What needs to be done
At DNB we advocate better pricing of carbon emissions. This means putting a price tag on more emissions, and raising prices. Governments can do this in different ways, by imposing a carbon tax or by operating an emissions trading system (ETS). This is a system whereby companies must buy credits to be allowed to emit carbon. Companies can then trade these credits.
Who should regulate carbon pricing?
Carbon pricing should preferably be coordinated at global level. This is to protect the competitive position of countries and to prevent polluters from transferring their emissions to other countries. It would be ideal if companies in each country paid the same amount for their emissions. But if this is not feasible, there are several interim solutions. For example, the largest economies could agree on a minimum price. At DNB, we believe that the Netherlands should push for such solutions.
Carbon pricing in Europe
Much can also be achieved at European level. In July 2021, the European Commission (EC) presented a comprehensive set of proposals for reducing greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. Carbon pricing is an important element in the proposals. Currently, only certain businesses in the energy and heavy industry sector in the EU pay for their carbon emissions. They do so under the European ETS. Besides improving the ETS, the EC proposes introducing a wider-scoped trading system that also covers such sectors as road transport and buildings. A system of carbon certificates should apply at the EU's external borders, which importers of electricity, steel and cement must buy. At DNB we welcome these opportune proposals. It is important, however, that they are not excessively watered down under pressure from individual Member States.
Limited impact on the economy
At DNB, we studied the impact of improved carbon pricing on our economy. This study shows that subjecting the manufacturing, energy and transport sectors to an EU-wide tax of €50 per tonne of carbon emitted will only have a limited impact on the competitive positions of the Netherlands and most other EU Member States. One of our previous studies showed that expanding and increasing carbon pricing will not have a major impact on the Dutch economy as a whole.