ON 1 June 2021 Jersey’s Citizens’ Assembly Report on Climate Change – titled Achieving Carbon Neutrality – was presented to the States by the Environment Minister.
This is an important document for all of us and the recommendations made will shape the direction of public policy in the years to come, particularly around the emissions associated with transport, heating, cooling and cooking.
Jersey, of course, is not alone in debating how it can reach ‘net zero’ and, central to incentivising the changes required globally to achieve this, is finding a realistic price for carbon.
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Last month The Financial Times reported the EU carbon price had extended its record-breaking rally (+50% YTD), jumping above €50 a tonne for the very first time – double its level prior to the pandemic. European policymakers have been focused on tackling climate change for many years and they launched their Emission Trading System in 2005 – the first, and now largest, emissions-trading platform in the world.
This model is now being increasingly copied, with several individual countries launching their equivalent.
In the US, the ‘social cost of carbon’ is a mechanism used to calculate a price to direct public policy. The concept applies a comprehensive estimate of climate-change destruction and includes fluctuations in net agricultural productivity, human health, property damages from increased flood risk, and changes in energy system costs, such as reduced costs for heating and increased costs for air conditioning. Under Barack Obama’s administration this cost was calculated at $43 per ton. Under Donald Trump it was as low as $3 (surprise, surprise!) and under Joe Biden the figure is $51.
Why does all this matter? Over time, carbon will become a standard ‘cost’ for all businesses to pay in the same way that rent, salaries and taxes have to be met today. If this is passed to consumers, it will serve to raise consumer prices, creating higher inflation. If firms are unable to pass on these carbon costs, this will dent profitability and could ultimately lead to job losses.
So, with all the recent headlines around Bitcoin, which price should you really be keeping an eye on – carbon or crypto?
Source: Jersey Evening Post
