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  • Rory Hills

Putting a proper price on emissions is critical to solving climate change

Updated: Mar 5, 2021

Putting a proper price on pollution, encourages three separate activities:

  • It provides a real incentive for those who are polluting to make every effort to reduce their emissions;

  • It provides a potential monetary incentive for those seeking to remove carbon from the atmosphere; and

  • It encourages technological innovation by providing a way for entrepreneurs to be rewarded for their investment (see the Economist article on Carbon Capture article 'We need a proper price on carbon to encourage technological innovation' as a great example).

Many people think the carbon price is heading towards $100 or beyond over the coming decade or so. Indeed, in May, Shell put out a report predicting that ‘Carbon prices must exceed €200 per tonne if the EU is to meet its net zero 2050 emission goal’.

More recently, in December 2020, Canada announced plans to increase the CO2 price under is ‘backstop’ carbon pricing regime by CAD15/tonne each year from 2023 through 2030, hitting CAD170 (USD 133) by the end of the decade as part of its plans to meet its Paris Agreement targets.

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