Carbon pricing: money talks
- robball6
- Jun 18
- 2 min read
An interesting story in the Financial Times this week reports on how US states, such as Washington and New York, are sending delegations to the EU to find out about carbon pricing schemes.
The FT quotes a senior EU official as saying: “There is clearly a business case for decarbonisation which can win over even Trump’s demagogy, and deep in Republican heartland.”
Money talks. And if the US were to adopt carbon pricing, the whole world would have to listen.
The use of carbon pricing around the world, in various forms, is growing. The World Bank’s annual report, State and Trends of Carbon Pricing, published earlier this month, says that there are now 80 emissions trading schemes (ETS) and carbon taxes implemented around the world with more planned in Brazil, India and Turkey.
Crucially, the World Bank reports that over $100 billion dollars have been raised for public budgets through these mechanisms for each of the past two years, commenting: “In addition to using direct carbon pricing as a tool to meet emissions reduction targets, governments have broader objectives. Carbon pricing is a potential source of revenue for fiscally constrained governments.”
Over the past 12 months, the proportion of global greenhouse gases (GHG) covered by carbon pricing has increased from 24% to 28%. China has contributed significantly to this rise by extending its ETS to cover cement, steel and aluminium with the liabilities applying retrospectively to these sectors from 1 January 2024.
The World Bank report also looks at the potential spread of border carbon adjustment mechanisms (CBAMs), where a tax is levied on carbon-intensive goods which have a higher carbon footprint than the same goods made locally. The EU already has one and the UK will introduce one in January 2027. Other countries are also planning or considering CBAMs, or similar mechanisms.
An interesting side note is that when the UK phases out free carbon allowances for the sectors that are covered by the UK CBAM – such as cement, steel and hydrogen – this could generate additional revenue of almost $2 billion by 2034, says the report.
What does all this mean for our sector and the companies in it? Carbon pricing will impact on what we do and how we do it at some point. And should the US take an interest in deploying it, those impacts could be felt sooner than expected.
Getting PAS 2080 accreditation for a company’s carbon management system – as Thermal Road Repairs did back in February 2024 – is a good first step in the road to carbon reduction. From there, actions can be prioritised and their impact measured and recorded properly.
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