may not affect all agents in an economy equally. Moreover in a multi-country context a reduction in domestic emissions may not result in a reduction in global emissions if some countries do not adopt or adopt only loose environmental policies. Complementary policies should be envisaged. At the domestic level distributional schemes can be implemented and financial support provided to firms to reduce their abatement costs. At the international level if coordination among countries cannot be achieved the implementation of measures at the border may help contain negative spillovers whether economic or environmental.
Acknowledgements
This publication is a product of the Trade Analysis Branch Division on International Trade and Commodities (DITC) United Nations Conference on Trade and Development (UNCTAD). Marco Fugazza was responsible for the writing of all chapters under the general supervision of Ralf Peters Chief (OIC) of the Trade Analysis Branch.
CO2 Emissions equivalences
As discussed extensively in Vallero (2019) different GHGs can have different global warming effects. GHGs differ from each other in terms of energy absorption (“radiative efficiency”) and in terms of permanence in the atmosphere (“lifetime”).
Market-based approaches to carbon pricing: Quantitative and empirical assessment
Chapter 3 presented theoretical insights into market-based approaches to carbon pricing. The effects were essentially of partial equilibrium nature obtained with a single representative sector approach and focusing on trade/production and GHG emissions.
National and international policies to improve cost-effectiveness of carbon pricing
Carbon pricing in particular carbon taxes and carbon emissions trading are a core element of government policies to combat global warming. However as pointed out in previous chapters such policies are often difficult to implement. Taxes may face strong opposition both from consumers and producers even if they are efficient instrument for reducing GHG emissions with respect to any alternative non-market policy instrument (Metcalf 2021). Emissions trading systems require constant monitoring and evaluation by their regulatory bodies to avoid high volatility in carbon prices. Several mechanisms underlying the impacts of unilateral environmental policies and their possible negative consequences for the implementing countries have been identified and should be accounted for. Reconciling national action plans with their potential global spillover effects as reflected in the elevated risk of emissions (production) leakage remains the core issue and a major determinant of cost-effectiveness.
Executive Summary
The scientific evidence draws a clear picture: To limit global warming to 1.5 °C above pre-industrial levels Green House Gas (GHG) emissions need to peak before 2025 and be reduced by 43 per cent by 2030 while net zero emissions need to be achieved globally in the early 2050s (Intergovernmental Panel on Climate Change (IPCC)). The international climate change legal framework is also clear. It requires all countries to adopt climate change mitigation measures in order to achieve the common objective of limiting the increase in global temperatures to “well below” 2°C but leaves each country free to choose the specific measures and policies to meet their individual emissions reduction targets.
Guidelines for Developing National Biodiversity Monitoring Systems
In December 2022 the resumed fifteenth meeting of the Conference of the Parties to the Convention on Biological Diversity adopted the Post-2020 Global Biodiversity Framework including a monitoring framework. The present Guidelines for developing national strategies to use biodiversity monitoring help make biodiversity monitoring a practical tool for environmental policy for countries of Eastern Europe the Caucasus Central Asia and South-Eastern Europe. The guidelines offer advice on how to: develop plans and strategies for the conservation and sustainable use of biodiversity mainstream biodiversity conservation objectives across policy sectors assess progress in achieving policy targets and the effectiveness of conservation measures minimize health environmental and socioeconomic risks resulting from biodiversity loss and ecosystem degradation and maximize benefits from biodiversity and ecosystems. The guidelines are addressed to government officials and experts working for governmental bodies responsible for environmental policy environmental monitoring and compliance monitoring.
Executive summary
The Paris Agreement and the fight against climate change impose the obligation to decarbonize UNECE economies and to achieve carbon neutrality by 2050. The energy transition will rely on a wide deployment of renewable energy as a key element. The electrical variable renewable energy (VRE) is expected to grow substantially in the following decades increasing its share in the future energy mix in the UNECE region. However the higher penetration of VRE into energy systems brings an associated challenge: how to manage in a cost-efficient manner the strong fluctuations and intermittency associated to VRE in order to ensure a reliable and robust energy system at all times.
Smart Sustainable Cities Profile: Grodno, Belarus
The Smart Sustainable Cities Profile for Grodno Belarus presents the outcomes of the city evaluation against the Key Performance Indicators (KPIs) for Smart Sustainable Cities (SSC) and proposes actions for the city to make progress towards achieving the SDGs. It provides guidance for Grodno city and regional governments for the development review and implementation of urban policies programmes and projects and for building partnerships with a view to reinforcing the implementation of the 2030 Agenda for Sustainable Development and SDG11 at city level.
Carbon Neutrality Through Synergies Between Gas and Renewable Energy
The publication shows how gas provides affordably the required flexibility to enable the integration of higher shares of VRE in the energy mix. The publication enlarges the scope of the renewable energy concept to cover not only renewable electricity but also renewable gases. It contains two parts. The first focuses on the short term and the use of flexible cost-competitive and agile natural gas-fired generation as enabler of variable renewable energy (VRE) sources integration. This second part discusses phase is based on the hybrid energy system concept which envisages the use of new gases(renewable decarbonised and low carbon) together with the sectoral integration concept and other technologies (e.g. DSM DER CCS etc.) as pillars to advance in VRE penetration while significantly reducing Green House Gas (GHG) emissions. The publication concludes with a number of recommendations aimed to guide UNECE member States in subsequently developing a coherent policy and regulatory frameworks to renewable energy across the region on a secure competitive and resilient manner.
Global Population Growth and Sustainable Development
The report covers the dependencies between population growth and the Sustainable Development Goals focusing on regions were population numbers are rising fast. The analysis elaborates on the social economic and environmental implications of population growth. It highlights demographic trends and drivers of population change namely fertility mortality and international migration and describes the complex interaction between of population growth and poverty hunger health education and human capital gender equality sustained economic growth and decent work. It further investigates the impact of population growth on the environment.