Dear Lucio,

The extent of carbon pricing has increased over the last few years, and includes some coverage of trade-exposed sectors like OECD and World Bank etc. The effective price levels for GHG emissions from trade-exposed sectors can be much lower than the overall carbon.

So far, carbon prices levied on industry have been low, either because of exemptions to carbon taxes, or because of generous levels of free allowances to firms covered by emissions trading schemes. Some countries have put carbon taxes in place, there are many exemptions for industrial sources. Competitiveness effects from environmental regulation are mainly due to differences in regulation between sectors or countries rather than to the regulation itself. There is therefore no experience to date on how the competitiveness of energy-intensive industries could be affected in the absence of free allocation of allowances or at substantially higher carbon price levels, although ex-ante studies indicate that levels of carbon leakage could be significant. A price stability mechanism (potentially including a price floor and/or ceiling) will thus provide a stable incentive to invest in GHG abatement. A price stability mechanism can also increase the stringency of the system.

Benefits

Carbon pricing has a positive effect on innovation, but effects on long-run competitiveness, it does remain inconclusive. A low-carbon policy attracts the interests of businesses, consumers, and policy makers. A carbon labelling scheme can significantly reduce the overall carbon emission supply chain and have an initially negative impact on the manufacturer and retailer’s profits. It has been found to drive private money into innovation of low-carbon technologies, which equip firms for international competition in the long-run – when carbon price levels increase. However, this competitive advantage in the long-run has not (yet) materialised into economic outcomes.

Hope content is helpful for you.

Ashish

Dear Lucio,

Indeed policies are profitable.

The extent of carbon pricing has increased over the last few years, and includes some coverage of trade-exposed sectors like OECD and World Bank etc. The effective price levels for GHG emissions from trade-exposed sectors can be much lower than the overall carbon.

So far, carbon prices levied on industry have been low, either because of exemptions to carbon taxes, or because of generous levels of free allowances to firms covered by emissions trading schemes. This is because while some countries have put carbon taxes in place, there are many exemptions for industrial sources. Competitiveness effects from environmental regulation are mainly due to differences in regulation between sectors or countries rather than to the regulation itself. There is therefore no experience to date on how the competitiveness of energy-intensive industries could be affected in the absence of free allocation of allowances or at substantially higher carbon price levels, although ex-ante studies indicate that levels of carbon leakage could be significant. A price stability mechanism may provide a stable incentive to invest in GHG abatement. A price stability mechanism can also increase the stringency of the system.

Real Benefits

Carbon pricing has a positive effect on innovation, but effects on long-run competitiveness, it does remain inconclusive. A low-carbon policy attracts the interests of businesses, consumers, and policy makers. A carbon labelling scheme can significantly reduce the overall carbon emission supply chain and have an initially negative impact on the manufacturer and retailer’s profits. It has been found to drive private money into innovation of low-carbon technologies, which equip firms for international competition in the long-run – when carbon price levels increase. However, this competitive advantage in the long-run has not (yet) materialised into economic outcomes.

Hope content is helpful for you.

Ashish

Dear Lucio,

I don't think so. Because the policies are maybe profitable for the developing countries so that their governments can carry out efforts to preserve protected areas (such as protected forests or conservation forests) with the income obtained from carbon pricing policies from developed countries that use them as environmental services in the form of clean air quality and global climate stability (reducing global warming).

Hope content is helpful for you

Dear friends, we know that traditional markets are perfect markets where profit maximization leads to producing at the lowest cost possible…this drives traditional economic activity…traditional consumers and tradition producers determine the traditional market price….no government intervention is needed unless there is traditional market failure….as cost decreases price decreases consumption increases….that is the expectation…behind traditional market culture and responsibility….

We know that in 2012 Rio +20/UNCSD we attempted to shift from perfect traditional markets to perfect green markets, where green profit maximization leads to producing at the lowest environmental cost possible as now environmental cost are endogenous issues to the model….this drives green market based economic activity….green producers and green consumers determine the green market price….no government intervention is needed unless there is green market failure….as environmental cost decreases green price decreases green consumption increases….that is the expectation…behind green market culture and responsibility….

Carbon pricing policies are non-free market policies or dwarf green market policies that need ongoing government intervention where as long as companies can pass the externally set environmental cost to consumers they will supply the market….as environmental costs are increased they will contract the supply of the market…..expectation that is inconsistent with the need to create a green market culture and responsibility that is needed to address the environmental crises head on….

So Carbon pricing policies are at odds with profitable pollution reduction behavior because companies in carbon pricing markets have no incentive to base profit maximization on producing increasingly lower and lower carbon based products and services as time passes to be able to produce at a lower and lower market price as they can make money by simply passing the set environmental cost by the government to consumers….and this is because a carbon price is not a green market price…

Thank you for your comments

Lucio