Adopting Carbon Pricing Tools at the Local Level: A City Case Study in Portugal

Luís Pereira Dias,Jieling Liu,Lurdes Jesus Ferreira

doi:10.3390/su14031812

Abstract

Debates on carbon costs and carbon pricing to accelerate the reduction of greenhouse gas (GHG) emissions are emerging as cities develop local policies and programs to achieve carbon neutrality. This paper focuses on how cities formulate economic instruments and adopt carbon pricing experiments to support their climate objectives. Extensive literature is available on science-policymaking interface Integrated Assessment Models (IAM) and on the two mainstream approaches of carbon cost formulation—Social Cost of Carbon (SCC) and Marginal Abatement Cost (MAC). Although, the literature on how governments develop climate policy instruments, particularly towards a local carbon cost, is recent. We start by reviewing these essential concepts and tools for carbon cost formulation. We then critically review a set of local carbon pricing experiments, totaling fourteen international cities, and confirm a great demand for scientifically robust, verifiable, and transferable carbon cost methodologies at the local level. We thus propose an approach to assess the short-term technology cost of CO2 emission reduction in the mobility sector in Matosinhos municipality, Portugal. Our approach shows that a carbon cost methodology at the local level with robust, verifiable, and transferable results is possible. We advocate for a methodological advance to estimate versatile CO2 prices suitable for local conditions.

Highlights

IntroductionPublisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations
We started by constructing a theoretical framework which includes the concepts (SCC and Marginal Abatement Cost (MAC)) and the tools (IAMs) related to the estimate of the cost of carbon and that are decisive for cities as emergent global climate actors experiencing carbon pricing initiatives
The use of concepts, approaches, and tools for the definition and application of a carbon cost at a local level that we presented in the theoretical framework provided a sense of complexity in local climate policymaking

Summary

Introduction

Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cities are entering the central debate on carbon pricing policies, as they are increasingly committed to climate action [1,2,3,4]. In 2021, 11,193 cities had some form of climate action [5], 733 cities committed to net-zero [6], and just 34 subnational jurisdictions, including cities, had carbon pricing initiatives [7]. The number of cities decreases as climate responses become more demanding, from policy to instruments and from instruments to actions for net-zero. Since the Paris Agreement encouraged the involvement of subnational actors and defined the generation of carbon markets, whose rules were approved six years later in COP26 [8], pricing is gaining new strength as an efficient and effective policy instrument for reducing GHG emissions, as Baranzini et al [9] anticipated

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