Nigel Topping: Pricing carbon will help deliver on promises made in ParisNigel Topping
On April 22nd, 130 leaders from across the globe will gather in New York City to sign the Paris Agreement – the largest international agreement in world history. In just four months, the world has responded rapidly to the new ‘rules of the game’ established at the UN Paris Climate Change Conference, COP21. I am greatly encouraged that this Agreement includes a strong reference to carbon pricing, recognising the value of cooperation among jurisdictions on emissions trading schemes and carbon markets.
Another set of world leaders will also convene for the signing. The High Level Panel on Carbon Pricing believes that ambitious action on carbon pricing will deliver on the promise of COP21. In its Vision for 2020 and Beyond, the Panel calls on the international community to double the amount of global emissions covered by carbon pricing by the end of this decade, and then to double it again ten years later. I am hopeful that this vision, of 50% of global emission incurring a cost by 2030, will help to quickly bend the GHG emissions curve.
Only last week, in Washington DC at the World Bank and IMF Spring Meetings, a major topic of discussion among world leaders was the accelerated adoption of carbon pricing to meet global climate goals. In a dinner dialogue convened by We Mean Business, CDP and the Carbon Pricing Leadership Coalition, it was abundantly clear that the Paris Agreement has, even now, catalysed action on carbon pricing. One speaker described COP21 as the signal that “the carbon pricing train is leaving and the ticket is free”.
The evening served as a renewed call for bold action to implement robust carbon pricing policies with price levels strong enough to trigger important techno-economic shifts, particularly in energy sources.
We currently have 40 countries and more than 20 cities, states and provinces deploying carbon pricing policies, with no evidence that such policies harm the competitiveness of their economies. It is not surprising then that these numbers are expected to rise considerably, as over half of the national pledges submitted in the run-up to COP21 reference carbon pricing and other market mechanisms as a tool to meet emissions reduction goals.
Additional evidence of momentum is easy to find. China’s national emissions trading scheme, once it is launched in 2017, will be the world’s largest. Canada is discussing a national carbon price, receiving just last week the endorsement of its largest mining companies. The EU is moving ahead with reforms to its system to strengthen price signals. In fact, French Environment Minister and COP21 President Ségolène Royal has formed a task force to develop concrete proposals on the establishment of a carbon price “corridor” that would steer investment towards the most robust climate projects.
Growing numbers in the private sector are aware that carbon pricing can drive the transition to a thriving, clean economy. Industry leaders have identified that the proliferation of these policies are an indication that business, too, needs to plan ahead for an end to the era of cost-less carbon emissions. Even before COP21, over 1,000 companies told CDP they will be pricing their own carbon emissions by 2017, to make smarter investments, catalyse innovation, and to show investors that they are leading on climate. One can only imagine the impact these new policies will have on business outlook.
Carbon Pricing Pathways update released today
For some time now, We Mean Business has been working to change the conversation on carbon pricing. Efforts must be focused on strengthening carbon price levels across carbon pricing systems worldwide. As Angel Gurrìa, Secretary-General of the OECD, likes to say, what we need is a “big, fat, price on carbon”: a price significantly higher than the current levels that can drive a smooth and fast transition not only to cleaner sources of energy, but to a full decarbonisation of our economy. Practically speaking, we need a price of at least $30-40 per tonne in order to ensure the switch from coal to gas.
Alongside CDP, we released the Carbon Pricing Pathways in September 2015 – designed to encourage dialogue and action by governments, business and investors that will lead to steadily rising carbon prices sufficient to keep global temperature rises well below 2oC of pre-industrial levels.
Today, we have published an update of the Carbon Pricing Pathways, providing analysis of the latest global trends that affect the outlook for carbon pricing. Our analysis suggests the world is rapidly responding to the new “rules of the game” set by the Paris Agreement and carbon pricing is an important piece of the game plan.
As the eyes of the world fall once again on global leaders renewing their commitment to a global and ambitious response to the climate challenge, the strategic conversation on carbon pricing is more urgent than ever to ensure the era of cost-less carbon emissions draws rapidly to a close.