Carbon Tax Being Discussed in the United States

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Democratic Senator Ben Cardin from Maryland stated there is support in the Senate to institute a carbon tax. The discussions come as the EU and China have already implemented measures to curb carbon emissions

With the Glasgow Climate Change Conference is coming up in November, the U.S. has yet to announce in what direction they will move to reduce carbon emissions.

The recent report from the IPCC has concerned world leaders. Global temperature levels are increasing far quicker than expected. The limit of 1.5 degrees Celsius above pre-industrial levels is close.

The report stated if immediate action is not taken, then temperature levels will rise above what is required for normal weather.

A carbon tax would increase taxes on businesses and industries which pollute the most. Specifically, in terms of carbon emissions. This would include increasing gasoline and natural gas prices in households.

The white house has previously mentioned it is leaning towards implementing clean electricity throughout the states, rather than a carbon tax. But the impending danger of climate change may implore President Biden to create many facets to reducing carbon emissions.

Currently, Democrats have introduced laws requiring fossil fuel producers to pay into a climate fund related to the number of emissions produced.

The U.S. is the second largest emitter of carbon emissions in the world currently. Important decisions await President Biden as the climate crisis grows.

Verra VCS Program Offers A Unique Opportunity for Carbon Offsets

Companies cannot eliminate carbon emissions overnight and developing the technology takes time. Unfortunately, with climate change, time is not on their side.

While there is still a lot of work that needs to be done, companies can reduce carbon emissions right now through carbon offsets.

Hereโ€™s how it works:

Companies purchase carbon credits through a carbon marketplace and each credit equals one metric ton of carbon, or greenhouse gas (GHG). One ton of carbon or GHG is then removed from the atmosphere through reforestation, improved forest management, and green energy.

Consider it a trade. A company puts one ton of carbon into the atmosphere. Then, they remove it through something positive, such as planting a forest.

If you were wondering just how lucrative carbon offsetting is, the industry is projected to hit $100B by 2030 โ€“ up from $300M in 2018. So, opportunities within the carbon offset industry are endless.

Credits are certified by independent agencies where itโ€™s the agencyโ€™s job to verify and manage the standards, projects, and transactions that take place. There are currently four major Green House Gas (GHG) crediting programs that certify projects:

  1. Verraโ€™s Verified Carbon Standard,
  2. Climate Action Reserve,
  3. Gold Standard, and
  4. American Carbon Registry.

Letโ€™s look at Verraโ€™s Verified Carbon Standard (VCS) Program

Verraโ€™s program boasts 1,700+ certified green projects that have removed more than 714 million metric tons of carbon from the atmosphere. They require registered projects to upload descriptions, auditing reports, and the status of all credits issued and retired.

All relevant information is easy to use and understand and CME Group – one of the worldโ€™s leading derivatives marketplaces โ€“ agrees.

On August 1st, CME Group created their N-GEOโ„ขย futures contract where its goal goes beyond just reducing carbon emissions. Their focus is to support biodiversity and conservation efforts within local communities.

They plan to do that by using Verraโ€™s Verified Carbon Standard (VCS) program to measure offsets โ€“ a big deal for Verra and the carbon offset industry.

Though each crediting program has excellent incentives, Verra’s Carbon Standard is one to watch.

EU to be Carbon Neutral by 2050

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The European Union has announced a plan to become carbon neutral by 2050. The plan outlined in the European Green Deal was drafted to meet the EUโ€™s commitment to the Paris Climate Agreement.

The Paris Agreement aims to keep the Global Temperature increase to less than 2ยฐC. However, now there is legislation in the union to pursue the goal of 2ยฐC.

Each member state is to devise its own plan of action to reducing emissions.

Plans of Action

The plan is to impact many of the sectors within the member states. The automobile industry will be subject to major changes as diesel and gasoline cars are to be phased out by 2035. In addition, both electric and hydrogen charging stations will be required to be installed along major highways, spaced 60 kilometers apart.

Carbon Taxes

The EU is also looking at introducing carbon tariffs on products being made outside of the EU, where emission laws are less strict. Previously, G20 leaders had been discussing carbon pricing and tariffs as a useful mean to combat climate change. The mindset surrounding carbon pricing has changed, which can only aid in the fight against climate change.

As a result, it will encourage EU member states to import goods locally. Initially, the carbon tariffs will affect natural resource sectors such as iron and steel followed by other sectors.

It will be difficult for smaller union states to adjust their economy to match the demands of the EU. The nations who rely on importing natural resources from outside the EU will be affected the most and may cause the negotiations to falter.

Carbon Credits: What Are They and Why Are They Popular?

Carbon credits have been a hot topic in the news. Both China and the EU have put forward new carbon plans. Both plans involve carbon credits, but what are they? Are they a currency, documents, or actual pieces of carbon?

What Are Carbon Credits? A Carbon Credits Definition.

A Carbon Credit is an allowance for a company holding the credit to emit carbon emissions or greenhouse gases. A single credit equals one ton of carbon dioxide to be emitted or the mass equivalent to carbon dioxide for other gases. Companies hold many credits, as many as they wish to purchase to balance out their emissions.

Why canโ€™t companies just stockpile carbon credits?

There are two characteristics of carbon credits. Excess credits are sold by companies to recoup finances and the amount of credits a company can hold is capped. These points encourage companies to sell their excess credits to other companies, as excess credits will result in fines.

How does one create a carbon credit?

Credits are created when a project is deemed to have eliminated 1 ton of greenhouse emissions. Planting a forest that would eliminate 1 ton of carbon emissions would be enough to create a credit. Credits do however decay over time which means companies continually need to create new ideas to remove emissions.

Many companies also specialize in trading and investing in credits. They will buy credits from large companies and resell them to whoever may need those credits. As the price of carbon continually rises, so too does the value of the credits.

 

Carbon Pricing in Canada โ€“ Would it Work?

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Carbon Pricing mechanisms are still new ideas in the scope of reducing carbon emissions. The EU and China both have outlined plans to tax carbon in different ways. Canada itself does have a carbon tax in place, however foreign carbon pricing could affect Canadaโ€™s industry in a negative way, according to a report by the Royal Bank of Canada.

The report states that foreign tariffs on carbon would hurt the Canadian economy. Extra fees on exporting goods are never good for the economy. As an example, the EU plans on tackling climate change involves tariffs on industries that produce high level of carbon emissions. The industries targeted are aluminum, cement, iron and steel, fertilizers, and electricity.

For now, none of those industries are major Canadian exports to the EU however times change and the race against climate change is heating up. The UN released a report urging significant actions to stop climate change. Further industries could be affected, ones that will reduce trade between Canada and the EU.

Another major concern is how the U.S. will apply its own carbon plans. Any carbon pricing or tariffs on Canadian exports to the U.S. would be a huge blow to the economy. Hindering any trade with the U.S. would reduce trade with Canadaโ€™s largest trading partner. Another possibility is a North American carbon tariff as to not isolate Canadian trade.

Global Carbon Price – How to Implement It

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The UN released a report recently that outlayed how little time there is to stop climate change. A United Nations climate change conference is scheduled for November where big decisions will need to be made in order to stop global warming. One such method is the implementation of a global carbon price.

Currently, the goal of keeping temperatures under 1.5 degrees of pre-industrial levels looks difficult. It is still a possible goal however it would require immediate and drastic action on a global scale. The problem countries are facing however is how to implement a global effort to reduce carbon emissions.

What may work in one country may not work in another. Previous agreements allowed nations to pick their own voluntary standards. However, urgency is high as ever and that may not solve the crisis. The EU recently put forth their own carbon pricing mechanisms but that is not enough to solve the world’s problems.

The IMF is proposing to create global carbon floors where floors would be created for countries to trade carbon at standard prices. This would include setting higher prices for developed countries and letting developing countries pay less for carbon emissions. Although these floors would be higher than what countries are currently paying for carbon emissions. This would be a huge step in the fight against climate change.

The Global Carbon Market โ€“ The Way Countries Should Trade

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Countries are trading carbon through domestic means rather than going through a global market, as most goods do.

This provides each country with unique strategies when dealing with emissions. However, there isnโ€™t a global unified solution on how to achieve carbon neutrality with domestic markets.

China recently launched its own carbon market. Chinaโ€™s plan covers 10,000 companies in most industrial sectors. The EU has also recently launched carbon pricing methods as well earlier this year.

This is fantastic news as tackling the Paris agreementโ€™s goal of 1.5 degrees Celsius above normal temperatures by 2050 will take a global effort. China previous carbon plans increased the number of emissions covered by carbon pricing by 6%.

Both carbon unions have tremendous potential as the carbon ramp up continues. Currently, the EU aims to be carbon neutral by 2050. China wishes to do the same by 2060.

Unfortunately, many carbon markets remained unpriced and unregulated. The US has yet to release their plans regarding carbon pricing.

According to the World Bank, only 45 countries in the world have carbon pricing initiatives. To make a dent in climate change, that number will need to increase heavily.

After holes in the ozone layer appeared in the 1970s and 1980s, countries acted and banned Hydrofluorocarbons (HFCs), which depleted ozone. Now, the ozone layer is replenished and the ozone crisis is solved. If the world takes similar action regarding greenhouse gases and price carbon emissions through a global carbon market, we may see climate change being stopped in its tracks.

COP26 President Says Largest Countries Need Drastic Carbon Plans

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Carbon Emissions are continuing to rise globally and the largest emitters are slowly committing to plans to cut carbon emissions. The President of COP26, Alok Sharma, said these large emitters must drastically reduce their emissions. According to Sharma, these countries should release carbon plans sooner rather than later to avoid the damage accrued from climate change.

Extreme weather resulting from climate change is already becoming increasing frequent. Wildfires are ravaging across the world while sea levels are rising among increasing temperatures.

Sharmaโ€™s concerns come as the ICPP has released a report revealing significant action is required to combat climate change. In a statement, Sharma said โ€œIf ever there was going to be a wake-up call to the world when it comes to climate change, this report is it.โ€. The Paris agreementโ€™s goal of 1.5 degrees Celsius above pre-industrial temperatures is in danger of not being obtained. Sharma mentioned there is still hope to stop the damage being done, but there is still a long way to go.

Sharma is targeting G20 countries because 80% of global carbon emissions are emitted from G20 countries. G20 countries must drastically reduce their carbon emissions. As a result of drastic plans, we could see a major shift in the fight against climate change.

Carbon Market Seeing Exponential Growth

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The carbon market is growing at exponential rates. New legislation has passed all around the world and countries are shifting to stricter carbon laws. As a result, carbon funds have been having a fantastic year.

Who is at the forefront of this boom?

One such fund is the KraneShares Global Carbon ETF. Trading under the ticker KRBN, the ETF is up over 74% in the last year as well as having $540 million dollars in assets. The majority of KRBNโ€™s portfolio consist of EU carbon futures, which have boomed over 60% over the past year.

Another growing fund is the iShares MSCI ACWI Low Carbon Target ETF which has increased over 32% in price over the last year.

Why is the carbon market soaring?

The interest in carbon credits is soaring as the market booms. Climate change is becoming increasingly alarming as countries fight to keep global temperatures under 1.5 degrees Celsius above levels today. Carbon taxes and tariffs are being introduced in the EU and China. Carbon credits have never been in such demand as restrictions become increasingly strict.

Another factor behind carbonโ€™s big boom is the long-term outlook of reducing carbon emissions. The job against climate change is not done and will not be finished until countries become carbon neutral in 30-40 years. Investors are seeing a long-term investment. One in which governments are making it their priority to invest into.

3 Americans Produce Enough Carbon to Kill One Person Annually

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Around 3 Americans create enough carbon emissions annually to kill a person. In addition, the emissions from industrial sources such as a coal power plant would result in around 900 deaths.

The numbers above come from a report released by Columbia University. A number was calculated to determine how much monetary damage each ton of carbon emissions does. As well, deaths per each ton of CO2 released into the atmosphere was calculated.

The backbone of the report states that for every 4,434 metric tons of carbon emissions released, one premature fatality will occur. Increased global temperatures results in increased fatalities. The report also mentions 4,434 metric tons of carbon is โ€œequivalent to the lifetime emissions of 3.5 average Americansโ€.

Retaining current global temperatures would save an estimated 74 million people. The report also only factors in heat-related mortalities rather than deaths from natural disasters such flooding or storms. Various studies have linked increased global temperature with an increase in natural disasters. Therefore, the estimate of 74 million lives is an understatement.

The study not only outlines the problems with global temperature increase, but also highlights the impact of American citizens. 12.8 average world people produce 4,434 metric tons of carbon while 146.2 Nigerians produce the same figure.

Carbon neutrality by 2050 requires significant steps. Now, human lives are presently at risk, rather than the previous thinking that humans would deal with the consequences later.