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Carbon pricing set to take hold across the world

Carbon pricing

​Addressing the threat of climate change is undoubtedly one of the most serious challenges to face the world and its leaders in generation.

The battle has already yielded several villains of the piece, the most prominent being carbon, with governments all over the world doing their best to try and put a price on its consumption and, subsequently, the output of greenhouse gases.

The idea of levying carbon is nothing new, with a number of schemes already in place across the world.

However, climate talks by the newly formed Carbon Pricing Panel in Paris in December appear to have brought the prospect of unified price on carbon a step further.

The panel included German chancellor Angela Merkel, Chilean president Michelle Bachelet, France's François Hollande, Ethiopia's Hailemariam Desalegn, Benigno Aquino III from the Philippines and Mexico's Enrique Peña Nieto, as well as Californian governor Jerry Brown and Rio de Janeiro mayor Eduardo Paes.

The panel was convened by World Bank's group president Jim Yong Kim and Christine Lagarde, managing director of the International Monetary Fund (IMF), Christine Lagarde.

In what the World Bank describer as a "a remarkable show of unity", the summit saw business leaders join with the various represented governments ahead of an eventual goal to put a price on carbon in bid to encourage better behaviour around the world.

Ms Lagarde said the current slump in energy prices means that the time was right to make a move towards credible and effective carbon pricing.

Turning point

Previously, the pricing against carbon was mainly carried out on a country-by-country basis, and was not exactly a universally popular route. But last year's climate summit in the French capital certainly feels like a turning point in terms of producing a uniform response to this pressing issue.

The decision by China to start pricing carbon has been seen as something of a watershed moment, with the nation currently responsible for around 30 per cent of global carbon emissions.

There are real hopes that this will inspire other countries to take similar action, easing concerns over losing competitiveness when compared to their neighbours.

Evidence suggests the trend could be taking hold on a global scale, with figures from the World Bank claiming that planned or implemented carbon pricing schemes nearly doubling since 2012, reaching a global value of around $50 billion.

The amount of income at stake is thought to be one of the primary drivers behind its adoption, which has seen four new mechanisms to charge polluters for their carbon emissions, including South Korea, Portugal, Canada’s British Columbia province and Australia.

Providing an added source of revenue is, according to John Roome, senior director for climate change at the World Bank, an added incentive for the schemes, which also benefit health and environment, while also directing investment towards a low-carbon future.

“Putting a price on carbon pollution is essential to help countries deliver on their promises for the Paris climate change agreement, as it’s an efficient and effective way to help cut emissions and send a clear signal to the private sector to invest in cleaner, greener growth," he said.

However, despite the positives, there are still some obstacles that need to be overcome before we reach a unified global agreement, with national interests often continuing to clash with each other.

The US, the world's largest economy, has been particularly guilty in failing to participate in global efforts to reduce carbon emissions since Kyoto over 25 years ago.

But with the current levels of progress being made by other nations around the world, it may not be much longer before we see a global carbon agreement become a reality.​