Assignment 3 - Storytelling with Open Data

Carbon Prices in the World

Caroline A.C. Tan s3951572

Background

Over the last 200 years, a main driver of the world’s climate change has been air pollution which is burning of fossil fuels, like for example coal, oil, and gas. One way to reduce the CO2 emission is by putting a price on carbon, it makes more polluting fuels, products, and services more expensive. This will encourage people to change from fossil fuels to low-carbon alternatives such as renewables or nuclear energy.

There are 2 policies which countries can put a price on carbon:

  • Carbon tax, which charges are implemented with respect to products or processes involving fossil fuel use resulting in such dangerous byproducts.The associated taxation rates imposed correspondingly increase relative to increases in resultant pollution output.

  • Emissions trading system, which is sometimes called a ‘cap and trade’ system. Here, the carbon price changes from time to time. A highest level of pollution (a ‘cap’) is defined and to emit greenhouse gases, manufacturers need licenses.

but which one is better? These next slides will explain world carbon prices and their impact to CO2 emission which makes the percentage of CO2 the key parameter/measurement.

Carbon Tax Price 2020

As showed on the plot above, Europe has the most countries with carbon tax and the highest carbon tax price is held by Sweden (US$48.81). Lowest is Poland (US$638.5 micro), with the overall average of US$9.5 from 24 countries (that are not US$ 0).

Emissions Trading System (ETS) Price 2020

The map above shows that Europe also has the most countries that implement carbon ETS, but South Korea (US$16.43 per tonne) has the highest carbon ETS price in 2020, followed by Bulgaria (US$15.91 per tonne) with the overall average of US$9.2 per tonne from 38 countries (that are not US$0).

CO2 Trend in the World

We can see that the CO2 percentage in both carbon tax and ETS has increased over the years, but carbon tax has an overall lower percentage of CO2 emission rather than carbon ETS, which means that carbon tax is more effective.

Carbon Tax Sampling

Now we sample a country that only implement carbon tax and not ETS, Slovenia. Over the years, the percentage of CO2 becomes lower than when they had just started implementing carbon tax. Even when carbon tax is no longer continued, it still has a huge decrease in the CO2 emission percentage.

Carbon ETS Sampling

This plot shows the sample of a country that only implements ETS and not carbon tax which is China. The price of carbon ETS is very low even while line of CO2 is progressively getting higher each year.

Carbon Tax VS ETS Prices

This shows a supporting factor that the carbon ETS price trend fluctuates from year to year, while the overall carbon tax price trend increases along with the increase in CO2. (Plot: CO2 Trend in the World)

Conclusion

  • The CO2 emission for both carbon policies (tax and ETS) worldwide is trending up from year to year (in a range of 15 years which is from 2005 to 2020) which is unexpected.

  • But we can see from the plots, countries that apply taxes (not applying ETS) have a lower CO2 way below than countries that apply carbon ETS (not applying tax).

  • carbon taxes goes hand in hand with how high and low carbon emissions are. If a country don’t use carbon taxes, then there is a possibility that prices of carbon will become very cheap which causes high carbon emissions (like the given example, China).

Overall Conclusion :

We can conclude that tax is a better policy which countries can put a price on carbon to reduce the burning of fossil fuels and also to help the world with climate change. Since it is more effective from year to year and carbon tax pricing have a more stable and corresponding flow with the CO2 emission. Overall, having a better result of CO2 emission percentage compare to ETS.

References