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Carbon Taxes Expected To Be Higher, More Numerous

by Ulrika Lomas, Tax-News.com, Brussels

25 May 2016


Over 80 percent of respondents to the International Emissions Trading Association's annual survey, conducted by PwC, said they expect an expansion of carbon markets, driven by the Paris Agreement.

This percentage was significantly higher than last year, when 58 percent of respondents expected countries to newly announce their intention to tax carbon dioxide emissions.

According to the survey, by 2025, new emissions trading systems (ETSs) are expected to be started up in Canada, Australia, Brazil, Chile, Japan, Mexico, South Africa, and Turkey. This is in addition to the national ETS in China that is expected to begin next year.

"This is the first real test of market sentiment since the Paris Agreement – and the mood is clearly positive," says IETA President and CEO Dirk Forrister. "The inclusion of markets in the agreement has boosted morale and opens the door for further opportunities for business to engage in carbon markets around the world."

"We are particularly interested in the prospects for new markets taking seed in the coming years – especially as more than 90 governments stated that market access is essential to fulfilling their Paris pledges, according to analysis by IETA and Environmental Defense Fund."

This year, respondents said a carbon price of EUR40 (USD44.5) per tonne is needed to achieve climate change objectives.

"The gap between price expectations for major markets and the price required to achieve the Paris goals reflects the difference between ambition and reality," says Forrister. "This needs to be addressed urgently if the world's political aims are to be met."

"This survey sends a clear message that governments need to get serious about carbon pricing or they won't hit the Paris targets," said Jonathan Grant, Director, PwC. "IETA members have highlighted the yawning gap between current prices and what's needed to achieve the Paris objectives."

He added: "With such low carbon prices, some will question whether the policy is working and changing business decisions or if it has become just an administrative burden on companies."

TAGS: South Africa | environment | tax | business | Chile | interest | Australia | China | Mexico | environmental tax | Brazil | Canada | Japan | Turkey | Africa

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