Geoscience Reference
In-Depth Information
50
45
Dec. 2012
Dec. 2007
40
35
30
25
20
15
0
2006
2007
2008
2009
2010
2011
2012
Figure 35.
The market price of CO
2
under the European Trading Scheme. This fi gure
shows the history of CO
2
prices under the EU Emissions Trading Scheme from 2006 to
2012. The price declined sharply during the fi nancial crisis and at the end of 2012,
when the future of global climate-change agreements was in doubt. Note: The vertical
scale uses metric tons rather than American tons (2,205 versus 2,000 pounds). The
euro averaged $1.36/
€
during this period.
number of allowances from the fi rst phase was greater than actual
emissions, and the price fell to zero in 2007. For the second phase,
prices started around 20 euros ($27) per ton, but fell by 2012 to around
8 euros ($11) per ton.
In the second approach to raising the carbon price, known as carbon
taxation, governments directly tax CO
2
emissions. The basic idea is sim-
ple. When a fi rm burns fossil fuels, the combustion leads to a certain
quantity of CO
2
entering the atmosphere. The tax would be levied on the
CO
2
content of each fuel. The defi nitional issues are the same for carbon
taxes and emissions caps. The only difference is that one taxes a quan-
tity while the other limits the quantity. The defi nitions of the quantities
are the same.
2
