Global co-operation on carbon trading could reduce the costs of climate change mitigation by 32% by 2030.
That’s according to a new report by the World Bank which adds the figure could rise to more than 50% by 2050.
It shows increased international carbon trading could enable large-scale emission reductions at much lower costs based on the carbon mitigation goals spelled out in countries’ Nationally Determined Contributions (NDCS) under the Paris Agreement.
The World Bank warns the goal of limiting emission reductions to meet a 2°C or lower target will be difficult to achieve cost-effectively without more carbon trading.
According to the World Bank, under a new co-operative framework, as more than 100 countries consider carbon pricing as part of their NDC, one state can benefit from mitigation activities resulting in emission reductions in another country to fulfill its NDC.
The report also shows carbon pricing keeps growing as 40 national jurisdictions and more than 20 cities, states and regions are putting a price on carbon this year so far.
Governments raised around $26 billion (£21.06bn) in revenues from carbon pricing initiatives in 2015 – a 60% increase compared to 2014, it adds.
The Bank also states if the Chinese national Emissions Trading System (ETS) is implemented in 2017 as planned, it would become the largest carbon pricing initiative in the world, surpassing the EU Emissions Trading Scheme (ETS).
Initial estimates show that emissions covered by carbon pricing initiatives could increase from 13% to between 20% and 25% of global GHG emissions.
John Roome, Senior Director for Climate Change at the World Bank said: “The more we co-operate through carbon trading, the larger the savings and the greater the potential to increase ambition by countries in the short term. To be effective, carbon pricing policies must be co-ordinated with other energy and environmental policies –this will require collaboration within and between countries.”
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