Carbon pricing after Copenhagen: an updated assessment

The report analyzes the global shift in carbon pricing dynamics away from a US-centric model toward Asia-Pacific initiatives, including Korea, Australia, and Chinese pilot schemes. It argues that while the US Federal government remains deadlocked, other industrialised nations must implement carbon pricing to avoid stranded assets and maintain international credibility. Using the EU ETS as a primary case study, the document highlights the effectiveness of cap-and-trade in delivering operational emission savings and the importance of 'easing policies' like free allocation to protect trade-exposed, carbon-intensive industries. It emphasizes that carbon pricing is a 'necessary but not sufficient' tool, requiring complementary measures such as energy efficiency programs and strategic revenue recycling to support low-carbon innovation. The author suggests that regional cooperation and the potential for 'border levelling' measures after 2020 may be necessary if global agreements fail.

• There is a visible shift in carbon pricing momentum from the Atlantic divide (EU and US) toward the Asia-Pacific region, evidenced by the adoption of emissions trading in Australia, California, and Korea, as well as pilot schemes in China.
• The lack of a coherent carbon price increases the risk of 'stranded assets' for private sector investors who continue to invest in carbon-intensive capital that may become obsolete as international carbon controls strengthen.
• The EU ETS has demonstrated that cap-and-trade can achieve operational emission reductions efficiently across various industries, with estimated savings of 40-80 MtCO2/yr on average during its first four years.
• To mitigate the impact on trade-exposed, carbon-intensive industries, ETS systems typically employ 'easing policies' such as free allocation, which in the EU case has provided counter-cyclical support during recessions.
• Carbon pricing is not a standalone solution; it must be integrated with complementary instruments targeting negative-cost opportunities (like energy efficiency) and high-cost innovation and infrastructure investments.
• The report suggests that border-related measures, specifically 'border levelling' to equalize carbon costs, may be considered after 2020 if the 2015 Durban Platform negotiations fail to produce an adequate agreement.
• A recurring pattern in the adoption of carbon pricing is that energy-importing jurisdictions are more likely to implement these systems, often aligning climate policy with domestic energy security, while major energy producers tend to oppose them.

APA

Grubb, M. (2012). Carbon pricing after Copenhagen: an updated assessment. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/cs-carbon-pricing-after-copenhagen-an-updated-assessment.pdf

Chicago

Grubb, Michael. Carbon pricing after Copenhagen: an updated assessment. Climate Strategies, 2012. https://climatestrategies.org/wp-content/uploads/2014/11/cs-carbon-pricing-after-copenhagen-an-updated-assessment.pdf.

Wikipedia

{{cite report |last1=Grubb |first1=Michael |title=Carbon pricing after Copenhagen: an updated assessment |publisher=Climate Strategies |date=2012 |url=https://climatestrategies.org/wp-content/uploads/2014/11/cs-carbon-pricing-after-copenhagen-an-updated-assessment.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{grubb2012carbon, author = {Grubb, Michael}, title = {{Carbon pricing after Copenhagen: an updated assessment}}, institution = {Climate Strategies}, year = {2012}, url = {https://climatestrategies.org/wp-content/uploads/2014/11/cs-carbon-pricing-after-copenhagen-an-updated-assessment.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }