This year is shaping up to be an important milestone for carbon markets in Canada and around the world.
Last week, Ontario Premier Kathleen Wynne announced that the province will launch a carbon-pricing scheme this spring. She did not reveal whether that will be a carbon tax or a cap-and-trade system.
“It will focus on the balance between economic growth and the need to address our very real climate change problem,” said Wynne, as quoted in the Globe and Mail.
In 2008, Ontario signed a commitment to carbon pricing with Quebec, British Columbia, and California. Since then, B.C. has implemented a carbon tax, while Quebec and California operate a joint cap-and-trade system.
The announcement marks a change from last June after Wynne won a majority government, when she said a carbon tax was not part of her plan.
Last week also saw carbon trading start in South Korea, which now operates the world’s second-largest market, after the European Union.
The nation’s cap-and-trade system will force 525 major companies, including power generators and car-makers, to buy allowances if they release carbon emissions beyond a specified limit. The allowances started trading at $7.26, but are expected to rise to $30 in 2017.
These developments coincide with new research that suggests the true cost of carbon emissions may besix times higher than previously thought.
In a paper published in the journal Nature Climate Change, scientists estimate that the economic damage from burning one tonne of carbon may be around $220. A previous U.S. government study had placed the cost at just $37 per tonne.
Part of the difference is that the new study takes into account the slowing in GDP growth that occurs when cities have to rebuild after climate disasters.
The research provides more support for mitigation measures like carbon pricing.
“Because carbon emissions are so harmful to society, even costly means of reducing emissions would be worthwhile,” said co-author Delavane Diaz in a press release.
Of course, every carbon market in the world will soon be dwarfed by China, which plans to launch its national carbon pricing scheme in 2016. China plans for its emissions to peak and begin to decline around 2030.