Governments are beginning to recognize the urgency of climate change and implement regulations and taxes on carbon dioxide and other greenhouse gas emissions. The 2015 Paris Agreement was the result of an international climate convention hosted by the United Nations, and the agreement was signed by 195 countries that have promised to create plans to limit emissions in the near future. Each country has the obligation to set their own direction and report back on progress.
In late 2018, the UN published a special report detailing the climate change trajectory and the actions needed to keep global warming to an increase of 1.5°C (2.7°F) over levels from 150 years ago. The report showed how current emissions have the world on track for a 2°C (3.6°F) or more overall global increase in temperature, which would lead to even more extreme weather, decrease biodiversity, and change ocean levels and acidity. The report called for decreasing CO2 emissions by 45% from 2010 levels by 2030. News headlines lead with a 12 year timeline to solve climate change.
Nations around the globe are regulating carbon emissions for their citizens and businesses by pledging to reach net zero greenhouse gas emissions, including carbon dioxide. Bhutan and Suriname are leading the way and are already carbon negative, meaning they take more CO2 from the atmosphere than they release. An additional 15 countries have either set or are planning to set net zero goals for emissions.
Canada has been a leader in emissions regulation and currently has both a tax on carbon and a trading system for industries with heavy emissions. Provinces and territories have the option to set their own higher standards. The plan calls for revenues from the tax to be refunded to Canadians to help balance higher energy bills. As of 2019, the price for carbon in the Canadian system is $20 per ton of CO2 equivalent.
In 2005, the European Union created its emissions trading program, which covers all 28 member countries as well as Iceland, Liechtenstein, and Norway for a total of 31 countries and 45% of EU emissions. The program regulates heavily emitting industries and is based on a cap-and-trade model. By 2020, the EU expects emissions to be 21% lower than when the program began, and for a 43% reduction by 2030.
States like California and regions like Scotland are also pledging to reach net zero emissions, along with 23 cities like San Francisco, Los Angeles, and New York City. Overall, about 16% of global GDP is covered by carbon regulations that plan for carbon neutrality by 2050 or sooner.
California put climate change policy on the books starting in 2006 and in 2016 increased its goal to reduce emissions to 40% below 1990 levels by 2030. The cap-and-trade program works by putting a limit on total emissions and letting companies buy and sell allowances in the state market. California also recently implemented a Tropical Forest Standard to reduce deforestation and verify the quality of forest carbon credits in the offset market. Businesses in California are already limited by these policies, and nations are increasingly passing carbon regulations and taxes.
Many more countries and regions have regulations, plan to implement regulations in the near future, or are considering regulations. The existing and planned regulations in total would account for over 20% of global emissions, about 11 billion tons of CO2 equivalent.
Emissions-heavy industries are also undergoing regulatory requirements. Airline industry emissions are being regulated by the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a phased program administered by the UN. Global air transportation companies are now required to report their emissions with goals for carbon neutral growth by 2020. In the auto industry, regulations are set by nations or regions. In the United States, automakers Ford, BMW, Honda, and Volkwagen voluntarily chose a higher emissions standard set by California instead of the lower national requirements.
Carbon offsets, when verified and monitored properly, prevent emissions that would have otherwise been released or remove CO2 from the atmosphere. Forest carbon offsets are one of the best choices for offsetting CO2 emissions because
- Carbon dioxide is removed from the atmosphere and captured as carbon in the forest’s biomass,
- Forests are restored or protected long-term,
- The best projects engage the local community and indigenous peoples, and
- Forest projects also protect biodiversity and the natural beauty of the world.
Companies that are considering these regulations now will be ahead of those that don’t. Nations, especially those who have signed the Paris Agreement, will regulate CO2 emissions in the future. Reducing emissions now and offsetting any remaining emissions is the best strategy for long-term viability and corporate sustainability.