Last edited 06 Jan 2021

Carbon price

Making Mission Possible - Delivering A Net-Zero Economy, published by the Energy Transitions Commission (ETC) in September 2020, suggests that carbon price is: ‘A government-imposed pricing mechanism, the two main types being either a tax on products and services based on their carbon intensity, or a quota system setting a cap on permissible emissions in the country or region and allowing companies to trade the right to emit carbon (i.e. as allowances). This should be distinguished from some companies’ use of what are sometimes called “internal” or “shadow” carbon prices, which are not prices or levies, but individual project screening values.’

The Energy White Paper, Powering our Net Zero Future (CP 337), published in December 2020 by HM Government, defines carbon price as: ‘A cost applied to carbon pollution to encourage polluters to reduce the amount of greenhouse gases they emit into the atmosphere.’

Emissions Gap Report 2019 published by the UN Environment Programme defines the carbon price as: ‘The price for avoided or released CO2 or CO2e emissions. This may refer to the rate of a carbon tax or the price of emission permits. In many models that are used to assess the economic costs of mitigation, carbon prices are used as a proxy to represent the level of effort in mitigation policies.’

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